MEXICO Oil Reserves and Production

This is a Guest Post by George Kaplan

In dollar terms, since mid 2015 Mexico has been a net importer of hydrocarbons (oil, natural gas, petroleum products and petrochemicals combined). To date it has been a relatively small and fairly constant amount, but with their oil production declining, and oil prices apparently continuing to fall while natural gas prices may be on the rise, the net cost could now start to increase.


2017 reserve numbers were issued in early June. These used to come from PEMEX, but now look like they come from the government through the National Hydrocarbon Commission (probably as a result of the initiative for oil industry deregulation). Overall all categories of reserves have been falling for some years. The chart below shows oil and total (i.e. including condensate, NGL and natural gas) for proved, probable and possible. The production, discoveries and revisions for total petroleum (no figures for crude alone) are also shown – a bit fiddly but the trends can be seen – falling production, small and declining discoveries and some big recent revisions.

Note that the usual confusion holds here in that reserves are for crude only (condensate is included in the total numbers), but total flow rates (discussed further below) have crude and condensate numbers included (but clearly specified). To add to the confusion the datasets below are labeled P1, P2 and P3, but because the charts are stacked they should be read on the axis as 1P, 2P and 3Ps (the bar chart increments don’t really work out very well like this because the revisions can be positive or negative).


Mexico has four oil producing regions, Northeast Marine, which includes KMZ and Cantarell – the biggest fields, Southwest Marines, Northern Region onshore and Southern Region Onshore. The changes from 2016 to 2017 for these are shown below.

Note that usually KMZ includes all fields in Northeast Marine that are not Cantarell, but sometimes I think KMZ is used only to refer to the three specific fields of Ku, Maloob and Zaap (I’ve separated these three out in the production numbers presented later).

Cantarell must be quite complicated as it is very mature, in steady decline and yet has almost 1 Gb of proved, and more than that (still), of probable reserves. By contrast Southern onshore is almost all proved. KMZ is mostly proven as shown, but the three big fields (K, M and Z) together are over 80% proved with 6% probable and 14% possible (i.e. well understood even though only about halfway through their life cycle). Based on 2P numbers and average production over the last twelve months Cantarell has R/P of 48 years and KMZ of 13. There must be some question about the Cantarell stated numbers, unless there is a major brownfield development in progress, which would allow them to be recovered in the nearer term.

The noticeable (i.e. against trend) changes for 2017 are the addition of the undeveloped new licences (I think involving mostly Pemex, BHP and Eni) and the big increase in P2 and P3 for Northern Region onshore. This last might have something to do with shale developments, though the indications are that these are mostly rich gas (e.g. part of them is an extension of the Eagle Ford gas plays from Texas).

Overall the proved crude reserve changes from 2016 to 2017 consisted of 44 mmbbls discovery; -72.4 delimitation (I think these would be downgrades from proved to probable based on appraisal drilling results); -224 mmbbls revision (probably partly price related); 458 mmbbls development (i.e. new projects with verified development plans so upgraded from P2 and P3 to P1); and -789 mmbbls produced.


I fitted simple probability distributions for each of the six areas that meet the normal definitions of proved (greater than 90%), probable (greater than 50%) and possible (greater than 10%) and then used a simple Monte Carlo simulation to combine them. As below. As expected the mean and median come out close to the 2P numbers – actually slightly lower which either means my fitted distribution curves weren’t very good or that the ratio of proved to possible is lower than ‘normal’, at least for the moment.


Production figures are released monthly. All regions except KMZ are in overall decline, though over the last three months production has been on a plateau: for May C&C was up 9000 bpd (0.4% on the month, the chart below shows y-o-y changes against the individual areas).


A key to near term production is the performance of the three main KMZ fields, highlighted below. In 2012 Pemex presented some forward looking scenarios (in green) that predicted a lot of new discoveries, which haven’t happened yet, and KMZ coming off plateau about now, which might. KMZ was developed using nitrogen injection from Cantarell, which then started accelerated decline, as would be expected. KMZ is likely to follow the same decline once gas breakthrough gets going. Therefore a key for the field in the near term is likely to be balancing the gas from each field to maximize production. A decline rate of around 12% as indicated in the PEMEX forecast might be a bit higher than expected given the current 2P numbers.



In terms of developments for the near term they have Abkatun (60 kbpd nameplate) due in 2019 (a replacement for a platform lost to an explosion), plus a few discoveries like Trion and Tobasco, which will be developed in partnership with outside companies (Trion may have been formally approved, but if not it is highly likely to proceed, will give around 120 kbpd and involves BHP and Pemex). There were five small shallow field discoveries in 2016 amounting to 160 mmboe (2P), and touted as a big success. Other developments depend on discoveries through the new licensing rounds and onshore shale. All licencing rounds are always announced as successes, no matter what happens, so it’s difficult to know what to make of them sometimes. The last one in mid June attracted attention from Eni, but a third of the blocks were not bid on, and most of the others were single bids. For shale PEMEX has drilled some wells, I think less than ten, and about half have been dry with the others rich gas – so no great success yet, but there may be more recent wells that haven’t been reported (or at least seen by me).

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311 Responses to MEXICO Oil Reserves and Production

  1. Hickory says:

    Thanks for the excellent report George.
    I assume that shale oil/gas bearing formations in Texas/NM extend into Mexico, and that production there will be viable with higher prices. Any thoughts on that prospect?

    • Dennis Coyne says:

      Hi Hickory,

      I think George suggested that in Mexico the extension of the Eagle Ford play will be mostly gas and NGL.

      If you look at the RRC Eagle Ford site.

      and look at the graphic (red dots are natural gas) towards the Mexican border are mostly natural gas wells.

      Chart below is from link above (reduced in size), if it’s unreadable click ling above.

    • George Kaplan says:

      Hickory – as Dennis says, probably rich gas. Apart from the EF extension there is another formation similar to (or extension of) Haynesville. However with few wells so far drilled it can’t be known for sure. There is a Pemex investor presentation (I think made in London) that is available in pdf but I can’t find it at the moment. It highlights the shale potential.

      Offshore might be better for oil. This is a report on last week’s shallow water leasing round:

      Shallow water means less cost, less risk but maybe less upside. There were a few of the majors involved but it mostly involved lesser known players. Ecopetrol is Colombia’s national company. Something could probably be made of their home grown prospects that they are now branching out.

      This is a report on the offshore potential from Hart EP:

      And an older study from Oxford Energy in 2014, a lot of details, but things haven’t exactly worked out as they were thinking with the price collapse.

    • Glenn E Stehle says:

      The U.S. Energy Information Agency conducted a study back in 2013 which concluded that Mexico’s shale natural gas reserves were sixth in the world and its shale oil reserves were seventh in the world.

      However as this recent article in the Oil & Gas Journal explains, more recent geological information indicates that Mexico’s shale oil and gas resources could be significantly greather than the EIA estimated back in 2013.

      The 2013 EIA study found 104 billion boe of risked, technically recoverable resources in Mexico.

      With significant improvements in drilling and completion technology over the past two years, and more recent geolgical data collected on Mexico’s shale reservoirs, Mexico’s shale oil and gas resources could be double or triple the EIA’s 2013 estimate. Mexico’s propinquity to the United States could also prove to be highly advantageous to the exploitation of these reserves.

      As the Oil & Gas Journal article explains, one of Mexico’s shale targets, the Pimienta, is 1000 km long, between 50 and 200 km wide, and may have more than 200 meters of shale thickness, double the typical Eagle Ford thickness in South Texas. The quality of the rock looks similar, if not better, than that of the Eagle Ford. It “could be a superior target to the Eagle Ford shale,” says the Oil & Gas Journal. And its areal extent is several times greater than that of the Eagle Ford.

      New bid round accelerates Mexico’s shale potential

      Mexico’s geologic and commercial qualities could thrust the country to the front of the emerging global shale market.

      Low oil prices delayed the country’s first shale auction, originally scheduled for last year and designed to attract needed foreign investment and technology. But it could take place later this year or in 2017.

      Recognizing its vast shale resources, Mexico’s government is opening the country’s most prospective acreage, formerly the exclusive domain of Pemex, to foreign capital and expertise. The opening of Mexico’s onshore and offshore basins to foreign investment for the first time in 75 years is a key part of the country’s ongoing reforms….

      The Upper Cretaceous Eagle Ford shale extends directly into northern Mexico from South Texas, though it undergoes significant structural and lithologic changes just inside the border. The less renowned Upper Jurassic Pimienta formation, a prolific Gulf Coast source rock correlating with the Cotton Valley-Bossier-Haynesville sequence of East Texas, is regionally more extensive and uniform and could be a superior target to the Eagle Ford shale.

      Regional geologic mapping reveals the Pimienta trend stretching 1,000 km across northeast Mexico (Fig. 1). The regional structure is simple throughout much of this trend, with few faults and mostly gentle dip angles (Fig. 2).2 Shale thickness, depth, and thermal maturity are prospective within a belt 50-200 km wide and spanning 27,000 sq miles (17 million acres), covering just the Pimienta shale’s two key basins: Burgos and Tampico-Misantla….

      Advanced Resource International Inc.’s (ARI) 2013 assessment for the US Energy Information Agency (EIA), which included areas not assessed by Pemex, found 104 billion boe of risked, technically recoverable resources, comprising 13.1 billion bbl of oil and 545 tcf of natural gas.

      Our current analysis, based on a larger public data set that we assembled for our multiclient study, indicates the oil potential could be greater. Shale areas in the Burgos and Tampico-Misantla basins are structurally simple with few faults. Owing to gentle or flat structural dips, the liquids-rich windows often are wider than in the Texas Eagle Ford. Overpressuring occurs locally in these prolific and still actively generating source-rock shales….

      Once shale blocks have been awarded, service companies based in the southern US (Eagle Ford, Permian, and Haynesville) are positioned to bring in specialized drilling and completion equipment and expertise. The Mexican government is working to facilitate such cross-border trade…..

      High-graded Pimienta shale areas, for example, may have more than 200 m of gross shale thickness, double the typical Eagle Ford thickness in South Texas. Mineralogy comprises mainly calcite with minor quartz and illite clay. TOC generally is lower than in the Eagle Ford at 2-3% (unadjusted).

      The Pimienta can be found in the volatile oil to wet gas windows (0.8-1.2%) and at optimal depths of 2-3.5 km. Porosity has been measured at a reasonably high 7%. Reservoir pressure often is high, reaching 50% over hydrostatic in places. The stress gradient has tested at a moderate 0.9 psi/ft, enabling good 3D fracturing systems during stimulation. Coupled with the vast prospective area, these are intriguing reservoir properties.

      • Dennis Coyne says:

        Hi Glenn,

        That EIA report is at the link below

        For the technically recoverable resources for shale gas and LTO we have the table below from page 1-6 of the report by ARI.

        The LTO TRR estimate for Mexico is 13 Gb about one fourth of the US estimate, for the World the LTO TRR estimate is 335 Gb, I think it is likely that only 129 Gb of this will be developed in US, China, Mexico, Argentina, and Canada.

        The amount that is economically recoverable will depend on oil prices, but it is likely to be much less than 129 Gb, probably 65-80 Gb.

        Relative to the 1500 to 2000 Gb of other crude resources, the LTO resource is about 4%. This is essentially a rounding error at the World level.

        On Mexico, I suggested much of the shale resource is gas, ARI agrees, of 103 Gboe, 13 Gb is LTO and 90 Gboe is natural gas, so about 12% of the resource is LTO according to the EIA report you cite.

      • Watcher says:

        This was examined here some yrs ago.

        The API number on the Eagle Ford rose sharply as one moved south. Most of the entire field was above API 45 and thus condensate.

        But for Mexico there are other problems. What few wells were drilled were exploratory and they also showed condensate and gas, but more or maybe most importantly, there is no water in that area. Fracking consumes enormous amounts of water. The nearest frack quality sand source is over 50 miles away, too.

        This ain’t happening any time soon.

        • Nick G says:

          I’m not an advocate of solving our PO problems on the supply side, but I find it frustrating for people to not have a clear sense of the magnitude of our various problems. In particular, fracking water consumption is simply not a big problem. For instance, one source says:

          [t]he amount of water needed to drill and fracture a horizontal shale gas well generally ranges from about 2 million to 4 million gallons, depending on the basin and formation characteristics.

          Well, 2-4M gallons is only about 50-100k barrels of water. That’s roughly half the oil that’s likely to be produced. So, we’re exchanging water that costs maybe a penny per barrel for oil that goes for $30-$100 per barrel. The fact that we’re paying a premium for the water because it has to be trucked in doesn’t change that: water is very, very cheap and is far more valuable for oil production than it is for it’s major competing use, agriculture. For instance, one pound of beef takes about 45 barrels of water. So, what’s more valuable: 90 barrels of oil, or one pound of beef??

          • Mike says:

            The actual amount of fresh, potable water used in most of todays frac’s, in all three of America’s major shale oil basins, is closer to 7.5M gallons per well. The best dilution rates (with produced/frac water) I have seen in the Permian Basin is only 70% fresh water, so it is essentially over 5M gallons of fresh water each well, x 185 wells per month In the Permian divided by 85 gallons per homo sapien per day and its a damn tragedy. West Texas is a desert. Odessa, Texas probably has a population of 200K at the moment; do the math. Various fresh water sands of the massive Ogallala formation take up to one million years to recharge from up-dip outcrops.

            Now stand back and listen to the lies and links to investor presentations showing what good “stewards” of the land Pioneer is, or Concho is. The so called “facts.” You decide what you want to believe but before you go, check this out… “With an expectation for crude production to significantly outpace domestic demand and consumption capabilities, we believe exports will play an increasingly vital role in clearing excess supply, supporting domestic prices and shaping the sector’s profit outlook,” analysts at Jefferies LLC said in a report last week.

            So, these dickhead shale operators, and the few that invest with them (not too damn many anymore) want to balance demand to consumption in America…by exporting LTO to foreign countries. Elsewhere here you can see Dennis’ work that suggests we have maybe, at the outside, 20 years of recoverable LTO left in America at 5M BOPD. Exporting it all away, so we can buy it back later at 3 times the price, is what some might call, ‘making America great again.’ Or “unleashing” America’s energy resources onto the rest of the world.

            • Nick G says:

              it is essentially over 5M gallons of fresh water each well

              Okay, I’ll rewrite that:

              Well, 5M gallons is only 120k barrels of water. That’s less than the amount of oil that’s likely to be produced. So, we’re exchanging water that costs maybe a penny per barrel for oil that goes for $40+ per barrel. The fact that we’re paying a premium for the water because it has to be trucked in doesn’t change that: water is very, very cheap and is far more valuable for oil production than it is for it’s major competing use, agriculture. For instance, one pound of beef takes about 45 barrels of water. So, what’s more valuable: 45 barrels of oil, or one pound of beef??

              • Mike says:

                Sorry, bad arithmetic 70% of 300K BW is 210K BW, that’s 8.8M gallons of fresh water (, enough for over 100,000 people to consume in one day. In arid W. Texas. To drill a well that will barely payout out, so we can export the oil.

                • Nick G says:

                  Well, 5% of fresh water is used for drinking water, while 80% is used for agriculture.

                  Both farming and oil production are tough industries, with a lot of people losing money. But, when a barrel of water is required to produce a tablespoon of beef, and could be used to produce a barrel of oil…it’s pretty clear that water consumption just isn’t what the oil industry should worry about.

                  • Mike says:

                    Water to drink is pretty important in Texas, even for people that make their living producing oil and gas. Most anyway.

                  • Nick G says:

                    Yes, that’s a common misconception.

                    It turns out, though, that people care more about their quarter pounders, each of which require about 500 gallons of water to produce.

                  • HuntingtonBeach says:

                    Quarter Pounder and Diet Coke

                  • alimbiquated says:

                    Basically because nobody charges farmers for wasting water, no matter how dry the region.

            • I suspect we can design water fracs with a higher salt content. I looked into water chemistry about 11-12 years ago, and we found additives we could develop to work with salt water (but they cost more).

              • Mike says:

                Yeah, yeah; well they have not been able to do that with cross link polymers needed to pump those stages 19,000 feet out near lateral toes. They all say their going to get better at it, use wastewater, blah, blah, then they drive the price of oil down so low there is no money for R&D for that sort of thing, or to pay for the infrastructure; its just cheaper to buy fresh water. And that they do, by the billions of gallons. Along with shuffling OPEX to CAPEX to lower breakeven prices, and flaring gas used in reserve bookings, water use is one of the best kept “secrets” in the shale biz. Giddy up, America. Tomorrow is today!

                • OFM says:

                  The particular amounts of water used for various purposes are generally and mostly important only in relation to the available supply of water at the local and regional level, when you get right down to the nitty gritty.

                  In places with limited water supplies, such as arid Texas, the people who live there are apt to wind up in a hell of a fix, later on, because so much water is being used there NOW for fracking. They are living on borrowed time as it is, in relation to water, there and any other place that depends on pumping fossil water.

                  On the other hand, most of the water that is supposedly used when people talk about hundreds of gallons per pound of beef is more or less immediately recycled into the local environment. It doesn’t make a hell of a lot of difference in terms of water supplies whether water is taken up and transpired by corn, or by trees and wild grasses. It isn’t actually used up, and it isn’t actually lost in terms of needing to be replaced, because most of it is replaced immediately by rain, which would run off or soak in any way.

                  This is not to say POLLUTION isn’t a major problem, but rather to say that except in areas where farming depends on irrigation, water is not all that big a problem, except if the region is well devoloped, and the weather turns dry.

                  Water pollution is a HELL of a problem.

                  People LOVE to throw big numbers around. They don’t always mean a whole lot.

                  Both Nick and Mike have valid points in this case.

                  • Nick G says:

                    In places with limited water supplies, such as arid Texas, the people who live there are apt to wind up in a hell of a fix, later on, because so much water is being used there NOW for fracking.

                    100x as much water (or more) is being used for agriculture, in Texas and everywhere in the rural US. We have water problems, but not for drinking…only because agriculture uses (and wastes) so much water.

                    It’s true that ag water goes back into the environment. The same is true for drinking water, and the same could be true for the great majority of fracking water – expensive methods of recycling water into 100% pure fresh water (distillation or reverse osmosis) cost one half of a penny per gallon (or 20 cents per barrel) or less, which is not much as far the costs of oil drilling goes. Places like Las Vegas recycle their drinking water.

                    Agriculture is where water problems exist, because farming requires very, very, very cheap water. Drinking water is really not a significant problem.

              • coffeeguyzz says:

                One of the biggest water treatment companies in the world, French based outfit named Veolia, is scheduled to open – in a few weeks’ time – the industry’s first full water treatment plant in West Virginia.
                At 60,000 barrels/day capacity, the Antero- owned plant will take all Antero’s flowback and produced water and return 95% of it to reusable condition.
                This will save SWD costs as well as water procurement issues, truck traffic, etc. as water delivery and takeaway pipelines are in place.

                The bigger issue is Veolia’s position to expand this project’s fundamentals to other areas in the US and elsewhere (Vaca Muerta).
                This water issue is but one of many areas that have a strong financial incentive to optimize more costly aspects of unconventional oil/gas development.
                One case in point, the outfit that built the Vorteq pressure pumper – Energy Recovery – has ambitious plans to replace all positive displacement pumps (think mud pumps) with their patented fluid to fluid pressure transfer process.
                The cost and logistic benefits of using centrifugal pumps over displacement pumps are huge.
                Their success is far from assured, as is the case with Veolia, but the amount of resources over a vast scale that is being applied globally, 24/7 to these issues is an indication of where future hydrocarbon production is anticipated to arise.

                • Cracker says:

                  Thanks coffee,

                  I’m sorry to not be impressed. We’re supposed to be happy to hear they are doing everything they can think of to scrape the bottoms of barrels.

                  And how high does the price need to be to make these technological wonder wells and water handling systems profitable, without other folks’ free money and fraudulent accounting, that is?

                  If hydorcarbon production rises as “anticipated”, the industry won’t be able to afford any of this, because the price will stay low.

                  Incredible stupidity, and the hucksters still try to dupe us into thinking we should invest because technology is involved. Give us your money and help us produce more oil to maintain oversupply and keep the price low. What a crock! I guess they should promise to lose the money for you, too, to be fair.


                • Glenn E Stehle says:


                  A change of subject, but you did allude to this the other day on another thread.

                  Having destroyed domestic coal, at lesast temporarily, the green lobby now has its sites trained on much bigger prey — natural gas.

                  Enbridge suspends Access Northeast natural gas pipeline plan

                  The state’s [Massachussets’] two biggest utilities are shelving a massive $3.2 billion natural gas pipeline project known as Access Northeast until they can find a way to pay for it.

                  The pipeline expansion, they say, is needed more than ever in New England, to bring cheaper natural gas on particularly cold days to the region’s power plants.

                  This is the second massive natural-gas project in New England to be put on hold. Pipeline operator Kinder Morgan suspended a major pipeline plan last year….

                  The utilities say Access Northeast could reduce electric ratepayers’ bills by as much as $1 billion a year across New England. They argue the new infusion of lower-cost natural gas would more than offset the cost of a tariff, allowing power plants to burn gas on cold days when that gas is often diverted for heating uses and not available for electricity.

                  Critics, meanwhile, are skeptical and argue that electric ratepayers would see their bills skyrocket to help pay for the natural gas expansion. They say less expensive or more environmentally friendly solutions — more renewable power, for example, and liquefied natural gas storage and shipments — are available….

                  “It’s clear that the New England ISO is gravely concerned about reliability in the region,” said John Flynn, a senior vice president with National Grid. “The need for this project is not in doubt. . . . Hopefully, we can get cooler heads to prevail and get the votes we need to go forward.”

                  The Access Northeast partners could find a tough audience at the State House. The state Senate last summer voted to oppose any effort to pass on natural gas pipeline costs to electricity customers. The House leadership could be more amenable, but dozens of rank-and-file members last year signed a petition opposing natural gas expansion efforts….

                  Natural gas expansion has become one of the most prominent hot-button issues in Massachusetts politics, with opponents fighting pipelines at every turn.

              • GJJ says:

                This is not new technology, almost every company in the Permian and Stack are using water recycling. Devon, Newfield, Continental, Pioneer, and several smaller private companies are using recycled process water for fracs. I’ve personally seen more than a dozen facilities that “process” more than 30K bbl a day each. It’s a win-win for the E&P, they don’t have to buy fresh water and don’t have to pay to inject process water, the economics are already there.

                • coffeeguyzz says:


                  And it will continue to expand everywhere.

                  It’s been a few years now that Lockheed announced a desalinization process involving graphene.
                  Just a few months back, some fuzzy heads out of Kansas serendipitously stumbled upon an extremely simple, inexpensive method to produce graphene – heretofore one of the big drawbacks to utilizing this ‘miracle’ material.

                  Unceasingly, this process of innovation continues apace.

                • Mike says:

                  Recycling produced water is not new, no; it has to be treated to even blend with fresh water for frac re-use. I’ve seen the same facilities you have (Apache has always been good about that), but I have also seen two SWD wells and 29 vacuum trucks running up and down the highways for every fresh water source well in W. Texas. Blending produced water with fresh water does not mean they don’t buy fresh water; that’s horse dookey.

                  Whatever, I understand completely why its becoming more necessary to quickly jump to the defense of the shale industry every day, anyway possible. They’re flat broke, the last thing they need is criticism about something as meaningless as water, or SEC violations, or shareholder proxy fights.

    • Watcher says:

      There is no mystery.

      1) Al Jazeera is based in Qatar

      2) When you move money from reserves to a sovereign wealth fund, it looks like a decline in reserves but is not a decline in national money.

      3) KSA currency isn’t backed by its foreign reserves. It’s backed by something not created from thin air. But see 1)

      “Nevertheless, a rise in the cost of insuring Saudi debt against default this month, to its highest level since early February, suggests concern may be increasing.”

      What crap. Al Jazeera is going seriously overboard. Credit default swaps on KSA bonds increasing in price means 1) nothing and 2) probably a decline in the denomination

      • George Kaplan says:

        Al Jazeera is pretty good on most news, but anything they say now concerning Saudi (or UAR) has to be a bit suspect.

    • Ves says:

      Qatar situation has to be looked in totality and not just in fragment. What we have is internal power struggle in the western power structures. The split is on every continent. It is comical to look at disintegration where so called “allies” are now shifting alliances and becoming “enemies”. So, you have Saudis vs Qatar, Britain (via Brexit) vs Germany, Turkey vs Germany, US itself is split into two opposing camps where Pentagon supports one, WH supports other, Exxon supports the third and all the tension creates a situation of all against all.

      • alimbiquated says:

        Thanks for the update from Mr. Putin’s war room. The strategy is already well known though.

        Calling Qatar “Western” or a “power” is a bit of a stretch though, isn’t it?

        • Ves says:

          I am sorry I did not used crayons for you but I thought it was pretty obvious. The internal struggle is between western capitalist elites’ centers (London, Paris, New York). That struggle is just manifesting on periphery, and particularly peripheries rich in resources like Qatar or Venezuela. So Qatar, Venezuela, Syria, are not powers but just unfortunately happened to reside on attractive real estate. Is it that clear now for you?

  2. Energy News says:

    Big maps of Mexican oil and gas fields…

    Pemex’s expanding farm-out efforts
    Faced with declining oil production and the global slump in energy prices, Mexico’s national oil company is seeking partners to assist in developing new and existing assets.

  3. Boomer II says:

    This author runs quite a few numbers. It’s worth reading.

    The New Darlings Of Wall Street: The Folly Of Oil Fracking Investing – Diamondback Energy (NASDAQ:FANG) | Seeking Alpha: “The fracking industry has consistently been burning cash over the last four years – even when oil prices were well above $80. And that cash-burning track record dates back even longer.

    We do not think the fracking industry is profitable at current oil price levels: only the willingness of investors and lenders to finance cash-burning operations keeps frackers afloat.”

    • OFM says:

      I have never run across precisely the right words to describe a certain phenomenon, maybe somebody who speaks German knows a word that fits.

      Sometimes the various organizations, entities, businesses, or people who stand to benefit handsomely from something happening can merely do nothing and allow it to happen, in the natural course of events. By standing aside, I mean not taking actions that would , under most circumstances, routinely be EXPECTED and taken.

      This FAILURE to take action can be interpreted as indicating the existence of a conspiracy involving the parties that stand to benefit from the lack of the USUAL and expected intervention in such affairs.

      There’s probably a German word for this that takes a whole line to type it, and a deep breath to pronounce it, lol.

      Now, to my point.

      It may not be obvious to the politically naive, but the federal government and the state governments of the USA are super motivated to keep the economy humming right along, and there’s nothing else in particular, short term at least, that can be considered better tonic for the overall economy than cheap oil.

      Maybe the reason the various government regulatory authorities haven’t and aren’t saying and doing anything about the HIGHLY questionable practices of the fracking industry because everybody involved, at a high level, knows which side of his bread has butter on it.

      Maybe the mid level people in such offices understand that even TALKING about such potential investigations is a good way to make sure they are never promoted again, or transferred to Alaska , or fired.

      Maybe nobody actually gives a hoot about the money that has been and will be lost in this industry other than the OWNERS of this money, because it’s not their money.

      Maybe there is no REAL conspiracy, but maybe there’s a de facto conspiracy of lazy calculated silence on the part of “financial police” , not a real conspiracy.

      There are countries that have arguably been at WAR ,economically, and are STILL at war, and waging it by way of glutting the market with oil, so as to injure their enemies, economically. Of course this does not mean that all parties may eventually bleed so much money that they are sooner or later forced to come to a truce, and maybe even cooperate in reducing production, lol.

      When the Saudis and the Russians are at each other’s throat, it suits the interests of the USA. It suits the interests of the USA to screw the people of Venezuela, since THAT particular screwing is only collateral damage in the cold war we have been and are still waging with the Venezuelan GOVERNMENT.

      It may well suit the LONG TERM interests of some of the larger conventional oil companies which are well supplied with money, given them the opportunity to buy up competitors and competitor’s reserves, while prices are down, including the reserves of companies specializing in fracked oil, because when the price goes up, fracked oil may be profitable.

      And as far as the Saudis and THEIR money is concerned, it’s de facto the ROYAL FAMILY’s money, and they are obviously smart enough to spend it very freely, if they think doing so will keep them in control of the country. If they have to flee, they will still have plenty hidden out of the country, enough to live like the princes and princesses they are, in exile, in the most expensive districts of the world’s most desirable cities, such as London and Paris.

      It’s hard to say exactly WHO controls all things, ultimately, in Russia, but Putin in my estimation does not have anything like the same degree of control of Russia that the House of Saud does of Saudi Arabia. But he has a hell of a lot of control, enough to call him a dictator in a lot of respects.

      So maybe there is a conspiracy of sorts, an ACCIDENTAL conspiracy, one that has come about simply because the interested parties are simply doing NOTHING to rock the fracking boat, for reasons that suit the various parties interests. No meetings necessary, no deals actually being cut, but the same result.

      I’m not much into conspiracies, but I wouldn’t be TOO surprised later on to learn that some of the bigger banksters who SEEM to have lost a lot of bucks by way of making bad loans are REALLY making out like the bandits they are, by trading on the sort of inside info available to the managers of big money.

      They don’t have to worry about anything except maybe paying some fines with corporate money, none of them ever go to jail, and the fines are small in relation to the profits. The Bushes didn’t prosecute, Obama didn’t prosecute, and Trump sure as hell isn’t going to prosecute as a general thing, although he might prosecute one or two who are his personal enemies, for revenge, and to make himself look good.

      HRC wouldn’t have prosecuted, she was busy making lovey dovey with the banksters instead of campaigning where it mattered, thereby losing the election.

      Over in Limey Land, once upon a time, the royal family called on the Scots and Irish for men to help fight one of their wars, and got a mere handful, whereas in times past they had come when called for by the thousands and tens of thousands.

      One of the Scots sent back the reply that from places where there are no men , none can be sent.

      The English forced them off the land of course, between those wars. Millions of them came here, rather than starve or freeze to death. That’s why I’m here, because my folks were forced out. I admire and love a lot of things English, but I tell it like it is, as best I know how.

      Maybe I have my head up my own backside so far I will never see daylight, but the scenario I have painted seems to fit the facts well enough to merit some consideration, if not acceptance.

      • farmboy says:

        Next we could also look into the demand side. With global oil production per capita peaking somewhere around 1979 you would think that the demand would be getting out of control but here we are with crude under $50. I’m sure the desire in humans for oil consumption on a global level has not diminished in the last 30 years. My guess is the the answer is to be found in a shortage of natural resources and none more so than” net energy” from oil gas and coal. It was fun while it lasted but now that it requires more effort and with all the dead wood that has accumulated in our society in the meantime the engine is sputtering. When it will shut down for good I don’t really know but likely in the next 15 years.

      • alimbiquated says:

        >This FAILURE to take action

        How bout Unterlassungssuende? Or as we good Catholics say in English, a sin of omission.

  4. Glenn E Stehle says:

    OPEC and the “expert conseusus” at Peak Oil Barrel have something in common — they both underestimated US shale.

    And given this post and comments, the POB “expert consensus” appears to be underestimating Mexican shale too.

    Rigzone OpEd: OPEC Production Cuts Fail, Markets Pay for Underestimating US Shale

    Crude oil prices have plummeted 20 percent since February, the most dramatic first-half slump since 1997, and inventory remains about 340 million barrels above the five year average.

    In short, the agreement between OPEC and its non-OPEC allies to slash their production by 1.8 million barrels per day has failed to rebalance the oil market and boost the commodity’s price….

    Jamie Webster, senior director at the BCG Center for Energy Impact, told me last month that…[T]he cuts might have had a chance if everything else had remained the same.

    “But of course, the U.S. producers being U.S. producers, they worked hard and increased production dramatically and helped minimize or completely offset, for the most part, their production draws,” he said.

    For their part, OPEC member countries underestimated the strength of U.S. shale potential. Webster said the club has historically under-assessed shale….

    And at Tudor Pickering Holt & Co. (TPH), analysts said the market wants fewer rigs in the field “to alleviate the fear of a tsunami of U.S. crude oil in 2018.”

    But many of the larger E&Ps are hedged for the rest of 2017, and as such, they are unlikely to cleave off production.

    Without a trim to the North American rig count or an OPEC/NOPEC agreement on longer, deeper production cuts, bringing inventory down to its five-year average will remain elusive.

    “It will be interesting to see who blinks first – OPEC with an additional cut or U.S. E&Ps laying down rigs,” TPH said.

    • Dennis Coyne says:

      Hi Glenn,

      Yes many people including the “experts” at the EIA have underestimated how quickly LTO would be developed.

      Below is a model for the Eagle Ford I did on Dec 13, 2013. A pretty good guess.

      • Dennis Coyne says:

        Also for the US as a whole I did an estimate for LTO compared with the EIA’s AEO 2013 on Dec 12, 2013, this underestimated output from LTO plays besides the Eagle Ford and Bakken (I had very limited data at that time from “other” US LTO plays such as the Permian and Niobrara.) I used the EIA’s estimate as my guide.

      • Dennis Coyne says:

        In June 2014, I underestimated future LTO output as it was not clear at that time how much of Permian basin output was LTO (I did not have to rely on for data at that time) and mistakenly believed that much of the Permian basin out put was conventional output at that time. So the “other” LTO (other than Bakken or Eagle Ford) estimate for the US was too low by a large margin (about 1.4 Mb/d in March 2015).

        I believed at that time the EIA estimate for US LTO was too optimistic and I was wrong or actually I was right, but the EIA estimate was much closer to correct than my model for the other US LTO plays besides the Bakken and Eagle Ford.

      • Dennis Coyne says:

        My most recent model for US LTO is below, based on the data I have through March 2017 and USGS LTO resource estimates and using reasonable economic assumptions to find economically recoverable resources (ERR).

        Note that this is not far from ARI’s resource estimate of 48 Gb for the US, the current EIA AEO 2017 scenario for tight oil assumes at least 80 Gb of US LTO ERR, my mean estimate is about 50% of this at about 40 Gb. The estimate below was made March 30, 2017.

        • Glenn E Stehle says:


          So you have consistently throughout the years underestimated US shale, and continued to do so in your latest model.

          For anybody that’s been paying attention, however, they already knew that.

          But at least you are in good company: OPEC and EIA.

          Nevertheless, being in good company did nothing to make your predictions more accurate.

          • Dennis Coyne says:

            Hi Glenn,

            Eagle Ford and Bakken have been pretty good. Permian I did not gave very good data for, so yes that was underestimated, it is difficult to get these predictions exactly right, I did not expect the Eagle Ford output or Bakken to grow as much as they did, it seemed most activity (high rig counts) was in the Permian.

            It is difficult to predict the future.

            Can you tell us what US LTO output will be in Dec 2017?

            I doubt you will go out on that limb.

            My predictions are based on an assumed rate of well completion and average well profile. When the well profile changes or the number of well completions is different than I have assumed, the predictions will be incorrect.

            My Eagle Ford prediction was low by about 200 kb/d and ND Bakken was low by 140 kb/d, the overall model was low in May by 320 kb/d.

            Note that early models that I did for Bakken and Eagle Ford, were much higher than this recent model.

            In this case I thought low oil prices would slow things down and was wrong.

            • Glenn E Stehle says:


              You are right.

              I will not “go out on that limb” and “predict what US LTO output will be in Dec 2017.”

              In order to do so, one would need an economic model and a political model which are able to predict the economic and political future.

              Since no such models exist, this makes predicting future LTO production a fool’s errand.

              I feel sorry for the pour souls who work for the EIA and OPEC, who are tasked with making such predictions, and whose predictions are almost always proved wrong by events.

              • Dennis coyne says:

                Hi Glenn,

                Why do you complain that predictions are incorrect?
                Many of my higher optimistic estimates have been higher than actual output.

                So it is not necessarily correct to say I have consistently been too pessimistic.

                • Glenn E Stehle says:

                  Dennis coyne says:

                  So it is not necessarily correct to say I have consistently been too pessimistic.

                  Let’s take a look at your predictions throughout the years (from the above graphs) for LTO production for the month of April, 2017 (see graph below).

                  Nuff said?

                  Given your track record, one would think a little bit of modesty on your part would be in order, since something’s obviously gone awry with your crystal ball.

                  And the fact that others’ crystal balls are just as defective as yours doesn’t make your crystal ball any better.

                  • Dennis Coyne says:

                    Hi Glenn,

                    In many cases there were other “high estimates” that were too high.

                    As in comment below


                    I do mistakenly think “average” wells will determine completion rates based on the economics, but profit maximizing behavior is either not being followed or every company believes their future wells will be above average (relative to the performance of older wells).

                    So maybe I underestimate the optimism of the average LTO focused firm.

                    One needs to be an optimist to lose that much money. 🙂

              • Schinzy says:

                I greatly appreciate the models Dennis publishes here. Running numbers in a model clarifies assumptions and results in a positive feedback in knowledge. What is important is not that the model was too low or too high, what is important is understanding why the model was too low or too high.

                The main reason the models were low was the assumption that the financial sector would not finance wells that don’t pay out. This assumption proved false, to my great surprise. I find it fascinating that the modern financial sector enables an industry to ignore market signals for so long.

          • Dennis Coyne says:

            Hi Glenn,

            Using an early model I did for the North Dakota Bakken/Three Forks in Jan 2013, the Eagle Ford Model in the chart a few comments upthread from Dec 2013 and the Permian and “Other LTO” model from March 2017 and combining those 4 models (2 of which were produced 3.5 and 4.5 years ago.) The following model is the result, which does not underestimate US LTO output except by a small amount from June 2014 to June 2015 (the model is low by at most 228 kb/d in Dec 2014 or 5% too low). Currently this model is too high by 10% or 457 kb/d.

            I have produced many models some that are too high and others that are too low relative to how the future actually unfolded.

            • Glenn E Stehle says:

              Dennis Coyne says:

              I have produced many models some that are too high and others that are too low relative to how the future actually unfolded.

              Now that’s really an intelligent move.

              That is, after all, what the EIA does with all its different cases. It pretty much covers the field from high to low.

              • Glenn E Stehle says:

                Nevertheless, the EIA has managed to consistently underestimate US shale throughout the years, even with its most optimistic predictions.

                • Dennis Coyne says:

                  Hi Glenn,

                  I think 2015, 2016 and 2017 outlooks vs actual would be more interesting. For example the AEO 2016 high oil and gas resource and technology case had 9.2 Mb/d for US output in 2016, actual output was 8.9 Mb/d in 2016, 300 kb/d lower than the optimistic EIA estimate.

                  So only by leaving recent estimates out (2013 to 2016) is your statement true.

                  Some relevant facts seen to have been omitted.

                  AEO 2014 had US C+C output at 10 Mb/d in 2016 in its high oil price case and 9.3 Mb/d for the low oil price case.

                  So no the EIA is not always too pessimistic.

              • Glenn E Stehle says:


            • Dennis Coyne says:

              Hi Glenn,

              The following shows a high scenario (C+C URR=3900 Gb) and a low scenario (C+C URR= 3000 Gb) and the average of the two scenarios (dashed line) along with data through 2016.

              Note that the average is not my best guess, just a simple average of the high and low scenario. Future output is likely to fall between the high and low scenario in my view. The dashed line is one of an infinite number of other scenarios that could be created which fall between the high and low scenario.

    • Dennis Coyne says:

      Hi Glenn,

      Can you explain how the low oil prices are likely to lead to a continued rapid development of US shale plays? The more they produce, the lower the oil price. Most people realize that the way to get out of a hole is not to dig deeper. 🙂

      Except for the LTO focused oil companies.

      • Dennis Coyne says:

        Hi Glenn,

        Took a look at net income of top 11 US LTO producers based on cumulative output through Feb 2017 (32% of all US LTO cumulative output produced by these 11 companies) for 2014 to 2016.

        EOG, Marathon, Whiting, Devon, Continental, Chesapeake, Hess, Pioneer, Anadarko, Oasis, and Concho. I left out the majors (Exxon, Conoco-Philips, and Statoil) because LTO is a relatively small part of their portfolio.

        These 11 companies collectively lost $62 billion over the 2014-2016 period or an average of $5.6 billion per company.

        At some point if oil prices remain low, these companies may find it hard to find people willing to burn more cash.

        • Cracker says:


          You are a saint! Although I don’t read his posts, somebody needs to call the crap what it is. You do it so well.

          Thank you.


  5. Watcher says:

    Exxon CEO is in Qatar.

    Turns out Exxon funded (invested in) most of the Qatar LNG export facilities and derive income from the revenue flow. He is chatting with the Emir about how to keep the LNG flowing around the blockade.

    He’s probably also wondering what happens to his investment if KSA invades and takes over the facilities.

    A proper conqueror perspective would be . . . this belongs to Aramco now. We’ll be happy to do business with you in the future.

    • That’s not the way it works. If KSA invades it’s unlikely it will do more than set up a puppet regime. This regime would honor all contracts. If KSA invades and steals the properties it will be considered a rogue nation, and the Security Council would give the go ahead to destroy its government.

  6. texas tea says:

    I read this article and it reminded me of many on this board, one reason NOT to pay attention to any single “smart person” or even a group….the free market place is ALWAYS right or at least better at forecasting the future then any single man. the free market place has no agenda, the free market place has no pride, the free market place does not need government to prop it up or to limit competition, the free market will reward the doers and the rest of us get to tag along for the ride with better lives. only men will let you down, only men will lie to keep you down and suck all and any value you may posses to “PROVE” he was right 🇺🇸

    • Dennis Coyne says:

      Hi Texas Tea,

      Yes the market is always right. For instance the housing market in the US in 2008.

      All houses were properly valued by the free market, which had very minimal government regulation.

      I agree generally it is best to let the market determine the best way forward, but completely unregulated markets do not always lead to optimum outcomes.

      The Great Depression is a classic example of unregulated financial markets leading to an economic crisis which the free market was unable to fix from 1929 to 1933.

      In fact without government intervention we might have seen a repeat of such a crisis (a depression rather than just a severe recession) after the GFC.

      • Eulenspiegel says:

        And not only to a financial crisis, but a global war – the WW2 would have been unthinkable without the economic crisis. At least not in this form, before 1929 the Nazis have been a splinter party.

        Nobody needs this – so as much free market as needed, but not too much.

        In 19th century, with much freer markets (Manchester Capitalism) it didn’t work out that good, too. The depression phases between the booms have been way too long.

        • OFM says:

          Eulenspiegel is dead on.

          The nazis would very likely never have been more than a minor element in German history if it had not been for the Depression, but it should be noted also that the terms forced on the Germans at the end of WWI were unduly harsh in that the winners tried to force Germany to pay reparations at far too high an annual rate, thereby setting the stage for the nazis to get a foothold in Germany even before the Crash of 29.

          I am not a historian, other than the armchair variety, but I have spent many an evening in my armchair reading the history of war, focusing especially on the conditions that lead to wars getting started.

          • Dennis Coyne says:

            Hi OFM,

            My guess is that Eulenspiegel knows the history of Germany far better than I do.

            I agree the World War I peace agreement was a recipe for WW2, luckily we learned from the mistakes of that agreement in the aftermath of World War 2, setting up something that seems to have worked pretty well in preventing World War 3 so far.

            • Eulenspiegel says:

              It was only one part of it.

              They reduced the contributions since then several times by negociations, and would have reduced them more often. Without the economic crises, millions of unemployed the Nazis wouldn’t have been able to recruit the 100,000ds of members to their private army.

              Perhaps without this crisis, Stalin would have become the greater issue. Facism was big in these times, I think even in the USA there where tendencies, but most of these didn’t tend to an all out global war.

      • texas tea says:

        your example is ridiculous government intervention in the market place is what created the atmosphere which led to the housing issues. once can make the same argument for the healthcare issues on and on….

        • Dennis coyne says:

          Hi Texas tea.

          A European would argue that the problem with the ACA is that there is too little government involvement in the healthcare system.

          They are correct in my opinion.

          • Hightrekker says:

            Just because they live longer, and do it for half the price, is a socialist plot to destroy capitalism and create a one world government.

          • OFM says:

            Hi Dennis,

            “A European would argue that the problem with the ACA is that there is too little government involvement in the healthcare system.

            They are correct in my opinion.”

            It’s partly too little involvement, and partly that half of what the government does is done inefficiently or badly. The folks who the government is supposed to be regulating have in more cases than not gained control of the regulatory apparatus, so for instance we pay double or triple the same price for the same drugs, or even more.

            • alimbiquated says:

              Another major problem with American health care is that caretakers are paid to treat patients, not to cure them. Obamacare changes that.

      • GoneFishing says:

        Dennis, I understand that theoretically the free market should determine a true value for products and services. However in reality the free market is a heavily manipulated market, proven historically many times. Predatory business practices suppress an actual free market. That is why government intervention was needed in the first place.

        • Dennis Coyne says:

          Hi Gone fishing,

          I agree the World does not consist of markets that are perfectly competitive and unregulated financial markets lead to depressions. The reason you gave was the first modern instance of government intervention in markets once the capitalistic framework took hold.

          The second reason economists recognized (starting with John Maynard Keynes) that government intervention was necessary is that the macroeconomy does not self-correct in a reasonable time frame, making government intervention to reduce the length of recessions and to control inflation and deflation necessary.

          There are very few economists that dispute the fact that the real economy is unlikely to lead to optimal outcomes with no government involvement in the economy. The main dispute is the level of government intervention, most economists these days believe that mostly monetary policy should be used to regulate economic output, some believe that when monetary policy becomes ineffective at interest rates close to zero, that fiscal policy should be used to boost economic output if inflation is low.

    • Dennis Coyne says:

      Hi Texas Tea,

      In a nut shell, the future is unknown, but hindsight is 20/20.

      Not much revealed by that piece except the summary above.

      On the market forecasting the future correctly, take a look at the oil prices futures strip, it does a very poor job of forecasting future prices.

      When the market is way off in its expectations of the future sometimes a financial crisis results, especially when financial markets are perceived to be all knowing (they are always right) and this need little or no regulation.

      The comments about Bernanke and Yellin suggest that they both have your faith that the market is always right.

      The author of the piece is pointing out that they (and you) are wrong about that.

      • Eulenspiegel says:

        Yeah, the future prices are a good joke. When somewhat moves the spot oil price ,perhaps 5 million barrels too much in storage in the USA moves the price by 2% – the future price of 2021 moves 1 %, too.

        What a joke – this is even more irrelevant as when Farmer Joe discovers a new oil well on his land.

        • clueless says:

          “Yeah, the future prices are a good joke.”

          This is the way that I look at it. If you are willing to spend your money TODAY, to get something 4 years later in 2021, what would you pay? First, I suggest that an investor/trader today, with respect to oil, would want at least a 15% return (compunded annually) on his/her money (use whatever you want). So, [sorry, I am not going to look up the strip] assume that the 4 year out strip price today is $55. That means that such investors want/expect the price 4 years later in 2021 to be at least $96 [15% compounded annually for 4 years]. Thus, the investor is willing to commit $55 TODAY.

          If the 2021 futures price today costs MORE than $55 and the investor expects the 2021 price to be only $96, the investor would probably rather buy a stock costing $55 today that he thinks will be $96 or more in 4 years.

          Yes, I know that buying on margin complicates the thinking, but basically, it should come down to something like this.

          The futures price has to provide a reasonable rate of return to an investor – so it is not a forecast of the actual price.

          • Eulenspiegel says:

            It’s right – but neverless, futures should be the nearest thing to predicting future prices in the market.

            For example: The mechanism you described should be obsolet, when everyone in the market would now (theoretical example):

            – The saudis, Iran, Exxon, Shell and others invest now like crazy and want bring together 8 MB/day new capacity online in the year 2019.

            Then 2020 futures should fall into limbo – otherwise, it would be a realy good bet to short this future.

      • texas tea says:

        the difference my dear Dennis, in a free market what is wrong will get corrected routinely ….you seem to be an exception to the rule as you ofter admit when you are wrong…that give you some credibility over a number of your peers. under other forms of government or commerce the correction only take place when the form of government changes resulting in needless additional misery and death. Bernanke and Yellin do not believe in free markets they believe they can control the markets.

    • Survivalist says:

      The true free market is a kind of myth because it has never existed under industrial capitalism. Governments, rather than markets, have always determined the fortunes of corporations, through preferential contracting, tax breaks and direct subsidies. What you claim is always right has in reality never been.

  7. GJJ says:

    Nat Gas Note: 7 out of the 8 weekly storage reports since May 1st indicate lower adds compared to the five year average. This mimics last summer only we don’t have the surplus we had last year.

  8. Watcher says:

    Qatar stuff.

    The LNG shipping point is from a port complex near Ras Laffan Industrial City. The gas field is 80 km northeast of there, quite a distance offshore. The company that runs it all is QatarGas.

    This place is well north of Doha (and thus far north of the KSA border so a longer drive in a tank). It’s near the northern tip of the Qatar peninsula.

    Interesting. Input that to Google Earth and have at it. Look over the scarcity of highways, too.

    • As Venezuela’s production continues to drop, there’s going to be market pull for more heavy oil from Canada. These pipelines require patience. Plus there’s talk of stopping all Venezuela oil imports as part of a sanctions package.

      • Hightrekker says:

        The Chinese Heavy Oil Refinery is under construction in Venezuela.
        Both the Chinese and Goldman Sachs are betting it will be completed.

        • Watcher says:

          Puerto La Cruz.

          Upon completion of the project in June 2018 , the refinery, which now runs light and medium crude oil, will be able to process 210,000 b/d of heavy and extra-heavy crude oil from Venezuela’s Orinoco region.
          In a July 2012 release, PDVSA said the deep-conversion project at Puerto La Cruz would require a total investment of $5.2 billion and involve the following new construction:
          • A two-train, 50,000-b/d deep-conversion unit based on HDH Plus technology developed by Intevep, PDVSA’s research unit.
          • A three-train sequential hydroprocessing unit.
          • A 130,000-b/d three-train vacuum unit.
          • Associated auxiliary units, service units, interconnections, and tanks.
          The modernization project also will include the upgrading of the refinery’s two atmospheric distillation units, PDVSA said

          Recent stuff says they are on sched.

          Ven consumption 611K bpd. The new 210K bpd facility adds to 955K bpd of Ven refinery capacity elsewhere (which can’t do the heavy oil).

          Oil to the present primary refinery complex comes from the Ule-Amuay pipeline and connects to the Lake Maracaibo oil field area. The oil for the new refinery will come directly from the Orinoco extra heavy oil region.

          These guys are about to lose dependence on US refining via Russian, Chinese and GS funding.

          • OFM says:

            Hi Watcher,

            Do you know about how much money the Russians and Chinese are spending in Venezuela ?

            The Maduro regime, if it survives, and the refinery and associated infrastructure is completed, most likely will display sense enough not to try to nationalize Chinese and Russian owned assets.

            Maduro can get by with that sort of thing with western owned companies because the press is extremely righteous about Uncle Sam throwing his weight around in some countries, Venezuela being one of them. The days of the local dictators/bosses making speeches on the balcony damming the Yankees and going inside toasting the arrival of Yankee troops are long gone.

            If Maduro pisses off the Chinese and the Russians, he won’t have any other places left to go for support, so he may play more or less by the rules in this case.

            In any case, the very fact that Eastern countries, countries from the far side of the world that were industrially backward within the lifetimes of people alive today, are financing and constructing giant industrial projects in our backyard says a hell of a lot about the decline of the USA in terms of who the big dog is these days.

            Anyway, a lot of people seem to believe the Russians are broke, and can’t manage without selling lots of oil at high prices. I guess maybe they are wrong about that. They seem to be at least holding their own ok.

            The Chinese seem to be doing everything possible to hedge their bets in terms of international trade, and especially in terms of access to imported fossil fuels. Maybe the renewable energy revolution will succeed, maybe it won’t, or anyway, not any time soon.

            Oil may turn out to be the dominant and key energy resource for a LONG time yet, maybe as long as thirty or forty years.

            Twenty years from now, if their economy holds up, the Chinese will probably have a blue water navy capable of protecting their commercial ships, especially tankers and colliers, any place on the planet.

            • Hightrekker says:

              Venezuela learned its lesson with the lockout by Multinational OilI Interests, with the attempted coup of Chavez, initiated by the attempt to make Venezuela a US Client State again.

              Apparently this is being prevented by China and GS, and Maduro has no interest in undermining this strategy.

        • Glenn E Stehle says:

          Turkey and Qatar pivoted to the New Silk Road, and now it looks like the United States faces similar problems even in its own patio atras:

          “China is primarily concerned that the Venezuelan opposition, were it to assume control of the government, would be unfriendly to China,” said Margaret Myers, co-author of the report and a director with the Washington-based Inter-American Dialogue.

          While China is committed to maintaining a presence in Venezuela, the $2.2 billion credit line extended to Caracas last year can “hardly be considered a lifeline” for Venezuela President Nicolás Maduro, she added. Beijing has opted to stand by its strategic partner, however—in part, analysts said, because it sees that as the best hope for getting Caracas to repay the $62 billion it owes, presumably when oil prices recover.

          “The Chinese government and also the policy banks have lots of concerns, but China also sees longer-term opportunity in Venezuela because it has lots of oil and minerals,” said Renmin University of China professor Cui Shoujun….

          Venezuela is part of China’s stronger economic and strategic focus on Latin America. In November, Beijing released a strategic blueprint for the region, its first in eight years.

          Last year’s $21.2 billion—mostly for infrastructure and raw-material projects—was more than either the Inter-American Development Bank or the World Bank lent to Latin America and the Caribbean, the report said.

          China’s decision to concentrate its financial firepower on Brazil, Ecuador and Venezuela reflects in part these countries’ rich natural resources and their willingness to negotiate the government-to-government deals that Beijing prefers, the report said. Perceived economic mismanagement limits their access to international credit markets, making their governments more receptive to Beijing, analysts said. The vast majority of Brazil’s $15.2 billion slice of last year’s lending, the report said, went to national oil company Petrobras Brasileiro SA, immersed in a corruption scandal.

          The three countries “are in need of Chinese loans and tend to embrace China with relatively open arms,” Ms. Myers said.

        • Glenn E Stehle says:


          • Watcher says:

            China is securing supply, of course.

            The Chinese entrepreneurs certainly want the concept of money embraced and not challenged, but the Chinese leadership doesn’t really have to do that. They have their own state controlled PBOC (their central bank). It pegs the renminbi. They can create all the money they want and it means nothing.

            So this presumption in analysis that the Chinese do things because their strategic thinking is that doing those things is the only way they can get $62 billion repaid is just not very deep thinking.

            Only oil matters. Not money, which is created from nothing. If they can secure oil flow for $62 billion whimsically created stuff, then hell yes they will do that. Get it repaid? Not important.

            Come on, guys. Open your eyes. Look at Greece. (Look at the US.) The debt is never ever going to be repaid. It just keeps the wheels turning.

            Only oil matters. Someone in China knows it.

            • clueless says:

              Most countries have too much debt. However, I believe that every country has to have some debt. For example, there are a significant number of people in the US, especially the elderly, who want virtually all of their savings invested in government debt.

              Many of them would just panic if they were forced to purchase corporate debt or stocks, etc.

              • Watcher says:

                Your age in bonds.

                85 yrs old. 85% bonds. 75 yrs old 75%.

                60 yrs old 60%.

                That was all pre QE.

                • Watcher says:

                  Oh and btw that became dicey when ETF products focusing on different maturities arrived.

                  A 60 yr old wanting his portfolio to be 60% bonds 40% equities has to decide if he wants 10 yr T notes, 30 yr T bonds or rolling 6 month T bills — noting the three maturities have significantly diff capital gains or loss potential. You won’t gain or lose much in 6 month instruments in a rate increase or decrease environment (plus the fact the Fed controls that short end and won’t allow much volatility there), but in 30 yr instruments, the rate change can be substantial and the Fed has less power to restrain that change.

                  So the 60%-40% portfolio structure for the 60 yr old doesn’t really look like what it used to look like. Some of those guys could be sold High Yield bonds and be told those qualify for the 60%, too. Conversely, the Fed crossed the Rubicon. If there’s systemic risk of any sort, they will intervene without a moment of qualm. When was the last time anyone heard the phrase “moral hazard.”

                  The world changed in 2008. Big. People just pretend it didn’t.

                  • Hightrekker says:

                    And all this is probably like the Austrians in 1913 arguing who their next Habsburg Ruler is going to be.

      • Boomer II says:

        Maybe the pipeline should be postponed, then.

        • Caelan MacIntyre says:

          What is this stupid thumb nonsense, Dennis?
          Do you really want to reduce POB in this manner?
          And why is Boomer II getting so many thumbs down?
          Ok, in solidarity of all of Boomer II’s thumbs down, I will thumb down my own comment…
          Looks like I can’t…
          Ok, then one thumb up for Boomer II…
          If anyone dares thumb up or down this comment, I will be really pissed off…

          Edit: Yes I can thumb down my own comment: Done– and it pains me to have had to. I just had to refresh my browser to see the thumbs.

          Edit 2: Who the hell thumbed up and down my comment! I am really pissed off now! You know who you are!

      • Boomer II says:

        Maybe in the name of patience, the pipeline should be postponed.

  9. texas tea says:

    new sheriff in town🇺🇸

    can’t say I agree with everything said but by god this country is sure the hell better off now that we have a capitalist in charge

    • Boomer II says:

      Well, keep that gas and oil coming. Keep those prices low. Bankrupt more companies. And goodbye coal.

      Fascinating to watch companies put themselves out of business. Capitalism at its finest.

      • Boomer II says:

        If this site is now tracking IP addresses with these thumbs, it’s now tracking all of those thumbs down. I wonder what profiles are being compiled.

    • Glenn E Stehle says:

      Quote from the article:

      In my opinion, this one speech and the policy initiatives it represents likely marks the end of the climate movement.

      Who will ever want to go back to the misery of skyrocketing energy prices, stagnant economic growth and a moribund jobs market, and endless fake scare stories about the non-existent climate crisis, after having a taste of this kind of prosperity and hope?

      How long will voters in other Western countries tolerate wallowing in the misery of politically imposed energy poverty, in the face of a constant stream of good news from the United States?

      Greens will continue to rave and scream that the climate apocalypse is upon us. But the more extreme their claims, the quicker the demise of their remaining shreds of credibility, as even their friends come to see their empty bluster for what it is.

      And sure enough, right on cue, just like the article says the histrionics are building to a crescendo:

      World has three years left to stop dangerous climate change, warn experts

      Avoiding dangerous levels of climate change is still just about possible, but will require unprecedented effort and coordination from governments, businesses, citizens and scientists in the next three years, a group of prominent experts has warned.

      Warnings over global warming have picked up pace in recent months, even as the political environment has grown chilly with Donald Trump’s formal announcement of the US’s withdrawal from the Paris agreement.

      • Watcher says:

        Suppose its geologically imposed energy poverty.

      • Boomer II says:

        Forget climate. There are other reasons for other countries to get away from fossil fuels: air pollution, cost (as renewables decrease in cost), not wanting to be dependent on buying fuel from other countries (they, too, might like to be fuel independent), favorable deals from China, political and economic pressure from companies and countries.

        Trump has little leverage and is giving away what he might have had.

        And countries, states, cities, and companies are still planning to cut carbon emissions.

        What is most likely to happen is more production will happen in the short term, driving down prices, and killing off companies due to lack of profits and lack of funding.

        • Boomer II says:

          Trump is selling an idea to a relatively small group of voters, but his ability to control the rest of the world is rapidly declining.

      • George Harmon says:

        The histrionics are increasing because the “prominent experts” can see that their gravy train of public grant money is coming off the tracks.

    • Hickory says:

      texas tea- another proud student in Trump Univ

  10. George Kaplan says:

    EIA GoM production numbers out: March revised down 3000 bpd to 1760, still a high record, April down to 1659 kbpd. With Cindy impacting June numbers and not much new production due, March looks like it might hold as the maximum now. I don’t know what impacted April – there were major shut downs on Constitution Spar because of separate fires in late March and late April, but that would only be 40 kbpd for however long it was shut down. Might be just that 10 to 15% decline rates in the mature fields has caught up with the ramp-ups on new projects.

    • Energy News says:

      I hope that I’ve got the numbers right, there seems to be a gap between the weekly and monthly production numbers for April? (not had much spare time today)

    • SouthLaGeo says:

      I haven’t seen much field specific April data to comment regarding the lower GOM number. One data point I know of is that Shell’s Perdido complex was shut in for much of the month – Perdido’s April daily total was around 10 kbopd vr. over 50 kbopd for March (which was also lower than recent totals which have been over 60 kbopd).
      Add this to the Constitution lower numbers and you get more than half of the difference between the March and April GOM numbers.

      • George Kaplan says:

        Looks like Cardamom (to Augur) and Kodiak (to Devil’s Tower) offline as well, Dalmation, Odd Job and Son of Bluto 2 (none of which have been doing well) are down again, so too Stones (doesn’t look like it’s going well there, they’ll be looking for someone to blame soon I think). Some charts next week if I get them finished.

    • Lightsout says:

      Hi George.
      As you probably already know the Stena icemax is now en route to drill the Druid/Dromberg prospect in the Porcupine basin. Success should it occur will be felt across the industry.

    • Guym says:

      I think it is pretty much in line with your earlier guesstimates. (Regarding George’s comment of April GOM production)

  11. Boomer II says:

    One could argue that Asian tech stocks are doing so well BECAUSE of low oil prices, but this article suggests that the stock market is less reflective of energy developments than in the past. I suppose we’ll have to wait and see what might happen if gas and oil prices go very high again, but it is possible that these developing countries will have weaned themselves off fossil fuels to the extent that a rise in prices won’t have the impact that it once might have had.

    Asian tech supplants oil as main fuel for emerging stocks | Reuters: Usually the index moves in lock-step with oil prices but since last year that correlation has been disrupted:

    Investors have been unfazed by oil’s drop, having poured more than $40 billion into emerging equity funds year-to-date.

  12. Boomer II says:

    What Trump’s New Energy Initiatives Actually Mean for the Industry – 24/7 Wall St.: “Offering new offshore oil and gas leasing opportunities. Opening the waters offshore of the Atlantic Coast and the north coast of Alaska with new leasing programs could take a few years to implement, and even longer to find bidders for. Offshore drilling is expensive and low prices for oil hardly support the investment. This can change, of course.

    Reviving nuclear energy following a new study. The new study is a punt. The single largest advantage of nuclear energy is that is produces no carbon emissions. One of nuclear energy’s biggest problems is the massive cost of new nukes. To encourage development of new nuclear energy projects, the federal government needs to apply a carbon tax on electricity generation that acknowledges nukes’ advantage. That is not on the table apparently.”

    “The administration did not refer to the trouble that TransCanada is having recruiting shippers for the Keystone XL pipeline. President Trump approved the 830,000 barrel per day pipeline in early March, and TransCanada has already invested more than $3 billion in getting the pipeline built and the total price has jumped to $8 billion. If anything, this has been a success for opponents of the pipeline.”

  13. Gaurav says:

    BHP Billiton admits $20 billion shale bet was a mistake. BHP’s (NYSE: BHP) chairman said that the $20 billion that the company spent on U.S. shale in 2011 was a bad move. “In terms of shale, if you had to turn the clock back, and if you knew what we knew today, you wouldn’t do it,” BHP’s Jacques Nasser said. “The timing was way off.” The mining giant has been under pressure to review its oil and gas holdings, which critics say has bled the company of around $40 billion in shareholder value. “We acknowledge that the acquisitions that took us into this business were poorly timed, that we paid too high a price, and that early on the very rapid pace of development was not optimal,” BHP’s CEO Andrew Mackenzie said on a call last month. “It was too quick. And we’ve learned that lesson.”

  14. Boomer II says:

    Enbridge, lacking financing options, suspends New England gas pipeline project

  15. George Kaplan says:

    Why do we have these fucking stupid thumbs now? I’m four times the (mental/emotional) age of anybody who should have any interest in that sort of crap, and I don’t think I’m unusual on this site.

    • Watcher says:

      Hadn’t noticed it. I suppose the same IP address can’t thumb click more than once, which means IP address is being sought/seen/logged blah blah

      How do we feel about that.

      • George Kaplan says:

        Yes – looks like once only, but I’m going for a coffee now so I’ll have another go there. I think your IP address can and does get changed by your ISP every so often so it’s pretty difficult to follow it back, especially after a few months.

    • Jeff says:

      Agree. Please remove them.

      I´ve also noticed a lot of trolls recently…

    • Lloyd says:

      I was away from my computer for the “Thumbs” debate; I do have some thoughts, though. First, Denis was right to remove them; also to put them up in the first place. Experimentation is frequently good; you usually learn something. In this case, Dennis seemed to be thinking about what the blog is, and how to improve it. As it turns out, we commenters have our own idea of what the blog should be, though without two days of Thumbs, Dennis may not have found this out.

      Thumbs of any kind exacerbate the Observer effect. Will more thumbs cause you to write similar comments in the future to get more Likes, or to comment more on topics that have more thumb action? This speaks to the question of what we the commenters see the blog as: I see it as a way to speak to the other commenters. Any other type of engagement is off my radar. Thumbs allow for knee-jerk engagement, and for people to comment without their reasoning being out in the open. The beauty of this blog is that we can hold someone up to ridicule if they say something stupid. This encourages careful thinking. It also makes you think twice before you post: do you have time to defend this? Has someone else already said it better? Does what you say make sense? (Too frequently, I start typing only to discover a thought is half-baked.)

      That said, I am loving the ignore button. It is a dangerous tool, though…I am using it sparingly. Only blocked one person so far.


  16. George Kaplan says:

    USA rigs were down one last week, but Canada rigs are being add faster than either 2015 or 2016 now.

    • Evolv says:

      The motney and duvernay plays, along with a bunch of deep basin stack plays are driving Canadian rigs. Generally all gas plays with high liquid content. Very economic. Especially the motney.

  17. SRSrocco says:

    I believe the U.S. has been totally underestimated. Once the oil price starts to recover, Shale oil companies will be adding a new record amount of oil production.

    We may become energy independent after all.


  18. Can you explain Mexico’s oil reserve history in this graph:

    First this steep rise and then a reassessment apparently. But why?

    • Watcher says:

      That’s bizarre, gotta be political.

    • George Kaplan says:

      Probably to do with Chicontepec, discovered in 1973 – it has about 140 Gb OOIP and either 19 Gb recoverable or 0, depending on who you ask. It is heavy, dead oil, with no production drive and in very compartmentalised reservoirs. They’ve tried a few times to produce it,but haven’t really found a way to do it commercially (or in any large quantity) yet. I don’t know when Pemex starting reporting according to SPE and SEC rules, presumably when they went partly public, but I’d bet that had something to do with the big drops.

  19. Boomer II says:

    Dennis, can you explain why the thumbs were added? To track people or comments? To do a troll count? To drive traffic?

    Personally I find them a distraction.

    • Doug Leighton says:

      Among other things the imbecilic thumb button is dumbing us down by helping to kill critical thinking and meaningful discussion. Limiting oneself to two perspectives: ‘like’ or ‘dislike’ is like asking: are you a Democrat or a Republican? or are you a Catholic or a Protestant? Half-witted is away too mild to describe this way of “thinking”.

      • GoneFishing says:

        It’s disruptive technology.

        • Dennis Coyne says:


          Thumbs Removed. Trying to get an idea of who’s comments others find annoying.

          The x next to a name allows you to ignore a particular commenter if you choose.

          If you want those comments to reappear (as others will respond to those comments) you may do so by clicking the x a second time.

          • Boomer II says:

            Now that is a better idea. There are people whose comments I ignore and if I can hide them, I will.

          • Glenn E Stehle says:

            Dennis Coyne said:

            Thumbs Removed. Trying to get an idea of who’s comments others find annoying.

            And you got an idea, didn’t you? That’s why the thumbs had to go.


            • Dennis coyne says:

              No people found them stupid/annoying.

              The sole reason.

              • Mike says:

                Dennis, its your blog, man; yours to do with what you want. I have never taken POB for granted and always thought it was a privilege to be able to express my opinions here. It takes a lot of time to do this sort of thing and for your effort you receive no monetary benefit and, incredibly, are criticized, constantly, by the likes of Stehle… for what, for underestimating shale oil production? With bar charts? That’s some really stupid stuff, actually. The ONLY reason US LTO production has grown to the extent it has, is the money it can borrow. Otherwise, it cannot stand on its own two feet.

                The ultimate “heresy” of any place to debate important matters like our hydrocarbon future is to be ugly, insulting and condescending; to rely on investor presentation data and to not be able to think for yourself. Or allow others to think for themselves. Its clear to me the intent here is to reduce the blog to 3 1/2 (tee-tee is the half) people who agree with each other. Most anyone with any experience in oil and gas operations, and real life economics that involve paying the bills, that understand fully the ramifications of decline and reserve replacement costs, that understand borrowing money to earn 125% IRR over the life cycle of a well is a train wreck, have all pretty much left.

                Anyway, you are far more patient than I am for taking the insults. I get to check the box and be done with the asshole. Thanks for that.

                • Glenn E Stehle says:

                  Mike said:

                  I get to check the box and be done with the asshole.

                  Then your isolation in your little defacualized world will be complete.

                  • Dennis Coyne says:

                    Hi Glenn,

                    You emphasize different facts and come up with a view of reality that is much less realistic than Mike.

                    Do you deny that the top 10 LTO producers in the US (excluding major oil companies like XOM, Statoil and Conoco Philips) as a group lost money from 2014 to 2016?

                    That’s what the 10Qs for those companies report for those years.

                    An inconvenient fact for you.

                    Only if one ignores the “one time losses” over those three years can the losses be imagined to be gains.

                    It is called the bottom line for a reason, at the end of the day it is profits that matter.

                  • Glenn E Stehle says:

                    Dennis Coyne says:

                    Do you deny that the top 10 LTO producers in the US (excluding major oil companies like XOM, Statoil and Conoco Philips) as a group lost money from 2014 to 2016?

                    No one denies that almost everyone in the oil business lost money from 2014 to 2016. Howevever, is a company’s being a “top LTO producer” the cause of this loss? Apparently not, since non-LTO producers also lost money during this time. Whether a company was a top LTO producer or not seems to have little effect, since most all oil companies — LTO producer and non-LTO producer alike, experienced losses during this period.

                    So there are other explanations for the losses of the top 10 LTO producers than those which the “expert consensus” here on POB proffers.

                    For one thing, the oil business had an A bomb dropped on it in beginning in the latter part of 2014 when oil prices fell by more than two-thirds, and are still only about a half of what they were in mid-2014.

                    There is also the explanation which Goldman Sachs gives, and that is that the shale industry was in an “investment phase” in the past decade, but is now entering an “exploitation phase” in which it will reap benefits from the inordinate investment and resulting technologcal breakthroughs that ocurred during the investment phase.

                    You block out all these facts and explanations in your analysis, however, and hew strictly to the peak oil party line.

                    And speaking of who is”less realistic,” it is time and future events that will determine who was less realistic in their predictions.

                    In addition, Mike has made several empirical claims, some which I have called him out on, that are simply not true. If someone can’t get the past and present right, then what are the chances they will get the future right?

                  • Dennis Coyne says:

                    Hi Glenn,

                    At current oil prices, the investment may not pay off. Clearly the drop in prices was a big problem. If oil is as plentiful as you believe, then oil prices are likely to remain low and it is unlikely many of the LTO focused firms will be able to repay their debt.

                    At that point the financing may dry up as investors may smarten up.

                    The rapid fall in LTO output that would ensue as fewer wells are completed might result in a rise in oil prices.

                    At that point LTO firms might start to operate out of cash flow and not attempt to flood the market with crude, but probably not. They might be constrained by a lack of financing.

              • Glenn E Stehle says:

                Oh please, Dennis, this is the United States we’re talking about here.

                While rule by an aristocatic, highly condescending, self-appointed “elite” might work in Europe or the UK, in the US it goes over like a turd in the punch bowl.

                • alimbiquated says:

                  America is a lot more elitist that Europe. Americans worship the rich.

          • George Kaplan says:

            Dennis – I’m all for democracy and it’s great that you want to consider out opinion but this is your site and you can direct it how you want. If you think someone (me included) is pushing it somewhere you don’t want it to go just kick them off (I think you can do it for a certain time if you want to give them a second go).

            • Dennis Coyne says:

              Hi George,

              I would prefer not to have to make that decision and it is nice to have alternative points of view, but some people are tiresome so I decided to see if the ignore feature works, it requires little input from me and individuals can decide what comments are worth their time.

              • George Kaplan says:

                Understood – tiresome is a pretty good reason for getting the boot if you ask me though.

                • Dennis Coyne says:

                  Hi George,

                  Everyone’s tolerance is different and each person might define it differently.

                  So I try to keep the banning of people relatively limited. A variety of opinions is nice if it can be kept civil.

      • George Kaplan says:

        Doug – it’s already been pretty dumbed down over the past month or so, I think you’d agree; at least Javier had something new to say, though I mostly scrolled past him as well. The ones least likely to vote are the ones more interested in actual discussion, and I don’t think they they are deliberately going to seek out a comment just to vote it down when they already (I suspect) have automatic scroll response whenever they see their names. It’s like putting a voting panel at the end of a book – “did you read this book – yes/no?” In fact worse than that as those who vote yes for that probably would have read it, those who vote on blog posts? – I think likely much less so, they are voting on key word triggers or imbedded likes and dislikes, or someone who votes like them, nothing to do with the quality of the comment.

        Like many things on the internet the voting does the opposite of what you might have hoped, it doesn’t help debate it just reinforces prejudice and blinkered opinion, and allows those with big egos but likely poor self image to get a shot of dopamine. Others similar would be: you get group think rather than individuality; you get 98/2 content to artist rather than 80/20 which was previously normal and 50/50 which was hoped for; you get i-phone and gaming zombies instead of new creativity; you get dumbed down, black-and-white and trite twitter instead of informed, maybe ambiguous and nuanced argument, you get enabled extremism instead of objective empathy – and many more

        • Glenn E Stehle says:


          Spin it however you wish, but the message was clear: There is even less love for the inquisitors than there is for the heretics.

        • Javier says:

          at least Javier had something new to say

          Why, you miss me?
          It must be boring always reading the same type of climate comments without anybody questioning them.

          Then I thought I should at least post one comment to give some people the opportunity to hit my ignore button. I bet they were thinking it was too bad I wasn’t commenting any longer to do it.

          • Survivalist says:

            I always liked your failed predictions. No lack of failure ever seemed to dent your enthusiasm for being wrong.

            “we will have more Arctic sea ice in September than ten years ago in 2007.” ~ Javier


            Not looking good for that prediction. Currently in third place as per link below. Well ahead of 2007 which is currently in sixth place.


            OSI SAF doesn’t help your case much either.


            Let’s look at your past predictions:

            01/02/2017 AT 8:19 PM
            “2017 will again show more Arctic sea ice than 2007, because the trend has changed”

            01/07/2017 AT 11:43 PM
            “Arctic sea ice is not decreasing. There will be more of it in 2017 than in 2016. You should be happy about it.”

            03/13/2016 AT 8:24 AM
            “If you are capable of tracing a straight line you will see that Arctic sea ice volume has been going nowhere since 2007.”

            01/10/2016 AT 8:45 PM
            ” it is easy to predict that in two years time, during a La Niña year that is likely to take place you are very likely to get quite a lot more Arctic sea ice.”

            01/09/2016 AT 3:48 PM
            “Once this El Niño is over by about 2017, Arctic sea ice will go back to growing”

            Pure comedy gold!

            “A fanatic is one who can’t change his mind and won’t change the subject” ~ Winston Church

  20. SRSrocvo says:


    Agreed. My previous comment was a test to see if the “SNOWFLAKE” mentality is the one responsible for most of the voting. It seems that may be the case

    Especially… if I receive a lot of thumbs down on this comment… LOL.


  21. Hickory says:

    I agree w the other requests- please remove the thumbs up and down.
    Thanks for all you do Dennis.

    • Hickory says:

      Thanks Dennis. I do think the ‘x’ idea is good.
      There are some people I just don’t agree with, but none-the-less feel that hearing their perspective is worthwhile, and will not x them.
      Others are entirely irrelevant or so politically biased that I have no interest in seeing their stuff = x.

      • Watcher says:

        what happens to replies to an X’ed dood

        what sense will they make

        another bad idea

        on a roll

        • Dennis coyne says:

          Hi watcher

          Then don’t use the feature your choice.

          It can be turned on or off by each user.

          • Watcher says:

            what happens to replies to an X’ed dood

            what sense will they make

            • Boomer II says:

              Well, if you are curious, you can make those comments visible again.

              It’s usefulness is being able to move through comments faster, skipping the ones from people you don’t want to see.

              • Boomer II says:

                I’m here to get info on LTO decline rates. This seems like the best place to find that info.

                The fate of civilization, climate change, politics, and energy investments are topics I follow elsewhere, so I tend to skip over those types of comments here.

                • Mike says:

                  Yet another negative ramification of overleveraged LTO oversupply in America that has thrown world oil markets out of balance, and into a tail spin; low, volatile oil prices the past 3 1/2 years may have set us all up for a price spike:

                  • George Kaplan says:

                    I think he’s a bit behind times, the possible supply cliff has been discussed here for at least two years; IEA have been highlighting it for at least a year. I’d add my usual comment – with few discoveries the big conventional projects being considered are those that were at the end of the cue in the high price years – i.e. difficult and expensive. If they weren’t they would be the ones getting developed in preference to LTO, but they are so obviously loss making that there’s no story at all that can be spun to obfuscate for the investors. When the supply crunch comes development costs are going to skyrocket, even a recession does pull down demand.

                    This is part of the Boomer II theme, though he/she makes it a bit broader.

            • Dennis Coyne says:

              Hi Watcher,

              That is a problem with the feature, I agree.

              If that is more annoying, then don’t use the ignore feature, your choice.

              If looking for perfection, you may need to look elsewhere.

              • George Kaplan says:

                I fear you are just inviting more trolls in as they can turn off all criticism and continue to wallow in their comfort zone of ignorance.

                • Glenn E Stehle says:

                  Same goes for the “expert consensus” that rides roughshod over POB.

                  They now have the option to withdraw into their own little cloistered convent where they can practice their religion without ever having to confront the reality of the world outside the sanctuary walls.

                • Boomer II says:

                  Ignoring the trolls so that you can’t see what they post and respond to it probably won’t stop them from coming here.

                  I decided to ignore a few people because it allows me to skim comments much faster.

                  Economic realities will be the ultimate wall the trolls run into. Most of the world and a majority of businesses are making plans for a lower carbon world.

                  I don’t think the US has ever before been in a situation where the administration is attempting to grow the economy by disregarding what is happening globally.

  22. Watcher says:

    Concerning China funding Ven’s heavy oil refinery and likely caring NOTHING about being paid back in money, but wanting a supply flow ensured . . .

    That’s the Swiss CB or Fed. Switzerland has 8 million people in it, but their central bank prints money and buys US stocks with it (and European stocks). (BTW this does drive up the prices. Why haggle a lower price if you printed the payment from nothingness)

    We have to live day to day paying for stuff with dollars, but viewed from the perspective of the necessity of oil — for growing and transporting food — it becomes clear that it’s all silliness. Nothing having to do with money has any law of nature associated with it. It’s an industry unto itself and those within it dare not face the reality of it all, but that reality is pretty clear if you look at it carefully. It’s a substance created by whim.

    When we are faced with oil scarcity above ground, and starvation, that oil will be made less scarce by decree.

  23. Guym says:

    Odd. George’s comments had up thumbs, until he complained about them. Then, down thumbs. Agree, thumbs are not pertinent in an intellectual discussion. Most people have more acumen on this board, and the thumbs could discourage discussion.
    At least, if you invite a person to guest post, you should respect their requests.

  24. Boomer II says:

    Oil Company Wins Over Investors by Promising to Stop Looking for Oil

    CALGARY—One of the best-performing oil companies in the past year is gaining favor with investors in part by embracing an unusual strategy: promising not to reinvest in its core business “in the foreseeable future.

    “We’ve decided to let the shareholders see the cash,” Chief Executive Steve Williams said in an interview. “We can continue this model for a lot longer.”

    • Hightrekker says:

      Well, maybe:
      We were going to use the increase in temperate (global warmin!) to turn the tar sands into rice paddies and simultaneously soak the oil out of the sands and produce a healthy crop of GMO rice modified to grow well in the oily water. BP and Bayer have the intellectual patents and are chomping at the bit to get it going. All thats holding it up is the XL pipeline.

    • Watcher says:

      This is share buybacks. All industries are doing it.

      GM is probably going to be a private company in about 7 yrs because they buy back so many shares.

      Started to ramp pre 2008, but has really accelerated since.

  25. HuntingtonBeach says:

    Dennis Coyne says:
    06/28/2017 AT 11:05 AM
    Hi Huntingtonbeach,

    In the real world there are hills and there is wind, so 100 HP is not going to cut it.

    There is still rolling resistance and air resistance to contend with. You don’t seriously think 100 HP is going to be adequate to move an 80,000 pound vehicle, I assume.

    We do not live in a flat frictionless World and as far as I know at relevant speeds, Newton’s Laws of motion still apply in the World that I live in.

    A big rig is likely to need at least 300 Horsepower which would be about 220 kW for the motor or motors. If that were the case it a 600 kWhr motor would last for maybe 3 hours before needing to be recharged, it might be able to fast charge, but that would reduce the life of the battery.


    Hello again Dennis (follow up),

    You clearly didn’t understand my comments the other day. The 100 HP I was talking about is the rolling resistance and aerodynamic drag. Climbing a hill or headwinds are addition power needed. I never said the truck should be limited to 100 gross HP. If the truck is equipped with a 300 hp engine. That doesn’t mean that it producing 300 hp all the time it is operating. Actually, it is seldom producing that amount.

    The rolling resistance and aerodynamic drag are a much better means of calculating the average energy demand on the battery. In general, what goes up. Also comes down. So the energy demand to push the truck up the hill can be recovered back to the battery or used to continue to propel the truck forward. The same is basically true for the wind. If it’s a head wind in one direction. Than it’s a tail wind in the other direction. This isn’t totally equal because the wind resistance is exponential and the vehicle is moving.

    My original statement was: ” Actually, I think it will be self driving rigs that will make EV trucks work. Without a driver, the most cost efficient speed on the road is going to be about 40 to 45 mph.”

    Notice on the graph below the rolling resistance is in constant relationship to the speed, but the aerodynamic drag increases exponentially. Rolling resistance can very by highway surface and tire type. Also aerodynamic drag can very by truck configuration. 70 mph isn’t the most energy efficient speed, but is the most cost efficient speed. Because of the labor involved in driving a truck. Once trucks become self driving and the world gets serious about climate change. It won’t be today’s BAU.

    BTY, in my early career I engineered and sold class 8 trucks for almost 8 years. Before the early 1980’s, when turbochargers and intercoolers were introduced to trucking after the energy crisis. Most diesel road tractor rigs only had between 185 to 220 horsepower.

    I still hold my belief that in the future no more than 5 percent of today’s trucking freight is going to get pushed to rail for cost efficiency or CO2 management. Rail is just to slow for most freight. Back in my day, I had a client who would pull containers of auto parts out of the LA harbor. Break them down into 53 foot trailers at his local warehouse and deliver them to the auto factories in the east, because the manufactures didn’t want to wait to have it shipped by rail.

    • GoneFishing says:

      There is still a lot that can be done about the aerodynamics of trucks.

      Hybrid hydraulic motors will save large amounts of fuel wasted in slow and stop-go traffic.

      We are nowhere near the end of the efficiency curve yet.

      • Dennis coyne says:

        Hi Gone fishing,

        I agree there will be increased efficiency.

        Does long haul trucking with batteries deem viable to you?

        My opinion is trains make more sense especially electrified.

        • Dennis Coyne says:

          Deem was supposed to be seem in comment above.

        • Hightrekker says:

          As stated before, trains are already electric.
          It is the energy source of the generation that is, apparently, the issue.
          Diesel is the preferred source at the moment, and unless one is in a very dense and developed area, I don’t see that changing soon.

          • HuntingtonBeach says:

            Trains are diesel powered generators powering electric motors. Not grid powered electric.

            • Eulenspiegel says:

              In the USA they are diesel powered.
              In Europe and China they are electric powered most of the time. Only small siderails are diesel powered.
              Diesel is for lines where is so little trafic that infrastructure investing don’t pay out.

              • Hightrekker says:

                Not in China—
                We have been through this before.
                Taking a train from Paris to Amsterdam , yes, I’ve done it.

                • Eulenspiegel says:

                  The main routes are electriefied in China, as in this picture:

                  55% of all locomotives are already electrified.

                  They are still building their net, lots of Diesel routes left.

                  Even the longest train route in the world, the Trans-Siberian railway with 6000 miles, is electrified since 2002, allowing doubling the train weight to 6000 tons for the increased traffic from China.

                  With the new “silk street” concept China plans railways through the whole Asian continent up to Europe, too. They will be all electriefied for heavy duty freight trafic with the international 25 KV standard.

                  • George Kaplan says:

                    The biggest impact is surely just switching from road to rail – it is much more efficient hauling in rail cars for long distances (for passengers and goods). Switching to electric helps but only if the electricity generation is low carbon, if not we’ll just switch back to coal as soon as it’s needed.

                    The biggest problem Europe has (I think) is that it’s set up for passenger rail, and not so much goods. The USA is pretty much the opposite.

            • Hightrekker says:


        • GoneFishing says:

          It is possible to cut truck fuel use by 50% without being EV.

          I think that an increase in train traffic is a great idea and would help fund the needed double tracking of mainlines and regionals that are causing bottlenecks now. It would also help to fund electrification of main lines. Increases in the cost of fuel would also help push that scenario.

          I think long haul battery powered trucking could become practical in a decade, as battery tech advances. As long as liquid fuel is cheap and nat gas prices stay low, I don’t see a fast conversion to electric trucking. Cars will convert first.

          But this whole freight transport business is predicated on large volume and weight of materials. I think it would be best if we thought of ways that reduce the need for transport at the same time as we make it more efficient and convert it’s energy use.
          Just eliminating the fossil fuel system will eliminate a large part of the demand for transport.

          • Dennis Coyne says:

            Hi Gone fishing,

            Yes best first steps are reduction in demand for transport and efficiency.

            Agree that land freight on roads can become much more efficient, I just do not think it will be as efficient as electrified rail.

            Better to increase efficiency and reduce demand, but choose the best technological option. This is where those nations with carbon taxes have a better shot at choosing the best long term solutions.

            Some day maybe the US will figure this out as we fall further and further behind.

    • Dennis coyne says:

      Hi Huntington beach,

      In any case the Tesla at 5000 pounds goes about 250 miles on a 75 kWhr battery.

      Big rig about 80000 pounds so do the math.

      Only part of the energy can be recovered to the battery on the downhill as perpetual motion is not allowed.

      • HuntingtonBeach says:

        Hi Dennis,

        I’m trying to show you the math. There are two constant forces against a vehicle motion. Road friction and aero friction. Other wise the vehicle would have “perpetual motion” like an asteroid in space.

        The road friction consist from the contact to the road(tires). The weight of the vehicle is directly proportional to this resistance. The graph above shows the HP to over come this resistance of a 80,000 pound vehicle. Yes, your 5000 pound Tesla would have about 1/16 the resistance. But this is not what most of the resistance a Tesla has to over come on the highway. A train that weighs a thousand time more than a truck doesn’t have this same resistance because it has a hard steel on steel contact to minimize this energy loss.

        The aerodynamic drag friction loss is directly proportional to the frontal area and drag coefficient of the vehicle. At highway speeds, this is about 90 percent of the resistance on the Tesla and about 75 percent on the truck. The frontal area of the Tesla is about 6 feet by 5 feet or 30 square feet. The truck is about 8 1/2 feet by 12 feet or 102 square feet. This is the reason your Tesla comparison is not legitimate. The truck only has about 3 or 4 times the frontal area compared to the Tesla, not 16 times and at highway speeds it’s all about aerodynamics. Even though the Tesla has a better drag coefficient than the truck. It’s doesn’t offset the proportional frontal advantage of the truck.

        Your crude Tesla comparison is a poor analysis. There is not a direct weight comparison.

        I’m still sticking to my original statement. Most cross country highway rigs are out there in the real world averaging about 70 mph. If you use the chart above. You will see about a 33 percent energy saving by reducing the speed from 60 mph to 40 mph. Reducing from 70 mph will be a lot larger energy savings.

        40 mph = (Aero HP) 25 + (Tire HP) 42 X 1.5 = 100.5 for 60 miles

        60 mph = (Aero HP) 90 + (Tire HP) 63 = 153 for 60 miles

        “300 Horsepower which would be about 220 kW for the motor or motors. If that were the case it a 600 kWhr motor would last for maybe 3 hours before needing to be recharged”

        The formula above shows a 67 HP need at 40 mph, not 300 HP from your statement. This would give an average of about 9 hours of operation or 350 miles before the need to recharge.

        • Hightrekker says:

          It is not going to happen.
          (unless the aliens bring us a new energy source)
          When it reaches 5% market share, we can talk.

          The national average for a class 8 diesel is 5.5mpg. Your average truck has a fuel capacity of 250 gallons now then although your average truck has a 250 gallon capacity they only draw about 225 gallons. So take 5.5 and multiply it by 225 and youll get your answer. My tractor has 326 gallons of fuel capacity and a 300 gallon draw and averages about 5 mpg so i can travel about 1400 miles before i hit the danger zone on a good day i can run 1500 before the motor dies and i have to get 10 gallons of diesel to throw in the tanks and a bottle of ether to get it fired up again.

          • HuntingtonBeach says:

            “It is not going to happen”

            And you know this because you spent last night at a Motel 6 or your sleeper cab ?

            It will be self driving rigs that will make EV trucks work. Then you can blog post 24/7.

            Never say never

            • Hightrekker says:

              I’m not questioning self driving.
              I’m questioning battery power.
              (And not for conventional personal transportation, although I think it will be harder than than our techno narcissists friends think)

              As I have stated, when we have 5% market share, we can talk. That will not be for a while [probably never]if we keep to 5%)

              • HuntingtonBeach says:

                Back in the 70’s my father went to work everyday for a large corporation called Rockwell International. Who build a truck that hauled payloads to outer space called the space shuttle.

                Oh, they can do it. We’ll just have to see what the future brings.

                • Hightrekker says:

                  No problem with surplus energy there!
                  No batteries involved.
                  My Uncle was a major player with the shuttle, and step brother was salesman of the year for Rockwell.

        • Dennis Coyne says:

          Hi Huntington beach,

          You need to include hills in the analysis, you assume the energy spent going up the hill is recovered going down the hill, some of it is if no braking is required going down hill, regenerative braking only recovers a portion of the energy.

          A train has lower aerodynamic losses than a truck. Yes the truck on flat ground once it is moving would require only 67 HP.


          and data from

          About 8.5 HP is needed for a Tesla S to go 45MPH on flat road. At 45 MPH and 50 F the Tesla model S with a 75 kWhr battery can travel about 350 miles, the semis rig requires about 10 times the horsepower (about 90 HP at 45 MPH on your chart).

          That suggests about a 750 kWhr battery would be needed to travel the same distance. Let’s assume battery cost is $100/kwhr, the battery would be about $75,000 and special charging stations for semis could be used and maybe charge 10 separate parts of the battery pack in an hour to help with battery life.

          Perhaps this is possible but lithium resources might be used up quickly and electric rail may still be more economic due to greater energy efficiency for long haul with batteries used from rail to store and factory.

        • Dennis Coyne says:

          Hi Huntington beach,

          I get about 350 miles for the Tesla at 45 MPH at 8.5 HP with a 75 kWhr battery.

          For the semi at 45 MPH it is 90 hp from your chart, this suggests a 794 kWhr battery pack to take the semi 350 miles at 45 MPH, about 7.8 hours between charges. So we are in the same ballpark.

          • Hightrekker says:

            A batter pack at 85 lWh weighs 1200 lb (/544 kg (85 kWh).
            For 794Kwr that would be a 11,210 pound battery, that would take you 350 miles at 45MPH.
            Not going to work.
            (One fill up with diesel takes you 1400 miles on the average 18 wheeler)

            • HuntingtonBeach says:

              People learn how to charge their cell phone when needed. This is all predicated on self driving drones and not BAU. Hightrekker, you will be sitting at home behind your computer programming your truck for it’s next destination. The computer will tell you that it will take 26 hours, travel 825 mile and stop to charge twice at these locations. Come on, work with me here a little. There’s a lot of companies out there who would love to not have to employ drivers and will step outside to box to do so. I understand the benefits of diesel.

              Also, I’m not quite sure how good of salesman your step brother was. They only built 5 shuttles.

              • Hightrekker says:

                He was in the tool division.

              • Eulenspiegel says:

                It get’s even wider, I worked in a company doing road optimization software for trucking / delivery.

                With a drone this recharging will just be another stop in the delivery plan – start here at 4 PM, drive 450 mile with 1 charging stop and one feary to xxx, drive to company A, unload 5 pallets, drive to company B, arrival at 5 PM.

                It was calculated with drivers, inclusive allowed union steering time and coffee breaks – it will handle drones just fine.

          • Watcher says:

            lithium not the problem, cobalt is

          • HuntingtonBeach says:

            Hi Dennis,

            I agree, our number are inline. Which should be good enough for horseshoes, hand grenades and POB. I would expect the engineers will figure out how to capture almost all the downhill energy. But, getting the rig over a 5 or 6 thousand foot climb over the Rockies might be a bigger issues.

            Yes, $75,000 sounds like a lot. But the average freight road tractor can total up 120,000 miles a year. At 5.5 mpg and $3 a gallon, your looking at $65,000 in annual fuel cost. At 2 kWhr per mile and $.15 per kWhr. That cost turns into $36,000.

            I still don’t think a significant amount of freight is going to be transferred to the rail system to make a big difference. I had a single owner operator client who once picked up a load of citrus in Oxnard(75 miles out side LA) on a Friday evening(5pm) and needed to have it to the Chicago produce market by Monday morning(5am). That’s about 2000 mile in 58 hours. Clearly he was cooking his log books. Even a drone EV running 45 mph and a third of the time charging would take 67 hours. On the other hand, shipping it by rail I would be surprised if the trailer was loaded on a rail car and sitting in the Los Angeles rail yard by Monday morning.

            I also can’t imagine what would happen to traffic in Los Angeles if almost all freight had to go though a bottleneck LA rail yard.

            Just a little food for thought

            • Dennis Coyne says:

              Hi Huntington Beach,

              The rail system can be improved and if done will be cheaper in the long run than using trucks for long haul.

              At 120,000 miles per year, the batteries may degrade quickly,

              I am not suggesting it won’t be cheaper than diesel eventually, a good rail system will be cheaper still.

              There may still be a use for trucks for perishable goods, but for many products that do not have a short shelf life, the cheapest option may be electrified rail.

              With bad public policy like we have in the US, rail will never be built out properly and we will continue with an inefficient system.

        • Robert Honeybourne says:

          In UK mpg, my Citroen C4 1.6 HDI runs at 75 mpg at 50 mph, 68 mpg at 60 mph and 59 mpg at 70 mph (trip computer)

          I think it is very clear the effect on speed. I maintained records since new. I have run a full tank at < 55 mph for 500 odd miles and got 74 mpg. The trip computer over 20,000 miles is within 4% of measured

          I think if I could bear the boredom I would save money. Your self driving truck info is very interesting!

  26. dclonghorn says:

    George this was an excellent post, very informative. I appreciate your input to this board, and feel I have a better grasp on where Mexico’s oil production is headed now. Thanks.

  27. Greenbub says:

    Thanks for the piece, George.

  28. Energy News says:

    in the news
    OPEC production estimates are up in June. Various articles suggest that both Libya and Nigeria are close to maximum output without billions of new investment.

    Reuters, Fri Jun 30, 2017
    OPEC oil output has risen in June by 280,000 barrels per day (bpd) to a 2017 high, a Reuters survey found, as a further recovery in supply from the two member countries exempt from a production-cutting deal offset strong compliance by their peers.
    The Libyan and Nigerian increases mean OPEC output in June averaged 32.57 million bpd, about 820,000 bpd above its supply target, adjusted to remove Indonesia and not including Equatorial Guinea.
    2017-07-03 OPEC June output climbs 210k b/day to 32.54 million b/day, JBC Energy says.

    Bloomberg – Electric Cars to Reach Price Parity by 2025 – June 23, 2017
    Falling battery costs set to reshape the auto industry

    Russian crude oil production in June at 10.95 million b/day, the same as May. Exports down in June and refinery processing up = following normal seasonal pattern. Statistics from Ministry of Energy.
    Refinery processing:

    • Energy News says:

      Russian crude oil production

    • Energy News says:

      Russian crude oil production

    • Watcher says:


      That says russian exports 4.6 mbpd, if that vertical graph is bpd

      Russian production 11.2 mbpd

      Consumption ain’t 7 mbpd

      Correct export number 7ish mbpd

  29. Glenn E Stehle says:

    It looks like US shale producers, and not OPEC, may be the first to blink.

    On Friday, Baker Hughes released its North American Rig Count for the week, and oil rigs in the US were down by two.

    Also the Dallas Fed on Thursday released its Energy Survey the Texas region for the second quarter.

    Growth in business activity in the energy sector in Texas has leveled off and in fact fell a bit.

    The report also states:

    Oil and gas production increased for the third quarter in a row, according to executives at exploration and production (E&P) firms. The oil production index was 10.2, down from 13.1 last quarter, and the natural gas production index declined seven points to 10.6. This suggests oil and gas production is rising at a slower pace than last quarter.

    All this should bode well for oil prices.

  30. Glenn E Stehle says:

    Progressive leaders always talk a good game when it comes to shutting down the fossil fuel industry. But when the rubber hits the pavement, the result is always the same, whether we’re talking about Ecuador’s Rafael Correa or Canada’s Justin Trudeau.

    Canada Undermines Targets for Protecting Oceans by Increasing Oil Exploration

    Emannuel Macron’s anti-fossil fuel stance that the video mentions mean nothing, since France has such a poverty of oil and gas natural resources. France produces only about 16,000 barrels of oil per day, compared to Canada’s 3,700,000. Marcon’s empty gesture amounts to nothing but grandstanding, cheap signalling, since France has no skin in the game.

    At least Hillary Clinton was not a hypocrite in this regard, and in her offical policy stance refused to give lip service to the anti-energy zealots.

    • Schinzy says:

      France imports about 1.6 MBOD. If Macron’s policies decrease demand for oil in France, this could have a significant downward influence on prices which in turn would result in decreased investment in fossil fuel production which will eventually decrease production.

      When I arrived in Toulouse 25 years ago, people commuted in cars and poorly insulated homes were frequently heated with oil. The city continues to install light rail and bicycle lanes. New houses are well insulated, people (mostly young) are insulating older buildings. Bicycles are now common. The city subsidizes electric bicycles. Heat pumps and biomass are now common forms of heating. Many families reserve the car for weekend outings.

      Moreover, Total is one of the 10 largest oil companies in the world, and is French.

      Macron’s policies could have a significant impact on fossil fuel production. If his policies are emulated by other countries, the impact could be profound.

      • Glenn E Stehle says:


        This is the Macron policy I was referring to, the one talked about in the video: The Macron administration has announced it will issue a moritorium on new oil and gas exploration licenses, and that it will ban fracking.

        It’s cheap signalling, however, a nothingburger, because France essentially has no domestic oil or gas industry anyway (16,000 boepd of oil and natural gas production countrywide, which is nothing).

        But you are right when you say, “If his policies are emulated by other countries, the impact could be profound.”

        The chances of that happening in the real world, however, are between slim and none, at least in the places that matter, the ones with significant oil and gas production.

      • Ves says:

        “Macron’s policies could have a significant impact on fossil fuel production.”

        Unfortunately, Schinzy It will be slow grinding Greek way, through austerity. I know there is hope but hope is fantasy because Macron- synthetic president is there just to save Don Perignon class. There is very little economically to drill any oil & gas in France even by low US shale economic standards. So, that ban on fracking is just one big lie. If they sell you one lie, then they can sell you hundreds, or thousands of lies.

  31. Energy News says:

    Brazilian oil production at 2.65 million b/day in May. The bounce is probably due to a return from outage. Brazil still has this additional capacity starting: The Libra FPSO is expected to achieve first oil by Q3 2017

    The FPSO Pioneiro de Libra will be the first to produce oil from the giant Libra field which covers more than 1,500 sq km (579 sq mi) in the presalt Santos basin. The field has estimated reserves of 8-12 Bboe. The unit can operate at water depths of up to 7,874 ft (2,400 m), with a production capacity of 50,000 b/d of oil and compression capacity of 4 MMcm/d of gas.

    • Energy News says:

      Brazil plans to test unconventional oil, natural gas production in 2018
      Rio de Janeiro (Platts)–3 Jul 2017
      Brazil’s government wants to start up a pilot project tapping unconventional oil and natural gas reservoirs next year, likely in the state of Bahia, as part of broader efforts to expand onshore output, a Mines and Energy Ministry official said.
      Brazil could hold as much as 250 Tcf of gas and 5.4 billion barrels of oil in unconventional deposits, according to a study by the Energy Economics Institute at the Federal University of Rio de Janeiro.

    • George Kaplan says:

      If I’ve understood the Portuguese properly then by the Brazilian government figures Brazil has been a net exporter of petroleum, in dollars, since the third quarter last year. I don’t know why the numbers jump around as much as they do. One surprising thing is that they actually import a small amount of ethanol every year (hardly visible on the chart).

      The have two other big (150 kbpd) cloned FPSOs due – Lula Norte and Tartaruga Verde & Mestica (might be on station but I haven’t seen anything) and more next year. But they also have 9 to 10% natural decline rates and every so often can send one FPSO offline for a long time in accidents, so they need at least two to three a year just to stay steady.

  32. Cliffhanger says:

    the US tried already to produce shale oil back in the 1980″s. And in 1991 the company producing it went bankrupt and out of business.

    Unocal to Close the Nation’s Last Shale Oil Project

    Here’s How NASA Thinks Society Will Collapse
    Too much inequality and too few natural resources could leave the West vulnerable to a Roman Empire-style fall.

    • Mike says:

      Oil shale is different than shale oil.

      • Dennis Coyne says:

        Hi Mike,

        Yes of course you are right. I try to consistently use “tight oil” or LTO (light tight oil) to refer to shale oil and kerogen to refer to oil shale because many people (myself included) get the terms shale oil and oil shale confused.

        They sound the same but are very different. One is viable at $75/b oil or higher, the other (kerogen or oil shale) requires oil prices at $150/b or maybe $200/b.

        Kerogen is the energy of the future and always will be. 🙂

        • Eulenspiegel says:

          I doubt you’ll get positive EROI on Kerogen – so it’s not energy. You’ll have to bake it to finished state with high temperature, first.

          And it’s better to leave some carbone in the earth – depleting natural gas, coal and oil will be enough for global warming, if you get everything carbon-xx out of the ground there will hardly be enough oxygen left to breathe, so much is down there. At least if you have a price of 200+$ / barrel to scrap it out, it’s not the kind of drill a hole and enjoy the wealth energy.

          Better get these fusion or thorium reactors working, if you want a big central energy source that works for centuries than scraping out this minor quality stuff.

          The only thing we NEED oil for longer than 50 years is doing wars and long distance air travel – and for this there is enough oil left even in 100 years. And air travel I’m not shure after 50 years – if you can shoot rockets to the moon with liquid hydrogen, I’m sure you can fly with it once security problems are solved.

    • Javier says:

      NASA Statement on Sustainability Study

      The following is a statement from NASA regarding erroneous media reports crediting the agency with an academic paper on population and societal impacts.

      “A soon-to-be published research paper ‘Human and Nature Dynamics (HANDY): Modeling Inequality and Use of Resources in the Collapse or Sustainability of Societies’ by University of Maryland researchers Safa Motesharrei and Eugenia Kalnay, and University of Minnesota’s Jorge Rivas was not solicited, directed or reviewed by NASA. It is an independent study by the university researchers utilizing research tools developed for a separate NASA activity.

      “As is the case with all independent research, the views and conclusions in the paper are those of the authors alone. NASA does not endorse the paper or its conclusions.”

      • Hightrekker says:

        Nor does it negate or deny them.
        It just uses NASA data.
        And 2014 is 3 years ago.

        He’s Back!

        • George Kaplan says:

          He’s also probably x’d you out.

        • Cliffhanger says:

          What does NASA have to say about all these other scholarly papers? Oh sorry they are to busy telling the sheep that cow farts cause global warming!!!

          (Meadows 1972) (Ehrlich 2013) (Jefferson 2015)
          (Chapman,I 2013) (Ritchie 2017) (Korowicz 2012) (Tainter 1990)

        • Cliffhanger says:

          The paper concluded collapse by 2030. Same as the limits to Growth. Its a mathematical certainty. To many people using to many resources and believe it or not they are almost GONE!!!!!!!!!!!I WON”T BE OUT DOOMED EVER!!!!!!

      • Cliffhanger says:

        “NASA does not endorse the paper or its conclusions.”

        RUN FOR THE HILLS!!!!!!!!!!!!

  33. Watcher says:

    Brazilian assay says 26% diesel. That’s rich.
    About 8% jet fuel. Overall API 31.

    Far superior middle distillates to US shale oil.

    US consumption of diesel a bit over 3 mbpd.

  34. Evolv says:

    Looks as though the electric car could be in some trouble. Reduction of subsidies.

  35. Cliffhanger says:

    Simple really….when the world economy collapses everything shuts down…the end….were talking about grids down all over the world and 7.5B people dropping like f*** flies in short order…the collapse will be absolutely horrible..There is no collapse or horror movie ever produced that has even come close to imagining what the collapse of BAU might look like… I’m talking about every corporation and every social program going bankrupt at once.I’m talking about people eating people. I’m talking about the worst catastrophe to ever happen in the history of mankind, and WILL ever happen. Nothing has ever, or will ever
    come close. “Limits To Growth” (Meadows 1972)

    • GoneFishing says:

      So what is the probability of a homogeneous economic collapse within the next decade?

  36. Energy News says:

    OPEC Exports – I don’t know how accurate these estimates are but if they’re right then exports are back up to the high level they were at the end of 2016.

    Thomson Reuters Energy – July 4th, 2017
    OPEC exports rise 450 kb/day in June from May, to 25.92 million b/day. Nigeria, Libya and the KSA saw combined exports up by almost 1.1 mbpd. TROilResearch
    Chart on twitter:

  37. Glenn E Stehle says:

    Just a Simple Independence Day Economic Comparison…

    • Glenn E Stehle says:


      • shallow sand says:

        Prices began a slow bleed in the summer of 2014, crashed Thanksgiving, 2014 and remained low thereafter.

        The lowest I paid for a gallon of gasoline was 2/2016 at $1.25 per gallon.

        Glenn, to me your posts indicate that your royalty is not worth much, or you own a trucking company. I have to drive a lot of miles each month and do so in a pickup truck. I am paying around $2,500 less for fuel annually than I did at the highest gasoline prices in 2008.

        I recall Obama touting low gas prices in early 2016, and I was not at all pleased with his comments, given both my personal investments plus the major job losses in all US basins at the time of his comment.

        The Bakken took off in 2007 and climbed through 2014, the EFS took off in 2009 and climbed through 2014. Vertical Wolfberry took off prior to 2008 in the Permian and horizontal followed there and in Delaware in 2011.

        • Glenn E Stehle says:

          shallow sand,

          I constantly receive letters with offers for my royalty interests.

          Back in 2011 they were in the $6,000 per net royalty acre range.

          The latest one I received was a few weeks ago and it was for almost $100,000 per net royalty acre.

          In August 2015 two 7500′ lateral wells were completed on the north offset lease to this particular property.

          In the first 22 months of production, the two wells together produced 557,513 BO and 520,670 MCFG.

          More recently, in May 2017 the two wells together produced 603 BOPD and 752 MCFGPD.

          The operator of the offset lease recently staked seven new wells. Drilling of these wells is now complete and they are currently awaiting completion.

          Undoubtedly my properties would be worth more if oil and gas prices were higher, but I have little to complain about.

          Nonetheless, if the anti-O&G fanatics were to get their way, my properties would be worth nothing. And for that reason I will never, never, ever throw my lot in with the anti-O&G zealots the way Mike has.

          And furthermore, the best way to fend off the anti-O&G fanatics is with cheap gasoline for the masses. The public loves that, and EVs have a difficult time competing.

          Here’s what the production curve of the two offset wells looks like.

          • Dennis Coyne says:

            Hi Glenn,

            I am not anti-oil and natural gas. I am pro reality.

            Oil and natural gas will peak at the World level, probably before 2030.

            The Chinese realize this and are rapidly building out their EV manufacturing ability. The US would be wise to follow their lead or we will be left in the dust, even better we would be wise to try to be leaders rather than followers.

            • Glenn E Stehle says:

              Dennis Coyne says:

              I am not anti-oil and natural gas. I am pro reality.

              Dennis, you are not “pro reality.”

              What you are is pro speculation, but you earnestly believe that your speculations are the same thing as reality.

              • Dennis Coyne says:

                Hi Glenn,

                There is quite a bit of peer reviewed literature that supports the idea that the conventional ultimately recoverable resources (as defined by the USGS, not including “continuous resources”) is between 2000 and 4200 Gb, this includes NGL (about 350 Gboe), so C+C conventional URR would be 1650 to 3850 Gb.

                The reality is that oil will peak.

                • Glenn E Stehle says:


                  No one is disputing that oil will peak, whether that was in 2016 (as David Hughes predicts) or will be 200 years from now (as Donald Trump predicts).

                  The truth, however, is that we don’t know when peak oil will occur, since this depends on a whole plethora of factors, including future economic, political and technological developments, which are unpredictable.

                  Nor is anyone disputing that we have a better handle on what conventional ultimate recovery will be, since it is in a quite mature stage of development.

                  When it comes to predicting what non-conventional ultimate recovery will be, however, we have a very poor handle on that. This is so because it is still very much in the infancy of its development.

                  You, however, are prone to making extremely confident predictictions about what the ultimate recovery of non-conventional oil will be. But regardless of you great confidence, this is nevertheless pure speculation, based on a number of assumptions that may or may not come true.

                  • Dennis Coyne says:

                    Hi Glenn,

                    I give a range of output for non-conventional (extra heavy oil and LTO) between 300 Gb and 700 Gb. For extra heavy oil I expect between 250 and 500 Gb and for LTO between 50 Gb and 200 Gb.

                    What is important to remember is that the LTO resource is quite limited so even if it is ramped up quickly, it will also decline very quickly. The extra heavy oil (Canadian Oil sands and Orinoco Belt of Venezuela) takes quite a bit of time to develop.

                    The Canadian Association of Petroleum Producers expects Canadian output to increase by about 2 Mb/d between 2016 and 2030, so Canadian oil sands are not the answer, I am doubtful we will see large output increases from Venezuela before 2030. That leaves LTO, which might increase as much as 2 Mb/d above the May 2017 level by 2022, note that recent estimates of high resources and technology by the EIA have been too optimistic.

                    I agree the peak in World oil output probably won’t be 2015 or 2016, but that will likely be closer to reality than 2217, in my opinion.

                    What is your expectation?

                    Does 2217 seem a reasonable estimate for the peak in oil output in your view, or does 2020 to 2030 seem more reasonable?

                  • Glenn E Stehle says:

                    Dennis Coyne said:

                    What is important to remember is that the LTO resource is quite limited….

                    Another assumption stated as fact but which is nevertheless based on nothing but speculation.

                    As to predicting when peak oil has or will occur, I believe that’s a fool’s errand. But Donald Trump has a political agenda in doing so. What’s your agenda?

                  • Dennis Coyne says:

                    Hi Glenn,

                    The agenda is very simple, if oil peaks between 2020 and 2030 as many experts believe, we will be in a World of hurt without alternatives for oil. When people realize that the reality is that a near term peak (next 10 years) is very likely, maybe they will prepare for the future.

                    Low oil prices are nice unless they lead to shortages and a spike in oil prices which may lead to a recession.

                    The LTO resource may not be as large as you believe. So far USGS estimates are about 40 Gb of technically recoverable LTO in the US, maybe another 10 Gb in the Delaware formation of the Permian, would raise TRR to 50 Gb, economically recoverable resources are usually lower, maybe 40 Gb.

                    You are correct that this is speculative as nearly all predictions of the future necessarily are.

                    I would expect somewhere in the range of 40 to 60 Gb LTO in the US.

                    There might be another 30 to 60 Gb produced in China eventually.

              • Dennis Coyne says:

                Hi Glenn,

                Most predictions of the future are speculative.

                So a prediction that output will be x on some future date is speculative as I have always clearly stated. I make assumptions, which if correct should give a future output that is close to correct.

                There is plenty of peer reviewed research that expects a peak in World oil output between 2020 and 2030.

                That is not speculation it is a fact.



                • Glenn E Stehle says:

                  Dennis Coyne said:

                  Most predictions of the future are speculative.

                  No Dennis. All predictions of the future are speculative.

                  Self-proclaimed “experts” invariably fall into what Nassim Nichola Taleb calls the “Platonic fold.”

                  And, as he goes on to explain:

                  we act as though we are able to predict historical events, or, even worse, as if we are able to change the course of history. We produce thirty-year projections of social security and oil prices without realizing that we cannot even predict these for next summer….

                  What is surprising is not the magnitude of our forecast errors, but our absense of awareness of it….

                  Based on [the experts’] empirical record, they do not know more about their subject matter than the general population, but they are much better at narrating — or, worse, at smoking you with complicated mathematical models.

                  — NASSIM NICHOLAS TALEB, The Black Swan

                  • Dennis Coyne says:

                    Hi Glenn,

                    I would disagree.

                    Let’s say I predict how much a one kilogram mass of stainless steel that was weighed today, will weigh tomorrow if it is untouched (we leave it on the balance).

                    I would say that within the margin of error of the measuring device, I can predict the future weight fairly accurately.

                    Likewise the acceleration of an object dropped in a vacuum at the same point on the planet can be predicted fairly accurately in the future.

                    So no, all predictions are not speculative, but many are and your claim that I am certain that my predictions will be accurate is patently false.

                  • Glenn E Stehle says:

                    Dennis Coyne,

                    I suppose then we will just have to agree to disagree.

                    I, like Ivar Giaever, subscribe the philosophy of science that says there are no incontrovertible truths, only hypotheses.

                    There is no way in which any scientific theory can be proved, and as a result such theories always remain hypotheses, which at some future date can be disproved by evidence and observation.

                    From week to week, even from day to day, the body of knowledge to which we attribute the name science is changing, the beliefs of one day being frequently, sooner or later, abandoned for quite different beliefs.

                    Eventually eroneous theories will fail to work and their falseness will be revealed, but it may take a very long time for this to happen. Thus scientific theories must be recognized as hypotheses and as subjective human creations no matter how long they remain unrefuted by evidence and observation.

                    To do otherwise takes one more down the pathway of doctrine and dogma — of incontrovertible truth — rather than of science.

                  • Dennis Coyne says:

                    Hi Glenn,

                    So there are no facts that can be known. As our understanding of the universe changes our perception of it, as we can only perceive the World and determine what is or is not.

                    Your philosophy would seem to lead to a World without facts that can be proven.

                    Thus your accusations of others making fact free claims seems absurd.

                    In you philosophy all claims are fact free, based on hypotheses that can never be proven.

                    Would you also dispute claims such as in the future 1+1 will be equal to 2 (in base 3 or higher as 1+1=10 in base 2)?

                    Highly speculative don’t you think? 🙂

                    My guess is that this has a high probability of being true both today and for long into the future.

                    Perhaps someone who has studied very high level mathematics could comment, as I may be mistaken, I would say that it is rather speculative to claim this will not be the case.

                    As far as physical theories, such as Newton’s Laws of Motion these become special cases of more general theories, they work well for speeds typically observed when they were developed.

                    At very high speeds they break down.

                    So you believe it likely that an object of mass M made from a stable isotope is likely to change its mass spontaneously from minute to minute?

                    This is not a matter of faith, just observation of the World as it is.

                    I imagine you might agree that proposing such a hypothesis (stable substances changing mass spontaneously), it could be readily refuted by observation.

                    Perhaps you would grant that the probability is low that well established physical theories are unlikely to all be proven false tomorrow?

                    You do recognize that fact and theory are very much intertwined, I don’t really go in for the fact free world that your relativistic philosophy leads to.

                    There is much that is not well understood (social sciences), but there is much that is known with a high level of certainty (much of physics and chemistry).

                  • Glenn E Stehle says:

                    Dennis Coyne said:

                    So there are no facts that can be known.

                    Sure there are facts that can be known.

                    These are evidence and empirical data, things past and present that have been and can be observed.

                    Theory, speculation, hypotheses and prediction of things that have not yet happened are not facts.

                    Granted, one can estimate the chances of something happening that hasn’t happened yet. Nevertheless, these estimates are not facts, and are frequently subjective.

                    Cromwell’s rule, named by statistician Dennis Lindley, states that the use of prior probabilities of 0 (“the event will definitely not occur”) or 1 (“the event will definitely occur”) should be avoided, except when applied to statements that are logically true or false, such as 2+2 equalling 4 or 5.

                    As Lindley puts it, assigning a probability should “leave a little probability for the moon being made of green cheese; it can be as small as 1 in a million, but have it there since otherwise an army of astronauts returning with samples of the said cheese will leave you unmoved.” Similarly, in assessing the likelihood that tossing a coin will result in either a head or a tail facing upwards, there is a possibility, albeit remote, that the coin will land on its edge and remain in that position.

                    If the prior probability assigned to a hypothesis is 0 or 1, then, by Bayes’ theorem, the posterior probability (probability of the hypothesis, given the evidence) is forced to be 0 or 1 as well; no evidence, no matter how strong, could have any influence.

                    Evidence and facts should trump theory and hypothesis, though as can be seen from the POB “expert consensus,” frequently they do not.

                  • Dennis Coyne says:

                    Hi Glenn,

                    You need to think a little more deeply.

                    There are many thing that are observed only by using tools and methods that are dependent on theory.

                    Have you observed a chromosome with your naked eye, nobody has.

                    Your philosophy seems to run skin deep.

                    Your philosophy leads to a dearth of facts.

                    Much of what is considered “fact” or empirical data relies critically on theory.

                    In fact what you see can be an illusion, so even observation cannot be proven to be correct.

                    Think of court cases where eye witnesses get things wrong about as often as they observe correctly, should there be some objective evidence such as a camera, which may or may not be real (as what is on film can also be an illusion.)

                    Can you define a fact. Does something exist if it is not observed? There is a dialectic between that which is observed and the observer which is difficult to untangle.

                    There are as many views of this problem as there are philosophers, so not a question easily settled. No facts to guide us here.

                • Glenn E Stehle says:

                  Dennis Coyne says:

                  There are many thing that are observed only by using tools and methods that are dependent on theory….

                  Your philosophy leads to a dearth of facts.

                  Much of what is considered “fact” or empirical data relies critically on theory.

                  In fact what you see can be an illusion, so even observation cannot be proven to be correct.

                  You are arguing in favor of relativism, constructivism and Platonic realism.

                  But just because most peak oilers practice relativism, constructivism and Platonic realism when it is convenient, does that mean that objectivism and empiricism don’t exist?

                  The most egregious cases of relativism, constructivism and Platonic realism by peak oilers, however, are not to be found on Peak Oil Barrel, but on Our Finite World.

                  There you will find people who argue that the oil and gas production data published by the EIA, IEA, OPEC, and BP is bogus. They argue that these institutions are instruments of the powers that be, and they lie to the people (this is their “critical theory”). According to them, peak oil already occurred a decade or so ago, but these arms of the ruling class are covering up that fact by cooking the data, creating an “illusion.” But of course they can see through the “illusion” and the dirty tricks being played on them.

                  Relativism, contructivism and Platonic realism are a valid critique of objectivism and empiricism, but if taken too far, then what is left to form an objective basis for science?

                  So let me repeat once again: theories, hypotheses, speculation and predictions are not facts.

          • shallow sand says:


            IHS Energy US Data online shows the lease you refer to as having three vertical producers and two horizontal producers. Am I looking at the wrong lease, or are there also three verticals that have produced around 100K of the cumulative BO to date?

            • Glenn E Stehle says:

              shallow sand,

              I get my produciton data from the Texas Railroad Commission production reports, which I consider to be the most reliable source.

              Here’s a screenshot of the Texas RRC production report for the Denise lease. As you can see, there was no production prior to August, 2015.

              • shallow sand says:

                Glenn. IHS also shows no production prior to 8/15.

                IHS shows one vertical with first production 8/15, one vertical with first production 9/15, one vertical with first production 10/15, one hz with first production 10/15 and one hz with first production 1/16.

                IHS provides a lot of data, including individual well production of oil, gas and water, as well as well numbers, field name, well TD, well TVD for hz wells, upper perf, lower per, latitude and longitude coordinates and a few other things.

                The production data for the whole lease matches what you have posted, but IHS says there are five wells, three being vertical.

                Same operator, lease name and number.

                • Glenn E Stehle says:

                  shallow sand,

                  Obviously the IHS data is wrong. It claims that production from the first horizontal well began in October 2015. It claims that in September 2015 that only two vertical Wolfberry wells were producing on the Denise lease.

                  However, the Denise lease made 22,625 BO in September 2015. There is no way that two vertical Wolfberry wells produced 754 bopd in September 2015. An extremely good Wolfberry well produces about 100 bopd during its first month of production, with the average probably being closer to 70 or 80 bopd.

                  The Texas RRC shows the Denise #205NH to have been completed on July 17, 2015. It shows the Denise #208NL to have been completed on August 20, 2015.

            • Glenn E Stehle says:

              shallow sand,

              As to a list of all wells that have been drilled on any particular lease in the past, this can be found by going to the Texas RRC’s “Public GIS Viewer” and in the search pulldown (designated by a magnifying glass) typing in the lease ID number.

              If you do this and type in 45874, this is a screen shot of what you get.

              • shallow sand says:

                Those are the same five well numbers. Interesting.

                Wonder why they are drilling verticals along with the horizontals? I have noticed other companies operating in Spraberry, such as PXD, PE and FANG have also been drilling verticals.

                Any idea what a vertical costs?

              • Glenn E Stehle says:

                You can then go to the Texas RRC “Drilling Permit (W-1) Query” and input the API number and look at the drilling permit.

                If we do this for Denise #1601, for instance, here’s a screen shot of what we get.

                The well was a vertical Wolfberry well completed on January 24, 2015.

                We can do the same for well #1609 and #1610.

                Denise #1609 was a vertical Wolfberry well completed on January 10, 2015.

                Denise #1610 was a vertical Wolfberry well completed on February 15, 2015.

                I do not know why these three wells did not produce any oil after their completion date. The typical vertical Wolfberry well in this area produces about 20,000 BO in its first year of production, and about 10,000 BO in its second year of production.

                • shallow sand says:

                  IHS shows the three vertical wells producing between 29-37K BO cumulative. Responsible for about 101K of cumulative lease BO.

                  • Glenn E Stehle says:

                    shallow sand,

                    It would not be possible to know when those three vertical wells began production, or even if they have began production, or how much oil they have produced without inside information from Henry Resources.

                    I’d be willing to bet a dollar to a donut that IHS does not have access to that sort of inside information from Henry Resources.

                    But you are right in one respect, and that is that I don’t have access to that information either. So part of the Denise lease production could have come from those three wells.

          • Glenn E Stehle says:

            Here’s a map of the Henry Resources Denise lease.

            All the leasehold in sections 16, 17, 20 and 21 south of Interstate 20 belonged to Chevron.

            My guess is that Chevron traded its horizontal rights in the west half of sections 17 and 20 for Henry Resources horizontal rights in section 16 and the east half of section 17. Maybe Henry Resources threw its three vertical Wolfberry wells in Section 16 into the deal, and Chevron now owns those. Maybe, if Chevron and Henry Resources were trading acreage and unitizing, there were title problems due to an objection by a mineral owner that had to be cleaned up before the three vertical wells could be put on production. Those can take months, or even years, to clear up. Who knows what’s going on. There are numerous possibilities. But something is going on since Henry Resources reported no production for its three vertical Wolfberry wells for many months after their completion.

            Such a trade, nevertheless, would give Henry Resources the west half of sectons 17 and 20 it can drill horizontal wells on, and Chevron all of sections 16 and 21 and the east half of sections 17 and 20 it can drill horizontal wells on.

            • shallow sand says:

              Glenn. I do not know either, just letting you know what they are reporting.

              Also, we do not know what gross working interest Henry owns. It could be Chevron and possibly many others own WI in these wells. The predecessor, Henry Pertoleum, which sold to Concho in 2008, routinely had participants in wells they drilled, from private companies up to the majors. At least that is what I see in interviews with its founder.

              Furthermore, given how broken up PB acreage is after close to 100 years of development it is quite likely vertical wells are drilled when there simply isn’t room for horizontals, or maybe due to lease requirements, or both.

              This looks like an above average project, should be close to payout, or maybe just has? Would be interesting to see payout statements. Of course, Henry is private, but as I have complained ad nasuem, we never see that from the public companies.

              • Glenn E Stehle says:

                shallow sand,

                I tried looking at the lease plats attached to the W-1s to try to get some clarification, but they aren’t much help.

                The only thing they show is that the lease lines for the Denise lease have changed over the past couple of years, so there is definitely some dealing going on between Henry Resources and Chevron. But like you say, we don’t know the nature of those deals are.

              • Glenn E Stehle says:

                Speaking of Henry Resources and Jim Henry, here’s a very interesting article on him.

                Even though he strove to keep his family-owned oil company small, he’s nonetheless a legendary west Texas oilman, godfather of the Wolfberry play, and, believe it or not, he drives a Tesla.

                Oil legend Jim Henry and the Fathers of the Wolfberry

  38. Glenn E Stehle says:

    Trump to promote U.S. natgas exports in Russia’s backyard

    President Donald Trump will use fast-growing supplies of U.S. natural gas as a political tool when he meets in Warsaw on Thursday with leaders of a dozen countries that are captive to Russia for their energy needs.

    In recent years, Moscow has cut off gas shipments during pricing disputes with neighboring countries in winter months. Exports from the United States would help reduce their dependence on Russia….

    Trump will attend the “Three Seas” summit – so named because several of its members surround the Adriatic, Baltic and Black Seas….

    Among the aims of the Three Seas project is to expand regional energy infrastructure, including LNG import terminals and gas pipelines. Members of the initiative include Poland, Austria, Hungary and Russia’s neighbors Latvia and Estonia.

    Trump’s presence will give the project a lift, said James Jones, a former NATO Supreme Allied Commander.

    Increased U.S. gas exports to the region would help weaken the impact of Russia using energy as a weapon or bargaining chip, said Jones.

    “I think the United States can show itself as a benevolent country by exporting energy and by helping countries that don’t have adequate supplies become more self-sufficient and less dependent and less threatened,” he said….

    “It undermines the strategies of Putin and other strong men who are trying to use the light switch as an element of strategic offense,” said Senator Cory Gardner, a Republican from Colorado who is on the Senate Foreign Relations Committee….

    “In many ways, the LNG exports by the U.S. is the most threatening U.S. policy to Russia,” said Michal Baranowski, director of the Warsaw office of think-tank the German Marshall Fund….

    The U.S. is expected to become the world’s third-largest exporter of LNG in 2020, just four years after starting up its first export terminal….

    Europeans will be watching to see whether Trump clarifies his administration’s position on a new pipeline to pump Russian gas to Germany, known as Nord Stream 2….

    The U.S. State Department has lobbied against the pipeline as a potential supply chokepoint that would make Europe more vulnerable to disruptions….

    Germany’s government supports the pipeline, and Trump’s position on it is a concern for European diplomats.

    • Watcher says:

      This is reporters who understand nothing making 2 phone calls to people with agenda.

      1) LNG costs far more than piped gas

      2) GAZPROM sends piped gas to Europe. “Europe” is not all of Europe. The far western Europe countries don’t get much GAZPROM gas. They get LNG, from Qatar.

      3) So if there’s an imagined competition involving natgas, it’s not with GAZPROM. It’s with other LNG exporters, none of whom cannot compete with pipelined GAZPROM gas.

      4) Some political action might be taken to change the playing field with GAZPROM, but they will not be defeated competitively. Countries can forbid buying GAZPROM gas, but that’s about the only way US LNG has any chance to gain market share. They will fail in any capitalistic competition because LNG has no chance vs pipeline.

      • Eulenspiegel says:


        Gazprom piped gas is not that cheap- in fact it was much more expensive than US gas most of the time. The arrival of this new competition makes it much more affordable.

        Most times its price was coupled directly to oil price – so when oil took its moon shot to 140$ – you get it.

        • Glenn E Stehle says:


          The best thing for Germany would be to have the option to buy gas from both the US and Russia. Let them fight it out for Germany’s patronage. This seems to be what Merkel is striving for.

          However, the US senate plays by the same rules Putin does, and wants to do what it can to eliminate Russian gas (the compeition) from the market (by political means and state intervention).

          I guess I should be all for what the senate is doing, but it strikes me as unseemly and too transparently self-serving. Plus all this anti-Russia stuff is just too much, and dangerous.


          Germany and Austria called on the US to stay out of European energy matters after the US Senate proposed new sanctions against investors in Russian energy pipelines. In this video, Stuart Elliott looks at how the controversy around Nord Stream 2 has moved to a new, unprecedented level, and how the natural gas pipeline is likely to be built regardless of interference from Washington.

          Taking A Deeper Look Inside The Senate’s New Anti-Russia Bill

          The new Senate sanctions bill on Russia backs president Donald Trump into a corner: either side with Republican legislators, or Vladimir Putin. That will be the story line weaved in the congress and the political press, making it that much harder for Trump to realize his hopes of improving relations with Russia in the fight against jihadis….

          On the practical side, it gives American shale oil producers some protection as it seeks to corral Russian energy companies worldwide instead of just in Russia, and fine companies for doing certain types of business with them….

          Secretary of State Rex Tillerson said the president would veto the bill….

          Trump has been damaged on Russia, giving Putin-hating lawmakers a chance for a first strike in hopes to contain the Kremlin like old times….

          [F]or the majority of Americans, Trump and Russia together are now simply a bad idea. For nearly all of congress, Putin is Public Enemy No. 1.

          Russian sanctions bill No. 232, sponsored by Republicans Mitch McConnell and Mike Crapo, goes farther than the previous sanctions as it also gives the U.S. Treasury the right to go after European companies doing business with Gazprom on the proposed Nord Stream II pipeline into Germany.

          • Eulenspiegel says:

            Yes Glenn,

            This is dangerous. Russia delivered already gas to Germany when they where still the Sowjet Union, despite all political differences. And now there is this trouble, like a new bully on the school yard.

            Expensive is one thing – but being reliable is another. And the USA is still no netto exporter for natgas, so getting dependend from this isn’t really an option. Merkel knows this, I think.

            Still it’s a good thing – at least nat gas seems to be more abundant frackable in the USA, so there will be a shift to more export in the future.

            A new source will come handy – the netherlands gas fields are running dry, and north sea gas is past peak, too. Gas fracking hasn’t worked in Europe, too – with the current the rock isn’t suitable.

            • Ves says:

              Glenn, Eulen
              Both of you are not reading this correctly. This is not about the natural gas per se. This is about bondage. Gas is there and it is piped, and it is piped for 70 years. So, gas is not a problem.

              Geopolitical problem for US is that you can not split EuroAsia in two without splitting established energy connection. If LNG can compete with piped gas then why do you need threat of sanctions?
              Life sometimes has its own ways because it is the same Germany and Austria (under EU banner) that put sanctions (excluding import of gas) on Russia in 2014 that are now under the threat of sanctions by US senate.

              It will be fireworks when all of them meet in Hamburg on Friday.

            • Glenn E Stehle says:


              Another article in the Mexican press on the subject, but in Spanish. It sets out in detail how senate bill S722 is so economically rounious for Russia.

              Rusia y Estados Unidos: la nueva guerra fría

              I’ve translated the last paragraph to English:

              The sanctions Washington wants to impose on Russia are linked to its goals in Ukraine, Syria and its drive to control the world energy market. Trump may be more interested in the projects of his companies and those of his friends (like Tillerson, his Secretary of State). But the priorities of empires are often more important than those of the current emperor. The sanctions imposed on Russia constitute a hostile act. Many wars have begun with this type of measures.

  39. Pingback: MEXICO Oil Reserves and Production –

  40. Energy News says:

    Crude oil stored in tankers…
    Singapore + Malaysia Sungai Linggi + Iran floating + USA anchorages (units: million barrels)
    From the free tanker tracking website
    They’ve started to cover the U.K. but still not the U.A.E. or the Caribbean

  41. Cliffhanger says:

    Simple really….when the world economy collapses everything shuts down…the end….were talking about grids down all over the world and 7.5B people dropping like f*** flies in short order…the collapse will be absolutely horrible..There is no collapse or horror movie ever produced that has even come close to imagining what the collapse of BAU might look like… I’m talking about every corporation and every social program going bankrupt at once. I’m talking about people eating people. I’m talking about the worst catastrophe to ever happen in the history of mankind. Nothing has ever, or will ever come close.

    (Meadows 1972) (Ehrlich 2013) (Motesharrei 2012) (Jefferson 2015) (Ebrahimi 2015)
    (Chapman,I 2013) (Korowicz 2012) (Tainter 1990) (Diamond 2006) (Ahmed 2017)

    • Watcher says:

      No such thing. Post 2008 central banks have discovered they can create money cooperatively as systemic defense. Money scarcity will never kill 7 billion people because money scarcity can be undone on a whim. So forget that scenario. No mass deaths come financially.

      They come from oil scarcity. Soon.

  42. Hightrekker says:

    Sinking values: Oil companies have spent three years slashing spending and firing workers to protect profits, only to find their hard work blown away as prices entered another bear market. The MSCI World Energy Sector Index is heading for a second consecutive quarter of declines, mirroring the drop in crude. The 90 companies that make up the index, including giants like Exxon Mobil and Royal Dutch Shell, have together lost $115 billion in market value since the start of April. (7/1)

  43. Boomer II says:

    I follow the daily oil price a

    • Boomer II says:

      Didn’t mean to post that half finished.

      I’m wondering if we will hit a plateau where when production goes up a little, the price comes down. And when production comes down a little, the price goes up. And if this plateau extends out for a significant period of time, this becomes our peak oil because there won’t be quite enough money to increase production and demand alone won’t be enough to boost prices.

      • Dennis Coyne says:


        That could happen for a few years perhaps, but the lack of investment since 2014 (aside from LTO) will start o bite by 2018 or 2019 without higher oil prices. There is quite a lag between a rise in oil prices and these larger projects start of first output (3 to 7 years I believe). So unless LTO can fill this gap along with OPEC, there may be a spike in oil prices.

  44. Energy News says:

    Alberta’s April production numbers, there was an outage at Syncrude’s Mildred Lake plant and planned maintenance at Suncor Energy’s Firebag.

  45. Cliffhanger says:

    They need some massive distraction soon or they will be losing their heads literally. They know that. That is why the war insanity is coming to the surface and is so blatant. Desperation.I don’t see the world surviving the coming war. The insane U$ Jew powers that be are trying so hard (Russia, China, Iran, North Korea), I think they will get desperate and push the button, if they don’t cause Russia to push it firs, which I expect. This is one time I hope I am wrong but all signs point to it happening in the near future. And note the time difference Russia’s day is our night. Sleep well in your beds tonight America, the MIC has your back. LMAO

  46. Cliffhanger says:

    Don’t you get it? Climate change was just pushed by the authorities as an excuse to get funding and public support for renewables cause of upcoming peak oil,coal, and gas.. And they couldn’t have just announced peak oil,coal, and gas was coming to the world because the sheep would go insane. And they failed because renewables don’t really work and they are to expensive. But soon CO2 pollution will go into terminal decline. And the earth will naturally recover and be perfectly fine. I Wish I could say the same thing about humans.

    • George Kaplan says:

      Define “soon” and define “terminal decline”. The net increase in CO2 stays in the atmosphere for hundreds to thousands of years. It takes thousands of years to equilibrate the air with the oceans and tens of thousands to convert it into carbonate rock. The number of steps involved in removing the CO2 is mind boggling, I seem to remember the rate is limited at some point by ocean calcium concentration (i.e. it pretty much stays the same no matter how much CO2 there is).

      As for the conspiracy theory – how come if the pollutions can come up with these long term, convoluted plans , and keep them hidden from the press, they are such crap at doing everything else (including hiding any kind of sexual shenanigans for moe than about five minutes)? Do you believe in a NASA Mars colony with child slaves as well?

    • Watcher says:

      So turns out wackoism arrives.

      Why would Russia start a war when they have the oil the world must have and can gently begin to price it in behavior rather than whimsically created money? When you’re winning, why blow up the arena?

      Climate change is zero important. When food has to get planted, and it does, the tractors will burn diesel regardless of any enviro regs.

      • Eulenspiegel says:

        That’s why the asian region wants to leave fossil energy, by either green energy or Uran / Thorium / fusion. Doesn’t matter.

        But they know there isn’t enough oil capacity to sustain asian growth, and they don’t want to enter the big game of thrones in the gulf. Since they don’t have the big reserves – they begin a new game.

        Imagine developing Africa – you’ll need an additional 20 MB/day oil for this, too. Even with fracking like mad the capacity isn’t there, not with Asian growing the same time.

  47. George Kaplan says:

    This is a pretty good article on the decline in oil sands investment. It’s from a climate change perspective, but could be looked at just from oil investment and coming supply crunch.

    It’s based on this piece, which is more from the oil side, specifically related to Alberta and Canada businesses rather than overall supply.

    Economic and political conditions unlikely to favor major re-injection of capital: It’s clear that production will continue to grow while the remaining under-construction projects are completed through 2020, and their production ramps up through 2025. For production to grow beyond that which is already committed, oil prices will need to rise substantially beyond current expectations. While costs have been cut from the highs of the pre-2015 boom, there remains a signi cant way to go before any projects can justify approval to move forward.

    The chart from Rystad data below is about as dramatic an indication of boom and bust as you can get.

    • Watcher says:

      Suncor is the big Kahuna of oilsands and they expect more production this year with less spending. It’s not like shale, they don’t face decline rates they must drill to offset. Their upgrader total won’t be added to any time soon, but what is flowing will continue depending on maintenance.

      • George Kaplan says:

        They’ve got Fort Hills (160 kbpd) coming on line this year – the last of the big ones started in the boom years. It’s at the end of it’s development cycle so capital cost will be well down. This week they promised investors that they wouldn’t invest any more in Tar Sands “for the foreseeable future”. And they’ve bought into Rosebank in the North Sea, which is a pretty difficult project, but one of the few remaining stand alone ones there, but is going through another Feed at the moment to see if it can be made profitable (I think using an existing FPSO, and maybe a relatively low throughput, but I’m not certain).

        If you look at the article it has oil sands production declining in starting maybe 2024, and even to maintain that requires a lot of money. . Canada conventional oil has been in decline for several years, so overall they will be coming to a new (maybe local only) peak in 2018 or 2019. It is going to be almost impossible to get projects online to stop that peak now. They’ve got lots of shale gas though

        • Watcher says:

          Nod. Suncor has always had a particular quality to it, namely, unlike XOM or CVX, they have actual reserves in big numbers. If you have to have it, and you do, Suncor can provide it.

          One annoying thing — Suncor until recently provided weekly production on the front page of their site. They stopped that when fires started. Pity. They used to be the only ones who made a real issue of transparency.

  48. Boomer II says:

    Oil prices down again. I just don’t see how Trump’s plan to encourage drilling everywhere can be good for current producers.

  49. Watcher says:

    Hyped story on CNBC today:

    “Look out Tesla, another car maker has announced their entire fleet will be electric by 2019! More in a moment after this message from our sponsors.”

    “Volvo announced today that they will make only electric cars by 2019. This is huge.”

    “Is it? I made some phone calls. What they mean is they will have electric motors in all cars by 2020. All of them. And all of them will also have gasoline or diesel engines in them. They will all be hybrids.”


  50. Dennis Coyne says:

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