North Dakota Production and STEO

The Bakken and North Dakota production data is out.

Bakken & North Dakota

Bakken production was up 6,540 barrels per day while all North Dakota production was up 5,383 bpd. This was not posted as a correction to last months data though it looks that is exactly what it is. Last months data was twice as much as it should have been so now it is correct. Notice the data from the Drilling Productivity Report. It appears to have June data exactly correct, or very nearly so. Of course that is all the Bakken, including the Montana Bakken.

Bakken BPD per Well

Bakken barrels per day per well held steady at 94 in May while all North Dakota bpd per well fell by 1 to 81.

From the Director’s Cut

Oil Production

April 31,259,426 barrels = 1,041,981 barrels/day
May 32,468,271 barrels = 1,047,364 barrels/day (preliminary)(all-time high was Dec 2014 at 1,227,483 barrels/day)
994,727 barrels per day or 95% from Bakken and Three Forks
52,637 barrels per day or 5% from legacy conventional pools

Gas Production
April 48,503,062 MCF = 1,616,769 MCF/day
May 50,949,167 MCF = 1,643,522 MCF/day (preliminary)( all-time high was April 2016 at 1,710,823 MCFD)

Producing Wells
April 13,054
May 13,167 (preliminary)(all-time high was Oct 2015 13,190)
11,078 wells or 84% are now unconventional Bakken – Three forks wells
2,089 wells or 16% produce from legacy conventional pools

Permitting
April 66 drilling and 0 seismic
May 42 drilling and 0 seismic
June 65 drilling and 0 seismic (all time high was 370 in 10/2012)

ND Sweet Crude Price1
April $30.75/barrel
May $33.74/barrel
June $38.75/barrel
Today $36.25/barrel (all-time high was $136.29 7/3/2008)

Rig Count
April 29
May 27
June 28
Today’s rig count is 29 (all-time high was 218 on 5/29/2012)

Comments:
The drilling rig count fell 2 from April to May, then increased 1 from May to June, and increased 1 more from June 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 41(final) in April to 37(preliminary) in May. 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 was 1 significant precipitation event, 14 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 931, up 39 from the end of April to the end of May.

Estimated inactive well count is 1,584, down 6 from the end of April to the end of May.

Crude oil take away capacity remains dependent on rail deliveries to coastal refineries to remain adequate.

Low oil price associated with lifting of sanctions on Iran and a weaker economy in China are expected to lead to continued low drilling rig count. Utilization rate for rigs capable of 20,000+ feet is 25-30% and for shallow well rigs (7,000 feet or less) 15-20%.
Drilling permit activity decreased from April to May increased sharply in June as operators begin to position themselves for higher oil prices in 2017. Operators have a significant permit inventory should a return to the drilling price point occur in the next 12 months.

The EIA’s Short-Term Energy Outlook came out Tuesday.  I have the most interesting charts from that publication below. All data below is through June, and projected data is through December 2017 and is in million barrels per day.

STEO Non-OPEC

The EIA has Non-OPEC total liquids peaking, so far, in 2015. This should surprise no one.

STEO Russia

The EIA’s projection of Russia is quite a shocker. They have Russia peaking in March 2016. Remember this is total liquids. The data from the Russian web site CDU TEK is crude + condensate.

STEO OPEC

They have OPEC total liquids up 520,000 barrels per day in June. The OPEC MOMR has OPEC crude up about half that amount. I think the EIA is a little overly optimistic concerning OPEC production.

Data in all charts below is crude + condensate.

STEO US C+C

The EIA has the US decline pretty much halting in August at about 8.2 million barrels per day, down about 1.5 million barrels per day from the peak in April 2015.

STEO GOM

The halt in the decline of US production is due to the ever increasing production from the Gulf of Mexico. The spikes down in August, September and October of 2016 and 2017 is due to the expected hurricane season disruption. In this case I think they are too pessimistic. I think that it is unlikely that we will have much of a hurricane season this year. Next year?

STEO Alaska

Alaska maintenance season bottoms out in August. The Alaskan decline was halted in 2016 but the EIA expects it to continue next year. It looks like Alaska will never have a monthly average of half a million barrels per day again.

STEO Lower 48

The EIA expects US Lower 48 to bottom out, early next year, at 5.8 to 5.9 million barrels per day, down about 1.85 million barrels per day from the peak in March 2015.

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459 Responses to North Dakota Production and STEO

    • Phil Harris says:

      Congrats. Highly recommended!

      There have been one or two interesting economic ‘co-incidences’ along with the geopolitical stuff over last 10 years or more: see this reflection on UK productivity and N Sea. http://www.coppolacomment.com/

      best
      Phil

    • Euan gets it right.

      • Dennis Coyne says:

        An alternative projection based on EIA C+C data, with 1% annual decline in C+C output from March 2016 to Dec 2017.

        Note that I assume a gradual recovery in oil prices as the oil market balances, if that is incorrect due to an economic recession then Euan Mearn’s scenario is more likely.

        In any case decline in C+C output between 1% and 2% through the end of 2017 seems likely to me.

    • Jef says:

      Is oil produced at a loss still considered as a plus on the production side of Hubberts curve?

      If so then why should we ever have a peak?

      • SouthLaGeo says:

        While the fact that global peak oil production will occur is not to be debated, one issue regarding peak oil theory is worth questioning – that is the oft mentioned idea that when peak oil occurs, half of the global oil reserves have been produced. This doesn’t seem like it has to be the case. Any comments on this? thanks

        • Javier says:

          I agree, SouthLaGeo,

          Hubbert’s theory is good for a conventional oil region when the rest of the world is still increasing production. It is no longer valid when applied to unconventional oil or when Peak Oil refers to the entire world if oil is being used to extract oil.

          Common sense indicates that a lot less oil will be extracted after Peak Oil than before. We won’t have an economy that could extract those Arctic, deep sea, and difficult geology deposits.

          Hubbert himself thought that oil could continue being extracted to the end because we would be fully into nuclear energy.

        • robert wilson says:

          Hubbert’s comment, according to Ivanhoe. http://hubbert.mines.edu/news/Ivanhoe_97-1.pdf

        • Paulo says:

          I believe the definition of Peak Oil Theory has been refined (pun intended) as the dynamics of affordability, including debt financing and astounding rising debt levels in all sectors, are added into the mix. Plus, as we approach, or have hit Peak, we are simply more aware of complicating details and nuance. Of course, there are so many other factors arising at the same time.

          The other aspect is actually knowing what remains? Sure, there are some very informed and knowledgeable people (on this forum) who live, breathe, and know the reserve numbers. However, it hasn’t yet been produced under unforseen difficulties. Those numbers could be a bit higher or lower. Furthermore, peak itself is now been re-defined beyond geology.

          I always think of Forestry. Timber cruisers/forestry engineers are given a plot to cruise that someone has indicated will be harvested using GIS, allowable cut levels, and market conditions to establish the cut plan and sequence. Off they go doing their sampling and extrapolations, and come up with a number of each species per cut block or per hectare. The public is told the cut is supposedly sustainable and falls within the company 5 year plan. But will the plot ever be cut and sold? That decision is always put on hold until someone makes that final decision.

          I once flew the Chief Forester for BC to some location or another. While we were trapped together in the plane and he was captive to my questions I asked him just how it could be believed that BC was harvesting timber at a sustainable level, and how the ‘maximum allowable cut’ was mandated? His reply was that the asumption was made that every standing tree on Crown land would be available for harvest, and that this total number established the cut based on the variables of growing cycles. Of course, every tree is not available to be cut as the Clayquot Sound logging protests of the ’80s virtually stopped all logging in that area. Over time, protests have spread to other areas and saved other stands of timber.

          Is not oil production and Peak similar? The techno folks believed that whatever was out there would be available to produce. When 1/2 was produced, that would be Peak. But……

          I really think Ron nailed it with his 2015 number, and also believe this latest post confirms this. I think it is also amazing that on other blogs I have read, (as recent as yesterday), that LTO is just waiting in the starting blocks to ramp up and that PO has been made irrelevent. Many believe the ‘glut’ exists because there is simply too much oil out there, or that oil companies are just too good at what they do and we need not be concerned, and do not understand that a broke company or country that needs cash will produce flat out until it can’t. They believe today’s modest surplus indicates health and not the other way around.

          Just my 2 cents worth. Regards

        • Euan Mearns says:

          I think the 50% “rule” is a gross oversimplification. Production seldom follows a symmetrical bell curve. Companies do all they can to keep production going on a plateau for as long as they can – injecting water, well work-overs, infill drilling, sub-sea tie backs etc. But eventually decline takes over, production falls and they give up.

          Above ground factors were much discussed in the past and scoffed at by some. But in fact they are likely as important as below ground factors. It’s a battle between human beings (and their systems) and geology.

          • Dennis Coyne says:

            Hi Euan

            I agree.

            I also agree there is a possibility that oil prices will remain under $75/be forever.

            I don’t think it is likely.

            What is your view?

            • AlexS says:

              How many times over the past 40 years we have heard that oil prices will never be above $…/bbl, or will never drop below $…/bbl, or that $…/bbl is a new normal.

              Oil industry was, is, and will be highly cyclical, with wild fluctuations in prices; and we will see new highs and new lows in the next decades.

              • Doug Leighton says:

                Yes, the oil industry has always been a series of boom-bust cycles and any long term projections that don’t reflect this are pure fantasy. Oil price is the key and always has been.

                • shallow sand says:

                  Completely agree.

                  Absolute statements are usually in error, and with regard to oil prices definitely IMO.

                  Have said many times, we have sold oil for a low of $8 and a high of $140.

                  In 2014, one month was $99.25. In 2016, less than two years later the price was $25.27 for a month. These last two prices are monthly averages, which we went to after the 2008 price crash, as we felt purchasers were sandbagging hauling oil as the price tumbled over $100 in five months.

                  Ah, commodities!

              • Dennis Coyne says:

                Hi AlexS,

                Let’s consider 3 year centered running average prices for Brent Crude.

                Base on the history since 1988, I think a prediction of future oil prices (3 year average) at $80/b or more is reasonable.

                I agree though that predicting the price precisely is not possible.

                • Dennis, you might have gotten a better looking chart if you had used a 4 year average. Or better yet if you had used a 5 year average.

                  • Dennis Coyne says:

                    Hi Ron,

                    We could do it by the day and get higher volatility. Most wells produce oil for many years so the average oil price received for the barrels produced is very relevant to the economics of the well.

                    Here’s 12 month centered running average of Brent spot price.

                  • I have carried my reply to the bottom of the page where the width is wide enough to view a graph.

  1. Enno Peters says:

    Thanks Ron.

    I also have a new, update on ND.

  2. George Kaplan says:

    The USGS should revisit their earlier estimate for undiscovered resources in Bakken / Three Forks now that about four times as many wells have been drilled since the first release.

    The way USGS estimated the undiscovered resources was quite simple. Split the region into 6 production zones (which may be stacked); for each zone split into core (sweet spots) and non core areas to give twelve assessment units. For each unit estimate total area (A), drainage area for each well (a), EUR per well (U), the proportion of the area unexplored (p) and the chance of not getting a dry well when drilling (r). Then resource is (A/a)*U*p*r. The values are different for each zone and they actually give three alternatives: maximum, median, minimum. Then they add up all twelve (or 36) estimates to give the total (or 3 different totals). The values for A, a and U might have some reasonable chance of being correct but p and, especially, r are just best guesses; for the maximum cases r is greater than 80% for all areas and for some minimum cases 90% and higher is used. In reality the E&Ps stopped wild cat permitting when they got to 50% success rate (and falling fast) in 2013/2014. Therefore, in the core areas p might be zero – the lease holders know what is there and have already included it in ‘proven undeveloped’, they don’t need to drill to be confident – and in the non core areas p * r is zero – the lease holders drilled wildcats out from the core until they started hitting dry holes, and then they stopped because there is nothing else to find (r is zero for all the remaining p). Therefore overall the undiscovered resources might now be zero for maximum, median and minimum cases, which would be quite a bit different from USGS numbers of 4, 7 and 11 Gb respectively, with a mean of 7.4 Gb.

    • R DesRoches says:

      The EIA did a bottoms up analysis of the “Technically Recoverable” LTO for the Bakken. The result was 23 Billion barrels.

      They divided it into 40 different areas, taking the EURs per well for each area and estimating the number of wells that can be drilled per area based on current data.

      The data was published in their “World Shale Oil Resource Report”, dated Sept 20, 2015. This is a major update of their June 13, 2013 report.

      • Dennis Coyne says:

        Hi R. DesRoches,

        The geologists at the USGS do a much better job estimating TRR than the economists at the EIA. It will be a 9 to 13 Gbo URR from the ND Bakken Three Forks, maybe 2 Gbo from Montana.

        • R DesRoches says:

          It was only a few years ago that the USGS were telling us the URR for the Bakken was only 5 Billion Barrels, now they are saying it is 9 to 13 Billion. Looks like they are headed in the right direction.

    • Dennis Coyne says:

      Hi George,

      I was responding to your comment about the USGS estimate.

      Remember that the estimate was based on data through 2012, I suppose it is possible that there are no longer any undiscovered resources for the reasons you state.

      I would still think there are some probable reserves which may become proved with higher prices or development of improved drilling and completion techniques. It seems your expectation is that probable reserves will be zero.

      Isn’t is possible that as prices fell that the oil companies decided that they would focus on the core areas? I would be surprised if these companies had booked 6.7 Gb of reserves (including cumulative production which were at one time proved reserves), but only will produce 4 Gb, I would also be surprised if probable reserves were zero.

  3. clueless says:

    Either ND needs to hire a proof reader, or I no longer can read with comprehension.

    “Gas Production
    April 48,503,062 MCF = 1,616,769 MCF/day
    May 50,949,167 MCF = 1,643,522 MCF/day (preliminary)( all-time high was April 2016 at 1,710,823 MCFD)”

    So which is it? April 2016 was 1,616,769 MCF/day or was an all-time high at 1,710,823 MCFD.

  4. Javier says:

    Art Berman also has an article dealing with Peak Oil for economic reasons. It looks like a lot of agreement lately on this issue between experts.

    Oil Prices Lower Forever? Hard Times In A Failing Global Economy

    • Yeah, this is a very good article. Art understands how the world works.

      Energy is the economy. Energy resources are the reserve account behind currency. The economy can grow as long as there is surplus affordable energy in that account. The economy stops growing when the cost of energy production becomes unaffordable. It is irrelevant that oil companies can make a profit at unaffordable prices.

      • Doug Leighton says:

        I agree. Meanwhile, an army group in Turkey says it has taken over the country; soldiers at strategic points in Istanbul and jets flying low in the capital, Ankara.

        • Watcher says:

          GAZPROM

          • Petro says:

            …..Oh, YEAHhhhhhh…

            Be well,

            Petro

          • AlexS says:

            “GAZPROM” ???

            From Reuters:

            “Erdogan said the coup attempt had been encouraged by the “parallel structure”. This is his shorthand for followers of Fethullah Gulen, a Muslim cleric whom he has repeatedly accused of trying to foment an uprising in the military, media and judiciary.
            Gulen, who lives in self-imposed exile in the United States, once supported Erdogan but became a nemesis. The pro-Gulen Alliance for Shared Values said it condemned any military intervention in domestic politics.”

            http://www.reuters.com/article/us-turkey-security-primeminister-idUSKCN0ZV2HK

            “Any country that stands by the Muslim cleric Fethullah Gulen will not be a friend of Turkey and will be considered at war with the NATO member, Turkish Prime Minister Binali Yildirim said on Saturday.
            The government said that followers of Gulen, who has been living in self-imposed exile in the United States for years, were behind the attempted coup by a faction of the military on Friday.
            The government accuses Gulen of trying to build a “parallel structure” within the judiciary, education system, media and military as a way to overthrow the state, a charge the cleric denies.”

            http://www.reuters.com/article/us-turkey-security-primeminister-gulen-idUSKCN0ZW0K5?mod=related&channelName=worldNews

            Bottom line: Turkish top officials accuse a guy who” lives in self-imposed exile in the United States”.

        • Caelan MacIntyre says:

          Yes, and best links and elaborations would be appreciated, thanks.

          • Ves says:

            Caelan,

            It is pre-emptive coup 🙂 (fake coupe in order to clear the military deck)

            It looks to me that this time Turkish political elite pulled pre-emptive coup on Turkish military so it can purge her from the elements that are influenced by remote control from outside the country.
            In one word this is Turkish version of Brexit. Basically financial, political, and military international structures that were established after II world war are crumbling because the interests of individual countries are so diametrical.

            • Fred Magyar says:

              In one word this is Turkish version of Brexit. Basically financial, political, and military international structures that were established after II world war are crumbling because the interests of individual countries are so diametrical.

              Oh Shit! Get ready for a new, old style caliphate and the ushering in of another couple hundred years of dark ages… The Ottomans are coming!

              • Ves says:

                Fred, Ottomans are not coming.. Chinese are coming with trade deals on Orient express train from Beijing…via Istanbul…you guys are so misinformed about what’s going in the world that you will be in state of shock when IMF, EU, NATO close the shop all in one day.

                • Fred Magyar says:

                  you guys are so misinformed about what’s going in the world that you will be in state of shock when IMF, EU, NATO close the shop all in one day.

                  Really , well get off your high horse!

                  Ves, I don’t know who you think I am or what you think my background is but let me inform you of two things.

                  One, I’m quite sure the Ottomans are not really coming! That was intended to be tongue in cheek. You know, like Ha Ha ha!

                  Second, as a reasonably well educated citizen of the world, I was born in Brazil, to Hungarian parents, I grew up on three continents with three native languages and steeped in three completely different cultural backgrounds, I’m pretty sure I can safely say that I’m not part of any group that might be labeled ‘YOU GUYS’! Whatever the hell that even means.

                  Perhaps you mean Americans? If so, then as a US citizen I guess that would apply to me as well! However not every American citizen is ignorant of what is happening in the world today. Perhaps it is you who is misinformed about Americans in general.

                  Furthermore there is very little that is happening in the world today that surprises or shocks me other than the arrogance and presumptions of people like you who jump to conclusions and think they are in a position to pass judgement on others.

                  I’ll leave it at that!

                  • Ves says:

                    Fred,
                    Caelan have asked a question. I wrote down my speculation. Do you have anything to share with us regarding his question? Go ahead. Topic is not where are you born, who are your parents or if Turkish failed coup is “disruptive” or not.

                  • Fred Magyar says:

                    Ves, just curious is this how you answer Caelan’s question, by addressing me by name?

                    Fred, Ottomans are not coming.. Chinese are coming with trade deals on Orient express train from Beijing…via Istanbul…you guys are so misinformed about what’s going in the world…

                    Or did I miss something?

                  • Ves says:

                    Because between my answer to Caelan and my answer to you is your nested nonsensical post to me about “dark ages” of caliphate and Ottomans coming.

                  • Javier says:

                    I’m pretty sure I can safely say that I’m not part of any group that might be labeled ‘YOU GUYS’!

                    I really, really, love that phrase, Fred. Well said.

            • Caelan MacIntyre says:

              Thanks for the elaboration, Ves. So a Turkxit then…

              Well, looks like the global industrial brain is slowly losing its synapses.

              Relocalization is of course also part of Peak Oil 101.

              “The Export Land Model is important to petroleum importing nations because when the rate of global petroleum production peaks and begins to decline, the petroleum available on the world market will decline much more steeply than the decline in total production.” ~ Wikipedia (Jeffrey Brown’s ELM)

              If Russia is better poised with regard to energy/resource independence and locality than USA and surrounds, then this would suggest a bit of a geopolitical shift in power and empire.
              The North America LTO/Bitumen/Arctic deep sea experiment was attempted and didn’t seem to quite work out, like ethanol, and maybe like lithium.
              So now I guess it’s in part, Venezuela and some attempts at steering new power shifts overseas, via ISIL, Syria, Turkey, Ukraine and some lacy NATO fringes along Russia’s hemlines?

              “The top 10 largest net importers of oil in 2012 (million barrels per day):
              [1] United States 7.39
              [2] Japan 4.66…” ~ EIA

              US is near double the second, Japan.

              “A correspondent of mine objected to the idea I floated a couple of times that Japan would be the first advanced industrial nation to ‘go medieval’. This prompts me to clarify that emphasis should be on the word ‘first’. The re-set to a much lower scale and intensity of human activity is certain for all nations; the only questions are the time-frame and the quality of the journey and those are sure to vary from one group of people to another.” ~ James H. Kunstler

    • texas tea says:

      Art also had this article out last month.

      http://oilprice.com/Energy/Energy-General/Why-We-Can-Expect-Cripplingly-Higher-Oil-Prices-In-The-Near-Future.html

      I like Art and now he thinks and writes but I also think that he as some Dennis Gartman blood in him, he holds many ideas at the same time and he can argue any of them very well. These articles seem to contradict each other a bit, but they are at least thoughtful..

      and now for something completely different:
      https://www.donaldjtrump.com/press-releases/an-america-first-energy-plan
      👍🚀🇺🇸😊

      • Oldfarmermac says:

        The ability to hold two , three, four or more opposing ideas in the mind, whole,fully leafed out, green and vigorous, to be called upon at will, may be THE best single indicator than the person who can do it is a hell of a lot smarter than “the average bear” of Saturday morning cartoon fame.

        This is not to say that – if you you can do it – you are a ninny com poop, as a dear little girl used to call me for teasing her about eating grass like her pony, or sniffing the ground to find her puppy( which is how a puppy finds it’s master out in the real world ) but rather that you are able to set aside your cultural and technical prejudices and REALLY THINK when dealing with a complex problem.

        A foolish consistency is the hobgoblin of a small mind, so they say.

        She is a scientist now, and has been known to remark , paraphrasing Twain, that our problems are mostly the result of things we know that ain’t so.

        Who knows, if we really RUN THE EXPERIMENT, we might even be able to ride in cars powered by the wind and sun before the oil is all gone. 😉

  5. Petro says:

    “Two years into the global oil-price collapse, it seems unlikely that prices will return to sustained levels above $70 per barrel any time soon or perhaps, ever. That is because the global economy is exhausted” ~A.Berman ca. July. 2016

    “But from 2008 to 2015, oil production actually fell in 27 of 54 countries despite record high price. Thus, while peak oil critics have been proven right in North America they have been proven wrong in half of the World’s producing countries” ~ E. Mearns ca. July, 2016

    It looks like my posts at this fine blog for the past 2 – 2.5 years are finally being read and understood …..

    Maybe one day even Dennis will get the message…….
    ……one can only hope…..

    “…while indeed initiated by geology, this time “PEAK” shall be by the way – and in the form of low prices…” ~ Petro’s main theme for the past 2 years on POB

    Be well,

    Petro

    P.S.: a little hubris and arrogance is healthy now and then….

    • Doug Leighton says:

      “Maybe one day even Dennis will get the message…” Good luck on that friend. They’ll be building igloos in Hell long before that happens.

      • Petro says:

        I dunno Doug,
        all those Sun spots and the new Ice Age, …….. I am optimistic…………………………..
        …………. about “Igloos in Hell”, that is!

        Be well friend … and thanx for making me smile,

        Petro

        P.S.: turkey situation is scary ….. and maybe one of the “triggers” of the INNEVITABILITY to come…

      • Dennis Coyne says:

        Hi Doug,

        So you also thing oil prices will be low forever? I believe the 3 year centered running average for Brent Crude oil will be above $75/b by 2020 and will remain there until the next global financial crisis (around 2025 to 2030 for the start date).

        I think oil output might return to 2015 levels or higher by 2019, but oil output will be in permanent decline by 2025.

        • Doug Leighton says:

          “So you also thing oil prices will be low forever?”

          Dennis, I don’t have the faintest idea what future oil prices will be and have said so consistently. I worked in the industry for 35 or so years and personally experienced several booms and busts which seemed to span about seven year intervals. Fortunately my wife had a teaching-research position that buffered us from downturn fall outs. If not I would probably have gone into something else. Many guys (gals were rare in the business then) packed it in and picked up degrees in law or civil engineering or something and never looked back. Actually I invested a lot of “spare” time refining seismic software code and learning foreign languages which paid handsome dividends and got me a lot of interesting work in good times so I don’t regret the way life went.

          • Dennis Coyne says:

            Hi Doug,

            In that case, why would you think that the argument that oil prices would remain under $75/b (in 2016 $) forever (let’s say the annual average price because some people object to the idea of multi-year averages) makes sense?

            That is essentially Petro’s argument, you seem to think he can predict future prices. Your position is more sensible, nobody knows for sure.

            I am sure oil will become scarce in the future and generally when a good is scarce the price increases. Petro argues there will be very little demand for oil in the future because there will be an economic collapse, which he seems to think will be permanent.

            I agree an economic downturn will happen at some point. probably about 10 years after peak oil is clear (when we see declining output for a 3 year period. The theory that such an economic collapse will never be recovered from is a bit of a stretch in my view.

    • Caelan MacIntyre says:

      From the archives…

      “Hi Nick and Ron,

      Can you guys explain why oil won’t rise above $70/b and we are at the peak.

      I agree with Nick it would be good if 2015 was the peak, but I think it will be a short term peak and oil output will continue to rise once oil foes above $80/b. If oil prices remain low long term, and the World economy continues to grow, and oil output starts to decline the story makes no sense.

      A pessimistic outlook for the World economy makes the story consistent, but it is far from clear that such a scenario will be correct. Even 2.5% World growth will be enough to get oil prices higher once output starts to decline, I am doubtful that World growth will fall below this level for very long, if it even falls to that level. A near term financial crisis could do it, but the world is likely to recover within a couple of years. It is also not clear that oil output will continue to decline once oil prices rise above $80/b, if supply becomes short oil prices will climb above $100/b and a new peak will be reached between 2020 and 2030.” ~ Dennis Coyne

      • Hickory says:

        Caelan and Petro,
        If the price of oil [in 2016 US dollars] doesn’t get over 80$/barrel by Jan 31 2018,
        I will come over that following summer (hitchhiking) to shovel out your chicken houses.

        • Caelan MacIntyre says:

          I have not made any predictions (except in an earlier comment for this year’s average price, though more as a joke).
          But if you want to come over, maybe you can help us with and join in the creation (depending on how a few things go) of what I have been calling, ‘a demonstration microecovillage within a gutted small-town context’. What is the point and practicality of traveling a potentially-significant distance just to clean out some chicken coops? I am unsure we will even have them or if so, that they won’t be for the most part, self-cleaning.

          • Petro says:

            Thank you Cae for saving me an explaining comment to Hickory!
            Anyway, I have read your:
            http://peakoilbarrel.com/petroleum-supply-monthly-texas-cc-estimate-permian-and-eagle-ford/#comment-575355

            …and I have an answer for it…coming.
            Just remember:
            NOTHING was said out of malice and disrespect!
            I hope you are correct…. but numbers unfortunately, tell me different…..
            You make me happy with your comments and I truly appreciate them…. please do not forget that!

            Sincerely (as supposed to: Be well),

            Petro

            • Caelan MacIntyre says:

              Hi Petro,

              That’s fine and thanks and understood. Your comments are fun too.
              So what can we say? Let’s just enjoy life and stop working for the man. How’s that?

          • Oldfarmermac says:

            Hi Caelan,

            Ya don’t want to hire no damned CARPENTER to build a chicken house. His brain will almost for sure be entirely fossilized when it comes to such things as level floors. 😉

            Get yer ( small ) chicken house well off the ground, and build the floor out of smooth materials, and sloped not less than two in twelve , with a full width door that opens UP, hinged along the top, at the lower end.

            Then you can reach in with a rake, and rake the manure and straw out straight into your wheelbarrow. Considering that SUSTAINABILITY is the name of the game, you will be cleaning that chicken house hundreds of times , over the next couple of generations.

            The time to put chicken manure in a garden, if you are careful about overdoing it , is when it is still nice and fresh and smelly. That way you capture a LOT more of the nitrogen. Dig it in a little.

            My grandparents and great grandparents knew a few things, although they never heard of permaculture, lol.

            • Caelan MacIntyre says:

              Hi Glen,
              It’s resilience too of course, not just sustainability.
              But sounds good and fair enough, thanks, I will keep that in mind.

              BTW, what do you think of this?

        • Here’s my forecast

          • Javier says:

            Unlikely, Fernando. I see very high volatility in oil prices heading our way.

            Sustained high prices are only possible with a very good economy or with a very low production (you only sell to the elites).

            On the other hand the value of money could tank with a monetary crisis, and oil prices could rise to millions of dollars per barrel.

            • Oldfarmermac says:

              Hi Javier,

              I agree with you that volatility is baked in, and a deep economic slump could force the price of oil down for a while.

              But I think Fernando is right about the price of oil going up, on average, over time, for at least a couple of decades and probably a lot longer.

              Rust and depletion NEVER sleep.

              But on the other hand engineers only sleep a third of the time, and the rest of the time they are busy finding ways for us to get more and more useful bang out of every barrel of oil that DOES reach the market.

              I am a big believer in renewable energy, efficiency, conservation, etc, but I read a lot of history and know a little about business and people and the economy, and I just don’t see renewable electricity, electrified automobiles, etc scaling up fast enough to keep the price of oil down in the face of depletion and rising average production costs.

              Sooner or later, if industrial civilization survives, we will be able to manufacture synthetic oil from coal or biomass , maybe even supplying the input energy needed with wind and solar farms.

              Oil is such an incredibly valuable substance that we can pay a thousand dollars a barrel for it ,if we must, to make lubricants and some other industrial chemicals.

              IF Old Man Business As Usual lives long enough, I suppose the price of conventional petroleum oil will eventually be limited by the price of synthetic oil.

              Most people who have looked into the synthetic oil question seem to think coal to liquid will be profitable at well under two hundred bucks per barrel.

              The climate question aside, two hundred dollar oil won’t wipe out industrial civilization, unless by way of triggering WWIII.

              There is a real possibility that a sudden drop in oil availability might play out to mean the end of life as we know it.

              A hard economic crash cut result in political decisions that foreclose the possibility of a transition to renewable energy.

              • Ulenspiegel says:

                “Oil is such an incredibly valuable substance that we can pay a thousand dollars a barrel for it ,if we must, to make lubricants and some other industrial chemicals.”

                Your statement has two interesting aspects, the upper oil price and impact of oilprice on essential products.

                The latter is quite easy: For many pharmaceuticals/fine chemicals it does not really matter whether oils costs 80 $ or 400 $ per barrel, this only increases the priceof your asperins by a few cents.

                The upper price of conventional oil is IMHO given by the price of synfuel from power-to-gas and gas-to-liquid processes:

                1) The current price for 1 kWh methan from electricity (and CO2/water) is in the range of 12-15 cents/kWh.

                2) Not so elegant gas-to-liquid processes have a loss of 30%, i.e. you need around 1.5 kWh methan to create 1 kWh liquid syn-fuel (which would be superior to oil destillates).

                3) 1 liter oil are 10 kWh, i.e. you need 15 kWh methan or around 2.00 $ with P2G + G2L. This gives an upper price of around 300 USD.

                For me as stupid chemist it does not make sense to assume that oil becomes more expensive than 300 USD/barrel. 🙂

                (I know that with current consumption even 120 USD are too expensive for most economies.)

                • Dennis Coyne says:

                  Hi Ulenspiegel,

                  At 2015 average output and World GDP in 2015, if we assume the World can afford to spend about 5% of GDP on oil, the upper end of the oil price would be $125/b in 2015$. If World real GDP grows by 2% per year and C+C output remains at 2015 levels then this “maximum” oil price would grow by 2% per year, by 2020 the oil price could rise as high as $138/b(2015$) under these assumptions.

                  If real GDP growth could continue at 2% per year while C+C output fell by 1% per year from 2015 to 2020, then oil prices could potentially rise to $145/b (in 2015$), I doubt this would be the case however and about $140/b (in 2015$) would be the maximum price in 2020 under fairly reasonable assumptions, growth would be slower if oil output declined. If real GDP growth was 1.5% per year and C+C output declined by 0.8% per year from 2015 to 2020, $140/b would be 5% of World real GDP spent on C+C output.

                  In 2008 World spending on oil (US imported real oil price times C+C output) was about 5.1% of World Real GDP, that is the basis of the 5% upper limit for oil spending.

            • Javier, my price forecast is indicative. Prices will oscillate around my projection, but I can’t display the potential oscillations in a simple graph. Like I wrote in my blog, these price scenarios are useful if one is trying to understand large oil company behavior, can be used to estimate the attractiveness of biofuels and synthetics, as well as EV penetration into the car market.

              • Wake says:

                Thanks Fernando for sharing your view. I assumed the volatility but out of curiosity and respect to petro’ view, doe you find it likely to have as much volatility to the upside of your trend as the downside?

                Upside volatility used to be easier for me to picture, as oil is so valuable even at higher prices, but these years of deflation and frantic stimulus have me wondering if any upside would be so short lived

            • Dennis Coyne says:

              Hi Javier,

              You do understand what is meant by “real” oil prices, I assume.

              The price is adjusted for inflation so the hyperinflation (Worldwide) argument goes out the window.

        • Stavros Hadjiyiannis says:

          I totally agree with you. I see the oil price rising well over 100 bucks per barrel before the end of the decade.

          As for the persistent fantasies that Russian oil output will decline. The exact opposite will happen in the long-term. Russian oil reserves easily dwarf anybody else’s.

          http://www.ogj.com/articles/print/volume-98/issue-21/exploration-development/sw-siberias-jurassic-bazhenov-may-contain-much-larger-oil-reserves.html

          The concluding paragraph on the oil reserves of the Bazhenov formation in SW Siberia reaches an unequivocal conclusion:

          “Giant recoverable oil reserves contained in the fractures suggest that the Jurassic reservoir is a primary oil accumulation which has no analog all over the world. Therefore, we believe that Russia has the largest hydrocarbon reserves in the world.”

          • shallow sand says:

            Any info on how the first wells in this play are performing. Seems it is difficult to find much information online about them.

          • FreddyW says:

            I see you have been looking on the internet for positive articles about russian oil production. But that article is 16 years old. You need to find something newer.

            • shallow sand says:

              Freddy. I can’t find much about oil actually being produced from Russian shale formations.

              Do you know of any articles which reference actual production, as opposed to estimates?

              One possibility is that these Russian plays end up being primarily gas plays.

              • AlexS says:

                shallow sand,

                Current LTO production from the Bazhenov shale is insignificant, probably some 15 kb/d.
                Most of production is from naturally fractured zones, with relatively high porosity and permeability.
                Several Russian companies are planning to produce LTO, but most of their projects are in pilot stage.
                Projects with participation of western partners (Exxon, Shell, Total, Statoil) have been postponed due to sanctions.

                “One possibility is that these Russian plays end up being primarily gas plays.”

                No, Bazhenov is an LTO play. The EIA estimates its recoverable resources at 75 billion barrels, the biggest in the world.
                Woodmac had estimated oil-in-place resources of the Bazhenov shale at 2 trillion barrels.

                • shallow sand says:

                  AlexS. Thank you for the reply.

                • Lightsout says:

                  Any figures available for production cost?

                  • AlexS says:

                    Current costs are relatively low, as oil is produced mostly from naturally fractured zones with vertical wells without hydraulic fracturing.

                    It is difficult to say what will be operating and capital costs when companies will produce from really tight rock.

                • The big question is going to be the per well recovery, and whether it justifies CAPEX+OPEX. There’s a large amount of gas condensate in the Jurassic underneath the giant gas fields, which merit priority over the Bazhenov oil prone sectors.

            • Stavros H says:

              There are many more if one cares to search for them. Both the West & Russia have good reasons to lie about the latter’s true oil reserves for very obvious reasons, hence why references to them tend to be quite obscure.

              Many people on this blog are so obsessed with convincing the world that *oil production has peaked* that they avoid rational thinking.

              Have you ever wondered why the NATO Axis is so obsessed with undermining/destroying in ascending order, Iraq, Iran and Russia? Well, outside of outright fiendish lunacy there can only be one explanation and it’s related to oil & gas.

              Global geopolitics can be readily summed up by one map:

              http://www.rubincenter.org/wp-content/uploads/2013/03/Fig-1.jpg

              A massive chunk of this “Strategic Ellipse” is found in Russia, and primarily in the SW Siberian region. The other part, is the Arabian Peninsula and Persian Gulf region.

              I am shocked by many of the posts on this blog, with so many intelligent and knowledgeable people sticking to many of the platitudes found on the MSM, especially if they tend to support the *end of the oil age* meme that The Economist was pushing 15 years ago.

              When one refers to the global oil industry, he should be able to first of all make the most crucial distinction. That between high-cost producers and low-cost producers. The hydrocarbon-producing countries located in the “Strategic Ellipse” are low-cost producers, in matter of fact, extremely low-cost compared to anywhere else, hence why they can tax oil & gas production as heavily as they do. Russia for one, taxes oil production at a dizzying rate.

              The high-cost producers are those found anywhere outside of the strategic ellipse, and with the passage of time the gap between the two sets of oil-producing regions grows wider and wider.

              After this, there is another hugely important distinction. That between low-cost producers controlled by the NATO Alliance, namely, KSA, UAE, Kuwait, Qatar and Oman and those outside of NATO control which ought to be undermined and ideally dismembered. These are Russia, Iran, Iraq and to a lesser extent Kazakhstan and Turkmenistan.

              Obviously, Russia is NATO’s primary target. That country is too big, too clever, has too many nukes and cannot be ever allowed to leverage her illimitable hydrocarbon resources for geopolitical and economic gain. The same principle applies to Iran, but to a lesser extent.

              As oil production indeed *peaks* or at least becomes a loss-making endeavor outside the strategic ellipse, the time-pressure on NATO to finish-off Russia & Iran (who may very well wrest complete control of Iraq at some stage) mounts.

              If NATO fails to achieve this strategic goal, then the day when Russia & Iran will be in a comfortable position of leveraging their colossal hydrocarbon potential for all kinds of concessions on all kinds of issues (most of all, on global market access) will inevitably arrive.

              I have argued repeatedly on this blog that the oil volumes produced by the countries found in the “strategic ellipse” is not much related to their actual capacity. First of all, the NATO-allied GCC countries have largely been stable producers over decades under the economic and military security provided by the US military aegis. From time-to-time, they have been calibrating their production levels in relation to global market forces but it is clear that the GCC countries are producing at a lever they are comfortable with in the long-run.

              As for Iran-Iraq, their production levels have been hampered by wars, invasions, NATO-backed insurgencies, sanctions, sabotage etc. Russia can resist NATO aggression much better than Iran-Iraq, but is still susceptible to it. This was especially the case in the 90s, when Russian oil production plunged by almost 50%.

              In any case, Russia’s (also Iran-Iraq’s) current oil production is restricted by the temporary glut created by epic over-investment in such high-cost regions as US shale, Canadian tar sands and offshore deep-water (Gulf of Mexico, LatAm, W. Africa, N. Sea)

              The current low-price environment will either help to soften NATO’s targets for a take-down, or NATO’s targets will endure the pressure and come out stronger once the high-cost producing regions find themselves with plunging production rates due to a dearth of investment.

              Just consider this. Why would a venerable corporation such as Exxon Mobil acquire massive acreage in the one country that resists US influence the most vigorously? Well, the explanation is provided in that old article I linked earlier, Russia’s oil reserves are without analog anywhere IN THE WORLD.

              http://www.bloomberg.com/news/articles/2015-03-03/exxon-s-russia-exposure-surges-as-long-view-outweighs-sanctions

              http://www.forbes.com/sites/judeclemente/2015/03/25/how-much-energy-does-russia-have-anyways/#4be58ae12daa

              Let me stress something out for you. What you read about Russia in Western MSM is deliberate misinformation that suit NATO’s goals propaganda. What you also find in RT or alternative media that tend to be pro-Russian, is also lies that suit Russia’s goals. What I give you above, is a brief sketch of the overall Big Picture, but it is a truthful and sensible one. As Karl Marx once said: “it is what they don’t tell you that is most important.”

              • DDD says:

                What a ridiculous “analysis”. Nowhere does it even mention China.

              • Greenbub says:

                “Obviously, Russia is NATO’s primary target. That country is too big, too clever, has too many nukes and cannot be ever allowed to …”

                Too big and getting bigger as it annexes other countries.

                • Which countries did Russia annex?

                  • Greenbub says:

                    I was half-joking. They only annexed half of the Ukraine.

                  • Javier says:

                    Greenbub, you have an overdose of propaganda.

                    Crimea has always been part of Russia since they conquered it from the Crimean Khanate, an Ottoman vassal, in the late 18th century. It was administratively assigned to Ukraine by an arbitrary decision in the 1950’s, and should not have been part of Ukraine when it gained independence. The root of the problem is that Ukraine independence was badly negotiated by Russia. The Eastern part of Ukraine is populated by Russians that only wanted to be part of Ukraine when things were better than in Russia. I guess nobody asked them which country they wanted to belong and now Ukraine does not recognize their right to decide.

                    One has to know history before understanding the root of many current problems.

                    While Russia is playing hardball to defend Russians outside its borders, it is not the imperialist aggressor that is being painted by the media.

                    As Sting used to say, the Russians love their children too, and we would do much better through cooperation rather than confrontation.

                • Petro says:

                  You are frighteningly miss-informed….

                  As a friendly suggestion, may I recommend that you limit your exposure to:
                  NYT/WaPo/NPR/CNN/FOX/NBC …. and other alphabet soup concoctions. and use other sources of info as your daily news digest….

                  Just a thought, just a thought….
                  be well,

                  Petro

        • Dennis Coyne says:

          Hi Hickory,

          I think that’s a good guess, I would go further and say the 12 month trailing average Brent oil price (in 2016$) will be more than $80/b by June 30, 2019.

          In addition I think there is a 50% or higher probability that the trailing 12 month average of World C+C output will be more than the most recent centered 12 month running average of 80.15 Mb/d in August 2015 (EIA data) by August 31, 2020.

          http://www.eia.gov/beta/MER/index.cfm?tbl=T11.01B#/?f=M&start=200001

          Chart below shows trailing 12 month average C+C output for the World with the peak in Feb 2016 at 80 Mb/d.

    • Javier says:

      Petro,

      It is fine and dandy that you show some arrogance when the data is starting to support your hypothesis, however I must point out that a lot of people have been coming to the same conclusions at about the same time. There are a lot of clever people in the world.

      Ron Patterson has been onto oil decline for a very long time from studying oil production data. He was about the first to realized that LTO was not a solution to the Peak Oil conundrum. He probably realized about the 2015 Peak long before he put it on writing. He can tell us. I seem to recall reading his prediction within the first half of 2015.

      Euan Mearns seems to be reaching the same conclusion from the same background, his geological expertise, but only now have I read him put it on writing.

      Art Berman has come to the same conclusion from a very different background, the energy investment field. This is also the first time I read him say it so clearly, but he probably reached his conclusion some time ago and only now he dares to write something so strong in his influential blog.

      Myself I reached the conclusion that Peak Oil was imminent in September 2014, from economic insight after I clearly saw that the oil price crash was really bad news for the consumer long term, while most people thought (think) that is great news for the consumer. I studied oil production data and saw my fears confirmed. That is when I started my oil (and climate) blog, and my first prediction on writing of a 2015 Peak Oil is from November 2014, and again February 2015.

      My understanding of macroeconomy is not as good as yours, but is good enough to understand that we are facing the end of the road and the can kicking will not continue much longer. Central Banks are buying some time through desperate measures that will make the fall harder while the elites hasten their preparations. We are contemplating the Peak of our civilization (in my opinion Peak Civilization took place in the early 70’s) and its unraveling is going to be a very long stressful one.

      • Fred Magyar says:

        We are contemplating the Peak of our civilization (in my opinion Peak Civilization took place in the early 70’s) and its unraveling is going to be a very long stressful one.

        I have a very difficult time agreeing with that statement. I don’t think we are at peak civilization at all!

        The earliest emergence of civilizations is generally associated with the final stages of the Neolithic Revolution, culminating in the relatively rapid process of Urban Revolution and state formation, a political development associated with the appearance of a governing elite. The earlier neolithic technology and lifestyle was established first in the Middle East (for example at Göbekli Tepe, from about 9,130 BCE), and later in the Yangtze and Yellow river basins in China (for example the Pengtoushan culture from 7,500 BCE), and later spread. Similar pre-civilised “neolithic revolutions” also began independently from 7,000 BCE in such places as the Norte Chico civilization in Peru[11] and Mesoamerica. These were among the six civilizations worldwide that arose independently.[12] Mesopotamia is the site of the earliest developments of the Neolithic Revolution from around 10,000 BC, with civilisations developing from 6,500 years ago. This area has been identified as having “inspired some of the most important developments in human history including the invention of the wheel, the development of cursive script, Mathematics, Astronomy and Agriculture.”[13]
        Source Wikipedia

        All of these past civilizations rose and fell without the use of fossil fuels.
        While throughout history there were certainly dark ages when we lost knowledge previously acquired, I’m not yet completely convinced that humanity cannot rise from the ashes of a post fossil fuel based civilization and create even more culturally, technologically and scientifically advanced steadystate political and economic systems around the world.

        You yourself just posted a link to high altitude generating kites. That is exactly the kind of disruptive technology that might allow us to transition to another level of civilization.

        Granted on the one hand we have groups like ISIS hell bent on trying to return humanity to the dark ages and that could happen if we allow reactionary forces exemplified by people like Donald Trump and his supporters to lead us there. Witness UK’s Brexit, Turkey, Egypt, Venezuela, etc, etc…

        But we also have incredible advances and profound disruption happening in so many technological and scientific areas from AI to artificial synthetic life forms and advances in materials science to name a very few!

        I suggest everyone take some time to familiarize themselves with the vast pools of creativity that we have yet to tap. Think Different! 🙂

        https://www.thinkdif.co

        #SystemReset

        Most global economic, social and environmental indicators show a troubling negative trend, which will surely be exacerbated by a rising world population. The time for tweaks to a system that has been faltering for several decades is over. It’s time for a change of operating system. In this DIF 2016 theme, our guests will explore how the rules of the game could be changed to encourage a different way of living, of organising society, of doing business.

        • Javier says:

          Fred,

          I don’t think we are at peak civilization at all!

          This is obviously a matter of opinion until enough time has passed, so no point in arguing about it.

          From my point of view the period 1975-2015 has seen a lower rate of development than the period 1935-1975. All the low hanging fruit available to a civilization with a much higher level of energy availability, from commercial aviation to spaceship travel, was collected in the first period. In the second we have concentrated in the low energy developments, like internet, computers, and mobile communications, while abandoning all our high energy dreams like human space colonization and space cities. Just pick a late 70’s future science magazine for a catalogue of what we have not been able to do. We don’t even have those types of magazines anymore.

          The future is unknown, but what I see is a lower energy future and as a consequence a civilization collapse. Our society is very complex, and thus not amenable to simplification. Several countries have already taken the path of collapse and more will follow, as social unrest, populism, and nationalism are only expected to increase with economic troubles.

          Western Industrial Civilization, was born out of intense use of coal for the Industrial Revolution. In my opinion it will fall shortly after Peak Oil. Current science and technology is fragile and dispersed, resting on the integrity of internet and global communications. It is impossible to envision what will survive or what will not and the type of societies and civilizations that will emerge after the fall of the Industrial Civilization, but I seriously doubt that they will have more energy available than we do have now.

          • Fred Magyar says:

            The future is unknown, but what I see is a lower energy future and as a consequence a civilization collapse. Our society is very complex, and thus not amenable to simplification. Several countries have already taken the path of collapse and more will follow, as social unrest, populism, and nationalism are only expected to increase with economic troubles.

            I know that and agree with almost all of it! Where I disagree is that I don’t think our current stage of civilization implies peak civilization. What we have now can’t continue in its present form for all the reasons you cite so it won’t continue. I expect massive disruption and change, So I guess to some segments of society that will be a form of collapse and also some very hard times. However I fully expect civilization to continue. Therefore I don’t see a peak.

            To be clear I’m using this dictionary definition of civilization:

            civilization (ˌsɪvɪlaɪˈzeɪʃən) or civilisation
            n
            1. (Sociology) a human society that has highly developed material and spiritual resources and a complex cultural, political, and legal organization; an advanced state in social development
            2. the peoples or nations collectively who have achieved such a state
            3. the total culture and way of life of a particular people, nation, region, or period: classical civilization.
            4. the process of bringing or achieving civilization
            5. intellectual, cultural, and moral refinement
            6. cities or populated areas, as contrasted with sparsely inhabited areas, deserts, etc
            Collins English Dictionary – Complete and Unabridged, 12th Edition 2014 © HarperCollins Publishers 1991, 1994, 1998, 2000, 2003, 2006, 2007, 2009, 2011, 2014

            • GoneFishing says:

              There can be continuous growth, if there is continuous death. Nature does it all the time. So current business will die and new business will take it’s place. Current ways will fade and new ways take over. On a finite world, an equilibrium will be reached between the new and old. Change is ever present even when equilibrium has been established.

              That said, equilibrium set points change too.

            • Javier says:

              Fred,

              Was Egyptian Chalcolithic a continuation of Neolithic? Was Eastern Mediterranean Iron Age a continuation of Late Bronze Age? Was Western European High Middle Ages a continuation of the Late Roman civilization?

              If you answer yes to those then you look to historical continuities and then you can consider that whatever the disruption civilization will continue,

              If you answer no to those then you look at historical discontinuities and then you can consider that the coming disruption will give rise to a new civilization. I belong to this camp.

              Whether a new civilization is better or worse depends on the point of view. For the high nobility the feudal system was the best and the French Revolution (new regime) the worst.

              • Dennis Coyne says:

                Hi Javier,

                If you are arguing that things will change, I agree. At some point there will be a crisis and that may lead to changes in how societies are organized.

          • Paulo says:

            I think Peak Civilization has to include vagaries of ‘human nature’, especially as we see moving trucks mowing down kids on a promenade this week.

            Maybe in the ’70s we were more naive. We were still digesting Hitler and his camps and perhaps too full and stupid to appreciate what might unfold as CC and Peak nudges us forward into current events.

            We have never known ‘civilization’, or civilized behaviour. We just had ‘more stuff’ per hour worked, in some countries. Others, not so much.

          • Dennis Coyne says:

            Hi Javier

            I agree that there may be less primary energy available in the future.

            We can use energy more efficiently in the future.

        • R Walter says:

          The internal combustion engine was a disruptive technology, changed the world. It was the zeitgeist at the time. Tractors changed agriculture and transportation. Wilbur and Orville Wright got an airforce base named after them. Airplanes disrupted a whole lot of things.

          Everybody back then did think different. No big surprise there, oil was the impetus that started it all. Give it some credit.

          The guillotine was a disruptive technology. Don’t know if it helped all that much, but it certainly changed things.

          http://oldsite.english.ucsb.edu/faculty/ayliu/research/around-1800/FR/times-9-12-1792.html

          I highly doubt that Donald Trump is at fault for the behavior of a few renegades making life miserable for a couple of billion people.

          You are finger pointing, a conflation.

          If any blame is going to go around, the current crop of politicians deserve it all. I won’t name any names.

          In the words of Hunter Thompson, every President from the first one on down the line, it has been all war.

          Hunter got it almost right, it started long before any president ever was born.

          If we are going to prosecute global warming deniers, we’re no different than the Jacobins.

          Enough to drive you to drink, so I do.

          • Fred Magyar says:

            I highly doubt that Donald Trump is at fault for the behavior of a few renegades making life miserable for a couple of billion people.

            You are finger pointing, a conflation.

            No, I’m not! In my opinion the Trump phenomenon together with all the other examples I cite are more a symptom than a cause.

          • GoneFishing says:

            Yep, the internal combustion energy sure put a bang into things. Enola Gay had lots of pistons banging away, before the big bang over Japan. It’s all about explosions and fire, so exciting, appeals to the adolescents and the frothing media. Renewables are quiet and boring, no explosions, no spills, no fires, just there doing their thing. Not sexy at all. We need explosions, fire, sex, violence, war. Humans don’t feel right without their nerves jangled.
            No juvenile excitement from renewables. Boring. Dull. Much like plants. Grown up stuff.

            BTW, it was coal that started it all, not oil. Nothing like a steam engine, huffing and hissing, pouring out black smoke and ready to explode if the water level gets low. Power ready to explode. We love explosions. Love noise too.

            But the new thing is rockets. Lots of fire and occasional explosion, basically a controlled explosion at the best. Lots of noise and flame. Much better than pistons or even jet turbines in afterburner.
            https://www.youtube.com/watch?v=bdvv8qIl_WI

        • Jef says:

          “I suggest everyone take some time to familiarize themselves with the vast pools of creativity that we have yet to tap. Think Different!”

          In other words pray to the gods of technolology.

          “Why looking on the bright side
          keeps us from thinking critically.”

          http://www.auroraadvisors.com/articles/Optimism.pdf

          • Fred Magyar says:

            In other words pray to the gods of technolology.

            You can pray to whomever you please!

            That is not what I’m suggesting at all. Sure, I think technology and science will by necessity play a part. But I’m saying something much more fundamental and all encompassing.

            Or did you miss this little tidbit from my quote above?

            The time for tweaks to a system that has been faltering for several decades is over. It’s time for a change of operating system.

            I’m going to bet you haven’t visited the link I posted much less explored what is there! If you are not willing to do that Then you won’t understand my point.

            Oh, as for:
            “Why looking on the bright side
            keeps us from thinking critically.”

            I think I fall into the category of realist and I’m pretty sure I’m quite capable of thinking critically, thank you very much!

        • Synapsid says:

          FredM,

          What’s “the development of cursive script” doing in there?

          Focused Dunning-Kruger alert. Take that source to task!

          Time for more port.

          • Fred Magyar says:

            What’s “the development of cursive script” doing in there?

            I guess you could take that question up with whoever posted that text to Wikipedia. Though I’m not quite sure what you have against the development of cursive as a sign of civilization. Granted, it is more and more a lost art in this day and age. Just for fun, try writing a long text in cursive.

            http://www.brainbalancecenters.com/blog/2014/09/brain-benefits-write-in-cursive/

            Research shows that learning to write in cursive offers brain benefits to kids that they don’t get from printing letters or keyboarding. An article from Psychology Today states that learning to write in cursive is an important tool for cognitive development. Specifically, cursive writing trains the brain to learn functional specialization, which is the capacity for optimal efficiency. When a child learns to read and write in cursive through consistent practice and repetition, he or she must effectively integrate fine motor skills with visual and tactile processing abilities. This multi-sensory experience supports cognitive function and development.

            • Doug Leighton says:

              Well, go for learning/writing a few thousand Chinese characters. I should be a genius by your reasoning. All that happened is that I can’t even remember my phone number now. My wife would roll her eyes and mumble things like: “Jesus, get a life Doug” and “can’t you find something that’s actually useful to do.”

              • Fred Magyar says:

                All that happened is that I can’t even remember my phone number now.

                Um, I think the operative word in there is kids… 🙂

                Research shows that learning to write in cursive offers brain benefits to kids that they don’t get from printing letters or keyboarding.

                BTW, my personal excuse for not remembering my own phone number is telling people that I never dial myself…

            • Synapsid says:

              FredM,

              My question is about “the development of cursive” in a list of most important developments in human history having been “inspired by” Mesopotamia (pretty poor phrasing there.)

              I’m all for cursive; I was a calligrapher for years. Since the discussion was of important developments in the context of talking about early civilizations in Mesopotamia, I’m saying that cursive isn’t one. The oldest writing we know of, now, that would be Sumerian and Old Elamite, both Mesopotamian (well, Old Elamite was neighboring Mesopotamian), but that’s not what’s in the quote.

              Writing developed in the Fertile Crescent, yes, as symbols pressed into tablets of wet clay with reeds cut at a slant to give a wedge shape. That was pretty much the story there for a couple of thousand years. No cursive in sight.

              Wikipedia will trip you up, it will, but I apologize for confusion resulting from my overly laconic query.

              Rats–the glass is empty…

              • Fred Magyar says:

                Writing developed in the Fertile Crescent, yes, as symbols pressed into tablets of wet clay with reeds cut at a slant to give a wedge shape. That was pretty much the story there for a couple of thousand years. No cursive in sight.

                Well you are absolutely correct in saying that the form of writing used in ancient Mesopotamia was certainly not cursive.

                I think the Wikipedia author may just have been suggesting that writing itself was in part born there. However many different forms of writing from other civilizations including some of their symbols did eventually evolve into cursive over the centuries.

                Here is an interesting synopsis of the history of hand writing.

                http://www.bfhhandwriting.com/history-of-cursive-handwriting

                Here’s another link to a more all encompassing history of writing in general.

                http://www.funsci.com/fun3_en/writing/writing.htm

                Raising a glass in a toast to you for making me learn a little more about the history of writing. Thanks 🙂

                And Cheers!

                • Synapsid says:

                  FredM,

                  That first link is part of a particular writing program and skips the writing that italic is a rapid version of: Carolingian minuscule, a script both beautiful and functional developed at the court of Charlemagne and not itself cursive. Writing it rapidly leads to connections between letters and a bit of a slant to them, in addition to the up-and-down difference noted in the link.

                  The second link is pretty good except for calling the Phoenician writing system an alphabet. The Greeks made an alphabet out of it by putting signs for vowel sounds on an equal footing with consonant signs. That was the first alphabet, and the oldest texts we have in it are poetry! They’re graffiti, sometimes scurrilous and ad hom., and inscriptions on containers of various sorts. The oldest texts we have of the very early writing systems were official (accounting or religious) and not to do with ordinary people, but the Greeks were having none of that.

                  As the article said, a Greek alphabet (there were several versions early on) was adopted by the Etruscans (did the article mention the Etruscans?) from whom the Latins borrowed it and adapted it to their language. Ours is a successor to the later form of that system. By the way, all the alphabets that arose right across the Old World are descended, directly or indirectly, from the Greek one.

              • Petro says:

                “Rats–the glass is empty…”

                ….oh no!
                Shame on you…..

                Fill it up…. fast ….. and cheers!

                Petro

                • Synapsid says:

                  Thanks Petro.

                  There’s a line from an old Gordon Lightfoot song titled Blackberry Wine:

                  Pass it on over. It’s a sin to be sober too long.

                  My interest in the song is the melody and rhythm, you understand. Fine song.

      • Dennis Coyne says:

        Hi Javier

        I only disagree on the timing of the peak and never believed lto would have much effect on the peak.

        I disagree with an analysis that suggests oil prices under $75/b for the 3 year average oil price forever.

        Volatility is a good guess though Fernando’s price scenario might be roughly correct for 5 year average oil prices.

        • Javier says:

          Dennis,

          You might be right and I might be wrong. What it is clear is that we see more or less the same situation but a completely different outcome.

          Two things separate completely my analysis from yours:

          The first is that I see a monetary crisis as unavoidable in the not too distant future. Most of the planet’s wealth is in the form of electronic money (derivatives and financial instruments). The folly of Central Banks is hugely increasing those that are in the hands of the financial elite so there is less and less real wealth (land, resources, and productive industries) to support that virtual wealth. At some point the bubble is going to be so big and the leverage so high that there is going to be a run of that virtual wealth to become real at any cost and that is going to destroy every currency you can buy something of value with. Over here in Europe I am already seeing some worrying signs of what is coming, as payments in cash are being limited to ridiculously low amounts and governments are trying to force everybody to have their money in the banks. With a monetary crisis the price of oil in dollars has no point of reference and predictions have little value. The US has no experience for generations on monetary crisis, so that is going to be a real shock.

          The second thing is that during economic crisis wealth gets distributed more unequally. The middle classes and low classes lose their savings and everything of value they have while some elite class fare quite well even if they lose part of their nominal wealth. This has several dire consequences. It can lead to bloody revolutions like the French or Russian revolutions. And in any way it leads to most people not being able to consume much. There won’t be enough customers for oil, making your price predictions useless.

          My own personal thought is that the current pricing system for oil based on margin pricing will have to be abolished once the shit hits the fan. It will simply not work. They’ll think of something to avoid total collapse of oil production.

          • Dennis Coyne says:

            Hi Javier,

            Well we don’t know how things will play out. But since 2010 World Debt to GDP has not changed very much according to the Bank for International Settlements (the central bankers Bank).

    • Dennis Coyne says:

      Hi George

      Keep in mind those estimates were based on reserves as of year end 2012. A lot of reserves and production have been added since then. Also remember that 2p reserves are probably not 50% higher than proved. I usually assume 1p ND reserves in 2007 were nonbakken.

      • Dennis Coyne says:

        Hi George,

        In my comment above I mistakenly put a “not” in there,

        “Also remember that 2p reserves are probably not 50% higher than proved”

        should have been

        Also remember that 2p reserves are probably 50% higher than proved reserves

        Proved reserves at the end of 2012 in North Dakota were 3.76 Gb at the end of 2012 and 0.48 Gb at the end of 2007, I assume 99% of the proved reserves added were Bakken/Three Forks reserves over that period because most of the drilling and increased C+C output over that period was from the Bakken/TF. Cumulative C+C output in the Bakken/TF at the end of 2012 was about 0.6 Gb. If we assume 2P reserves are about 50% more than 1P reserves, then at the end of 2012 2P reserves in the Bakken/TF would be 4.9 Gb. In April 2013 the USGS estimated 5.8 Gb of undiscovered TRR in the North Dakota Bakken/TF (mean estimate), when we add this to 2P reserves at the end of 2012 plus cumulative C+C output we get a mean TRR of 11 Gb (5.8+4.9+0.6). The 95% to 5% probability TRR range is 9 to 14 Gb.

        At the end of 2014 ND C+C 1P reserves were 6 Gb, if we assume most of the reserves added since 2007 were Bakken/TF reserves, then Bakken/TF 1P reserves were about 5.5 Gb at the end of 2014 and 2P reserves were 8.25 Gb. Cumulative Bakken C+C output was 1.2 Gb at the end of 2014 which would suggest a URR of 9.45 Gb, if the 2P reserve estimate is correct and all reserves are eventually produced.

        If pessimistic projections of future World economic output prove correct, Bakken output might be lower than this, I doubt oil prices will remain low (under $75/b for 1 year average oil price in 2016$) over the next 10 years. I agree prices will be volatile, but the price will bounce between $70 and $130/b and mostly stay in the $80 to $100/b (in 2016$) range from 2018 to 2025 unless a major depression hits (around 2025 to 2030 would be my guess for when that might start).

        • George Kaplan says:

          Dennis, thanks for the reply, I didn’t see it earlier. I think you may have replied to a comment that wasn’t mine, but maybe not, I have trouble following the indents sometimes.

          But I have three questions and two quotes below concerning the contributors with whom you are having discussions above, (or maybe below): 1) Why do you think it justified to use probable/proven ratios from mature, super giant, conventional fields originally discovered and developed without much technology on unconventional fields which are developed using the latest seismic, geologic analysis and drilling methods? 2) When USGS went to the top seven Bakken drillers and asked for their estimates on undrilled prospects and likely success rates, as they did in their analysis, do you think the answers were a) vastly over estimated as it allowed the companies to give the impression they have much more resources than in reality without breaking SEC rules, b) about right – i.e. about 50% dry holes but falling as they moved away from the core areas, or c) underestimated knowing that it would be wrong to give potential investors false hopes? 3) Undeveloped reserves have to be online within five years by SEC rules. Currently about 50 wells are spudded each month with, say, maximum EUR for each at 300k which gives 0.9 Gb over the next five years, or upper estimate 1.2 Gb with all the DUCs developed – where do you think all the rest of the reserves are (note, this is so far out I think I must have got something wrong, but after a decent supper I can’t really be bothered to check further)?

          Confucius:
          “He who knows all the answers has not been asked all the questions.”
          “He who knows not, and knows not that he knows not, is a fool. Shun him.”

          Mark Twain:
          “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

          (that’s three quotes but so what)

          • Doug Leighton says:

            c) underestimated knowing that it would be wrong to give potential investors false hopes. 🙂

          • Dennis Coyne says:

            Hi George,

            The EIA has proved reserves based on second data.

            The rules are pretty clear. For the UK north sea the ratio of 2p to 1p is 1.7. Also for the US from 1980 to 2005 this gives reasonable results. I have used 1.5 here to be conservative. Note that when prices are higher 2400 wells per year will be drilled.

            • Dennis Coyne says:

              Hi George,

              The EIA proved reserves data is based on SEC 10ks and the last data we have is from 2014.

              If one believes (as many on this blog seem to) that oil prices will remain under $75/b (2016$) essentially forever, then it is possible that the URR will be less than proved (1P) reserves plus cumulative production in 2014 (6.7 Gb).

              I don’t think oil prices will remain low forever and eventually they will return to 2014 levels or higher ($90/b in 2015$).

              I looked at reserve growth at link below:

              http://peakoilbarrel.com/us-oil-reserve-growth-2/

              For the US reserves from 1980-2005, if we use a 1.7 ratio of 2P/1P reserves (based on data from the UK from 1977-2013). we get 63% growth in US 2P reserves.

              If we assume a lower 2P/1P reserve ratio of 1.4, reserve growth would have to be 90% over that period to account for the increase in US reserves when discoveries and cumulative output are deducted.

              Note that if you believe the 2P/1P ratio is even lower than 1.4 an even higher reserve growth would be needed to account for the reserve increase.

              Let’s assume you think 90% reserve growth is reasonable (it seems too high to me) and you prefer 1.4 for 2P/1P vs the 1.5 I have used for the Bakken/Three Forks.

              In that case 2P reserves in the Bakken/Three Forks would be 8.9 Gb at the end of 2014.

              If we assume there will be no discoveries and no reserve growth in the future, then URR would be no higher than 8.9 Gb.

              Do those assumptions seem reasonable to you?

              • George Kaplan says:

                Dennis – no I don’t think that is reasonable. It might be correct, but not because of the arguments you use (everything in the oil industry is risk – probability * consequence, so nothing is absolute). I don’t see how growth predictions from old fields, or new off shore fields, or any conventional fields apply to LTO. They are completely different beasts. I don’t see how the available area within the bounds of all the dry holes that have been found in the Bakken can accommodate any more than 5000 wells, even with stacked plays, but lets say 10000 – that is 2 Gb given well EUR seems to be falling with time, with 1.4 Gb already produced, 0.7 to come from already developed wells – that gives 4.1 Gb. I think that agrees fairly well with IEA and Total forward projections.

                I don’t think oil price will stay low forever, but I also don’t things will respond as you think to high prices, just as low prices didn’t kill production (in fact it made companies accelerate production from developed reserves) I think high prices might have a non obvious response (e.g. lenders insist on being paid back first – don’t take that as a prediction by the way, just an example). But like Doug, I freely admit I have no idea. But one thing I do know, and this has not got enough attention anywhere, we are discovering absolutely F*CK ALL at the moment and that has never happened in the history of oil.

                I think there is a significant risk in the next five years that oil supply will collapse at the same time as the propped up world financial system finally falls over and climate change induced crop failures all combine to just about wipe civilization in the course of a few years. Happy clappy estimates of fairy dust oil reserves just make that so much more likely. I’m quite happy to sacrifice next years cruise if it means the risk of the catastrophe case gets mitigated.

                • Dennis Coyne says:

                  Hi George,

                  I don’t expect the reserves to grow, but I do expect there are likely to be some probable reserves that get produced.

                  So you believe there will only be 5000 more wells at most drilled in the ND Bakken/TF, for a total of 15,000 wells. That would amount to about 4.5 Gb URR. I expect at least 35,000 total wells will be drilled in the Bakken/TF, but it will require higher prices. If 1800 new wells per year were drilled at high price levels and 35,000 total wells are drilled (similar to the projection in Drilling Deeper) we could see 14 more years of drilling (from 2018-2031) with 8 to 9 Gb URR.

                  How do you reconcile the proved reserves in North Dakota with your estimate?

                  Proved reserves plus cumulative production at the end of 2014 was 6.7 Gb for the ND Bakken/TF.

                  I guess you are assuming probable reserves are zero (or less), which does not seem a reasonable assumption.

                  North Dakota proved reserves at link below, 2007 proved reserves were 482 MMb. (I assume most of these reserves are non-Bakken and that the non-Bakken reserves have not increased since 2007).

                  http://www.eia.gov/dnav/pet/pet_crd_pres_dcu_SND_a.htm

                  Even without a lot of discoveries as fields get developed reserve estimates tend to increase as knowledge of the field increases. For the US from 1980 to 2005 2P reserve estimates increased by 63% or roughly 2% per year. The US reserve base is very mature and the US tends to use pretty good technology, so I would expect this kind of growth to be typical for the World.

                  Bottom line is that reserve growth may continue, if it does not and there are few discoveries, then decline could be more rapid. That would lead to higher oil prices and a more rapid transition to plugin hybrids, EVs, and better public transportation (light rail, rail, and electric buses on overhead wires.)

                  In the grand scheme of oil, lto is a drop in the bucket, likely less than 100 Gb World wide, maybe as little as 60 Gb.

                  On the collapse of oil production, I doubt it.

                  I agree oil is likely to begin to decline within 5 years, but it will be slow at first, unless there is an economic collapse which causes a collapse in the oil price due to lack of demand. Perhaps in 15 years persistent high oil prices might lead to a depression, it depends how quickly the World transitions to alternative transportation once the peak in oil output is clear.

          • Dennis Coyne says:

            Hi George,

            Yes I definitely put this in the wrong place sorry.

            It was supposed to be in response to your comment about the USGS estimate, but somehow I put it in the wrong place.

            • Dennis Coyne says:

              Hi George,

              At the end of 2014 there were 3.5 Gb of proved non-producing reserves in North Dakota and at the end of 2007 there were 0.1 Gb of proved nonproducing reserves.

              If we assume all of the added non-producing reserves are Bakken/TF, that would be about 3.4 Gb and if we further assume the average well produces 300 kb over its life, that would be about 11,000 wells. The other 2.1 Gb of proved producing reserves at the and of 2014, could be produced by 7000 average wells, but a better metric would be cumulative output plus proved producing reserves or 2.1+1.2=3.3 Gb. That amount of output could be produced by 11,000 average wells. If 4 Gb is the URR and all wells are average 300 kb EUR wells about 13,300 total Bakken/TF wells would need to be drilled. About 11,000 Bakken/TF wells have been drilled so far (10,500 since Dec 2007). So about 2300 to 2500 more wells to drill to get to 13,300. Lets say the average number of wells drilled per month over the next 3 years is 75 new wells per month, we would see drilling end in 3 years if your estimate for URR and my guess of an average of 75 wells per month is correct.

              Note that the NDIC estimates 55,000 to 60,000 total wells drilled, while you estimate maybe 21,000 wells at most. I think the average of these estimates is pretty good which is about 39,000 total wells drilled, I actually think the economics will lead to a slightly slower number of 33,000 total wells+/-2000 wells.

              • In 20 million years the rock layers will erode, portions of North Dakota will be known as the “Steel Forest” as tens of thousands of old casing stubs filled with cement plugs gradually emerge and rust. The robots who rule the planet will worship this region as the birthplace of their race. 🐸

              • R Walter says:

                Through December of 2015 there has been 3,387,116,363 barrels of oil cumulative production for the Williston Basin in North Dakota, all formations.

                The Bakken has produced 1,590,525,938 barrels of oil, almost half. Approximately 9000 wells have been added since around 2007. The next ten years should double the number if more Bakken wells are added.

                https://www.dmr.nd.gov/oilgas/stats/statisticsvw.asp

                Click on cumulative production link.

    • Hickory says:

      Petro- I’ve got a question for you?
      I ‘m having a lot of trouble wrapping my mind around the idea that –
      ‘as global crude oil production passes the peak the price will fall.’

      Could you, or someone, please simply walk me through the assumptions on this stepwise.
      I think I must have been absent for a few classes, and seem to have some missing pieces on this theory.
      Thanks.

      • Oldfarmermac says:

        Hi Hickory,
        You’re not the only one with doubts about of the price of oil declining even as the production of it declines.

        Basic supply and demand theory says that as the quantity of a good or service coming to market declines, the price of it rises, everything else held equal.

        The customers who buy at high prices are not so numerous, but on the other hand, they can afford and NEED oil. My MD and my lawyer could afford twenty dollar gasoline. I can’t afford twenty dollar gasoline for my personal car.

        But I can easily afford twenty dollar diesel fuel as a farmer, because I can pass THAT cost along to my customers. . so long as my competitors are paying about the same as I pay.

        Take note of the fact that some producers of some commodities have MUCH lower costs than other producers, and that if demand falls off far enough, then the high cost producers are forced out, and the low cost producers will accept any price they can get, so long as it’s a price that turns a profit.

        OK- Now let’s consider the cost of new production, versus the cost of OLD production, as this changes the ground rules. If you consider that an existing hypothetical well has day to day operating expenses of say forty bucks a barrel, then the owner of that well can be expected to keep it in production so long as the price is over forty bucks. The well might have cost ten million and only produce six million dollars worth of oil, but hey, selling whatever it produces is better than losing the whole ten million.

        Now the owner of this well will compute the price he needs to get to drill a NEW well, and if it is seventy bucks, then he won’t drill a new well when the price is forty-UNLESS he is gambling on the price being above seventy by the time his well is ready to produce.

        I suppose it is POSSIBLE that the economic cards could fall in either of two ways , or some combination of these two ways, so that demand for oil would decline or hold steady at such a low level that the price of it will stay low.

        One way is that the world wide economy goes to hell in a hand basket, and the demand for oil falls off enough that the lowest cost producers are the only ones left, and they accept forty because that’s all they can get. Forty is ok if your production costs are only thirty lol.

        The other way is that renewable energy technologies and economic and cultural adaptation to fossil fuel pollution and depletion advance faster than any body except the most optimistic NICK G and Tony Seba types expect.

        Between a more or less permanently SICK economy, and fast improving alternative technology scaling up fast, I suppose it is POSSIBLE that oil will STAY cheap.

        But I am not willing to bet MY money on that horse. My money says depletion outruns demand destruction, and that oil is so valuable at the margins, as you reduce consumption, that the price of it will go up and stay up, for a long time, ASSUMING the world economy manages to stay on it’s feet.

        Basically I am betting on depletion on the one hand, and a functioning world economy on the other, forcing up the price of oil as it depletes faster than new technology can force the price DOWN.

        Hopefully I have understood the reasoning of the folks who believe oil will STAY cheap. If I am wrong, hopefully somebody will point out WHERE I have gotten off track.

        • GoneFishing says:

          The way the price of oil would stay low as oil production falls would mostly be through demand reduction. This could happen with technology changes, efficiency changes, lifestyle changes, alternative power and transport, sloughing off lower end customers, taxes and rationing.
          We already have increasing efficiency standards built in. Alternative transport and power are coming on line.

      • Petro says:

        Hickory,

        no worries, you are not alone!

        The likes of A.Berman, E. Mearns et al missed “that class” too.
        They are ONLY now starting to get it…
        It is not something one learns in an economics class.
        It is the understanding of complex, non-linear, dynamic system theory that leads one to understanding that “oil paradox” …..

        I was in investment banking (mainly energy) and had the honor of working with the likes of M.Simmons for a few times and, until I started learning in depth about complex, dynamic systems, I was thinking the same: supply-demand. low production =high price etc, etc.
        It was only roughly around 2008 (of course, my understanding of economics, finance and money helped) that after seeing the numbers, I got my brain out of the “box” and said: oh, shit! we are screwed……. no matter what we do. From this point on is just a matter of time….
        That is what I mean when I say: “…Let Yellen and Draghi and Kuroda bull shit us some more….is bonus time”

        Although her understanding of finance, money and debt is a bit “plebeian” and her explanations a little “muddled” and repetitive, the ONLY blogger out there who got this correct since the beginning is G. Tverberg.
        While her understanding of energy and oil and gas and so on, is NOWHERE near that of A. Berman, E.Mearns, R.Patterson, R.Likvern etc, etc. she understand DEBT and its role in economy better and she got out of the “classical box” of data and made the connection with the complex system theory.

        Have you noticed that since the beginning I have been pretty much correct about price, rates, etc…..
        ….I do not have a crystal ball and R.Patterson, A.Berman, E.Mearns and R.Likvern have forgotten more about oil and gas than I would ever know…..

        But, they are thinking WITHIN the system…. and within that system, knowledge tells you “supply and demand” and when that does not happen, one is puzzled….just like you are.

        Anyway, all I have writen here at this blog since 3 years ago explain what you ask me so I cannot do it in a reply to you. However, I will try to be more explanative in the future.

        Whoever tells you different though, remember this:

        Our system cannot be reformed or saved.
        Our civilization is not akin to prior ones who existed before.
        Never before “the civilization” encompassed the whole Globe and never before “the civilization” had the means to destroy the whole Planet…. literally destroy it!
        When a civilization fell before there was always some other place where another one flowrished.
        After we fall (and we shall….. if one believes in laws of physics and math that is) there shall be no Renaissance…..
        The system is so fragile that does not tolerate ANY shock…. even little ones.
        The elites know this and are doing everything to keep it up and running…
        So, pray for Yellen not because she is good or evil….. but by praying that she succeed, you pray for your self and family.
        We truly live in bonus times….enjoy it!

        Be well,

        Petro

        • Hickory says:

          Hi Petro.
          I agree with the gist of your points. I’m not going to believe in a ‘miraculous’ outcome until its shinning brightly in my eyes. It just looks far too unlikely, given how damn far into overshoot we are.

          In the shorter term (1-5yrs), however, it looks to me like we are in for a big spike in prices. And if that is sustained I do believe it could crash the system- the system that is now so over extended, debt ridden and fragile.
          If the system crashes (and by that I mean a widespread depression), then I can see the oil demand (and thus price) drop. If that happens, then moneys for other energy investment (ex PV) will dry up immediately.

          Certainly, other things could crash the system as well. Those triggers will have to be discussed by someone else or later, but that surely could lead to demand destruction as well. I suppose that is what you have been driving at.

          But lets look at a country like South Korea. The have no oil production and import about 82% of their net energy consumption. Some is coal, some is NGas, and some is oil. And its a cold place, and they are highly dependent on exports to fund their economy [similar to Germany in many ways]. I think they will spend pretty much every last dime to keep the lights on, the factories and homes warm, and the engines running.
          At least for a while, this kind of desperate spending will drive the price of oil higher.
          Thats how I’m seeing it.
          Not sure I want to see how this pans out.
          Bonus time indeed.
          btw- kayaking at Gabriola island was outstanding!

          • Petro says:

            “…kayaking at Gabriola island was outstanding!”

            That’s the spirit……!

            Be well,

            Petro

          • Ulenspiegel says:

            “But lets look at a country like South Korea. The have no oil production and import about 82% of their net energy consumption. Some is coal, some is NGas, and some is oil. And its a cold place, and they are highly dependent on exports to fund their economy [similar to Germany in many ways]. I think they will spend pretty much every last dime to keep the lights on, the factories and homes warm, and the engines running.”

            South Korea or Germany are not directly killed by higher energy/oil prices. E.g. in Germany car fuel is heavily taxed, when the oil price doubles we see an 50% increase at the fuel station, we had this in the past. BTW around 45% of the car trips are spare time activity, lot of fat to trim.

            The killer is the fact that our customers can not afford expensive oil, we are killed indirectly.

            • GoneFishing says:

              Excellent point further illustrating the interdependency of the modern world.

          • Paulo says:

            Come up our way. Sayward. (Unless it’s blowing ) Yesterday, caught first salmon of the 2016 ‘run’ and had it on the barbie within 20 minutes. With stir-fry from the garden, and rice, (no time to dig the spuds)…a feast for kings. Home made wine. Making some new lures this morning. 5 year old grand-daughter coming for a few days. She will catch her first ‘pink’ Wednesday.

        • Wake says:

          Petro, do you belive the elites such as they are understand these issues as you imply? I am not of the impression that very many market participants belive in peak oil, have heard of net oil exports, etc

          I do think most market participants have a stronger unease about the current through the looking glass world and central bank activity

          • Petro says:

            Wake,
            no I do not!

            However, they know it is about to explode and have the “band aids” ready: they see a bleeding here….stick a band aid (read: QE, negative rates,… etc);
            they see a bleeding there….. stick another band aid…. and so on

            But I read a lot of misinformed and confused commentators here….. which leads to stupid questions and assumptions (i.e.: analogies with collapse of Roman Empire, or “what is the price of oil going to be after PEAK” or, ” ..how many barrels Bakken and 10 Forkks will produce in 2025….” , or “…..how many high altitude kites we will need to make shade upon the Earth…. which then we can light up with energy from the kites…” …..and BS like that) , so let me be simple and clear:

            There is no way out of this…we will collapse!
            I understand that is a frightening big leap even for well informed people to make…. but that is reality!
            And that is what elites know: we are crashing!!!!

            The likely scenario of this is:
            first we will have economy fail (in process….). When elites are fully clear that they cannot keep it up and running any longer, we will see war….
            so, be prepared “for them Russians and Chinese to be more aggressive…” (even-though we are surrounding them with bases at their own borders…and the narratives you hear on MSM about it are almost totally false…intentionally) and be prepared for more racial tensions and more bull shit akin to BlackLivesMatter… and more “…domestic grown terrists…” and stuff like that.
            At the end, anything and everything shall be done to blame somebody else ……. and to rally the tamaguchi (read: masses, people) around an nationalistic, authoritarian society…. for which the brainwashed, pokymon-sculled idiots are going to beg about/for !!!!!! (Russians and Chinese elites are doing the same by the way, with their own tamaguchi….)

            …this (war)will be the end…

            The third scenario (which is extremely unlikely) is that, even if we somehow skip the first 2 stages and have a “smooth” transition to a “simpler” way of life powered by kites and windmills and mirrors….. and avoid war, what we have done to mother Nature thus far, will catch up with us no later than the middle of this century……. and there is NO WAY we can manage our selves out of that….

            So, whoever says to you that what elites are doing will make the crash harder…. tell them that we are already dead if we crash now….. so prey that we keep this a little longer….

            So, to answer your question in short:
            elites may not know or believe “Peak Oil”, but they know that the ship is sinking for sure… and that is why they are doing what the’re doing…. not for you and me, but for themselves…..

            Let’s pray they do it for a little longer and let’s help them.
            How?

            I tell you how: system does not tolerate changes/shocks so, go and vote and elect the candidate who most likely will continue the status-quo.

            It matters not if he or she is RepubliCrat or DemocliCan….

            Keep the status-quo running for as long as we can….
            The other side of this (which is an INNEVITABILITY….do not forget that!) will be beyond the worst nightmares and SAW movies…. combined…..

            Be well,

            Petro

            • Lightsout says:

              Petro

              I agree with most of your views but given that money debt and all that goes with it are man made all can be manipulated and fudged by the elite. Politicians don’t really matter that much in western democracies as they are not the real power brokers.
              In the end the system/civilisation will fail but I think it might very well chug along for some time yet as it has since 2008 with new rules made up as we go.
              In the mean time eat drink and be merry might as well live like there is no tomorrow because that days coming.

        • Dennis Coyne says:

          Hi Petro,

          If one considers BIS statistics for World non-financial debt (all non-financial) sectors, the debt to GDP ratio has been relatively stable from 2010 to 2016.

          As long as debt to GDP at the World level remains at roughly this level (where debt grows at the same rate that GDP grows at the World level) it is not clear why there would be a problem. Chart below gives World Debt to GDP % for all non-financial sectors (trailing 4 quarter average). The data is from the Bank for International Settlements

          https://www.bis.org/

          I would expect this ratio would increase before there would be a crisis. There are many countries with debt levels above this average level where there is no apparent crisis. As the World develops and more people have access to credit markets one would expect this ratio would tend to rise over time.

          In Japan this ratio has averaged 340% from 1998 t0 2015 and for the past 2 years the average has been 386%.

          I am not suggesting 340% Debt to GDP is a good idea, simply that Japan is not experiencing an economic collapse as far as I have heard, the lowest Debt to GDP for any quarter from 4Q1997 to 4Q2015 in Japan was 307.7%.

      • Javier says:

        Hickory,

        You can usually get some information from Petro’s posts, but almost never a clear answer.

        The answer to your question is affordability. People need to be able to afford something to buy it. If they need something but cannot pay for it (even food), they do not constitute demand.

        After Peak Oil it is expected that the economy will collapse and most people will lose their jobs and won’t be able to afford much. The demand will go down faster than production. We have seen what happens to oil producers when supply outstrips demand. They’ll try to survive selling as much as possible and outselling the competence so prices will go down even more as the most expensive more indebted producers go out of business reducing production. Despite oil being very low priced, the production will decrease fast trying to chase the sinking demand, and the economy will be deprived of the much needed oil acting as a vicious positive feedback.

        Once the dust settles there won’t be much recovery. Oil production will be so low that it could turn into a highly priced luxury product.

        Of course this scenario is also compatible with a highly volatile oil price if the economic collapse takes place in steps with frequent mismatches between supply and demand.

        • Dennis Coyne says:

          Hi Javier,

          Why will this economic collapse be permanent? There are other sources of energy besides oil, oil will be used more efficiently and substitutes such as electrically driven transportation will be developed. Perhaps the speculation that economic collapse is inevitable is correct, but I don’t think so.

          As you are fond of saying, the theory of permanent economic collapse is an unproven hypothesis.

          • Javier says:

            It is certainly an unproven hypothesis.

            The more you know about how things work the more you can constrain future outcomes based on probability.

            If you understand gravity on practical terms, and human resistance to impact you can constrain the future consequences of a person falling from a four stories building to the street to very severe before that person jumps, even if you don’t know if that person will survive or not.

            And I am not talking of a permanent collapse. Let’s talk about a person living in Western Europe in the year 175 AD versus the year 600 AD. International commerce has all but disappeared, knowledge has been lost, living conditions are probably harder for most, population has reduced, common infrastructures are no longer built and they are living in different civilizations. It is a different thing. The person in 600 AD does not have a feeling of loss as he has been born into his system. Collapse is only permanent in the sense that it is part of the history. This person looks at the Roman ruins nearby as he helps to erase them by recycling their stones while he has a sense of awe at the power of the ancients that were capable of building such huge structures.

            Even if we have the possibility to develop and implement other sources of energy that doesn’t mean that we will be able to do so. To replace the economic infrastructure is an herculean task of many decades under a strong economy. Once the economy fails, there is nothing you can do but watch. By the time of Peak Oil most of the world economy, energy and transportation should have been oil-free to avoid collapse. We were warned about “Limits to growth” with enough time and we decided to continue the party. I seriously doubt that as a species we could have taken a different decision.

            • Doug Leighton says:

              Totally agree, well said.

            • Dennis Coyne says:

              Hi Javier,

              The transition will be gradual, oil prices and other fossil fuel prices will increase and gradually people will buy more fuel efficient vehicles (including plugin hybrids and EVs) and wind and solar will become more competitive and will gradually replace coal and then natural gas for electricity generation.

              You assume that fossil fuel output will rapidly decline, but this is highly unlikely unless the economy collapses for other reasons.

              World debt to GDP has been relatively stable for the past 5-6 years (since 2010), it increased in response to the GFC from 2008 to 2010, but has since stabilized according to BIS data.

              A recession is always a possibility, but global crises such as the GFC do not happen often (the previous serious Global episode occurring 80 years earlier.)

              • Javier says:

                Dennis,

                No.

                Our economy cannot and will not function correctly with a decreasing amount of oil being produced in a sustained manner.

                It is going to be TEOTWAWKI.

                A completely different and unknown world awaits us in about a decade and a half or less. And I am afraid we are not going to like it if we survive the transition.

        • texas tea says:

          Javier,
          I think you would agree, if such an episode would occur the effects would not be limited to oil and gas. For instance, how in the world will advanced economies be able to afford the “luxuries” such as solar and wind power, or food or cable TV or cell phone service.
          There is one thing different about oil and gas that does not apply to most other essential commodities except food, they deplete. So let’s play pretend. Using Japan for a model how many ways to sunday can a government using a variety of mechanism to keep the economy on its feet. They are innumerable. While the end of the world may very well occur it will be after we have thrown everything including the kitchen sink at the problem. Food and energy will be the very last items a country will give up on procuring for its people and its economy. If the scenario plays outs like you suggest, we will have a zero tax on oil production to make it commercial after that we will have tax credits etc etc. The oil and gas will flow until there is NO more.😊 you can take that to the bank, just don’t deposit it there😜

          • Javier says:

            Of course everything will be tried, and of course the outcome will be far from the worst scenario we can imagine.

            But you see, once oil stops growing and starts contracting, the economy will not be able to grow in a sustainable manner. There can be periods of growth but on average it will contract. And in a contracting economy interest rates become meaningless because lending money or investing does not make sense as there are no future benefits but loses on average. Stock markets collapse as people try to recover their money and put it into wealth they can keep, because the smartest thing to do with wealth is to keep it. The run to real wealth means hyperinflation and monetary crisis.

            The oil and gas will flow until there is NO more.

            I don’t think so. Peak Oil is less about lack of oil and more about lack of economic capability to obtain the very expensive oil that is left. When we no longer extract oil in significant amounts there will still be plenty of oil left in the world.

            • Dennis Coyne says:

              Hi Javier,

              The world has been using oil more and more efficiently and as oil becomes scarce prices will rise and the efficiency will improve.
              World C+C output has grown at about 1% per year on average since Jan 2000 (through March 2016, EIA latest data point).
              World Real GDP (IMF data based on market exchange weighted real GDP) has grown on average at 2.5% per year from 2000 to 2015.

              Real GDP growth will undoubtedly slow down when oil peaks, but there is coal, natural gas, nuclear, hydro, wind, solar, and geothermal energy as well. I doubt things will fall apart as quickly as you envision. Oil will remain on an undulating plateau for 5 to 10 years (2015 to 2019 or 2024) and then slowly decline. In the meantime oil prices will be relatively high ($80 to $130/b in 2016$) and the fuel efficiency of personal transportation will improve as the World improves public transport in densely populated areas and moves to plugin hybrids and EVs in low and medium population densely populated areas.

              • Javier says:

                Dennis,

                ” Oil will remain on an undulating plateau for 5 to 10 years (2015 to 2019 or 2024) and then slowly decline.”

                Or not. Euan Mearns shows a 2.1% yearly decline already in the graph that Ron posted in his comment above. I don’t know if this is a slow decline for you but obviously it has the potential to increase. As AlexS has shown, China has declined >8% this past year, and if I remember correctly it is the fourth world producer.

                I hope you are right, but I am afraid you will be not.

                • Dennis Coyne says:

                  Hi Javier,

                  There could be a short term decline in output of 2.1% until the market balances and oil prices increase. Many are of the opinion that oil prices have decreased due to lack of demand, I think it has primarily been due to over supply.

                  I expect the short term decline in output to slow as oil prices rise. I doubt a rise in oil prices to $90/b will have much negative impact on the World economy, but it will eventually lead to more output.

                  There will be a 2 year (or more) lag between higher oil prices and increased investment in deep water and arctic projects so most of the output will need to come from lto. This may moderate the decline to 1% per year until other longer term projects come on line. A spike in oil prices to over $125/b will likely lead to a recession which will moderate demand somewhat.

                  Time will tell if Euan’s projection is correct, I think decline will average 1%/ year from now until mid 2018 rather than the 2% predicted by Euan Mearns.

                  • Dennis, Arctic projects could have a 5 to 15 year lag time. I think 10 to 15 years is more likely, although I imagine the Kara Sea oil and condensate could come out sooner if the Russians make it a priority.

                  • Dennis Coyne says:

                    Hi Fernando,

                    Thanks,

                    I was thinking of large projects by NOCs and deep water offshore in Africa, and N+S America. I did not realize that Arctic projects took that long.

                    In the past you have said with oil at $150/b there is lots of oil. What kind of lead time between oil prices reaching that level and this “higher output”.

                    Were you thinking 10-15 years later?

                  • Dennis, for some Arctic projects the path forward requires additional delineation and extended well tests. The drilling season usually runs July to early October, so it’s a painful task to get things done.

                    These projects require soil data, a pretty good understanding of ice and weather conditions, and exotic platform, loading station and tanker designs. This means the preliminary phase can take five years.

                    The project has to go through exhaustive enviromental impact statement reviews, which require engineering. That can take three years. If they are lucky they can go for government approval and sanction in 8 years, receive it say 9 months later. This puts the construction phase in years 9-10-11-12 and if they are lucky they start production in year 13. Or something like that.

                    They can cut corners, but watch the Kara sea oil discovery and start counting down…

              • Hickory says:

                Dennis- ” I doubt things will fall apart as quickly as you envision. Oil will remain on an undulating plateau for 5 to 10 years (2015 to 2019 or 2024) and then slowly decline. In the meantime oil prices will be relatively high ($80 to $130/b in 2016$) and the fuel efficiency of personal transportation will improve as the World improves public transport in densely populated areas and moves to plugin hybrids and EVs in low and medium population densely populated areas.”

                I sure hope you are correct about this gradual pace of change.
                Earlier you noted an assumption affecting oil price- that the world could afford up to 5.1% of GDP on energy. Where does that number come from?
                I suspect the ‘world’ would spend considerably more for such a useful item. I somewhere read that 1 barrel of oil is equivalent to a human manual labor for 11 years.

                • Bob Nickson says:

                  “I somewhere read that 1 barrel of oil is equivalent to a human manual labor for 11 years.”

                  I don’t think that’s right.

                  A barrel of oil has the equivalent energy of 1628.2kWh of power. A walking human uses 250 watts, and a running human uses 1000 watts.

                  Let’s say a working human uses 500 watts. There are about 2000 hours in a standard work year (40 hours x 50 weeks), so you would get just under 1.63 man labor years from a barrel of oil.

                  Cost at $40. a barrel is then $25 per man year.

                  Compare with a 350 watt solar PV panel, which would produce at about .63 man power. Over a 25 year span it would produce 15.75 man labor years, so at $0.80 watt panel cost, PV is about $17.77 per man year.

                  The future is electric.

                  • GoneFishing says:

                    Did you account for the fact that oil is not all fuel (about 70 percent is fuel) and it is only about 20 percent efficient? That gives it 227 kWh of useful energy.
                    A laborer can put out a continuous 75 watts for eight hours. That comes to 1.5 years of hard labor.
                    At $15 an hour, that would be $45,000 for the laborer, plus taxes, benefits and overhead.
                    So for a $300 PV panel, one could easily get the daily labor of 16 men 7 days a week for 30 years or more and no extra costs.
                    Or the equivalent of about 58 barrels of oil. At $45 per barrel, that is a cost of $2610 for the oil equivalent of the PV panel.

                  • Byron Walter says:

                    Hi Bob,

                    While I never measured anyone’s output for 8 hours, my impression is that a fit adult can manage about 40 to 50 watts per hour above their basal metabolic rate for an extended period of time. That would change your estimate by a factor of 10 or around 16 years per barrel (I think that 11 years is close to the mark). Back when I actually worked for a living, I ran VO2 max studies on thousands of folks from kids to 90 year olds, including couch potatoes to athletes so I do have a feel for this stuff.

                    There are around 34 kWh of juice in a gallon of gas which even when gas was pushing four bucks around here, I never complained.

                    BTW, thanks to the gang that keeps this site up and running.

                  • Bob Nickson says:

                    Okay Byron, in that case:

                    If the base rate for a human is 90 watts, then that puts us at 130w/h for a worker.

                    https://www.google.com/search?q=human+basal+metablic+rate+in+watts&oq=human+&aqs=chrome.0.69i59j69i57j69i59l2j69i65j69i60.2357j0j9&sourceid=chrome&ie=UTF-8

                    That means 6.25 man labor years for the barrel of oil.

                    Don’t take much PV to put out 130 watts.

                    What this means in the near future is that I’m out of a job.

                • Dennis Coyne says:

                  It is based on world spending on oil in 2008,
                  I estimated using real imported oil prices in US and c+c output in 2008 and IMF real GDP data. Spending on crude produced in 2008 was 5.1%. I assume this is the upper limit.

                  • Hickory says:

                    This may be a decent number (5.1%) to work with for this purpose, but I do suspect the real value is higher (which would then support a higher price for oil).
                    In 2008 the economy went down primarily due to the financial system shenanigans, rather than due to energy costs, although I do acknowledge the role energy costs played to some extent.

                  • Javier says:

                    Hickory,

                    The financial mismanagement was a one way route to disaster, but the responsibility for the crisis taken place when it did is greatly on oil price.

                    As oil price increased in the years leading to summer of 2008, so did CPI as this pervasive cost has to be passed on to consumers. As CPI increased so did interest rates. The rise in interest rates was what finally destabilized the financial Ponzi scheme. The spike in oil prices during the summer of 2008 was the final straw in the camel that made sure a recession in the general economy would accompany the developing financial crisis, creating the perfect storm.

                    Oil problems have been at the root of everything that has happened in the world since 2004.

                  • Dennis Coyne says:

                    Hi Hickory,

                    The number was intended to be conservative, in 1980 the World spent 12.9% of World real GDP($27,492B in 2015$) on C+C output(21.8B barrels) at an average price in 2015$ of $97.4/b. (Again I used the US imported oil price from the EIA’s real prices viewer).

                    If the World could afford to spend 10% of real GDP on C+C output (less than in 1980), then oil prices could rise to $250/b.

                    I doubt the World economy would fare well at $250/b, but consider what oil prices looked like in 2000.

                    I will switch now to Real prices in 2000$.

                    From 1990 to 1999 the real oil price in 2000$ averaged $20/b and if someone had claimed the World would be fine with oil prices at $75/b from 2011 to 2013, I would not have believed it. That is a price 3.75 times higher than the previous 10 years and surely it would cause a depression or worse.

                    I would have been wrong (as I often am).

                    Fast forward to 2016. The previous 10 years the real oil price has been more volatile than 1990-1999, but the average real oil price has been $84/b in 2015$.

                    Maybe 10 years in the future oil prices will be 3.75 times higher or $315/b in 2015$, again I am doubtful, I think $200/b is a more reasonable upper limit, but nobody really knows.

                  • Dennis Coyne says:

                    Hi Javier,

                    Oil price was a factor, but not the primary factor, oil price spikes happen often and oil prices were high from 2011 to 2013 without causing a major crisis.

                    One can claim that changes in the price of oil are the source of all problems in the World, but I think it is a little more complex than that. 🙂

      • Caelan MacIntyre says:

        Hi Hickory,

        I suspect much boils down to the levels of human (system, symbolic, etc.) synchronization/harmonization with reality, whether that reality is human needs and values; nature’s capacity to absorb pollution; or thermodynamics, for examples, and changes and/or limitations thereof.

        “price yourself out of the market

        If a company prices itself out of the market, it charges so much for a product or service that no one wants to buy it.” ~ Cambridge Dictionary

  6. Looking at Art Berman’s chart below. World oil production since 2005, less US and Canada, has been pretty much flat. This is despite the fact that prices have risen dramatically in that period of time. So lets look at the other huge gainers since 2005.

    Russia: See the EIA’s take above. Even if they are wrong, Russia’s huge gains are gone forever.

    Angola, Brazil, China and Colombia: China and Colombia have definitely peaked. Angola peaked in 2010 and has declined slightly and been flat since then. Only Brazil has any hope of increasing production, and tat not by very much.

    Iraq: I believe Iraq has peaked. Some may disagree but there is no doubt that their best days are behind them. They have far more downside potential than upside potential.

    There is little doubt that all those countries will decline in the next few years regardless of what the price of oil is. After all, if oil above $100 a barrel in the past did not sent them producing massive amounts of oil, there is no reason to believe it will do so in the future.

    That leaves the USA and Canada. To those massive high prices in the past few years, only the USA and Canada responded. So… will higher prices bring on enough US and Canadian production, to make up for the decline in the rest of the world… plus increase production enough to push production above the 2015 peak?

    Not a snowball’s chance in hell will that happen.

     photo CC Production by Cuntry_zpsmmrubi3z.jpg

    • Caelan MacIntyre says:

      Sobering, as Euan writes. Alarming I’d say.
      In a possible future’s retrospect, it may turn out to have come as a surprise how fast things unraveled sociogeopolitically so close after the peak.

      Fossil fuel, within a certain EROEI range is, of course, power. It powers pseudoeconomies, governpimps, and their militaries. And now China and Russia, for two examples, are not nearly as ‘backwoods’ as they may have been, historically. They have become, ‘Westernized’…

    • LTG says:

      Hi Ron,
      What are your reasons for calling the Iraq peak?
      Thanks

      • After a year of trying to increase their production they have been unable to do so. Now things are likely to get worse. Iraq depends almost entirely on outside contractors. Also there has been a steady stream of skeptical news coming out of Iraq.

        Iraq struggles to match January’s record oil production

        Iraq is Opec’s second-largest producer after Saudi Arabia and has ambitious plans to increase production capacity to between 5.5m b/d and 6m b/d by 2020.

        This target, which has been revised downward in recent months, has been viewed with scepticism as a budget crisis is limiting the federal government’s ability to pay companies that are producing oil in Iraq. These include from BP, Royal Dutch Shell and Russia’s Lukoil.

        Although they are developing some of the lowest cost easy-to-access deposits of oil in the world, the fields need more investment to maintain production at current levels and increase future capacity. At the same time, the government in Baghdad is requesting companies reduce spending.

        “We’re taking more risk to keep production the same, while not getting paid. We can’t continue to produce for 2-3 years like this, it’s not possible,” said one executive at an oil company operating in Iraq. “Maybe they can achieve 6m b/d by 2030.”

         photo Iraq_zpsmk9hg42n.png

        These numbers are through June. As you can see they still have not matched January’s numbers. And their contractors are not getting paid. Now what would you think would be the likely effect on Iraqi oil production?

        • LTG says:

          Hi Ron,

          My guess is that Iraq oil production will struggle to maintain current levels over the next couple of years and then drop rapidly as their ongoing religious civil war makes the situation too dangerous for continued foreign investment.

          Another guess is that the global economy will be in recession by 2020, reducing demand, lowering world oil prices, and pushing many national economies into bankruptcy. The impact for countries highly dependent on oil revenue to maintain social services and stability will be devastating and we’ll see the breakdown of societies and the rise of dictatorship.

          All wags of course. But it seems to me, generally, that geopolitics and social/economic problems will begin to overtake any geologic and technological limitations in world oil production. Venezuela is a current example, and now Iraq, starting with their “budget crisis” and workers “not getting paid”, as your article describes. In other words, above ground factors are determining production and not the lack of oil in place.

          Thanks for your reply, always appreciate your clear-headed thinking.

          • Eulenspiegel says:

            I think in a global recession oil prices will get through the roof – a breakdown of Irak and Venezuela alone will wipe 6 mbd from exportable oil – even when demand shrinks that should evaporate the now full storage very fast.

            • Venezuela’s oil production won’t drop to zero. The new set up has General Padrino López as a co-regent with Maduro. This general is a very tough guy, if necessary he will put enough troops in Eastern Venezuela to keep some oil coming.

              I’m not sure if they can keep western Venezuela producing because it has been historically anti Chavez, and now the population is really hostile towards the Castromaduristas.

    • Javier says:

      Ron,

      Matt Musalik has been making similar graphs for a long time showing the same:
      http://crudeoilpeak.info/latest-graphs

      Probably Art is basing his incremental graph in Matt’s ones.
      Also very noteworthy is Matt’s graph on “Conventional Oil Plateau” from his May 2015 update on that link.

  7. islandboy says:

    Earlier this week, I was looking at locally available data to see if renewables have begun to affect petroleum consumption on the island, The data I found was from the web site of the Ministry of Science Energy & Technology, from the Statistics & Data section, the “Petroleum Consumption By Activity” page. The data is available as a series of PDF files with a table covering five years and a pie chart for the last year in the table. The tables wouldn’t play nice when attempting to copy and paste to my spreadsheet but, I manged to figure out a way to get the data into the spreadsheet that did not involve copying the data cell by cell. I then produced a graph, leaving out the lines for Cement Manufacturing and Sugar Manufacturing since they consume negligible amounts relative to the other activities. Based on the result, I decided to add WTI price.

    The big message in the graph comes from the decrease in consumption attributed to “Bauxite/Alumina Processing”, from more than 9 million barrels in 2008 to under 3.5 million barrels in 2009. From the Jamaica Bauxite Institute, in 2008 the island had four plants that process bauxite to produce alumina (aluminum oxide). These plants use a lot of energy that was primarily supplied by oil and we all know what happened to the price of oil in 2008. Compounding the high price of oil with depressed commodity prices led UC RUSAL, who has controlling interests in three of the plants and had been pressuring the government to allow them to use coal instead of oil, to promptly shut them down with only one being returned to production in 2010. Following the discussion on recent posts with regard to the effect of price on oil supply and demand, clearly at some price it becomes uneconomic to produce alumina in Jamaica using oil, unless aluminum prices are high.

    Apart from “Bauxite/Alumina Processing”, the price of oil seems to have had very little effect on consumption in Jamaica. After 2011, oil use in “Electricity Generation” started to decline. The local utility initiated a pilot “Net Billing Program” in 2012 putting in place a framework for customers to start using grid interconnected inverters to supply electricity but, I doubt that could account for the 415 thousand barrel decline in oil use. Maybe after three years of sustained high prices, consumers started getting serious about energy efficiency and conservation. I will have to do some more investigation. I don’t know how long it will take the ministry to release the data for 2015.

  8. FreddyW says:

    Hello guys. Here is my updated Bakken GOR graph. It looks like the increase in GOR has finally stopped, at least for wells earlier than 2015. GOR for 2015 is still increasing fast. 2008 and 2009 are on the other hand decreasing. So what does this mean for production? Lets see in my next graph bellow.

    • FreddyW says:

      Here we can see that for 2009 there is a huge drop, about 6%. As a comparison it would translate into more than 50% in one year. But of course you should not extrapolate from a (cherry picked) single month like that. For 2008 there is instead a slight increase. At least some of that can be explained by that some wells that were previously not producing, are now back online. I don´t know how much of an effect that has though. I´ll show more about that in my next graph. 2013 has slowed down the decline since last month, but is still bellow 2012. So overall nothing dramatic except for 2009.

    • FreddyW says:

      This graph looks like a mess, I know. I hope you can make something out if though. It shows the percentage of wells that are producing in a certain month. There is a downward trend over time, but the oil price is not affecting it much at all. It´s only this spring when the oil price was in the 30s that you can notice some decline. But it´s not more than 1-2% of the wells that were put offline. Never the less, there were some wells that were put back on production in May which should have a positive effect on production. Also ,the total producing “days” for all wells combined has increased by about 5% since last month (which I don´t show in any graph here).

    • FreddyW says:

      Just an update on the GOR distribution. The graph shows a snapshot of the months mentioned.

  9. FreddyW says:

    Here is an update on Chinese oil production if you have not seen it already:

    April:
    “China, the world’s fourth-largest oil producer, pumped 5.6% less crude year-on-year in April”
    Link: http://fortune.com/2016/05/14/china-april-crude-oil-output/

    May:
    “The Asian nation reduced oil output in May by 7.3% from a year ago”
    Link: http://www.worldoil.com/news/2016/6/13/opec-has-its-way-as-china-oil-output-cut-by-most-in-15-years

    June:
    “In June alone, China pumped 8.9 percent less crude than a year earlier”
    Link: http://oilprice.com/Energy/Crude-Oil/Chinas-Oil-Output-Tanks-Hits-4-Year-Low.html

    8,9% in june and the decline just continue to increase!! Lets see what happens in the future, but right now it certainly looks like its collapsing.

    • Doug Leighton says:

      Some Chinese production is very expensive and they will get their oil from the least costly source. I know this because I’ve worked there with their senior resource people and had the discussion. Of course, China is facing serious oil depletion as well.

    • AlexS says:

      In fact, China’s production increased 62 kb/d in June vs. May to 4.03 mb/d.
      But y-o-y decline accelerated to 8.5% in June 2016 (not 8.9% as says Reuters article quoted by oilprice.com).
      June 2015 was the peak month for China’s oil production (4.41 mb/d).

      I am using original data from the National Bureau of Statistics and conversion factor of 7.3 barrels/ton

      China oil production (kb/d) and year-on-year change

      • AlexS says:

        China has seen in the past significant drops in monthly oil production, most likely related with maintenance.
        But this time is different. I agree with Ron that China has peaked.

      • FreddyW says:

        Ok good to know. But 8,5% is still huge. Looking at the graph I see that the number will continue to increase untill end of year unless production levels out or start to increase.

      • Watcher says:

        China yuan July 2015 6.2 per USD
        China yuan July 2016 6.7 per USD

        Oil in dollars July 2015 $46ish
        Oil in dollars July 2016 $46ish

    • Caelan MacIntyre says:

      So the thermodynamic collapse of the oil industry, that is now underway

      …not only is likely to be completed within some 10 years but is also in the process of triggering a falling domino effect (aka an avalanche, or in systemic terms, a self-organising criticality, a SOC).

      Presently, and for the foreseeable future, we do not have substitutes for oil derived transport fuels that can be deployed within the required time frame and that would be affordable to the GIW [globalised industrial world]. In other words, the GIW is falling into a thermodynamic trap, right now. As B. W. Hill recently noted, ‘The world is now spending $2.3 trillion per year more to produce oil than what is received when it is sold. The world is now losing a great deal of money to maintain its dependence on oil.’ ” ~ Louis Arnoux

      Alright! ^u^

      When’s Part 3?

      • islandboy says:

        “The world is now spending $2.3 trillion per year more to produce oil than what is received when it is sold.”

        So, let me get this right. The losses being incurred by the oil and gas industry globally are $2.3 trillion? To put that in perspective, at $2.30 per watt for solar PV (an arbitrary figure that is probably too low), that would install 1,000 GW of daytime electricity capacity with a useful lifetime measured in decades, as opposed to gone within the year. That is more than four times as much as the total capacity installed worldwide to date!

        Looked at another way, that could buy 57.5 million EVs at 40 grand a pop. That’s enough for about two out of every three cars sold worldwide to be an EV.

        While the low prices that are causing these losses are great for consumers, they have shifted the focus away from alternatives and discussions of “Peak Oil” and lulled many into a false sense of security. I don’t even want to talk about the amount of (uninformed) people that say stuff like “Oh, the world has enough oil to last hundreds of years!”

        Methinks something’s not right! If humanity goes to hell in a hand basket, it is entirely of our own doing!

        • GoneFishing says:

          Islandboy,
          From “What the Hell is wrong with people these days.”

          Brandon Zuern of Austin Books & Comics: I wish I knew. It seems like people have their worldview and that’s it, there’s no other opinions, there’s nothing else that can be said, it’s What You Think. We don’t really want to listen to each other anymore – and that’s a really weird thing. People just don’t listen enough. They want to be heard, or they’re happy to quietly not pay attention, but no one really wants to listen. So, listen up, folks!

          David Jewell, Poet: I would just have to say, too much information to sort out short-circuits their sense of being. And, ah, they’re all hypnotized and they all have amnesia. They’re a culture of amnesia.

        • Caelan MacIntyre says:

          “If humanity goes to hell in a hand basket, it is entirely of our own doing!” ~ islandboy

          No kidding, islandboy…

          Did you read the article?

          The thing is, we don’t appear to have the time left to EV/PV ourselves out of this pickle anymore, and into some sort of imagined or hoped-for elite-derived neopseudoeconomic Shangrila.

          We appear to be talking about the complete ‘paradigm-retrofit’ of the geosocioeconomic structure/order in about 10 years, maximum– trucking/shipping and agro industries, batteries, lithium mining, general global transport, new industries, new jobs, taxes for governpimps to actually run on and deliver typical services taken for granted, such as sewage and water systems, pensions, welfare, roadways, and so on.
          It appears we have run out of time (as the global social shifts and chaos appear to be increasing pitch– Nice, Turkey, Britain, etc.), or time is running out along an increasingly-steep exponential function.

          And what is the late Allen Albert Bartlett’s famous quote that all we Peak Oil Heads here should know by heart?

          ” ‘The greatest shortcoming of the human race is our inability to understand the exponential function.’

          and his Great Challenge:

          ‘Can you think of any problem in any area of human endeavor on any scale, from microscopic to global, whose long-term solution is in any demonstrable way aided, assisted, or advanced by further increases in population, locally, nationally, or globally?’ ” ~ Wikipedia

          We now appear to be rapidly approaching the halfway point where the lily pads have covered about half of the lake or the stadium is half-full of filling-up water and we are chained and locked to the seats with no keys…

          By the way, where is everyone? Do you think that some people left because Dennis took over the blog or that a few of us are impolite? Or do you think there’s something more ominous behind their departure?

          Go start growing mangoes!

          Island Girl

          “…Oh she’s a big girl, she’s standing six-foot three
          Turning tricks for the dudes in the big city

          Island girl
          What you wanting with the white man’s world?
          Island girl
          Black boy want you in his island world

          He want to take you from the racket boss
          He want to save you, but the cause is lost
          Island girl, island girl, island girl
          Tell me what you wanting with the white man’s world

          Well she’s black as coal, but she burn like a fire
          And she wrap herself around you like a well-worn tire
          You feel her nail scratch your back just like a rake, oh oh
          He one more gone, he one more John who make the mistake

          • islandboy says:

            No, I did not read the article. I just latched on the the little tit-bit I quoted but let me explain my perceptions on the issue of time. It was late 2007 when I noticed the term “Peak oil” pop up on one or more of my favorite web sites that feature hybrids, plug-ins, alternative fuel vehicles, EVs and things of the sort. I got curious which led me to watching several clips and documentaries on the subject, which left me with a great deal of anxiety as I was convinced TEOTWAWKI was at hand. It is now nine years on and my perception is that many of the predictions made in the documentaries are playing out but, not even remotely close to the speed one perceives when watching a movie.

            On the other hand, the development of alternatives is happening at a pace never anticipated in any of the documentaries, like a one hundred fold increase in solar electric generating capacity. I remember when I first became aware of Peak Oil the typical comment was “How could solar ever scale up? It’s only about one hundredth of one percent now!”. Well it’s grown by over a hundred times in less than nine years to just about one percent now. What if it grows at even half that pace over the next nine years?

            The thing is I am growing weary of waiting for bad shit to happen, while all the people around me are just going about business as usual, trying to cope with all the shit Peak oil is throwing at them(not that they know why all these things are happening). As a result I have decide to take a different approach and advocate for change like my life depends on it. I have also heeded the advice of the one known to us old TOD hands as “westexas” and developed expertise in energy conservation and solar PV technology. So for now I will remain focused on try to change things in my neck of the woods, while the folks who know about oil to continue getting it for us as best as they know how. Hopefully they’ll get enough for long enough for enough change to happen, to avoid all hell breaking loose.

            I wish I could post what percentage of US electricity will be generated in July 2017 but, I’m just going to have to wait. While I wait for the “good” stuff to happen I will be trying to help “good” stuff happen in my neck of the woods. As for stuff I can’t do, I won’t even try. Kinda goes without saying.

          • Heinrich Leopold says:

            Caelan,

            …. where is everyone?

            Before Dennis came, this site was an excellent source for independent information, which is very important for good decisions.

            This changed when Dennis presented and repeated in my view just Wall Street propaganda, which brought horrible losses for many investors worldwide. There are hundred other sites you can get this kind of Wall Street propaganda.

            Luckily Ron writes from time to time an article.

            • Dennis Coyne says:

              Hi Heinrich,

              Could you specifically point out the Wall Street propaganda?

              Like predicting a peak in fossil fuel output before 2025? Was that in the Wall Street Journal? I must have missed it. 🙂

              To be honest, I don’t real the Wall Street Journal so it would not be surprising if I did.

              • Heinrich Leopold says:

                Dennis,

                The main message of Wall Street is that oil is running out worldwide, yet there is still plenty of cheap and economic oil and gas within the US due to the fantastic progress of shale companies, which have improved the economics of oil and gas. Therefore everyone has to invest into shale and related companies. And US production will rise to unseen heights.

                However, the last years have shown in my view that this is not the case, as shale companies have made horrendous losses at an oil price of USD 40 per barrel. Therefore companies had to reduce production accordingly.

                I am not alone with my opinion:
                http://crudeoilpeak.info/iea-us-40-oil-means-3-mpd-less-oil-by-2020

                ….as even the IEA admits that US production will decline over the next years if WTI prices stay around 40 USD per barrel. Over the last few months it became even evident that the decline is even much faster and we will see a 3mill b/d decline until mid 2017 (see below chart) – if prices stay low. It does not need complicated statistical methods to see that after the decline of 1.2 mill/d over the last year, we will see another 1.5 mill b/d over the next year. Especially as drillig is coming down by over -50% year over year.

                US oil production simply lacks economics of scale: Texas alone has around 200.000 wells at a production rate of around 15 barrels per well. Saudi Arabia wells have a production rate of 10.000 barrels per well and Russia has an average production of 1.000 barrels per well. This is a factor of 100 -1000 in economic advantage for Saudi Arabia and Russia. How can US oil and gas production become ever competitive at low prices?

                This makes also any forecast for higher US production obsolete as a higher US production would imply huge losses, which can only be paid by innocent investors- losing enormously. As long as low cost production still exists worldwide, oil prices will stay low and US production has little chance to thrive.

                As many people have lost their shirts lured in by false hopes for a new oil production technology, this is nothing to play with. I have a friend who gave up his job five years ago to invest into shale and who has lost everything. I appreciate also your work to maintain this site, yet it is very important to find the right conclusions as otherwise this will destroy many lifes.

                US production still plays an important role worldwide as it prevents an escalating oil price. As soon as the oil price rises again, increasing US oil production will hold down the oil price again.

                • The decline rates are hyperbolic, this means the wells will decline less and less as time goes by. Therefore it’s hard to simply eyeball the ongoing decline and extrapolate it. Got to take into account the number of wells being completed and starting production, their quality, and the way the older wells decline. I don’t think anybody really has a perfect handle on all these factors.

                • Dennis Coyne says:

                  Hi Heinrich,

                  In 2013, I expected oil demand would increase faster than supply and did not ever expect lto output would grow fast enough to cause an oversupply of oil.

                  I agree that if oil prices remain low (under $75/b in 2016$) that lto will never be profitable.

                  I just don’t agree that output will fall as sharply as you foresee, but I also expect that the near term fall in oil output may increase oil prices and this will reduce the rate of decline. Based on Dean’s work I also believe the EIA is overestimating the fall in US output.

                  As Ron has said in the past, I am doubtful that this blog has much influence on how people invest in the oil industry.

                  If there is anyone investing based on what I say, I would strongly advise that they stop.

                  Instead, find a good charity and give the money away to a worthy cause. 🙂

            • Dennis Coyne says:

              Hi Heinrich,

              I am continuing the blog at Ron’s request, he posts as much as he wishes to.

              The negative comments make it more likely the blog will not continue.

              What is it that you think I am trying to sell?

              I do not give investment advice and have never claimed as much.

              The blog is intended as a place to exchange ideas about the energy industry and its affect on the future.

              • HuntingtonBeach says:

                Dennis, your doing a great job managing PeakOilBarrel.

                Thank you

              • Javier says:

                Dennis,

                Don’t pay any attention to negative comments. You and I have opposite views on about everything, but I respect you and thank you if this place can continue being what it is because of you.

                Don’t forget that the strength of this place is the exchange of oil data and oil knowledge between visitors. You should encourage that rather than try to push your views or models too much.

                Good job and thanks.

                • Hickory says:

                  Don’t let heinrich bother you Dennis.
                  Maybe its chronic constipation, or something like that.
                  Anyway, the job you do is very much appreciated.

                  • dclonghorn says:

                    Dennis, We may not always agree, but I appreciate your continuing this blog. Thanks, again.

                • Dennis Coyne says:

                  Hi Javier,

                  Thanks. I agree I should not push my ideas too much.

                  Generally my viewpoint is the minority viewpoint on the future prospects for the World economy.

                  On oil output as well I think my viewpoint balances the usually pessimistic output of many here.

                  I agree oil and other fossil fuels will peak and decline, but based on the research of others (Webhubbletelescope, Jean Laherrere, Steve Mohr, and David Rutledge), there are resources which can be produced if there is not economic collapse.

                  In my view the World economy is not as sensitive to higher oil prices as many people assume.

                  We could deal with oil prices up to $110/b (in 2015$) without a recession caused by higher oil prices (that is 4.5% of 2015 GDP at 80 Mb/d), if output falls we could afford higher prices ($116/b at 79 Mb/d and 2% growth in GDP for example).

                  In any case good advice, and I appreciate you sharing your views even though we don’t usually agree.

                  If there were no differences of opinion the blog would be much less interesting.

              • Dennis Coyne says:

                Thanks for all the positive comments everyone.

                As far as pushing the Wall Street agenda.

                Here is an early LTO scenario I did in April 2014, my views have not changed much, except at the time I did not expect the crash in oil prices that occurred in the fall of 2014 and have continued for far longer than I predicted in 2015.

                My expectation when prices crashed was that lto output would rapidly decrease because the wells would be unprofitable to drill. I was right that the wells would not be profitable, but was wrong to think that it would affect the number of wells completed overnight (it seems it took about 12 to 18 months for output to be affected much).

                Hard to guess at future output without knowing future prices so my scenarios will always be wrong because the assumptions underlying them will prove incorrect.

                In the scenario below the assumption was that oil prices would remain above $80/b(in 2014$) through 2016 and generally increase because demand would outstrip supply.

                I was wrong then and will no doubt make further mistakes in the future.

              • Jonathan Madden says:

                Dennis,

                Opposing views exchanged without ad hominem aggression are what this blog is all about. It would be a mere fraction of what it is if everyone were in agreement.

                You are doing an excellent job here and I trust you will feel able to continue.

            • You should be grateful Dennis isn’t a reptilian humanoid like the guys at Morgan Stanley. 🐸

              • Paulo says:

                Do not quit!!

                I had stopped reading PO.com because of the ongoing negative attacks that took over the site. There is not much of a PO community left with any forum to exchange ideas and data. One of the great traits of this site is the inherent depth of knowledge, and that a layman (like myself) can ask questions and receive opinions from experts.

                I also appreciate the two threads format.

                Thanks for your time.

        • BW Hill says:

          “Methinks something’s not right!

          The world is now producing about 93 mb/d of petroleum. Which is equivalent to 200 quad BTU per year, or 58.48 trillion KWhrs per year. The entire world’s installed solar capacity is 137,000 KW, which equals 1.2 billion KWhrs per year. If it were possible to install the entire world’s solar capacity each year, it would require 49 years to compensate for the loss of petroleum. Since the majority of the operating costs for solar are upfront cost, with paybacks running from 20 to 30 years, the effort would bankrupt the world.

          Good luck with that.

  10. R Walter says:

    December of 2014, 36,000,000 barrels produced, 8950 Bakken wells.

    May, 2016, 30,000,000, barrels, 10,602 Bakken wells.

    1,652 more wells, 6,000,000 barrels short.

    Peak has come and gone

    https://www.dmr.nd.gov/oilgas/stats/statisticsvw.asp

  11. George Kaplan says:

    Most of the GoM production, and all growth, comes from deep water. BSEE has deep- water production and lease details broken out. Below shows number of lease discoveries and production startup per year. Discoveries are lumped together per field, but production start may be different for different leases in a field. The big jump in production is because of the jump in leases started up in 2014 and 2015. The number of discoveries has dropped off towards zero. Before discovery there needs to be exploration and before that lease purchase. Oil companies started losing interest in those around 2013, so it is unlikely that discoveries will pick up soon.

    129 leases were expired before production started. There are about 35 discovered leases not in production or under development. The group from around 1998 to 2004 are probably small and/or difficult, recent ones may or may not proceed. I think some that are tie backs need to be developed in line with what major platforms are in the area (and have some life left in them).

    Deep water production falls quickly once it comes off plateau unless in-fill drilling picks up to compensate – see the drop in 2011/2012 which was probably due to the stop in drilling following Deep Horizon. The current cuts in expenditures probably mean some maintenance is being postponed, which will eventually catch up on production some time soon and reduce availability on top of any fall in well productivity. People can make up their own minds what production might look like after 2017 / 2018.

    (Lease numbers – not total reserves – are left axis, mmbbls per year are right)

    • SouthLaGeo says:

      Deepwater GOM is seeing a third “peak” because technology is allowing industry to advance out into deeper water and more difficult plays.
      The first peak, in the 2002-2004 time frame, was due to the initial wave of deepwater discoveries in plays that were outboard of salt, bright-spot associated, and just basinward of the shelf. Shell’s Mars-Ursa fields were the biggest producers in this early phase.
      The 2nd wave, in 2009-2010, was a result of the early production from the first subsalt Miocene fields, including fields like Thunderhorse, Atlantis, Tahiti and Shenzi. The drop off after that was partly due to a Macondo effect, and also do to rapid production declines from a number of these fields.
      The current peak is a result of both redevelopments of some earlier fields, and new production from the more challenging and deeper Wilcox fields, including the Perdido complex and Jack – St. Malo.

      Industry has a healthy queue of new projects set to come on line within the next few years, but, as George Kaplan states, discoveries are way down both in quantity and quality.

    • SouthLaGeo says:

      The deepwater GOM is seeing a 3rd “peak” in production as industry moves out into deeper and deeper water and produces from more challenging reservoirs.
      The first “peak”, in the 2002-2004 time frame, was production from the initial round of discoveries just off the shelf edge in the ~1000-3000′ water depth ranges. These fields were out-board of salt, bright spot associated and were highlighted by many of Shell’s early discoveries like Mars, Ursa and Auger.
      The 2nd “peak” occurred in the 2009-2010 time frame and came from the Miocene subsalt fields such as Atlantis, Tahiti, Thunderhorse and Shenzi. The rapid production declines seen in 2011 or so are both a Macondo effect (Macondo occurred in April, 2010), and declines seen from some of these subsalt fields.
      The current peak is coming from both redevelopment projects from existing fields, and the latest new fields that have come on line as technology advances have allowed production from Wilcox reservoirs as seen in fields like Jack-St. Malo and Great White.
      There is a healthy list of projects in the queue to come on line between now and the early 2020s. As George Kaplan mentioned, though, significant discoveries of late have been way down, so the potential for new significant projects coming on line after the early 2020s is less certain.

      • SouthLaGeo says:

        Slight correction – Ursa is in 4000′ water depth.

      • I reviewed some of the Eocene data a few years ago, and I noticed the rock and oil quality were fishy. I don’t think those ultra deep Eocene fields will be as prolific as the Miocene fields. And I can’t see where they can head from here. I’d say they may have better luck drilling in deep water in Mexico, but those prospects bother me in the sense that heavy oil and gas are not exactly a big deal in very deep water.

        • SouthLaGeo says:

          The Eocene/Wilcox reservoirs are certainly not as favorable as the Miocene reservoirs – lower porosities and perms, but, what they lack in perm, they make up for in thickness. Typical Wilcox reservoirs are over 1000′ gross thickness, maybe 40-60% total net to gross, so 400’+ total net oil pay. (Great White is not typical Wilcox – has “Miocene” like rock properties and thicknesses).
          The truth is it is still too early to tell how the Wilcox as a whole will perform. The Cascade/Chinook complex has been disappointing, but Jack-St.Malo has been fairly successful. Exxon’s Julia project has just started producing, and Shell’s Stones project will come on line later this year.
          There has also been a distinction made between the inner and outer Wilcox trends. All of the production has come from outer trend fields, but industry feels the inner trend actually has slightly more favorable rock properties.

          • The problem I saw was the potential to deposit asphaltines in some of those reservoirs. I also noticed the reservoir deteriorates with depth (the coarse silica sands stand up well, but the finer grain rocks lose permeability). I warned the team I was advising to look hard for variable bubble points and asphaltine contents, and to model everything pre and post structure formation, but they didn’t ask me to come back so I don’t know what they did. The oil CAN deposit asphaltines as pressure drops towards the bubble point. This is a very delicate issue which requires a lot of lab work and a very smart development design. I’m afraid some companies aren’t up to the challenge.

          • By the way, why don’t you write a post here outlining the difference between the rocks and oil at Mars and say Great White? I assume that’s public knowledge. Also explain where the limits are to exploration, why the successes are drying up. Lots of folk seem to think we can keep at this forever. They need to come down from the clouds.

            • SouthLaGeo says:

              My apologies for this reply being way overdue. I will respond to Fernando’s questions above in a future post.

              • Reno Hightower says:

                Good. Need more technical people posting. Look forward to the post.

  12. Oldfarmermac says:

    This one is for Doug. ;-).

    http://phys.org/news/2016-07-oil-dinosaurs.html

    The short version is that the huge asteroid that created the whathcamacallit crater in the Gulf of Mexico area may not have lead directly to the associated extinction event, because stuff thrown into the atmosphere by the impact would not have stayed aloft long enough to bring on such a global extinction.

    BUT- The impact area is very rich in OIL, and the impact may have have resulted in enough oil burning to darken the skies long enough to wipe out most of the large life forms. There is some evidence this is the case, since the associated soot layers in the relevant strata match up better with oil soot than with soot from burnt vegetation.

    • Doug Leighton says:

      LOL Well, maybe you’re stretching it a bit but I suppose we’ll let you under the wire and say that’s an oil related observation Mac. Let’s see, oil —-> soot. Sure, we’ll let her go. You do know, I hope, if you’d mentioned soot related climate change there your testicals would have been lopped off already? 🙂

    • Ok…so we take rocks holding say 10-15 % total organic carbon and vaporize them by exposing them to the energy from several thousand (or millions) atomic bombs…I bet not all the rocks fly off in large chunks, a large amount must be vaporized. The fire ball must have set a large area on fire…my guess is that these guys don’t know much about what they are talking about.

  13. Dennis Coyne says:

    Hi all,

    My model for the Bakken (using data provided by Enno Peters) vs the data to May 2016 and a projection for future output based on the 2015 average well profile and the number of new wells per month increasing by 1 each month from 46 in May 2016 to 90 wells in Jan 2020. If oil prices remain low due to impending economic collapse, then output will be lower than this scenario.

  14. Duncan Idaho says:

    Matt Ridley accused of lobbying UK government on behalf of coal industry
    (Ridley has actually written some interesting science writing)

    https://www.theguardian.com/environment/2016/jul/15/matt-ridley-accused-of-lobbying-uk-government-on-behalf-of-coal-industry?utm_term=0_876aab4fd7-ad8ef1d2bf-303447041

  15. Oldfarmermac says:

    We get plenty of comments from members who equate money with actual wealth.
    But money is only a token, a tool used to facilitate doing business, and a tool used to conveniently keep track of who owns what, and who has a CLAIM on what, and on who as well.

    Money simply is NOT wealth as such. If anybody doubts this, consider a couple of people stranded on a dry desert island, one with a jug of water, and the other with a pocket full of hundred dollar bills. If the guy with the water sells it, then he is an utter and absolute fool,although he might or might not be morally obligated to share the water, depending on who you ask.

    Now there is little to no doubt in my mind that a failure of the world’s banking system can and very well might lead to the end of life as we know it, and for what it is worth, my personal opinion is that actual ecological and economic collapse will probably be PRECEDED by monetary collapse, and especially the collapse of debt. This money and debt collapse probably imo be final and clinching cause of general economic and ecological collapse.

    But so far as I can see, there is no reason to believe that the collapse of the monetary /banking/ debt system NECESSARILY means the end of the world.

    It does mean that those who have the claims to such actual wealth as exists will lose out on their claims. The folks with a million in a checking account will lose it, and old folks dependent on social security checks, etc, will lose their claims as well.

    But with the exception of such actual wealth as is destroyed by fighting, etc, the real wealth of the world, wealth in the form of skilled manpower, farmland, oil fields, clean water, etc, will still exist.

    In times past, local cultures and societies have been wiped out by war, or other forms of conquest, and the people who had claims to the wealth possessed by these societies lost their claims. The new dominant society established claims on whatever ACTUAL wealth existed.

    Debts can be repaid according to the terms agreed upon, or inflated out of existence, or reneged on outright , or eliminated by conquest.

    My point is that the collapse of life as we know it is not NECESSARILY a foregone conclusion simply because we have more debts than we can ever hope to pay. It’s the lack of REAL resources that will mean the end of life as we know it, if the end comes to pass.

  16. Caelan MacIntyre says:

    Stuck on a one track to nowhere

    All alternatives, PVs, wind turbines, biomass, shale oil, tar sands, new nuclear, etc., are under the sway of the ‘Inverse Red Queen Effect’.
    If they grow at above ~ 7%/yr, the energy needed for their build up drains net energy out of the industrial world, just when much more of it is required,
    While they actually need to grow at ~ 35%/yr to address the Perfect Storm over the next 10 years- at that rate, the net energy drain would kill the industrial world
    …the critical parameter to consider is not that absolute amount of oil mined (as even ‘peakoilers’ do), such as Million barrels produced per year, but net energy from oil per head of global population, since when this gets too close to nil we must expect complete social breakdown, globally…

    In 2012 the OI [Oil Industry] began to use more energy per barrel in its own processes (from oil exploration to transport fuel deliveries at the petrol stations) than what it delivers net to the GIW [Global Industrial World]. We are now down below 4GJ/head and dropping fast.

    This is what is now actually driving the oil prices: since 2014, through millions of trade transactions… the reality is progressively filtering that the GIW can only afford oil prices in proportion to the amount of GDP growth that can be generated by a rapidly shrinking net energy delivered per barrel, which is no longer much. Soon it will be nil. So oil prices are actually on a downtrend towards nil.

    To cope, the OI has been cannibalising itself since 2012. This trend is accelerating but cannot continue for very long. Even mainstream analysts have begun to recognise that the OI is no longer replenishing its reserves.”

  17. Watcher says:

    If you’re post Peak, why should the price go down?

    How about scarcity is deflationary.

    • Dennis Coyne says:

      Hi Watcher,

      If all resources were scarce that would be true. The price of an individual good is determined by its scarcity relative to demand for that good.

      Now if everything depends on oil and there is no substitute and no possibility of improved energy efficiency then scarcity of oil would lead to a lack of aggregate demand and deflation.

      The two key assumptions that there is no substitute for the energy provided by oil and that the efficiency with which oil can be used (oil intensity of real GDP in barrels consumed per unit of real GDP produced) are unproven hypotheses.

      • GoneFishing says:

        You make a lot of sense Dennis. Ignoring present technical achievement, I can imagine a world where oil became scarce and transport switched to coal and natural gas power. Then oil would have little use in transport except as a source of lubricants and some polymeric materials. Price of oil for transport would be low since demand was limited. Any price rise would put synthetic liquids and bio-liquid fuels in a good position.

        I doubt that will happen, because we will switch to electrically powered systems, mostly driven by renewables. But it still illustrates the lack of hold of oil on civilization.

        • Watcher says:

          Oil scarcity is deflationary because it is the uber commodity. Its scarcity depresses economic activity. Slowing economies are deflationary.

          And the price falls.

          • Dennis Coyne says:

            Hi Watcher,

            If oil was the uber commodity you suggest, you would be correct.

            The hypothesis is interesting, but unproven.

            On might logically argue that energy is the uber commodity.

            There are many forms of energy. In fact Petro claims that everything is energy (and technically he is correct), it is relatively 🙂 difficult to convert all forms of matter to energy and there wouldn’t be much left of the planet were this accomplished. For the present the conversion of matter to energy through nuclear reactions remains rather limited, except about 93 million miles away from Earth.

            • Petro says:

              Your hubris that indeed you not only can fully comprehend what I am writing about, but condense it to about half a sentence, is truly amusing to me…..
              …and I am not elaborating on how entertaining it is that you think you can condense General Relativity and Quantum Theory in about 2 sentences….., for elaborating on that is a long, long story.

              Allow me to say however, that you are frighteningly ill-informed on and grossly miss-representing what I write about…. among a lot of other things.

              I strongly and amicably suggest that you stick with Bakken and 55 Forks, rather than entangling yourself with Strings and Quanta……… I suspect is a bit much for you.

              …and what Watcher writes in his comment:
              1.) is NOT a hypothesis
              2.) Yes, it is proven

              But, I suspect that is a bit much for you as well!

              Be well,

              Petro

              P.S.: in my comments I generally follow the word “energy” with
              “(read: FF, Oil)” and for PRACTICAL purposes of our discussions here, use those words as equivalents of each other.

              • Dennis Coyne says:

                Hi Petro,

                If you want to educate us on General Relativity, String Theory, and Quantum mechanics, feel free.

                I know almost nothing about string theory or General Relativity.

                It was you who was “disappointed” that I didn’t realize (but I do) the equivalence of matter and energy which is pretty basic physics, known to most high school students.

                The relevance of your point I missed …

                Can you point us to the relevance of string theory and general relativity to petroleum production?

                • Petro says:

                  “If you want to educate us on…”
                  “Can you point us to the relevance of…”

                  My reply was addressed to you, yet you choose to answer in plural…. and that is another thing that is amusing.

                  “The relevance of your point I missed …”

                  …yet, you continue to write with assertiveness regarding what I claim, or think.
                  You intentionally evaded answering the substance of my reply to you, for you cannot!

                  I am not here to educate you on anything -especially Strings.
                  Doing so would be a futile and a long, long, …..long endeavor.
                  I simply asked you to curb your arrogance and not think that you can condense my postings here into half a sentence.

                  As far as matter and energy being basic elementary physics which you obviously comprehend easily….. well, I rest my case with you!

                  Be well,

                  Petro

                  • Dennis Coyne says:

                    Hi Petro,

                    My apologies, I will in the future try not to refer to any thing you say in any way so as not to offend you.

        • Dennis Coyne says:

          Hi Gonefishing,

          I agree, coal and natural gas can substitute for oil to some degree, but most oil is currently used for transportation, particularly land and air transportation (as far as the volume of oil used in each these are the largest shares). Most of this will eventually be replaced by driving more efficient vehicles (hybrids and plug-in hybrids, and EVs), a build out of public transportation in densely populated areas, and better urban and suburban city design where neighborhoods are designed for easier pedestrian and bicycle access to local markets.

          As wind and solar costs decrease they will gradually replace coal and natural gas for electricity generation. Fossil fuels won’t crash in amount produced unless demand wanes due to economic recession, substitution of alternatives, and better efficiency.

          Fossil fuel scenario below for medium scenarios with fossil fuel decline rate on right axis in annual %. Left axis scale is energy in millions of tonnes of oil equivalent per year (Mtoe/a).

      • LTG says:

        Hi Dennis,

        You wrote: “If all resources were scarce that would be true…” You seem to imply that resources are not scarce because of “substitution”.

        All resources are scarce. The study of economics is based on “the allocation of scarce resources.” And even if we could remedy that with “substitution”, we still live in a finite world of finite “subsistution” resources. So “substitution” only kicks the can down the road as we add 80 million new consumers to the world every 12 months.

        Then you conclude with: “The two key assumptions that there is no substitute for the energy provided by oil and that the efficiency with which oil can be used… [oil consumed/GDP]… are unproven hypotheses.”

        It is a proven hypothesis, in terms of energy density. And energy efficiency is clearly subject to diminishing returns.

        “Crude oil contains more than twice as much energy as coal and two-and-a-half times more than wood.” – Art Berman, as he links to basic BTU conversion charts.

        If you’re thinking of nuclear, uranium is still a finite resource. Even using spent commercial and military fuel is only kicking the can down the road as we add 80 million new consumers to the world every 12 months.

        Did I mention we’re adding 80 million new consumers to the world every 12 months and in the process creating the sixth mass extinction? (And your standard response to this – “yes, but the rate is decreasing!” – shows lack of understanding and is of little value when human civ is already deep into carrying capacity overshoot).

        Always looking on the bright side with wishful thinking may be useful at times. But not when it really counts. See the “Stockdale paradox”.

        When asked who didn’t make it, Stockdale replied, “Oh that’s easy, the optimists.”

        He said, “This is a very important lesson. You must never confuse that you will prevail in the end, with the discipline to confront the most brutal facts of your current reality, whatever they might be.”

        • Dennis Coyne says:

          Hi LTG,

          Did I say “energy density”?

          No I did not. Of course all resources are scarce, the implication was one of relative scarcity. If there is not enough oil and it becomes very expensive other forms of energy will be used. So scarcity is a relative concept. Substitution does not eliminate scarcity and I did not intend to imply that was the case. My point was simply that the relative scarcity of oil as an energy source would result in an increased price which would lead to substitution of other forms of energy and increased efficiency in its use.

          Yes there are limits to energy efficiency, based on thermodynamics. I do not dispute that there are limits to growth, but where those limits are is not crystal clear. There are many different estimates of overshoot, so how “deep” the overshoot actually is not well measured.

          I expect population will peak in 2070 and begin to decline as total fertility ratios continue to fall. Fossil fuels will become more expensive and will gradually be replaced by wind, solar, hydro, geothermal, and nuclear power while energy is used more efficiently.

          Consider that in 2015 about 11,900 million tonnes of oil equivalent(Mtoe) of coal, oil, natural gas, and nuclear power were consumed. About 62% of this energy was wasted as thermal losses, so only 4500 Mtoe (at most) were used to perform useful work.

          Replacing the fossil fuels with wind and solar, eliminates the average 62% thermal loss so that energy requirements fall by almost a factor of 3.

          I agree there are many problems, I look for solutions rather than harping on the negative, I will leave that to others. 🙂

          • LTG says:

            Hi Dennis,

            You wrote: “…that there is no substitute for the energy provided by oil… [is an] unproven hypothesis.”

            Energy density is implicit in that statement. You didn’t have to “say” it. If it’s not implicit, then the energy provided by oil is the same as coal or wood or wind or solar. Which it clearly is not. So it is, indeed, a proven hypothesis.

            There are many other problems with your analysis, but I’ll try to be brief:

            Wind and solar are created using oil and coal. These fossil fuels are finite. Without them there is no wind or solar. Or, in your scenario, are you able to build and maintain wind and solar with the energy produced from wind and solar?

            “Thermal losses” are a required cost in the energy transformation process. Energy efficiency can only marginally (diminishing returns) impact that process. Or do you know of a new technology that will change thermodynamic law? Again, wind and solar are built with fossil fuel- which requires “thermal losses”, so your statement that energy requirements would “fall by almost a factor of 3” is, to be polite, highly unlikely, if total embedded energy is considered.

            If humans are causing the sixth mass extinction with a population of 7 billion, what will the impact be with 10 billion? Humans can only survive in a functioning environment. With the extinction event ramping up, what will be left functioning in 2070? You seem to be unwilling or unable to use systems thinking in your attempt to imagine future scenarios.

            Your “solutions” look like a concealed, or unconscious, effort to extend and maintain BAU. You say that you don’t dispute limits to growth, but then quickly dismiss them because they are “not well measured” or “not crystal clear”. That has the whiff of an “agenda”. I have no doubt you use the precautionary principle in your daily living (eg. home and auto insurance). But it seems to be entirely absent in your solutions.

            The greatest problem with your analysis, however, is your often repeated assumption that oil prices will be “very expensive” in the future, triggering your wind and solar build-out. But what if they already are “very expensive”, right now, today, with consumers essentially broke? A recent survey reveals 63% of Americans are near “financial disaster”, unable to afford an unexpected $500 car repair bill or a $1,000 emergency room expense (Bankrate.com survey). You strenuously ignore the strong case that can be made that oil prices will not increase significantly long term, which would cause your entire analysis to be wrong. If that happens, would you then be able “to confront the most brutal facts of your current reality”?

            Your closing comment about “harping on the negative” unfortunately undermines the credibility that you “look for solutions”. Recall the Hardy quote on the late TOD masthead:

            “If a way to the better there be, it exacts a full look at the worst.”

            Cheers!

            • Hickory says:

              LTG- I agree with the general gist of your outlook, but I do appreciate the different stance that Dennis offers on a consistent basis.
              A lot of us tend to be “sky is falling’ types, and his different view is certainly one possible version of reality.
              I’m here to listen to other views, rather than just convert people to mine. Dennis sets a very useful tone for that purpose.
              He and I see the danger of over- indebtedness very differently.
              He does a good job pointing out that population is on a trend to fall by the late 21st century. Many of us worry about the jolts between now and then.
              There are many ways to see this all unfolding.
              I’m glad to hear much of it, especially the less partisan, theological and head in the sand parts.

              Also, when confronted with these problems some people focus on dissecting the risks, some on solutions, some on the hidden corners, and some just spend time denying, or drinking beer. All have there role I suppose.

            • Dennis Coyne says:

              Hi LTG,

              Ok I will grant you that oil has very high energy density, the assumption that the use of petroleum liquids as transportation fuel cannot be substituted by other types of energy is an unproven hypothesis. In addition, I measure energy in joules, I don’t include the form of the energy in the measurement.

              Also note that the specific energy of diesel fuel is higher than anthracite, but its energy density is lower. Methane has a higher specific energy than liquid petroleum such as diesel fuel.

              Rail and light rail can be used, powered by electricity, also EVs, plug-in hybrids, buses on overhead electric wires can all be used to substitute for liquid fuel use.
              Do you dispute those basic facts?

              Of course energy efficiency gains are limited, I agree that a combustion process is limited in how efficient it can be by thermodynamic laws.

              However fuel can be used considerably more efficiently in transportation by using lighter materials, more aerodynamic designs and hybrid technology. Yes there will eventually be a point where no further improvements can be made and I agree there will be diminishing returns.

              There is no BAU, the only thing that remains constant is that nothing remains the same.

              At first most wind solar and EVs will be produced using fossil fuels, but as the share of wind, solar, hydro, geothermal, and nuclear power increases less and less of the embodied energy in manufactured goods will be provided by fossil fuels. Eventually most new wind, solar, hydro, geothermal, and nuclear will be built with very little fossil fuel input (maybe 75 years in the future.)

              The thermal losses will gradually decrease as fewer fossil fuels are used, did you think I was claiming that the transition would happen overnight? I am talking about a 75 year transition, no magic wands.

              I don’t dismiss LTG (limits to growth), I just do not think the limit has yet been reached, though we may be close.

              The world as it exists with 7.5 billion people is a reality, my “solutions” attempt to deal with what we have. World total fertility has decreased from 5 births per woman in 1965 to about 2.5 births per woman in 2005. If we get to 1.75 births per woman by 2045 for the World average total fertility, population will peak by 2070 at about 9.1 billion and fall to 8.8 billion by 2100. Lower population would be better and a focus on education and access to healthcare for women might achieve this.

              The economy would be doing better with more equal distribution of income, despite the claim by some on the right that everything would be better with as little government interference as possible.
              The return to laissez faire that began in earnest in 1980, has been a disaster for the middle class. A return to the progressive tax rates of 1964 in the US (with brackets adjusted for inflation), and an elimination of all tax loopholes that favor the wealthy would correct much of the economic malaise in the US. Government investment in basic infrastructure (light rail, water systems, and HVDC transmission) would also help, as would free university education.

              I ignore the case that oil prices will remain low long term because it depends on the assumption that the economy will crash.

              The economy will no doubt suffer a severe recession in the future due to a lack of affordable energy. I do not pretend to be able to predict when such a recession will occur though I have guessed maybe 2030, it could be anywhere from 2016 to 2045, anyone who claims to know in advance is full of it.

              Energy is very affordable at present, the economic problems are structural and can be solved with appropriate economic policy.

              Nobody has laid out a clear argument for why the economic crash will happen, so the case is far from strong in my view.

              Everyone expresses concern about debt, in the US it rose a lot from 2001 to 2010 and has been stable since. For the World we only have data back to 2001, it was relatively stable from 2001 to 2008, rose quickly to 2010 and has been stable since then.

              High oil prices from 2010 to June 2014 were not a problem for the World economy which grew by 2.6% per year (real GDP) from 2010 to 2014.

              US Debt to GDP from BIS from 1952 to 2015 in chart below.

              • LTG says:

                Hi Dennis,

                Was off grid for a few days. Have returned now and am pleased to read your interesting reply. You are indeed a cheery optimist!

                I’ll let other posters decide if you’re even in the ballpark with these statements:

                “Energy is very affordable at present…”
                “Nobody has laid out a clear argument for why the economic crash will happen…”
                “I ignore the case that oil prices will remain low long term because it assumes the economy will crash.”

                But I will comment on this one:

                “There is no BAU, the only thing that remains constant is that nothing remains the same.”

                Huh? So strangely non sequitur, so glib, and given the trends and data streaming in from around the world, I’m sorry to have to say, so denialist.

                BAU is the general understanding that there are no limits and that humans can use technology to enjoy their accustomed lifestyle for many generations to come.

                But wait, you’ve already said there ARE limits… but then quickly dismissed them with “they’re not well measured and they’re not crystal clear, and besides, we’re not there yet, but maybe we’re close and who really knows…”.

                And now, as if you haven’t distanced yourself as far away as possible to anything that can even remotely be called “limits”, you finally just shrug your shoulders, wave your hand, and banish them away entirely by saying, “don’t worry, be happy, life is change”.

                ???

                Dennis, could you be any more transparent? I think you pay lip service to limits in order to avoid the ridicule that would come with denying them. It certainly seems like you want to stay in the discussion, but based on comments like this it’s clear you’re not seriously engaged.

                “Of course I believe in limits! (wink, wink, big smile, nudge, nudge)”.

                Frankly, it would be more respectable if you just denied there were any limits up front and then honestly admitted that your solutions are based on more growth, more technology, and more complexity (See Tainter on this).

                Here’s a challenge: In a sentence or two, describe a couple of facts that, if true, would persuade you to conclude human ind civ had reached limits to growth? In other words, what does it look like? And how would those facts change your solutions?

                Here’s another challenge: Does history show a pattern in the rise and fall of civilizations? (See Turchin for a recent analysis). If so, why do you faithfully believe we are the exception?

                And I can’t resist your “decreasing fertility, happy ending” screenplay. I’ll use an equally banal Titanic analogy:

                GOOD NEWS! Taking on water at a RATE of 400 tons a minute WILL THANKFULLY PEAK at 38,000 tons. And at that point (despite losing critical rivets and vital structures which cause the ship to rapidly fall apart) THE RATE EVENTUALLY FALLS TO ZERO!

                The bad news is that the remaining passengers on board will no longer live in a “functioning environment”.

                Systems thinking my friend, systems thinking.

                Cheers!

  18. Oldfarmermac says:

    While I don’t believe an across the board economic and ecological collapse , planet wide, is NECESSARILY baked in already, as I once did, the odds in my opinion are high that such a collapse will occur over most of the planet , piecemeal, sometime within this century.

    This in my opinion is because most of the world is either too poor, or will react too slowly to resource depletion, to manage a successful transition to a low energy, high efficiency, mostly renewable energy based way of life.

    Depletion is going to win most of the fights on a country by country basis, almost for dead sure, imo, whereas we have no more than a fair to good chance of turning the resource depletion corner without crashing our own race car, the Yankee Special. A half a dozen or so other rich countries might also make it around the resource corner.

    While it might – or might not- be possible for the alternative energy industries to scale up fast enough to replace fossil fuels, I just don’t see it happening, because it is not in the nature of naked apes to display the necessary foresight and make the necessary long term sacrifices to giterdone across the board, world wide.

    The troubles are approaching from a dozen, a hundred directions , all at once, and some of these troubles are going to get over the walls, past the defenses, and into the heart of our life as we know it civilization.

    A good many of us, even in places such as the Land ‘o the Free, are apt to meet hard ends.

    http://www.scientificamerican.com/article/gonorrhea-may-soon-be-resistant-to-all-antibiotics/

    • GoneFishing says:

      Old Farmer,
      Have you read the book “Miraculous Abundance” by Perrine and Charles Herve-Gruyer?
      I am part way through it and it is quite interesting so far. It is a book about farming from both an older and newer perspective. I would appreciate any thoughts you have on this.

      • Oldfarmermac says:

        I have not, but if you recommend it strongly I will add it to my research library. Will you tell us a little bit about it in a nutshell when you finish?

        I posted the above link about what old country boys call “the clap” partly because it has a lot to do with the unjustifiable use of antibiotics in livestock feed, which results in all the nasty little bacteria in the whole damned ecosystem being exposed to them , constantly, at a low level, setting the stage for them to evolve resistance.

        And once the gene combinations conferring such resistance are determined in the genetic lottery, which tosses losers and saves winners, well………….

        One day a bug of one sort or another is going to REALLY upset the apple cart of industrial civilization. Something as bad or worse than the Black Death is entirely possible. Air travel might spread such an emergent disease all over, to such an extent it could not be successfully quarantined. Or a disease, or other problem, that could ordinarily be successfully contained, could get entirely out of hand because we might be suffering from an economic crisis brought on by bad debts, etc.

        • GoneFishing says:

          I think this is happening already with antibiotic resistant strains appearing in hospitals and elsewhere. As the little critters say “resistance is not futile”.
          Economics will certainly play a role in future outbreaks, even now we do not have a lot of resilience in the medical community to handle large fast outbreaks. Hospitals will get overwhelmed quickly.

          Luckily the combination of resistance, rate of progression and mode of transmission needed to successfully kill off a high percentage of humans is difficult to produce. We certainly have built civilization to transmit disease quickly and far ranging. On the other hand, we detect new disease fairly quickly if it is deadly or debilitating.

          Here is a paper discussing the spread of a disease of cattle and sheep, Schmallenberg virus . Spread into Scotland is examined and would be temperature related. Vector is a biting midge.

          http://www.nature.com/articles/srep01178

    • Javier says:

      … to manage a successful transition to a low energy, high efficiency, mostly renewable energy based way of life.

      While certainly a low energy life has been demonstrated as possible, what has not been demonstrated is that modern civilization with scientific research and advanced healthcare can be sustained on that.

      I went sometime ago to an ecovillage, and hippy commune or gypsy camp are the type of things that come to mind.

      Somehow we will manage, as we are a resourceful species, but we are going to lose a lot of feathers in the transition.

      • Oldfarmermac says:

        Yes, indeed. LOTS of feathers.

        But if we still have just forty percent of the oil and gas thirty years down the road that we have today, on a daily basis, we can in my opinion manage to keep the wheels from falling of the economy of Yankee Land.

        Some things will have to go, such as extensive air travel, long haul trucking, BelchFire Special automobiles, the current building code rule book, the current motor vehicle rule book, the current common carrier rule book, most of the current zoning rule books, and a hell of a lot of jobs dependent on people running hither and yon in automobiles like ants from a destroyed colony.

        But if we are lucky in that the oil and gas supply declines GRADUALLY, so that the guys and girls on the street are FORCED to recognize that depletion is happening, over a decade or so, THEN we will have an excellent shot at implementing policies to adjust to a lower energy life style.

        There will be an economic depression, and it will be a bad one, but we will do the same thing we have done in times past, and put a lot of people to work on public works projects. If we are again lucky in that we have leadership that is at least not utterly INCOMPETENT, most of the projects will actually have a decent positive impact on solving the problem.

        Let us for example consider the possibility of converting existing large houses close in to town to duplexes or triplexes. The neighbors who don’t need the extra money will squeal like hell, but if they get a big break on their income and property taxes, paid for via taxing the new housing units and spending the money on services such as home health aides…………….

        There is no reason whatsover we can’t cut the use of gasoline and diesel fuel by the post office in half by delivering mail every OTHER day.

        There is no REAL reason that we can’t allow a person with a clean driving record to purchase and post a bond to cover accidents, etc, and drive a van to work with four or five coworkers paying him a couple of bucks or so for a ride. Likewise, there is no reason an ambitious kid should be prevented from buying and delivering groceries using a refrigerated van. This could cut fuel use for grocery shopping be eighty percent or more.

        I could go on all day.

        • Hickory says:

          All good points OFM, assuming the supply decline is gradual.
          With time, I’m sure humanity could get by using half as much fossil energy,
          and gradually less as we downsize population.
          We’d have to behave ourselves, and be smart- that is also a big assumption.

          There is a lot of wisdom in the quote-
          “Live simply, so that others may simply live”

  19. Dennis wrote: We could do it by the day and get higher volatility. Most wells produce oil for many years so the average oil price received for the barrels produced is very relevant to the economics of the well.

    Well the price of oil is one place where we can get daily data. An the daily chart does not look half bad. And such a chart gives us a far better look at prices than any 3 year average.

    Here you can see that the price started to drop two years ago and has been very low for a year and a half. This has had a dramatic effect on rig count and future oil production.

    Everyone looks at the oil price….daily. I doubt that anyone checks the three year average.

     photo Brent Daily Oil Prce_zpsa1a1ibdy.jpg

    • Dennis Coyne says:

      Hi Ron,

      Yes people look at the prices daily, but just like stocks the long term average is more important.

      Oil producers care about the long term price of oil because when you sink millions of dollars in a well you don’t hang your hat on the daily price of oil.

      The point of the 3 year average is to show the long term trend in oil prices, I don’t think daily fluctuations tell us much, ymmv.

      • Dennis, no one is talking about daily fluctuations. Looking at the above chart I posted, you get a perfect view of what has happened to oil prices in the last five years. Of course the chart does not tell you what the price of oil will be in the future. All price charts, or production charts for that matter, are about history. And the history of the last few days, weeks or months are far more important than any three year average.

        Oil producers care about the long term price of oil because when you sink millions of dollars in a well you don’t hang your hat on the daily price of oil.

        Oh good grief! You sure as hell don’t hang your hat on the three year average oil price. Prices will move, up or down, from where they are today, not from where the three year average price turns out to be.

        But drillers don’t likely look at any past average price to make decisions, they look at what they expect the future price to be. They look at storage, the market and a lot of other things including the bond market. Do you actually believe that any of them calls up a three year average of oil prices?

        • Dennis Coyne says:

          Hi Ron,

          Expectations of future prices are based in part on the past prices. You may think daily prices are more important, I think long term averages are more important.

          Do you think they base their decisions on the daily price of oil?

          Of course many things are used to forecast future prices. Again the 3 year average was shown to indicate the past trend in prices, based on that trend it seems that $80/b would be a reasonable future price, that was the only point.

          Does $80/b in 2016$ at some point in the future seem outlandish to you?

          Or are you with Petro that the Brent oil price (let’s say the 12 month average Brent price) will remain under$75/b (in 2016 US $) until hell freezes over.

          • Do you think they base their decisions on the daily price of oil?

            Dennis, they make their decisions, primarily, on the expected price of oil in the future. They look at many things to try to make an educated guess on the future price of oil. They look at storage, they look at expected production form OPEC and from all non-OPEC nations. They look at expected demand, that is whether a recession is in progress or if one expected soon.

            I would bet my bottom dollar that not one of them yells: “Hey, someone bring me a chart of the three year average of oil prices going back to 1996”.

            And they know for damn sure that all prices will move, up or down, from where they are today. They know that future prices will not based on any average of past prices.

            Really Dennis, how do you manage to come up with such shit?

            • Dennis Coyne says:

              Hi Ron,

              As I said, the expectation of future prices is based on many things, one of these is expected demand, another is expected supply, do you think that all of these are completely unrelated to past prices.

              How does one judge the balance of supply and demand?

            • Dennis Coyne says:

              Hi Ron,

              Does a future oil price (12 month average oil price) of $80/b (in 2016$ seem unreasonable, say sometime before 2020?

              It is a simple question, do you expect, like Petro, a near term economic collapse that precludes oil prices from ever breaching $75/b (for a 12 month average oil price in 2016$) in the future.

              This seems to be the argument that many people are making.

              You have remained silent, I believe in the past you have said you thought such a scenario (low oil prices forever) unlikely in the near term (next 5 years).

              Have you changed your mind or am I remembering your position incorrectly?

              • Dennis, I have no idea where oil prices are going. But the daily price of oil definitely has an effect on oil production. Do you remember last year when Brent price dropped to $50 a barrel in January? Rigs were being stacked by the dozen. But suddenly the price started to rise again. And the stacking of rigs stopped. Then in May Brent reached $66 a barrel and rigs were being added everywhere.

                But by July the price was dropping like a rock again and rigs were being stacked again. Now the price has stopped dropping and a slight increase has happened. A the rig count has stopped falling and a slight increase is happening.

                And you tell me that the current price don’t matter. You tell me that they look instead at the long term average? Oh give me a fucking break!

                I don’t know what the economy is going to do. I haven’t a clue. I suspect that the economy is just going to get worse. I expect that oil production will continue to fall and oil prices will rise in response. But that is nothing more than just a wild ass guess.

                I do not expect however that world oil production will rise above the 2015 peak. The very high prices of the last few years brought on increased production only in the USA and Canada. And now with the rest of the world declining there will not be enough US and Canadian production to make up the difference, plus push production to new highs.

                • Dennis Coyne says:

                  Hi Ron,

                  I am not arguing that daily prices don’t matter, I just think the longer term trends are what drive investment decisions, maybe not 3 years, but I think oil companies consider more than a single day’s price in making their decisions, it is the accumulation of many days (probably a month at minimum) prices that will affect decisions to drill or not to drill along with many other metrics (which you have elucidated very nicely).

                  Don’t you think at least monthly data is more useful than daily data? I mean at some point you really don’t get much more information by going to smaller and smaller time intervals.

                  Weekly data is pretty noisy, daily is worse. Monthly to yearly data is far more useful in my view.

                  • Dennis, I never argued that decisions were being made based on a single days oil price. Of course drillers look at the trend. Is it going up or is it going down? I would not even guess as to how many days they look at. But they look at the trend, not averages.

                    And of course a lot of them would have thresholds. That is they might say something to the effect: “When prices hit $60 a barrel I’m jumping back in.” Or whatever price you think might entice them to get back in.

                  • Dennis Coyne says:

                    hi Ron,

                    I see the trend better by looking at moving averages and use longer term averages to simply smooth the trendline. Again the point was to show that $80/b may be a reasonable future oil price (2016$).

                    Here’s a hypothetical for you. Assume the economy does not collapse in the next 3 years, but instead grows at an average rate of 2% per year from 2016 to 2018.

                    Given your expectation of future C+C output, for example assume the prediction by Euan Mearns for World liquid fuel is correct, would you expect with those two assumptions that the 12 month trailing average oil price in 2018 will be less than $75/b?

            • Some seem to look at the average price over the previous 3 to 10 years, set it in constant dollars, and use it applying inflation to both price as well as CAPEX and OPEX. I used to have access to around 35 company and bank oil price forecasts, and played around with their numbers to backwards engineer what they were doing.

              Others seemed to extrapolate the recent past as long as it was climbing. Some companies were loaded with PhDs goofing around as if they were teenagers.

    • Dennis Coyne says:

      Hi Ron,

      Over a longer period of time the daily oil price looks more volatile on a chart. The yearly average is much more useful imo, for longer term trends (which would indicate better what big oil companies are doing because there investments take much more time from start to finish) the 3 year average is better still. Note that daily oil price is only for non-holiday weekdays so there are usually about 255 days per year that spot oil prices are reported so 255 days= one year of daily spot prices (Ron probably knows this, but others may not).

      • texas tea says:

        I would look at the above chart and say to my self can I make money at $40. If so I would drill if I could not I would not. My experience has been when doing business with large companies they use a variety of economic projections based on various prices and some internal risk/reward ratios. 👍

  20. Chart Monkey says:

    JODI-Oil World Database – Canada Crude Oil Closing Stocks
    Not much of a draw considering the wildfires in May. These figures are usually revised in later months but I was thinking that the draw would be higher than 2 million barrels. What’s going on?
    (thousand barrels)
    Dec 65,291
    Jan 67,082
    Feb 65,040
    Mar 65,733
    Apr 63,419
    May 61,075
    http://www.jodidb.org/

    • George Kaplan says:

      The IEA month to month production chart from last month’s OMR looked to have Canada at a peak in August 2017. I wonder what price oil needs to be for tar sands activity to pick up again, plus what commitment on pipelines they’d need and expectations for future natural gas prices. The remaining deposits must be getting less economic as they get deeper and/or smaller and availability of funding for such long term projects must have taken a near term knock. Suncor seems to be the only player still really gung ho at the moment.

      • Deeper isn’t the real hassle. Rock quality is what seems to be getting worse. There’s also a lot of oil that’s a bit too shallow to steam but too deep to mine. Any ideas on how to get at it?

    • clueless says:

      I am probably mistaken, but I thought that they shut down some pipelines also because of the fire. If that is true, then some of the US decline should be due to lower imports from Canada.

  21. Chart Monkey says:

    This EIA article shows that oil companies have never been cash flow positive, even when oil was over $100. Borrowing money to spend on capex is a strategy that is said to give faster growth. But now in hindsight it looks like they have been burning through investors money for years, and they still are…

    EIA – U.S. oil companies closer to balancing capital investment with operating cash flow
    The companies included in this analysis are 39 public U.S. crude oil producers operating only onshore fields. Their collective production averaged 2.1 million barrels per day, or approximately 30% of U.S. Lower 48 production in first-quarter 2016.
    http://www.eia.gov/todayinenergy/detail.cfm?id=27112&src=email

    • Dunno…I used to work for a company that stays cash flow positive. We had subsidiaries that made in excess of $1 billion a year. And debt has always been kept to below 30 % of investor equity.

      • Synapsid says:

        I know of two, and I’m not connected with O%G. Both are privately-owned, so don’t show up in the EIA publication above.

    • shallow sand says:

      Looking at analyst estimates for Q2, 2016, it appears that almost all non-integrated publicly traded US E & P companies will again post losses on a GAAP basis. I looked at COP, MRO, PXD, CLR, OXY and EOG, all predictions are for losses, except the high estimate for OXY was for .03 per share earnings.

      Looks likely that if North American operations are the only one’s considered, all will have lost substantially again, although a $9 improvement in WTI will be of some help.

      WTI was $42.10 for Q2. It has been slightly higher for July, 2016. Most of the non-integrated US E & P will post losses for the 6th consecutive quarter, and I suspect absent significant improvement in WTI price, these losses will continue.

      I was surprised to learn that the largest independent, COP, currently has just 3 rigs running.

      Unless prices close at or above an average of $65 for the first day of the months August through December, 2016, the SEC reference price for WTI for 2016 will be below that of 2015. Right now, if prices hold, the reference price for WTI will be around $41-$42.

      Although debatable as to how much, I think it is generally agreed that US production is falling in 2016. Therefore, between the low WTI price and the production declines, proved reserves and PV10 will be quite a bit below those of 2015. Most companies will likely see PV10 below long term debt.

      It appears that the above companies, and many others, will continue to have access to capital as they continue to burn through cash.

  22. R Walter says:

    The little tiny oil company that has a number of wells, not many, along with some problems with finance, all efforts were concentrated on financing the costs. The end result, all wells are paid in full. Income provides the financing of taxes, accounting, and operating costs. After that, no debt, royalty income is then free and clear.

    Just so you know. Decline and depletion doesn’t matter. The money rolls in and stays in the bank until distributions.

    Must be something wrong with the rest of it.

  23. Amatoori says:

    Anyone knows how the DUC’s are doing? A couple of months a go that was the main discussion in the media. How it was going to come back with a bang.
    Remembered someone in here tracking them in US. If anyone has insight or new statistics? I would love to hear.

  24. Oldfarmermac says:

    http://www.scientificamerican.com/article/new-concentrating-solar-tower-is-worth-its-salt-with-24-7-power/

    I am a long way from a one percenter, but I could pay for enough electricity to get along ok at twenty to twenty five cents per kilowatt hour, especially after getting rid of my older appliances and trading up to new more efficient ones.

    The cost of overnight storage will probably come down quite a bit over the next few years due to economies of scale to be had in purchasing and installing the necessary equipment.

    If molten salt plants can be put into service for twelve cents per kilowatt hour, then it would make sense NOW for fuel importing countries with a suitable climate to start building them, because oil and gas and even coal will be getting scarce within the easily foreseeable future.

    Let’s not forget that such projects are generally financed with low interest loans, and despite all the yakking about deflation, wages and prices on average continue to increase as measured by fiat money- and any loans used to build such plants will be repaid with fiat money as a general rule. Maybe in a few cases the financing arrangement will include the lender being guaranteed access to some or all of the electricity produced on a preferred basis.

    Solar power storage is surely at some point going to be cheaper than a military establishment adequate to guarantee access to ever more expensive ( in fiat money anyway ) imported generating fuel.

    • Scientific American isn’t what it used to be, it dishes a lot of misleading propaganda.

      That plant can store about 10 hours’ worth, and that’s probably by generating a declining amount over that time period. The article neglects to explain it essentially useless if there’s several cloudy days in winter time (when days are shorter and nights are colder).

      • Oldfarmermac says:

        It’s true that such a plant cannot store much heat to generate electricity at night and also produce electricity for consumption during the day, if the weather is cloudy. If the weather is really crappy, even daytime production will fall to near zero as a percentage of nameplate capacity.

        But there is more to the issue than using such a molten salt storage plant as a means of DOING AWAY with fossil fuel electrical generation.

        Cutting down on the amount of purchased fossil fuel needed to generate electricity for the next twenty, thirty, or forty years is quite an advantage, especially if the fuel is IMPORTED.

        If we can run on storage generated electricity for a few hours every evening, or most evenings, until the evening peak is past, this means we can run peaker plants less, and more efficient base load plants more economically.

        And while such a molten salt plant probably will not last any longer than a new coal fired plant, it most likely can be refurbished when it is worn out, rather than scrapped. Mirrors and focusing controls for instance can be replaced during the night, with no loss of production.

        Now here is a point that folks who point out undeniably high DIRECT costs of renewable electricity, compared to fossil fuel generated electricity, as of NOW, always avoid mentioning.

        Every kilowatt hour generated by wind and solar farms is a kilowatt hour that we don’t have to generate with coal and gas plants, and when you cut back on the purchase of coal and gas, the price of coal and gas DECLINES, everything else held equal.

        We hear a lot about DEMAND DESTRUCTION when it comes to oil, but for some reason I am the ONLY person in this forum who ever mentions coal and gas demand destruction other than within the context of an economic depression or economic collapse.

        I have not been find any well accepted estimates for the price elasticity of coal and gas, but I suspect that we are already saving enough money, collectively, as a society, here in the USA, on the purchase costs of coal and gas, to recover what we have are spending on subsidizing wind and solar power.

        The EXISTING wind and solar farms plus small scale solar installations we have here in the USA are saving us well over five percent of our electrical fuel generation cost THIS year, and will save us this amount for the life of this infrastructure.

        And to THAT savings we can add the savings created by forcing down the price of coal and gas over the same time period…………….

        • Mac, my comment referred to Scientific American’s tendency to publish misleading information.

          A solar plant can indeed stretch fossil fuel resources. But scientific American stretches things and gives its readership the idea that such a plant is the final solution. This in turn leads politicians to use more and more subsidies and design misguided policies to satisfy the needs of what’s evolving into a giant social parasite.

  25. The latest Drilling Productivity Report is out. I have their Bakken input in the top chart of this post. And I have updated that chart to reflect the their latest Bakken data… through August.

    • Eulenspiegel says:

      Hi Ron, do you know where this productivity comes from? How much is improved technique and how much only drilling known sweetspots without exploring any new zones?

      Only drilling sweetspots should have a limited potential of ramping up production the next years.

      • No, I really have no idea how the EIA arrives at their data.

        • shallow sand says:

          I have found it interesting that, even now, EIA primarily focuses on 30 day IP rates in shale.

          One would think there would be some study of longer term production rates, particularly as there is a lot of conflict between the company presentations and actual data.

  26. R Walter says:

    Japan is paying 38.65 usd for a barrel of oil today. It will cause a downward movement on the oil price.

    On another note, I tuned in public TV tonight to watch a favorite program and here there is the convention for the Republican Party being broadcast. Whose big idea was that?

    This is the outrage of the day. Have had enough of those idiots.

    Nobody wants to hear anything from those goofballs.

    More bread and circus for the Great Unwashed.

    Good thing none of the Bush’s are there. The place would start to smell something awful!

    Cleveland will need to be aired out and sanitized after the dirty rotten Republicans leave, the filthy swine. 😁

    • GoneFishing says:

      Are the Republicans even showing up for the convention?

      • texas tea says:

        for folks that pretend they are so damn smart you guys seem to have a real hard time with following directions😜
        oil and gas is good 🇺🇸

  27. Watcher says:

    Looking ahead, we have post Peak realities in play. There will be inadequate oil supplies to fuel economic activity. Suppression of such activity would yield deflation and deflation is by definition lower prices. Of course, the Fed could decide to fund oil production, but even if it does there will still be 9 mbpd of imports.

    Lower prices of course eliminate any chance of “outbidding” competing consumption. And inadequate amounts amplify the power of Russia (and to a lesser extent KSA) to dictate most things, not just the destruction of American shale production, but outright global policies and behavior.

    Then embargo becomes credible. The US import totals would be pressured to rise with elimination of shale output, though the permanent reduction in economic activity would moderate that need for imports. But population grows so it is merely a moderation. The need will still increase, to transport food for more mouths if nothing else.

    And so, embargo. We will see a real test of the 1970s position that “we will not allow oil to dictate our national policies”. One suspects that test will be failed.

  28. GoneFishing says:

    Hah watcher, we have a trick up our sleeves for embargoes and oil shortages. It’s called ride sharing and rationing. Then in a couple of years all the cars will be higher mpg to take care of the problem. It’s not that difficult to conserve and is not the end of the world. Look at Europe, they use a lot less fuel than we do.

    Once we eliminate a lot of those Chinese imports, think about how much fuel that would save, and money too.

    • AlexS says:

      “Once we eliminate a lot of those Chinese imports, think about how much fuel that would save, and money too.”

      Once developed countries eliminate a lot of Chinese imports, they will have to replace it with own production. That will increase energy use.

    • Ves says:

      ” Once we eliminate a lot of those Chinese imports, think about how much fuel that would save”

      GoneFishing,
      That is very superficial view of relationship between energy and economy. You have to observe it deeper. Changing location of production does not change absolutely anything in terms of energy consumption on global level. Economy is energy. But economy is also desires. Extra available energy allows excess of desires. If you want to reduce your energy consumption all you need to do is work on reducing your desires. If you want this kind of economy going that we have now than you have to have your desires alive and kicking 24/7. This is paradox of life.

      • Watcher says:

        If you want to reduce consumption, kill the enemy. Dead enemies don’t consume.

      • GoneFishing says:

        Or produce locally using renewable energy. One must also consider the quality of the product. A number of the Asian sourced products I buy have about 1/4 or less the life of similar American products I used to buy. Constantly making new ones and shipping them across the world is extremely energy intensive. Make a good one locally that lasts a long time, costs more initially, costs far less in the long run.
        Grow and distribute food locally, saves a lot of energy and is generally better.
        My desires are already very low, use very little energy. How about you?

        • Ves says:

          ” Or produce locally using renewable energy.”

          Who exactly is going to tell who what to produce locally and with what kind of energy input?

        • Caelan MacIntyre says:

          Run the simulation…

          Make sure to include ‘all’ the variables, such as vested interests and responses to change (strikes, protests, lockdowns, riots and general unrest, and asymmetrical warfare); unions (dockworkers, Teamsters, etc.); job losses/restructuring; large-scale ‘government/debt-based economy’ (built from and tuned to run on ~90:1-50:1 EROEI oil and running on progressively diminishing EROEI); requirements and effects of alternative retrofittings, buildouts and new financial instruments; military expenditures; political power shifts and plays; tax revenues; social program spending and funding; diminishing trust and respect of the status-quo by the general populations; relocalizations and disunions; international trade and shipping; scientific findings like effects on climate, flora and fauna and responses by the planet and by, say, radical environmentalists; increased sovereign movements; etc…. Did I forget anything? Lots? Then you can be sure everyone will.

        • Jef says:

          This argument has been played out ad nauseum.

          You are essentially saying as people lose jobs and have reduced income, (happening now and increasing rapidly) they should switch to consuming ever more expensive “locally produced” items. The opposite is what is happening.

          Any reduction in energy consumption means less jobs and money flow.

          • GoneFishing says:

            Not what I said.
            Reduction of energy use has been going on for over 6 decades. Otherwise we would be using twice the energy now used.

            If there is more manufacturing here, they gain jobs, usually in support of manufacturing.
            I do agree that the American consumer is often not up to the job of making good decisions about what to buy. Also, there are now no alternatives to cheap foreign products in many areas. A product of a sociopathic business model.

            If the American consumer cannot see a real bargain, then the products will be sold elsewhere. The US was the number one manufacturing country in the world and it will probably be again. Not to say manufacturing jobs will increase much, but other jobs will.
            http://fortune.com/2016/03/31/united-states-manufacturing-china/

          • Dennis Coyne says:

            Hi Jef,

            As energy is used more efficiently we get more output for the same amount of energy consumed.

            Consider that about half of the primary energy (at minimum) is wasted as thermal losses in internal combustion engines and electric power generation (average World figures). As more energy is produced with wind and solar power many of these thermal losses are eliminated. The switch to plugin hybrids and EVs also reduces some of these thermal losses.

            So to solve the coming shortage of fossil fuels we need to do two things, ramp up wind, solar, geothermal, hydro, and nuclear power and use energy as efficiently as possible. Pollution taxes would help, but in their absence rising prices for fossil fuels and falling costs for wind and solar might cause a rapid ramp up in output from energy alternatives.

  29. AlexS says:

    Dennis,

    RE: your posts on the cost of oil for global economy.

    The chart below shows global oil expenditures as % of global GDP.
    I am using total liquids consumption (not C+C), nominal annual Brent price and nominal global GDP from the IMF database.
    The numbers are not exact, as NGLs and other liquids are less costly compared to C+C, and the mix of crudes and condensates used globally is cheaper than Brent. Yet, the chart reflects the general trend.
    For comparison, I also included the real price of Brent in 2015 dollars.
    The chart shows that in early 1980s the “oil burden” was much bigger (around 7.5% of global GDP) than in 2008 and 2011-13 (4.8-5.0%), although real oil price was slightly lower. That is a result of declining oil intensity of GDP.

    Global oil expenditures as % of global GDP
    Data sources: IEA; BP; IMF WEO database

    • pochvennik says:

      But as you know oil share in global energy mix was higher in early 1980s.

      “That is a result of declining oil intensity of GDP.”

      Would be interesting to see this graph to reflect fossil fuel intensity of GDP or hydrocarbon intensity of GDP. As a percentage share of natural gas and coal grew significantly over decades. China increasing domestic coal (incl. coking coal) production tremendously was an important factor of global economic growth since China joined WTO. And probably overall all this recent non-OECD and emerging markets economy growth was still very fossil fuels intensive. Since 2000, energy use has grown approximately as fast as world real GDP–increases for both have averaged about 2.5% per year growth.

      • Dennis Coyne says:

        Yes the fossil fuel energy intensity increased slightly from 2000 to 2005 and has since decreased. Much of the increase was China’s increased use of coal.

    • AlexS says:

      Declining oil intensity of GDP is a result of:

      1/ Declining energy intensity
      2/ Declining share of oil in energy mix

      World Primary Energy Consumption by Source (%), 1973 and 2015
      data source: BP

    • Dennis Coyne says:

      Thanks AlexS,

      Did you adjust for the different energy content of the liquids? I would use BP data in tonnes and convert to barrels of oil equivalent at 7.33 b/Tonne to find total liquids. I agree total spending on liquids was higher in 1980 compared to 2011. I get 7.26% (using boe instead of barrels) in 1980 and 4.62% in 2011, it is interesting that the spending was slightly less in 2008 at 4.53%.

      As oil intensity continues to decrease I would expect we might be able to sustain higher spending on liquid fuel, perhaps as high as 7%, in 2015 at 80 Mb/d, that would have been $175/b.

  30. Chart Monkey says:

    JODI – Closing stocks
    I’m not sure how reliable the JODI data is. But here is a chart of the sum total of the crude oil closing stocks for this list of producers. I tried to include all the producers that had good data. I didn’t include May because it seemed incomplete.

    • dclonghorn says:

      Chartmonkey, thanks for the inventory chart. Even though world inventories are much more important than US, data availabiltiy and timing allow US data to lull folks to a view that’s not always right. Based on your chart, the view of the neverending oil glut looks flat wrong.

  31. Oldfarmermac says:

    Maduro wants to jail executives of Kimberly Clark for what seems at first glance to be walking away from the company investment, just giving up and eating the loss.

    http://www.upi.com/Top_News/World-News/2016/07/19/Venezuelas-Maduro-threatens-to-jail-Kimberly-Clark-executives-with-Interpol/9971468944113/

    It probably won’t be too long before he is talking about jailing suppliers to the domestic oil industry for failure to deliver on credit, lol.

    It’s hard to see Venezuelan oil production holding up much longer.

    • Venezuelan production isn’t holding up very well.

      That diaper factory story is only the tip of the iceberg. Last night the secret police were trying to arrest workers at a beer factory, and arrests of company supervisors and managers are quite common. The policy seems to be to induce fear, this is copied from their Cuban masters, who love to terrorize the population as needed. The combined venecuban or Cubazuelan regime is evolving into a monster as the economies in both countries melt down (Cuba suffers because it used to steal billions from Venezuela, but this amount has been reduced considerably).

      • SatansBestFriend says:

        Arresting beer factory workers! Send in the marine corps!

        Please stop the insanity!!!

  32. Oldfarmermac says:

    Sometimes Faux News gets there fustest with the mostest.

    http://latino.foxnews.com/latino/news/2016/07/19/venezuela-former-chavez-allies-join-opposition-push-to-recall-president-maduro/

    Maduro in my opinion is on his way out, and simply doesn’t have sense enough to make a graceful exit good for the country.
    Maybe his exit will come in time to prevent the domestic oil industry from shutting down.

    • Maduro isn’t leaving. Raúl Castro owns Maduro, gave him orders to hang tough. This is the result of Obama’s policy, which gives Castro the idea that his semicolony in Venezuela can evolve to full disctatorship under Cuban tutelage. This is a point the USA media is covering up from you guys, because once they get aboard the government bandwagon and the elites are all in agreement, there’s no way they’ll keep you well informed. They lied all in concert about the Iraq WMD, and they lie now about the linkage between Castro and Maduro.

      • Oldfarmermac says:

        Hi Fernando,

        I agree that Maduro will not give up power peacefully, but the opposition has managed to move on to the next step of the recall election process, and a bunch of old Chavista hands are now calling for the recall to go forward.

        My guess is that things will soon get tough enough that some of the police and military people will turn against Maduro, within the next year and maybe sooner, and that if there is no recall election, then there will be a civil war.

        As I see it right now , it is likely that a lot of the people supporting Maduro are supporting him simply because they are still getting food, medicine and services such as water and sewer and police protection for the reason that they ARE SUPPORTERS.

        As things get tougher, he will have to start throwing some of his supporters off the government bus. They will join the opposition.

        How much longer will it be until some troops whose immediate families are getting fed but who have relatives who are losing weight fast send their families out of the country and join the opposition?

        They are apt to take their weapons and some ammo with them when they do so.

        For what it is worth, I tend to think you have a valid point in that the Castro regime has a lot of power and influence in Venezuela, but maybe a lot less than you think in terms of actual power. The Cuban regime is no doubt in my mind doing all it can to keep Maduro in power, and just by supplying advice, that can be a whole lot. I have no doubt there are Cuban intelligence operatives on the scene.

        Now a few of the leftish leaning members of this forum may say I am a deluded republican right wing nincompoop, etc, for agreeing with you on this point, or at least THINK IT, but on the other hand , these same folks would laugh their asses off if I claimed the CIA and other Yankee government agenies don’t have men on the ground bending the rules making things happen that Uncle Sam wants to happen- or used too, at least , when the R party controlled the White House.

        Some of them believe R types can do nothing right, and D types can do nothing wrong, lol.

        Personally I think all of our national leaders, both D and R , find it necessary, or at least expedient, to say one thing and do another when playing hardball power politics.

        The real question, in terms of this forum, is mostly about what will happen to the Venezuelan oil industry.

        As I see it for now, the only thing that might save Maduro’s ass is that the price of oil MIGHT go up substantially within the next few months or within a year at the most. The extra revenue might be enough he could spend it on food, etc, and stay in power.

        • Dennis Coyne says:

          Hi Old Farmer Mac,

          I think many of the lefties here tend to agree that dictatorships are not a good thing and that Venezuela would be best served by a representative democracy.

          Fernando has fairly strong feelings about Cuba.

          I think the opening up of China by Nixon got China moving in a better direction.

          Perhaps the continuation of the 54 year embargo on Cuba was the correct policy, Fernando seems to think so.

          Nixon went to China 44 years ago and the Communists are still in power, but the Chinese people may be better off today than in 1972 (their income is higher in any case).

          Maybe trade with Cuba will destabilize the communist regime and the Cuban people will be better off 44 years from now.

          I have no idea if the Cuban influence in Venezuela is as great as Fernando thinks.

          • That’s right Dennis, most of you don’t have an idea. The USA media doesn’t give you the insight I have. Let me give you an example: senior Venezuelan officials seem to spend so much time talking to Cuban mentors/bosses or traveling to Cuba that their accents are getting a Cuban accent twang. We can also hear the words they use, and their behavior. It’s clearly Cuban Castroite directed.

            It’s as if suddenly you saw most important USA politicians speaking with a slight Arabic accent, saying Inshallah for everything, and avoiding pork and alcohol.

            I see an incredible amount of comments linking China to Cuba. This seems to be a mantra or propaganda line crafted to support Obama’s friendly behavior towards an evil regime which happens to be extending its cancer into Venezuela and other nations. As it turns out China and Cuba aren’t the same at all, but USA citizens are well known for faulty understanding of basic geography and geopolitics. This is why it’s so easy to convince people to support humongous blunders like the Iraq invasion, and/or Obama’s incredibly misguided foreign policies.

  33. Oldfarmermac says:

    https://www.theguardian.com/environment/2016/jul/20/june-2016-14th-consecutive-month-of-record-breaking-heat-says-us-agencies

    It wouldn’t hurt my feelings at all to see this record string come to an END.
    It’s so damned hot and humid I am reluctant to even THINK ABOUT the farm after about nine am.

    • Hickory says:

      Interesting to hear you say ” so damned hot and humid I am reluctant to even… the farm after about nine am.”
      I just saw an article yesterday referencing a study indicating 2 $T lost productivity in the next 13 years due to heat- primarily in the farmlands and cities of the subtropics/tropics- places like Indonesia and Mexico.
      The SE USA is like that in the summer, too.
      I doubt that equates to lower energy demand.
      What would be the population/productivity of Houston without air conditioning?

      http://www.reuters.com/article/us-global-climatechange-costs-idUSKCN0ZZ1S9

    • El Niño has faded and the tropical Pacífic is in borderline La Niña conditions (temperature 0.5 degrees cooler than average). I’ll post the RSS lower troposphere temperatures and the surface as measured by the Hadley Center and the Climate Research Unit (UK) if it lets me.

      I’m spending the summer in Eastern Spain by the sea. This summer is much cooler than last year’s. The water temperature has lately been a bit below normal.

    • Lower troposphere

    • Surface. If the global system behaves as in previous Niños, the temperature anomaly should drop an additional 0.2 deg C (more or less).

      • Here’s the plot

      • Javier says:

        Global temperatures are dropping like a stone. We haven’t seen such a fast drop at least in 18 years, according to RSS. But it won’t get reported on the news. Not the type of records people like to read nowadays.

        • aws. says:

          God, you’re crooked

          • Fred Magyar says:

            aws, Come on now, just look at that graph Fernando provided us, it clearly shows downward trend! Tell me you can’t see it! Look harder!

            • aws. says:

              Yes, I could see the downward trend that you have helpfully highlighted and made clear. 🙂 /sarc

              https://youtu.be/JK7NV2YheGk

              • Duncan Idaho says:

                You need to turn it upside down!
                The libtards turned it around to destroy capitalism, create a one world government, and tax everything!
                You need to know the truth.
                Ice Age coming soon.

                • Fred Magyar says:

                  You need to know the truth.
                  Ice Age coming soon.

                  I know! Down here if Florida I can’t even find any more snowblowers for sale, I’m guessing they are all sold out! The people must all be terrified of the prospect of being snowed in, because of the massive blizzards they are predicting.

                  • GoneFishing says:

                    Up north here, if it’s a snowy winter, I build a huge pile of snow as a seed glacier. Hasn’t worked yet, but will keep trying.

                    I f the chart is inverted, do the glaciers start at the equator and head northward? 🙂

            • aws. says:

              Up is Down in their world.

              There is no hope.

              • Doug Leighton says:

                Maybe he for got the yellow face? Or maybe: “I spend a lot of time upside down. It increases the blood flow to the brain, so it really helps your creativity.” Daphne Guinness. It’s gotta be something like that. Right?

                • Duncan Idaho says:

                  Well, those Oz deniers are upside down all the time—
                  Need I say more?

            • Duncan Idaho says:

              Anything with Bob Tisdale as a reference needs to be taken with caution.
              The dude is ideologically crippled!

            • The Hadcrut data lags one month (it’s through May).

              The anomaly for June is even lower, and July looks lower thus far. If we assume the El Niño-La Niña cycle will be similar to 1998-1999, the temperature anomaly should drop so as to range within the 1998-2013 average. The big question is whether La Niña (a cool phase) does track 1999 or it’s weaker.

              The troposphere temperature measured by satellites seems to be diving towards the 2001-2014 average.

              There are other data sets we can use which are more reliable than the USA agency sets, which are increasingly political. There’s a set which provides a temperature reanalysis at 2 meters above the surface,

              https://twitter.com/fernandoleanme/status/756490959026872320

          • Javier says:

            Facts are facts. According to RSS we just had the biggest three months drop in average temperatures for the last 18 years. Whether you like it or not.

            I thought people so worried with global warming would be happy to celebrate this recent cooling. I guess they are only happy when temperatures increase. “The worse, the better” mentality.

            • GoneFishing says:

              And it’s still higher than the preceding six years peak temperatures.

              • Javier says:

                Just wait a little longer. La Niña has not started yet.

              • Thing is, we just went through an aborted Niño in 2014, which revived and became the very strong 2015-16 El Niño, and this raises world wide temperatures. If we put El Niño effect on top of a slight warming we get the 2014-15-16 temperature spike. This has been conveniently aided by the USA agency reprocessing the data to increase the temperature anomalies during the recent past.

                The shenanigans being pulled by USA agencies make me pay more attention to the satellite data, which is harder to cook, and the products from the university of Maine, which are obtained via reanalysis on a very tight grid.

                The current Arctic ice extent is kind of skinny, but the ice mass being reported by the Danish Metereological Institute shows the Arctic Ice is holding up well.

                The Antarctic has two broad sectors, East and West including the Antarctic peninsula. As it turns out the data from meteorological stations based on the peninsula shows its cooling down. We also see the Antarctic circumpolar current with a negative temperature anomaly. There are also hints (based on satellites) that ice mass is growing over East Antarctica.

                This tells me the spot we should worry about is Greenland. In general, I think the problem is less critical than discussed by the propaganda we see. Unfortunately we see a huge effort producing worthless studies, when the focus should be on better data acquisition and development of practical nuclear power to replace fossil fuels.

                • Fernando said:
                  “Thing is, we just went through an aborted Niño in 2014, “

                  You really don’t know what you are talking about. The phenomenon of ENSO acts on a continuum. There is no such thing as an “aborted Nino”. There are only cycles of differing amplitudes.

                  http://ContextEarth.com

            • Doug Leighton says:

              Each of the first six months of 2016 set a record as the warmest respective month globally in the modern temperature record, which dates to 1880, according to scientists at NASA’s Goddard Institute for Space Studies (GISS) in New York. The six-month period from January to June was also the planet’s warmest half-year on record, with an average temperature 1.3 degrees Celsius (2.4 degrees Fahrenheit) warmer than the late nineteenth century.

              https://www.nasa.gov/feature/goddard/2016/climate-trends-continue-to-break-records

              • Doug Leighton says:

                Meanwhile, summer sea ice cover over the Arctic raced towards oblivion in June, crashing through previous records to reach a new all-time low. Arctic sea ice extent was 100,000 square miles below the previous record for June, set in 2010 and 525,000 square miles below the 1981-2010 long-term average.

                • Javier says:

                  Well, Doug,

                  What would you expect? The world has been thankfully warming for the past 400 years and therefore temperatures are now in the highest range for the period. Since CO2 did not cause the 400-years old warming trend it is difficult to predict when it will end.

                  Regarding Arctic sea ice according to DMI the level is pretty normal for the last 10 years despite record temperatures (see figure). We have been pounded by claims of Arctic sea ice demise for months, and people that have made them should recognize that they have been wrong. It is highly unlikely that there will be a record low Arctic sea ice this year.

                  BBC: Melt ponds suggest no Arctic sea-ice record this year

                  Sorry to spoil the alarmist party by bringing good climate news, hey.

                • GoneFishing says:

                  Arctic sea ice volume down 13,000 km3 from 1979 level. Volume tells the story. Almost no old ice now.

                  Sea ice cover only has to be greater than 15% ice to be considered covered, mostly water. Winds and currents cause sea ice extent to vary. Melting and breakup cause increases in sea ice extent. A very poor measure of ice.

                  • Javier says:

                    So you are not happy with the way the Danish Meteorological Institute measures sea ice. They are considered quite experts at that.

                    Arctic sea ice age has recovered some from its low in 2012 and appears to be relatively stable despite intense warming from El Niño.

                  • Javier says:

                    When climate alarmists crash against reality:

                    Global Warming Expedition Stopped In Its Tracks By Arctic Sea Ice

                    A group of adventurers, sailors, pilots and climate scientists that recently started a journey around the North Pole in an effort to show the lack of ice, has been blocked from further travels by ice.

                    There has been one small hiccup thus-far though: they are currently stuck in Murmansk, Russia because there is too much ice blocking the North East passage the team said didn’t exist in summer months.

                    They probably thought as you do that there is very little Arctic ice during the summer.

                  • GoneFishing says:

                    Just describing the method and it’s weakness.
                    I am sure the way the Danish measure sea ice is quite valuable to the maritime trade.

                    Nothing to do with my emotional state.

                    You get your climate news from the Daily Caller?
                    “The Daily Caller is a politically conservative news and opinion website based in Washington, D.C.. It was founded by Tucker Carlson, a libertarian conservative political pundit, and Neil Patel, former adviser to former Vice President Dick Cheney.”
                    Do you listen to Rush Limbaugh and Michael Savage? I hear they are just chock full of information.

                  • Javier says:

                    GoneFishing,

                    I don’t know what you are talking about. I don’t live in the USA and I don’t know those people you talk about.

                    The only question is if the new is true or false. Attacking the news bearer does not distract from the fact that another ship of fools has been stopped by that pesky polar sea ice that refuses to die.

                  • GoneFishing says:

                    Javier, when did anyone say there was no sea ice????? A single misinformed or misguided small group does not represent my thinking or anyone else’s thinking.
                    I doubt if the reporting is very factual considering the source.
                    You do get a lot of exercise jumping to false conclusions about me and many other things though.

                  • Javier says:

                    Or you could do a little bit of search and read it from the expedition leader:
                    http://polarocean.co.uk/two-problems-solid-ice-red-tape/

                    Oh, sorry. I forgot you don’t know how to search internet.

                  • Javier said:
                    “Oh, sorry. I forgot you don’t know how to search internet.”

                    Speaking of … they are poking at Javier over at HotWhopper
                    http://blog.hotwhopper.com/2016/07/ari-halperin-falsely-claims-forgery-by.html

                    “DavidR July 22, 2016 at 6:43 PM

                    Javier: “I don’t like being deceived.”

                    Really, it took ‘this’ post before Javier realised he/she was being deceived at WUWT?”

                    I think the problem with Javier is that he is just a bit too naive in understanding the agendas of many of the anti-AGW and cnontrarian-PO players.

            • Fred Magyar says:

              Facts are facts. According to RSS we just had the biggest three months drop in average temperatures for the last 18 years. Whether you like it or not.

              Right!

              RSS Monthly Global Lower Troposphere Anomalies
              Current Value = +0.47 Deg C:
              (Reference 1979-1988 Average) Jan 1979 to June 2016

              Call me when it is -0.5 Deg C for the next 18 years…

              • Javier says:

                I hope that doesn’t happen on my time. Such long intense cooling period would be really bad news to humanity. But just in case leave your phone number.

              • If the temperature were to drop 1 degree versus today’s temperature humanity would have a very hard time coping. That would take us close to Dalton minimum temperatures.

  34. The EIA’s Weekly Petroleum Status Report is out. US C+C production up 9,000 barrels per day. Alaska up 38,000 bpd while the Lower 48 was down 29,000 bpd.

     photo US Weekly CC_zps35pjcygy.png

  35. learner2 says:

    Was there something about Alaska that this week was a catch up to, like maintenance or other outages?

    • Doug Leighton says:

      If you’re interested in oil production rates you have to view Alaska (especially North Slope) on an annual basis. Output always jumps around quite a bit in the summer owing to maintenance work and other issues.

  36. aws. says:

    Presentation from the 2016 EIA Energy Conference

    From Boom to Gloom : Energy States after the Oil Bust

    Mine Yucel, Senior Vice President and Director of Research, Federal Reserve Bank of Dallas, July 12, 2016

  37. aws. says:

    From Boom to Gloom : Energy States after the Oil Bust

    Mine Yucel, Senior Vice President and Director of Research, Federal Reserve Bank of Dallas, July 12, 2016

    • shallow sand says:

      It looks to me that TX May production is low, given May is a 31 day month.

      Looking forward to analysis of TX production release.

      • shallow sand says:

        Crickets are chirping.

        I looked at several of the shale counties in TX.

        Midland, for example, is still growing production.

        Karnes, De Witt, La Salle and other Eagle Ford shale counties appear to be crashing.

        Questions about how up to date the data is.

        Also note the conventional only counties continue their quiet decline, like the rest of US conventional appears to be doing.

        Anyone else out there looking at this?
        .

        • shallow sand says:

          In perusing data, I note that ExxonMobil, through its subsidiary, XTO Energy, is continuing to grow US onshore production. Not only are they completing many horizontal wells in the Bakken and Permian, but they are growing production in their long held conventional fields in Texas.

          Wonder what the strategy is, given they lost big time $ in North America the last five (soon to be announced six) quarters.

          • Greenbub says:

            It seems the main strategy in the entire sector is to pray to god that the price of oil goes up a lot and soon.

          • Cracker says:

            ss

            Strategy is to do SOMETHING to show to Wall St and pray for higher prices, like Greenbub says.

            It is critical to work on something related to new production, so they can project something related to growth, to keep investor interest. Profits are less important, and perhaps not attainable for awhile, but must keep up appearances, for financial reasons.

            Stock prices will fall if they don’t at least pretend to try to grow production. Smoke and mirrors are OK, too.

            Jim

            • texas tea says:

              Smoke and Mirrors
              nothing compared to some other industries just look at amazon and tesla. Amazon: “Nearly 20 Years In Business And It Still Doesn’t Make Money, But Investors Don’t Seem To Care”

              • shallow sand says:

                he Nasdaq website show consensus EPS forecast for AMZN as:

                2016. $5.37
                2017 $9.82
                2018. $17.61

                TSLA

                2016 -$2.33
                2017 -$1.51
                2018$3.27
                2019 $9.10

                Granted, both are highly speculative. Amazon is generating positive EPS now.

                Compare ConocoPhillips:

                2016 -$1.90
                2017 $.92
                2018 $2.29
                2019 $3.60

                Again, highly speculative, dependent on increase in oil and natural gas prices.

                I believe above numbers do not include “one time charges” such as asset write downs, etc.

          • The strategy is to make money. Their projections use a price deck a bit more conservative than the one I listed above, but they aren’t $50 WTI.

  38. robert wilson says:

    Marita Noon on Trump’s energy policy. – 15 minutes, well done. Depletion and peak oil not addressed. http://www.pecosvalleybroadcasting.com/KSVPpodcasts/Marita%20Noon%20Podcast%20July%2018%20.mp3

  39. Watcher says:

    http://www.abqjournal.com/803674/oil-producers-want-u-s-to-restrict-imports.html

    ALBUQUERQUE, N.M. — New Mexico and West Texas oil producers are gearing up for a national effort to draw all major U.S. oil basins into a grassroots movement to restrict crude imports from overseas.

    Leaders of the Panhandle Import Reduction Initiative, which launched in April in the Permian Basin, are seeking public meetings and rallies in other oil-producing zones to convert what’s now a regional initiative into a national movement, said Daniel Fine, associate director of the New Mexico Center for Energy Policy, who is working with local producers.

    • Caelan MacIntyre says:

      America was now importing crude oil and its derivatives in quantities sufficient ‘to impair the national security’.

      “Eisenhower responded with his Mandatory Oil Import Program, demanding import licenses on foreign oil to keep new quotas limiting imports to nine percent of domestic production (except in the West, Canadian and Mexican oil enjoyed special exceptions)…

      Experts consider this move in March 1959, ‘the single most important energy policy in the postwar era’…

      Eisenhower’s quotas infuriated Venezuela, Saudi Arabia, Kuwait, Iraq, and Iran. In September 1960, they established the Organization of Petroleum Exporting Countries which eventually organized the oil embargo and oil price hike that triggered the Great Inflation. And so, the Eisenhower-triggered OPEC would by 1973 create the national security oil crisis and ‘can’t get nation’ the Eisenhower-imposed quotas hoped to avoid.

      Hillary Clinton and Bernie Sanders beware: government taming of corporations doesn’t always tame corporations as the government tamers imagine. And Donald Trump beware too. When provoked, even small nations can respond—sometimes causing huge harm.”

      Almost nine years on, many Chavez supporters miss those halcyon days.

      “The oil price was above $100 a barrel and the charismatic leader was untouchable at the polls. There seemed to be no end to his largesse, with the profits from the country’s vast oil wealth shared among left-wing allies in the region…

      The defining policy of the Chavez-Fidel era was the ‘oil-for-doctors’ programme: Cuba receives about 100,000 barrels of oil a day from Venezuela in exchange for sending doctors and nurses to work in Venezuelan shanty towns and rural villages…”

      • The Castro dictatorship used to rip off a lot more than the oil for doctors scheme. That rip off is slowing down as the Venezuelan economy craters. As of right now the Castro dictatorship is imposing corrective measures, rationing electricity, and increasing repression.

        One of the issues I like to point out to the Venezuelan opposition forces is to highlight the abuses perpetrated by the chavista regime by stealing and redirecting funds to prop up the Castro dictatorship as well as the Kirchners, Correa, and the child molester president of Nicaragua.

        • Caelan MacIntyre 🍕 says:

          It’s too easy, (but I hear you).
          Take whatever State-cum-glorified-open-air-prison you want and you will find a myriad of sociopolitical problems and pathologies. It’s just a matter of degree, and of how luxurious or otherwise the prison is and how secretive and pathalogic, etc., the prison officials are…

          …and, incidentally, how easy/’red-carpeted’ (or otherwise) it is to ‘escape’ to another prison (maybe a little harder at the moment for those holed up in Venezuela compared with Cuba, both currently, and historically).

          “In 1965, the first Cuban ‘boatlift’– when the Cuban government opened the port of Camarioca to anyone wishing to depart the country– prompted the United States and Cuba to reach an agreement allowing Cubans to fly to Miami on U.S.-government chartered ‘Freedom Flights’: about 300,000 Cubans arrived this way between 1965 and 1973.

          In 1966, Congress passed the Cuban Adjustment Act (CAA), which provides a pathway to permanent residence for Cubans who have been physically present in the United States for at least one year.” ~ Migration Policy Institute

          Hey, look! Is that an old postcard I see of a young Fernando 🐸 waving from the airplane window!? ‘u^

          We are a simple, tribal, hunting-and-gathering species, Fernando, out of scale and out of touch within these needless overcomplex, hierarchical, sociopolitical and electromechanical constructs.

          One irony with Venezuela, is that, the closer it gets to outright collapse, the closer it will get to the truth of we as a species. 🐒?

          Let us permanently remove the wool from our eyes; let the emperors always have no clothes; and turn off for good, the lights on their bread-and-circuses.

          Caelan’s pizza emoji, sponsored by:
          The Leaning Tower of Pizza™
          “Don’t worry about collapse, have a pizza.”

    • Watcher says:

      Looks rather a lot like desperation, but only for industry.

      If you have to have it, and you DO have to have it, you’ll get it, regardless of price, origin, regardless of anything.

      • Caelan MacIntyre: Oily K.I.S.S says:

        To a certain EROEI (whether we can or want to calculate it or not)?
        What about below a certain EROEI? What kind of EROEI does large-scale ‘government‘ run on?…

        Executive Summary

        “How the State supplanted community enterprise with an entitlement-driven economy
        Why the State’s entitlement approach is unsustainable, mathematically — and is finally imploding as we watch
        What to expect at this point: more egregious abuse to keep the system working, ultimately triggering serious social unrest
        How self-reliance and local enterprise will emerge as paramount once the current State system collapses

        …What was it built to run on?
        What happens to it when EROEI slips below some critical threshold?

        …So they tried ethanol, shale, and the arctic. Now what?

        Who’s got the highest EROEI oil right now? And are they at their door?

        As an aside (sort of); take economic fuel and national security:
        What if your body was a nation? And what if you weren’t growing your own food (or hunting and gathering it) and were buying it from some corporate chain? Would your body be ‘secure’, such as if all the chains shut down or the shelves became bare in the event of an emergency?

        “Control the oil and you control entire nations; control the food and you control the people.” ~ Henry Kissinger

        So which nations’ oil are you trying to control, Henry?

        And what happens when the petrodollar disappears?

        Nixon made it so the U.S. dollar was supported by the planet’s incredible thirst for oil.

        “…The deal with the Saudis firmly established the U.S. dollar as the reserve currency for the world.

        And allowed the United States and its citizens to create a much higher standard of living than would otherwise have been possible.

        Let’s consider how America has benefited from the petrodollar…

        Oil being priced in dollars creates an artificial demand for dollars. Additionally, because global oil demand increases each and every year, so too does the demand for dollars.

        If demand for dollars increases, so too does the need for a greater supply of dollars.

        Which is the real key to why the petrodollar has been so huge for America.

        It provided the American federal government the green light to expand the money supply.

        And do so without repercussions.

        Every country with its own currency has the ability to increase its money supply. For most countries, though, printing money brings with it the major side effect of inflation.

        More money in the system chasing the same assets drives up the price of those assets.

        The petrodollar system allows the American government to get around this, because as it increases the supply of money, that money goes overseas to the foreign countries that need U.S. dollars to purchase oil.”

        And is the Gigafactory ready yet and does it even make sense?
        Or is it going to be some strange apparition in the middle of nowhere that some anthropologists wander across and wonder about, millennia from now… (cue dusty windy sounds…)

        The Writing

    • texas tea says:

      if you watched Harold Hamm’s speech at the RC last night I get the feeling that either import restriction or tariff or a serious talk with gulf states regarding “dumping” will be forthcoming if Trump Pence will in NOV. As a free market guy I am uncomfortable with import restrictions or tariffs, but a discussion with saudi’s regarding the need to make oil available at a price that will allow continue investment across the globe for the future seems very reasonable to me. A target price of $70-80 would seem reasonable. IN that event at the same time I would like to see the RRC commission step up and use the proration system we have here in Texas as a model to keep a check on domestic production in that event to prevent over supply and a real risk of our producers creating a even greater oversupply in the future. go trump/pence👍🇺🇸😊

      • R Walter says:

        Trump is a megalomaniac, although, a kinder gentler one.

      • islandboy says:

        ” I get the feeling that either import restriction or tariff or a serious talk with gulf states regarding “dumping” will be forthcoming”

        I get the feeling that, if oil production declines continue, while consumption continues it’s upward trend, import restrictions of one sort or another are going to “be forthcoming” in many countries. Thing is, I get the feeling that the populations of many of these countries experiencing “import restrictions” are not going to be exactly happy about it. For example, I could imagine “import restrictions” happening in my neck of the woods because, we can’t afford to use as much as we’d like to.

      • Longtimber says:

        .. Howard Hamm 5 min speech @ RNC.
        ” We can’t ignore this problem anymore – it’s not going away”
        https://www.youtube.com/watch?v=M6NmkiXMe0I

      • Watcher says:

        Somehow this desire for high prices always equates to someone else reducing production.

        If production is supposed to largely define price — given population gain and consumption gain as shown in the BP yearly data — then why not have shale shut down? That will get the price gain in their mindset. Of course, they’ll be out of business so it won’t help them. tra la tra la

        What they are really saying is let’s have someone else go out of business so we can make a lot of money. Yes?

        But none of this is required. The shale industry can be nationalized and then oil will flow. Of course, the Harold Hamms of shale won’t be making money, but is that really the imperative of national policy?

        Pretty amusing tho. The left wing wackos of the Democrats about 8 yrs ago threatened nationalization of some oil companies in House committee testimony I recall, because the price was too high. Instead, nationalization may be required because the price is too low.

        • Lloyd says:

          Watcher said: But none of this is required. The shale industry can be nationalized and then oil will flow. Of course, the Harold Hamms of shale won’t be making money, but is that really the imperative of national policy?

          From The Intercept:
          Donald Trump’s reported top pick for energy secretary, oil and fracking billionaire Harold Hamm, declared on the Republican National Convention stage on Wednesday night, “Every time we can’t drill a well in America, terrorism is being funded.”

          Or the Shale Industry becomes the government.
          Eliminates the middle man.

          -Lloyd

          • Watcher says:

            There is merit in that line. Every US well not drilled does indeed fund terrorism.

            But that’s part of the pursuit of victory. Terrorism isn’t so much pointed at Russia.

            • GoneFishing says:

              So that makes Tesla and other EV manufactures the super patriots of our time.
              Let’s take that logic a bit further. Anyone using an ICE is funding terrorism.
              Do you really want to go down that road?

              • Watcher says:

                745 watts per horsepower. Physics declares all the EV wackos to be traitors.

                The road is for military hardware to prepare for the inevitable attack.

                • Lloyd says:

                  Yo Watcher…
                  I’ve been reading your stuff today and can only picture you in a shed in the woods (albeit one with 4G) with a long, scraggly beard working on a manifesto, Unabomber-style.

                  Of course, the trick is figuring out which parts are meant to be funny. 🙂

                  -Lloyd

                  P.S. And now that I think about it, I wonder how many of us that description would cover? 🙂

                  • GoneFishing says:

                    More likely in a 1950’s bomb shelter under his parent’s house.
                    Forgot that we stopped building bomb shelters for a very valid reason.

                  • Caelan MacIntyre says:

                    Unless they already divulged that, Watcher could be female, too, or somewhere in-between…
                    (To digress, maybe we’re all somewhere in-between, except where we’re on or close to extremes of male and female.)

                    Or maybe Watcher is a disembodied, cloud-like apparition, floating somewhat above the earth and with a semblance of what could be called, eyes…

                    Or simply a pigment of our colorful imaginations…

                    “I’m nobody…” ~ Watcher

                    Timebomb
                    “In a world full of no ones, I am a someone…” ~ Chumbawamba

                    “The song is a song about the 17th Century Digger Commune’s struggles against their landowners…” ~ Wikipedia

                    “The Diggers were a group of Protestant radicals, sometimes seen as forerunners of modern anarchism, and also associated with agrarian socialism and Georgism. Gerrard Winstanley’s followers were known as True Levellers in 1649 and later became known as Diggers, because of their attempts to farm on common land.

                    Their original name came from their belief in economic equality based upon a specific passage in the Book of Acts. The Diggers tried (by ‘leveling’ land) to reform the existing social order with an agrarian lifestyle based on their ideas for the creation of small egalitarian rural communities. They were one of a number of nonconformist dissenting groups that emerged around this time.” ~ Wikipedia

            • Lloyd says:

              There is merit in that line. Every US well not drilled does indeed fund terrorism.

              Only if drilling those wells caused the oil price to drop and took money out of the hands of various actors…I don’t think that was the kind of “truth” Hamm wanted to spread. He didn’t say “I want to drill more wells so the price of oil will continue to be uneconomic for both us and our enemies, so that they will have less money to fund terrorism.” Hamm instead was pushing energy independence (“we could double oil production again”) and implying a causal link between the Orlando shootings and those undrilled wells. My guess is that any “truth” in anything he said was entirely coincidental and likely unintended.

              -Lloyd

              • Ves says:

                “Only because drilling those wells might cause the oil price to drop and take money out of the hands of various actors…I don’t think that was the kind of “truth” Hamm wanted to spread. ”

                Loyd,
                Yes, Hamm said the truth and wanted that truth to spread that he can continue to drill and drop the price further. Problem is in everyone’s interpretation of what does shale represents. Shale does not represent US worldwide Oil production. Not even close. Shale is a tool. It is just political tool in high stake game and mainly between US power interests. That is absolutely clear once Mr Trump picked Mr. Hamm.

                • Watcher says:

                  Not a bad pick. It shows an understanding that oil is more important than anything, and it’s going to stay that way for the 800 million still alive . . . soon.

                  • Lloyd says:

                    Bomb shelter it is! 🙂

                    GoneFishing says:
                    07/21/2016 at 6:53 pm

                    More likely in a 1950’s bomb shelter under his parent’s house.

                  • Watcher says:

                    Bombs are counter productive. You want to induce starvation in the enemy so that he surrenders in return for oil. If you bomb him, he doesn’t surrender because he consumes less and thus puts less pressure on their leadership.

                    You kill him after he surrenders, not before. Maybe forced sterilization for conscience balm.

                • Lloyd says:

                  Ves said at 07/21/2016 at 4:56 pm:
                  Shale is a tool. It is just political tool in high stake game and mainly between US power interests. That is absolutely clear once Mr Trump picked Mr. Hamm.
                  That assumes that Hamm didn’t pick Trump. Trump is not a craftsman. If shale is a tool, he’ll drop it on his foot.
                  This is a pair of opportunist demagogues who see there is money to be made in power. The only policy they are concerned with…oh, right, they have no policies, and no stated path to any goals.
                  They offer platitudes that could mean anything and allow people to translate them as they wish. Your mistake is that you think there is an actual meaning in anything Trump or Hamm says: I’ve seen numerous charts this week showing Trump as being both for and against a huge number of policy points. He is a conman depending on the populace’s lack of attention, the frailty of human memory, and people’s reluctance to change their minds when they start to doubt: that tendency to double down rather than admit you made a mistake.

                  -Lloyd

                  • Watcher says:

                    Surviving the primary process pretty much destroys that theory. Now if you’re a Democrat you nominate a guy who got fewer votes than his competition in 2008 on a bros before hos philosophy. They can thus sidestep the primary process screen.

                  • Ves says:

                    Loyd: “Your mistake is that you think there is an actual meaning in anything Trump or Hamm says:”

                    Yes there is always a meaning. Mr Hamm appointment explains his talking down of the oil price at every opportunity in the last 2 years.

    • Oldfarmermac says:

      https://www.yahoo.com/news/earth-another-record-warm-month-162945930.html?nhp=1

      The last cooler than average month, world wide, was all the way back in ‘eighty four according to NASA.

      The R party hasn’t only shot all its toes off nominating Trump, who is the only R politician in America likely to lose to Clinton. It’s also making sure no new toes grow back, by pretending forced warming is an environmentalist/ D party plot to take over whats left of the economy.

      If somebody wrote a thoroughly rotten hack novel with a D sleeper getting the R nomination , or the other way around, so as to throw the election, the author wouldn’t even be able to give it away, he would be laughed out of every publisher’s office in the country. Until now. Expect such a novel to hit the stores sometime soon. It will become a cult classic.

      It’s incredibly unfortunate that environmental issues have become an “us versus them” litmus issue, but shit happens. Hopefully the D’s won’t push so hard on cultural issues that they reap a backlash adequate to get them thrown out of office for a generation, which is a real but receding possibility in my estimation for now. We have most likely seen the high water point of the R party as we ( used to ) know it.

      Trump might win, with a couple of lucky breaks, considering HRC is too big to jail, as my life long D lawyer puts it, etc, but even if he does, the boomer generation is on its way out. I could go to a funeral every month and still miss some among childhood school chums. The D’s are set to own Yankee politics for a while, until a new opposition party emerges from the various ashes of the R party allied with some centrist voters who aren’t fond of big government and more immigrants, etc.

      I can see a real third party being born, but I am not actually predicting this will happen.

      The question right now that fascinates me the most is the coattails question. Which party will control Congress after the election?

      Clinton has a real opportunity to do something about the climate issue, and if she doesn’t blow it, we can expect strong support for the renewable energy industries plus tougher regs on fuel efficiency, etc.

      • R Walter says:

        Hillary is a megalomaniac, not a kind one though.

        • Javier says:

          I am dismayed that in a 320+ million people country you cannot find anyone better than Trump or Clinton II to lead the country.

          At school they taught me what a great system democracy is. Now I am having second thoughts.

          • GoneFishing says:

            First Javier, the US is not a democracy, it’s a republic. Second, the system is a good one and can work if citizens get involved in government. Problem is that big business and power-mongering politicians got in the way and promote consumerism instead of citizenship.
            The two party system has been a direct result of the electoral and voting system, which needs to be highly modified to allow actual representation of voters. Now it is a win or lose situation. A small majority rules, leaving as much as 49% essentially unrepresented.
            That needs to be changed. Once that is done, presidential power needs to be reduced and better distributed. The power of the president to initiate war should be eliminated.

            https://en.wikipedia.org/wiki/Duverger%27s_law

            • texas tea says:

              GF👍
              oh my, a new found found respect for your opinions may be in order, I don’t think I could have said that better🇺🇸

          • Dennis Coyne says:

            Hi Javier,

            Democracy is a terrible idea, just better than all the alternatives.

            • Caelan MacIntyre says:

              That would seem to depend on what kind/how it is defined and whether one is able to opt-out of it entirely or on a per-rule/law basis, yet still reasonably-exist alongside or within it. But then, is that a democracy anymore?

              And/Or, how would we know if we’ve never really had a bona-fide democracy, if we agree we haven’t?

              In any case, maybe we can look to our fellow creatures for clues to alternatives, and/or (failing that) all help contribute with coming up with one or some (better ones).

          • R Walter says:

            It is a democratic republic, not just a republic. A democracy is nothing more than an ongoing revolution.

            Of course, if you don’t have polo horses and a polo barn, you are not part of the club, the oligarchy.

            The money must be in the right hands and those hands aren’t yours.

            You need a two thousand dollar suit, a private jet, at least ten billion dollars. Manhattan plush digs with 28 foot ceilings is a must.

            A place up on Connecticut Avenue also helps.

            If you don’t have those, you are in the not worthy. Oil billionaires don’t count.

            You must be a well-heeled east coast billionaire to be an American.

            The Great Unwashed are on a ‘need to know’ basis only and you don’t need to know. You’re left out in the cold.

            That’s the way it goes moving west.

            • GoneFishing says:

              Definition of republic

              a state in which supreme power is held by the people and their elected representatives, and which has an elected or nominated president rather than a monarch.

              The US is a republic. “and for the republic for which it stands”

          • Oldfarmermac says:

            Hi Javier,

            For what it is worth, Clinton and Trump are unquestionably in my opinion as a life long reader of history and observer of American politics the two WORST candidates that have been nominated by the major parties since we have HAD just two major parties, the R’s and the D’s.

            I am personally appalled by both of them. Of course hard core R types will think I am an idiot for thinking Trump is a crook and a chump and hard core D types will think the same because my opinion of Clinton is only a TAD higher.

            I am dead serious in saying that any republican candidate EXCEPT Trump could easily beat Clinton. Even Cruz could beat her, but it would be a closer race with Cruz on the R ticket.

            This is not to say I have had a HIGH opinion of the ethics of any of our recent leaders.

            • texas tea says:

              I had a hard time with Trumps do/say anything to win, over the top showmanship, but he is a doer. I think a lot of people including me say, what do we have to lose. Maybe, just maybe, he is truly a citizen legislator who can set us on a better track. I really like Pence and his trumps children would make any parent proud. A lot of very negative things were said about Reagan, but he did one very important thing, he instilled new confidence in the small business community, that goes a long way in my book, and that is really the only thing that can keep the wheels on this truck for a bit longer: confidence in our country, confidence in our money, confidence in our government and confidence in each other. 🇺🇸
              👎with all political family dynasties

            • Caelan MacIntyre says:

              I am so hoping that Trump or Clinton get in and somehow help crash the system. I say help crash it, because it is an utterly contemptible system that is crashing itself.

              There are very few redeeming qualities about BAU.

              My ‘interest’ (etc.) will be in watching the whole apeshit implode in real time.

              • Petro says:

                …don’t hope too much, Cae!
                What we have now is much better and peaceful than what comes next, unless you………………………. No!

                I do not think you are that wicked.

                Be well,

                Petro

                P.S.: …don’t tell me you have seen that “Purge” movie lately…..

                • Caelan MacIntyre says:

                  The last POB-relevant one watched was The Big Short. Just about right up my alley for the limited fiction films watched (I generally try to stick with quality non-fiction documentaries). I will assume you recommend ‘Purge’ and will look it up on Rotten Tomatoes. How did you like it? ’99 Homes’ was pretty good too.

                  The system is wicked, my Pet’, but I understand what you mean.
                  At least my hope is relatively-harmless, and I’m working (not very hard at the moment) on Permaea, which is explicitly described, in part, as a safety-net for an exit for the ‘bread-and-circus trapeze performers for the crony-capitalist plutarchy elite’.

                  • Petro says:

                    Cae,
                    I indeed do admire your innocent, romantic. utopistic optimism….
                    I wish I were inspired by it a little more than I actually am….
                    ….perhaps would make my days better.

                    Be well,

                    Petro

                    P.S.: I have not seen “Purge”, nor do I intend to…… but one cannot help commercials…

                  • Caelan MacIntyre says:

                    Petro,

                    Of course there is an idealistic Permaea– the one on paper/in theory– and them a realistic one– the one that actually forms– assuming it even does– and properly– and in my lifetime. Some big ifs.

                    But if I don’t do anything with what I know, then my conscience won’t be clear that I didn’t at least try.

            • GoneFishing says:

              Old Farmer, I would like to know how many presidential nominees came up in front of their party and said at the acceptance speech ” I will represent all of the American people and try to do what is right for the country.” Or something similar.

  40. R Walter says:

    Japan is paying 38.95 usd for a barrel of oil today.

    BNSF hauled 7348 petroleum cars last week, down about 1900 cars compared to one year ago.

    Grain shipments are up 3000 cars from the same time last year.

    323 million Americans are going to have to have something to eat. Happens every day.

    http://www.bnsf.com/about-bnsf/financial-information/weekly-carload-reports/

    If I were to make a guess, as good as any, there will be another 75,000,000 barrels of crude consumed again today, with the condensates, the total hydrocarbons in the 94,000,000 barrels range.

    Also, a total of 20 million tonnes of coal will be burned.

    The wheels will fall off of the wagon if that doesn’t happen.

    Nice day out there today, going to heat up again. The temperature was 102°F yesterday, not a record though. In 1960, it was 106°F. Going to cool down to 91°F today, the record in 1931 was set at 99°F.

    Even Baffin Island is 12° C, with an overnight low of 7° C. The sun is shining purdy much all of the time up there, so it makes sense. 9/5(12)+32=53.6°F

    https://www.theweathernetwork.com/ca/weather/nunavut/baffin

    http://www.sat.dundee.ac.uk

    If you register, it is free, you can view the earth from pole to pole, it is something to see.

  41. islandboy says:

    Going to do this kind of backwards, quote first:

    By definition, we must at some point achieve a sustainable energy economy or we will run out of fossil fuels to burn and civilization will collapse. Given that we must get off fossil fuels anyway and that virtually all scientists agree that dramatically increasing atmospheric and oceanic carbon levels is insane, the faster we achieve sustainability, the better.

    Here is what we plan to do to make that day come sooner:

    and now the article:

    Tesla Releases Master Plan Part 2 – New Kind Of Pickup Truck Part Of Plan

    More quotes:

    “Tesla also says it is getting into heavy trucking (think “Tesla Semi”) as well as high passenger density urban transportation (which sounds a lot like a bus to us).

    “In addition to consumer vehicles, there are two other types of electric vehicle needed: heavy-duty trucks and high passenger-density urban transport. Both are in the early stages of development at Tesla and should be ready for unveiling next year. We believe the Tesla Semi will deliver a substantial reduction in the cost of cargo transport, while increasing safety and making it really fun to operate.”

    • GoneFishing says:

      Didn’t we solve those problems over 100 years ago with electric trolley systems in cities and electric trains?

      • Caelan MacIntyre says:

        +1

        There is a century-old soapstone or sandstone mill/warehouse building that was for sale (1. 2. 3. 4.) that I had been casually ‘following’ and that I had thought of for different, multifaceted purposes. I just found out that they ripped out the tracks that passed conveniently-by alongside it. It would (have made or) make a great central hub for the town of Middleton and its valley, the Annapolis, over here.

        One could live in the little cabin up-top and just the one building could house a microbrewery/microdistillery; a year-round micro-farmer’s/misc. market; and when the loading deck is not being used, a few chairs and tables put out for a little cafe-resto-snack-bar kind of deal.

    • We have “high density urban transport” called a TRAM. It’s hooked up to an overhead wire. Sure looks more practical than using batteries.

      The heavy trucks could be designed to carry batteries in a second trailer. They could swap trailers to allow for faster “refueling time”. It sounds more practical to use a natural gas micro turbine hybrid with a secondary loop.

  42. Longtimber says:

    Latest from Art. Charts Illustrate how we got here.

    “The oil industry is damaged and higher prices won’t fix it because the economy cannot bear them.”

    ” The future for oil prices and the global economy is frightening. I don’t know what beast slouches toward Bethlehem but I am willing to bet that it does not include growth. The best path forward is to face the beast. Acknowledge the problem, stop looking for improbable solutions that allow us live like energy is still cheap, and find ways to live better with less.”

    http://www.theburningplatform.com/2016/07/20/oil-prices-lower-forever-hard-times-in-a-failing-global-economy/

  43. texas tea says:

    week before last nat gas injections seem strangely out of place, any comments on that from the gurus?

    http://americanoilman.homestead.com/GasStorage.html

  44. learner2 says:

    A new meme is circulating that gasoline stocks (lot of export from chinese “tea pot” refineries) are now causing a global glut, which will lead to another downleg in oil prices. Is this confusing cause and effect? Or as mainstream is reporting, it points to not enough demand for gasoline ? Whatever the reason, the market seems determined to bring oil prices down once again.

    • GoneFishing says:

      Gasoline has fallen back into the $1.89 range again near me. Gasoline stocks were up 1 percent from the previous week and about 25% from the previous year in the US. Oil inventories are even higher, 56 percent up from a year ago (7/15) according to the EIA.
      It’s summer and the stocks of gasoline are rising.

      http://www.eia.gov/petroleum/weekly/

      • dclonghorn says:

        David Demshur CEO of Core Labs gave his quarterly earnings call comments including his macro view of the oil business. Core is the top dog in its business and gets data from IOC’s, major oil companies, and independents. They know the details about world reservoirs.

        Demshur predicts 2016 production declines of around 1.1 million bpd for the USA, and around 2.8 million bpd globally.

        http://seekingalpha.com/article/3990333-core-laboratories-nv-clb-david-m-demshur-q2-2016-results-earnings-call-transcript?part=single

        • dclonghorn says:

          Exxon has declared that Qua Iboe is under force majeure for at least a month as it makes repairs. This is the line the NDA said they blew up, Exxon repeatedly said it was not attacked. Apparently Exxon was full of it when they denied the attack, and instead of coming clean they say the line had anomalous pressures when loading. Maybe from the hole the NDA put in their line. What I don’t understand is why Exxon would bullshit about the attack instead of coming clean and saying terrorists damaged our export facility.

          http://finance.yahoo.com/news/nigerias-qua-iboe-crude-under-154126116.html

      • clueless says:

        Gofish – “Oil inventories are even higher, 56 percent up from a year ago (7/15) according to the EIA.”

        You may have misread. Oil stocks are up 55.6 million bbls. They went from 463.9 to 519.5 million bbls. So an increase of 12%.

  45. learner2 says:

    Quotes from David Demshur at CLB are sobering. He’s saying market is going to be 2.8MBarrels short by this time next year, given their calculated 3.3% net decline curve.

    And yet, WTI heading south with gusto every day last several days. That 52 top seems so long ago. I guess people like me are confused about the gasoline “glut”. If demand is so high everywhere, why do we have a glut?

    • Watcher says:

      Why do you think there has to be a relationship?

    • shallow sand says:

      We do not know if there is a world wide gasoline glut, just like we do not know if there is a world wide oil glut.

      We have reliable gasoline and oil storage data from well less than 50% of the countries that refine and produce crude oil.

      There is a supply and demand element, but market sentiment, global economic views and large funds exaggerate prices both up and down.

      Commodities are out of favor, it is not just oil.

      Farmers and oil producers are natural enemies, so it seems. However, farmers admit things are usually not good for them when oil prices are low. This seems counterintuitive, given fuel and fertilizer are major expenses.

      However, the two farm booms in my lifetime coincided with the two oil booms. Likewise for the busts. Maybe not directly correlated, but close.

      It is not simply supply and demand, large funds make a lot of difference.

  46. aws. says:

    I had lulled myself into thinking that the coming wave of petroleum industry bankruptcies wasn’t going to lead to broader repercussions…

    The Risk Oil Drillers Couldn’t Hedge Away

    Failing drilling companies lose valuable insurance that would protect them against falling oil prices.

    Asjylyn Loder, Rachel Adams-Heard, BlooombergBusinessWeek July 20, 2016 — 8:44 PM EDT

    That’s unusual. Bankruptcy law typically stops creditors from foreclosing on the property, such as land and equipment, of companies that are about to fail. The rules are meant to ensure that companies have a chance to restructure and that assets are divvied up fairly among various creditors.

    But there’s an exception for assets in the form of financial derivatives such as hedges. It’s designed to keep trading losses from spreading when a company goes under. The same exemption came into play when Lehman Brothers went under in 2008. It allowed other Wall Street banks to collect billions on trades with Lehman, though not without controversy. Eight years after the collapse, some investors are still fighting over the trades in court.

  47. Duncan Idaho says:

    Will this effect Kuwait’s oil production?

    Eastern Hemisphere’s All-Time Temperature Record: Kuwait Fries in 54°C (129.2°F) Heat

    https://www.wunderground.com/blog/JeffMasters/eastern-hemispheres-alltime-temperature-record-kuwait-fries-in-54
    (we have probably left the 20th Century weather in the rear view mirror)

    • Bill Franti says:

      To me, this is what I like to refer to Mother Nature being Mother Nature. Some years it’ll rain and snow a lot in countless places around the world, but then some years it just won’t. Then some years the spring winds will blow from March all the way thru to June, but then some years they don’t. Some years the South will get hit with many tornadoes and hurricanes, but then some years it doesn’t happen. These are some of the common changes in weather patterns that happen each and every year. It’s a fact of the way our glorious worldwide climate systems work, nothing historic about any of it, for it’s just Mother Nature acting out and doing what she’s been doing for centuries. I used to make a living drilling North Slope wells deep in the Alaskan arctic, drastic climate change has gone on there for eons. It’ll get warmer, colder, yes change all the time. I’m a retired old man at this point in my life so unlike the younger generations that think all of this climate news being reported these days is all something new, I”m old enough to have seen all these supposedly new “records” and “changes” happen before at least once in my life, there’s just nothing new or interesting in it.

      • Strummer says:

        Yeah, except these “records” and “changes” are recently all going in one direction only.

      • Fred Magyar says:

        I”m old enough to have seen all these supposedly new “records” and “changes” happen before at least once in my life, there’s just nothing new or interesting in it.

        In science, eyewitness testimony and personal experience is considered to be the least reliable of all forms of evidence to support a hypothesis.

        The first principle is that you must not fool yourself – and you are the easiest person to fool.”
        Richard Feynman

        “The difference between stupidity and genius, is that genius, has limits!”
        Albert Einstein

    • I did some time in the desert. When it got really hot I had surface crews go to night shift only, shut them down around 8 AM, fed them dinner and put them to bed. Such a high temperature impacts rig crews. We give them crushed ice and set up large blowers, but the work pace really does have to slow down. Humidity doesn’t help. It’s really interesting to see your coveralls turn white even though you don’t think you are sweating.

  48. clueless says:

    Devon completed the Pony Express well. First 30 days: 1,500 barrels oil per day [2100 BOE]. They also completed its Alma spacing pilot test: 840 barrels of oil per day [1400 BOE].

    It will be interesting to see how long some of these STACK wells in OK produce meaningful amounts of oil.

    • coffeeguyzz says:

      Clueless

      Devon’s ongoing down spacing is but one of the many, continuing enhancements to the completion techniques that lie behind the increase in productivity from the newer wells.
      Over at Peak Oil, there is a post on Pioneer’s efforts at maximizing returns as their understanding of the Permian’s unconventional development continues.
      It was just two years ago that Whiting was testing five perforation clusters versus three over 30 stage (300′ per), 10,000′ laterals.
      Pioneer is now testing 100′ stages (50 per 5,000′ lateral), with perf clusters 15′ apart.
      This provides 300 entry points into the formation versus Whiting’s 120 – with three clusters – with a lateral half as long.
      The effective use of diverting agents is enabling the increase in clusters as it minimizes larger fractures from ‘taking’ all the frac fluid. (250,000 barrels of fluid in Pioneer’s examples).

      • Reno Hightower says:

        And they are all still losing money.

        Big reserves and high IP rates are great, but worthless unless they make money.

Comments are closed.