The North Dakota Oil Production Stats are out. North Dakota crude oil production was down just less than 10,000 barrels per day.
Bakken crude oil production was down 7,743 bpd in March while all North Dakota production was down 9,846 barrels per day.
From the Director’s Cut:
Producing Wells
February 13,017
March 13,024 (preliminary) (all-time high was Oct 2015 13,190)
Permitting
February 70 drilling and 1 seismic
March 56 drilling and 4 seismic
April 66 drilling and 0 seismic (all time high was 370 in 10/2012)
ND Sweet Crude Price
February $18.07/barrel
March $26.62/barrel
April $26.87/barrel
Today $33.00/barrel (all-time high was $136.29 7/3/2008)
Rig Count
February 40
March 32
April 29
Today’s rig count is 27 (lowest since July 2005 when it was 27)(all-time high was 218 on 5/29/2012)
Comments:
The drilling rig count fell 8 from February to March, 3 from March to April, and 2 more from April to today. Operators remain committed to running the minimum number of rigs while oil prices remain below $60/barrel WTI. The number of well completions fell from 64(final) in February to 59(preliminary) in March. Oil price weakness is the primary reason for the slow-down and is now anticipated to last into at least the third quarter of this year and perhaps into the second quarter of 2017. There were no significant precipitation events, 4 days with wind speeds in excess of 35 mph (too high for completion work), and no days with temperatures below -10F.
Over 98% of drilling now targets the Bakken and Three Forks formations.
Estimated wells waiting on completion services is 920, up 13 from the end of February to the end of March. Estimated inactive well count is 1,523, up 84 from the end of February to the end of March.
Looking at the longer term chart we can see that the increase in production beginning in around 2011 was very steep while the decline has been less dramatic.
North Dakota change in barrels per day, 12 month trailing average, actually went negative in September of 2015. It is unlikely to go positive for at least two years, if it ever does again.
Bakken barrels per day per well now stands at 101 barrels for the Bakken an 87 for North Dakota.
North Dakota Wells Producing has plateaued. North Dakota wells producing in March was actually 83 wells less than it was in October 2015. Of course new wells are added each month but old wells are shut down.
I will just point out that the March also had record gas production, as per the directors cut, even with 10,000 bopd decrease. Continuing the increase in GOR!
The cause?
Choke? or just drilling gassier formations?
Time will tell.
Gas Production
February 48,987,408 MCF = 1,689,221 MCF/day
March 53,002,954 MCF = 1,709,773 MCF/day (preliminary)(NEW all-time high)
Ron. Thank you for continuing to post this data.
Toolpush. Looks like new EPA methane rules require operators to monitor for leaks around wells, tanks, etc twice per year, regardless of volume. High volume/pressure areas, such as compressors, will require four times.
There are rules for drilling and completions. They refer to them as “green completions”.
I suppose the monitoring will cost so much per well, tank etc. I suppose that if wells, tanks, etc are not in compliance, they will need to be or plugged, removed, etc.
The way the EPA release reads, we are going to have to complete surveys on all our wells, and rules regarding existing wells will not be finalized by the Obama Administration, but by his successor’s admin.
Can’t this just be done with sensors as a part of the well’s equipment and be monitored 24/7 as a matter of course?
Paulo. I suppose so. The issue is the cost versus the benefit.
There are over one million active oil and gas wells in the United States. Most have been operated at or near a loss for quite some time.
I presume the majority of these wells release little to no methane individually. As a group, the environmentalists argue, they release a lot and therefore all need to be regulated.
I note that municipal gas distribution systems are exempt from these rules, even though they emit several times more methane, overall, than do upstream operations.
For example, what do you think about each household having to monitor methane emissions 24-7? All households emit a small amount of methane, so therefore should that also be an EPA rule?
I suppose if the cost is too excessive, wells will be plugged.
Just something that will have to be dealt with, and will depend greatly on future oil and gas prices. Wonder how other countries regulate upstream methane emissions?
Shallow
This is the breakdown from 2014. Waiting on the regulations to monitor the other 66% of emissions.
https://www3.epa.gov/climatechange/ghgemissions/gases/ch4.html
In 2014, CH4 accounted for about 10.6% of all U.S. greenhouse gas emissions from human activities…Pound for pound, the comparative impact of CH4 on climate change is more than 25 times greater than CO2 over a 100-year period.
So, 25 times multipled by 10.6% gives about 2.7. That suggests that methane is 2.7 times more important than CO2.
Is that right?
Nick, that is only for US emissions. Globally CH4 has about 1/3 radiative forcing effect of CO2 at the present time. As far as US emissions go, the greenhouse effect of added methane is 2.7 times higher than US added CO2 (much higher over the short term though). But there are much broader ramifications for methane.
Molecule for molecule, methane is at least 20 times stronger greenhouse gas than carbon dioxide, due mostly to the fact that it is dilute and not saturated like CO2. Luckily the absorption band of methane is at 1300 cycles/cm where the earth and atmosphere emit less energy. Unluckily, methane concentration is doubling at a faster rate than CO2. Also unluckily, there is a vaster amount of available methane to can released into the atmosphere than there is CO2 sources. Most of these sources are natural and are temperature sensitive. So raising the temperature is decidedly a very risky venture.
Also keep in mind that the released methane converts to CO2 so the warming does not end with the oxidation of methane.
So basically what methane does is give a very strong greenhouse effect per concentration and then also produces a smaller long term effect from the CO2 it becomes.
Hi NickG,
No CO2 is more important because it persists in the atmosphere for much longer than methane. Problems don’t stop after 100 years, we need to think long term. The focus should be on CO2. See Methane at Real Climate to get the perspective of experts.
Hmmm.
On the other hand, we certainly need to have some kind of time discount: the economy grows, labor productivity grows, technology advances, costs fall.
I wonder how things would look if we assumed that GHG emissions fall to zero in, say, 75 years, than go negative after that?
That would be an interesting model…
Hi Nick,
It is difficult to get GHG emissions very far negative. Lower population may help with land use change and perhaps some low energy process to remove co2 will be developed.
If we assume (realistically) that GHG goes no lower than zero. CO2 remains in the atmosphere for 1000s of years, about half of emissions get removed quickly, the next 40% persists for 10,000 years or more.
This is the reason carbon dioxide is the key greenhouse gas. Water vapor is also important, but this is largely determined by temperature.
Nick, in an ideal world we might get our CO2 output down to a low level, say 10 to 20 percent in 50 to 75 years.
With a growing population, even that is doubtful as coal and natural gas take over from oil. But still possible.
As far as methane output goes, industrial output is only about 1/3 of the amount going into the atmosphere. The rest is from agriculture and natural sources.
Natural sources are on the increase, as will be agricultural sources due to increasing population. So I do not see a decrease in future atmospheric methane with a significant likelihood it will continue to increase even after we get control of fossil fuel outputs.
We need to eat more pork and less beef. Rice is also a huge emitter. The highest methane concentrations are found over India and China.
Dennis,
Why do you think that methane concentrations will go down with time, I see no evidence of that? Methane concentrations are rising, doubling faster than CO2, not falling. Residence time is not a factor as long as the source input is greater than the disassociation rate.
Hi Gone fishing,
I believe it will be determined by natural gas output (which will peak and decline) and by population (which will also peak and decline).
Read David Archer at real climate, I find his arguments convincing, methane is not likely to be a problem.
http://www.realclimate.org/index.php/archives/2014/09/the-story-of-methane-in-our-climate-in-five-pie-charts/
and
http://www.realclimate.org/index.php/archives/2014/08/how-much-methane-came-out-of-that-hole-in-siberia/
The issue isnt really monitoring emissions, this can be done for $100 per site.
The issue is what to do about emissions we know happen. For example, in many jurisdictions we can use natural gas as instrument air. The system releases methane. In some jurisdictions we are regulated and use instrument air.
In some jurisdictions we can put produced water in a tank which releases vapors to the atmosphere, and this water can have dissolved methane. The same applies to condensate tanks, which can be allowed to release gas via the relief valve. In very large facilities we pick up gas and compress it, put it back in the system. But I’ve seen some which allow straight release.
Then there’s the gas we vent from casing annulus. I always give orders to keep the annulus closed, but some operators allow it to vent to help the pump and avoid gas lock.
I could go on naming problem areas I’ve solved simply by spending money or issuing instructions to field managers. Which they like to ignore.
$100 per site per how often? Monthly?
I do note that the rule exempts wells that produce under 300 scf of gas per stock tank barrel.
That may very well exempt quite a few stripped wells and would put the non-gassy ones at a competitive advantage.
It appears to be exempt an operator will need to obtain a certification for each well. That will be a time consuming process, but if it is a one time thing, maybe will not be too bad.
What would be the easiest way to measure gas for wells where there are no gas is not marketed and there are no gas gathering lines.
Continuous monitoring. We can send you a reading every 20 seconds if you have a hard Internet line. Or we send you the signal via a phone card. I have a project for a methane sensor for high school students. The site needs electric power. Thus far the component costs are about $40, but we are building a pilot in a wooden box.
Tool push, the depletion process leads to increasing gas to oil ratio. As pressure drops in the reservoir the reservoir fluid releases gas in increasing amounts (think of it as if it were boiling off as you release pressure in a pressure cooker). The released gas tends to flow easier (has less viscosity), the oil that’s left in the reservoir flows less because it suffers from increased viscosity as it releases gas.
This is a very simple outline of what goes on. The bottom line is that GOR will simply keep increasing, which makes the wells on pump harder to lift. Beyond 1200 GOR or so it’s a real problem.
Fernando,
So do you think the increasing GOR can all be attributed to decreasing pressure due to natural decline? Or do you feel the rate of decreasing pressure is being helped along by cracking open the choke a little bit further than is prudent?
Hi Toolpush,
I know so little about the actual day to day operation of oil wells that you could write it all on a postage stamp with a four inch paint brush, lol.
But it is written in stone that business men in a bad bind for cash invariably do whatever they can to put their hands on that cash, short of robbery, and robbery is pretty damned common.
Survival in the short term trumps all long term considerations whatsoever in the business world.
I have “been there and done that, got the tee shirt” myself a few times, doing altogether the wrong thing from the long term pov in order to survive in the short term.
If cracking the choke a little too far will generate enough additional cash to keep the doors open another week, another month, you can bet your ass and your last can of beans that the choke WILL be cracked.
I am under the impression you are a conventional oil guy, rather than a tight oil guy, but you can tell us something anyway, at least about conventional wells.
How much extra oil could can you get out of a well SHORT TERM by opening up on the choke? I know a precise answer is impossible, but a couple of examples at the high end an the low end will throw some light.
OFM,
I am a great believer in human nature, and realize, as you do, that once people are backed into a corner, normal behavour goes out the window. So getting back to choke and oil production, my gut feeling is that some operators at least, will be running the well for short gain, rather than long term benefits.
Now I am just trying to find the evidence to prove my suspicions. What I am looking for is the newer wells dropping below the older on cumulative production. So time will tell.
As for my back ground. I have always worked offshore, international, and therefore no shale experience. I am also on the drilling side of things. Our intention is the keep the oil below ground. We let other people bring it to surface, though I do get to mix with the production boys at times.
Mostly depletion. Evidently if you lower bottom hole pressure by opening up a choke you can deplete the near well region a bit harder, which increases gas to oil ratio. I’m just going by book learning, I’ve never babysat a newish well with such poor quality rock. I’ve had a couple of really old wells producing from lousy carbonates, but those were put on a clock.
Hi Fernando
What are the units for 1200 GOR?
Cubic feet of gas at standard conditions per barrel of stock tank oil.
So 1.2 MCF/bo is a problem? For all of TX the average GOR is over 2 MCF/bo.
Comparing apples to a fruit stand.
Hi Reno,
My point is simply that currently North Dakota is at about 1500 cubic feet natural gas per barrel of oil produced.
Fernando says this is a problem, I think.
Not sure if it is or isn’t. Increasing gor in an oil reservoir is not good. But I thought you were inferring that Texas was in worse shape. My point was you can’t make that assumption. My only point
I thought maybe the units should be thousands of cubic feet of natural gas per barrel of oil because both Texas and North Dakota are over 1200 cf/bo GOR.
It’s a problem for two reasons: the reservoir loses pressure faster when GOR increases, and , if the well is on pump, the pump efficiency suffers.
If a well makes little water the higher GOR allows it to keep flowing, so that’s lower opex. If it makes 50 % water then as bottom hole pressure drops you got to install a pump or use gas lift. Gas lift is more efficient when GOR is high. But gas lift requires compressors and a surface network.
This is too complex to describe here, but in general a higher GOR, like a higher water cut, can be considered a negative factor. This is more so if gas prices are very low. At $7 per mcf it’s less of a problem.
Hi Fernando,
So the problem is that artificial lift is needed as GOR increases beyond some value (roughly in the ballpark of 1200 cf/b, no doubt this varies depending on water produced, geology, and many other factors I am unaware of). I would think that most wells eventually need artificial lift as they deplete so this is not so much of a “problem”, just the natural course of oil production.
Completion technology gets you more gas (and oil) in the short term. In the longer term geology plays a far more important role on single well life of field economics than completion technology.
0-12 month production is a combination of reservoir and fracture dominated flow. Increases in mean rates are mainly related to advances in completion technology (longer horizontals, > number of stages, reduced spacing between stages, improved proppant technology).
After 12 months, liquid production is reservoir dominated. Decline curves converge to +/- 5 bopd. Geology is the main controlling factor. From 2008 to 2015, the following increases have been observed;
197% increase in 90 day gas only production
46% increase in 90 day oil and gas production
27% increase in 90 day oil only production
10% increase in 90 day income
Extrapolating the 2008 to 2015 curves to 20 years of production, the following changes have been estimated;
6% increase in 20 year income
Break Even oil price lowered from $64 to $60
Conclusion: Completion technology gets you more gas (and oil) in the short term. In the longer term geology plays a far more important role on single well life of field economics than completion technology.
Great comment Ciaran, thanks.
https://www.dmr.nd.gov/oilgas/stats/statisticsvw.asp
6.3% production decline year over year with 1,000+ additional wells
March 2014 to March 2015 production up about 23%
A slow decline in production with 1,000+ wells over the 12 months is to be expected, right?
“Bakken crude oil production was down 7,743,000 bpd in March while all North Dakota production was down 9,846,000 barrels per day.” Extra zeros?
Thanks Greenbub,
Corrected. Should have been 7,743 bpd and 9846 bpd.
A first sight an over 6% year over year decline does not sound very spectacular.
However, in my view it is the dynamics which counts. Since the latest 18 months Bakken production declined at a monthly rate of roughly 2% (see below chart). Should this hold, production will be down by 30% by the end of 2016 (blue arrow in below chart).
We currently see it roughly 30% from the peak of Dec14 by Dec16.
gwalke,
This seems to me a good estimate.
When comparing the 2008/2009 cycle with the current 2014/2018 cycle (see below chart), the 2008/2009 cycle has been quick and dirty, in contrast with the current cycle which is double in length or about 4 years.
The green line is the change in oil price, which leads the red drilling cycle by around 6 months, which in turn leads the blue production cycle by 18 months. As the current cycle is much steeper and longer, the oil price has seen already its through, yet drilling is just about to turn around.
Production will very likely turn around 18 months after drilling has recovered, which is likely not happening before end of this year. So, production cannot recover before two years. This is a lot of time for production declines.
Hi Heinrich,
There is not an 18 month lag between when the well drilling starts and completion unless the DUC inventory is high.
A more likely scenario is that the DUCs will be completed and this will moderate the decline. Then because the DUC inventory has been reduced the lag between the start of drilling and completion of the well will also be reduced, probably to about 6 months so once the rigs get working again the limitation will be the number of fracking crews, we know there is enough equipment to complete wells at a very fast rate, finding workers and training new crews will be the only limitation. I will let the oil pros comment on how quickly crews can be gotten up to speed to resume the pre-crash rate of drilling, my guess would be 24 months at most.
Of course only half that rate or maybe even only one third that rate is needed to stop the decline, but ramping up will require more rigs and more fracking crews.
Dennis,
History tells there is a lag of about 18 months. There are maybe more DUC wells, yet the timing for a restart of drilling is difficult as companies do not know how sustainable any price recovery will be and the start of the recovery will be very tepid.
In addition, the above chart represents total US oil production including Gulf of Mexico (GOM) production. It is especially GOM production which will recover very slowly and will depress the average time of a production recovery.
The recovery will also depend on how long prices will be depressed. In my view Saudi Arabia and also Russia will try to keep prices below USD 50 per barrel as long as possible in order to gain as much market share as possible before prices will go up again.
“It is especially GOM production which will recover very slowly and will depress the average time of a production recovery.”
GoM production continues to increase despite the drop in oil prices
GoM oil production
Source: EIA STEO, May 2016
AlexS,
I do not share your optimism about GOM production.
Roger Blanchard has an excellent article about the same subject and he is pessimistic for GOM production as well:
http://www.resilience.org/stories/2012-02-17/how-reliable-are-us-department-energy-oil-production-forecasts
Heinrich Leopold,
It’s not my optimism. It’s the EIA’s forecast based on oil companies’ project portfolio. These projects were started at times of expensive oil, are now at final stages of development and will not be canceled.
Low oil prices did not affect oil production volumes in the GoM in 2008-09 and 2015-17E, although longer-term prospects may be affected as new projects may be postponed.
Declines in the GoM output in the past several years were due to the accident with BP’s Deepwater Horizon platform (2010) and a temporary moratorium on drilling.
There were also temporary shutdowns of production facilities due to hurricanes Katrina (2005) and Gustav (2008).
Oil production in the GoM, 2005-16 (kb/d)
AlexS,
In above chart about GOM production, you can see that GOM production still grew after the oil price crash in 2008 until 2009. After the peak in 2009 GOM production crashed nearly 700 000 b/d until 2011.
Despite the oil price recovery in 2009, GOM production could not grow again until 2013.
I can therefore see the same scenario for the period 2014-2018: GOM production has peaked in spring 2016 and is set to fall close to 1 mill b/d over the next two years. Any GOM recovery will not happen before 2018 – if any recovery will happen at all. The GOM basin is a very mature play – like the North Sea and will possibly see a terminal decline, especially in the light of new deepwater regulations.
Heinrich Leopold,
Did you read my post above?
If not, I repeat:
Declines in the GoM output in 2010-11 were due to the accident with BP’s Deepwater Horizon platform and a temporary moratorium on drilling.
GOM production has NOT peaked in spring 2016, as several new projects are due on stream in 2016-17 and project started in 2015 are ramping up output.
“In the midst of the downturn, the deepwater GOM perversely continues in a production boom. After falling every year since 2003, Gulf production was 1.4 MMbopd in 2014, and is expected to average 1.61 MMbopd in 2016 and 1.79 MMbopd in 2017, reaching 1.91 MMbopd in December 2017. That will account for about 21% of total, forecast, U.S. crude oil production, according to the Energy Information Administration (EIA).
Contributing to the EIA’s forecasted production growth are 14 deepwater projects: nine that started in 2015, four starting in 2016, and one anticipated to start in 2017. Last year’s additions were Silvertip, Deimos South and West Boreas (Shell); Hadrian South (Exxon Mobil); Lucius (Anadarko); Big Bend and Dantzler (Noble Energy); and Marmlard (LLOG Exploration). EIA had expected LLOG Exploration’s Son of Bluto 2 field to come online in 2017, but the subsea tieback began producing to Delta House in April 2015.
Start-ups this year include Anadarko’s Heidelberg field, which began producing in January. Heidelberg is a truss spar, aimed at reducing development costs. Shell’s Stones field development, which is also due this year, uses the second floating production, storage and offloading (FPSO) vessel in the GOM. The first GOM FPSO was installed by Petrobras and put online in 2012. The other two fields starting production in 2016 are subsea tiebacks—Noble Energy’s Gunflint, and Freeport-McMoRan’s Holstein Deep.
Production from other Delta House tiebacks has been ramping up steadily. Freeport-McMoRan’s (FM O&G) Horn Mountain Deep well, which will be tied back to existing facilities, is expected to begin production during first-half 2017.”
http://www.worldoil.com/magazine/2016/april-2016/features/regional-report-gulf-of-mexico
AlexS,
Sorry for my late answer, I am not checking the site every day.
From above picture I can see that the big chunk of production increase comes from existing fields and not new fields. This is very unlikely to happen. We know by next year what will happen.
Heinrich, the 2015 projects are still ramping up which explains a lot of the increase. The problem will come in 2018 and later when there is a big drop in new projects and deep water projects installed over the last few years come off of their short plateaus.
According to the EIA, before the oil price drop, the average lag between the start of the drilling and well completion in the Bakken was between 4 and 5 months.
AlexS,
Agree with the shale time lag. Yet my chart above is for total US oil production including GOM production. I can actually not say why this time lag exists, yet the numbers tell me there is a time lag of up to 18 months for total US production.
I have made also a chart for the time lag of GOM production and this chart shows a much higher time lag than 18 months for US GOM production. It has been not earlier than 2013 when GOM production recovered from the 2008 oil price crash, which is at least 2 years later than US average production recovery in 2011.
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFP3FM2&f=M
So, this adds up for an average 18 months time lag for US production.
What makes me very pessimistic on US oil production is also the hostile attitude of the US government against its own O&G industry.
http://oilpro.com/post/24429/white-house-issues-final-methane-rules-kicking-og-while-down
Maybe anti-O&G but pro-human? pro-planet? pro-our-grandchildren?
Or pro reserves?
Most people would say that it is good for a country to have large oil reserves. Encouraging companies to pump oil reduces reserves.
Assuming, for the sake of argument, that peak oil is a real thing, a rational government should discourage oil production until the world starts running seriously short of the stuff.
A broken US O&G industry will break also the US economy. How does it feel to be broken and healthy? We will find out soon.
A broken US O&G industry will break also the US economy.
Somebody should have told the “Drill baby, drill!” crowd, “Be careful what you wish for!”
Heinrich Leopold,
What 18-month time lag are you talking about?
Oil prices peaked and started to decline in June 2014. The U.S. oil rig count peaked and started to decline in October 2014 (4-month lag). U.S. Lower 48 states oil production peaked in March 2015 (5-month lag) and total U.S. oil production in April 2015 (6-month lag).
So combined time lag between the peak in prices and peak in production was 9-10 months.
Hi Gwalke,
Thanks. It all depends on the assumptions for wells added in 2016 and your well profile.
Currently my model underestimates actual output by 53 kb/d, but without adjusting the model the output would be 918 kb/d in Dec 2016 or about a 23% decline from actual output in Dec 2014 to the model result in Dec 2016. The “model” peak was in April 2015 at 1158 kb/d, pretty close in magnitude to the actual peak in Dec 2014 (1163 kb/d).
The data from Enno Peters shows 64 well completions in North Dakota in March 2016 (I simply assume all of these are Bakken completions), the model assumes 60 wells per month are completed from May 2016 to Dec 2017, and 62 well completions are assumed in April 2016. Output falls to 886 kb/d in Dec 2017. Chart below.
If we assume that oil prices eventually rise above $80/b in mid 2018 and that the well completion rate rises from 60 per month in June 2018 to 165 completions per month in June 2020, then remains at 165/month until June 2024 and then gradually declines to zero by Nov 2027 we get the scenario below. ERR is 8.5 Gb, about 26,000 total wells are drilled (about 15,000 wells after March 2016) and peak output is 1262 kb/d in Jan 2024. This assumes new well EUR begins to decrease in June 2018 and reaches a maximum annual rate of decrease of 8% 12 months later. EUR decrease is not the same as well decline, it means well productivity decreases as sweet spots become saturated with wells. We do not know when this will start or what the rate of decrease will be, I have guessed at the start date and rate of decrease so that 40,000 wells drilled would be close to the USGS URR estimate from April 2013.
The model is of course likely to be wrong as there are many assumptions, all of which could be wrong.
Hi all,
I updated my model for the well profile from July 2015 to March 2016 using the latest data from Enno Peters (March 2016). The well profile for those months shifted higher, I do not know why. The model now gives a result of 1046 kb/d in March 2016 (1% too low), the model peak in April 2015 is 2.5% higher than the near term peak in March 2015. The scenario below, has 50 wells per month from June 2015 to Dec 2018.
I got that wrong on the near term peak for the ND Bakken/TF, it was June 2015 at 1153 kb/d, the model peak was 2 months earlier in April 2015 at 1158 kb/d, the timing was off a bit and the magnitude was too high by 0.4%. In any case the model is far from perfect, but does a pretty good job considering its simplicity. It is basically well profile multiplied by number of new wells and then add it all up.
The scenario above assumes that the well profile determined from well data for wells starting production from July 2015 to Jan 2016 (611 wells) does not change substantially from April 2016 to Dec 2018. Given the large changes in the well profile from the Jan 2015 to June 2015 well profile to the last half of 2015 ( 12 month cumulative increased from 97 kb to 119 kb), that assumption may not be valid.
If we assumed instead that the well profile shifted back to the Jan-June 2015 well profile starting in April 2016 and that profile was maintained until Dec 2018, then output would fall to 883 kb/d in Dec 2018, assuming 50 new wells per month are added from June 2016 to Dec 2018. Scenario is below and reality may be between this and the previous scenario (if the 50 new wells per month guess is a good one).
Hi Dennis.
Yes, I think we take different (equally valid) approaches to modelling ND. Our approach is to try to work out how many completions there will be per month – I will be the first to admit this is not very accurate but is not a bad ballpark. I’m pleased we come up with similar numbers, it’s a good ‘sanity check’. I would be cautious in assuming that a price rise means a completion increase though, as completions and price don’t correlate very well. LTO is dominated by financing – as they say, give an oil man a dollar and he’ll drill a hole. We might expect more financing to be available at higher prices, but that is not a given.
With the well profile, we have 5 – one for each core county plus “Other”. They are now based on 2015’s data. It is possible 2016 wells will have different profiles. They did increase 14-15, but what is interesting is that the increase was not uniform across counties. McKenzie saw barely any increase. This suggests that tech gains are marginal – you’d expect uniform gains from tech improvement – which also suggests the increases were more to do with geology (“high-grading”).
Ciaran’s comment further up on this is very important – they have been trying to force more production earlier in the well’s life. They have then been claiming to investors that this will increase recovery by ~45%, which is a lie. But it is still important for our purposes because fewer wells are needed to keep production flat. This is a likely reason production beat Helms’ expectations. I would also point out he’s not the greatest production forecaster (nor is it his job to be so, in fairness), and, as we all know, he doesn’t get his completion numbers right.
Thanks Gwalke,
Yes our approach is different as I don’t break down the well profiles by county so your forecast would probably be better. Thanks for the info.
My thinking on well completions increasing is that higher prices will increase profits. Note also there is a lag between the oil price increase and completion increase in the long term model (prices start to increase in 2016 but completions don’t increase until 12 months later, this is a pretty conservative guess imo). Of course my guess may be wrong, I don’t know future prices or how these prices will affect the industry’s decisions. I agree financing will be important, some players such as XTO and Statoil can self finance as their pockets are deep.
Maybe ours is better for the front month – we’re pretty accurate for the next month’s data because of how ND report. Long-term, I would expect your estimate to do better than our long-term forecast.
Hi guys, I have a question that follows from my previous post.
To carry over a quote:
That quoth, the global industrial machine seems to be running now on the EROEI of what? Deep sea/shale oil EROEI? Which is what? 20:1? 15:1?
So my main question is; what might it be, roughly, and what kind of change for EROEI would we guesstimate over what timeframe?
IOW, how soon do you think the global fossil fuel supply might begin to breach, say, an EROEI threshold of 10:1? Also, given price-production-destruction, would it accelerate?
Where’s Jeffrey Brown, by the way?
Presumably, the reason no one uses ERoEI* is that no one has heard of it. I am too busy with my better-than-hopeless projects to go around hyping ERoEI*, regarding which I began my latest attempt to write a clear definitive discussion of sustainability as follows:
It is essential to realize that energy is the life blood of a society. Sustainability amounts to providing a sustainable renewable energy technology, a technology that harvests energy (corrected for entropy) from the sun in real time and that returns more energy than is consumed to install it, operate it, maintain it, maintain its storehouses of natural material capital, prevent or repair environmental damage including aesthetic damage, and support the community that it serves.
If we wish to define a ratio of Energy Returned over Energy Invested (ERoEI*) that will indicate a sustainable alternative energy technology if and only if it is greater than 1.0, we must begin to think of society as a system the purpose of which is to maintain the flow of high-grade renewable energy. Let us begin with a thought experiment … http://eroei.net/sustainability.htm
I’ll get back to your comment later today, Thomas, but a little bit coincidentally, I just came across these shocking numbers that are not even factored in apparently! (Which may make EROEI an even more difficult subject.)
“Caelan why are you such a downer these days?” ~ Aws
No idea.
Caelan ,
I think maybe you need to just quit looking at the worst of the downside possibilities for a few days for the sake of your own enjoyment of life. We only live once, you know.
Hall is a god like figure in my eyes, but his work is still just HIS work, and later estimates of the overall EROEI needed to make energy production and the economy work are more in the range of five to seven to one, for the whole shooting match.
I don’t have any trouble believing wind and solar power can exceed that level over the long term, and even if they can’t, we are building them out NOW using the existing fossil fuel endowment.
So – even if wind and solar prove to be uneconomic over the LONG run, they will still enable us to live ok AND extend the life of our one time endowment of fossil fuels by quite a bit, a generation or two at least.
“Sufficient unto the day are the troubles thereof.”
All these doomer type scenarios fail to take into account the simply ENORMOUS amount of energy we waste these days and the countless ways we can change the way we live so as to live just as well without all that waste.
Furthermore they generally fail to take account of the fact that the population of the world is almost sure to peak and begin to decline within the next couple of generations at the longest, and maybe sooner.
They generally fail to take into account the likely continued fast reduction in the costs of building out and installing wind and solar infrastructure.
Five or ten years ago, I was pretty much a hard core doomer, because I didn’t believe myself that the cost of wind and solar power could ever fall as fast as has happened. I didn’t believe battery technology would advance even a third as fast as it actually has advanced.
I am not complacent, and recognize that there are some VERY tough times ahead of us.
I believe that large portions of the world are likely to experience a die off of the invasive species commonly referred to as the naked ape within this century.
But I also understand that highways last almost forever with maintenance compared to the cost of building new. Houses. even the cheapest sort built in places like the USA to building codes generally last at least a century if they are well maintained. We already have more shopping malls and office buildings, which will also last indefinitely, to last just forever, considering the population is going to peak .
I have worked on machinery since I was a little kid, and the one possession I remember being the proudest of AS a kid was buying my own first reasonably complete set of mechanics tools out of the Sears catalog. It had over four hundred individual tools. I spent a hell of a lot of time divided about equally between looking at the lingerie models and the tools, and I got the tools with my own money when I was fourteen years old. Still got some of them. I never did get one of those models though. LOL.
So even though I am not an engineer, I know a hell of a lot about machinery, appliances, and so forth. There is absolutely no question that an automobile cannot be made to last fifty years, easily, by standardizing the design, and building it in such a way that it is EASILY repaired and reasonably proof against rust. There is no reason a washing machine or refrigerator or electric range should be scrapped in less than fifty years except maybe on the basis of energy effiiency. I have a house full of furniture that will last a couple of centuries, barring fire.
Things are going to be tough, but the situation is NOT hopeless. If you were handy, I would have you over and fill you up to your tonsils with beer and some backyard grilled free range chicken. 😉
“Caelan why are you such a downer these days?” ~ Aws
Caelan, good to see you still have your sense of humour. 🙂
Thing is, Caelan, for many reasons we have to keep on keeping on. BAU sucks, but there has to be some transition worth trying. We all have too many people we love to afford the luxury of not making the effort.
That’s key and you just answered it yourself: BAU sucks, but there has to be some transition worth trying.
If BAU sucks (and not in a good way), then ‘some transition worth trying’ is probably not BAU-based.
At the very least, a BAU-based transition is not a low-power, self-empowering, democratic, or local-community-empowering transition.
Right. If we invest energy that poisons the biosphere to get more energy that does the same, what’s the gain?
On the other hand, if we look in detail, it’s fairly simple to quit the crap, focus on what’s really needed and behold, energy problem cut to maybe 1/10 what it is now, and solar/wind can do that.
Start here, start now, start! Take a look below
http://www.plancurtail.org/
Hi Wimbi,
I am on board!
“All we have to decide is what to do with the time that is given us.”
– Gandalf in The Fellowship of the Ring
Hi OFM,
My favorite part of the Lord of the Rings trilogy is that conversation between Frodo and Gandalf in the mines of Moria.
Another nugget from that conversation, Gandalf says (to Frodo)
Even the very wise cannot see all ends.
Somewhere in the Gandalf is asked why he talks to himself so much.
Gandalf answers that he has the habit of addressing his remarks to the wisest of those present, to save time. As a result, he often ends up talking to himself.
OFM. don’t understand why you think going to solar/wind will be slow and hard. My direct experience was that it was fast and easy, and that’s not just me.
http://thinkprogress.org/climate/2016/05/12/3776728/climate-change-solutions/
You know what a 10kW diesel looks and smells like and how much TLC it takes to keep it going, not to mention its habit of just guzzling gobs of diesel endlessly.
Compare that with 10kW of PV sitting out in the south slope. It just sits there, no noise, no smoke, no fuel, no squeaks for TLC. Just puts out pure power more or less forever. Sure, intermittent, but anybody with farm experience knows full well that everything is, and, for 10,000 yrs, they have coped with it.
I paid for all that by not paying for a pickup. Pain-free.
Hi Wimbi,
Slow and hard are subjective words, and mean different things to different people, and in different contexts.
I think the transition, IF it succeeds, will take not less than fifteen to twenty years, due to the scale of the problem. That’s allowing for a pretty fast rate of growth, in the face of what will be resource shortages, hard times, and opposition from the dug in fossil fuel industries and their allied business interests. People can be slow to change too, due to habit and ignorance.
The hard part is going to come from paying for renewable energy UP FRONT. I would already have a new Volt automobile if I could afford one. I COULD put my hands on one, by doing without something else, say selling some real estate, or making payments.
But my PAID FOR old ice car runs cheap enough that I simply cannot afford to put thirty thousand bucks in a new car.The money is best used elsewhere, spent on things that generate a greater return.
Most people don’t pay for stuff up front. They borrow and pay over time. Interest rates are very low. Those with good credit ratings pay zero interest rates for new cars. PV probably 3% or so.
Well, around here, anyhow, the local bank gives zero interest loans on EV’s, preferably used ones, that cost maybe 1/4 new and are still mechanically like new. And the PV installer will also give zero interest installations.
And, of course, a DIY like me can go out to places like Sun Electronics and pick up oddball PV for 35 cents a watt. And good used inverters too.
Now, just for fun, did you include the cost to the grandkids of the carbon from that cheap old car you have there? Was it still cheap?
Hi Wimbi,
Good to know, I didn’t realize you could get a used car at 0% interest, where I live the loans through the solar installer are about 3%, you might have state incentives where you live, I only get the federal incentive, which would be used for the down payment and the rest of the loan is about 3% over 12 years. I pay about 50 dollars per month for electricity and a PV system would result in a $70/month payment for 12 years, after that the electricity would be free (if there are no net metering rules changes), that would be a simple grid tied system with no backup essentially $20 per month to help reduce carbon or on a kWhr basis it is about 7 cents per kWhr for the first 12 years. I think many people could afford this, but most people think short term, myself included (as I have been think about doing this for a while, but will probably downsize to a smaller home first.)
Once we have the smaller house, PV will be installed with some battery backup.
On the freight and mobility side, Lockheed Martin is not sitting still. Able to lift large loads and access roadless areas much more efficiently than helicopters. Faster than trucks and able to scale up to large freight loads, the hybrid gets lift as it moves forward.
Lockheed Martin – P-791 Hybrid Aircraft
https://www.youtube.com/watch?v=isJRgEu7DQo
Wimbi, one of your site’s short articles suggests that Plug-In Cars Are No Better Than Hybrids. (Do you own a Nissan Leaf? Is it a plug-in or hybrid?)
At any rate, at the end, the article says,
“Even better, share a ride, bike, and walk.”.
I am a long-time acquaintance of Pat Murphy, the author. I talked with him about his not mentioning cars such as mine, an all-electric running, not on the coal-fired grid, but on my own PV. I am asking him to do the same comparison on that combo, including the carbon footprint of the PV. We shall see.
My own crude numbers say the Leaf + PV is very far ahead of all the others.
I also note that all my friends could easily afford to do just what I did and go all-PV for house and car. Nary a one of them has so far, including my highly paid silicon valley son. He’s so deep in his own little universe that he simply does not think about such mundane things as cars.
I agree with his share a ride remark, the obviously better way to go.
Surprised to see you didn’t know a Leaf is all-electric.
I figured the Leaf was, just too tired/occupied to look and confirm. I’ve looked enough this week. lol (Maybe the Leaf-Blower came in a hybrid or Hy-blow™ model.)
So you do have a Nissan Leaf-Blower then? Aha. Now you have to go and justify your ownership. ‘u^
Don’t forget the embedded energy (emergy) of the EV and PV, etc., and the cost and disposal emergy of the ICE’s, batteries over time, mining and realistic figures of that and PV life, BAU/GAU-level roadway maintenance, etc.. Be honest. And then ask yoursef if it would be better to transcend/avert BAU– which all or much of this leads to– and attend more and more to the local scale, the democratic, etc.. I imagine you’re already doing that.
Then share with the neighborhood and/or leave your Leaf-Blower in the parking lot and maybe go out for a walk or a bike ride if you’re not too tired yourself, you rocket scientist, you. ‘u^
Hi Caelan,
Considering your extreme pessimism when it comes to renewables and electric cars, etc, you have just proven that you DON’T EVEN READ THIS ONE FORUM carefully.
The fact that the Nissan Leaf automobile is a battery driven car has been mentioned here HUNDREDS of times.
Wimbi himself has posted about his own Leaf and his own personal pv system fifteen or twenty times at least.
Caelan is just another a good example of an individual’s ideology and personal views blocking out factual evidence that contradicts those views.
If you believe something to be true then why would you waste your time checking the actual facts.
Given the fact that so many of us on this site have been using Wimbi’s all electric Nissan Leaf as an example of how transition is happening already. And we have been doing it for a very long time, just goes to show that most people still aren’t listening!
Of course we know that this is exactly how human nature works. Nothing to see here, move along now, folks!
Hey guys, don’t be silly and grasp at straws or split hairs or whatever.
Part of an interest in the truth means that I might ask questions I’m fairly sure I know the answer to just in case. As already suggested, the Leaf-Blower might come as a hybrid, called the Hy-Blow™. Maybe the company– based in an ostensibly-floundering economy that is Japan, realizes– apparently like the site wimbi mentions– that hybrids are more economical.
Hi Caelan,
When everything is considered, the hybrid is not more economical (if one ignores externalities it might be, but Wimbi chooses to look at the big picture.)
Fair enough, Dennis.
…Hey, Dennis, just a heads up that there are 2 extra copies of this comment that need to be deleted. Thanks!
That goddam wimbi talks too much, he’s a one-note johnny and I’m glad you pointed that out to him.
So, wimbi, quit all that and go back under yer rock, where every one of those good fun widgets need work you aren’t giving them. And, don’t forget the chicken house has a flat tire again.
Ok, fine, same here, I have to get back to my shipping container residence design too.
How many chickens do you have? Anyway, give them a pet for me.
I am almost finished reverse-designing it (3D model off Google 3D warehouse) which means turning all the surfaces into proper solid volumes, after which time as the actual house design will begin.
It’s certainly true that about 70% of the car traffic in America is completely pointless, and could be eliminated by legalizing sensible arrangements like corner stores, garage businesses, etc.
My favorite example of the irrationality of American city planning: Traffic safety people claim that drunk driving is a major cause of traffic accidents.
But most American cities have strict laws dictating that bars must have a minimum number of parking lots per seat, and may not be near the homes of the patrons, but no laws saying they should be near public transportation. So how do you get home?
Americans waste vast quantities of liquid fuel driving around the “Great Triangle” separating their suburbs, their office buildings and their shopping malls. The problem could be solved by simply canning the zoning laws that caused it.
Hi Wimbi,
I left Pat a question:
Your article suggests that a Prius is better than a hybrid.
Have you taken into account the ability of a plug-in to charge when wind and solar production is at their peak, thus
1) changing the mix of electrical generation used by the EV, and
2) incentivizing wind and solar by creating demand where high renewable production lowers power prices?
More mindless blather about “sustainability” and “renewables”.
Instead of designing an economy that sucks up all the worlds crude oil and sends useless junk like solar panels and batteries to the dummies destined for the firing squad, Thomas Wayburn is desperate to be that dummy.
“Don’t shoot me, I’m sustainable!!!”
When are you pseudos going to learn that “renewables” is hydro dams? You’re reenacting the dreamworld of one Vladimir Lenin who in 1920 had the same queer command economy worldview. Nothing has changed in 100 years except now you have 7 billion. Venezuela is not a basket case…its a paradise compared to what you are putting on the blackboard.
Hi Thomas,
Pardon my delay. I glanced at your site briefly and will return to it.
If understood correctly, your fundamental position, at least in a nutshell, is one of human’s leveraging of energy that is in harmony and balance with itself and (in the process, with) the surrounding ecosystem; and that a certain approach, understanding and appreciation of ERoEI (and/or interrelated/underpinning thermodynamic issues surrounding the ‘sociopolitceconomic’) is important in this regard. If so, I agree.
I would add– and with Dennis Coyne’s apparent position in mind, seemingly somewhat at odds for someone with both an economics and physics education– that if we don’t want to take the responsibility to ‘do the math’ or ‘make the analyses’ where those kinds of things are concerned, maybe because it’s too hard or inconvenient, then we might as well abandon most, if not all, our technology (because we don’t have the responsibility to make, manage and use it [beneficially]), and notions that– at least high-energy/BAU-energy and related technology– will ‘save us’.
Hi Caelan,
It is important to do cost benefit analyses where external costs are included. The thermodynamic laws will not be broken so I don’t really concern myself too much with those. So as many engineers would claim and I agree, energy return on energy invested is just not very useful. You are welcome to pursue that, but for it to be useful it needs t look at all energy sources used by society, because it is the EROEI for society as a whole which is the only measure that is useful. I am not going to attempt such an analysis, you can have at it.
Hi Caelan,
The important measure is the EROEI for all energy used by society and it is very hard to measure.
If there is not enough energy its price will rise, so the assumption that price is determined by EROEI is false. The price is determined by supply and demand. Potentially demand for energy will be reduced by efficiency improvements or by a recession, supply of energy will depend on many factors both geological and technological.
I don’t think the EROEI analysis is very helpful, as it is too difficult to measure with any degree of accuracy.
“I don’t think the EROEI analysis is very helpful, as it is too difficult to measure with any degree of accuracy.”
I agree. Furthermore, EROI analyses generally use quantitative data that include production factors but ignore stuff like climate change, air quality, and other environmental qualities which are considered “externalities”. They are (mostly) a useless distraction.
Hi Doug,
You agree with me? One of us is going to need to rethink their position. 🙂
Hell Dennis, I only disagree when you’re wrong. 🙂
Hi Doug,
Good to know. One of us is wrong (at least) when we disagree, probably not he same one every time. 🙂
In many cases we’re both wrong.
That’s not necessarily an issue with ERoEI, but a human/human-system issue/failing.
That’s why some of us call the economic system, the uneconomy:
It boldly, ignorantly and obstinately operates outside of reality, such as via debt/usury (money/the future) and so-called externalities (‘over the shoulder’).
(And that’s probaby why we’re going to get a seneca cliff, incidentally, and why…
photovoltaic PV solar panels may be a ‘short-term huckster’ by Big Oil/Big Energy. Who says Big Oil/Big Government/Big Energy doesn’t own or have a large share/stake in the Gigafactory/PV pie
…with Musk being their posterboy, their ‘logo’, like Colonel Sanders or Ronald MacDonald. Do you think Big Oil didn’t/doesn’t have access to Marion King Hubbert’s work and related peak oil details? Big Oil/Big Energy powers Big Government; Big Oil/Big Energy IS Big Government.)
Any thermodynamic/truly-economic analysis and system worth its salt should take, or at least attempt to take, so-called externalities– present and future– and issues of sustainability and resilience into consideration and into its modus operandi.
But then that’s more democratic. And that’s a problem for elitism.
And as it has been said before, and since we’re on about this, ‘humans are clever but not wise’.
Hi Dennis,
While I ‘know about the problem’, ERoEI is not necessarily about energy price at all, although others may want to make that connection.
My interest in it is more from, say, a ‘civilization/sustainability/thermodynamic/maximum power principle’ perspective.
You may think that an ‘ERoEI analysis’ is not very helpful, but then there are those who may not think that a climate analysis or whatever other complex analysis have you is very helpful either; and others (anyone we know?) who find that an ERoEI or maybe ‘thermodynamic’ analysis somehow threatens their ways of life and/or sacred cows, like electric cars/vehicles (EV’s) and photovoltaic panels (PV’s) that they might own and cherish.
See also.
If anyone (Caelan) hasn’t taken the time to watch Tony Seba presentation- well I just did and suggest you sit down with it and take it in (53min).
https://www.youtube.com/watch?v=Kxryv2XrnqM
If you spend time thinking about EROEI, energy scarcity, innovation, climate change or other associated issues, you will very likely find it good food for thought.
Thinking about PV energy, you could think of the upfront cost as paying for the EROEI upfront (as well as the cost of minerals, manufacturering, etc), and after sometime between perhaps 10-20 years depending on how good the insolation is at your site, you will start to be accumulating an increasing EROEI ratio thereafter. Not sure if I’ve explained that notion well enough, but hope so.
If you don’t live in a sunny locale and the deployment of PV/batteries doesn’t look to have a reasonable payback time period, well just consider that if PV is deployed massively in sunnier areas it will cut into the fossil fuel demand to a degree. This will help will the depletion rate (and prices) overall (elsewhere) to some extent.
Solarcity is offering 5.25% 5yr investment bonds with the funds being using to pay for PV rollout.
https://solarbonds.solarcity.com/b/bond/10183/525-solar-bonds-series-201610-5/
To check on your local insolation potential- here is a good map
http://maps.nrel.gov/prospector
The USA is endowed with very good insolation over about 1/2 its territory.
Build me a HVDC transmission system please.
OK, pardon the non-oil comments. I’m off to explore the Barrow Downs….
Probability Of Bankruptcy Analysis
All the things in our world have an industrial history.
Hey Caelan
On this Monday the largest state in the union got 31% of its daily electricity demand filled by renewable energy.
And it has barely been rolled out yet.
http://content.caiso.com/green/renewrpt/20160516_DailyRenewablesWatch.pdf
Do you live in a cold and shady area?
Hall’s energy analysis of petroleum shows that only twenty percent of the energy gets to the car. Then the car itself is only 20 percent efficient.
So the “real” kinetic energy of a car is actually 0.38 percent of highway speed kinetic energy, which means no harmful accidents actually occur. I am so glad you pointed out how safe we are.
I have been wondering a long time what my speed is “really”.
America does it again!
Perhaps the expression ‘going nowhere fast’ applies here.
repost from the previous thread:
Total oil production in North Dakota Bakken fell to 1057 kb/d in March, a monthly drop of 8 kb/d.
Decline in February-March was only 10 kb/d.
Cumulative decline from December 2014 peak level is 107 kb/d (-9%).
The chart below shows that both the EIA Drilling Productivity Report and the EIA/DrillingInfo monthly LTO production statistics tend to underestimate the resilience of tight oil production, at least in the case of the Bakken. The EIA estimates for February and March will likely be revised upward. I think that even bigger upward revisions will be done for the Eagle Ford.
Bakken oil production statistics: NDIC data vs. the EIA reports (kb/d)
as Shallow Sand pointed out:
“It surprised me that production in ND didn’t fall much when Mr. Helms stated there would be a dramatic drop.”
From an article in Bismarck Tribune:
“Next round of N.D. oil production figures ‘going to be bad,’ Helms says
May 4, 2016
http://bismarcktribune.com/news/state-and-regional/next-round-of-n-d-oil-production-figures-going-to/article_5633c44e-09a9-5d3c-a47c-664f43dfd9cb.html
Early March oil production numbers show that North Dakota will likely drop below 1.1 million barrels per day for the first time since June 2014, the state’s top oil regulator said.
An official update will be released next week, but Director of Mineral Resources Lynn Helms told an oil industry group in Williston he expects to see a “severe” production drop.
“It’s going to be bad,” Helms told the Williston Basin chapter of the American Petroleum Institute Tuesday night.”
In fact, the decline was not as big as was expected and total ND oil production (incl. conventional) in March was 1109 kb/d.
The chart below does not show any acceleration in monthly decline rates:
Year-on-year and month-on-month growth/decline rates in Bakken North Dakota oil production (%)
Might be a slow decline, however, a parabolic increase in the Misery Index was one result after the price bust.
When wells are shut, the lease expires, no longer held by production.
No?
Hi R Walter,
Generally speaking, an OGL that is past its primary term must produce oil and/or gas in “paying quantities” with no cessation of more than xx days (depends on lease language) to continue to be held in effect. There are many ways an operator can handle this situation by producing just a few days a month. An operator can pay a “shut-in gas” royalty to defer a production obligation in certain circumstances. Each situation is different and requires its own analysis.
An operator is not required to show that a well or leasewell is capable of “paying out” it’s cost of the lease, drilling and completion, gathering, treating facilities and so forth.
The important issue is that a well or lease must be capable of producing oil or gas in “paying quantities”.
Generally speaking (in Texas anyway) a lease must generate cash flow in excess of its monthly cost of production. $1 over that monthly cost is sufficient. Naturally, each operator’s cost are different and each lease/well is different.
In my opinion, many wells are “magically” producing just enough oil and gas to generate a marginally positive cash flow. Why you ask? To avoid plugging and abandonment until a greater fool comes along to buy the lease and allow the current operator to get off the hook.
I know of one case where SandRidge Energy (Arena Acquisition) drilled 52 vertical wells in one 640 acre section. Each well is capable of producing 1-2 bbls/day. Payout will never happen and I doubt that production in paying quantities is happening. I also doubt that a greater fool exists to take over this lease
But…… someday someone (perhaps you) will be on the hook to plug and abandon and restore the surface to its original condition.
Thanks for the post Ron.
@Alex,
coming back to your comment at the end of last post:
”
The chart below shows that both the EIA Drilling Productivity Report and the EIA/DrillingInfo monthly LTO production statistics tend to underestimate the resilience of tight oil production, at least in the case of the Bakken. The EIA estimates for February and March will likely be revised upward. I think that even bigger upward revisions will be done for the Eagle Ford.”
The small declines in Feb & March is indeed surprising. Based on the new well count, and on 2015 1H well profiles, I expected declines around 20-25kbo/d. It does appear that the average well that started in the 2nd half of 2015 behaves quite differently, peaking for a few months longer than usual. This is caused for a large part by wells from Burlington, XTO, CLR & QEP. That has messed a bit with my projections, and probably also the EIA. If those wells had behaved more like earlier wells, ND production would be at least 20 kbo/d lower in March.
Questions in my mind now are:
1. How will these “higher for longer” flow rates behave over the next couple of months?
2. Will we see the same behavior in all new wells?
3. Will we see something similar in other basins?
I think you could be right about those upward revisions. To me it shows that there is quite some new uncertainty caused by these changing dynamics.
Enno,
Thanks very much, that’s really surprising.
Perhaps they are using some new completion techniques?
Will try to find something in companies’ presentations.
Hi AlexS and Enno,
Perhaps its just a sharper focus on the sweet spots and only completing the “best” wells has shifted the average well profile over that period.
Great comment, Enno, as ever. It’s important to remember that the EIA’s forecasts seem to generally be very “smooth”, and their models are mostly done at an economic level, meaning they aren’t working from number of wells upwards. This meant they completely missed the beginning of the production decline – their initial forecasts kept on adding ~30kbpd a month to Bakken until April15, for example. Now they are a little to heavy to the downside.
We just did some work on the EIA/IHS report on well costs that came out a little while ago. We suspect that these longer peaking wells may be possible due to lower service costs. Operators have switched to natural sand, and lots of it. Not being an engineer, this is only an educated guess, but the general gist I can gather is that natural sand crushes more easily than artificial ceramic proppant, but is significantly cheaper.
Our assumption on the interests of operators like CLR and WLL is that they currently want to maximise short-term production to boost revenue, and they care significantly less about maximising recovery. Using lots of natural sand fits in with that – though the sand will be crushed more quickly than if artificial proppant will be used, more fractures will be propped open in the short term.
Many of these short term production gains may be given up shortly after any price increase, as the service costs will also rise, and the short term revenue considerations will become less important. That’s the theory we’re working under currently, anyway…
The decline after peak of new wells appears to be significantly steeper than previous years, so when companies claim 40% IP increase = 40% EUR increase, one should be extremely skeptical. By month 7 of production, the average 2014 well had produced 18% more oil than the average 2010 well at the same stage of its life – but by month 26, that difference was down to 7.6%. In month 3, the average 2014 well had produced nearly 9% more than the average 2013 well – by month 26, that was down to 2%. Those are total cumulative oil produced figures, btw.
HAYNES AND BOONE, LLP OIL PATCH BANKRUPTCY MONITOR May 1, 2016
http://www.haynesboone.com/~/media/files/attorney%20publications/2016/energy_bankruptcy_monitor/oil_patch_bankruptcy_20160106.ashx
Hi Ron,
In your opinion will the Saudi’s and Russians be able to significantly ramp further production capacity as they threaten?
I’m not Ron, but this is my view:
Russia is not planning to significantly ramp production capacity.
Energy Minister Novak said today that the country will be able to maintain long-term production levels within the range 525-545 million tons per year (10.5-10.9 mb/d). That’s what Russian officials were saying earlier.
According to the Saudi officials, planned expansion of the Khurais and Shaybah oil fields will only
compensate for falling output at other fields. They claim that the country’s “maximum sustainable output capacity is 12 million barrels per day and the nation’s total capacity is 12.5 million bpd”, but there are no plans to increase capacity and there is no evidence that this capacity really exists.
I think that in reality Saudi Arabia is able to increase crude production from the current 10.2 mb/d to 10.5-10.6 mb/d during the peak season for local demand in the Summer, but not well above those levels.
The Saudis aren’t stupid, they’re good businessmen, and they have sent a lot of younger sons to excellent universities in western countries. So there can be no question they understand that their survival as a prosperous country depends on getting away from oil.
My personal guess is that they are tied up in knots , internally, from the political point of view, so that just getting STARTED on the necessary transition is a hell of a job.
But oil prices will go back up again, barring either a totally bed ridden world economy, or miraculous breakthroughs and growth in alternative energy and electrified transportation, etc.
I am ready to make a substantial bet that within a year of the time oil hits eighty bucks again and stays there for a year that they will announce bidding on contracts to build some giant solar farms. They can do that, and sell the oil they presently burn to run air conditioning at a substantial profit after that.
Solar power is HERE when it comes to oil and places with a good solar resource.
But on the other hand, they have to balance off the big savings on building those solar farms due to the cost of solar power going down year after year against the savings.
I have put off buying a solar system for my place for that very reason. I can’t save enough this year on the juice to offset the cheaper price of buying next year.
If the calculus falls out the same way in other oil exporting countries with hot dry climates, this might mean there will be a couple of million daily barrels or even more available for export than would be the case otherwise.
Incidentally has anybody here run some numbers on how much it would cost them to build and run some coal fired plants in order to conserve oil for export?
You mean the “excellent” universities like Harvard where all they do is concoct ponzi schemes for themselves and recommended to give away heavy manufacturing because it was obsolete? Naturally they preach the Gospel of Solar. The Mighty Solar Cell shall set us free!
Isn’t it obvious by now that The Service Economy Hoax is a code for “We’re broke”?
Or that the Web 2.0 bubble is a continuation of Dot-com fraud?
Idiots gawking all day long at flashing pixels and posting pictures of their dogs?
Would someone please shut down all these useless universities and the educated freeloaders that inhabit them.
Hi Ponzi,
YES, by all means excellent universities such as Harvard, Yale, Princeton, Oxford,MIT, Cal Tech, the University of Chicago, even my own “cow college” land grant university.
Such universities generally have colleges of engineering, physics departments,geology departments, colleges of the life sciences, colleges of agriculture, etc, although judging from your comments it seems you are less than well informed about the existence thereof.
The Gospel of Solar and the Mighty Solar Cell may not set us free, but continued reliance on depleting fossil fuel absolutely guarantees we go back to the horse and mule era.
Production capacity can be ramped with a press conference.
Both Saudi Arabia and Russia are producing flat out. There is no spare capacity in any country in the world except in places like Libya and Nigeria where production is cut by war and civil unrest. Production could be increased in Venezuela if peace and prosperity were to happen there. But that is extremely unlikely.
Iran is ramping up production and will soon be back to pre-sanction levels.
Most of Saudi Arabia’s old fields are in steep decline. They are increasing infill drilling in Khurais and Shaybah in an attempt to compensate for this decline. And for a while they might succeed in doing this, but not for very long.
Hi Ron,
What is the evidence for “steep decline” in the old Saudi fields, there are a few that are certainly declining especially in the northern part of “Ghawar” (which is actually several fields grouped together)? Also how do you define “steep decline”, the average decline is 6.5% with no new wells drilled, so would 6.6% decline be considered “steep”.
As far as I know we have very little data on output from individual Saudi fields, so I would assert that we don’t know what the decline rate is for the old fields in Saudi Arabia.
Dennis, yes 6.5% would definitely be considered steep, especially when it is happening despite massive infill drilling.
I have posted this link many times.
“Saudi Arabia’s Strategic Energy Imitative: Safeguarding Against Supply Disruptions”
8% to almost 2% depletion.
http://www.csis.org/media/csis/events/061109_omsg_presentation1.pdf
Unfortunately the link has since been taken down.
This was a Saudi organization that posted this link in 2006 stating that all Saudi fields had an average natural decline rate of 8% but with their infill drilling program they had gotten the decline rate down to just above 2%. That was 10 years ago.
So do the math. Say a natural decline rate of 8% but with infill drilling… that is pulling the oil out a lot faster… they had gotten the decline rate down to almost 2%. What would the depletion rate have been?
This is from the EIA’s Saudi Arabia country brief. This was posted several years ago but has since been replaced.
One challenge the Saudis face in achieving their strategic vision to add production capacity is that their existing fields experience, reportedly on average, 6 to 8 percent annual “decline rates” (as reported by Platts Oilgram in 2006) in existing fields, meaning that the country needs around 700,000 bbl/d in additional capacity each year just to compensate for natural decline. Decline estimates for Saudi Arabia vary widely, however. The Ministry of Petroleum maintains that decline rates in Saudi Arabia are around 2 percent annually.
Really Dennis, don’t you think that if Saudi fields had a natural decline rate of 8% 10 years ago, but managed to reduce that to 2% by sucking the oil out a lot faster, that the decline rate should be a lot higher today?
Hi Ron,
No not necessarily, and as far as the decline of the nation as a whole, a Hubbert Linearization suggests a URR of 310 Gb and usually the HL results in an underestimate of the eventual URR. At the end of 2014, KSA had cumulative output of 138.5 Gb, and about 142 Gb at the end of 2015.
If we assume the peak is near 50% of eventual URR, that 310 Gb is correct, and output remains at 2014 levels from 2015 to 2019, then the peak would be 2019. Decline from that point would not necessarily be steep, assuming there is adequate demand.
As to whether the decline rate is higher today depends on many factors, I said that I don’t know what the decline rate is, and you can speculate that it is steep, I could also speculate that it is not, but I won’t. We don’t know.
Dennis, Jeesus H. Christ, you have to be joking! A natural decline rate of 8% is what it is, a natural decline rate of 8%. To try to spin that into something else by using Hubbert Linerazation, or whatever, may spin it into something more desirable, but it does not change the facts that all of Saudi’s old fields have a natural decline rate of 8%. End of story. Pumping it all out early will only lead to a Seneca Cliff later on.
Hi Ron
I don’t agree with the 8% natural decline estimate. There have been lower estimates. Probably 6% would be more reasonable.
Dennis, that 8% decline rate was Saudi ARAMCO’s estimate. I know they lie a lot but it is just not like them to lie on the pessimistic side. But when they said they had gotten the decline rate down to almost 2% with infill drilling, now that might have been a lie.
At any rate that “almost 2%” was 10 years ago. There is no way it is still “almost 2%” today.
Oh, one more thing. That 8% was just an average. What they actually said was their fields had a natural decline rate of from 5 to 12%. That would average out to be 8.5% but they rounded it off on the optimistic side.
Also that 5 to 12% was also 10 years ago. With massive infill drilling keeping production high but depletion higher as well, there is no way it is still 5 to 12% today.
But I do understand, you disagree with ARAMCO’s estimate. You think ARAMCO is either lying or totally incompetent. Okay Dennis, I know where you are coming from.
Edit: The decline of the world’s major oil fields
Aging giant fields produce more than half of global oil supply and are already declining as group, Cobb writes. Research suggests that their annual production decline rates are likely to accelerate.
By Kurt Cobb, Guest blogger APRIL 12, 2013
Snip.
5. Now, here’s the key insight from the study. An evaluation of giant fields by date of peak shows that new technologies applied to those fields has kept their production higher for longer only to lead to more rapid declines later. As the world’s giant fields continue to age and more start to decline, we can therefore expect the annual decline in their rate of production to worsen. Land-based and offshore giants that went into decline in the last decade showed annual production declines on average above 10 percent.
What Cobb is saying is that while technologies keep the decline rate low early, it can only increase the decline rate later. Hell, that is just common sense. But then common sense don’t count for much these days.
Dennis, you would not believe 8%. Would you believe 10%?
A Seneca cliff aroundabout now on the world’s largest fields?! 🙁
Hi Ron,
A study by the IEA in 2008 suggested about 3 to 5% decline rates for supergiant fields (URR > 5 Gb).
See
http://www.theoildrum.com/node/4820
I think Sam Foucher’s 2009 scenario may have missed the potential for reserve growth. His scenario had about 62 Mb/d for 2015 and in the comments some thought the scenario was too optimistic. To be honest it looked pretty good to me at at the time. None of us could have foreseen LTO growth at the time, but this only accounts for an extra 5 Mb/d, still leaving us 12 or 13 Mb/d short of actual 2015 output.
There are many different opinions on this that one can find. I don’t know what the output of individual Saudi Fields are, so I cannot determine what the decline rate is, I will leave the speculation to others.
Dennis, I don’t like to speculate and pay little attention to what other’s speculate. But when the Aramco Senior Vice President Abdullah Saif, says their fields have a natural decline rate of 5 to 12 percent, I see no reason to think he was lying.
Of course he also said, a bit later, that via their drilling program, (infill drilling). they had gotten this decline rate down to almost 2 percent, then I believe that also. But that was ten years ago.
That was Curt Cobb’s point. Increasing production so dramatically with infill drilling has to increase the depletion rate, thereby increasing the decline rate later on. Therefore that 8 percent natural decline rate has to be much higher today, over 10 years later. (It was in 2005 when the Aramco Vice President informed us of this natural decline rate.)
I really don’t understand why you have such a problem with this. It seems to me to be only common sense.
You perhaps think that Cobb was speculating? Is that your point? You perhaps think that the natural depletion rate would decrease because of massive infill drilling, thereby decreasing the decline rate? You need to explain that logic? Please, please explain how that might happen?
Hi Ron,
The only thing I know is that I don’t know.
I have not said the decline rate has decreased, I have said there are different estimates. You seem to selectively believe things that the Saudis say. When they say decline rates are high, you believe it relative to others who say something different (IEA). In other cases such as when KSA claims high reserves you choose not to believe what they say.
Note that I am not claiming that decline rates have decreased, just that we don’t know what is going on with individual Saudi fields. You seem to want to claim that I have said something or implied something that I have not.
Dennis, I think I see where the problem lies. The Aramco Vice President was talking about the “natural, or organic, decline rate with no new drilling.” You are talking about the actual measured decline rate of all fields “already in decline.” That is about 6% but that is measured decline and includes new wells.
Now the Aramco Vice President said that number, for Saudi Arabian fields, was very low, just above 2%. He is saying 2% while everyone else, the IEA or whomever, is saying 6%. Really Dennis, you should not have a problem with that.
And the 5 to 12 percent “natural decline rate”, not counting new infill drilling, really quite low. Really low Dennis. Try 19 percent!
Alex Burgansky: Russian Oil and Gas Industry Surprises Analysts
There are plenty of projects in Russia, both, new projects and existing brownfield projects. Russia is a very mature producer. If you exclude all the drilling activity taking place every year, then Russian organic decline in production is close to 19%. To compensate for that organic decline, Russia drills somewhere between 5,000 and 6,000 wells every year.
Burgansky is saying that with no infill drilling Russia’s old fields have a natural or organic decline rate of 19%. The Aramco Vice President is saying, without infill drilling, their natural decline rate is only 5 to 12 percent.
So thinking about it Dennis, I really don’t believe that. I think it is much higher, much higher. And as to their true decline rate, counting the oil from infill wells, being down to almost 2%? I would have believed that in 2006. But I do not believe that today. But your figure of 6%, that I would believe.
So we are in agreement? 😉
Hi Ron,
As to your comment on Saudi decline rates (which I had missed). I stand by my comment of not knowing decline rates in Saudi Arabia, comments by various oil ministers in Saudi Arabia, may be true or not, I am rather skeptical of Saudi pronouncements in general.
The IEA’s 2008 study reviewed by Sam Foucher suggested that super giant oil fields have a fairly low decline rate of 3 to 5%, the 6.5% decline rate is for all fields over 500 million barrels.
In practice we do not see the “organic decline rate”, but it could be modelled with enough information, where we look at existing output from all wells in a field and use a model average well to project future output and then see what output would look like if all well completion stopped.
In that case we might see very high decline rates for a year or two and then the field decline would slow down to 6 or 7% after a couple of years. In practice the well completion tends to gradually slow down so unless there is some catastrophe (collapse of the Soviet Union for example) the “organic decline rate” remains theoretical.
If there is no “oil shock” in Saudi Arabia, I would expect the nation as a whole might decline at 3%/year at most, maybe after 2030, but a 1 to 2% decline in actual Saudi output seems more likely to me.
So mostly I would think we do not agree.
Though I don’t think you have speculated on Saudi C+C decline rates (national output). I have the impression you believe these will be 5% or 6%, perhaps higher (I mean annual decline rates for KSA C+C output after decline begins).
I do agree I was missing the distinction between “organic decline” (no wells drilled) and the decline rate.
I started out just trying to understand what you meant by “steep” decline and threw out 6% as a round figure I remembered from previous reading (which is for all giant and super giant fields production weighted in 2008). That figure is not “organic decline”, that we agree on.
Whether the Russian and Saudi organic decline would be the same is unknown, but I certainly agree the Saudi organic decline is higher than 5% and perhaps higher than 12%, but that would be speculating based on believing the Saudi Aramoco vice president’s remarks in 2006.
Was his statement accurate? Not known.
Using EOR methods such as artificial lift, as they have installed in Safaniya, and intelligent multilaterals, as in Ghawar, it is possible to significantly increase production (i.e. not only reduce decline rates but turn them into production acceleration and increased capture). But eventually it catches up and the rates will crash, as was seen with nitrogen injection EOR on Cantarell. There should be some overall increased recovery, but mostly these techniques push out the peak. Saudi are looking at Safaniya Phase III development, which might be their last option for the offshore fields; once ESPs are installed in new completions on old fields, as was done in the 2012 upgrades, then you are pretty close to sucking up the dregs. Similarly for intelligent completions – I have worked on fields with horizontal producers in water flood with much simpler methods then Saudi are using but once the water contact started to rise past the producers production dropped over 60% in two years. There was a much slower decline thereafter, in fact almost a plateau for some time but it took more drilling to maintain it. H/L doesn’t work in such circumstances.
Hi George,
There are few places in the World where output has been pushed as hard as in the US lower 48. The HL for US lower 48 C+C output has also changed over time, from 1970 to 1988, the data suggested a URR of 180 Gb, data from 1989 to 2008 suggests a URR of 230 Gb.
I agree the HL estimate is not very good, but it usually does not overestimate the URR of a large producing region.
Do you have an estimate of Saudi Arabia’s URR?
You are correct that the HL is not a reliable method and it can overestimate as well as under estimate. We don’t have good data on Saudi Arabia, but let’s assume the 1980 proved reserves estimate was relatively good (these were done by Aramoco and had to be audited), typically 2P reserves are the best estimate and these tend to be 50% higher than proved reserves, so the 168 Gb of proved reserves is about 252 Gb of 2P reserves. Cumulative production from 1980 to 2015 in KSA was roughly 104 Gb, so assuming no reserve growth and no discoveries we would have 148 Gb of 2P reserves at the end of 2015. My HL estimate suggests 168 Gb of 2P reserves at the end of 2015. So in 35 years the Saudi 2P reserves would have grown by 8% if there were no discoveries over that 35 year period.
This compares to the United States where in 25 years (from 1980 to 2005) 2P reserves grew by 63%.
Chart for US HL below.
Hi George and Ron,
Matthew Simmons found that Saudi 2P reserves were 178 Gb in 1979, about 74 Gb of oil was produced from 1979 to 2005 leaving 104 Gb of 2P reserves, if there was no reserve growth and no discoveries. US 2P reserves grew by about 60% in 25 years (1980 to 2005).
The HL estimate suggests about 200 Gb of 2P reserves in 2005, if reserve growth stopped altogether in 2005. That unrealistic scenario would require 54% reserve growth if we assume no discoveries after 1979 in KSA.
Note that no reserve growth after 2005 is not a realistic assumption. Let’s say KSA reserve growth was only 30% (half the US rate of growth) from 1979 to 2005, in that case 2P reserves would have been 157 Gb in 2005 and we would need only 27% reserve growth over the next 95 years to reach a 310 Gb URR.
if reserve growth stopped altogether in 2005. That unrealistic scenario…
…no reserve growth after 2005 is not a realistic assumption.
Dennis, reserve growth is not a verb, it is not something that is always happening as if reserves are always growing. Reserve growth is a correction of a miscalculation of earlier reserve estimates. That is, they got the earlier estimate too low and now they are correcting them. Once they get them right they need no more correction.
Very old super giant fields, discovered in the first half of this century, or in the fifties and sixties, have long ago had their early estimates corrected. We should expect no more corrections.
In many cases, like in Oman, their early estimates were too high. In the case of Oman we had “reserve shrinkage.” But then again, reserves don’t shrink any more than they do not grow, early incorrect estimates are simply corrected.
Dennis, reserves do not really grow! Wrong estimates are simply corrected. That’s all reserve growth really is. Hell Dennis, I thought you knew that.
The definition of ‘Reserves’ seems rudimentary. One problem is that it doesn’t address the variable of price or cost.
The Reserve in the state of Texas, for example, surely will vary if the price of crude is $30/barrel vs $130/barrel.
Oil Reserve- “Oil reserves are the amount of technically and economically recoverable oil. Reserves may be for a well, for a reservoir, for a field, for a nation, or for the world. Different classifications of reserves are related to their degree of certainty.”
For SEC reporting purposes, reserves are dependent on product prices.
Yes Ron I do know that. The reserve estimates in the US increased by 63% from 1980 to 2005, after that there were a bunch of changes in reserve estimates due to LTO and I stopped in 2005 so as not to include those.
Most of the increases in reserve estimates in the US are on fields that are as old or older than most of the Saudi fields. The estimates change as new techniques are developed and also as the oil price increases.
I won’t insult you by suggesting that you didn’t know, I am sure that you do.
The reserve estimates are always changing as fields are developed, on average the estimates of recoverable reserves tend become larger in magnitude over time.
The shorthand for this is reserve growth.
Hi Ron,
You have made he point many times that reserves do not grow. I understand that and repeatedly respond that “reserve growth” is the term that is usually used to refer to the tendency for the reserve estimates to increase over time as fields are developed.
The USGS paper linked below discusses reserve growth in detail.
http://pubs.usgs.gov/sir/2013/5063/SIR13-5063_508.pdf
I don’t understand the disagreement. Ron is right and Dennis is right on the semantics. I think the reason the reserve number is off is because the FTC requires conservative estimates of reserves of new fields. If they required the best guess estimate, there probably would be less reserve growth.
Another USGS reserve growth paper from 2015
http://pubs.usgs.gov/sir/2015/5091/sir20155091.pdf
Outside the US the USGS believes total oil recoverable resources are 3300 Gb, but I believe their remaining reserve estimate is too high by about 150 Gb. If we assume no more reserve growth in the US and 30 Gb of LTO URR outside the US, and a US URR of 290 Gb (including 35 Gb of LTO), then World C+C less extra heavy URR would be 3400 Gb. This is 300 Gb higher than my “high” scenario.
Hi Webhubbletelescope,
Actually I adjusted US reserves to 2P reserves based on the UK data where we have estimates of both 1P and 2P reserves. For the UK 2P reserves were about 70% higher than 1P reserves on average. I used this to adjust US 1P reserves (multiplied by 1.7 to get 2P reserves). Then I looked at US reserve growth (the change in the estimate) from 1980 to 2005 and it was 63 %.
Laherrere’s assertion that the reserve growth is due to proved reserves being reported instead of 2P reserves does not seem to be correct in my opinion.
See link below for the details:
http://peakoilbarrel.com/us-oil-reserve-growth-2/
But reserves do grow. For example, we can invest in a co2 flood which requires investment, a co2 source, and increases recovery factor from say 42 to 48 %. That’s real reserve growth.
Or we can identify an unswept layer which is trapped against a fault, drill a well to tap it, recover 2 million barrels. That’s also reserve growth.
That is about the dumbest thing I have heard in years. If they are going to get “off” fossil fuel, what the hell are they going to get “on”? In Canada no less, land of eternal sunshine.
I do wish people would get real. We will get off fossil fuel when they are all gone. Either that or after what’s left is too expensive to produce.
Yes, I am a card carrying liberal, just not one of the very stupid kind.
For example, we can invest in a co2 flood which requires investment, a co2 source, and increases recovery factor from say 42 to 48 %.
42 to 48%? Fernando, I do think you forgot to insert your smiley face.
Dennis:
The first cited USGS paper’s main points in summary are:
1) Results of statistical assessments on one set of fields are not applicable to other sets, and especially not single fields.
2) All the reserve growth in the fields analysed came from 10% of the sample, which included all the major fields. The other 90% averaged zero growth.
3) Growth can come in two phases. All fields showing growth have an early phase where geology and chemistry is understood, delineation drilling is completed and well design optimised. Some fields then have shown a continuous growth through their lifetime, these are considered mostly outliers, and the reasons for their behaviours are usually due to features unique to each such field.
4) Older fields have shown the largest growth, because they were on average larger and because newer fields use better technology to refine initial recovery estimates.
I don’t see how any of that supports your assertions of expected reserve growth. For almost all fields presently producing they are either too small or too well understood before development to show any growth, or for older fields any reserve growth will already have been found.
Of course the second cited paper ignores everything recommended in the first and incorrectly applies growth numbers from old US fields to everything now discovered. They also have so much new discoveries proposed that it will take 250 years to find them at current rates.
Hi George,
Most of the growth has come from large older fields and a very small percentage account for most of the growth.
Where are most of the large oil fields in the World?
The oldest large fields are in the US and from 1980 to 2005 US reserve growth was 63% if 2P reserves are 70% larger than proved reserves.
The USGS proposes that the rest of the World my look like the US ( as most of the super giants are outside the US and these are the fields that have grown the most (or a subset of these fields), it is possible that the USGS estimate is too conservative.
Note that I think the estimate of undiscovered resources and reserve growth by the USGS is probably too high.
That is why I use a URR estimate which is 800 Gb lower than the USGS estimate.
Their estimate is 3560 Gb (when the US is included), let’s round to 3600 Gb (as more than 2 significant digits is not warranted).
My estimate for non-continuous oil resources is 2700 Gb (I use 60 Gb for World LTO and I am rounding the 2740 Gb to 2700 Gb).
Ron, you are staking your house on an 8% Saudi decline rate, and snapping at Dennis, based on a 10 year old report (that no longer exists seemingly) of “a Saudi organisation”. At least say what organisation you think it is. If its not Aramco, and we can fairly safely say it would not have been, what is it but someone else’s best educated guess that you are taking as gospel?
I think Ron wrote Saudi Aramco.
Brian, you are questioning my honest. I quoted that site at least two dozen times while it was still active, on both TOD and my site.
Here I quote it two years ago but the site was taken down some time a couple of years earlier.
OPEC Update and my argument that OPEC is producing flat out
Saudi admitted, early that their old giant fields were in steep decline. Ravensworth.org published the following quote about eight years ago however their web site has since been taken down:
One challenge for the Saudis in achieving this objective is that their existing fields sustain 5 percent-12 percent annual “decline rates,” (according to Aramco Senior Vice President Abdullah Saif, as reported in Petroleum Intelligence Weekly and the International Oil Daily) meaning that the country needs around 500,000-1 million bbl/d in new capacity each year just to compensate.
And I said Saudi ARAMCO
EDIT: Hey, here it is from The Oil Drum’s Heading Out. Would you believe him?
Updating Saudi oil production plans
The answer lies in another quote from the EIA page.
These numbers have been much discussed, in earlier posts here and conjectured about by a number of authors. But this is an upgraded set of values and I will write more on this in a specific post, following this one. But it is worth noting that this drop will require an significant number of additional new wells each year, over and above the new production wells. And in light of our earlier comments this is where the extra 60 drilling rigs will come into play. (60 rigs x 6 wells per year x 3,500 bd per well, is close enough to 1 mbd per year of new production).
What I write I can verify. Do not question my honesty. It just pisses me off.
Hi John,
I agree with AlexS’s assessment. In short, no not much further increase in output will come from Russia and Saudi Arabia, certainly not until oil prices rise above $70/b in 2018, and perhaps never.
The combined output of Russia and KSA will remain within +/- 2 Mb/d of 2015 C+C output levels until 2020 in my view.
IMHO Alex missed the bigger picture. Exports will decrease. Might be significantly because more and more oil will be processed internally.
This link is not directly related to the current topic so any discussion of it should be put in the last open topic post but it is well worth the time to read it to anybody interested in the long term prospects of the oil industry.
Office Refugee posted it first in the open topic thread, but I doubt if any body much is looking at it now because it is getting stale.
http://www.theatlantic.com/magazine/archive/2016/06/chinas-twilight-years/480768/
The word of the day is chimera.
The Bakken is one ugly beast, a razorback with a huge amount of lipstick smeared all over the thing from front to back. It has cost investors a bundle.
Not to worry, the farm is still there. har
RW, you remind me of my good friend Mark. He also talks in riddles 🙂
OIL AT $45 A BARREL PROVING NO SAVIOR AS BANKRUPTCIES PILE UP
“Three bankruptcies this week shows that $45 a barrel oil isn’t enough to rescue energy companies on the verge of collapse…
…Since the start of 2015, 130 North American oil and as producers and service companies have filed for bankruptcy owing almost $44 billion, according to law firm Haynes & Boone. The tally doesn’t include Chaparral Energy Inc., Penn Virginia Corp. and Linn Energy LLC, which filed for bankruptcy this week owing more than $11 billion combined.”
http://www.bloomberg.com/news/articles/2016-05-12/oil-at-45-a-barrel-proving-no-savior-as-bankruptcies-add-up
Not surprising as some (most) of these firms were underwater @ $110/barrel.
They survived by selling shares, junk bonds and flipping leases against a background of relentless/stupid hype. People were desperate to believe; finance lent and that was all that mattered … and matters today.
A few more months of low(ish) prices and the hype will be unmasked as fraud. Two years = 730 tomorrows. How many more before utopia arrives … ?
Never. $45/barrel = too low for drillers yet it is still too high for (broke) customers who would rather spend the spare change they have left on alcohol and beignets.
Alex,
I doubt that Russian will so easily forgive the West the current price slump and sanctions. Remember it was Russia which was one on the main initiators of “freeze” the US and EU managed to derail.
My impression is that Russia wants to process most of its oil internally which will reduce the amount of oil available for export significantly. That’s now semi-official policy.
Production figures are less meaningful in this context then export volumes and are like a smokescreen on the eminent move to oil shortages on world markets.
Yes, production might be stable or slowly declining. But exports will not be stable. They will be declining. Now what ?
nonsense.
1) The current oil price slump is due to supply/demand dynamics, not to western conspiracies. This is very well understood by Russian officials.
2) The Doha deal was torpedoed by Saudi Arabia, primarily due to its conflict with Iran and the intention to defend market share.
3) The output freeze deal was intended at changing the sentiment in the market and prevent further decline in oil prices. This objective was achieved: oil prices are up 70% from February lows, which is partly due to the talks between Russia, Saudi Arabia and others that started in February.
Nobody expected the Doha deal to help oil prices to return to $100 levels, as an output freeze is not an output cut. Besides, the agreement should have been non-binding and there was no mechanism to control its implementation.
An increase in oil prices well above $50 this year is not in Russia’s or Saudi interest, as it could reverse the declining trend in LTO output. Russia’s government officials, management of oil companies and experts generally think that rebalancing of the oil market should be left to market forces, and any attempts to artificially cut supply would be counter-productive. Therefore, nobody saw the failure of the Doha agreement as a tragedy, particulalry as prices are already at acceptable levels.
3) Russia’s oil policy is driven by economic considerations. Cutting oil exports (and hence foreign currency revenues) in order to “punish” the West is like shooting yourself in the foot.
4) As Russian oil production was increasing in the past 15 years, and domestic demand remained relatively stable, the country has been ramping up exports of both crude oil and refined products. Upgrading oil refining capacity means that Russian oil companies are able to increase the share of refined products in total exports at the expense of crude oil.
This results in changing structure of liquid fuel exports, not in the decrease in its combined volume. In fact, the structure of petroleum exports depends on comparative profitability of crude and product exports. Sometimes it is more profitable to export crude rather than diesel or fuel oil.
3) Russia’s oil policy is driven by economic considerations. Cutting oil exports (and hence foreign currency revenues) in order to “punish” the West is like shooting yourself in the foot.
Aleks,
I agree that a sustained embargo on the West by Russia is not realistic economically. Cutting supplies for a month to send a message might be.
Or you could do something else…send your supplies via pipeline to Asia.
There by you get your money and decrease the supplies the West has access to.
Russia pipeline to India:
https://in.rbth.com/economics/cooperation/2015/12/21/gas-pipeline-to-india-being-considered_553397
Russia to China oil pipeline:
http://www.rferl.org/content/russia-china-pipeline-cnpc/27731340.html
Russia to Pakistan pipeline:
http://learningenglish.voanews.com/a/russia-to-spend-billions-on-gas-pipeline-in-pakistan/3193228.html
SatansBestFriend,
I am sorry, but what you and likbez are saying here sounds naïve.
Russia is diversifying oil and gas exports towards rapidly rising Asian markets due to economic and security considerations. But cutting oil exports to Europe, even for one month, would be inefficient and self-destroying.
1) European customers could easily find alternative sources of supply. Saudi Arabia and Iran would be happy to take Russia’s share in the European market and it would be very difficult to take it back.
2) It is impossible to redirect all Russian oil exports to Asia. Nobody there expects sharply increased volumes of Russian oil. China has increased oil imports from Russia, but is not willing to depend entirely on Russian supplies.
There are also serious logistical issues. Russia exports oil to Asia from the fields in Eastern Siberia and Far East.
The fields in West Siberia, Volga-Urals and Timan-Pechora regions are not linked by pipelines with Russia’s eastern borders and transportation costs in this case would be too high.
3) Contrary to what the western MSM is saying, Russia has never used energy exports as a political weapon. The episodes when Russia was cutting gas supplies to Ukraine were related with prolonged non-payments from that country. As soon as payments were resumed, Russia restarted gas supplies. Today, when relations between Russia and Ukraine are worse than ever, Russia is supplying gas to Ukraine as Ukraine is paying for it.
Cutting energy supplies to Europe, even for a month, would destroy Russia’s reputation as a reliable supplier and result in multiple lawsuits and potential multi-billion fines. Note that Russian oil companies own significant assets in Europe, including refineries, oil terminals, storage facilities, etc.
In general, Russia and Europe are so interdependent in the energy sector, that any drastic steps there may have extremely negative consequences for both sides. Not surprisingly, the western sanctions against Russia did not include a ban on the imports of Russian oil and gas. Russia, on its side, will never cut its energy supplies to Europe.
“Russia is diversifying oil and gas exports towards rapidly rising Asian markets due to economic and security considerations. But cutting oil exports to Europe, even for one month, would be inefficient and self-destroying“.
Hey AlexS,
I think you are correct with the bolded part above.
However, if Russia (even for economic reasons) began diverting supplies to Asia via pipelines, wouldn’t that mean there would be less for the West to buy? Due to the laws of mathematics?
Unless of course Russia’s Oil/Gas production is growing to offset the diversion.
Also, please note that my couch potato analysis was meant to be considered under Peak Oil/ELM conditions. Not BAU as in today. I should have specified.
If there is anyone to trust on this point…It isn’t me!!! LOL!
thanks for you analysis AlekS.
No. Try putting together a spreadsheet with sources and sinks. Use transport costs to link these two. When you do you’ll see the only difference is to change transport costs and security.
I used to work and live in Russia and I’m sure they are using models like we did to understand the best options to move Russian oil.
I’m a bit outdated, but what we see is a need to refine oil for internal consumption with a better kit. They need to improve their refineries to grind oil molecules for real.
Assuming no growth in world oil production and that shipping oil to China/India/Pakistan wouldn’t free up that same amount on the world market.
How would Russia shipping their 500k oil via pipeline to China, not reduce the amount that is available for the West?
I think it is safe to say I am the one that is wrong here given I have no experience at doing this.
Would love to see an example spreadsheet Fernando to see what you are talking about.
If Russia sends 500kbopd to China this frees an equal amount from the Middle East to go to Europe. If you build the spreadsheet properly it works like a wackamole game.
The analysis assumes open bidding for oil loads in a transparent market. That is no boycotts or sanctions. The transport costs are built into the bidding strategy.
A very complex version includes the crude assays and can work it down to product prices. But these models are incredibly secret. They are kept in hidden bunkers by large traders.
Alex,
In general, Russia and Europe are so interdependent in the energy sector, that any drastic steps there may have extremely negative consequences for both sides.
That’s exactly what EU is doing with the USA pressure applied. Severing the ties. They view Russia as the EU energy colony (which it was under marionette regime of drunk Yeltsin), no more no less. And resent any moves in the direction of Russia’s independence or “fair” play and escaping neoliberal globalization rules which dooms Russia to poverty.
Or you have other thoughts about this.
Also if the USA invaded Iraq, and France (with full USA support and encouragement) Libya to get “closer” to the oil deposits in those countries, why do you think that the oil price slump is a “natural” and not, at least in part, “engineered” event. When the speculative boom in US shale and Canadian oil sands (as well as several new projects coming on line simultaneously at the time) and Saudi new leadership were used to bail out Western block from sliding into the second round of the Great Recession by driving oil price down until it really hurts.
And decimating Russia’s and several other countries economies and the standard of living in the process. With the US shale as collateral damage thrown like the empty bottle to the garbage can. And with the USA conventional oil industry severely hurt.
That’s how great powers behaved all the time in history. You can’t find morality or “fair play” rules on this level. It’s jungles where the strong rules and weaker nations needs to suffer what they must. Nothing new here (with the UN emasculated). That’s what the famous book
Moral Man and Immoral Society was about.
What will be the naïve view in this particular case ?
Alex,
This is a very questionable assumption. Supply/demand dynamics, especially reckless financing of shale in the USA was a factor (as in “crisis of overproduction” — if we remember classic Marxist term ;-), but this is only one and probably not decisive contributing factor. Paper oil, HFT, Saudis oil damping and Western MSM and agencies (Wild cries “Oil Glut !!!” “OMG Oil glut !!!” supported by questionable statistics from EIA, IEA and friends) were equally important factors. It you deny this you deny the reality.
Remember the key Roman legal principle “cue bono”. And who in this case is the prime suspect? Can you please answer this question.
And please remember that the originator of the word “conspiracies” was CIA (to discredit those who questioned the official version of JFK assassination).
I agree, but this not the whole story. Western MSM went to crazy pitch trying to amplify Saudi animosities and to play “young reckless prince” card toward Iran and Russia. Do you remember the interview the prince gave to Bloomberg just before the freeze ? Do you think that this was accidental?
BTW I agree that this was a huge win of Western diplomacy and “low oil price forever” forces.
Nonsense. First of all mankind now needs oil above $100 to speed up the switch to hybrid cars for personal transportation, and Russia and Saudi are the part of mankind.
It is also in best Russia’s and Saudi economic interests, contrary to what you read on Bloomberg or similar rags. World oil production is severely damaged by low oil prices and 1MB/d that shale it can probably additionally produce in best circumstances is not that easy to achieve after this slump.
And definitely $50-$60 price band is not enough to revive the US shale. LTO is dead probably on any level below $80 and may be even above this level. That does not exclude “dead chicken bounce”. Moreover LTO is already played card. In reality it probably needs prices above $100 to fully recover.
For probably the next five-seven years everybody will be too shy in financing shale and other high risk oil production ventures. So the oil price will probably set a new record. After that we will have another round of “gold rush” in oil as institutional memory about the current oil price slump will gradually evaporate. Neoliberalism is an unstable economic system, you can bet on that.
Nonsense. No nation politics is driven only by economic consideration but Russia stupidly or not tried to play the role of stable, reliable oil and gas supplier to people who would betray you for a penny. And sometimes this desire to play nice with the West led to betraying its own national interests.
If I were Putin I would create strategic reserves and divert part of oil export to them to sell them later at higher prices. Buy low, sell high: is not this a good strategy 🙂
Or play some other card by artificially restricting export of oil to Western Europe to refined products (and to please the USA, as it so badly wanted Russia to restrict supplies to EU to damage their long time strategic partner 🙂 and let the EU face consequences of their own polices.
But this is probably not a possibility as neoliberals still dominates in Russia. Especially oil and economics ministries. Reading interviews of Russian oil officials is pretty depressing. They swallow and repeat all the Western propaganda one-to-one. Unfortunately. In this area they have a lot to learn from Americans :-).
Exports are reliable hard currency stream. But it not a stable stream, as Russian recently discovered.
At the same time, increasing the volume of high additional value products such as plastics, rubber, composites, etc is in best Russia’s interest. It is difficult to achieve though. I think creating the ability to withhold substantial amount of oil from the markets for the periods of say 6 to 12 month is more important. And here they can get some help from OPEC members, Saudi be damned.
This is a tricky balancing solution, but still this is some insurance against the price slumps like the current one, when Russia was caught swimming naked and did not have any viable game plan. It is unclear what is the optimal mix, but in no way this 100% or even 80% raw oil.
Renewables: The Next Fracking?
Thus solar panels will have a U shaped price curve:
If that “U” shaped curve turns out to be true, its a great reason to get on with the “Great PV Rollout” now, on a massive and unrelenting scale, while prices of fossil aren’t prohibitive.
And in 30 years when those panels are no good and broken down?
In-situ lignite gasification, 4th generation photovoltaics, heavy oil sludge pots, etc.
Of course this will only be for the wealthier 1/3rd.
Doug. There are rumored to be a couple more multi-billion dollar bankruptcies being filed next week.
As I have stated, I was not paying attention in 1986. I feel that things are worse in this bust than in 1998-1999.
Wonder if there is a way to determine which of the three busts has been the worst so far (I do not think the current one is over yet, it could last quite a while)?
Hi Shallow,
Well, the ’86 bust was bloody terrible for me; I had kids in university then. Of course it was much worse for some of the other guys. At least my wife had her teaching/research job in Sweden so we managed. On a personal level I’d say it depends on where you’re sitting. Sometimes I feel like a shit babbling on here when some very smart, productive and capable people, like you, are in the thick of it.
Hi Doug,
On a personal level I’d say it depends on where you’re sitting.
Very true. Those in the trenches always suffer most.
Hi Doug.
I guess I am just wondering if there are any statistics out there comparing job losses and/or company bankruptcies?
I have read 25% of US E & P/ service co went BK in 1986. The US bankruptcy law firm Haynes and Boone is tracking oil and gas BK this time around. Through 4/30/16, 69 had filed with debts totalling about $35 billion.
The list doesn’t include May, which could see another $20 billion of debt alone in BK for the industry.
Of course, it is still my opinion that many more companies are technically insolvent as reserve values are below debts of most.
If you would have told me in 2013 that $40 oil would be brining us great relief, is would have said you were certifiable.
In my opinion, almost all drilling activity at present in the US lower 48 is to avoid closing down company divisions. So many in the Bakken with just one rig, for example.
U.S. energy bankruptcy wave surges despite recovering oil prices
http://www.reuters.com/article/us-usa-energy-bankruptcies-idUSKCN0Y42BK
Imagine that. Bankruptcies and defaults.
No need to imagine.
Very good article on Ft Mac.
Towards the end: “Most Albertans and most Fort McMurray residents never wanted reckless growth. In a heartbeat they would have voted to slow down the tarsands years ago with higher royalties and better regulations, but their political masters refused to put on the brakes.”
http://thetyee.ca/Opinion/2016/05/13/Fort-McMurray-Slow-Burn/
Who does not want higher royalties? As for their political masters putting on the brakes, politicians are worse than these E&P Company Execs. They are all just trying to feed the beast and keep as much money coming in as possible. The only difference is that the politicians will keep getting reelected without the least bit of accountability. At least the E&P company execs will have their equity wiped out and assets sold off.
Satellites over the DESERT Again
“Much like OIL , lithium is in vast supply. Also much like OIL a lot of that lithium can’t be recovered economically at a reasonable cost of extraction. Lithium that exists but can’t be produced economically essentially doesn’t exist for the fundamentals of supply and demand.”
http://seekingalpha.com/article/3974819-rundown-controls-acreage-offsetting-teslas-nearest-lithium-provider
http://satelliteoerthedesert.blogspot.com/
Can’t help but wonder if some these plays will turn out like Monterey Shale ?? It may be there.. but …
Of Interest from the above SA Article.
“It Isn’t Hard To See That Lithium Demand Is Going To Grow
>UNLESS you are invested in oil and gas stocks or work for an oil and gas company, you are likely rooting for the electric vehicle to succeed on a massive scale.
>Goldman Sachs estimates (in report linked earlier) that just a 1% increase in the share of this market going to electric cars would cause total global lithium demand to increase by 50%
>Lithium is not traded as a commodity. There is no lithium listing on an exchange. The price is set directly between customers and the four major suppliers listed previously”
Rockefeller eat your heart out.
Rockefeller eat your heart out.
Yeah and unlike coal, oil and natural gas, which once burned are gone forever, lithium carbonate, cobalt and nickle can be recovered over and over again from recycled batteries giving them many many lives…
And to add a little to Fred’s most excellent remarks, consider the possibilities of easily mining as much of these three key elements as we are likely to need, illustrated by way of the example of oil.
The oil industry managed to hold production steady for roughly a decade by spending like hell as the wholesale price of oil went up by a factor of five.
We can probably deal with the price of these three elements going up by a factor of ten or even TWENTY considering that not THAT much of any of the three are needed to build an electric car, and that they WILL be recycled rather than lost as pollution into the air we breathe.
Article says a standard cell phone uses 5-7 grams of lithium carbonate and a Tesla Model S uses 63 kilograms of lithium carbonate.
There is probably plenty of lithium to last at least a generation even if electric car sales go ballistic.
Beyond that, ???
This link is the best one I have run across on the subject of lithium supplies.
http://www.rmi.org/Content/Images/Lithium%20ion.PDF
If the supply of lithium runs really short, and no other battery technology can be substituted, then really small, very short range cars electric cars will suffice, because they will HAVE to suffice.
I for one believe lawyers to be in law school today will be driving fore and aft two seaters from their mansions to their offices before they retire.
We will be in very deep shit if the oil supply curve goes shark fin, but if Dennis and the guys who think like him turn out to be correct, between changing lifestyles and changing technologies, we can probably deal with peak oil ok for a generation or maybe even two without the bau house of cards collapsing.
We never see some possibilities mentioned, but consider this for instance. You have a house fairly close to a place with a great job, say within ten miles. Your twenty five mile range plug in car gets you there and home.
You retire. Your replacement offers you more than you think your house is worth, so as to be able to get to work easily. You move thirty miles, or three hundred, or a thousand miles, to a place that is both cheaper and probably more pleasant to boot, and being retired, you only have to drive ten or twenty percent as many miles as formerly.
OFM. Just like the retirement communities in AZ and FL, our small towns now permit people to drive golf carts on the streets. They are not permitted on the state highways in town, or outside the city limits, although they are ok to cross the state highways in town.
We have quite a few people driving them, when it is 50 F or warmer. Most are battery powered, some are gas powered.
Aw,c’mon, OFM, think outathbox.
Forget the lithium. Use the extra PV juice you get every now and then to compress air. and, run your house trash thru a pyrolyzer to get a fuel gas.
When you want, charge up your car with compressed air and a few liters of fuel gas. Hit the road with the compressed air going thru a burner burning the trashgas into a turbine from a turbocharger you got from the junk yard.
The turbine puts out 3 times as much oomph to drive the car because it’s not driving its compressor. Zoom! You zip past all the golf carts.
Then, being old and poorly sighted and reflexed, you hit a curb, flip over, and are dead like old geezers like me oughta be.
All good, all around.
Next problem?
Compressed air is sooo old school-
Use your extra PV output to produce H2 from water, and put that in your fuel cell hybrid (coming 2017)
http://automobiles.honda.com/clarity
Hydrogen production for use in fuel cells is undergoing a lot of study. Here are some examples of the innovation happening on that front-
http://phys.org/news/2014-09-hydrogen-production-breakthrough-herald-cheap.html
http://fuelcellstore.com/horizon-hydrofill-pro-fch-020
There are innumerable locations that can produce electricity via wind or PV, but have no grid connection (or power purchase agreement-PPA), like a gas well without a pipeline. So-called ‘stranded’ production.
Hydrogen production on-site would be a great solution at these locales. A similar scenario plays out if your state laws/utility don’t pay you for excess PV production (net metering).
It gets me to wondering if heavy oil would be amenable to using in a fuel cell, rather than being refined and then burned in a ICE???
Wait till a few garages/house get blown up, then we’ll see how popular hydrogen is. As for heavy oil, far too many contaminants and likely to clog the membrane.
NAOM
I’m thinking about after the crash survival tech. I can easily make a trash/wood pyrolyzer, that gives me really cheap gas fuel. I can run that fuel thru any ICE, of which there are an infinite supply already lying around in the junk yards.
If I were far sighted enough to have PV, which I do, I could use it to compress air, and do the turbine trick with it. Infinite supply of turbines lying around too.
BUT, no way can I make a fuel cell.
While I do not like hydrogen due to its storage issues, the production of liquid organic hydrogen carriers may be a solution that even works for smaller sites.
BTW: Excess wind and PV may be better stored as liquified air (ntrogen), which is used to drive turbines.
Lithium makes up less than twenty percent by mass of lithium carbonate, so a Tesla S actually has only about eleven kilos of actual lithium in the battery.
The price of lithium can go up four or five times, or even ten times, without being a real problem because the lithium is only a very minor line item when considering the whole cost of an electric car.
And a plug in hybrid such as a Volt needs only about a quarter as much lithium to begin with.
The article is about demand driving development of aditional commercial suppließ. Perhaps it will be like Si was for PV. . Periods of high price will mushroom supply streams. Guess semiconductor grades are not traded on exchanges and not manipulated even with Washington’s tariffs monkey business on PV.
Just in case you missed it:
“Big Oil To Invest In Renewable Energy”
Another myth is ‘clean’ (industrial) energy, but that’s beside the point…
When BAU/GAU (Governpimps As Usual) own most of the power– energy and political– then maybe we can expect an effort by them to large-scale centralize control of so-called renewables as well.
How?
How about grid-tied solar and wind-farms, attached to EV’s/their batteries to supposedly smooth out the intermittencies.
The sheeple will buy into this.
Don’t say I didn’t warn you.
Utilities love EV’s; Pooh loves honey.
Thanks Ron for the update. Here is my updated GOR graph. And yes GOR is still increasing.
Here is a graph showing 24 months cumulative production by first production month. It looks pretty much flat. So no indications of decreased ultimate recovery. However if they are pumping up the oil faster as the GOR graph indicates, then that should of course make the graph look more favourable for later dates than if they would not have done that. So we can´t really make any conclusions from the graph.
Here is a snapshot what the production was after 24 months. It also shows gas to oil ratio and water to oil ratio (not water cut). The dotted black line is just the 3 months centered average of the black line.
It actually shows a slightly declining trend in production. 2013 and beginning of 2014 has about the same production as 2012. But 2012 did not have as good initial production as 2013 and 2014 had.
While oil production in the Bakken has been in decline for more than a year, natural gas production continues to increase. As there is no big natural gas fields in North Dakota and most of the gas is associated, this trend can be entirely attributed to the rising GOR.
Oil and natural gas production in the Bakken
source: NDIC
Since the beginning of the shale boom in the Bakken North Dakota
the natural gas to oil production ratio has increased almost 3 times
Natural gas to oil production ratio in the Bakken (kcf/barrel)
Anybody know if choke setting affects GOR.
Why would they have been decreasing the choke for the entire 2008 to 2016 period?
There is likely a geological explanation for increasing GOR and Fernando has already given it to us.
Yes choke affects GOR, so does depletion.
The U.S. Department of Energy’s EIA projections continue to miss the mark.
Much ink has been spilled over the vast difference between the scenarios put forward by the U.S. Department of Energy’s Energy Information Administration (EIA) and reality. And whatever the arcane arguments made by EIA, the fact remains that even without the impact of new policies, the agency’s scenarios remain utterly incongruent to current reality.
Unlike the agency’s Annual Energy Outlook (AEO), International Energy Outlook focuses on global trends. But like AEO, the report misses the boat on renewable energy and makes projections about the fossil fuel industry which run counter to facts on the ground.
International Energy Outlook 2016’s section on electricity forecasts that total generation from renewable energy sources will rise 2.9% annually under the baseline scenario to reach 29% in 2040, driven by non-hydro renewable energy rising 5.7% annually. By contrast, EIA expects global coal use to rise 0.8% annually, and for coal to still represent 29% of global electricity generation in 2040, the same amount as renewable energy.
Dennis, I posted a link and a excerpt a couple hours ago but, it seems to have been caught by the spam filter or something. Should I try again or wait and see if it surfaces?
What month was it when the production was at 1.2 million barrels per day with maybe 10,800 Bakken wells, the average of about 108 barrels per well per day?
The rest of the wells were from other formations, Lodgepole, Madison, Red River, etc.
Dec of 2014?
Now there are 13,017 and the production is 100,000 BPD less. Another 2000 Wells or so and not as much oil.
The handwriting is on the wall. Decline is a bad word.
Time for a trip to Xanadu.
Samuel Taylor Coleridge wrote the poem Kubla Kahn. My favorite poem of all time. Fun to digress now and then.
Didn’t see this posted. Hope it’s not a duplicate.
Baker Hughes Rig Count is out. Looks like Lower 48 lost 9 rigs. Oil is down 10. Gas is up 1.
( Sorry I don’t know how to post pictures, tables, or graphs)
The Baker Hughes Rig Count is out. Total rigs down 9 to 406. Oil rigs down 10 to 318.
Maybe the economists and the cornucopians are RIGHT after all, and we need not worry about the peak oil issue, because we can INNOVATE and SUBSTITUTE our way out of any sort of economic problem.
AS RW would put it, har har, HAR, extra emphasis mine.
But NEVERTHELESS:
http://cleantechnica.com/2016/05/13/chevy-bolt-production-rumored-start-october/
I wonder how many years it will be before a cheapskate like me can buy one used for peanuts?
China oil production decline is accelerating:
China April crude oil output lowest since July 2013
http://www.reuters.com/article/us-china-economy-oil-output-idUSKCN0Y5059
China, the world’s fourth-largest oil producer, pumped 5.6 percent less crude year-on-year in April, official data showed, as oil firms struggled with cost pressures with crude prices hovering around $40 a barrel.
Data from the National Bureau of Statistics released on Saturday showed China produced 16.59 million tonnes of crude oil last month, or about 4.04 million barrels per day (bpd), the lowest rate since July 2013 on a daily basis.
Production in the first four months was down 2.7 percent over the same year-ago period to 68.14 million tonnes, or about 4.11 million bpd.
PetroChina, the country’s top producer, recorded a 0.2 percent drop in oil and gas production in the first quarter and Sinopec scaled back domestic crude production by 10.35 percent in the same period, companies said in April.
Offshore specialist CNOOC Ltd, however, delivered a 5.1 percent rise in total net oil and gas production in the first quarter over a year ago, thanks to new Chinese offshore fields.
Natural gas output last month rose 5.6 percent on the year to 10.6 billion cubic meters, with production up 5.3 percent in the first four months, the data showed.
That is a lot. It could be because of temporary shut-ins in some fields. But if it´s because of declining production, then they are in deep trouble. 5.6% would translate to more than 40% decline in just 10 years.
These are not temporary shut-ins. Apparently that’s peak production in China’s mature onshore fields, particularly Daqing, where until 2015 production was supported by massive infill drilling.
Daqing was the last of the post-WWII era giant oil fields to reach peak output levels.
Bloomberg’s version: China’s Oil Production Drops Most In 4 Years
China’s domestic oil production dropped 5.6 percent from a year ago to 16.59 million metric tons in April, the steepest slide since November 2011, according to government data released Saturday. The trend is likely to worsen in the months ahead and, along with U.S. production declines, will help rebalance the global oil market later this year, according to Gordon Kwan, head of Asia oil and gas research at Nomura Holdings Inc. in Hong Hong. The cut in production comes as the nation boosts imports to meet record refining demand.
This is what happens to all oil producing nations… sooner or later.
Oh “trend is likely to worsen”, do they mean that decline rate will increase even more? 5,6 % is already a lot. IEA totally missed this. In their oil market report they have Chinese production at 4,2 million barrels per day for all of 2016.
More musings for grins and giggles.
All we as humans need to do is start manufacturing oil abiotically. What is the problem?
Grab the excess CO2 from the atmosphere, bottle it in secure vessels, take out the oxygen, add hydrogen, voila, abiotic oil. Hydrocarbons synthetically appear, just some anthropologic ingenuity at work and pesky peak oil goes away like magic.
You will reduce the CO2 down to 295 ppm like it should be, and you will have brand new oil from oil that has been burned already.
The ultimate recycling program. It will be a challenge. Use wind and solar to retrieve hydrogen from water through electrolysis, string carbons eight long, seven long and bond another carbon along the chain for more octane oomf.
Plenty of carbon, lots of hydrogen, the elements are there, just takes some thinking. Won’t even have to drill for oil anymore, the earth can remain pristine all over again.
We will be home free.
Sounds crazy and it is. One can dream.
Pie-in-the-sky, but what the heck.
Grab the excess CO2 from the atmosphere, bottle it in secure vessels, take out the oxygen,
Just how does one “grab” the CO2 from the atmosphere. How much energy does that consume. And how much energy does it take to remove the oxygen from the CO2?
add hydrogen, voila, abiotic oil.
Removing the hydrogen from water via electrolysis is an energy intensive operation. In fact it takes more energy to get the hydrogen from water than you would get from the hydrogen if you just burnt the hydrogen directly.
string carbons eight long, seven long and bond another carbon along the chain for more octane oomf.
How does this operation work? And how much energy does it consume?
But not to worry, electrical energy from the sun if free… is it not? Free, free, free… therefore we can use ten units of energy from solar panels to create one unit of liquid energy from the atmosphere.
Yes, energy from the sun to create liquid fuel for transportation, that’s the ticket. I wonder just why no one has ever tried this scheme? Why, why, why… after all it is all done with free energy?
I think the idea is to use a “carbon deoxygenator” and a “hydrogen deoxygenator”, release the oxygen and use the deoxygenated atoms to make C6H14. This product can be sold at $60 per barrel quite profitably, and outcompete wind and solar.
Ya got a typo in there Fernando, and you forgot your smiley face.
I think the idea is to use a “carbon deoxygenator” and a “hydrogen deoxygenator”, release the oxygen and use the deoxygenated atoms to make C6H14. This product can be sold at $600 per barrel quite profitably, and outcompete wind and solar. 😉
The best technology to sequester carbon is 100’s of millions years old and
costs nothing. One can take advantage of this technology by ceasing
industrial agriculture techniques and espousing ecoagricultural techniques
(which produce more food per unit area than industrial
techniques) http://e360.yale.edu/feature/soil_as_carbon_storehouse_new_weapon_in_climate_fight/2744/
We will give up industrial agriculture the same year frogs sprout wings and quit bumping their asses to get around.
It’s not that it is technically impossible to do things differently in the farm sector but rather that we aren’t going to, to any significant extent, until……….. well , I am not sure WHEN, but compared to going back to localized, small scale, organic farming methods in developed countries, transitioning to renewable energy and getting rid of all the oil burning personal cars in the world, and putting every body in a net zero energy house will be child’s play.
It is PERFECTLY safe to assume industrial agriculture is safe from the economic and political points of view, as far as the eye can see, or until it is literally impossible for it to continue.
Some people might think I am just stuck in my own intellectual box, and unable to see outside that box.
But getting Mr and Miss citizen to drive an electric car, or live in a net zero house is merely a question of making the car and the house available at an affordable price.
Getting people to give up their way of life and eighty or ninety percent of the foods they take for granted is a political NON STARTER to put it as mildly as possible.
I am enjoying a fruit basket right this minute that has nothing on it that didn’t grow at least a thousand miles to the south. Without industrial agriculture, I would never have another orange or banana unless I moved to a semitropical environment. The cheese on the tray came from a thousand miles north and west.
My parents ( up until the sixties or so ) and grandparents and their parents before them kept free range chickens raised entirely on home grown feed using only a little purchased fertilizer. Those chickens were mighty tasty, but that sort of chicken costs at least twice as much at my local upscale supermarket as industrial chicken costs at the same store.
Doing away with industrial agriculture would mean most of us comfortable with urban and suburban life would have to MOVE and change our life styles substantially. It would mean giving up most of the EXOTIC foods in our diet , such as fresh produce in the winter time, and apples in March, etc. Fuggettabout shrimp and oysters except if you lived on the coast and had a ton of money.
But OBESITY would no longer be a problem, lol, I guarantee it!
Industrial agriculture will last as long as it is possible to maintain our usual and accustomed way of life in developed countries.
Agree with you OFM about industrial farming. I feel the same way about hydrocarbons. Nothing out there can replace hydrocarbons or industrial farming without major major disruptions.
We will give up industrial agriculture the same year frogs sprout wings and quit bumping their asses to get around.
Well, these flying tree frogs are pretty close 🙂
Rhacophorus nigropalmatus
This is way better than the answer I was trying to come up with. Fantastic!
Great shot, Fred! Maybe I oughta make my solar/wind/muscle boat that way. 4 big gas bearings sticking out the corners of a square covered with PV, all skimming the lake, wake-free. Beautiful.
Great design wimbi. Put swivel motors under each pad and you will get tremendous maneuverability.
Ron Patterson wrote “Removing the hydrogen from water via electrolysis is an energy intensive operation. In fact it takes more energy to get the hydrogen from water than you would get from the hydrogen if you just burnt the hydrogen directly.”
This argument does not make sense. You start with water, produce hydrogen via electrolysis, synthesis fuel from CO2 and hydrogen, and burn the fuel to CO2 and water. This is a CYCLE.
Whether it takes more energy or less to cleave water is meaningless as long as hydrogen ends in the fuel and can be used to produce water again.
Hint: If cleavage of water did consume less energy you would get less energy by burning the synfuel. Sorry that is basic chemistry. 🙂
Ulenspiegel, your command of basic chemistry is not very strong but your command of the laws of thermodynamics is even weaker.
When hydrogen oxidizes, or burns, it combines with the oxygen atom to form a water molecule. This bond takes less energy than was held in the two separate atoms, hydrogen and oxygen. That excess energy is given off as heat. If you separate these two atoms again, that same amount of energy must be restored. You are, in effect, unburning the water molecule, separating them again into one hydrogen atom and one oxygen atom. But that process also consumes energy, the energy that it took to build and operate the power plant, generator, or solar panels etc. etc. Therefore it takes more energy to “unburn” hydrogen than you get when you burn it again, that is oxidizing it back into water.
You seem to believe that the energy it takes to generate hydrogen can simply be ignored. Absurd! Energy always matters. It is all explained in the article below, starting with a quote from Jules Verne.
The Hydrogen Hoax
Long Snip:
So if we put aside the spectacularly improbable prospect of fueling our planet with extraterrestrial hydrogen imports, the only way to get free hydrogen on Earth is to make it. The trouble is that making hydrogen requires more energy than the hydrogen so produced can provide. Hydrogen, therefore, is not a source of energy. It simply is a carrier of energy. And it is, as we shall see, an extremely poor one.
The spokesmen for the hydrogen hoax claim that hydrogen will be manufactured from water via electrolysis. It is certainly possible to make hydrogen this way, but it is very expensive — so much so, that only four percent of all hydrogen currently produced in the United States is produced in this manner. The rest is made by breaking down hydrocarbons, through processes like pyrolysis of natural gas or steam reforming of coal.
Thanks Ron, I was naive about the energy requirements to claim the hydrogen from water for fuel. There is a lot of work going on with fancy catalysts for the reaction, but I suspect none are likely to be a game changer for this poor energy equation.
Japan is investing heavily in the “hydrogen” energy system, including big plans to gasify Australian lignite in situ.
Their dream- http://www.nippon.com/en/currents/d00167/
It’s really just basic laws of thermodynamics, in that no transfer of energy is 100% efficient so, if you were to start with a given quantum of energy and use it to split water into it’s constituent atoms and then use the energy available from re-establishing the bonds to split more water, rinse and repeat, you would eventually end up exhausting all the energy you started with.
The amount of energy lost is going to depend on the efficiency of each conversion and that’s where the hydrogen boondoggle gets really ugly. You might find the following article interesting.
Fuel Cell Efficiency: A Reality Check
Fuel cell proponents point to the device’s high efficiency as one of the major advantages of the technology, but just how efficient are they really?
Hat tip to RW,
All of us here know the business as usual applecart of American politics is upside down in the ditch. Noboby EVER predicted the two major parties would run candidates with the highest negatives, etc.
The financial apple cart is teetering, with at least one wheel about ready to fall off.
And the world of big business industry is has likewise in recent times been hit with tornadoes that SOME people refer to as constructive destruction, as one new industry after another kicks an old one off the top of the heap.
The battery industry is now threatening to displace the internal construction engine in personal vehicles, and the wind and solar industries look to be set to eat most of the coal industry’s electricity lunch.
But these things take a while.
With the political situation so strange, nothing seems impossible any more, especially if you have a snort or two to lube up your imagination.
I wouldn’t be altogether surprised to see oil shoot up to well over a hundred bucks again within the next year or two. Honest to Sky Daddy, I wouldn’t be TOTALLY surprised to hear the Saudis are thinking about importing coal to generate electricity so as to sell more oil before too long. Hat tip to RW, he could have made some comic hay with this possibility.
Most observers insist it will not happen, but coal to liquid is a PROVEN if expensive technology, and a shark fin fall in the supply of oil would be enough to convince the world that coal to liquid is a GREAT idea. I believe in electricified transportation, but I also believe in the hundreds of millions of ICE propelled vehicles already on the road, and the hundreds of millions more that WILL BE built before electrification can make much of a dent in oil consumption.
Has anybody seen a RECENT estimate of the cost of building a coal to liquid plant?
If the coal market really does stay in the pits insofar as electricity generation is concerned, a coal to liquids company could probably buy coal under a long term contract for only ten percent so above the cost of mining and transporting it.
A country such as India could manage the construction of a coal to liquids plant, and might just laugh at the rest of the world, so long as coal can be bought, in the event oil CAN’T be bought.
Coal to liquids will work at $110 per barrel in a protected environment (meaning where the oil price is allowed to have a floor and there’s no regulatory penalties for CO2 emissions). I think there’s a twist the Indians could use: a nuclear powered coal to liquids plant (it will have less CO2 emissions).
FL: “protected environment”? Unlimited CO2 emissions? Sounds like an unprotected environment to me…
Ask SASOL in South Africa, where they have been economically producing CTL for decades.
The “idear” that the USA will not go down this route is absurd IMO.
110 a barrel CTL is nothing compared to desperation.
Actually the Shenhua Group claim that their direct coal liquefaction process is competitive with oil prices above $60 per barrel. Looking around the internet, CTL projects are going on all over the place, US included. I think a big project is planned for Alaska: amazing given their oil reserves.
Denis an open source paper on equilibrium climate sensitivity Bates 2016
http://onlinelibrary.wiley.com/store/10.1002/2015EA000154/asset/ess278.pdf;jsessionid=A05045A67D48ABC675E3C01444353CE3.f04t03?v=1&t=io7e1sl7&s=275c88f87b3fa294257a09aace247dfb7d14dc98
Your link doesn’t work.
This one does:
http://onlinelibrary.wiley.com/doi/10.1002/2015EA000154/pdf
The paper in its present format is a bit difficult to read as it has not yet been formatted for final publication.
Of course all the denialist sites are using it to support their claims that we can now all rest easy and disregard the high end estimates of climate sensitivity, which despite their claims, this paper does not do!
Bates cites this paper:
The uncertainty interval in the first column of figures is ± 1 standard error;
values in curly brackets in the other columns are the outer limits of the quantity in question.
The slopes of Lindzen and Choi (2011; LC11)
Furthermore, Bates, in his acknowledgements thanks Lindzen And Choi both notorious for papers containing egregious flaws. See link below:
https://www.realskeptic.com/video/lindzen-and-choi-2011/
One of the problems in this study was that Lindzen only used temperature data from the tropics. Which he then used to calculate a global climate sensitivity for a doubling of CO2. Remember my Ohio population analogy in one of the previous sections? This paper is the perfect example of why you don’t do this.
The problem is that the climate has a phenomenon called polar amplification. What this means is that as the world warms it will do so more in the polar regions than in the tropics. Generally speaking the tropics will warm the least compared to other locations on the world. It’s an effect you see if you look at how much, and where, the world has warmed.
This flaw, and many others, are the reason why this paper basically got torn to shreds in the scientific literature. The problem with the new 2011 version of this paper is that this problem, and several others, never were addressed. It’s the reason the 2011 version was rejected for publication in the prestigious journals PNAS and AGU.
For the PNAS submission the peer-review comments are publicly available. And all four reviewers said that the paper wasn’t of suitable quality and the conclusions weren’t justified. This is the reason the paper was ultimately submitted and published in an obscure Korean journal.
As usual when it comes to climate science Fernando is wont to post cherry picked and very unreliable sources!
Kinda of rent a corporate friendly paper?
(I’m being kind)
It wasn’t cherry picked. I posted it because it supports my contention that climate sensitivity is a debatable issue. Therefore, the science isn’t really settled. Given the forthcoming fossil fuel depletion crises the climate change problem is definitely a secondary issue, which merits low priority.
Hi Fernando,
Most science is never “settled”. Yes there are a range of estimates for climate sensitivity. If the low estimates are correct, there is less of a problem, if the higher estimates are correct there is more of a problem.
In either case fossil fuels will deplete, so we need to find alternatives in any case, so it would make sense to get started. The uncertainty is reason to be cautious.
For the same reason that a civil engineer will tend to overbuild a bridge, just in case, it would make sense to assume climate sensitivity is higher to be on the safe side. Once the carbon has been emitted 50% is removed quickly, the next 30% is removed over 300 years or so and the last 13% remains in the atmosphere for over 10,000 years. Better to leave it in the ground.
Aberdeen: the Granite City in crisis
“I’ve been driving people from the Aberdeen airport into town for almost twenty years so I’ve seen downturns before. This one is different,” says one driver.
Shown are Stats as Graphics on the North Sea – “20bn Barrels of Oil Left”. I assume that’s 20 x 10 to the 9th.
http://www.telegraph.co.uk/business/2016/05/14/aberdeen-the-granite-city-in-crisis/
http://www.telegraph.co.uk/business/2016/05/14/shell-eyes-40bn-non-core-asset-spin-off-to-cut-its-huge-debt-pil/
One of the very biggest of the big boys is having a yard sale in order to make ends meet short term.
LT, >> I assume that’s 20 x 10 to the 9th. <<
Yep, no-one here in the UK uses 10^12 any-more. We're so Americanised we're even approaching your obesity rates 🙂
If the Saudi OPEC calculus was designed to inflict pain on Iran one might argue it has had the opposite effect. The sanction lift coincided with oil bottom…Iran is the major benefactor while KSA has many self inflicted fires burning.
http://blogs.reuters.com/reutersselect/2016/05/12/reuters-select-oklahoma-earthquakes-shake-up-insurers/
Externalized cost.
Of privatized gains.
Implicitly… yes.
The day when the Venezuelan oil industry shuts down for duration of the revolution is probably not far away.
http://www.bbc.com/news/world-latin-america-36294939
Maduro is now seizing factories and jailing owners for failing to produce goods they CANNOT produce without imported feed stocks.
We all know about how eager outside business people are to extend any further credit to Venezuelan businesses.
http://www.theatlantic.com/international/archive/2016/05/venezuela-is-falling-apart/481755/#article-comments
How much longer will it be before the oil workers refuse to report to work, or start burning oil production equipment?
Shell CEO: Solar Energy To Be Backbone Of World’s Energy System
Big Oil Leads in Innovations and Renewable Energy
The Greenest Oil Companies In The World
Myth: U.S. oil companies have refused to invest in alternative energy and other clean technologies.
Are oil companies promoting alternative energy?
When renewables meet the oil and gas industry, opposites attract
Difficult to invest in green energy in Canada without Big Oil
Big Oil To Invest In Renewable Energy
Once again:
“n.b. Ferruccio Ferroni is/was president of the NIPCC-SUISSE,
a climate change denier group.
His (apparent) Linked-in page (in German)
https://ch.linkedin.com/in/ferruccio-ferroni-85480060
has some fragment of ‘Head Division Safety bei Leibstadt Nuclear Power Plant’.” ~ sunnnv
Hahaha… Good times… (‘Deny climate change; then/thus push for lots of so-called renewables very fast.’)
See also Acknowledging The Arrival of Peak Government
“Behind Boetie’s thinking was the assumption, later spelled out in great detail by David Hume, that states cannot rule by force alone. This is because the agents of government power are always outnumbered by those they rule. To insure compliance with their dictates, it is essential to convince the people that their servitude is somehow in their own interest. They do this by manufacturing ideological systems…” ~ Llewellyn H. Rockwell, Jr.
Like PV or EV.
With your tax-pimped money.
So keep eating what they serve up. Maybe including Tony Seba’s slop.
Baa-a-a
Caelan- your whole comment can be summed up as –
“boy do I hate being wrong (about solar energy in particular)”
https://goo.gl/J4SztO
Prelude/Angry Young Man – Billy Joel Lyrics [on screen]
And there’s always a place for the angry young man
With his fist in the air and his head in the sand
And he’s never been able to learn from mistakes
So he can’t understand why his heart always breaks
And his honor is pure and his courage is well
And he’s fair and he’s true and he’s boring as hell
And he’ll go to the grave as an angry old man
Anger turns in to hate, cancer of the soul
That’s possible, yes.
And it continues to permeate throughout this violence and hate-based culture.
Those are some contexts in which electriclivingroomsonwheels and pseudorenewables are made.
I know… Let’s take a moment of peaceful silence for Fred…
… while we do that, let’s imagine the effects, including energy cannibalization and/in the race for governpimp-owned-and-mandated national-oil-turned-(pseudo)renewables washing over the the gentle corals of Fred’s ocean…
“Capitalism involves the domination of this class over the working class”
The working class seems to me to be their own worst enemy by demonizing representative government and organized labor. Their ignorance falls prey to corporate media and self centered politicians. Education is the key to success.
What kind of education? The kind that makes it clear that this system is not representative government? Are you a member of the so-called working class then with regard to preyed-upon ignorance?
What so-called class is going to support your system if everyone is educated and pursuing lives of leisure like they were supposed to?
Oh, wait, I know; robots! Pfft.
“What kind of education?”
One that teaches how the world around them works (economics, political science, math, science, communication and critical thinking) . That doesn’t teach the world is 6000 years old and life after death.
Some forms or levels of education aren’t in the status-quo’s best interest.
Then again, much of the status-quo’s interests are not in humanity’s best interest.
Pure capitalism without representation isn’t much more than slavery. The elites need some of the population to be educated to different degrees for their standard of living and protection. Keeping the masses fighting against each other and demonizing government works well for the elites. When the masses unite and rise up the elites lose power.
Caelan, your hurting your own self interest.
United we stand, divided we fall
Maybe Hickory is interested in being right; I am interested in the truth.
For SKY DADDY’S SAKE CAELEN,
“…with Musk being their posterboy, their ‘logo’, like Colonel Sanders or Ronald MacDonald. Do you think Big Oil didn’t/doesn’t have access to Marion King Hubbert’s work and related peak oil details? Big Oil/Big Energy powers Big Government; Big Oil/Big Energy IS Big Government.)”
Who ever wrote that is EITHER and utter and absolutely ignorant fool, or else so contemptous of his readers he takes THEM for utter and absolute fools. And you are making a FOOL out of yourself by posting it.
Somewhere in this very forum within the last couple of days, you admitted you didn’t even know a LEAF is a pure electric car.
Hubbert was MANAGEMENT in big oil, and a professor specializing in oil technology.The damned fool who wrote that quote …………. oh , never mind. The author of it may just be a totally brazen cynic who knows nobody ever went broke overestimating the ignorance of the public.
Is it possible you know even less about Hubbert than you do about the LEAF after hanging around this forum for years?
Do you understand how bad such a quote makes you look?
What? The leaf is electric? I always thought it was part of a plant and photochemical or something. But I hear you can hybridize plants, so maybe your electric leaf is possible as a hybrid. Is Monsanto in on this? They should be. There’s a Mint to be made. Monsanto Mint.
Anyway, it looks like your ‘Leviathan’ is slowly going pseudorenewable, whether the sheeple like it or not– well they do I guess, or would they be sheeple?– or whether it makes any sense or not.
Do you think it was your Leviathan that threw all kinds of sheeple money at ethanol and fracking before, in its bid for survival, before pseudorenewables?
And why our Mike is so bitter about it? Perhaps the smaller fracking outfits were the ones that were not too big to fail? They were not part of Big Oil, except where they got ‘infiltrated’?
But you know, when considering Big-Government-owned Big Oil getting into Big Pseudorenewables; and energy cannibalization (etc.) in the process (C02); and concerns for climate change; those periodic anthropogenic climate change or anthropogenic global warming denialist drive-by’s would seem to make even more sense.
Har?
Big government makes big mistakes of course. Nobody I know, claims otherwise, and nobody has ever heard me claim otherwise.
Big government has outcompeted every other form of social organization, which is why big government dominates in a Darwinian world, and YES, we DO live in a Darwinian world.
But this does not mean that ALL the major players are working in collusion with the government. There are always upstarts who are trying to displace the older established players, and the SMARTER older players keep an eye on the upstarts, operating on the assumption that if you can’t lick’em , then the best thing is to join’em.
This is why big oil is buying into renewable energy. Big oil sees renewable energy being the name of the game within the foreseeable future, and the big boys who own big oil want to KEEP ON BEING THE BIG BOYS.
Now the world wide industrial economy COULD have a heart attack and fall over dead, and anybody with a working brain realizes that this MIGHT come to pass.
But if it does, I GUARANTEE you WON’T like it.
In the meantime, most of the people in this forum are interested in understanding what is happening, and developing insight into what WILL or MIGHT happen, and doing something to make things easier rather than harder.
Hi Caelan,
Three refreshing and for this forum new terms in one post: "Big-Government-owned Big Oil", "Pseudorenewables", and "energy cannibalization".
Especially the last two. Viva to a skeptic in this forum !!!
They are both related to the concept of ERoEI . In order to be economically extractable on large
scale, the source of energy should have EROI over 10. The current generation of PV panels barely meets this threshold ( http://www.academia.edu/7138503/Eroei_Of_Pv_Panels ).
That does not doom it, but that suggest fundamental problems in scaling up this source of electrical energy from single digits.
Another term related to "energy cannibalization" is “energy density” — the term applicable to lithium batteries:
The lower the energy density of the battery, the less efficient is its use in cars, as you need to move the battery along with the useful load. This is another side of "energy cannibalization" which typical calculations of efficiency of EV do not take into account
For "energy cannibalization" see also:
http://www.slideshare.net/romeugaspar/xypartners-cannibalization-insolarenergy
http://www.thisisxy.com/sites/default/files/ficheiros_artigos/xypartners_cannibalization_in_offshore.pdf
And for "Pseudorenewables":
http://addeurope.org/5-energy-the-nefarious-role-of-europe/681
Hi likbez,
I’m just a messenger.
And the implication of the message seems that BAU/Government-As-Usual (which includes Big Oil and ‘Most Oil’); energy cannibalization (including the fracking debacle and the current ME wars– cold, hot and proxy, etc.– and refugee crisis, etc..); global Jevon’s Paradox (where some countries might increase efficiencies, other countries may decrease them and use more oil) assorted and related environmental threats, including anthropogenic climate change / global warming (and its respective propagandic denialism and denial drive-by’s); and Big/Most-Oil/Gov-owned (pseudo)renewables and their ‘mandates’, including EV’s, all very much appear to be intimately/intricately-tied and to support, reinforce and feed off of each:
The crony-capitalist plutarchy machine may very well cannibalize the diminishing remains of its FF lifeblood for another form– hell, climate stability, emergy, democracy, ERoEI, the environment in general, and high-water be damned– in the interest of its ‘survival’, despite that it may be writing its own demise in the process.
Many of us here know only too well about the collapses of previous civilizations. And so it goes…
Those of us on here might do well to use, modify, and/or extend this idea, if or where they think it’s valid, as part of their normal contextual/analytical lenses through which to view, interpret and analyze what is going on.
Thanks for the links, I’ll check them out.
The low energy density of ‘renewable’ transport technologies is a strong driver for re-localisation of society. Redesign society to make habitation, food production, energy production and industry as close to each other as possible, to reduce bulk and individual transport miles as much as possible. We do lose some benefits of industrial scale and high employment densities, and big entertainment events become uneconomic, so don’t buy shares in football stadia.
Of course, this is far harder to do politically than pretending the problem has a technofix, so simply does not exist.
Ultimately, we are in population overshoot, so this will probably all be moot anyway.
R Walter’s post further up got me thinking, what if the money spent on 2000 shale oil wells had been spent installing utility scale PV instead? Since these gizmos that we use to connect to Internet can make fairly light work of doing the arithmetic for some interesting scenarios, I decided to put together a little spreadsheet to do a comparison.
Using Ronald’s figure of 2,000 wells at an average cost of $5.9 million per well, the total cost for all these wells would be $11.8 billion. shallow sand posted an analysis, of the economics for a “typical” Bakken well but, since finance and economics are not my forte, I haven’t been able to come up with calculations I have too much confidence in. To make matters worse (for me), I had a look at the guest post by Ciaran Nolan, BAKKEN – Single Well Economics and I just don’t have the chops to do that sort of work. My curiosity got the better of me and I decided to go ahead with an extremely crude comparison.
Based on this graph from Enno Peters, I tried to estimate average annual production, year by year for seven years for a typical well and came up with 250 bpd average in year 1 with 120, 90, 60, 50, 50 and 50 bpd average for the subsequent six years. That gives 91250 barrels for the first year with 43,800, 32,850, 21,900, 18,250, 18,250 and 18250 for the subsequent years. These numbers are critical to the results so if I am off, I would gladly be corrected. As the old axiom says “garbage in, garbage out”.
I used a price of $35/barrel (wellhead price?) and OPEX and G&A of $8 as per shallow sands’ example. I have no idea how to calculate lease expenses or royalties or taxes or any other expenses so, they are omitted. I also assumed all of the well cost was financed at 5% and that, all of the net income was used to pay down the principal. This very crude spreadsheet gave me a net income, after OPEX, G&A and interest expense of $2.17 million in year one, dropping to $461k in year 7 with a loan balance of $636k.
I attempted to do a similar set of calculations for PV and for the cost of a $5.9 million well you will get 1.97 MW of PV using an installed cost of $3/Watt. This Wikipedia page cites the EIA and gives the lowest LCOE of any source as onshore wind at $65.6/MWh and at that price the interest rate used to finance the project would have to be less than 3.2% for the income of $193520, before expenses, to be greater than the interest, based on the production from an area with solar resources equal to Wyoming or Nebraska (see this map). If the quality of the solar resource is more like the desert south west, or if the installed cost is less, the project could withstand higher interest rates but, under no circumstances will PV generate millions of dollars per annum from a $5.9 million investment. For example using the best available areas in the US and an installed cost of only $1/Watt, would still not break the million dollar mark.
The results show why people, especially those in the oil/FF business, think solar is a waste of time! There is just not the same magnitude of money sloshing around when it comes to PV. In the calculations for PV there is no OPEX or G&A so the situation is actually worse than what the spreadsheet shows. It may be the case that Operations and Maintenance costs (O&M) in the PV business are very low compared to oilfield OPEX but, that suggests that there will be nowhere near the amount of good paying jobs in solar O&M as the are in the oil business. If LTO is bad as an investment, it would appear that PV without incentives is far worse.
I did a little exercise to see how many vehicle miles would be powered by the sample well versus 1.97 MW of PV, using 31 gallons of fuel yield per barrel, average fleet mpg of 20 and a figure of 340 Wh/mile EV power consumption. The sample oil well could fuel 56.6 million miles in the first year and fall steadily to 11.3 million miles in year five with a cumulative 151.6 million miles for the seven years. The PV on the other hand could provide power for 12.1 million miles in the first year, declining slowly to 9.5 million miles by year 25, due to the performance of the PV declining to 80% of nameplate in year 25. The PV hits 150 million cumulative miles by year thirteen and powers over 279 million miles by year 25.
The thing is that even though oil will produce more revenue and arguably a better standard of living for the people working in the industry, at some point that party is going to end. PV is not going to sustain anything like the standards of living afforded by oil but, assuming some semblance of BAU can be kept going the benefits of PV will last a lot longer and there is the possibility that the materials used may be recycled or re-used, unlike the oil which once burned, is gone forever.
https://www.theguardian.com/business/2016/may/15/shell-creates-green-energy-division-to-invest-in-wind-power
It seems to me that most or nearly all of the really big oil companies are putting enough money into wind and solar power ( even if the actual amount is trivial compared to their revenues) that they will have INSIDER access to the all important day to day data of running a renewables operation. When the time comes, they will be ready, and they are in the BEST POSSIBLE position to know when the time will arrive, lol.
Shell says not to expect much out of this new division for about ten years, because management thinks it will be that long before conditions are ripe for Shell to make gobs of money in renewables.
I have posted my theory some months ago.
I will repeat it again.
Climate change is being blamed on fossil fuel consumption/emissions in order to Fast Track alternate energy BEFORE FF production really begins to crash.
1. World leaders have known freaking well for the last 30-40 years that Peak Oil was real-it was literally just a matter of time.
These people are pretty smart-they have authority to use Nuclear Weapons on each other so yeah, they are not dumb asses and actually know what is going on….
2. Back in the 1970’s Jimmy Carter told the US ( and by doing that, told the entire 1st world) that cheap energy -oil, coal, etc, etc (BAU) was going to end so we should start looking at alternates.
He was laughed at and ridiculed. Oil production worldwide was able to massively expand and energy was once again cheap and plentiful.
The road goes on forever and the party never ends.
Plenty of time for more margaritas by the pool.
3. In order to get renewable energy on the fast track ( remember, we are running out of time) “blame” climate change on fossil fuels.
Do it to save the planet.
Do it because oil is toxic. ( Well actually it is….but it is also what transformed humanity and created the world we now live in.)
Do it because it “feels good”…
4. The ends justify the means, but by all means, find alternates to fossil fuels.
Even if you have to make up a story about fossil fuel being the PRIMARY CAUSE of destroying the world thru climate change.
Hey- just ask any old T-Rex or Brontosaurus about climate change and I’m pretty sure they will say the climate has changed a lot since they were walking around.
5. Do whatever you have to and say whatever you must to get alternates in place.
Because fossil fuels WILL become scarce and the party WILL REALLY be over if there is no backup plan.
Margaritas by the pool suck when there is no ice and the pool gets nasty with no circulating pumps and filters.
Sorry about the rant but I am sitting here on my deck waiting to see if my company is going to cut my tickets to Malabo for a short XOM job.
We are going to be right next to Nigerian waters, freaking Niger Delta Avengers shot the crap out of a Chevron rig 2 weeks ago in that area….
That area always sucks and I’m not too happy about going back there…
Forget Nigeria. You should be an intelligence analyst with CIA. Haha just kidding. You suggest climate change is a conspiracy to mitigate peak oil? Now I’ve heard everything!
Hey I agree it sounds waaay out there but,,,it seems to be working, right?
Definitely a weird theory but I’m actually surprised no one could see how the pieces fit together so well, even if you have to force a few pieces together to make them fit!
And it keeps me amused!
You have it completely backwards, when the resources run out they always blame the environmentalists. For example, as the last old trees in the Pacific northwest were coming down and the timber industry shirking they blamed the entire problem on the EPA.
PV Scales all the way down to a cell phone charger. Oil wells do not scale and are not deploy-able unless you name is Jed Clampett. Hundreds of millions will own a PV Systems or Invest in part of one. Energy flows are increasingly controlled by corrupt centralized NOC’s . Soviet Union and now many other Nations are in danger of collapse from dysfunctional centralized Energy “wiring”. Can Electron flows from Centralized PV compete with Distributed PV where the $$ stay Local? In Southern Latitudes Shade from Rooftop PV Arrays is invaluable. Oil wells ya say, In 2010 my dad was scammed into in Shale “investment”, Banksters made m a killin. Gone gone. A few 10kW PV arrays would have been nice. What you think electricity prices will do when Nat Gas prices normalize? Perhaps wise to smartly invest in both the Tortoise and Hare? Failure to prepare is to prepare to Fail.
Hi Islandboy,
The wells never stop declining so for your final three years each year should be 93% of the previous year, this doesn’t really happen for about 10 to 15 years. Below are annual decline rates for an average new Bakken well in 2013. The first year’s average output is 2.9 kb/d and the decline rates are year 1 to 2, 2 to 3, …, 9 to 10.
51.91%
32.53%
26.51%
20.41%
17.02%
14.59%
12.78%
11.36%
Output in barrels per year
87696
42170
28453
20911
16643
13811
11796
10289
9120
8187
7425
6792
6252
5763
Hope that helps. The decline rate eventually levels out at about 7% per year by year 15 and remains at that rate until the well is shut in about 12 years later (with the well producing about 6 b/d).
Thanks Dennis, I worked those decline rates into my spreadsheet but the essential message is the same, relative to PV shale oil will generate more than 15 times the gross revenue in year 1 and still be generating more than twice the gross revenue in year 7! Your figure of 2.9 kb/d for the average first year production seems way out of line with the numbers that shallow sand used in the analysis I referred to or anything that can be interpreted from Enno’s graph below. I was really hoping that shallow or Ciaran would have commented on my estimate but, I guess my work is way too amateurish for them! 😉
Edit: Dennis, after I posted this, I noticed your additional responses below. I will try to add these additional factors into my spreadsheet as I am interested in how these enterprises gobble up millions of dollars!
I also noticed where you mention 266 kb as EUR and wonder how a well that produces 2.9 kb/d can end up with an EUR of 266 kb after 60 months?
Hi Islandboy,
My mistake 2.9 is a factor of 12 too high, I multiplied by 12 where I shouldn’t have, but the numbers for barrels per year are correct. It should have been 240 barrels per day for the average first year output.
Also if you look at the numbers for output per year that I posted (which can be copied and pasted into a spreadsheet) it is clear that 87,696/365 is not equal to 2900 b/d, it is 240.2 b/d. Sorry for the mistake.
Hi Island boy,
The royalties are 20% of output, taxes are another 9% or so. So if you had 100,000 barrels of output, you keep 80,000 barrels and then figure you only get net revenue of 91% of the wellhead price and then you have to subtract opex, G+A, etc.
So at $35/b at the wellhead you get $31.85/b after taxes, then if we deduct OPEX we get $23.85/b, so net revenue would be 1.67 million the first year. Also remember the future revenue should be discounted at 10% per year. With no discount shallow sands wants the net revenue to pay for the well after 5 years. In this case the net revenue is $3.737 million after 5 years and the well is a failure (it loses money). Even after 14 years net revenue is only $5.25 million. I have ignored interest in this example and have assumed the well has been paid for out of cash flow. If the well head price were between 50 and 51 per barrel the well would be paid for after 5 years.
Shallow sand can correct my mistakes. Note that I have used my numbers for yearly well output, based on data from Enno Peters. The well used is the average 2013 Bakken well.
I quickly checked the same analysis for the recent Bakken well profile, which has a higher 60 month EUR (266 kb vs 196 kb for the 2013 well). The well is paid for in 60 months at a wellhead price of $40/b using the same assumptions I used in the previous example.
Dennis. Looks good to me.
Of course, as you mention, none of the companies are able to pay for wells right now out of cash flow. All have interest expense, many have interest expense in excess of $5 per barrel. Then, the question is when will any of these companies begin to use cash flow to reduce debt principal. Some have reduced debt, by buying back their own debt at distressed levels, and/or exchanging the debt with creditors for reduced principal new debt, but at much higher interest rates and more stringent terms (liens upon company assets as opposed to unsecured bonds).
Also, another expense I have noticed with more frequency are gathering expenses. Many of the LTO companies sold their gathering and/or produced water disposal infrastructure in order to raise cash. They now are required to pay $X per barrel or mcf of gas in order to get their products to market.
I would also note, 20% is a “base case” for Bakken royalties. The actual figures can range from 12.5% (1/8) to over 25% (1/4). If one is looking at the EFS or Permian, I suggest using a “base case” royalty of 25% (1/4). However, taxes in TX are less than ND.
Hi Shallow sands,
I was trying to keep it simple. For someone like you who probably does not borrow, there would be very little interest expense. This may also be true for XTO and Statoil. So basically someone who uses a 60 month payout rule, probably is not in debt so interest payments are not a factor. I also was trying to get it done in 5 minutes so skipped some steps.
Hi Islandboy,
I get 137 million miles of driving, if we ignore the energy used for refining and distribution of the oil produced for the 2013 average Bakken well, for the more recent wells it is 185 million miles over 7 years. For the late 2015 to early 2016 Bakken average well we get 248 million miles of driving over a 25 year well life (ignoring refining and distribution energy). So over the long term we get more driving miles out of the PV. Note that the average Bakken well really costs more like 8 million rather than 5.9 million so the apples to apples comparison over 25 years would be 378 million miles from PV and 248 million miles from the LTO well. So 50% more miles of driving per dollar spent on energy to fuel the ICEV or EV.
2.8 acres of PV produces 1 GWh annually of output (fixed array). PV farm cost is about $500,000 per acre. Typical well cost is $15 million (initial plus continuous costs) and lasts for about 15 years, with low output the last 10.
So $15 million of PV would be thirty acres at 10.7 GWh output. By year 15 the output might be at 90% so average is 95% over 15 years giving 152 GWh total ouput for 15 years. Since the PV is local I won’t use transmission losses. At 0.3 kWh per mile that is 506 million miles. The PV farm will produce almost double that over it’s full lifetime. No pollution produced, no pipelines, no refineries, no spills, no smog, no noise, no global warming, etc. No Red Queen effect. No depletion problem. PV panels are getting better and cheaper, oil is not.
URR of well being about 300,000 barrels would give 265 million miles at 30 mpg (70 percent fuel recovery). When one starts to take into account the energy losses in drilling, transport, refining, more transport, etc. That would drop significantly.
No brainer for transportation.
Consider also that hydropower uses over 25 times the area to produce the same amount of power and also messes up the environment. PV looks a lot better all around.
Photovoltaic panels have a significant opex. This is associated with parts replacement, as well as panel washing (they are worse than cars left in the open). When you compare apples to lemons make sure you include everything.
Yair . . .
This “panel washing” may be a factor on commercial installations but I occasionally see it mentioned in relation to domestic as a difficult problem on hard to access roofs . . . well we have been running panels for over twenty five years and they get washed when it rains.
Cheers.
Scrub Puller, dust is obviously not a problem where you get lots of rain and little dust. But there are places where you get lots of dust and very little rain.
I lived in Saudi Arabia for five years. It seldom ever rained and the wind blows dust all the time. We had an unbelievable dust problem. Dust would accumulate in little piles every place there was a tiny leak in the window sill. Dust got on everything. The insulators on the high voltage power lines had to be washed every couple of weeks because dust would accumulate on them, then the dew would wet the dust and they would arc over.
In some places dust is a problem, a very serious problem, with solar panels. But obviously not in the area where you live.
Yair . . .
Gotcha Ron.
I was just pointing out that in “normal” climates this so called cleaning problem is not an issue . . .and I’m not that convinced a bit of dust makes much difference.
I have a panel with crazed “safety glass” that I rescued from the tip in 1982 and it still puts out nameplate performance.
Cheers.
Sure. But the areas where solar panels get more sunlight have very low cloud cover and it seldom rains. Panel washing is one of the biggest problems for solar plants in southern Spain. They use so much water they are having conflicts with farmers.
They use so much water they are having conflicts with farmers.
Really?! Do you have a citation with numbers to back up that claim? I’ve never heard that before. My BS meter is flashing all kinds of alarms!
Water Processes and Utility-Scale Solar Power Plants
http://www.seia.org/policy/power-plant-development/utility-scale-solar-power/water-use-management
Solar power plants, whether concentrating solar power (CSP) or photovoltaic systems (PV), offer pollution-free electricity generation with impacts on local water sources that are comparable to and often less than traditional fossil fuel generation.
Nice! Sort pf in line with something I was trying to get to with the original comparison. What I am trying to get to with the VMT calculations is an idea of value versus cost, along the lines of total vehicle miles powered by a typical well relative to the cost, versus the total vehicle miles that could theoretically be powered by a PV system of similar cost. At a glance, it would appear that, because electricity has not been used for the purpose of personal transportation (cars) it’s cost has been considered high. If electricity ever becomes the main source of energy for cars a greater value will be placed on it.
As an example, if an individual takes a road trip in ICE powered car it will cost an amount, determined by the cost of the fuel, the distance traveled and the fuel efficiency of the vehicle. If the electricity to power the same trip in an EV costs a quarter of the cost for the EV, one could say that the electricity is “worth” four times as much as the price paid for it. As EVs increasingly become a more acceptable substitutes for traditional vehicles they will have the effect of putting a cap on the price of liquid transportation fuels.
If the cost of PV technology continues to fall and the cost of oil trends up, like some of us expect it to, at some point the cost of the fuel for one year is going to be able to buy a PV set up that generates more than enough electricity to cover the distance traveled over the course of a year and continue to do so for the life of the vehicle. IIRC a guy using the handle “techsan” has said as much over at TOD and possibly at this site as well.
When EV prices drop such that an EV sells for the same price as a comparative ICE powered vehicle and it becomes widely known that the cost of one year’s fuel can purchase a PV system that, can provide all the electricity you need to power all the distance normally traveled, expect both EV and PV sales to skyrocket.
Both Governor candidates for North Dakota are calling for an independent audit of the North Dakota Oil and Gas Division. There are allegations of improprieties in accounting for production as well as claims that Lynn Helms ordered the destruction of records and emails to cover up.
http://www.wday.com/news/4031848-governor-candidates-call-audit-north-dakota-oil-and-gas-division
Its been apparent that they have had trouble counting their wells and DUCs for some time. If something is going on with their production records as well, then it might explain some of the quirks in their production reports. Perhaps the recent resilience could be due to earlier understatements of production.
I read some stories on this. ND primary is not till 6/14. There are more candidates than those two.
Also, one of the candidates is implying the oil is being under counted.
I do not know anything about any of this first hand. However, our experience over the years is that errors do not happen often. Our primary issue is arguing over BS & W, which is with gauger for the crude purchaser, and not the truck driver.
There are over 1 million barrels being produced daily up there. I am sure there are errors, but my guess is they are not far off. At least not enough to be material to the analysis that goes on here.
Shallow, I reread the article and it does say there are other candidates running for gov.
I do not know anything about North Dakota politics, and these allegations may solely be for political gain.
However, they haven’t been a big time oil producer for long, and if there were a way to avoid state severance taxes there would be people tempted to make a deal. I agree the amounts of misstatements would probably not be material to when oil peaks.
However, if such misstatement ceased, the change could result in lower declines in oil production and unexpectedly higher GOR’s. Both of these subjects are debated here.
Again, I do not know whats going on with NDIC, but if improprieties are found they could explain some of the apparent inconsistencies of their data.
Delonghorn/Shallow,
I maybe a bit slow, but with decreasing oil production, abet slower than expected, and record gas production, any fiddling with the production numbers, to me would revolve around manipulating gas produced, maybe as a means of avoiding the flaring rules.
Now that most of the development is in the highly developed centre of the field with adequate gas collection and gathering system, then it would be hard to fudge. If, both oil and gas numbers have been fudged, we still have the situation of the increasing GOR.
Anyway it is all speculation at the moment. It will be interesting to watch, and see how it develops.
China has reported April 2016 production at 4.04 mbpd. A 5.6% decline year on year. It’s down 380,000 bopd (8.6%) from the 4.42 mbpd JODI lists for June 2015.
http://www.hellenicshippingnews.com/china-april-crude-oil-output-lowest-since-july-2013/
Depletion seems to be wining more and more.
The Future of Canada’s Oil Sands in a Decarbonizing Global Economy
by: Jeff Rubin, Published: March 15, 2016
CIGI Paper No. 94
Isis attacking Iraqi gas plants. How long before they go after the export oil facilities?
http://www.independent.co.uk/news/world/middle-east/isis-suicide-attack-baghdad-iraq-gas-plant-a7030161.html
Isis claims responsibility for deadly suicide attack on Baghdad gas plant
Militants have launched a suicide attack on a natural gas plant near the Iraqi capital Baghdad, killing at least 11 people and injuring a dozen more.
During the assault, which extremist militant group Isis said it had carried out, a car was blown up at the entrance to the facility approximately 20km north of Baghdad.
Six people then entered the site with explosive vests and fought security officers, the Reuters news agency reported. Three gas storage tanks were set on fire during the fighting.
Suppose they had hauled a small artillery piece within range, meaning anywhere out to fifteen or twenty kilometers, and set up those same suicide fighters to defend the gun. My guess is they could have burned everything that WOULD burn, and shot the rest up pretty good.
Such a gun could be concealed in a load of building material or even inside a tanker truck.
Breitburn Energy Partners filed BK this am.
Over $3 billion of debt.
Conventional oil and gas producer.
Rumors are Sandridge will any day.
If they do, $20 billion of BK oil and gas debt in May alone.
Sandridge did also. EXCO is next.
SS – you have been on top of the situation for maybe 1 1/2 years. I do not know if you trade stocks. But, if you do, and if you followed your opinion, and went short some of these debacles, you made up for the decrease in price.
If not, I understand well. Going short is a very high risk/high reward proposition. At any rate, you saw all of this coming long before the average investor. So, there is some self-satisfaction in knowing that you were right. And, you were able to adjust your business to cope.
Clueless. I have never shorted a stock.
It would have still been tough to pick winners and losers. I have often railed on CLR, yet their share price has continued to defy my expectations.
Of course, timing is key, unless they BK and wipeout the common.
HC Debt disease spreads to California
-About $3 billion of Breitburn’s debts are bank and bond debt, topped by $1.25 billion in loans from lenders led by Wells Fargo Bank, NA. Breitburn is carrying $650 million of senior secured second-lien bonds and $1.1 billion in unsecured bonds.
-Breitburn’s estimated proven reserves, which were valued at $4.5 billion at the end of 2014, were worth only $1.3 billion as of the end of 2015.
-Breitburn has crude oil and natural gas assets in the Midwest, Ark-La-Tex, the Permian Basin, the Mid-Continent, the Rockies, the Southeast and California.
“Crude Oil” ??
http://www.wsj.com/articles/breitburn-energy-partners-files-for-chapter-11-bankruptcy-1463400009
http://www.wsj.com/articles/sandridge-energy-files-for-bankruptcy-protection-1463404621
On another part of this debacle….one of the auctioneers in West Texas saidthey are getting about $.15 on the dollar for oil field equipment at auction.
I also see the C & J services is rumored to be filing BK. I am not familiar with them, from my reading they are a very large well completion company. Looks like their CEO passed away unexpectedly at age 46 back on 3/11/16.
I think this bust is trying to claim the top prize for most brutal oil and gas bust,
Of Interest: French oil giant Total acquired lithium-ion battery developer Saft in a $1.1 billion deal.
http://www.pv-magazine.com/news/details/beitrag/the-pv-magazine-weekly-news-digest_100024601/
A few members of the proletariat getting a bit uppity:
http://earthfirstjournal.org/newswire/2016/05/16/bomb-trains-blockaded-as-thousands-converge-in-albany/
Earth First! We’ll drill the other planets later?
Earth First! Haven’t heard that name in a while. Had to deal with those yahoo’s back in the late 80’s/early 90’s over in Humboldt Co. California. They showed up in droves to “save the Redwoods” after Pacific Lumber (due to some disastrous business decisions) was taken over in an LBO by a get-rich-quick company that then ramped up redwood harvesting (on their property) to cover junk-bond payments. Nominally, it was obvious something had to be done – which the locals were working on – but EF! rolled in from out of town and seemed to derive more satisfaction from creating mayhem than saving the redwoods.
I was part of that action.
It has been a while.
While Headwaters did get protection, Dianne Feinstein sold us out.
Her husband was a friend of Charles E. Hurwitz, the head of Maxxam Inc., the corporate raider on Pacific.
Ecotech myths and lessons from the past (video)
I think you will enjoy this:
Confessions of a Recovering Environmentalist
https://orionmagazine.org/article/confessions-of-a-recovering-environmentalist/
That internal/external debate has been raging since the 1st Earth Day – and many decades before. The typical monthly National Geographic magazine is filled with this debate – defining” environmentalism” and what man’s path “should” be in the Long Term. Look at Stewart Brand, publisher if the “Last Whole Earth Catalog” in the late 1960’s/early 1970’s, and compare to his current thinking in his book, “Whole Earth Discipline – An EcoPragmatist Manifesto”.
Brand is a techno narcissists.
I do enjoy his sponsored programs in San Francisco, and often gets insightful speakers.
Hi Duncan,
Thanks for the link, I’ll check it out.
Incidentally, that’s cool of you to have been involved in that Earth First! action.
Apparently some environmentalists are among those under domestic terrorist watch by the governpimps. Quite the honor.
Past time, of course, to turn the tables and return the honor…
“The Earth is not dying, it is being killed. And the people who are killing it have names and addresses.” ~ Utah Phillips
Hey Caelan- here is something we seem to have in common. Utah Phillips appreciation.
And btw- I learned along time ago to not care about being right or wrong, rather I’m generally in discussions to learn, share, and listen.
Hickory, it’s a little late here and I’m just about to retire for the day, but just off the cuff:
Just because people are doing something in some sort of significant percentage doesn’t necessarily mean it’s the right thing to do.
In fact, we are good at doing a lot of stupid things that we shouldn’t be doing.
A whole lot of us around the planet are contributing to trashing it and working hard at it too in our asinine 40-hour BAU workweek.
While Hickory may be interested in being right, I’m interested in the truth.
Caelan MacIntyre
Har!
LOL
Trains go up, trains go down, electricity goes in and out
With apologies for posting this on an oil thread, but I thought it was getting towards the end here and I thought wimbi might like it
https://www.wired.com/2016/05/forget-elons-batteries-fix-grid-rock-filled-train-hill/
I was just fixing to post it myself. Such gravity storage via train ought to work quite well for load balancing over periods of minutes, but I can’t see it working for storing three pm sun for use at eight pm.
Here is a link from the Resilience site that has an old TOD hand making a rough estimate of what it a transition to renewables will cost, and how long it might take.
I am just now reading it, and hope since this oil thread is just about run dry, that we might be able to get some discussion of it. Personally my guess is that none of the hands on oil guys have anything at all to worry about in terms of their jobs over the next decade or two, because old guys retiring will likely match the pace of oil depletion, meaning the younger guys will have work.
If we are lucky, oil will stay cheap enough long enough that we can use it liberally to fuel the transition to renewables.If the world economy does poorly , investment in renewable energy will slow down or stall. Broke or near broke individuals,companies, and governments do what they have to survive in the short term.
http://www.resilience.org/stories/2016-05-10/how-much-for-the-sustainable-energy-transition-a-back-of-the-envelope-calculation
If we are lucky, oil will stay cheap enough long enough that we can use it liberally to fuel the transition to renewables.
I disagree. I think mankind needs over $100 oil to do even the first tiny steps toward the transition to renewables. Inertia is tremendous and problems with renewables are real. For example, the current “low oil price forever” mentality essentially reverted the trend toward replacing SUVs with smaller hybrids in the USA. You need over $4 gas even for the first significant steps in this direction. Instead, due to oil price slump we got SUVs as the most popular class of personal transportation vehicles in the USA.
I think that this “young Saudi prince” who was instrumental in the creation of the initial momentum for this oil price slump is an adventurist and I hope he and his country will eventually pay high price for his reckless gambling. I have a similar attitude toward Obama administration (although Obama will move on at the end of this year ) , although I understand the desire to preserve neoliberal globalization, which is extremely beneficial for the USA elite.
Actually, you do not need a university degree in physics to understand that issues of moving toward more sustainable energy consumption are extremely complex. For example integration of PV and wind generated electricity does require huge investments in national high voltage transmission lines (West-East lines) and “instant up” natural gas powered “buffer” electrical stations. If Germany managed to screw this transition royally, I think there is a high chance that other countries will repeat their mistakes. Although the USA now can theoretically avoid most of their mistakes.
On the other side I think that this gamble with “low oil price forever” is moving toward the end and conventional oil producers will feel much better in the second half of 2016. Which is a small step in the right direction, EIA oil price forecasts be damned ;-). As Dan Steffens observed (but what due to “low oil price forever” cheerleading escaped the attention of EIA)
I also do not believe in “LTO revival at prices over $50” propaganda. I am convinced that LTO in the second half of 2016 will start to feel that they became red hair step child for financial industry…
Yep, I and a couple of million other guys have thought of that one, starting probably with some Babylonian. Then, next step, why bother with all that hardware when you can do the same thing with just a hole in the ground and a great big rock pulling a rope down the hole as it turns a generator/motor shaft on the top? Near 100% turnaround efficiency, if you are really good at it.
Now, do the arithmetic to find out the size of all that stuff. Hm, pretty big. Isn’t there some better way? Aha! gravity is a very weak force, how about some much stronger one, like maybe chemical bonds? Battery! Big leap forward, but in detail, turns out to be still pretty big and messy. Some bigger force? Aha again, Nuclear, now we’re talking. Oops, big force, but big problems riding on top of it. What to do?
Suddenly the true light dawns. Nothing! Do nothing. Cheap, simple, anybody can do it.
But, but, what about food, shelter, beer? Gotta have some things, nothing won’t get ’em.
Simple, use your head. We know one hell of a lot we didn’t used to know about how to get what we need without doing much. So do that.
Class dismissed. Go and sin no more.
Hi Wimbi, Likbez,
First off I consider oil at a hundred bucks to BE CHEAP. Hundred dollar oil is a bargain considering what it does for us, and it will still be a bargain at a hundred twenty five and a hundred fifty, so long as the price goes up slowly, giving us time to adapt.
By cheap I mean affordable to the extent we can keep Old Man BAU up and on his feet, because if he is flat on his back, there WILL BE NO TRANSITION.
Societies or countries that are experiencing really tough times necessarily spend everything on day to day survival, and next to nothing on solving long term problems.
It occurred to me that putting the train or weight on a nearly vertical slope would make it the rail road battery system work a hell of a lot better, and there are plenty of damned steep mountains where such a “rail road battery” could be built.
Using cables instead of on board generator/ motors would probably be a good idea too. This would enable near vertical or actual vertical operation WITHOUT tracks, while eliminating mobile electrical connections.
I have no idea how much it would cost to punch a hole deep enough and large enough to construct a pit type gravity battery such as wimbi suggests. It seems likely that keeping it dry, and keeping the sides from caving in, would be serious problems.A rail system on an existing steep slope would appear to be cheaper, at least at first glance from an amateur pov.
I am thinking there must be places out in the boonies where we could build some fair sized pumped storage facilities once there are more new transmission lines built to move wind and solar power around. Any place with suitable topography close to such a transmission line could work. The water supply doesn’t have to be huge, it can be recirculated except for what evaporates.
There are probably some places on sea coasts that are high enough to work ok too, and salt water could be used.
http://finance.yahoo.com/news/how-t–boone-pickens-would-get-america-out-of-the-middle-east-193150383.html
How T. Boone Pickens would get America out of the Middle East
LOL! I guess that wall between the US and Mexico just might not be such a good Idea after all… The solution is for the US, Canada and Mexico to start our own Cartel cuz we got all the oil we’ll ever need!
Burn North America First (I recall that 40 or so years ago the cynical slogan was Burn America First.)
The USA doesn’t need Mexico. The wall can be built with a several crossings where customs and immigration authorities can do their thing.
Well, I say again. Oil at any out of pocket price is still outasight expensive when you count it’s cost to the future– the biosphere.
OFM, surely you know that, but you keep getting back to the “oil is cheap” theme. That is, you seem to put an environmental cost on it of zero, the only value that’s CERTAINLY WRONG. Not so? Why not?
On the more pleasant subject of hydrostorage. Easy to do all over the place, but not done. Example, I live on a ridge over a good little river. That river runs thru 300 meter ridges both sides for tens of miles. All of that length is easy hydrostorage. There are LOTS of such little rivers all around me in these foothills, and probably around you too.
And, one of my longtime favorites, the Red Sea. Brightest sun in the world, and rimmed by some hills. Perfect for massive production of solar/ storage, 24/7.
It is wrong to say “sand country” has nothing without oil. It has PLENTY, but ignored.
How about this for a crazy energy storage scheme, and enourmous hydraulic based system with a huge rock piston:
Hydraulic Rock Storage (HRS) is a
new concept for storing power in the scale of
multi-GWh. We believe that HRS will be a
game-changing solution for the world´s energy
supply, as photovoltaic (PV) and wind power
become the cheapest source of electricity and
the demand for power continues to increase
rapidly. HRS offers reliable 24-hour supply of
solar and wind power at steady, predictable
costs. It can also play a part in increasing and
ensuring the resilience and reliability of the
power grids to which HRS plants are connected.
A piston of rock of diameter 100 m or more
is separated in the ground from the natural
surrounding rock. In times of excess power,
water is pumped under the piston. When
additional power is needed (e.g. at night or in
times of little wind), water is released from
beneath the piston, allowing it to fall, and used
to drive turbines.
http://tinyurl.com/hk3q5j9
So you excavate the cylinder in its entirity, because working around a stone plug that size is not going to be easy or cheap, and any way, the stone is apt to fall apart in use. Getting a good fit would be impossible imo.
You build a sleeve liner inside the excavated cylinder, and grout between the cylinder and the native stone. You put all your plumbing in place. Then you build the piston in place, hollow of course, with a close enough fit to get a workable seal between the piston and cylinder. Then you backfill the piston with the stone excavated from the cylinder.
Then you build the big building full of high pressure reversible hydraulic motor / pumps and attach them to reversible motor/ generators, and tie it all to suitable nearby transmission line.
The THREE things that sound really good about this scheme are one, that as the storage capacity would increase geometrically in proportion with the mass of the piston as the diameter of the cylinder is increased; two, once built, such a system ought to last a LONG time; and three, the physics and engineering are straight forward and the components are pretty much all off the shelf.
The cylinder sleeve and piston would be built using the same techniques used to build large ships and skyscrapers, in place, out of ordinary steel, suitably corrosion proofed. If the water is protected from atmospheric contact, and kept moderately hot, there will be no significant corrosion issues, because hot water won’t hold dissolved oxygen even in contact with air.
I haven’t got the faintest clue as to how much this sucker would cost, but no doubt it would be cheaper than a fusion power plant, lol.
From my perspective as a farm boy who has worked around some serious heavy construction, it looks like it would be far simpler to excavate an artificial lake on a mountain top or plateau, and use that as a pumped storage reservoir.
Probably a hell of a lot cheaper too.
Pump storages are working techniques and good for storing the 24h day/night differences. They where invented to dampen the noon-peak in electric demand when coal and atomic plants couldn’t be overpowered for a few hours, and couldn’t be dampened in the night. Now we have it the other way round.
Its much easier to store 40 million tons of water on a mountaintop and pump it there via a stationary and old tech pipe, than having a hell of mechanical (= failure) parts moving big masses.
Providing up to 13 hours at 3 GW energy:
https://en.wikipedia.org/wiki/Bath_County_Pumped_Storage_Station
You see it works, is really old tech, it scales, it wouldn’t be impossible to build one as addition for Glen Canyon dam, too. You need the water only one time, and in desert regions I think you can do something against evaporation like drifting material on the water.
Right, my conclusion too. On that desert lake. What better place to put a bunch of circular PV islands, tracking the sun effortlessly, and providing fish habitat underneath and human vacation cabins on top, under the PV, nice and shady fishing spots. Rent out for big bucks.
We are DROWNING in opportunity all over everywhere, where’s our wits?
oops!
dependent origination:
Fire Nears Enbridge Oil-Sands Tanks, Workers Removed From Camps
http://www.bloomberg.com/news/articles/2016-05-16/alberta-blaze-nears-enbridge-oil-sands-terminal-as-flames-spread
According to the gospel of peopleonherearestupid, there are only stupid people here on this forum. Forget that peopleonherearestupid implicated peopleonherearestupid as being stupid, that’s how stupid peopleonherearestupid is. Oh well, the denizens here know that it takes understanding to tolerate people like peopleonherearestupid.
There must be a better way. I didn’t light that fire, so don’t blame me.
Here are a few thoughts on making gas the abiotic way:
If humans can invent an engine that burns gasoline, then humans can invent some kind of engine that makes gasoline, a reverse running engine that slowly fills the tank as you drive and the engine that burns gas can also power the engine that makes gas. From the exhaust pipe, pipe the exhaust to the engine that makes gas and then funnel the new abiotic gas back to the tank. 😉
Sounds like pounding dirt, but it could happen! Might have to wait a couple of hundred million years to get that CO2 fixed into the hydrocarbon state, so that is why humans need to come up with a machine that will make new gas. Biofuels won’t be enough, so burning gas to make new gas is the answer.
I just want to make sure that peopleonherearestupid doesn’t gain the lofty position of Village Idiot. I have that position locked-in and secure and ain’t nobody going to replace the Village Idiot, especially here.
Back to things that make sense, but for now, let the nonsense continue a bit longer.
The time to speak up has passed, now is the time for senseless bickering. har
Here’s one for peopleonherearestupid. He or she is infinitely stupider than AI…
http://www.forbes.com/sites/bridaineparnell/2016/05/17/ai-recreates-nobel-prize-physics-experiment/#5e8d12ae5f2b
Researchers have developed an artificial intelligence capable of recreating the physics experiment that won the 2001 Nobel Prize.
The AI system was able to recreate the complex quantum experiment to create an extremely cold gas trapped in a laser beam, known as a Bose-Einstein condensate.
“I didn’t expect the machine could learn to do the experiment itself, from scratch, in under an hour,” said co-lead researcher Paul Wigley, of the Australian National University Research School of Physics and Engineering, in a statement.
“A simple computer program would have taken longer than the age of the universe to run through all the combinations and work this out.”
The FED oil production index for April came out today. It is the most timely indicator of US production and give a glimpse on April Bakken and Texas RRC report. It shows that production declines unabated in a straight line by roughly 3% per month and over 8% year over year (blue line in below chart, rhs). As long as drilling (red line in below chart) still declines, this trend will accelerate towards the end of the year, when production will have declined by over 30% year over year.
The good news is that the oil price has seen its sharpest declines (green line in below chart lhs) and also drilling – albeit beating all time lows – seems to have seen its largest year over year declines. However, even if oil prices go up sharply by next week, it will take at least until year end until shale production can recover by next year and total production will take even longer to recover due to a longer time lag of Gulf of Mexico production.
https://news.vice.com/article/in-photos-shells-gulf-of-mexico-oil-spill
Minor spill … not quite 10 to the 5th gallons. but little MSM coverage thru all the nonsense.
Even JHK is Focused on restroom access.
EIA’ s Annual Energy Outlook early release is out today.
Projected U.S. C+C production to 2040: lower that in last year’s AEO in the short and medium-term, higher in the longer-term
Projected sharp increase in LTO production
Lower 48 states onshore conventional oil production projections:
lower than in AEO 2015, but completely different trend
Lower 48 Offshore (mainly GoM)
Sharply lower projections vs. AEO-2015.
Existing projects will be completed, supporting output in 2016-17, but current low oil prices will affect output from 2018 as new projects are being postponed and canceled.
Apparently, much lower exploration activity and less exploration success are expected to impact output in the longer term.
chart:
Last year, the EIA expected oil production in Alaska offshore to start in the second half of 2030s. No US Arctic offshore production is projected in this year’s AEO.
Medium and long-term oil price forecast only slightly changed vs. last year
Lower 48 Average Wellhead Price
2015 dollars per barrel – in AEO 2016
2013 dollars per barrel – in AEO 2015
On top of projected growth in C+C output, the EIA expects a sharp increase in NGLs output
The EIA expects tight oil production outside the U.S. to increase from 0.46 mb/d in 2015 to 3.28mb/d in 2040.
The EIA also expects continuing growth in Russia’s oil production.
Apparently, this includes Arctic projects and LTO volumes
C+C production in the U.S. and Russia
This is the correct chart:
3 other non-OPEC countries contributing to C+C production growth are Brazil, Canada and China.
The EIA is optimistic on oil production in non-OPEC Latin America
The EIA projects declines in the North Sea and non-OPEC Asia (ex China), and increasing output in non-OPEC Africa.
Relatively flat C+C output is expected in Eurasia and Eastern Europe (ex Russia).
Projected crude oil production growth in OPEC countries by region, 2015-2040 (mb/d):
Middle East: +10.4
North Africa (Libya, Algeria): +0.4
West Africa (Nigeria, Angola): +0.8
South America (Venezuela, Ecuador): +0.6
Total OPEC : + 12.2
Global liquids supply by source (mboe/d)
Global liquids supply by source: 2015 and 2040 (mboe/d)
Conventional C+C, which has hardly moved in over a decade, is supposed to increase by 13.61 mbd or by almost 19 percent by 2040. Why, after being on a plateau for over a decade do they expect it to suddenly take off? Their logic escapes me. If higher prices could not move it how do they expect lower prices to do the trick?
Ron,
They expect a sharp increase in OPEC oil production, especially in the Middle East.
This likely assumes most optimistic projections for Iraq and Iran and some growth in KSA, Kuwait and UAE. Note that all projected growth in the Middle East comes from re-development of already producing fields. I don’t think this is realistic, given declines in mature fields, unsufficient investments and political issues.
Projected increase in Brazil of 2.24 mb/d is theoretically possible, but does not take into account economic and political issues, which lead to constant project delays.
1.5 mb/d increase in Russian C+C also seems over-optimistic. Russia’s government forecast of flat output to 2035 is much more realistic.
Canada’s production is expected to increase by 1.23 mb/d. This is possible, but all growth should come from oil sands, while conventional output is declining.
Given the recent trends in China, its production is likely to decline, rather than increase by 390 kb/d by 2040. Probably the EIA expects substantial growth in China’s offshore output to offset declines in mature onshore fields?
Overall, its seems that the EIA assumes most optimistic scenarios for all existing sources of supply + additional volumes from yet undiscovered resources and ignores numerous economic and political risks.
Alex, the EIA is being totally unrealistic here. China has clearly peaked and will have declined significantly by 2040. To predict that they will increase by 390k barrels per day by 2040 insane.
And Russia? Why are they so optimistic about Russian production when Russia is not? Do they know more about Russia’s future production potential than does Russia?
This whole thing stinks. What is going on?
I have compared the EIA’s forecasts from the AEO-2016 and AEO-2015.
For Russia, they continue to project long-term growth in C+C production. In AEO-2016 they are expecting a temporary decline in 2016-2021, probably due to lower oil prices, but steeper growth thereafter.
In fact, in 2016 Russian production will be higher than in 2015, and will likely remain flat in 2017.
Long-term forecast (from Russian Energy Strategy to 2035, base case) is also predicting flat output around current levels, as new fields and unconventional output should offset declining production in mature West Siberian fields.
For China, the EIA projects only a temporary decline in 2016-18, followed by a steep rebound in 2019-2022.
A new decline is expected in 2025-2030 and moderate growth during the 2030s.
What do they know about future oil projects in China?
There were some revisions in forecast for Brazil, but the EIA still expects an increase of more than 2 mb/d by 2040.
New forecast for Canada looks much more realistic given oil sands project delays and cancelation, as well as potential effects of environmental legislation
Global bitumen production, incl. syncrude
EIA use demand side model based projections based on expected economic growth and then fill in the supply requirements to match. It used to be a call on OPEC for pretty much everything but now it looks like a call on shale, OPEC, Russia and anywhere else where data is a bit fuzzy.
EIA is a government agency. I’ve seen work like this in the past, they put together a spreadsheet and crank out formulae. The bottom line is the oil reserves. And those they can fiddle.
Non-US LTO production forecast was sharply revised down
Global LTO production is much lower in this year’s AEO for most part of the projected period, but the two curves converge by 2040.
So according to EIA LTO bottoms in 2017 and then LTO production lifts off like a space shuttle in 2018 until 2040?!! LOL
So does the EIA in their report explain who is going to pay for all the LTO drilling prior to 2017 before the lift off stage starts in 2018? These EIA reports increasingly appear like a trolling for LTO.
I don’t know what is the source of their optimism. Let’s wait for the release of the full report. At least they will show their assumptions on technically-recoverable resources. Hopefully, there will be projections by key shale plays.
Financial side of LTO production is certainly not a part of EIA’s models
Alex,
I would not even call this “EIA optimism”. These reports are all about making up stuff on the level comparable with Saudis fancy Power Point “Vision 2030 without oil”!! WTF? 🙂
This is all for mass consumption. There is something big going on behind smoke and mirrors.
‘funded by fossil fuel interests‘
Samples at that link:
“A national oil company (NOC) is an oil company fully or in the majority owned by a national government. According to the World Bank, NOCs accounted for 75% global oil production and controlled 90% of proven oil reserves in 2010…”
“Big Oil Leads in Innovations and Renewable Energy”
“Difficult to invest in green energy in Canada without Big Oil”
What can we say about television, work, church and taxes? Why those four?
Propaganda/Indoctrination? Wage slavery? Ideology/Groupthink? Coercion?
BAU-cum-GAU(Government As Usual) is the dinosaurs. It is the human, scaled way up. Humans come in at least two scales…
Yes, perhaps it’s a darwinian world and what happened to the dinosaurs, Glen?
Plains All American Pipeline indicted in Santa Barbara oil spill
http://www.reuters.com/article/us-california-oilspill-idUSKCN0Y826J?feedType=RSS&feedName=domesticNews
Sorry for posting this down here instead of replying to one or the other AEO 2016 comments but I wanted to get it wide enough.
Just looking at the difference in C+C predictions for each year leaves one to believe that the EIA has not a clue as to what US C+C production will be down the road.
Ron,
Basically, the EIA is projecting much higher LTO production from mid-2020s, with continuing rising trend, instead of the peak in 2020 in AEO-2015.
Projected conventional production is lower than in AEO-2015
LTO was a “black swan” in 2010-14, and it remains one of the biggest uncertainties for future global oil production
———————–
In the early release, the EIA does not explain its assimptions for the LTO output.
All they say is:
“Lower prices through 2017 has the greatest impact on tight oil
production, which drops to 4.2 million b/d in 2017 before
increasing to 7.1 million b/d in 2040. The general increase in
tight oil production is largely attributed to the higher oil prices
and the ongoing exploration and development programs that
expand operator knowledge about producing reservoirs.”
Hi Ron and AlexS,
The cumulative tight oil output for the reference case from 2015 to 2040 is 57 Gb.
think that is too optimistic by a factor of 2 at least. My guess, based on the USGS 2013 study of the Bakken/Three Forks and work by David Hughes on other LTO plays in Drilling Deeper is about 30 Gb for US LTO output (2005 to 2050) if prices go to over $100/b and remain close to the AEO reference oil price scenario for 2020 to 2040. Those prices might not even be high enough (in other words 30 Gb is an optimistic estimate, or pessimistic if one believes very high oil prices will be needed for a transition to alternatives).
I think we may reach a peak that is 10% to 20% higher than the March 2015 peak in LTO output in 2021 and then output will start to decline rapidly by 2025, the maximum decline rate will be about 12% per year in 2027 and by 2032 decline will become more moderate at about 7%/year (this is US LTO output only).
Hey, I agree with Dennis here. I must have a fever. 😉
LOL.
We must both be wrong. 🙂
Just kidding, we are both always right, except when we disagree, then it’s a coin flip.
In addition to the 57 Gb of cumulative LTO production until 2040 they project 7 mb/d production on an upward trend at that point implying at least 50 Gb remains to be produced after that. So it’s more like optimistic by a factor of 4 since you and Hughes rightly predict that LTO production will have declined to a low level by 2040-50.
Hi Stoney,
If we assume the decline has a similar slope of opposite sign, you would be correct, in the case of LTO I expect a pretty steep decline for 2 or 3 years (maybe a 15% overage decline rate over that period.)
So maybe a factor of 3 too high, but I agree more than a factor of 2 is definitely correct (if my 30 Gb estimate is roughly correct.)
Thanks Dennis
That might be true in theory but since they show a rising trend and no plateu at the end of the forecast period it is highly unlikely they assume everything will be drilled up by then.
Look at it this way, imagine you could ask the EIA “This looks really good up to 2040, but what will happen after that?”. Would their answer be: “O, we expect a relentless catastrophic decline after that”? I doubt it.
Hi Stoney,
Probably correct. I don’t know if they think beyond the forecast. I am just giving my opinion what would actually happen after the forecast, if it were accurate, but it isn’t. My main point that the US LTO URR is likely to be 30 Gb (and not more than 40 Gb) and the EIA estimate of say 100 Gb or more is 3 to 4 times too high.
Note the USGS estimates undiscovered LTO resources at 13 Gb and there are about 18 Gb of LTO 2P reserves plus cumulative output for a total of 31 Gb, at the end of 2013.
http://certmapper.cr.usgs.gov/data/noga00/natl/graphic/2013/mean_cont_oil_2013_large.png
Ron, your comment and that graph made me chuckle.
Just looking at the difference in C+C predictions for each year leaves one to believe that the EIA has not a clue as to what US C+C production will be down the road.
It ain’t just what US C+C production will be down the road. See my post further up. Hint, some observers think they are way out of left field on renewables as well.
The charts tell me two things-
1. The EIA has increased US production potential estimates over the last two years buts currently is being held back because of an over supplied market
2. Current production will have to continue to fall at current rates all though 2016 to reach current projection and end near 8.2 mbd. Then production turns around in the first half of year to meet 2017 projection.
Hi Caelan,
I will post a reply at the tail end of the last open thread.
Read and replied to. Enjoy.
The Beast Growls — Warming-Induced Wildfire Again Doubles in Size, Burns Tar Sands Workers’ Camp
https://robertscribbler.com/2016/05/17/the-beast-growls-warming-induced-wildfire-again-doubles-in-size-burns-tar-sands-workers-camp/
Meanwhile,
POLAR HEATWAVE DIGS IN AS ARCTIC SEA ICE CRASHES — BLUE OCEAN EVENT LOOKING MORE AND MORE LIKELY
https://robertscribbler.com/2016/05/13/polar-heatwave-digs-in-as-arctic-sea-ice-crashes-blue-ocean-event-looking-more-and-more-likely/
THE KILLER SEAS BEGIN — MASS MARINE DEATH OFF CHILE AS OCEAN ACIDIFICATION BEGINS TO TAKE DOWN FLORIDA’S REEF
https://robertscribbler.com/2016/05/12/the-killer-seas-begin-mass-marine-death-off-chile-as-ocean-acidification-begins-to-take-down-floridas-reef/
2 C COMING ON FASTER THAN WE FEARED — ATMOSPHERIC METHANE SPIKES TO RECORD 3096 PARTS PER BILLION
https://robertscribbler.com/2016/02/26/2-c-coming-on-faster-than-we-feared-atmospheric-methane-spikes-to-record-3000-parts-per-billion/
Of all the times I have examined the northern hemisphere jet stream, the past week takes the prize for the most chaotic and fragmented. A shortened stream blew down to about 40 north latitude in the eastern US and then turned north after heading east over the Atlantic to bring warmed air straight up the center of Greenland toward the pole.
There were fragmented segments over the polar regions and other streams blowing into the polar regions from the south.
Yes, methane is the new upcoming big GHG. The sources are so vast and distributed that getting accurate and comprehensive data is very difficult. A Swedish study just showed that methane output from lakes is very temperature sensitive, exponential in fact.
But it’s a good year here for the plants, lots of growth and flowers, not many bees though. Frog population has fallen dramatically as well as much of the insect and snake population. Most of the raptor nests I observe have failed for the first time, not sure what is going on with that. Very few hawks. Duck population is stable. Geese are under heavy attack by government killers. Deer are doing well. Turkeys have not been seen for several years now. No bears anymore either. One passed through, but no permanent resident. Coyote packs on the rise. Rabbits all over the place.
Mountain birds are decreasing dramatically here in the mountains and foothills to be replaced by common lowland birds.
Much more silent here than usual, except for the throbbing noise of ICE’s and the blast of shotguns.
Doug, on the melting Arctic people are describing it as ‘unexpected’, but in fact there have been predictions of such an event ‘as early as 2016’ from various sources (including the US Navy), especially those who visit the area and have been saying how rotten the ice has been. For example Peter Wadhams, who was almost vilified for his comments and has since gone quiet, but looks about to be vindicated. It’s interesting that in these cases the commenters often seem to read ‘as early as 2016’ as ‘not later than’. In the past the bigger melt has been the year following an El Nino, so if not this September ice free, maybe next.
The other bad news is that despite El Nino being past peak CO2 in the Keeling Curve is accelerating every month. I tried to find if there are isotopic indications that would show a source (e.g fossil fuel, wildfires, permafrost) but couldn’t – some papers behind firewalls.
Hi George,
Yes, I’m especially interested in the role of soot relative to Arctic climate, especially with the increased incidence of northern wildfires. Black earth sucks in a lot of heat. In a previous life I spent a lot of time in the far north, a time when wildfires were rare. This is no longer the case.
Doug – I like the animations here:
http://polarportal.dk/en/groenlands-indlandsis/nbsp/isens-overflade/
To me it looks bad for the surface darkening, but don’t have the history to compare with previous years. I guess some of the extreme (yellow) values on the southern coast is where the ice has fully melted away and new rock is exposed.
My tweet about Arctic ice conditions
https://twitter.com/fernandoleanme/status/732467194584432641
Today’s Arctic temperature at 850 HPa can be mapped here
https://earth.nullschool.net/#current/wind/isobaric/850hPa/overlay=temp/orthographic=13.27,83.15,503/loc=-37.797,77.828
The surface temperatures are here
https://earth.nullschool.net/#current/wind/surface/level/overlay=temp/orthographic=13.27,83.15,503/loc=-37.797,77.828
The sea surface temperature anomaly is here:
https://earth.nullschool.net/#current/ocean/primary/waves/overlay=sea_surface_temp_anomaly/orthographic=25.08,-76.69,503/loc=-37.797,77.828
A long hot spring… wonder what summer will be like.
I expect summer will be cooler than last year. But last year we had a really hot spell with air coming in from the Sahara (it also brought a lot of dust).
Lucky for us winter was balmy, it has been raining everywhere except for SE Spain, water reservoirs are filling, and the mango crop is outstanding.
The El Niño is subsiding, the tropical pacific is starting to show a below average temperature anomaly in a line right on top of the equator. By August we may be in La Niña conditions.
Obama Veto? Ratio of Lawyers in the Senate – 57% Which Genie comes from the Lamp now ?
http://thehill.com/blogs/floor-action/senate/280179-senate-passes-bill-allowing-9-11-victims-to-sue-saudi-arabia
The energy illiteracy in the comments of the various articles related to what is a ‘draft’ plan is astounding… yet unsurprising.
Ontario Liberals want to eliminate reliance on natural gas: Report
CityNews, Posted May 17, 2016 2:29 pm EDT
That is about the dumbest thing I have heard in years. If they are going to get “off” fossil fuel, what the hell are they going to get “on”? In Canada no less, land of eternal sunshine.
I do wish people would get real. We will get off fossil fuel when they are all gone. Either that or after what’s left is too expensive to produce.
Yes, I am a card carrying liberal, just not one of the very stupid kind.
Hi Ron,
In this case I must agree with you. We aren’t going to give up fossil fuels until they are gone, or super expensive. I expect both words gone and superexpensive to apply within the next few decades, which is why it is SO important to keep the renewables pedal to the metal NOW.
Even if we never manage a successful transition to renewables, we can stretch the one time endowment of fossil fuel out a generation, or maybe even two generations.
This in itself is a very worth while goal, because during that time, we will learn and apply a hell of a lot about living well on less and less energy per capita.
Now as far as the linked article is concerned I suspect it is a somewhat of a hit piece written by political enemies of the current government. It is very easy to make people look bad just by the choice of words used.
It seems to me that it would be political suicide for a politician to insist that everybody in the province would have to rip out existing gas heating systems in exchange for WHAT, within the next few years. Maybe heat pumps driven by hydro electricity?
That might be a workable goal for NEW houses. But for EVERY house? I am not interested enough to pursue this particular piece of politics by researching it in Ontario newspapers.
If I were a young guy living in the deep south today, I would build a super insulated house and cover the roof or back yard with solar panels sufficient to run air conditioning at least, without batteries. This would be easy enough, all I would have to do is put in sufficient thermal mass and enough insulation to keep the house cool overnight until the ac kicked on again with the morning sun.
There is no real reason a refrigerator can’t be built with a five to ten gallon ice reservoir, which would keep it nice and cold for as much as three or four days, the way old time ice boxes stayed cool, etc. I have homemade solar domestic hot water already, and it has cut my hot water electricity consumption by eighty percent.
There is some hope for some of us, given the possibilities of combining renewable energy, conservation, and efficiency.
My best local friend used to ride a motor scooter on a daily basis back in the fifties to fetch liquor for some of the older guys from a bootlegger. We didn’t have a local ABC store then. Now there is a local barely legal age adult who will make your liquor run for you to the ABC store- on a motor scooter.
One of my relatives runs a farm market. He gets BUSLOADS of customers, by appointment, mostly from churches, but also from a couple of community organizations.
I burn wood and use a high efficiency oil furnace for back up heat, because I got it dirt cheap used, and installed it myself. When it dies, I will be installing a heat pump.That will cut my oil consumption another fifty to a hundred gallons a year. If I stay healthy enough to drive five more years, my next car will be will probably be a used Chevy Volt, and that will result in cutting my PERSONAL gasoline consumption by at least ninety percent. I use the truck exclusively for farm work, etc.
With the car will come the personal pv system. That will cut my grid juice consumption by at least forty to fifty percent. The only reason I don’t own both the Volt and the PV system already is that the prices of both are coming down fast enough it is far better for me to delay the purchases, in terms of bang for the buck.
In the meantime, this one old hat piece of technology which can be retrofitted to existing pumped storage will allow a good bit more wind and solar energy to be added to the European grid, by way of making it easier to balance the supply and load quickly and easily.
http://phys.org/news/2016-05-variable-storage-hydro-era-smarter.html
Western Europeans are already getting eight percent of their electricity from wind alone.
California- the biggest state in the union- is on a slow march towards renewables as well.
For example, on Monday 31% of the states electrical demand was met by renewable s. The state grid operator posts the info in realtime, as well as a daily summary.
Here is the daily summary for Monday-
http://content.caiso.com/green/renewrpt/20160516_DailyRenewablesWatch.pdf
and here is the realtime link-
http://www.caiso.com/outlook/SystemStatus.html#Renewables
This switch to renewables isn’t cheap, the retail rate here in PG&E territory is about 25cents/kwh (blended rate).
Texas ain’t doing too shabby either.
And both of these states have barely begun the PV build-out. They could easily expand it a thousand fold, without sacrificing any farm or forest, or wetland.
Europeans northern areas have been doing it for a long time, they use underground thermal storage to store heat from the vast amount of sunlight they get during the summer. If you have ever spent much time in Canada, you would have noticed that the days are very long up there in the summer, at least it was that way when I was there.
Hi Ron,
Pretty sure the wind blows in Canada. They also do get sunshine there, just not much in the winter. For heat a lot can be done with passive solar and thermal storage.
When fossil fuels become more expensive than renewables then people will switch.
Fossil fuels will become more expensive while wind and solar become cheaper, high fossil fuel process also make the investment in passive solar building and high efficiency building design more attractive. It will be a gradual process and will take 30 to 50 years, but it could potentially happen.
Dennis, the wind does blow in Canada… sometimes. And the sun shines in Canada… sometimes. If Canada switched to only wind and solar they would have to install billions of dollars worth of wind turbines and billion in solar panels, and billions for inverters. But those billions would be only a small part of the investment needed. The big expense would be the price of batteries. It would take massive battery banks to cover the period when the sun is not shining or the wind is not blowing hard enough. Imagine that, the grid powered by batteries!
Oh good grief Dennis, this shit is just not going to happen. People who think it will happen are living in la-la land.
I agree that places like Canada would be foolish to attempt to go 100% solar/wind, Ron. So would most places.
But in the lower 48, I believe that solar/wind could do something like 50% of the electrical load within 30 years.
Worth the shot at it since fossils will be getting tighter, as you have so well pointed out.
Worth the shot at it since fossils will be getting tighter, as you have so well pointed out.
Hey Hickory, I agree, take that shot. The problem is that is not up to you to take that shot, or I. The question is, is it economically feasible to take that shot. It is not up to you or I Hickory, it is up to the folks with the money and are they willing to take that gamble?
I seriously doubt it, but time will tell.
Thanks for that post Ron. As a father, I have been struggling in my head as to why we won’t do the things necessary for a better future for our kids.
Because it is easy to bet with other peoples money!
If you got no skin in the game it is easy to say…”Let’s convert the grid to run on French fry oil”.
Would I risk my own money (I don’t have any) and my families future to buy SOLAR?
If it didn’t work, the guys who are calling for it (with no skin in the game) won’t bail you out and your own family will suffer.
I’m storing that post in my list of favorites.
Good point. If US farmers could make more money covering their farms with wind mills and solar panels, they would do so. Maybe someday they will. Has not happened yet.
Likewise, US stripper well operators, even at current depressed prices, see a better shot at making a return in that than getting into the renewables business.
Small businesses cannot run cash flow negative for years, like the large corporations behind wind, solar, and yes, LTO.
A while back I asked if it would make sense financially for us to try to power our wells by installing solar. The response I got from solar advocates here was, no it would not. Maybe someday it will.
I do not mind the electric automobile discussions here, to an extent, because the day those can make the manufacturers money will be a big turning point away from gas powered vehicles.
I pay attention to Tesla earnings out of self interest. I also pay attention to their sales numbers. I still see one around here, the owner has since traded in two gasoline powered vehicles for two other gasoline powered vehicles, one being a new $90K gasoline powered “luxury” vehicle. He likes the Model S very much, but hasn’t gotten comfortable with his family’s fleet going all electric.
If US farmers could make more money covering their farms with wind mills and solar panels, they would do so. Maybe someday they will. Has not happened yet.
Back in 2010 I attended Winndpower 2010, the American Wind Energy Association’s annual trade show and conference in Dallas. An optional part of the trade show package was a tour of some wind farms west of Dallas. After a couple hours of driving we got to an area, IIRC the general area around Sweetwater, that was surrounded by a lot of wind farms. I distinctly remember the tour guide describing how the wind farms were re-invigorating the local rural communities by bringing in lots of cash and that the farmers who leased the land for the turbine sites, were extremely happy to supplement their income with the leases. IIRC the tour guide also said that some farmers, while still being able to operate their farms (work around the turbines), were making more income from the wind farms than the actual farms. The build out of wind is still in progress in Texas so, there might be some truth to that.
Likewise, US stripper well operators, even at current depressed prices, see a better shot at making a return in that than getting into the renewables business.
The discussion I started with my post further up, was an attempt to juxtapose the short term (gross) revenue performance with the long term value of PV. If the transition to renewables is successful, PV farms will be providing electricity for all sorts of uses, long after the last stripper well has been plugged and abandoned.
Based on the cost trajectory of solar, as highlighted by Tony Seba, solar will eventually become the lowest cost source of electricity, bar none. I would really be interested in hearing your opinions of his ideas, if you could ever spare the 53 minutes needed to watch the video linked to by Hickory in his post up top. As one who appears to be in the belly of the beast (oil industry) I’d be really intrigued to hear your take.
I have formulated this analogy of the situation in my mind. Oil is like buying vast acreages of forest, consisting of mature lumber trees, most of which are hundreds of years old. Clear cutting through a mature forest is going to be very profitable. The trees stayed there growing for hundreds of years and you can cut each one down in minutes.
PV is like buying the formerly forested land, after it has been clear cut. Assuming it has been partially re-planted with some fast growing lumber trees and is properly managed, it will eventually generate some revenue but, will never generate the bonanza that a vast mature forest can. The volumes that can be harvested from a sustainably run forest are also much lower than those that can be had from clear cutting old growth.
In my county Apple is building a $850M PV facility right now.
http://www.bloomberg.com/news/articles/2015-02-11/what-apple-just-did-in-solar-is-a-really-big-deal
I would add to Ron’s point that, along with the idea of energy cannibalism, is the idea, among others, of energy cannibalism of increasingly-diminishing (exponential?) ERoEI of the remaining fossil fuels and in light of potentially-serious climate change, among other effects.
To continue on seems to be gambling (And for what exactly?) with the planet and the lives of the creatures on it, and I (and many others) don’t approve.
If you want to gamble that way, go get your own planet and with a one-way ticket off this one. This is not a private planet for some elite.
As for the recent mention of self-driving cars, if I ever encounter one, maybe I can try to get a dog or two to take a good crap in one of them, just to contribute my part in helping to work out the bugs. Hey, no charge.
By the time humans run out of fossil fuel. Canada will be 80 degrees in the winter and the future Canadian President Trump will be building a wall to keep the Americans out.
Hi Ron,
As the price of fossil fuels increases, it will cost billions to burn fuel to produce electricity and to heat homes. A widely dispersed interconnected grid can nearly eliminate fossil fuel or battery backup with 90 to 99% of power provided by wind or solar. The intermittency is not much of a problem as long as the grid is interconnected over a wide area. Canada could also import electricity from the US, the wider the area connected, the less intermittency is a problem.
It is nighttime all over North America at the same time. Therefore you are talking about 100 percent wind power at night. It is extremely unlikely that you are going to have enough wind somewhere to power the grid everywhere. To maintain that there would be enough wind “somewhere” to power the entire grid in the early evening when demand is the highest, is totally unrealistic. Impossible! But then some people can believe impossible things.
“Alice laughed. ‘There’s no use trying,’ she said. ‘One can’t believe impossible things.’
I daresay you haven’t had much practice,’ said the Queen. ‘When I was your age, I always did it for half-an-hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.
A grid powered entirely by solar and wind, with no storage, is just a pipe dream. Totally unrealistic. Absurd beyond belief.
It is armchair surmising. One can sit in an armchair and surmise damn near anything, and then surmise it is entirely possible. But sometimes some of these armchair surmises get totally unrealistic. Rolling in the floor laughing my ass off unrealistic. And that is the case with your surmise Dennis, a grid run totally by solar and wind with no storage.
For electrical supply Ontario gets over half from Nuclear, a quarter from hydro and up to 10% from wind (no solar really) with a similar amount gas. The initiative is to expand electrical supply for space heating to eliminate gas (this is for the province only not all of Canada). A big part may be from new hydro.
Off Topic but Informative -Peaker Kunstler stars on Latest RT/Keiser Report – US Election & Assault on the Deep State. https://www.rt.com/shows/keiser-report/343319-episode-max-keiser-915/
Those who are excited about rapid growth in EV sales ignore the dire financial situation of EV producers, such as Tesla Motors.
Same can be said about producers of solar panels. Rapid volume growth and declining product prices in this sector resulted in sharply deteriorating financial situation of the companies producing solar panels.
The real price of aggressive growth, be it in shale oil and gas production, electric vehicles, or solar panels, is negative cashflows, rapidly rising debt and, finally, a wave of bankruptcies. When your compare competitive advantages of new technologies for the consumers, you should also pay attention to the economics of the producers.
—————————–
China Green Energy Firms Have Record Debt Due as Yingli Defaults
http://www.bloomberg.com/news/articles/2016-05-13/china-green-energy-firms-have-record-debt-due-as-yingli-defaults
• Renewables sector has $4.4 billion bond maturities by year-end
• Upstream companies are ‘still suffering from excess supply’
China’s clean-energy firms face record bond maturities this year, just as investor confidence was shaken by the default of a company that had been the world’s top solar-panel manufacturer.
Renewable companies must repay 28.8 billion yuan ($4.4 billion) of bonds over the rest of the year, more than any other previous annual repayments, according to Bloomberg-compiled data. A venture of Yingli Green Energy Holding Co., the top producer of panels until 2014, missed payments on 1.76 billion yuan of its notes. That brings the number of companies that defaulted on bonds to four, involving $1.8 billion, data compiled by Bloomberg show.
Overcapacity still plagues the industry after years of aggressive expansion that left the sector with 105 billion yuan of outstanding bonds. While President Xi Jinping has vowed to reduce pollution that’s a byproduct of a 30-year economic boom, the number of solar and wind-power generating plants in the nation lagged behind production of equipment.
“Companies in the upstream sector are still suffering from excess supply,” said Li Ning, general manager of the fixed income department at Western Securities Co. in Beijing. “Downstream companies, such as electricity providers, in the renewable energy industry have better credit profiles because of government support.”
Yingli’s venture Baoding Tianwei Yingli New Energy Resources Co. failed to make payments on Thursday for two separate five-year bonds, according to statements posted on the website of ChinaBond. One of the two notes was originally in default in October and holders had sought repayment by May 12.
Solar-cell maker Shanghai Chaori Solar Energy Science & Technology Co., was the first company to default on onshore notes March, 2014. Suntech Power Holdings Co. and LDK Solar Co. missed obligations on offshore bonds.
There are signs investors are getting wary. Clean energy companies only managed to sell 7.9 billion yuan of bonds this year, 14 percent less than the same period last year.
======================================
SunEdison at risk of bankruptcy, unit says; shares plummet 60 percent
Tue Mar 29, 2016
http://www.reuters.com/article/us-sunedison-inc-terraform-global-risk-idUSKCN0WV160
U.S. solar energy company SunEdison Inc, whose aggressive acquisition strategy has saddled it with almost $12 billion of debt, is at “substantial risk” of bankruptcy, one of its two publicly listed units warned on Tuesday.
A bankruptcy would rank among the largest involving a non-financial company in the past 10 years, according to bankruptcydata.com. SunEdison declined to comment.
SunEdison’s shares – already reeling from a Wall Street Journal report on Monday that the company was being investigated for overstating its cash position – fell as much as 60 percent to a record low of 50 cents.
Bankruptcies have historically been extremely common in all really fast growing industries.
There are always survivors that go on to become household names and stock market big boys.
At one time at least four hundred companies were building automobiles here in the USA. Eventually we got down to about three or four survivors big enough to matter,plus companies specializing in commercial trucks. Now we are back up to at least eight or ten, counting foreign makes that have set up production here in the USA, plus a number of smaller companies that may or may not survive.
Tesla will probably survive and thrive imo, but if not, the company will be bought up by a bigger company, and the early investors who held on will make out like bandits- barring an economic crash.
I’m not questioning the fact that the solar industry will survive.
My point is that current prices of solar panels may not properly reflect the true cost of production.
True enough about current prices possibly not covering current production costs. On the other hand, as the technology advances, more efficient panels at higher prices may still result in falling turn key system prices.
I am betting myself that the price of a COMPLETE system, including racking, converters, etc will continue to fall for at least four or five more years, which is about how long it will take me to do all the OTHER things I can do to cut back on my own fossil fuel dependency. If I had plenty of money, I would put in pv and get an electric car NOW, but there are other things I can still do that will yield a bigger bang for my dollar for the time being.
I am not hard up, but otoh, I don’t have a lot of cash laying around getting mold on it either.
Field-install labor is the big item now. I expect to see pre-wired structural arrays, with panels, connecting structural channels, cabling, micro inverters, everything factory-installed, in 1 kW modules. You just drop 4 modules onto the roof, bolt down to the structure, plug assemblies together with pre-wired cabling connectors, and run the main circuit to the electrical panel. 4 kW installed, connected, and operational in 3-4 hours by a two-man crew and a trailer-towed lightweight mobile crane to set the assemblies. If they can get the labor down to about $0.35/watt and materials/overhead/profit at $1/watt, the numbers start to look real good.
This one is for u Alex.
A continuation on our last Tesla/Musk discussion.
—–
Tesla Motors announced on Wednesday an underwritten registered public offering of about $2 billion shares of its common stock to accelerate the ramp of the Model 3.
The electric automaker is offering about $1.4 billion in shares. CEO Elon Musk will sell the remaining shares to “cover tax obligations associated with his concurrent exercise of more than 5.5 million stock options.”
Shares of Tesla were down more than 2 percent in after-hours trading.
In a Wednesday note to clients, Goldman Sachs estimated that Tesla only needed to raise $1 billion to fund accelerated Model 3 production. The firm also said it sees a 22 percent upside to its six-month price target of $250.
http://www.cnbc.com/2016/05/18/tesla-raising-2b-for-model-3-shares-plunge.html
———-
Might work out in the end but boy is there lot of air/hope in that company right now.
Thanks, Amatoori
“CEO Elon Musk will sell the remaining shares to “cover tax obligations associated with his concurrent exercise of more than 5.5 million stock options.”
Amatoori,
Don’t be so hard, maybe the guy is just on short end of the cash flow for personal taxes 🙂
You see CNBC tells you what are they doing and in the same paragraph tells you why something is done ….and people buy it. They could even write that Mr Musk is renovating his basement and needs extra cash from his shares and people would still buy it.
http://investmentunderground.com/2016/05/sandridge-energy-files-for-bankruptcy-with-4-1b-in-debt/
How Portugal went 107 hours on only renewable energy (+video)
For 107 hours, Portugal powered all of its electricity from biofuels, hydropower plants, wind turbines, solar panels, and geothermal heat.
http://www.csmonitor.com/Environment/2016/0517/How-Portugal-went-107-hours-on-only-renewable-energy-video
I WONDER about this .
Calling Fred Maygar!
http://phys.org/news/2016-05-robot-cars-traffic-congestion-cliff.html?utm_source=menu&utm_medium=link&utm_campaign=item-menu
I have not forgotten that computers were supposed to eliminate most of the market for paper in offices, rather than multiply it!
It is likely that the number of cars will fall somewhat as autonomous cars are added to the mix of transport vehicles. As long as the taxi companies use vans for commuting, so several people can commute in the same vehicle, the number of vehicles on the road may fall.
However, there is no way that the number of miles driven will decrease unless a lot of ride sharing goes on. In fact the number of miles driven will actually increase over privately owned cars.
I don’t see autonomous cars as a cure for much, although it can be a great boon to the disabled, the elderly, the impaired and the occasional user. Properly handled it will be an assistance.
For a real solution to traffic problems and miles driven we need fleets of vans and small buses that will carry several passengers at once to destinations and to work. Ride sharing with strangers is a scary proposition with no driver present, it could be a setup for a number of crimes.
I also predict quite a number of people owning both a private vehicle and occasionally using the autonomous system. So what does that do?
Not in any of our lifetimes. Just think of instances that have happened to you while driving, that all of these vehicles will have to cope with. Here are a few examples of the many that have happened to me.
1. You are driving along, and immediately in front there is an accident. A police officer is near, zooms up, jumps out of his car an motions you to – a) make a u-turn and go back; b) go into the opposite lane and go around [another officer is blocking on coming traffic]; or c) back up 20 feet into a median to unblock the intersection.
2. You are heading north on I-35 in nowhere Kansas. Because of an accident 3 miles ahead [unknown to you] the highway patrol has blocked the highway and motions you to turn off onto a county road. You follow a stream of cars going 5 miles east, then turning north for 10 miles, then turning back west 5 miles back to another I-35 entry point. No signs, just follow everyone else.
3. It has been raining heavily. You come to an intersection and there is a roadblock in the middle. You can easily go around, but it has a sign saying no through traffic. You automatically know that the road has temporarily flooded in the last hour. You are on your own to re-route yourself.
4. You are heading for work one foggy morning. There is a low spot of about a mile on the interstate. The fog there is so severe that vision is limited to 15 feet. Everyone [all 3 lanes] has slowed down to 10 mph, and is just following the car ahead. You know from prior experience that when you go a mile the fog will be less dense.
5. You are in a mall parking lot getting your groceries at Target. When you are loaded up, you note that the exit is blocked – some kind of commotion, fire trucks in the street [a burning car]. You have to go around the mall to another entrance/exit and get out there.
All of these problems are solvable. But, not in my lifetime. The problem is: There is no gradual way to introduce the technology. You cannot send a vehicle out saying that everything will be okay 99% of time as it is. It will have to deal with 100% of the problems.
For example: They invent the most nutritious food ever. Everyone can benefit from it. But, for some unknown reason, about 1 out of every 100 servings will make a random person mildly sick. No way to tell which serving or when. 99% great. Zero chance of being on the market.
Clueless, I’m not sure you grasp what AI algorithms are capable of. Driverless cars currently on the road can already handle the scenarios that you describe better than your average human can. You seem to believe that humans are safe drivers. The evidence shows that they are not.
Here’s just one example of how incredibly good AI is in performing very delicate task and AI can learn new tricks incredibly fast.
http://www.zmescience.com/science/physics-ai-bose-einstein-condensate/
Lazy physicists from Australia programmed an artificial intelligence system to maneuver a delicate experiment with little to no oversight. The A.I. had to control an array of lasers that are used to cool atoms near absolute zero temperature, where the slightest hiccup could destroy the fragile state of matter of the atoms. But the machine performed marvelously.
“I didn’t expect the machine could learn to do the experiment itself, from scratch, in under an hour,” said co-lead researcher Paul Wigley from the Canberra-based Australian National University (ANU). “A simple computer programme would have taken longer than the age of the Universe to run through all the combinations and work this out,” Wigley added.
AI is already driving on our roads and it is already proving to be far far better than humans!
We all know that some of today’s AI computers are capable enough. But, what is their cost? And, for the car, how much will the sensory input cost? Right now, the cost of the sensory input and actual I [not AI] is zero: it is the driver.
Probably most people on this site believe that there is a better car currently available: Tesla. But, not very many have switched because of cost, certain limitations and availability [and it is not self-driving]. And, if it ever becomes a mass market vehicle, governments will not be able to pay up to 20% of the cost as they now do.
So, I guess that I will stick with the thought that self-driving cars will not be ubiquitous in most of our lifetimes. I kind of assume that the average age on this site is over 60, but I may be vastly wrong.
The ability of the the older generation astounds me. First, they never could figure out how to work a VCR [in the 1970’s]. Then the PC became a necessary possession, but mostly an email toy, and unusable with any glitch. Now with smart cell phones, probably 5% of their capability is being used: but, you have to have one to keep up. And soon they are going to own a supercomputer in a car with the sensory input capability of a human, and if a glitch occurs, I know they will know exactly what to do. Call a grandchild.
I wonder what OFM thinks.
We all know that some of today’s AI computers are capable enough. But, what is their cost? And, for the car, how much will the sensory input cost? Right now, the cost of the sensory input and actual I [not AI] is zero: it is the driver.
Google Tony Seba’s talk and pay special attention to cost of sensors and computers. They have become really, really cheap and are getting cheaper! The cost of this technology is no longer an issue when compared to the cost of a vehicle.
http://www.driverless-future.com/?page_id=774
Top misconceptions of autonomous cars and self-driving vehicles
1) Driver assistance systems will evolve gradually into fully autonomous cars
2) The first models of fully autonomous cars will be targeted to the consumer and will be available for purchase
3) It will take decades until most of the vehicles on the road are capable of autonomous driving
4) Self-driving cars are controlled by classical computer algorithms (if-then rules)
5) Public demonstrations of self-driving cars provide an indication of their capabilities
6) Self-driving cars need to make the right ethical judgements
Ironically I’m on the road today… but the idea is that not only will we have driverless cars but that we will not own them individually and they will shared, rented, leased etc… That’s the idea behind companies such as Uber, Lyft, Zip Car, etc… most of the major car manufacturers seem to be planning for that kind of a business model. If that model is the one that is followed then there will be many fewer cars on the road at any one time and there will be much less need for parking lots.
But who the heck knows, ask Yogi! 🙂
Hi Old Farmer mac,
World paper and cardboard output has been pretty flat since 2006, so the growth in paper use has stopped, at least for the time being. I imagine as GDP has grown cardboard has become a larger share of the total (more stuff packed and shipped) and paper output has probably gone down.
http://www.worldwatch.org/paper-production-levels-environmental-footprint-still-high
Link above says 54% of paper and paperboard is used for packaging, but I cannot find how this has changed over time.
Tesla needed money and they have gone to the market to get it.
http://www.cnbc.com/2016/05/18/tesla-raising-2b-for-model-3-shares-plunge.html
Tesla files for $2B stock sale to back Model 3; shares plunge
But, I had to laugh when I went to look for articles. I found this, from 6 hours earlier.
http://fortune.com/2016/05/18/goldman-sachs-tesla-musk/
Goldman Sachs Says It’s Time to Buy Tesla Stock
So Goldman, recommends Tesla, price pop, Raise capital, price drop, and Goldman makes money on all sides. You have to love Wall Street!
Toolpush,
I found it amusing that Goldman raised their price target (causing a rally in the stock) hours before underwriting a capital raise that cause a decline in Tesla’s stock.
Although, to be fair there are SEC rules that are very explicit, with severe consequences, if Goldman Sachs’ underwriting dept talked or leaked anything to their analysts.
Goldman Sachs does plenty of shady things to make a profit – like selling Mortgage Backed Securities as AAA investments, and simultaneously, knowing they’re crap, betting on them going bad (covered in the critically acclaimed documentary “Inside Job”), or helping Greece hide their budget deficit with accounting magic… so they can sell them debt… that they know will go bad.
However, as odd as it is, none of those actions were illegal. THIS would actually be illegal, and Goldman Sachs is smarter than that. I’d guess it is a genuine coincidence.
On a separate note, I find it important to note that Tesla FIRST scouted out battery suppliers to supplement their battery supply 1 DAY before announcing the amount of their capital raise.
My hypothesis, Tesla’s accelerated Model 3 ramp-up meant that they will need a large supply of additional batteries as the Gigafactory will not be able to accelerate it’s schedule enough to match the accelerated vehicle production ramp.
This also tells me that Tesla is confident enough in their accelerated Model 3 production schedule that they needed to arrange a multi-million dollar contract with battery suppliers to supplement their capacity until the Gigafactory can meet demand.
Although, to be fair there are SEC rules that are very explicit, with severe consequences, if Goldman Sachs’ underwriting dept talked or leaked anything to their analysts.
This is all about corruption of regulators and impunity of TBTF financial institutions under neoliberalism — which is an immanent feature of neoliberalism aka “casino capitalism”…
Goldman’s role in the growth of casino capitalism in the USA is similar to that of other players, except for one thing: Goldman didn’t believe its own hype. The now famous Rolling Stone magazine article in 2009 by Matt Taibbi unforgettably referred to Goldman Sachs, the world’s most powerful investment bank, as a “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” ( http://www.forbes.com/sites/jakezamansky/2013/08/08/the-great-vampire-squid-keeps-on-sucking/ )
https://www.bostonglobe.com/opinion/2016/05/12/the-age-impunity/LHBxamqFENCs3W6lvWnCIJ/story.html
http://www.softpanorama.org/Skeptics/Financial_skeptic/Casino_capitalism/Systemic_instability_of_financial_sector/TBTF/Goldman_Sachs/index.shtml
It’s amusing that petroleum observers in Alberta are surprised at efforts to reduce GHG emissions. They can’t possibly say that they couldn’t have seen it coming?
Ontario’s move away from natural gas would hit Alberta producers
10% of Alberta’s natural gas production flows to Ontario
By Tracy Johnson, CBC News/Calgary, May 18, 2016 7:00 AM MT
From the DoE.
The Energy.gov podcast: Direct Current
Episode 1: Tackling the Hidden Costs of Rooftop Solar
Yet another BK, as Rune notified me today. Halcon, ticker HK, with operations in the Bakken and EFS. $3+ billion of debt.
Further, Mr. McClendon’s new company, American Energy Partners, announced they are winding down and closing up shop.
One of the Permian guys here mentioned that those of us who survive this debacle need to hoist a few cold ones sometime. I’m ready, once I am sure the debacle has passed.
SS,
This is not bankruptcy in real sense.
From todays article regarding Halcon: “it plans to file for a prepackaged bankruptcy that would wipe out $1.8 billion in debt and help it survive the drop in crude prices.”
It is the game of pretending where debt is wiped out as Kramer from Seinfeld would say “Jerry they write it off (debt). They do all the time”.
And then magically a “new” set of investors show up with newly printed or digitally created numbers on the account and start process again. And start drilling cash into the ground in order to get any oil left regardless of monetary paper loss/gain. What that tells you that current economic system is completely broken. It is running on fumes.
What does this say about Saudi spare capacity, the Doha meeting and future supply (if anything):
“Saudi Arabia’s crude oil stockpiles fell in March for the fifth month in a row reaching the lowest level in 18 months as the kingdom kept shipping crude to meet customer demand while keeping a lid on production.”
http://www.bloomberg.com/news/articles/2016-05-18/saudi-oil-stockpiles-hit-18-month-low-in-march-as-output-capped
Sinking rig counts worldwide doesn’t correspond to these fantastic planned production increases – if it was that easy to crank up production, why has everyone hasn’t done it before?
And opening the chokes, damaging the oilfied only works short term before new infills / CO2 or other expensive stuff is neccessary.
Sinking rig counts worldwide doesn’t correspond to these fantastic planned production increases – if it was that easy to crank up production, why has everyone hasn’t done it before?
A relevant quote:
see also http://softpanorama.org/Skeptics/Political_skeptic/Neoliberalism/index.shtml
We may still have a choice of a prez candidate who is neither the property nor the owner of big business interests.
….. keeping a lid on production.”
To me this means that Saudi Arabia has peaked. And crown prince Mohammed bin Salman’s plan to ween Saudi Arabia off oil is simply additional proof of this being the case.
George,
That’s very interesting.
Data is for March – before Naimi was replaced by the Prince’s new oil minister.
The markets still seem to think that the Saudi’s can raise production at will, and that replacing Al-Naimi (who wanted a freeze) will lead to much higher Saudi production.
We won’t know for a few more months though.
I will say it is amazing how quickly the markets went from oversupply to deficit. Saudi’s are drawing down their inventory to meet demand, Canada is making up for 1,000,000 bpd of lost production by drawing down inventory.
Q1 2016 OECD inventory stocks were 800,000,000 barrels below estimates BEFORE these recent disruptions in Canada, Nigeria, Venezuela, and, as of today, Colombia.
On the horizon we have additional lost production from Iraq and Venezuela due to CAPEX changes from the government’s to the oil companies.
It really is incredible that oil prices are still 20% below year ago levels at this point. Considering the supply/demand picture we just entered into, and the guaranteed continuation of depletion and rising demand prices should be HIGHER than 12 months ago… yet here we are.
OAS press release, message addressed by its Secretary General to Venezuela’s dictator, Nicolas Maduro
http://www.oas.org/en/media_center/press_release.asp?sCodigo=E-062/16
The problem all of these diplomatic moves face is the way the Obama administration has undermined democracy by cuddling up with the Castro family dictatorship (which happens to be Maduro’s mentors/bosses).
http://techcrunch.com/2016/05/19/uber-confirms-its-testing-self-driving-cars-in-pittsburgh/
No question Pittsburgh prostitutes are delighted; some Carnegie Mellon students might be excited about those new possibilities as well 😉
Iraq has peaked.
Iraq’s Oil Output Seen by Lukoil at Peak as Government Cuts Back
Crude output in Iraq, OPEC’s second-largest producer, has probably peaked and is likely to fall short of the country’s target over the next two years, according to an official with Lukoil PJSC, operator of one of the country’s biggest fields.
I think the title of the article is misleading. A sharp decrease in investments does not mean a peak in Iraqi oil output. It will result in a slower growth in production. Iraqi government’s goal of 6 mb/d by 2020 is obviously unrealistic. But Iraq still can increase output from the current 4.3 mb/d to more than 5 mb/d in 2020.
Pump and Dump: Saudi Kills US Shale Oil Industry and Buys it for Pennies
http://sputniknews.com/middleeast/20160519/1039930364/saudis-oil-fracking-obama-economy.html