OPEC Hits New High

The new OPEC Monthly Oil Market Report is out with crude only production numbers for June 2016. OPEC added Gabon to its member countries this month. But I do not have historical production numbers for Gabon so this report does not include Gabon.

OPEC 13

OPEC crude only production reached 32,643,000 barrels per day, (not including Gabon). This was an increase of just over a quarter of million barrels per day. See exact data below.

Secondary Sources

Algeria

Algeria, slightly up this month but s nevertheless in slow decline.

Angola

Angola seems to be holding steady.

Ecuador

Ecuador is also holding production steady. Ecuador increased its rig count from 2 to 5 in June but that is down from an average of 25 in 2013 and 2014.

Indonesia

Indonesia has reversed its decline in the last year and one half but I don’t see much progress from this point on.

Iran

Iran’s increase since sanctions were lifted has slowed. There are other problems on the horizon for Iran. They are talking about changing all their oil field contracts to “buy back” contracts. That is they want the option to nationalize all everything. This will likely cause a mass exodus of foreign oil companies from Iran and hit their production considerably.

Iraq

Yes, believe it or not, Iraq has peaked, or at least peaked for the next several years.

Kuwait

Kuwait has recovered from the problems they had in April. I expect their production to flatten out here with a slight decline over the next few years.

Libya

Libya’s problems continue, and will likely continue for a long while yet.

Nigeria

Though Nigeria’s production increased slightly in June their problems with the rebels continue.

Qatar

Qatar’s oil production seems to have bottomed out since late 2014.

Saudi Arabia

Saudi Arabia peaked, so far, in June 2015 and seems to be holding rather steady since then.

UAE

The United Arab Emirates had some problems earlier this year but they seem to have recovered. I think they will hold production steady for a while now.

Venezuela

Venezuela’s oil production is dropping much faster than most analysist had predicted. And they, very likely, have a bit to go yet. Many of their workers and contractors are not getting paid. I expect them to be at 1.9 million barrels per day, or lower, very soon.

World Oil Supply

Though OPEC production reached an all time high in June, world oil production is still down almost 2 million barrels per day since peaking in November 2015.

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200 Responses to OPEC Hits New High

  1. VK says:

    Recently finished reading Richard Heinberg’s newest book, Our Renewable Future. It is a clear and concise book which lays out with great clarity I felt the opportunities for solar and wind as well as the numerous challenges. One thing is certain, at the global level as well as the national level, there must be discussion as well as clear joint action about the twin realities of peak oil and climate change. Considering that we may have to invest $100 Trillion within a time frame of 20-25 years to mitigate the worst effects of climate change as well as advance our engineering enough to electrify processes such as the manufacture of cement as well as heavy duty equipment related to trailers, mining, farming etc, we must begin to talk more honestly and openly about the coming transition. Just going back and forth between peak oil circle confines isn’t going to help society much at all. The challenge lies in creating a positive vision for a post carbon future which the public hasn’t grasped yet, or maybe is unwilling to.

    http://www.abc.net.au/news/2016-06-24/renewable-energy-technology-breakthroughs-needed-says-heinberg/7512840

    • Fred Magyar says:

      Considering that we may have to invest $100 Trillion within a time frame of 20-25 years to mitigate the worst effects of climate change as well as advance our engineering enough to electrify processes such as the manufacture of cement as well as heavy duty equipment related to trailers, mining, farming etc, we must begin to talk more honestly and openly about the coming transition.

      Indeed! We will have to rethink everything and start a lot of things from absolute scratch. This is the time to go back to the drawing board and reexamine all of our assumptions.

      Here is an example of the kind of thinking we will need to be doing more and more.

      http://www.ready-for-the-resource-revolution.com/en/bacteria-in-concrete-how-biomimicry-is-inspiring-sustainable-construction/

      Hendrik Jonkers, a Dutch microbiologist and finalist in the European Patent Office’s 2015 European Inventors Award, was inspired by the ability of octopuses to regrow lost tentacles, to develop a new cement that could self-repair cracks in a cement structure. To do this, Mark Jonkers included, in the cement, natural bacteria (bacillus pseudofirmus and B. cohnii) capable of producing limestone. Normally dormant, they “wake up” as soon as they come in contact with water and flow into the crack. The limestone creation process then fills in all cracks. Another benefit of this innovation is that the bacteria consume oxygen, thus minimizing internal corrosion in the cement.

      For the construction industry, this new material has an essential additional property: its durability. Bacteria can remain dormant for 200 years, which is a real benefit for major civil engineering projects that are difficult to access. This cement, which combines expertise in construction and marine biology, could allow the heavy construction and civil engineering industry to significantly reduce the maintenance costs of bridges, tunnels, and more…

    • I dont see a need to electrify cement manufacture. There’s a lot of misinformation flying around about global warming which seems to be based on flawed (and poorly documented) carbon cycle processes. As far as I can tell the peak CO2 concentration will be around 630 ppm and then begin a long downward descent to 180 ppm.

  2. Florian Schoepp says:

    Has depletion finally gained the upper hand? My back of the envelope calculation:
    Conventional: 78 million barrels at 4% = 3.1 million barrels.
    All other: 19 million barrels at 10% = 1.9 million barrels.
    Total: 5 million barrels per year
    2015 was a year where a lot of projects came online that were developed in previous years. There is less of that this year. So 2 million for this year seem reasonable. Next year will be interesting.
    If demand keeps growing, there should be a substantial shortfall, draining storage. The only way to close the fast growing gap is a miraculous recovery of Libya and others that are currently hampered by political unrest.

    • George Kaplan says:

      There are still a lot of projects due this year and next and even into 2018, but not quite enough to make up for the declines. Probably 2.5 to 3.5 mmbpd fall over the three years barring big, unexpected outages. In 2019, 2020 and 2021 there will be dramatic and accelerating falls unless a lot of expensive, and currently delayed, oil developments are fast tracked soon, or a lot of very cheap oil is found somewhere, or in fill drilling ramps up quickly on the big reservoirs. We’ll get to see the truth behind LTO sustainability and flexibility; that and depending on how demand goes, plus the real storage numbers will determine prices and therefore future supply developments. Overall though I agree, I think we will suddenly find ourselves short at some point in the next 5 years, and without many options.

    • Watcher says:

      Why would you want to drain storage when you can kill competing consumption with weapons.

      • Dave P says:

        Because the people you are trying to kill will then attempt to kill you?

      • clueless says:

        Watcher – I think that Ron “almost” has you pegged. Basically he notes that no one can be that Fu–ing stupid. But, he may be wrong. What in the hell are you talking about when you say “you can kill competing consumption with weapons?” Why would anyone in the supply chain want to kill “CONSUMPTION?”

    • It’s erroneous to decline “all other” at a fixed rate like you propose.

  3. Pingback: OPEC Hits New High | Energy News

  4. Watcher says:

    Output of KSA vs July 2014 at $100+ /b up about 600K bpd. Less than 1/2 price and up 600K bpd.

    What’s the latest Russia vs July 2014, Ron? Similar? Probably.

    Imagine that. Price didn’t matter.

    • Till says:

      It’s time lag. Simply said, when prices where at 100$+, everyone had lot’s of money to invest and drilled like mad to get even more oil, explored, developed new fields.

      These operations have normally completion times of a few years, so they come alltogether online now. A typically pork circle.

      Price does matter – now new projects are delayed or canceled, ready to go into the next round.

      • Dennis Coyne says:

        Hi Till,

        You won’t convince Watcher that price matters, but most of us agree that price matters.

        • How can anyone possibly deny the effect the price of oil has on the production of oil? The very high price of oil brought on the shale revolution. Oil prices above $80 a barrel caused shale oil production to boom. However shale oil production is just uneconomical at prices below $60 a barrel, or somewhere in that neighborhood.

          Dammit, it is as plain as the nose on your face. Price determines production. Does Watcher really deny that simple fact? No, Dennis, you are simply mistaken. Watcher is not so dumb as to deny that simple fact…. Is he???

          • Oldfarmermac says:

            Watcher has BEEN denying it, as steadily as if somebody were paying him by the word, for as far back as I can remember.

            Some people, quite a few actually, believe God looks after their lives for them on an every day basis, and no amount of evidence, good or bad, is enough to shake this conviction.

            Watcher apparently believes in some UNIDENTIFIED POWER that keeps oil coming regardless of the price, or perhaps more accurately, keeps it coming even while controlling the price and forcing it down by half or three quarters.

            Of course there might be another explanation. Maybe he just enjoys rubbing everybody nose in the apparent failure of the market system in the case of oil.

            The explanation is simple enough, in principle. The oil industry is the biggest and slowest moving of all industries, when it comes to NECESSARILY operating on a five to ten year time scale in terms of making production decisions.

            Being an orchardist, I am personally quite comfortable with such planning time scales, because my kind of work is planned on a very similar time scale. If I miscalculate , meaning guess, really, what the price of apples will be ten years down the road, and plant too many new trees, I am not just going to take a chainsaw or bulldozer to my orchard because the price collapses. I wait it out, and hopefully OTHER orchardists go broke first. Old trees will be dying, there is depletion in apples, lol.

            The production decision making process is triply compounded in difficulty by what we usually forget , because in a forum such as this one, the discussion is centered around BUSINESSMEN out to make a living, folks such as Mike, Shallow Sand, Texas Tea, etc. They make rational decisions, as best they can.

            What we forget is that the oil industry is an industry dominated by governments, and governments are notoriously clumsy in managing their business affairs when circumstances demand action.

            Politicians, be they Saudi kings or socialist Venezuelans, or right wing dictators or more middle of the road types, are NOT going to do anything to upset their citizens, or piss them off, if it can be avoided. Laying off a few tens of thousands of people is just not DONE until there is NO OTHER choice.

            Nobody would notice if we laid off half the people who work in the post office here in the USA. Every body I know , excepting my cousin who is a carrier, and the post master, thinks we could get along JUST FINE delivering the mail three days a week instead of six.

            Politicians at the top of the heap are mostly interested in one thing, that thing being to stay in power, and to do that, they play an incredibly complicated, fluid game maintaining the network of supporters who ENABLE them to STAY in power.

            Expecting them to act like BUSINESSMEN running a business is naive. As a rule, they will never do anything proactive in order to solve a problem that might just go away by itself. When they DO do something , it is to be expected that the doing will be undertaken much later than it ought to be, and that it will be inadequate to deal with the problem until the problem becomes an existential emergency.

            ONCE all the chips are on the table, and it’s literally do or die, or be sent home, out of office and out of power, governments can do some pretty spectacular things, such as mobilize to fight a flat out war.

            Things aren’t that bad yet, in the countries dependent on oil revenues,excepting Venezuela. Maduro is actively constructing a police state in hopes of staying in power.

            The industry has excess capacity. It took years to build that capacity, and the economy couldn’t absorb the amount of oil coming to market at a hundred bucks, so the price collapsed. The economy IS absorbing the oil coming to market, about the same amount , at about forty bucks.

            It will take a WHILE for the excess capacity to dry up.Maybe another year or two, maybe less, maybe longer. If the economy turns sour, it will take longer.If the electric car revolution really comes to pass, on the GRAND SCALE, and very quickly, demand destruction will mean there is so much excess capacity that the price will stay low for a long time.

            There is nothing involved in understanding the oil price question that requires more than a basic understanding of supply and demand, plus an additional understanding of the relevant time scales and the nature of GOVERNMENTS as opposed to BUSINESSMEN making decisions.

            If businessmen were running the post office, we would have half as many postal employees, lol. Maybe even less.

            • Watcher says:

              OTOH, I notice 2 yrs later KSA is producing 600K bpd more oil at less than half the price.

              And what is Russia producing now at less than half the price? (asking again since Ron tracks them)

              Oh, and more fun, y’all recall the big drilling investment from the majors got cut in Jan 2014?

              • Frugal says:

                It`s called delayed effect.

              • Oldfarmermac says:

                Farmers have generally done the same thing, collectively, when the price of whichever crop they produced crashed.

                As an individual guy growing corn, or wheat, or rice, or apples, I cannot produce enough, or cut back far enough, to influence the market price. What I CAN do, is go flat out to produce every possible last bushel, going for the all important marginal dollar that might enable me to survive short term. This is what the SMALLER oil producers are doing, by and large.

                While producing flat out individually, and collectively, we make the price crash even lower, and stay in the pits longer, but then this is what drowning men who cannot swim do in the water- try to survive by pushing themselves up by pushing another man under.

                The game changes when one (or more) supplier is big enough and rich enough to have pricing power and staying power running at a loss. In that case, the big boy can “sweat” the little fellow , in the words of John D Rockefeller, running him out of business, deliberately.
                Now this didn’t take long at all while Rockefeller was running a small local company out back in the early days of big oil, but it can take a hell of a long time when the little guy is a sovereign government, or a giant corporation. I should say that SA and Russia are engaged in BOTH ways, producing flat out to maximize revenues, plus hoping to run some competitors out of the market, at least temporarily.

                Folks who aren’t TOO simple minded to think a little also realize there is such a thing as war and politics, and that war can be fought in markets as well as with guns. The USA basically broke the old USSR by making it impossible for that now dead empire to compete with us on building guns, never mind butter, plus encouraging the Saudis to flood the market and deprive the Soviets of oil revenue. Hard core D types will never admit that this is true however, because it is grounds for being kicked out of the party to admit that a Republican has ever succeeded at doing anything at all except creating more and bigger problems.

                There is an element of WAR being played out in the oil markets now, and for the last year or two, and it will continue to be important for a while.

                Anybody who thinks anybody in DC, excepting oil state congress critters and oil lobbyists, gives a flying fuck about the oil industries problems has a near zero understanding of economic politics. Cheap gasoline is an elixer that is damned good for the OVERALL economy, and as good as a zanax for soothing the nerves of consumers. To expect the Obama administration to do anything to raise the price of oil, when raising it would cost D ‘s elections, is tantamount to insanity. Who can remember this quote? “It’s the economy, stupid”?

                Hells bells, the R party rakes the D ‘s over the coals for LOWERING the price of oil by insisting on higher fuel economy standards, lol.

                And one last little bit of ranting, and I will lay off for an hour or two , at least, so help me Jesus. This is history we are talking about, not a goddamned thirty minute tv show.

                Things that matter take time in real life.

                • R DesRoches says:

                  Looking at what Ron has said that the threshold for LTO production is $60, what I find important is that just a few years ago that threshold was in the $80 to $100 range.

                  Even at today’s prices, $45 to $50 range, we have seen the oil directed rig count, increase over the past few weeks.

                  This indicates that some of the better plays have a lower threshold.

                  As we go out in time I would not be surprised that the $60 threshold will move down again.

                  • texas tea says:

                    R DesRoches,
                    absence of some new technology, I expect we are at the lows of what LTO break-even cost will be for the best LTO plays. As oil prices pick up and balance sheets get better the drilling companies, Fracking co will begin to have some better pricing power and I expect they will use it. So for a time expect break even to stay low but begin to rise “somewhat” as prices move up. I still think $75 WTI is what the best companies in the best plays really need to MAKE MONEY not just break-even in a normal business environment. (lets says 1200 rigs running lower 48 ) I know I would be drilling in the areas I am active at that price, $50 not so much and only with a gun to my head 😜🔫

                  • clueless says:

                    RDR – I am never sure of what anybody said about breakeven, unless it is accompanied by a complete financial statement.

                    If an oil company has undrilled land in an LTO area, that (1) needs production to “hold” the lease, and/or (2) has bank debt related to its lease acquisition, then: Their breakeven point and perspective is totally different (lower) than if you or I tried to determine our breakeven point if we went someplace, bought acreage and drilled a well.

              • OTOH, I notice 2 yrs later KSA is producing 600K bpd more oil at less than half the price.

                And what is Russia producing now at less than half the price?

                Watcher, you cannot measure every barrel produced with the same yard stick.

                It cost KSA about $20 a barrel to produce oil, more in some places less in others. Therefore they want to produce every barrel possible in order to meet their budget.

                It cost Russia pretty much the same to produce oil from their old fields. But it cost them much more to find new oil and produce it. The price of oil is hitting Russia very hard but will hit them much harder unless the price rises soon.

                The low price of oil is killing Venezuela. Their production is dropping. It will drop much further unless the price starts to rise soon.

                Almost every barrel being produced cost a different amount to produce. There is a thing called “the margin”. That is what it cost to produce the most expensive barrel of oil being produced. As the price of oil drops, barrels being produced “at the margin” starts to drop off. More expensive oil stops being produced, less expensive oil continues to be produced. Of course there is a delay between the price dropping below the margin and that marginal barrel dropping from production.

                Watcher, it is just fucking insane to claim that price has no effect on production. You have to know better than that. Why on earth do you think the number of oil rigs working in North Dakota dropped fro 215 rigs four years ago today, to 30 today? It was because the price of oil dropped and for no other reason. And that decline in the number of rigs is currently having a dramatic effect on oil production in North Dakota.

              • Dennis Coyne says:

                Hi Watcher,

                Prices dropped in June 2014, maybe you mean Jan 2015?

          • Dennis Coyne says:

            Hi Ron,

            It may be that I am misinterpreting Watcher. I have been mistaken in the past and history tends to repeat. 🙂

            • Dennis, I was just being sarcastic. I know that Watcher really does believe that the price of oil makes no difference. Imagine that! He also believes that money is just a piece of paper.

              • R DesRoches says:

                If you go to any of the big LTO independent oil companies web sites and look at their investor presentations you will find two trends.

                First the day to drill wells have come down in the last couple of years, in many cases by over 30%.

                Second with bigger fracs and changes in the mix, IPs and EURs have gone up, in many cases above 25%.

                What this means is that the break even price of oil has been coming down.

                We are starting to see rigs coming back to the patch at oil prices below $50. IMO as the oil prices moves up towards the $60 level the rate of increase in rig counts will also increase.

                • Dennis Coyne says:

                  IPs have gone up due to more proppant and more frack stages, this increases well cost.

                  I doubt the breakevens have fallen below $75/b for full cycle costs.

                  • R DesRoches says:

                    Yes they have added more stages with closer spacing, but total well cost to drill and complete have gone down.

                    According to EOG, 2/3 rds of the lower cost is from sustainable efficiency improvements and the rest is from lower service costs.

                    According to EOG spud to td has gone down by 43% to 59% (Bakken), and LOE has gone down 30% from $17.02 to $11.86.

                    At the same time 120 day production rates in 2014 has gone from 10.7 Bbl per foot to 20.9 Bbl in Q1 2016.

                    Bottom line more oil at lower cost has reduced break even oil price?

                  • Dennis Coyne says:

                    Hi R DesRoches,

                    Well costs went down and then back up as more esoteric well designs have become common. Note that supd costs may have gone down and LOE might also have gone down, but you are leaving out completion costs which is about 2/3 of the capital cost of the well, the decrease in spud cost has been more than offset by increases in completion costs (this includes the fracking). On balance total well cost has probably not decreased much and for the newer designs with more stages (up to 40 or so in the Bakken) and higher amounts of proppant, total well cost has probably increased.

                    The “lower well cost” presented in the investor presentations is for an older “standard well design”. The newer well designs that have increased the output per well cost an extra 1 or 2 million per well (in the ND Bakken/Three Forks).

                • shallow sand says:

                  What does frac water cost per barrel, or at least a range? How many barrels of water are needed to drill and complete a hz well? How much does trucking the water cost.

                  I know all this can vary, so just some ranges will do.

                • Dennis Coyne says:

                  Hi R DesRoches.

                  I took a look at oil rigs operating in the Permian, Bakken and Eagle Ford.

                  For those 3 plays we have:

                  Total oil rigs- 213
                  Horizontal-191
                  Vertical- 22

                  Bakken – 28T, 27H
                  EF- 27T, 26H
                  Permian-158T, 138H, 74% of oil rigs in the big 3 LTO plays.

                  Of the 28 oil rigs added since May 27, 2016, 22 were added to the Permian and all were horizontal rigs. The Bakken added 5 horizontal rigs and 1 vertical and the EF 1 vertical rig.

                  Based on this, Eagle Ford is probably the high cost play, then Bakken, with the Permian perceived as best at the moment of the LTO plays.

                  Data from Bakker Hughes pivot table.

                  http://phx.corporate-ir.net/phoenix.zhtml?c=79687&p=irol-reportsother

    • Petro says:

      “…Imagine that. Price didn’t matter…”

      Watcher,

      just like you were wrong when you wrote: “…countries with CBs cannot default…”, you are incorrect with this one, as well.
      (I clarified that for you here: http://peakoilbarrel.com/petroleum-supply-monthly-texas-cc-estimate-permian-and-eagle-ford/#comment-575038 )

      -Not only price does matter, but It is PRECISELY due to the low prices that everybody is producing in a ” …the last big party…” mode, … last oomph, if you will!
      All in!
      All they can!

      ….and has little to do with the “delayed effect”…. if there is such a thing.

      Be well

      Petro

  5. Frugal says:

    Nexen to lay off 350, releases findings on hydrocracker explosion and pipeline spill

    Nexen Energy will lay off about 350 workers from its Long Lake facility, following its release of results of internal investigations into a July 2015 pipeline spill and the January 2016 hydrocracker explosion.

    Nexen is based in Alberta but owned by CNOOC, a Chinese company.

  6. dclonghorn says:

    Ron is the return of Canadian bbls the big reason for the estimated 400,000 bpd worldwide increase?

    Page 51 of the report infers a 700,000 bbl recovery in Canadian production from May to June. Does that sound right to you.

  7. dclonghorn says:

    Hat’s off to Enno for the information he posted refuting Michael Filloon’s claim that Northest Mckenzie wells routinely produce 200,000 to 400,000 bbls oil in the first year. We need more facts, not bs.

    http://seekingalpha.com/article/3987709-bakken-update-rig-counts-tell-us-little-horizontal-wells-changed-predict-future-production

  8. Oldfarmermac says:

    It’s amusing to watch the msm dance around avoiding any REAL discussion of why Venezuela is in such real trouble.

    http://money.cnn.com/2016/07/12/investing/venezuela-crisis-oil-production-plunges/

    • The English language media has very uneven coverage. For example, a few days ago Maduro named General Padrino López to a new unconstitutional post. Padrino will boss all ministers as well as the Armed Forces. Giving hm control of the interior ministry gives him control of the dreaded political/secret police, the SEBIN, as well as the national police and national guard.

      This cession of power to a general, at a time when the Supreme Court is a mere pawn of the executive and the National Assembly is being ignored blatantly, marks what we could call a self coup. But there’s more, the Cubans are known to be enmeshed in both the military and secret police apparatus. And I have a photo of Padrino López kneeling in front of Fidel Castro. So we could say Venezuela is ruled by a dis functional and corrupt military dictatorship subservient to the Castro family Mafia. All of this is well known to the USA government. Now think through, why is Obama extending a life ring to Raúl Castro, at a time when he’s practically invading Venezuela?

      http://www.caracaschronicles.com/2016/07/12/padrinos-move/

  9. Watcher says:

    Well heck and son of a gun and it’s a real knee slapper, let’s go to the industry bible, shall we?

    The BP data released.

    Russia production end of 2013 –10.779 mbpd
    anddddddddddddd end of 2014 — 10.838 mbpd
    anddddddddddddd end of 2015 — 10.980 mbpd

    so mid 2014 right around 10.8 mbpd trala trala this is all liquids I think, but let’s not be ever so particular
    I’m seeing the top two producers cranking out over 100K bpd MORE at less than 1/2 the price of two full years ago.

    Why should price matter when it’s defined in what has been exposed as whimsically defined pieces of printed paper? Think it’s all real? Comfy intellectually with negative interest rates?

    • Petro says:

      “”’Why should price matter when it’s defined in what has been exposed as whimsically defined pieces of printed paper?…” ~ Watcher

      Your understanding of those “…whimsically defined pieces of printed paper…” is incorrectly simplistic .

      As our world functions today, those “…whimsically defined pieces of printed paper…” make EVERYTHING possible…
      ….even us having a long distance written conversation.

      Be well,

      Petro

      P.S.: …and to be technically correct, nowadays they are “…whimsically defined concoction of pixels…”

    • Greenbub says:

      Watcher, doesn’t Russian production reflect the strength of the dollar vs ruble rather than a disassociation from money altogether?

      • Watcher says:

        It’s not just Russia. It’s KSA, too. Ron’s numbers lay it out.

        It’s Been Two Full Years of price decline. There is no more . . . oh it’s just some transitory effects and we should just wait. Hell, if you wait for anything you’ll eventually see it, and declare that moment verification.

        It’s not about some “when”. It’s the area under the curve. All this time it’s not happening, because it’s all gone away since 2009. And it’s never coming back.

        • shallow sand says:

          It makes sense to me that in the areas where production costs more, production is declining, while where production costs less (Middle East and Russia) production is holding steady to rising.

          Let’s see where we end up at end of 2016.

      • shallow sand says:

        Good point, which AlexS has verified previously.

    • Why should price matter when it’s defined in what has been exposed as whimsically defined pieces of printed paper?

      Only a tiny fraction of all money is in paper printed form. The vast majority of all money is just an electronic entry in a bank somewhere. The form money is in, either in paper notes or as an electronic entry in a bank account, does not change the value of that money. Lots of things can change the value of money, but the fact that it is either printed or in entry form changes nothing.

      Russia is seriously hurting because of the low price of oil and Venezuela is dying because of the low price of oil. How can anyone on earth possibly believe that price does not matter?

      The low price of oil has a different effect on different producers. In many places the cost of production is still below the price of production. So these folks are producing every barrel possible just to try to stay afloat. But in places where new production cost more than the current price, production is dropping drastically.

      You cannot measure every barrel produced with the same ruler. Production costs differ and this difference has a corresponding difference in production.

    • AlexS says:

      Watcher,

      Russian oil companies are largely shielded from negative effects of low oil prices by:

      1) the depreciation of the ruble, which makes oil prices higher in ruble terms and costs lower in dollar terms;
      2) the Russian oil tax system, which imposes much higher taxes when oil prices are high and much lower when prices are low.

      But Russia is not typical.
      In most other countries producers are much more exposed to the price effects

      Russian oil production vs. oil price, 2013-16

      • Watcher says:

        And KSA up even more?

        Production cost differential was true in mid 2014 as well as now.

        The price is less than half what it was and two full years have passed. Production is up in the two countries that represent what, a full 25% of the global output.

        You guys are contorting yourselves to make an overwhelming reality fit your preconception. These central banks don’t have any idea what trillions upon trillions have done. Hell, Fed governors have explicitly said they don’t.

        • PonziWorld says:

          The “Financial System” is nothing but a bunch of Ponzi Systems.

          How else does a small default trigger the collapse (Japan 1997, USA 2008) of the entire interbank market?

          Shadow Banks
          “Money” Markets
          Goldman Sachs appointed central banks

          Does that come across as legitimate? And that Shadow Banks are somehow disconnected from the regulated banks? Nonsense.

          Short term debt in these “Money” markets is Private Money. Fake Money. Ponzi Money. The Ponzi Operators control the central banks, not the respective governments. Read the new legislation after 2008 where government was cut out of the loop.

          Isn’t it funny when their is a run in the Shadow system by the default of a small firm that it PERMANENTLY impairs the ENTIRE real economy.

          The definition of Money is More Transactions (Bigger Ponzi) than anybody else. There is nothing real about it because relationship banking disappeared long ago.

          Originate a loan, package it, get rid of it, and collect a fee. More loans (transactions), more fees to collect, more power. More subprime = Greater power.

          Shale is Subprime Oil.

        • Oldfarmermac says:

          Hi Watcher,

          There’s an old story about a proud dad watching his son in the school marching band. Dad sez his boy is the ONLY one marching to the music, everybody else’s kid is out of step to the music.

          Now maybe there is some sort of secret cabal of super rich guys who control the whole world economy, and tell people like Putin and Obama what to do, and when. It could even be that Putin and Obama are the two newest members, lol.
          Maybe. 😉

          Now I do believe it is possible for a central bank to steer resources, in the form of money , which buys people and concrete and steel, into a given industry. If this happens, then the rest of the economy is deprived of those same resources, in most cases without even realizing it.

          But now here is the problem with your argument. Even if a government mandates the production of oil, or any other good or service, by subsidizing it, directly or indirectly, the price of it is still the same.

          Sure you can get a few thousand off the price of a new TESLA, or a new pv system, because of subsidies. BUT the TESLA company, and the company that sells you the pv system GET THE FULL PRICE.

          The price the seller gets is the TRUE PRICE , the price that determines what can and cannot be profitably produced.

          Apparently you just aren’t able to get your head around the facts that price wars happen, that economic warfare is a fact of life, that all businesses can’t react to changes in prices as fast as an independent restaurant operator who can open or close his doors on very short notice.

          I have family members who are dead certain that if they broke a leg, God arranged for them to do so, and likewise if they win the lottery. God ordained it.

          You aren’t all alone in cherishing a few favorite delusions. 😉

          I cherish a few myself, but I try not to advertise them in wide open forums.

    • Survivalist says:

      It seems to me that when the price of oil drops and one still needs the same amount of income then you have to sell more oil to earn it. Sooooooo price goes down and production goes up so you can afford your budget.

      Are you saying Watcher that because price drops KSA should pump less oil? Why ever would they do that? They need money right. They make money selling oil right. Price per barrel goes down so number of barrels being sold needs to go up. Pretty simple stuff I figured.

      • Petro says:

        Absolutely correct.

        ….at the end of the day, the gross budgetary and debt roll over needs/obligations MUST be met … and that is why EVERY TIME price falls, cheaper/long term conventional producers (as well as the existing non conventional ones that are currently in production!!!!) increase production.
        They go on a “fire drill” and produce all they can… until they can, that is!

        If prices go lower, expect Russia and KSA (…and Kuwait and a few others…) to increase production – not lower it!
        When the production decreases with the prices, is the end of the party and we will have the violent spikes I have mentioned once or twice in the past…
        …has little to do with the “delay effect” and “supply-demand”.

        You have the accurate grasp of the “glut”, my friend.

        Be well,

        Petro

        • Watcher says:

          That scenario would presume a grand choke that defines level of output, rather than drilling new wells to offset decline rates. The latter is more likely.

          The new wells either are or are not free. That is where it has broken.

        • Oldfarmermac says:

          “As an individual guy growing corn, or wheat, or rice, or apples, I cannot produce enough, or cut back far enough, to influence the market price. What I CAN do, is go flat out to produce every possible last bushel, going for the all important marginal dollar that might enable me to survive short term. ”

          In the short term, cash flow trumps just about every other decision during a bad downturn. If you can make your payments, you survive to worry about profits another day. You don’t put tires on the truck, you don’t get your teeth fixed, your kid goes to school in Goodwill clothes, flea market clothes.

          Oil producers are in a very similar situation, excepting a few big boys,especially the Saudis, have a lot of cash in the bank to fall back on. Russia is a special case,hard up in some respects, but actually still bringing in a profit due to the low value of the ruble and the Russian tax system.

          The Russians and the Saudis cordially wish to see each other in Hell, asap. Putin is in a position now to weather low oil prices. The Saudis are not, after their money in the bank runs short, except for whatever they will be able to borrow.

          • Paulo says:

            Petro’s explanation makes the only sense to this situation.

            It’s the same with everything. When my wages dropped I did two things; I cut expenses and worked more hours (as needed). Everything had to be paid for. Corporations are no different.

            The only thing I never did was expand debt load to pay bills or pretend all is well, (like some Oil Companies do).

            • Dennis Coyne says:

              Hi Paulo,

              In the short term, individual businesses may react by producing more at lower prices. For the market as a whole, if there has not been a big shift in the cost of production for a mature industry, over the long term lower prices will lead to lower output.

              Let’s consider the World Oil Market, there are low and high cost producers and over the long term, if prices remain low, oil output will decrease as high cost producers are driven out of business due to lack of profits.

              There is a lag between when prices decrease and when output begins to fall due to oil in storage and international and major oil companies taking a long time to adjust their investments.

              Claims that there is no delay between oil price movements and oil output are not correct.

              The IEA expects non-OPEC liquids output to fall by 800 kb/d in 2016 (June report), this is offset by a rise in OPEC NGLs of 200 kb/d, whether OPEC can increase output from 2015 levels to make up the difference of 600 kb/d is unknown.

              A problem with the IEA analysis is that they should report in barrels of oil equivalent or in metric tonnes so that we would know the amount of Energy produced.

              It has always seemed strange to me that an agency which purports to report on Energy, wouldn’t use more appropriate units such as Exajoules (EJ) to report energy output.

        • George Kaplan says:

          There seems to be a general assumption that the larger conventional producers can choose to significantly ramp up production when they like, but I doubt that is true. Saudi have just bought on line the Shaybah extension which was a pretty big job to extend production facilities for ‘just’ 250,000 bpd.

          Production from a given field may be limited by different parts of the facilities at different times. Typically the limit will be the lowest nameplate capacity between each of: the reservoir / wells; oil processing; produced water handling; associated gas compression; total liquids flow; water (or gas) injection capacity. Overall power availability may also be limiting at some combination of oil/water/gas flow below each one of their individual limits.

          Usually in mature fields the wells become limiting. For example as water cut increases not only does the water displace the oil but also, as it is significantly heavier than the oil/gas mix in the wellbore, the overall flow rate declines rapidly. However this need not always be the case. In Saudi I think they design and manage their facilities to keep the production at the oil flow design capacity, which is nominally set to give 2% depletion of the original estimated ultimate reserves per year. To maintain this they maintain excess capacity in the other key facilities. In particular they need to control the water cut by using intelligent wells, expandable liners, and recompletions, or when needed drill new wells higher in the formation. If they lose control of the water cut, which must happen one day (ideally for them it would be the day they flow the last barrel of oil and shut in but that is not going to happen) then the likely limit will be water injection capacity. Water has to be pumped in to maintain pressure to exactly balance the volume pumped out. For the produced water in the oil that is about one for one, for a stock tank barrel of oil it is higher because the oil shrinks as it cools, but mainly because of the gas that is lost. This is ratio is called the formation volume factor and typically is 1.1 to 1.8. Say for a field the water cut is 50% and the FVF is 1.5, this means 2.5 bbls of injection water are needed to give one bbl of oil. I don’t know the Saudi figures but something like that for them means 25 mmbwpd injection (that represents a huge amount of large pipes and pumps, and power – the water isn’t like domestic supply, it has to be at high pressure). It’s not normally economic to build in much spare capacity for the piping systems (but who knows with Saudi). Once water can’t be controlled in horizontal wells the cut increases quickly, if it can’t be handled within the facilities and enough pressure maintenance from injected water supplied then the oil production has to fall (i.e. wells choked back) accordingly.

          If at a capacity limit (or limits) increasing production may need new wells, but more than that completely new topsides facilities, anything more than a few tweaks would need at least 2 to 3 years engineering, procurement and construction effort.

          • Doug Leighton says:

            Informative comment. Thanks George

          • Very good overview. I worked with a field set up to handle extra water, but they forgot the water heat capacity requires more heaters. So as water cut climbed we had to use lots of chemicals to get clean oil, until we could install more heaters and heat exchangers. These bottlenecks can be really subtle, so I took to asking for full surface system simulation runs at 90 % field water cut to see where the troubles were bound to pop up.

      • Javier says:

        I think Survivalist and Petro have nailed a very good analysis of the situation. When prices crashed most National Oil Companies and many independent producers tried (and are trying) to produce more to maintain income. The real tragedy comes when prices remain low and production falls like in Venezuela. Lack of investments guarantees that this will happen eventually to most producers, and then once production falls enough we will get very destructive price spikes.

        • Petro says:

          Bingo!

          …while indeed initiated by geology, this time “PEAK” shall be by the way – and in the form of low prices…

          As I said before:
          ….more than $65-$75/brl/oil kills economy….less than $60brl/oil kills Shallow and his colleagues…. take your pick….

          We have reached our limits…
          Let’s keep the party going for a little while longer and enjoy it responsibly.

          Be well,

          Petro

          • shallow sand says:

            $60 doesn’t kill us. I have been hoping for a $55-$65 price band, but we are way below that.

            We got $44 average for all of 2015, $32 average for first six months of 2016. We are around $5 off WTI.

            That’s why break even at $50 is crap. We haven’t been there for 20 months on a sustained basis.

            As AlexS notes elsewhere, I’m starting to think $50 breakeven refers to per BOE, which means $70+ WTI.

            • Petro says:

              You “disappoint” me, SS….

              As I have mentioned to you numerous times, numbers are illustration and not exact….
              I hope you get my point…. but maybe not!
              You are fine with $60brl….somebody else is not ….yet, somebody else is ok with $30/brl….. and so on.

              As I said numerous time before….we are stuck in this range and going lower….until the party ends.
              And you will know the ending by the spikes and shortages….. but by then, is late….too late.

              Be well,

              Petro

            • Petro says:

              …and SS, when you say : “..$60 doesn’t kill us…”

              I wrote “…LESS than $60…”

              …just to be correct, you know…

              Be well,

              Petro

              • shallow sand says:

                Petro. I understand.

                My point is our savior, US LTO, needs a higher price than our 111 year old stripper field.

                Which means to me there is a real problem on the horizon.

          • Hickory says:

            Petro, we see eye to eye on much these issues, but I do think that the world economy will be able to pay much more for oil than 60$ without crashing. Probably more than $100.
            The stuff is too useful, and money will be diverted from other uses to keep buying it.
            We’ll see, one way or another….

            • Javier says:

              Hickory,

              You cannot simply look at the oil price between 2010 and 2014 and deduce that those prices are sustainable for the World economy. You need to understand the situation under which those prices were made possible at the time. The period 2009-2014 was a time when Chinese debt was growing at unsustainable levels to fuel an oil demand that compensated the demand contraction from an overindebted Europe that could not accept those high oil prices and went into recession and debt crisis. The period 2009-2014 was also a time when central banks engaged in exceptional ZIRP and quantitative easing policies with most countries significantly increasing their public debt.

              But there is only one China and all significant economies have now a high level of indebtment so a very rapid growth of debt has become a lot less likely. At the same time ZIRP and quantitative easing policies are a one way avenue of increasing risk, decreasing effect, and extremely difficult return.

              The oil price crash has probably delayed the next economic crisis. However the world economy is in no position to assume the oil prices required to guarantee the level of investment required to increase oil production above 2015 levels.

              Oil depletion, debt, and low economic growth, will all work to make 2015 the year of Peak Oil. If we enter a period of high oil price volatility due to mismatches between production and demand that will be very destructive both to the economy and to oil production.

              • Dennis Coyne says:

                Hi Javier,

                Possibly $100/b is a problem, but there is a lot of room between $50/b and $100/b. When oil supply decreases, oil price will increase. How much oil prices can increase without damaging the World economy is far from clear.

                One can arbitrarily claim $75/b is the magic number that will make the economy crash, nobody knows. There might be a sweet spot between $75/b and $95/b where oil supply can either be maintained or possibly increase slightly and not cause World output to decline. World debt to GDP has been relatively stable since 2010 based on BIS data.

              • Hickory says:

                Javier- you (and Petro etc) may be right, and the civil difficulties of Venez and poverty of Moldova may be coming to places far and wide.
                I’m thinking that most commerce will still churn on, even if oil is 100$. Maybe just wishful thinking.

            • Dennis Coyne says:

              Hi Hickory,

              I agree. There is very little evidence that oil over $75/b kills the economy, what it has done recently is result in too much oil production relative to demand.

              What has changed is that there is no one willing to cut back on output. From 1930-1970, Texas was the World’s swing producer and from 1985-2014 Saudi Arabia fulfilled that role. Now we will see volatility in oil prices unless some new cartel is formed, maybe OPPC (Organization of Petroleum Producing Countries).
              US, Norway, UK, Russia, Brazil, and Canada could join the OPEC nations and have a production agreement to control oil prices.

              This would never happen, but maybe each nation should regulate output as the RRC once did for Texas, it would help with oil price volatility.

  10. George Kaplan says:

    E&P spending is much lower this year than was expected even after the big cuts initially announced. US independents and Canada in particular are hurting. Middle East is the only place holding up.

    http://www.ogj.com/articles/2016/07/cowen-global-n-american-e-p-spending-fall-revised-downward.html

    “In its midyear E&P spending update, Cowen & Co. now estimates global expenditures to fall 24% compared with a 16% decline in its January survey. The downward revisions were primarily driven by larger spending cuts from North America-focused E&Ps and major international oil companies.
    In this update, Cowen & Co. expects US spending to decline 45%, reflecting oil prices of $40/bbl and natural gas prices of $2.50/MMbtu. This was down from a 22% estimate at the time of January’s survey, which was based on $48.5/bbl oil and $2.50/MMbtu gas. Canada spending is expected to fall 33% compared with an earlier estimate of an 18% falloff.
    Survey of international spending reveals a 19% decline compared with an initial estimate of 14% in January. The Middle East remains an area of stability while the largest negative revisions come from large IOCs, Latin America, and the Asia Pacific region, excluding China. Latin America is still the weakest region, where spending is expected to decline 30%.
    IOCs and independents are projected to have spending declines of 24% this year, while other independents are expected to spend 45% less. This compares with prior decline estimates of 10% and 17%, respectively.”

  11. R Walter says:

    94.33 million barrels per day and money isn’t a factor. Holy Smoke!

    If I have some land and the land has a petroleum deposit, what can be done to extract the oil and probably some natural gas?

    The oil will be anywhere from on top of the ground to 10,000 feet deep.

    Who do you call? Not Ghostbusters, you will call somebody who drills for oil. Slawson would be a good choice, but Saint Mary’s would also work.

    What will it take to have an oil driller come out to the spot to drill a hole 10,000 feet deep? Oranges? Apples? Oil? Money?

    Neither one is going to work for free, so you choose one that will do more for less. They both can do the job, so the cost would be a deciding factor. It would be a tough choice, if Saint Mary’s decided to drill for oil pro bono, I would probably choose them. However, Slawson might just pay to drill for oil, so the choice would be obvious, take the money, lease the land for exploration and hope the oil from the well is a gusher at 300k per day.

    Slawson is not going to walk away. Drilling for oil is their business. They might offer more to drill for oil and Slawson might drill two for the price of one, and two gushers producing 600,000 barrels per day is definitely going to be better than one. At 40 usd per barrel, you’ll be making 24,000,000 dollars a day, you’ll be able to pay both drillers the costs and they’ll probably deserve a bonus. Both companies will probably offer to drill for more, if the price is right.

    After a year of production, you can open a bank account. The banker will be your best friend. The money from oil sales will do a lot of talking.

    In any event, no one will walk away with nothing to show for their work. A free lunch won’t be enough, I’m afraid.

    You’ll be swimming in gopher gravy like Jed Clampett, so you’ll move to California and the land will be an oil depot. Shipments will be in the bag.

    Who will be shipping the oil? You can’t expect the pipeline company to handle the shipments for nothing, and a free lunch won’t be enough, so you’ll have to share some of the proceeds. Warren Buffett won’t ship a single barrel for free, you can’t buy him an ice cream cone, he owns the ice cream store.

    Unfortunately, there will be some kind of compensation necessary to keep everybody happy. Money is probably the answer, all interested parties will probably take money.

    That’s when you go out and buy a meter. Of course, there needs to be demand for the supply, no demand and you’ll be sitting there with oil and no money. It couldn’t get any worse. Probably won’t happen that way, somebody will want some of that oil. Libya would take it, I’ll bet money on that.

    Some info on Libya, looks like they don’t work for free either.

    The top exports of Libya are Crude Petroleum ($14.4B), Petroleum Gas ($2.63B), Refined Petroleum ($696M), Gold ($95.4M) and Iron Reductions ($89.1M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($2.32B), Cars ($603M), Wheat ($434M), Other Furniture ($282M) and Insulated Wire ($245M).

    The top export destinations of Libya are Italy ($5.58B), France ($2.27B), Germany ($2.1B), the Netherlands ($1.39B) and Spain ($1.07B). The top import origins are Italy ($2.93B), China ($2.12B), Turkey ($2.06B), Egypt ($969M) and South Korea ($885M).

    http://atlas.media.mit.edu/en/profile/country/lby/

    Maybe Egypt is receiving oil from Libya and Libya isn’t telling.

    http://atlas.media.mit.edu/en/profile/country/egy/

  12. The IEA’s Oil Market Report is out this morning. The full report is available only to subscribers and will be available to the public in two weeks. But the highlights are now available to everyone. Bold theirs.

    Global oil supplies rose by 0.6 mb/d in June to 96 mb/d after outages curbed OPEC and non-OPEC supplies in May. World production was 750 kb/d below last year as higher OPEC output only partially offset non-OPEC declines. Non-OPEC supplies are set to drop by 0.9 mb/d in 2016, to 56.5 mb/d, before rising 0.2 mb/d in 2017.

    • I wrote a short post in my blog discussing what I think represents “oil production” – crude oil and condensate. I plotted refinery throughput as a proxy of C&C and also BP’s “production” to have a handy reference. I realize we do have storage and other kinks, but I’m simply trying to discern what’s going on at a time when most sources seem to fog the data.

  13. Paulo says:

    Received an email from a buddy stating, “Chalk one up for you”, (meaning, my prediction on BC LNG)

    Shell says final decision to be made end of 2017. I say that is a face-saving statement which really means, ‘no’.

    http://globalnews.ca/news/2819984/dark-cloud-over-lng-in-b-c-after-project-delay/?sf30809541=1
    ‘Dark cloud’ over LNG in B.C. after project delay in Kitimat
    globalnews.ca
    Premier Christy Clark’s dreams of a booming liquefied natural gas industry in British Columbia were dealt another blow Monday when a Shell-backed venture delayed a final decision indefinitely on a project in Kitimat.

    • Longtimber says:

      In the US – Will it be a choice between Health Care or a Car? Car Sales Bottom in Venezuela
      http://www.zerohedge.com/news/2016-07-13/what-happens-car-sales-socialist-utopia

      • Hickory says:

        “In the US – Will it be a choice between Health Care or a Car?”

        Certainly.
        And a choice between a vacation and paying the heating bill,
        between paying for kids schooling and a replacement battery pack,
        between groceries and the broadband bill.
        Cheap energy has allowed us to take just about everything for granted.

        Ever done your laundry by hand? How does wool underwear feel? Ever plowed a rocky field with horse?
        Ask Caelan. He does all those things.

        • Caelan MacIntyre says:

          Hey, Hick’,

          I’m ok with you expressing your fantasies about moi semi-publicly.

          We could even call it something, like Hickory Dickory. Whaddaya think? ^u^

          “…I have deliberately (and successfully) avoided having children. Not to say that I haven’t gone through the practice motions with some ladies many hundreds of times…” ~ Hickory

          BTW, have you read Euan’s recent article? It’s pretty good.

  14. The EIA’s Weekly Petroleum Status Report is out. US C+C production was up 57,000 barrels per day to 8,485,000, Alaska up 71,000 bpd to 411,000 bpd, US Lower 48, including the GOM, was down 14,000 bpd to 8,074,000 barrels per day.

     photo US Weekly CC_zpsqyaxzq6f.png

    Inventories were down just over 2.5 million barrels to 521,804,000 barrels. I have no idea why prices are down around two bucks today.

  15. Oldfarmermac says:

    http://www.resilience.org/stories/2016-07-10/gmo-industry-the-dumbest-guys-in-the-room

    I am not so sure about that.

    Clear and comprehensive labeling ought to be the law, and no mistake.

    BUT having said this much, GM crops have the potential to help avoid the worst sort of environmental and humanitarian disasters, and they shouldn’t be outlawed out of hand.

    This doesn’t have much to do with oil directly, but it has everything to do with getting thru the next half century or so.

  16. shallow sand says:

    This comment is without me doing any analysis, but does it seem that the IP’s out of the Bakken in the Daily reports are trending towards the “less spectacular”? Lots of sub 1,000, and more than a few sub 500 BO IP.

  17. Enno Peters says:

    I created a presentation where I show where oil production from existing shale US wells is heading in the coming years. It only includes the actual & projected production of horizontal wells that started production before 2016.

    • GoneFishing says:

      Excellent work Eno, thanks. I notice that the cumulative production of 2008 and 2009 wells is much higher than other years. Any explanation?

      • Enno says:

        Thanks, the main reason for that is that those were mostly Bakken wells, and Bakken wells are more productive than the ones in other basins.

    • clueless says:

      Enno – Excellent information! I always thought that EOG was the “darling” of the group. But, they having the lowest % of remaining – 36% (64% produced). In that regard, with respect to the production remaining, can you advise “about” how many years of production is represented for an average producer that you note?

      • Enno says:

        Thanks Clueless,

        I don’t get your question exactly, can you rephrase? The remaining production is all the production that is still expected from the legacy wells, in the coming 20 years, although most of it will of course be produced early on.

        • clueless says:

          You answered it. Everything in the next 20 years. I was wondering if it was a truncated number of years, like next 5, etc.
          Thanks.

    • I wrote a comment in your blog.

  18. dclonghorn says:

    Maybe my imagination has become to active, but I believe the story of the NDA attacking Mobile’s Qua Iboe terminal should be getting more interest. Monday night the NDA announced they had blown up the 300,000 bpd export line. Exxon was quick to deny that an attack had taken place. Someone is lying and it is not clear who.
    http://footprint2africa.com/nigeria-militants-exxonmobil-tug-words/

    Although it seems almost inconcievable that Exxon would lie about this, there are a couple of things that make you consider the possibility. One is that in May there were reports of a militant strike on the facility, which was denied by Exxon. Shortly after that Exxon reported that a malfunctioning rig had caused damage to the facility, and it was shut down for a short while.

    Another is that after the latest attack claimed, Shell reportedly shut in the trans-Niger pipeline, and there have been reports of oil companies evacuating 700 staff.

    http://www.vanguardngr.com/2016/07/shell-shuts-trans-niger-pipeline-avengers-strikes/

    http://www.news24.com.ng/National/News/militant-attacks-oil-companies-to-evacuate-over-700-staff-from-bayelsa-20160712

    It remains unclear what the status is of the Qua Iboe terminal, and other facilities in Nigeria. But it is clear that they have some big problems.

  19. Greenbub says:

    Regarding the KSA, it used to get talked about that they were damaging their fields with over pumping salt water. Is this a discredited notion at this point?

    • I have no idea what you are talking about. I don’t remember any such discussion and I have followed KSA production since about 2001. KSA has used water injection for way over half a century. That is the only way they can keep the pressure up. It does not damage their fields other than normal depletion.

      • Greenbub says:

        From the wiki page on Saudi oil reserves- “Simmons also argued that the Saudis may have irretrievably damaged their large oil fields by over-pumping salt water into the fields in an effort to maintain the fields’ pressure and boost short-term oil extraction”. It was a theory that I saw regurgitated when KSA was threatening to pump xx millions last year. Thought I saw it here; apologies if not.

    • George Kaplan says:

      Actually the opposite is true, they carefully manage water injection so as not to bypass any oil and, for example, in the past would rest Al Abqaiq field without production to allow the water contact to level out (that field might now be close to exhaustion). They have the best reservoir models in the world and will drill wells just to allow monitoring of the reservoir if needed.

    • We usually inject salt water. I assume water being injected in Saudi Fields is mostly sea water. As long as the waters are compatible and the water is oxygen and bacteria free then there’s no problem on the “chemistry” side.

      Not knowing the detailed well layout and rock description it’s hard for me to speculate with authority. The key in these fields is to pump water to sustain reservoir pressure slightly above the bubble point. Thus it’s possible that an operator could inject too much, in the sense that pressure would be kept a bit too high. This in turn reduces recovery factor a small amount.

      By the way, I’ve seen countries where regulations don’t allow fine tuning pressure, and we are forced to operate at a pressure higher than optimum. The guys who wrote those regulations simply didn’t understand the way Mother Nature works.

  20. VK says:

    The price of oil seems pretty darn important. Art Berman had an interview with Chris Martenson on peak prosperity that projects with some 20 Billion barrels of oil have been deferred due to the current low price. That’s a pretty large amount of oil that’s not coming online when required as a result of price.

    Not to mention that oil is becoming much harder to find, Steve Kopits at Princeton energy advisors has shown that between 1998-2005 $1.5 Trillion was spent on oil CapEX to increase oil output by 8.4 Mbpd and that from 2005-2013, $4.0 Trillion was spent on CapEx to increase output by just 2.4 Mbpd.

    Society is energy constrained and it’s showing up in the economy with crazy effects like NIRP, where $13 Trillion worth of global bonds now yield negative returns from Zero just a few years ago, think about that, paying someone to borrow your money!! Also an economy where young people aren’t getting decent jobs to pay for incredibly overpriced house prices as evidenced by affordability ratios, where populism and extremism is on the rise globally as well as large swathes of society are left out of prosperity. Energy is the ability to do work, without increasing energy supplies society has to fundamentally change.

    • Fred Magyar says:

      Energy is the ability to do work, without increasing energy supplies society has to fundamentally change.

      As far as I can tell, it is not against any natural laws, for societies around the world to contract, use energy more efficiently and develop technologies that harness energy from sources other than fossil fuels. Yeah, I guess you could say that would be a fundamental change! 🙂

      • texas tea says:

        it may not be against any “natural laws” for societies around the world to contract but there is not economic system on earth that will withstand a contraction of any duration.✋it did not have to be this way but it is😢

        • Caelan MacIntyre says:

          👻

        • Fred Magyar says:

          …but there is not economic system on earth that will withstand a contraction of any duration.

          Since we have been stuck in a growth based economic system for some time now, I certainly understand why most people would think that. However at least in theory, there are other ways of skinning the cat.

          http://steadystate.org/discover/definition/

          John Stuart Mill, pioneer of economics and gifted philosopher, developed the idea of the steady state economy in the mid-19th century. He believed that after a period of growth, the economy would reach a stationary state, characterized by constant population and stocks of capital. His words eloquently describe the positive nature of such an economic system:

          “It is scarcely necessary to remark that a stationary condition of capital and population implies no stationary state of human improvement. There would be as much scope as ever for all kinds of mental culture, and moral and social progress; as much room for improving the Art of Living and much more likelihood of its being improved, when minds cease to be engrossed by the art of getting on.”

          A more current and updated attempt at how to achieve a steady state economy is a vision embodied in “The Circular Economy” promoted by the likes of the Ellen MacArthur Foundation.

          https://www.ellenmacarthurfoundation.org/circular-economy

          Circular Economy
          A circular economy is one that is restorative and regenerative by design, and which aims to keep products, components and materials at their highest utility and value at all times, distinguishing between technical and biological cycles.

          CIRCULAR ECONOMY OVERVIEW

          Today’s linear ‘take, make, dispose’ economic model relies on large quantities of cheap, easily accessible materials and energy, and is a model that is reaching its physical limits…

          In any case since we haven’t really seen if a steady state economy can work, we won’t know until we try it. Either because we consciously and deliberately transition to one or because we allow our societies to follow the natural course of events to collapse and we have consequences like dieoff.

          And if it doesn’t work, we can always go with Anarchy and Permaculture 🙂

          BTW, on a much more serious note, I’m more worried about ecosystems simplification and biodiversity contraction than I am about economic contraction. It seems the Anthropocene’s major contribution thus far has been the ushering in of the 6th mass extinction event.

          • Caelan MacIntyre says:

            Hi Fred,
            Aside from my thanks for your permaculture promo, (permaculture is essentially anarchic in nature, incidentally), unless your unspoken agenda is to help cull the human herd– which would seem to appeal to Hickory, incidentally– I’m unsure sitting like a lump, and going to an imaginary job, where one again sits like a blob at an office desk in a cubicle (because AI robots are now replacing human manual labor, right?), in a self-crashing car, getting off on Elon Musk, Tony Seba and/or assorted CEO TED Talks and pushing AI-connected buttons on the dashboard console on the way is a good ‘adaptive survival strategy’ in the face of potentially-new pressures of natural selection in a post peak oil world. It just doesn’t seem too forward-thinking– perhaps a bit like the current psuedoeconomy that some of us call the economy. (But maybe I missed a sarcasm tag or winky face or two, haha.)

            As I’ve previously mentioned, humans could be considered at least ‘two’ scales; one, the ‘dinosaur-sized’ fossil-fuel-enabled global-industrial-technology-scale footprint; and the other, human-scale, made by our own actual feet. And we both likely know a little bit about what happened to the dinosaurs during the KT Extinction Event. The little ‘dinosaurs’ with the smaller feetprints or clawprints if you will– the birds– of course made it, along with our little ancestors, through this bottleneck.

            Therefore, in terms of so-called steady-state economies, I would be inclined to consider them a little in that sense; in looking at some creatures that have survived through an extinction bottleneck or two. It might give us clues into how to do the same, such as with our ‘economies’, such as if we might be able and willing to shrink them down, along with the rest of ourselves, sufficiently small so as to fit them through the next extinction bottleneck. (Which is in part, BTW, why I think permaculture is a far better bet than ‘Suits, Inc.’ technology, which is what appears to be what is creating a looming bottleneck in the first place.)

            “It is a simple law of nature Fred. Natural selection can never stop… Natural selection pressures decrease in times of plenty and increase in times of extreme scarcity.” ~ Ron Patterson

  21. texas tea says:

    Let’s break a few hearts:
    http://oilprice.com/Energy/Crude-Oil/In-World-Of-50-Oil-Shale-Beats-Deepwater.html
    “U.S. shale is the lowest cost option for new oil production and is likely to be more competitive than conventional offshore drilling, according to a new report from Wood Mackenzie.”

    • Reno Hightower says:

      That sounds true tt but in the world of $50 oil, I do not think either one, offshore or shale, is profitable.

  22. texas tea says:

    http://fuelfix.com/blog/2016/07/13/report-cost-cuts-have-helped-texas-shale-drillers-find-profits/

    “Worldwide, average oil production costs have fallen by $19 a barrel to $51 a barrel. At least for now, the oil industry has squeezed its production costs down to 2009 levels, and drillers could make a profit extracting 9 million barrels a day over the next decade, a 20 percent increase from the days of $100 oil.

    In West Texas, oil companies could make money in the Bone Spring and Wolfcamp tight oil plays with $37 a barrel oil, while their rivals in the Eagle Ford Shale in South Texas could turn a profit at $48 a barrel. The average break-even price in North Dakota’s Bakken Shale is $58 a barrel. In Oklahoma’s Scoop region, it’s $35 a barrel, Wood Mackenzie estimates.”

    I think I have mentioned here before, OKLA is happening, and “appears” to be the lost cost LTO play in US. Now that does not mean I know a damn thing about the oil business but it does mean you boys should keep a eye out in the future for considerable production coming out of this area as “development” gets underway.

    • GoneFishing says:

      Considering it is only worth about $10 a barrel to society, they should be happy at $50 a barrel.

    • Production costs dropped because the industry hit the fan and today there’s contractors, subcontractors, and individuals willing to give bargain prices to survive as long as possible, hoping demand will rise and they can return to being profitable.

      • Eulenspiegel says:

        Yes, a trillion $ old economy industry can’t cut prices by 50% by “innovation” in a few years. It’s all about subcontractors working for just cashflow to pay interrest on their loans.

        When they all resume drillig to these low prices (and in shale all drill in the same few sweatspots with the low $ oil), prices will crash up since there are few workers left to do all this additional work.

        Prices are low as long nobody drills…

        • No kidding. Back in the 1980’s I was a junior supervisor, but I was asked to cut budgets to the bone during the 1985-86 crash. The whole process was incredibly stressful, but we managed to achieve significant cuts by having rather forceful talks with service providers to get cuts. In some cases they had to sit down with unions and their subcontractors, but it seemed to work pretty well after we cancelled a platform painting contract on the spot after they refused to reduce their charges.

          • Eulenspiegel says:

            As I said.

            I don’t know any oil business here, since I sit in Germany, but we have lot’s of industry. And in the last crisis 2007 you could produce for lots less than break even, just to maintain a cashflow. Workers have been on short labor here (It’s a thing from the state to prevent firing, it paid out big time later).

            But when the economy picked up prices got higher again. So – you get only the low prices when few people buy – if everyone and his dog would run out drilling new wells these low prices would be history again.

    • Ves says:

      texas,
      That break-even bullshit is just nonsense. What is happening in oil industry is debt deflation aka “you have to eat less”. That debt deflation is direct result of debt infused shale development by Wall Street in order to prevent debt deflation in the rest of economy. Wall Street kicked the can of debt deflation in economy for about 10 years with 3 major shale plays in US. That’ all.

      OKLA plays maybe will get drilled but they will not make a dime like the rest of shale did not make dime by extracting oil, other than by doing the ponzi type of reselling of leases, companies to a greater fool.

      • texas tea says:

        Ves,
        you are ignorant, I personally have wells in this trend that will make money, that is working interest that I pay out of pocket money for and get a real after tax return. You should take a little time to learn and then think before you write, or you can continue to show the cyber world just how little you really know about the subjects you write about. decisions decisions…😉 I have not ask because i do not care but your understanding of the real world seems rather limited, do you profess to know more or have equal or better credentials, education and information, or more access to objective worldwide data within the oil and gas business than Wood Mackenzie? Thats what I thought👎

        • Ves says:

          texas said: “Wood Mackenzie?… made of credentials, education and information….”

          That is scary.
          Why do I need Wood Mackenzie’s interpretation? Reality does not need any interpretation. US oil production is down 1 mil within a year from the peak and folding like cheap wall mart chair, oil price is still in the basement at $46, and shale has outstanding credit card debt of 300 billion. And you are dialling 1 – 800 VISA to finance more drilling of shale in OKLA hoping for different outcome. Priceless, as VISA would say.

          • texas tea says:

            Ves,
            I now must assume you may have graduated high school, and were in the bottom 1/4 of your class and you may have taken remedial reading. So here is a little help for someone who is just so special.
            From the report:
            “In West Texas, oil companies could make money in the Bone Spring and Wolfcamp tight oil plays with $37 a barrel oil, while their rivals in the Eagle Ford Shale in South Texas could turn a profit at $48 a barrel. The average break-even price in North Dakota’s Bakken Shale is $58 a barrel. In Oklahoma’s Scoop region, it’s $35 a barrel, Wood Mackenzie estimates.”
            Do you see where it said Bakken @$58? This is in North Dakota, not OKLA.
            Do you see where it said Eagle Ford @ $48. That is in South Texas. again not in OKLA, Those $$$ numbers were far higher last year.
            Now can we name the two biggest LTO fields in the US, stay with me, I know this is hard for you. It is the Bakken and the Eagleford, both on a field wide basis are currently uneconomic and have been for well over 20 months. Most all LTO and conventional production world wide was uneconomic for the 4th 1/4 2015 and the first 1/4 2016, perhaps that explains why production has dropped.

            With regard to the economics of my personal business, it will not matter what I say, because you are just plain to ignorant to understand our business. But I will again share, if at such time we see $4.00 nat gas and $75 oil, this play will have risk weighted returns that exceed most of any projects I have been associated with in my 30 years. That includes a number of very prolific trends within the lower 48🇺🇸

            • Ves says:

              Texas,
              You really don’t understand numbers. So let’s leave at that. I will tell you the secret about these reports you religiously read by Wood Mackenzie, Citi, Bloomberg whatever.

              Their only purpose is to keep you in a dream. You are dreaming. If you are in oil business today the present is almost a hell. You can endure it only because of the hopes that you have projected into the future. You can live today because of the tomorrow. You are hoping something is going to happen tomorrow, some doors to paradise will open tomorrow. They never open today. And when tomorrow comes, it will not come as tomorrow, it will come as today – but by that time your hope have moved again.

              You go on moving ahead of yourself – this is what dreaming means. You are not one with the real, you are somewhere else ( like $4.00 nat gas and $75 oil), moving ahead, jumping ahead. You are dreaming.

              Have a nice day.

        • Dennis Coyne says:

          Hi Texas Tea,

          And what has your ROI been so far on these wells after taxes?

          • Ves says:

            Dennis,
            I have asked texas the same question few weeks ago and no answer so maybe he is still calculating ROI 🙂

            True story: Once I was standing in line for some Korean fast food and guy next to me start talking. “How yu duing?” , “What do yuo do”….. so the guy says “I am investor” for a living .
            I said “Cool”. So he starts talking about his investments in real estate, abraka-dabra …so he says: “profit 200% in 2 years, so you can make 100% annually”
            And my antennas start beeping right away. The guy was adding the percentages to calculate the profit after 2 years!!! Catastrophe. So he did not even know how to calculate a profit and he was “investor”!!!

            If he was making 100% annually then 2*2=4, so he had 4 times more money than in the beginning. 4 times more is 300% and not 200% as he claimed. That was in 2005-6 when RE was “hot” and anyone was RE “investors”, so maybe he is shale investor today 🙂

    • Dennis Coyne says:

      Hi Texas Tea,

      I doubt those quoted costs are full cycle costs in those plays for the average well. They may be based on the fantasy type curves found in investor presentations. When one takes a close look at actual average well output data, the well profiles in investor presentations are usually about a factor of 2 higher than real world results. So the real world full cycle (vs point forward) cost per barrel would be roughly double what you quoted above.

      • shallow sand says:

        I again wish all would realize that OK resource plays are generally wet gas plays, not oil plays.

        Just did a quick search. Found 539 hz wells with first production in OK since 1/1/15.

        13 have hit 100,000 cumulative BO or more.

        248 have hit 300,000 cumulative mcf gas or more.

        It is a wet gas play, just like the Woodford has been for decades. Springer is the only one I would call an oil resource play, I think it is generally agreed to be uneconomic at present prices.

        Woodford wells will produce a lot of gas, obtain a premium gas price due to high BTU, and produce little water, so LOE per mcf is low.

        I cannot comment on the economics of these wells, but do believe the data, thus far, shows these to be gas. Yes, many have initial high % of liquids, but the liquids disappear quickly.

        I think TT has generally agreed with me on these observations.

        • shallow sand says:

          Again, another quick search, looks like over 1/3 of the OK Woodford wells with first production 1/13 or later have hit 1 million mcf. Also looks like most are producing over 30K mcf per month.

          OTOH, most did not produce any oil in the most recent month. The big oil producers currently are for wells less than 12 months old.

          Safe to say these wells generally will produce a lot of gas. I am not able to discuss economics, do not have enough data.

          Hope I’m not annoying anyone as I have typed this numerous times. My beef is the wells are advertised as oil wells, in an “oil window” with IP and cumulative production measured in BOE.

          Kind of like calling driver assist function ” Auto pilot”.

          • Synapsid says:

            shallow sand,

            Your posts are always solid information and useful. Anyone who might be annoyed is no-one you need even think about. I bet a lot of us here count on you.

            For all:

            Can we please see an end–an END–to the snotty tone in far too many of the comments here? There is no call for any comment of the “I see that you have no understanding of (fill in the blank)” type, or of anything like it.

            Content and accuracy of post are important. Clarity of presentation is important. Civility and courtesy are important. What anyone posting here thinks of anyone else posting here is not important for the public discussion.

            • Caelan MacIntyre says:

              Troll alert. ‘u^

              (Joking of course and agreed about the civility, etc..)

          • AlexS says:

            shallow sand,

            “Hope I’m not annoying anyone”

            You are not. Please keep posting. I’m sure I’m not alone here to read all your posts.

      • texas tea says:

        Dennis,
        I have WI interest in 6 Woodford wells, I have RI interest in a dozen more. I fully expect to have have interest in well over 80 wells in Woodford and Springer when our minerals are fully developed. I have been active in this area for over 5 years and in the industry for 30 years. I have first hand knowledge of what the facts, the production and the economics are. I am going to MAKE money on a Woodford oil well that was brought on line June 2015 and has produced during the low price cycle. Those are just the facts.
        The bigger point here is if oil price recover of the next couple of years, what I have personally knowledge of will become more accepted. I really do not care one whiff if all the other experts on this blog can understand this NOW or not. Just sharing😉

        So what you have is a number of LTO players and oil majors with the ability to invest in projects all over the world CHOOSING to invest in OKLA and TX over all other opportunities, a sensible person would ask themselves why, and not be so dismissive of experienced, knowledgeable and educated oil and gas professionals.

        As to what work Wood Mac did, if they did no more than regurgitate industry presentations and then charged their clients for that information they are committing a fraud and I expect their clients would not pay for that type of already known public information. Just a WAG😜

        • Dennis Coyne says:

          Hi Texas Tea,

          I am most familiar with data for the Bakken and Eagle Ford and the cost estimates that WoodMac gave for those two plays is much too low (the average well breaks even in those plays at about $75 to $85 per barrel with a 10% discount rate), personally I would not invest unless I expected an ROI of 20% minimum, so probably $85 to $95/b might look good for drilling a well (considering the high risk).

          In any case it makes me wonder if those cost estimates are realistic for the Permian basin, but you are correct that there has been some increase in rigs there since late may so perhaps the economics is pretty good.

          Mike is very familiar with the Permian basin so I will defer to his judgement.

    • AlexS says:

      Texas tea,

      SCOOP is a shale play, but not an LTO play.
      $35 a barrel breakeven is actually $35/boe.

      Continental is one of the biggest players in the SCOOP.
      In 2015, oil accounted for less than 28% of its total production volumes in the SCOOP.
      When Woodmac says that $35 is a breakeven, they should add that average selling price for SCOOP producers is 3/4 to 2/3 nat. gas price.

  23. Oldfarmermac says:

    While I am all for pedal to the metal on the renewable energy question, I believe in always putting the precautionary principle FIRST when it comes to questions as grave as fossil fuel depletion, climate and power politics.

    So – I am also for pedal to the metal research and development of new nuclear reactor designs, which in my estimation certainly do have the potential to be REASONABLY safe, and affordable, considering the alternatives. We don’t have any guarantees at all that a nationwide robust HVDC transmission system will be built, or that wind and solar farms will be built in adequate numbers to shoulder the load currently carried by the fossil fuel industry. While I believe such a grid CAN be built,etc, from the technical and economic pov, I have less than great faith that it WILL be built in time to save our asses from ff depletion, climate troubles out the ying yang, and more resource wars.

    If for any of lots of different possible reasons, the BAU economy crashes before we manage a transition to renewables, then there probably won’t BE a transition, at least not within the forseeable future. People and countries in desperate circumstances spend their money and resources on short term survival. Long term investments don’t help much in the short term, if they help at all.

    There is political support enough for a new generation of nuclear energy that it MIGHT actually come to pass. We can abandon the field to the Chinese and the Russians, or we can keep our hand in, and build a few new generation nukes and see how they pencil out.

    The nukes we have now are are for all intents and purposes similar to what one off hand built cars would have been back in the sixties and seventies. Such cars run, and they can run reliably, and they can last, but they sure as hell ain’t cheap, compared to cars built to standardized designs and mass produced.

    Maybe I am deluded in this respect, but my opinion is that a new generation of nukes, built to standardized design, could be built for half what it costs to build a sixties era design on a one off basis.

    If the design is ready and proven, and the shit hits the fan, then the permitting process problem will take care of itself pdq. As my fishing buddy and attorney puts it, his two super liberal super green young professional women right thinking D voting daughters are all for the environmentalist agenda, so long as it doesn’t interfere with their lifestyle. They make plenty, and paying another few bucks, or even twice as much, for gasoline and electricity is no big deal for them.

    But let there be just a few rolling blackouts, or long lines at a service station, or real gasoline rationing, and they will vote for the Koch brothers next election.

    So sez he, and I guess he knows his girls.

    Sure I ‘m concerned about long term storage of hot waste. Sure I’m concerned about runaway reactors. But I am also either dumb enough or smart enough, take your pick, to be just as scared of air pollution which is a GUARANTEED killer on the grand scale.

    This piece is most definitely pro nuke and has the finger prints of a dingaling republican all over it, but it also points out that two D’s are sponsoring the legislation mentioned in it along with the two R ‘s.

    http://www.tulsaworld.com/opinion/othervoices/u-s-sens-jim-inhofe-sheldon-whitehouse-mike-crapo-and/article_639861e6-d2ee-52ac-98fc-db25bfff3231.html

    • Longtimber says:

      FIRST Get 5 decades of “waste” underground. It can be re-used in 50 (?) generations. These facilities are the ultimate target for bad guys. The consequences of Radionuclides unzipping the DNA of all the planets lifeforms is unacceptable.

      • Oldfarmermac says:

        So you think it is acceptable to bet the survival of industrial civilization, and maybe most of the biosphere, on renewables being UP TO THE JOB BEFORE we either run desperately short of fossil fuels, or fight WWIII over the remaining dregs?

        We KNOW what is happening already with the climate, and we know how BAD it apt to be later.

        Personally I am utterly and absolutely convinced that we know how to store hot wastes SAFELY ENOUGH to justify the risks associated with building a new generation of nukes.

        Can anybody guarantee absolute safety in any large scale industrial undertaking?

        No, only a fool can possibly believe that any grand scale industrial activity can be absolutely safe. The question should be the sober evaluation of the RELATIVE risks of putting hot wastes into ( reasonably ) permanent storage versus maybe or probably continuing to pour long lasting pollutants into the air and running a HIGHER risk of resource wars.

        ( There is some risk of war associated with building new nukes too. Even if they produce no end products suitable for making weapons, we might wind up fighting over uranium ores, etc. )

        • GoneFishing says:

          Old Farmer Mac said “So you think it is acceptable to bet the survival of industrial civilization, and maybe most of the biosphere, on renewables being UP TO THE JOB BEFORE we either run desperately short of fossil fuels, or fight WWIII over the remaining dregs? ”

          But OFM, it is the very use of fossil fuels that has put mankind and the biosphere in the looming headlights of such risks. The least they can do is help us get out of the way.

          Anyone interested in risk assessment should read “Strange Glow”

          • Oldfarmermac says:

            The fact that fossil fuels have made it possible for probably ninety nine percent of the members of this forum to EXIST most certainly does not negate the fact that unless we manage a successful transition to OTHER sources of energy, ninety percent or more of us will DIE hard miserable deaths due the economic and ecological crash baked in due to fossil fuel depletion and pollution.

            I have consistently supported doing any thing and everything possible to ensure the fastest possible technical development of renewable energy technologies, as generously subsidizing the actual building of renewable energy infrastructure.

            But I am NOT personally willing to bet that renewables will scale up fast enough to avoid a HORRIBLE economic and environmental crash.

            Maybe I am deluded, but if so, I am not alone in being so. There are other people who understand the consequences of fossil fuel depletion and overshoot in general who believe the risks associated with a new generation of nukes is entirely acceptable compared to the risks of being without them.

            The hot waste we ALREADY have on hand , and will have to deal with, will STILL be here, and will still have to be dealt with, regardless of whether we build a new generation of nukes.

            The game of life is like a never ending poker game, where in leaving the table means you DIE. You play till you lose, whether you are a species of rat, or a species of hairless apes.

            Nature doesn’t allow you to drop out, and nature doesn’t do REDEALS.

            We have to play the cards in our hands, as best we can. All the crying in the world about past mistakes won’t change the fact that they were made, and now have to be corrected.

            Do we go forward entirely dependent on renewables , or do we go forward with both renewables and nukes as backup ?

            Politics is , they say, the art of the possible. My humble opinion is that if we once have just one major blackout in a country that has bet it all on renewables,due to bad weather, the coal industry will come roaring back with a vengeance.

            • GoneFishing says:

              Nuclear thermal power generation is moderately safe until something goes wrong. Then death and suffering are spewed across the landscape for decades. I am sure it can be made safer, and have no idea how much will be used in the future. There are cheaper, safer and more reliable methods of power generation and storage available.

              We need to find safe, workable solutions to the problems we see, not just blindly and fearfully cling to the past because something might not work out. We also need to have faith and realize that what we are creating now is not where we will end up, it’s just another stepping stone. We do need a clearer vision of the path we want to follow into the future.

              Two or three hundred years from now humanity may be dying off from the effects of global warming, that we did not start but that we heartily kept promoting.
              Then again, two or three hundred years from now we could be controlling the weather and climate of the planet and everything we talk about today will seem not a problem at all.
              So maybe safer nuclear plants will be developed, maybe ones that use what we call waste now. Or maybe we will not need them at all. Remember, they did not even exist a few generations ago.
              The big problem I see is to reduce our general level of mental illness and make people more effective and happier, or at least cared for if they are in trouble. We need to start actually caring for ourselves, which will then allow us to really care for the world we live within. The living world, where air, rock, water, and sun comes to life.
              For that is what is really at stake here, the world of life. Not just us. Choose well.

        • Longtimber says:

          It’s not a big deal to Cask 5+ year old fuel and move to stable underground for safekeeping. Gov clueless idiot lawyers need to grow up and mandate movement out of pools. It’s been studied to death and is not a “big” technical problem. Some US reactor sites lack safe containment. Most Plant sites were not designed or have capacity for longer term safe storage. “Breach of Containment” applied to sites before decades of on site buildup. Everyone here (Westinghouse Pensacola) that built PWR’s is in disbelief over the irresponsibility of not at the very least not casking spent rods. Nightmare never imagined. Should be conditional before we build new sites. Vogtle II was built by Southern Co, since they ran low of on site storage. Don’t think the Gov lawyers can only screw up Health care. In Germany many of my colleagues witnessed relocation of casks away from population centers as a not uncommon occurrence. Rarely announced and with tens of thousands of military as buffer even though you can do just about anything to the casks. People just need to let their Congress critters know that they need to do the right thing and make it happen.

          • Caelan MacIntyre says:

            How much nuclear waste could be rocketed to the moon per payload?

            • HuntingtonBeach says:

              Enough to make a 200 mile radius around the launch site uninhabitable for humans

              • Caelan MacIntyre: Full Moonings and Assorted Lunacy says:

                Of course. Then it will have to work. ‘u^

                On the other hand, I hear some folks are big on population reduction.

                …Ok-ok, then what about a self-flying AI-controlled SpaceX elevator? Something we could all get behind and ’embrace’.

                “…Now is the time to [embrace] …the rapid disruptive change happening all around us.

                Good Luck to All! And may that Star Spangled Banner yet wave upon the early morning light of a new world…” ~ Fred Magyar

                Yes, may that Star Spangled Banner yet wave upon the early morning light of a new, conquered, controlled and elite-driven world.

                Go Elon Musk; go Tony Seba; go corporate CEO; go Donald Trump… Fly that Star Spangled Banner high! For all the world to see…

                “Sauper also converses extensively with local residents, who have savvy and unexpected things to say. ‘Do you know the moon belongs to the white man?’, one person casually remarks, while another, echoing the title of the film, says, ‘foreigners say, ‘We come to help,’ but they support gangsters…’

                Sauper’s second gift is his ability to talk himself into places usually off-limits to documentarians. In ‘We Come as Friends’ he befriends Chinese technicians who happily tour him through an enormous Chinese oil refinery, complete with a mosque for the workers, that turns out 300,000 barrels of oil per day…” ~ Kenneth Turan

                “Some of the most iconic moments in American history occurred when the Apollo astronauts planted U.S. flags on the lunar surface in the 1960s and 70s.

                “Hope wrote a letter to the United Nations saying the moon was his and asked the group to come up with a legal reason why an individual could not claim ownership of the moon…

                Since then, he’s sold more than 611 million acres of land on the moon. Individual, one-acre lots sell for $19.95…” ~ US News

  24. Looks like the new UK leadership intends t0 close down their Department of Energy & Climate Change – decc.GOV.UK
    http://renews.biz/103443/decc-appears-doomed/

    Their North Sea oil is on a steady decline so I suppose they see no point in keeping track of the individual fields. Also who cares about keeping tabs on wind turbines.

    UK version of Trump

  25. Watcher says:

    China exports of middle distillates up a ton.

    Q1 2016 diesel exports up 736% to 250K bpd. Jet Kerosene up 29% to 264K bpd.

    Nanhai light, off shore South China Sea oil
    API 39.5
    Kero yield about 20%
    GasOil (Diesel) also about 20%

    (contrast with Kuwaiti Assay that specifies about 1/2 those middle distillate amounts)

    Chevron has a bunch of Asian assays, but that one above is the only one I guess China submitted.

    That middle distillate yield is quite a bit above most.

    • Duncan Idaho says:

      Lets be honest.
      Fernando escaped from a right wing dictatorship (Batista) after the Revolution, and chose to live in Fascist Spain under Franco.
      One must respect the causality of that action when taking his analysis into consideration.
      (I’m not saying his analysis is not valid, but be aware)

      • s says:

        Hi Duncan,
        I don’t know when Fernando moved to Spain, but Franco Spain is ancient history in terms of Fernando’s living there today.

        His personal background is not relevant to his understanding of the oil industry, and he occasionally points out relevant stuff either unknown to the other regulars, or overlooked by them.

        Refugees are often compelled to go places that might be their second or third or fourth choice, due to being unable to get into the country of their choice, and sometimes they go to particular places because they have friends or relatives already there.

        Over the course of years, I have met a lot of people who were real experts in their own line of work, but less than well informed about other fields.

        And so far as his politics go, I strongly suspect he has forgotten more about Cuban politics than everybody else in this forum ever knew, all put together.This is not to say that we should take his word on partisan matters, because he is obviously a partisan.

        You may disagree with his politics but that is no reason to question his professional qualifications as an oil man.

        Fernando obviously knows his stuff when it comes to oil.

        WHY should his politics have anything to do with the historical facts of the oil industry and how it has changed from burning gas to get rid of it, and collecting it and selling it today?

        What could he possibly gain by misrepresenting these facts ?

        They used to flare gas to get rid of it even here in the USA. As a matter of fact they continue to do so, to some extent, although I am under the impression this practice will be almost entirely phased out via regulation very soon here in the USA. There was a great deal of discussion of flaring in North Dakota in this forum not more than couple of years back.

  26. Brian Rose says:

    Saudi Arabia will IPO Aramco next year.

    Maintaining production with little to no increase may be the goal in the meantime.

    Stable production proves stability and that is great for investment.

    Consistency without large increases/decreases in production gives upward momentum to global prices as well.

    One HAS to wonder where Saudi leaders want global oil prices when the IPO occurs one year from now.

    We may be setting up for that moment. Lower prices are better NOW.

    6 months from now not so much.

    • clueless says:

      They may be sorry if they do. I see some possibility of things going wrong.

      Looking at Mexico and Venezuela, the people wanted to kill the golden goose when they learned how much money could be distributed to them. Their oil legacy assets have sufferred.

      If SA sells some stock to foreign interests, they may shortly see those foreigners as looters of their wealth.

      150 years ago, the US had land. We gave it to the railroads so that they had land to put down the rails, plus extra land as an incentive to expand. The people hated the railroads and the rail barons. The US then regulated them to death and every single railroad eventually went bankrupt with their infrastructure in tatters.

      • s says:

        But the people who will get most of the money and nearly all of the easy living out of doing that IPO don’t give a crap because they will be dead and gone soon.

        Likewise the rail roads. The people who owned stock in them, and the people running them, back then, didn’t give a crap about looking any farther into the future than their own retirement, and most of them would have been glad to sell out sooner if the price was right.

  27. s says:

    If such outfits as ISIS get their way, we will be fighting hot wars all over thru the Middle East and heart of OPEC even before oil runs short enough for oil wars to morph from guaranteeing access, which is what we Yankees have been doing for the last generation to wars of conquest by countries with power enough to make conquest stick.

    http://www.cnn.com/2016/07/14/europe/nice-france-truck/

    Apparently this bad guy got about sixty five or seventy people with the truck, and the rest with a gun after he stopped the truck-( speculation on my part) which might have been damaged enough it wouldn’t run any farther, or maybe he came to the far side of the crowd and stopped for that reason.

    Fortunately cops were on the scene and killed him before he had an opportunity to kill more than half a dozen to a dozen or so with a gun.

    Some people have no intention of being assimilated.

    • HuntingtonBeach says:

      Well we all know the best way to stop a bad truck driver is no driver at all.

      “Automatic brakes are designed to stop a vehicle before it collides with a car or another object.”

      http://www.npr.org/sections/thetwo-way/2016/03/17/470809148/automatic-braking-systems-to-become-standard-on-most-u-s-vehicles

      • s says:

        It will be at least twenty years in my opinion before most trucks are automated, and more likely a lot longer.

        I guess we can make everybody undergo a background check and get a permit before they can buy or rent or steal a big truck. Sarcasm light is ON.

        It’s surely a good thing that nearly all terrorists are underachievers. A Yankee jack of all trades could probably easily figure out ways to kill a thousand people if he were so inclined.

        Hopefully we can break our oil habit before it breaks us, but I see hot resource wars arriving well ahead of the renewable energy promised land.

    • Dennis Coyne says:

      Hey s,

      You should re-type your name in the name box on your next comment so we don’t get confused by the new name.

    • Fred Magyar says:

      Some people have no intention of being assimilated.

      I wonder if in your mind that includes a white Christian, self identified fascist and counterjihadist , like native Norwegian Anders Behring Breivikm, who first blew up people people with a truck bomb then went to a camp for teenagers and ended up killing 77 people and injuring scores more.

      Where exactly does he fit into the definition of terrorist? He had multiple personality disorders and felt the world had wronged him and he decided to take matters into his own hands and right those wrongs. Is that the same mental disease that these so called Islamic terrorists seem to be suffering from?

      Now whether or not this piece of shit truck driver turns out to be affiliated with a radical Islamist movement or not, I still think it is a safe bet to claim he was also first and foremost insane!

      Religion and dogmatic ideologies can be a very dangerous tools used for manipulating already weak and damaged minds but at this point we don’t yet really know what this guy’s motivation was, do we.

      Like the American born Muslim who perpetrated a mass shooting in a gay nightclub in Orlando and claimed he was doing it for ISIS but that might have been a way for a very sick mind to deal with the fact that he was actually gay himself but could never admit it to his father, family and community or even to himself.

      I am just very uncomfortable with demonizing entire groups of people. It reminds me how easy it was for the Germans to perpetrate the atrocities they did and commit genocide against the Jews.

      To be clear, as an atheist I am deeply suspicious of all religious thought and see very little difference between the three major religions of Christianity, Judaism and Islam and have seen that all of them harbor fundamentalists and radical dogmatism and all of them can produce equally dangerous activities.

  28. R Walter says:

    The daily heebee geebees are here now.

    http://www.worldometers.info/world-population/

    The population of humans has increased one percent since January 1 of this year.

    A lot of souls out there trying to gain a life on earth, as wicked as the place has become.

    There is hope for humanity. Right now, there is none, but that doesn’t matter anymore.

    The demand for more oil will be an increase of one percent, 840,000 bpd.

    Until there is something in place to replace oil, oil rules, steers the boat.

    “Sit down, you’re rocking the boat.” – Louis Armstrong

    No room for orangutans or humpty-backed camels or chimpanzees, but who cares?

    Heaven is almost full according to the Jehovah’s Witnesses, so there will be hell to pay here on earth.

    har

    • GoneFishing says:

      Babies don’t drive cars, don’t need groceries. How can they be causing more oil demand? 🙂

      But babies are the best opportunity we have, train them properly and they will not use much resources at all. In fact they can be a resource. Maybe it’s the parent’s fault and the grandparents for training them improperly and giving them unreachable expectations. 🙁

      There is plenty of room, we just need more lions to cull the poachers.

      • LTG says:

        GoneFishing wrote:

        “Babies…don’t need groceries.”
        “…babies are the best opportunity we have…
“There is plenty of room…”

        Did you forget the “sarc” tag or simply lost your mind? You’ve posted some good thoughts here in the past but this is not one of them.

        Anyone who fails to connect the dots between population/carrying capacity overshoot and social/environmental collapse will have a deeply flawed understanding of world history, resource dynamics, and future trends.

        Cheers.

        • GoneFishing says:

          Really, you took that seriously even with the smiley/frowny faces there? Are you standing on your head a lot or did you take a course to get that way?

          • LTG says:

            GoneFishing wrote:

            “Really, you took that seriously even with the smiley/frowny faces there?”

            Uh, guess that’s why I replied with, “Did you forget the “sarc” tag…”

            So, putting smiley/frowny faces anywhere in a comment now means “this entire post is sarcasm”? Good to know, thanks. Your sanity has been restored. Now we just have to work on your rude behavior.

            Cheers.

            • GoneFishing says:

              The plenty of room comment was room for animals, not people.

              I was actually being fairly nice to someone that implies I am insane.
              The real quote that I invented many years ago would go like this.
              “Did you get that way naturally or did you have to take courses to be the village idiot”.
              See, I was being quite nice.
              Now as to your interpretation of things marked funny, well that is your problem.
              You do know that babies do not drive and drink their mother’s milk, don’t you?
              If we teach the next generation to not act as the previous ones, maybe things will change.
              See the logic?
              But please, don’t let that stop you from telling other people how to be. We all need to know the sensitivities of the people around us so we can act accordingly.

              sarc

              • LTG says:

                Hi GoneFishing,

                Sorry, I’m not very good at responding to incoherent posts. So I’ll just put my hands in the air and slowly back away from you. Have a good day.

                Cheers.

                • GoneFishing says:

                  Thanks.

                • Caelan MacIntyre says:

                  “So I’ll just put my hands in the air and slowly back away from you.” ~ LTG

                  Don’t do it! It risks creeping them out– the arms up like that and walking uncharacteristically backwards in such a position!

                  • GoneFishing says:

                    Hey, I went from being labeled insane to being labeled incoherent in a very short time. There is hope for me yet. A cure is in sight.

                  • Caelan MacIntyre says:

                    If you changed the T to N, it could be Liquid Natural Gas.

    • DrTskoul says:

      Really that is the best source of info you can come up with??

      • DrTskoul, was that supposed to be some kind of an argument against the info Tex posted? It wasn’t. So let’s turn your argument around:

        “DrTskoul, is that the best argument you can come up with?? It was pitiful.”

        Renewable energy from wind and solar will never work unless a very reliable storage system is put in place. To date, no such storage system exist.

        • HuntingtonBeach says:

          How many rockets failed before man walked on the moon ?

          I haven’t seen anyone ever say it’s going to a cakewalk transitioning to renewables. Changing our habits to consume when power is available is one of the early steps and part of the process.

          “Dammit, it is as plain as the nose on your face. Price determines production. Does Watcher really deny that simple fact?”

          Price can also determine consumption.

          • How many rockets failed before man walked on the moon ?

            Really? This is supposed to have some relevance to the subject being discussed? It does not.

            HB, my comment was about storage. There have been no failures with the grid storage system. Not the first failure. That is because there has been no attempts to implement a grid electricity storage system, not even one attempt.

            Hell, no one on this blog seems to even want to talk about it. I know some would like to talk about it but no one seems to know where to start. So instead they just come up with silly shit, like rockets failing.

            Price can also determine consumption.

            Well hell, who would have ever guessed that? I really had no idea. Thanks HB, I will write that down in my little day book so I will not forget it.

          • Caelan MacIntyre says:

            “How many rockets failed before man walked on the moon?” ~ HuntingtonBeach

            Did you read my previous moon comment?

        • Dennis Coyne says:

          Hi Ron,

          When the Wind and solar is overbuilt by a factor of 3, widely dispersed geographically, and tied together with a reliable grid with adequate HVDC interconnects between regions, very little storage is needed for backup.

          In fact a lot of energy can be stored by heating water or making ice (depending on the season) when there is excess wind or solar, also there is pumped storage, fuel cells, and batteries. In addition Wimbi’s method of burning biomass or trash in a pyrolyzer can also be used for energy backup.

          When fossil fuels peak and prices rise alternative energy will be more competitive and will gradually replace fossil fuels as they deplete.

          There will also be demand management through variable pricing in the future (for electricity), when supply is low price will increase and people will adjust there energy use (turn down the heat in winter or adjust the thermostat higher in summer).

          • clueless says:

            “When the Wind and solar is overbuilt by a factor of 3,” I wonder what the prices will be? Will windfarms go bankrupt because of low prices and a glut of supply? Or, will prices be very high to pay for the fixed costs of overbuilding?

          • When the Wind and solar is overbuilt by a factor of 3, widely dispersed geographically, and tied together with a reliable grid with adequate HVDC interconnects between regions, very little storage is needed for backup.

            Dennis, do you give any serious thought to the scenarios you come up with? Where will the money come from to overbuild anything by a factor of 3. Only a fool would invest in anything in order to overbuild it by a factor of 3.

            Also, it is nighttime all over the nation at the same time. And in the winter that is for many hours. So we are talking about wind and wind only. The very idea that we will have enough wind, in places where the wind happens to be blowing, to supply the entire nation with electrical power… is absurd. And that is putting it mildly.

            • GoneFishing says:

              I agree with Ron, a three times overbuild is impractical.
              One may want to design solar for winter insolation in the cold regions and summer insolation in the hotter regions. Levels of wind and hydropower will influence regional design. I prefer a more local build, but that only works well in non-city areas.

              Here is an article discussing the renewable grid and how it will be made to work.
              http://cleantechnica.com/2015/12/16/how-the-grid-works-why-renewables-can-dominate/

              I think too that the use of smart machines and processes that would take advantage of excess grid power at lower prices will be a boon to stabilizing the grid.

              There can be rare extended weather periods of up to several weeks where sunshine level is cut in half or less in certain areas. Some forms of backup would be needed for these rare events. What type of long term backup will be chosen depends on the characteristics of the region and the local resources. I only recall one of those periods during my lifetime. It lasted almost six weeks.

          • LTG says:

            Dennis Coyne wrote:

            “When the Wind and solar is overbuilt by a factor of 3, widely dispersed geographically, and tied together with a reliable grid with adequate HVDC interconnects between regions…”

            Good grief. You do this often in your posts, Dennis: Set up an imaginary air-tight scenario and then imply, “There, you see, it could work!”

            Well, gosh. If wishes were horses then beggars would ride.

            Where’s the money to pay for this pipedream? Will you now set up another imaginary air-tight scenario where Congress immediately cuts the Defense Department budget in half for two years to finance this project. Then write, “There, you see, it could work!”

            Where’s the political will? Will you now set up another imaginary air-tight scenario where our elected reps take a pill and become honest, forward thinking people, making responsible decisions that lead us all to a bright future? Then write, “There, you see, it could work!”

            Maybe you could create a chart that shows multicolored lines converging exactly in support of your imaginary air-tight scenario? Then write, “There, you see, it could work!”

            Anyone can play this game. But it’s a time-wasting conversation tactic. Too often you confuse wishful thinking with hard reality.

            Cheers.

            • Hickory says:

              I’ll go part way towards overbuilding the renewables by a factor of three.
              Lets get it built up to factor of one, and when we get close we can look to see what would be smart next.
              Maybe double up. Maybe not.
              But we ought to crank it up in any case.
              Or just start building more coal stoves.

  29. Heinrich Leopold says:

    It is now official: US natgas production fell year over year according to the FED natgas production index. The fall is also confirmed by the monthly EIA production report:
    http://www.eia.gov/petroleum/production/?src=home-b6#ng-tab

    The overal production fell -1.8% in the EIA report for wet gas and the FED index for dry gas fell -0.4 %. Despite a massive year over year gain of over 60 % in Ohio (Marcellus/Utica), production fell already month over month in Pennsylvania and declined steeply over -10% in Alaska, Arkansas, Gulf of Mexico and also down over -6% in Texas.

    In below chart the decrease of the production line (blue line) triggered already a rise in Henry Hub natgas price. So, the market reacts the same way as in 2012/2013.

    As production came further down in May, June and July (the latest number for Texas in July is 18 bcf/d and down -20% year over year), I expect the official numbers down by roughly -2% per month which implies a production fall of at least -15% by year end. This assumption is underpinned by the still extreme low drilling rate which is actually falling by a rate of -60% year over year (red line in below chart). Until the drilling rate comes up again, production is very likely to decline at an accelerating decline rate at a time lag of about 6 months.

  30. The Baker Hughes Rig Count is out. US oil rigs up 6, gas rigs up 1. Permian up 2, Williston down 1, Eagle Ford unchanged.

  31. robert wilson says:

    Over the years I have had several opportunities to fly from Houston to Los Angeles. One trip was after an ASPO meeting. Navigation seems to be via El Paso Texas. The Permian Basin is a prominent feature from 34,000+ feet. In the daytime the roads and pad circles are clearly visible. The bright lights are spectacular at night. As EROI studies note, it takes energy to produce energy.

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