OPEC September Oil Production

All data below is based on the latest OPEC Monthly Oil Market Report.

All data is through September 2017 and is in thousand barrels per day.

The above chart does not include the 14th member of OPEC that was recently added, Equatorial Guinea. I do not have historical data for Equatorial Guinea so I may not add them at all.  OPEC production has held steady for the past four months. Equatorial Guinea production is tiny, 141,000 bpd so their monthly change in production can be ignored without much effect. OPEC 14 production was up 88,000 barrels per day in September. But that was after their August production had been revised downward by 82,000 bpd.

The OPEC 13, (not including Equatorial Guinea), peaked in 2016 at 32,385 kbpd and are down 150 kbpd for the first 9 months of 2017. Please note that when I say “peaked” I mean “peaked so far“. I am well aware of the fact that OPEC, or some OPEC nations may have further peaks in the future.

Not much is happening in Algeria. They peaked in 2008 at 1,393 kbpd and their annual average is down 338 kbpd since then.

Note: Here and below the annual average being down from the peak, I am referring to the average of the first 9 months of 2017. And, of course, I am aware that there may be further peaks down the road although that is highly unlikely for all but a couple of OPEC nations. That is because every OPEC nation is currently producing every barrel they possibly can and that includes Saudi Arabia.

Angola peaked in 2008 at 1,870 kbpd and are down 229 kbpd since then.

Ecuador peaked in 2015 at 547 kbpd and they are down 16 kbpd since then.

Gabon peaked in 1997 at 230 kbpd and they are down 29 kbpd since then. Note: My annual data only goes back to 1997 so their production could have been higher prior to 1997.

Iran peaked in 2005 at 3,938 kbpd in 2005 and they are down 131 kbpd since then.

Iraq’s average production, this year, is 4,452 kbpd and that is a new high for them. Iraq is the only OPEC nation to reach an average yearly peak this year.

Kuwait peaked in 2012 at 2,794 kbpd and their annual production, this year, is down 87 kbpd since then.

Libya’s production peaked in 2008 at 1,717 kbpd and their annual production is down 951 kbpd since then.

Nigeria’s production peaked in 2005 at 2,413 kbpd and their annual average production is down 717 kbpd since then. Nigeria seems to have solved some of their political problems however. Their annual production should increase further this year and in 2018. But I don’t expect it to reach levels they reached in 2010 and 2011.

Qatar’s oil production peaked in 2008 at 841 kbpd and they are down 230 kbpd since then. Qatar has the largest percentage, non-political decline of any OPEC nation. That is their very large decline is due entirely to depletion of their reserves.

Saudi production peaked in 2016 at 10,338 kbpd and their average production for 2017 is down 443 kbpd so far.

UAE production also peaked in 2016 at 2,927 kbpd and their average production is down only 8 kbpd this year.

Again, my annual data only goes back to 1997 and that is when I have Venezuela peaking at 3,240 kbpd and their average annual production is down 1,280 kbpd since then. It is unclear as to how much the decline in Venezuela’s production is due to politics. Much of it is no doubt but the political situation there is so desperate that it will likely take decades for them to recover even a small percentage of their decline.

Of Non-OPEC news I need to add Russia’s latest production chart.

Russia’s average for the first 9 months of 2017 is 10,947 kbpd. That is the peak so far.

The above Non-OPEC data is from the EIA is through June only. Non-OPEC peaked in 2015 at 46,509 kbpd and the average for the first six months of 2017 is down 879 kbpd to 45,629 kbpd.

World C+C through June 2017. Peak 12 month average was 2016 at 80,556 kbpd. The first 6 months of 2017 was 80,480 kbpd. That is, so far, 77 kbpd below last year.



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316 Responses to OPEC September Oil Production

  1. Asdf says:

    You could add world monthly c+c by EIA.

  2. Mario Vachon says:

    I really think suggesting that Saudi and a few others are pumping every last barrel is very inaccurate.

    • No one has said they are pumping every last barrel. What the hell do you mean by “last barrel” anyway? I am saying they are pumping every barrel they can. They are all drilling more wells, drilling more injection wells and doing everything they possibly can to increase production. Or to be more correct they are trying, as best they can to keep new production ahead of decline.

      That is not to say that they cannot, or will not, increase production in the future. They are all engaged in massive infill drilling in an attempt to keep ahead of decline and, in some cases, increase production. But infill drilling just sucks the oil out a lot faster. It does not create new oil in the reservoir.

      • Westexasfanclup says:

        Yes Ron, adding here my little opinion, I think you’re right. The world, over the last decade, has implemented production “improvements” at a big scale and is now facing the limits of that method. Still, if hurricanes, wars, earthquakes and revolutions work hand in hand (or rather cease to do so), we could see some significant increase, but on the other hand an abrupt decline for the same reasons also could be possible. But I think we’ve reached more or less the final plateau now, which could last for half a decade before starting to decline significantly. Maybe it holds long enough and declines sufficiently slow to make a smooth transition possible. I’m still optimistic.

      • Mario Vachon says:

        No need to be rude. I simply think you’re wrong. I think the very graphs you are posting show pretty clearly that Saudi and a few others have deliberately cut back on what they can produce. We will agree to disagree.

        • Westexasfanclup says:

          I think the saudi production spike before the lately flat production was result of a red hot and therefore unsustainable production and price battle, while the actual production, at least for a while, seems to be very well sustainable.

        • Watcher says:

          Dood, you gotta be precise with terminology. It matters.

          Deliberately cut back on what they can produce . . . what does that mean? That means nothing.

          What you meant to say was Deliberately cut back on what they are producing.

          This is an industry with as much terminology obfuscation as finance. If you don’t understand the specifics, you’re helpless.

        • I don’t think I was rude at all. I still don’t know what you meant by “last barrel”. No one is anywhere near producing their last barrel.

          We discussed this months ago. Several OPEC nations, as well as Russia and some other non-OPEC nations, made heroic attempts to increase production just before they announced “cuts”. This was not all that difficult. Wells are shut down, sometimes annually, for maintenance. All they would need to do is not shut down any wells for several months. That way they could artificially increase production in order to “cut production” according to their agreement. Also, they could empty their storage tanks.

          The charts, in many cases, show a sudden increase then a decline from that increase, right back to where they were producing before.

          • Nick G says:


            Is there any question that the US is drilling much more aggressively than most of the world?

            Think of how many rigs are drilling in the US, and compare that to the number in Saudi Arabia – KSA’s drilling level is really tiny in comparison. The same applies to other large producers. We had one very credible contributor (I forget his name, he seems to have dropped out) who argued that Russia had enormous untapped potential at this point – more than enough to sustain current production levels for quite some time. It seems likely they could raise production substantially if they really wanted to.

            It seems unlikely that KSA, and some other similar countries, are really reaching their limits of production, should they choose to invest more.

            • Dennis Coyne says:

              Hi Nick,

              We really don’t know what will happen. It is possible that Russia and some OPEC nations may be able to maintain output or possibly even increase output a bit for another 10 years or so.

              Higher drilling rates do not increase URR, it leads to faster depletion and a temporary boost in output with faster decline rates after the peak.

              Also there will be a fall in output from many nations, so just to maintain World output the increases from OPEC and elsewhere must more than offset declining output elsewhere.

              Output of C+C is unlikely to rise to more than 85 Mb/d, maybe around 2025-2027, if it occurs. Another possibility is a plateau between 80 and 81 Mb/d until 2030, higher output will lead to higher decline rates.

      • Ron, our studies show infill drilling increases recovery factor by a small amount in very continuous and homogeneous rocks, and can increase it by a large amount in discontinuous heterogeneous rocks. Even very homogeneous rocks can yield more oil in some cases (for example where an aquifer moves with an uneven front).

        In general we can see the infill well helps due to a bit of improved recovery and rate acceleration effects.

        • Yes, I realize infill drilling helps some. There would be gaps where oil would be left in the reservoir if no infill drilling was done. However, all the oil that is recovered via infill drilling is not oil that would not be recovered otherwise.

          That is most of the oil is simply creaming the top of the reservoir. They drill horizontal wells that skim the top of the reservoir as the water rises up from below. This keeps the production decline rate of the reservoir to almost nothing and in some cases actually, increases production from the field. But while the decline rate is decreased the depletion rate is increased.

          As a result, all those old supergiant fields in the Middle East and Russia are still producing at near their peak levels. If you looked at their production curve it would have a flat top, only slightly declining. Then…. then…. the water finally hits those horizontal wells and…

          It is going to happen. The only question is when?

          • Dennis coyne says:

            Hi Ron

            It is probably already happening one well at a time.

            The process is likely to be gradual, unless most wells arrive at their shut down point at the same time.

            I do not think there is a physical reason to expect that to occur.

            • dclonghorn says:

              Dennis, there are reasons to believe that many of the wells in giant Saudi fields will decline quickly and at around the same time.

              An example is the development of the Shabayh field. Shabayh was discovered in 1968 and developed in the mid 1990’s using over 60 one km single lateral wells. N. G. Saleri and others published an SPE paper in August 2004 discussing how they redeveloped the field using MRC (Maximum Reservoir Contact) wells.

              In Saleri’s paper on the Shaybah-220 they describe how they redeveloped Shaybah with MRC wells with target depths 60 feet above the oil/water contact and 150 feet below the gas/oil contact. The SPE papers show Aramco systematically drilled their fields using geosteering to place well bores exactly where they wanted them, then they used advanced completion technology including intelligent completions which reduce the effects of coning.

              The SPE papers show similar projects using these MRC wells to redevelop Abqaiq and other fields.

              Because they have systematically developed and redeveloped their fields, it is likely that many of their MRC wells in each field are of similar age, are similarly placed in relation to oil/water/and gas contacts, and have been produced in a similar and efficient manner. While they certainly won’t all go at once, it is very likely that wells in each field will go close together.

              • Some reservoirs benefit from natural gas liquid injection. The Saudis could use ethane/propane slugs to recover more oil, but this implies shutting down petrochemicals.

              • Dennis coyne says:

                Hi dc longhorn,

                The point is that there are many fields around the World, perhaps every well will be shut in at a large field over a short time.

                A claim that this is likely in every field all over the world seems incorrect.

                Even a claim that this would occur in most KSA fields over a short period is doubtful in my opinion.

                • dclonghorn says:

                  Hi Dennis,

                  I agree with you that it is not likely that every well in most KSA fields will be shut in within a short time. That was not my assertion.

                  My view is that because of the manner and timing of their redevelopment, as well as the advanced technology used to redevelop these fields, these fields will not show a normal decline. Instead, they will produce at a high level, with a relatively low decline. Then they will suddenly water out with many (not all) of the wells in each field declining rapidly.

                  This will lead to a very steep field decline once production comes off the plateau. I believe that Ron was also expecting this type of production in his comments above with which you also disagreed.

                  I suppose we won’t know for sure how this turns out until KSA releases more production data. But if you will read some of their papers, the Aramco scientists make a good argument that they are accessing more oil from their giant fields. Of course the downside is that once their technology has run its course, there won’t be much left.

                  • Dennis Coyne says:

                    Hi Long Timber,

                    I agree with you at the field level, though my guess is that large fields may have been redeveloped in stages so that each development stage might have most wells water out at around the same time.

                    At the level of the nation state the timing may be such that decline remains gradual (2 to 3% per year). In any case we can only guess because we don’t have much data for KSA except nationwide output.

                    From what I have read, World 2P reserves based on proprietary databases is pretty close to BP reported proved reserves.

                    See section 3(b) of report linked below (published Dec 2013)


                  • Dennis Coyne says:

                    Sorry the reply above should have been addressed to dclonghorn.

  3. Westexasfanclup says:

    Question: Why did the last two points on the world-graph go up about 1 million bpd while OPEC stayed rather flat and the non-OPEC countries went up just about 1/2 million barrels? There seem to be 1/2 million of unreported barrels.

    • The answer to your question is rather simple. The non-OPEC graphs end with the June data while the OPEC graphs end in September. So let’s just look at the months of May and June, the two months in question. World production went up 1,018,000 bpd during those two months. OPEC production went up 757,000 bpd during May and June while non-OPEC nations increased by 261,000 bpd during May and June. Adding the two we get 1,018,000 bpd.

      • Westexasfanclup says:

        Thank you Ron, I missed that important detail while scrolling between the charts through the whole article.

  4. Watcher says:

    Fleshing out consumption numbers from the only place that matters — China.

    Chinese July consumption up 690K bpd over 2016’s July. That’s about 6%

    Chinese total consumption 11.67 mbpd July. YTD the average monthly increase has been 550K bpd, which compares with 210K bpd for the same period 2016.

    This is not all liquids as BP tracks. That number will be headed towards 13 mbpd this year. Chinese consumption growth last year was 3+%. It’s on track for over 6% this year (amid the silliness of EV hype). This is a somewhat typical number for them.

    • Watcher says:

      Here’s what EIA has monthly for US consumption:

      Avg of month to month consumption numbers 2016 Jan – July
      19.561 mbpd

      Same thing for this year
      19.822 mbpd

      The triumph of EVs.

      • islandboy says:

        According to the Monthly Plug-In Sales Scorecard over at insideevs.com, US plug in sales up to the end of September were 142, 514. Someone named Mark Larsen has a page on The State of United States’ Plug-In Vehicles where he tracks the sales of plug in vehicles in the US with lots of colorful graphs and pie charts. Larsen tags the cumulative sales of 100% electric vehicles at 374,463 with plug hybrids at 331,514 for a total of 705,977 plug in vehicles sold on the US up to the end of September 2017. Thats about 563,463 at the end of 2016 rising by 142, 514 as at the end of September, out of a fleet size of about 250 million. At 0.28% of the fleet, not quite at the point where we can expect them to “move the needle”…… yet.

  5. George Kaplan says:

    Jeff linked this on the previous post, just before the new one, and it’s worth a look – in French but Google translate gives the general gist (not that great though, I don’t know if Lahererre uses a lot of slang).

    In conclusion, we must not decarbonise Europe, we must change our way of life because the current consumer society is based on inexpensive and unlimited energy.

    We must abandon our consumer society at all times or as Sister Anne we wait every day for growth!

    I don’t know who Sister Anne is, maybe some particular French meme, also a great old song by the MC5, but I don’t think that’s who he means.

    (Note he is a climate change denier, and doesn’t make as much sense when going on about that as for oil reserves. I think he hangs his hat on ice core dating without considering all the research around it for bubble migration, permafrost melt etc.)


  6. George Kaplan says:

    Personally I think Nigeria is at their limit. They hinted that they’d be prepared to limit production at 1850, which is what they are at and if you extend the decline curve from 2012 it would be about there now. They don’t have much new this year, maybe a bit of ramp-up, or next until Egina. Their main offshore production comes from a set of FPSOs of a similar age, so they could start declining quickly at about the same time.

    I also don’t follow how Ecuador maintains production. They have heavy oil, which usually needs a lot of wells continually coming on line. But they only have 5 rigs. Their new fields are funded by China, who also gets first option on the production, so maybe there are operating rigs that Baker Hughes don’t have access to.

    • I wouldn’t say Ecuador’s oil is heavy. Some older fields are in the 20’s API, and they have infill potential. The reservoir has oil over water, a large acquifer, and this is suitable for infills. The wells are easy to drill, can be completed with a workover rig.

  7. George Kaplan says:

    This posted by Longtimber on previous oil and gas thread also worth repeating

    “Art believes falling inventory will result in price support.”

    • Dennis Coyne says:

      Thanks George and Longtimber,

      I agree with Art Berman’s assessment, hard to know about the timing, but the summer driving season from May to Sept 2018 seems a likely time that oil prices might rise, assuming no major recession or war in the interim.

  8. Longtimber says:

    TFP = T H E * F I N A L * P L A T E A U
    THE Movie or reality? more or less is more or less
    Like this flick-Gotta Ask-Where the hell are we?

  9. Survivalist says:


    The Scottish and UK oil industries are entering their final decade of production, research suggests.

    A study of output from offshore fields estimates that close to 10 per cent of the UK’s original recoverable oil and gas remains – about 11 per cent of oil and nine per cent of gas resources.

    The analysis also finds that fracking will be barely economically feasible in the UK, especially in Scotland, because of a lack of sites with suitable geology.

    If the study’s predictions are correct, the UK will soon have to import all the oil and gas it needs, researchers warn.

    Instead, they recommend a move towards greater use of renewable energy sources, particularly offshore wind and advanced solar energy technologies.

  10. Guy M says:

    Thanks for the post, Ron. The site is very informative, and I have come to the conclusion that I need to read more, and comment less. But, you are right. Couldn’t help it.

  11. Energy News says:

    2017-10-11 BSEEgov: From operator reports, it is estimated that approximately 32.68 percent of the current oil production in the Gulf of Mexico remains shut-in, which equates to 571,854 barrels of oil per day. It is also estimated that approximately 20.51 percent of the natural gas production, or 660.55 million cubic feet per day in the Gulf of Mexico is shut-in.
    Estimate of “Lost” Gulf of Mexico crude production due to Hurricane Nate is 7.82 million barrels of oil.

    Also, Genscape GoM production chart: https://pbs.twimg.com/media/DL4r7v6UEAA75uK.jpg

    • Guy M says:

      You never fail to find good info. Thanks. Didn’t know Genscape tracked GOM.

  12. Verwimp says:

    Ron, Your statement on Gabon is not consistent with the graph. It might contain a typo, I think. What was the peak production level?

    • Guy M says:

      Yeah, the high was 370k a day in 1997. Pretty immaterial to the total, but a country I’d like to see.

      • Not much to see. The beaches can have worms, there’s a really nice beach at Sogara, but the view can be ruined a bit by the French refinery. Libreville public bathrooms are dirty.

    • shallow sand says:


      How is your Bakken model? I haven’t seen you update it, although maybe I missed it.

      • Verwimp says:

        Hi Shallow Sand, Thanks for asking! I’ve reported some times during the last months that the gap between the model and the data is growing.

        • Verwimp says:

          Or the extended version of the graph below. So you can see there was a huge correlation between the model and the data, and also between the first derivative of the model and the changes in the data for more then 3 years until january 2017. From that moment all correlation is lost. Data show that the increase in production was not only related to the increase in number of wells, but also in the amount of oil per well (on average). That is ‘weird’. I mean, that is absolutely not in line with what I expected to happen, and not in line with what was actually happening until the end of 2016. So, you know: we can all be very happy: Peak Oil is for some reason postponed again, and we can all keep going speculating about The Moment When It Will Happen! 🙂

          • Guy M says:

            What I see is that they are getting some good response out of drilling sweet spots, for sure. I think the stated demise of Bakken and the Eagle Ford is premature. Just needs a better oil price. Plus, it needs a long lead time to allow completion crews to gear up.

        • SRSrocco says:


          Great to see you posting an update. I can honestly tell you that the “WEIRD” rise in production per well in the Bakken may not be as high as the data shows. Unfortunately, I can’t publicly state the reason I know this. If you contact me via my email address: SRSroccoReport@gmail.com, I can provide a few more clues.

          However, the SHITE is going to hit the fan in the U.S. Shale Oil Industry once this news gets out… which will likely be made public shortly.


  13. Email from Jean Laherrere:

    dear Ron
    in your last post George Kaplan quotes my last paper in french but with graphs in english and wrote y that he does not know about Sister Anne who cannot see anything coming

    you could tell him that it is from Bluebeard
    “Bluebeard” (French: Barbe bleue) is a French folktale, the most famous surviving version of which was written by Charles Perrault and first published by Barbin in Paris in 1697 in Histoires ou contes du temps passé.[1][2] The tale tells the story of a wealthy violent man in the habit of murdering his wives and the attempts of one wife to avoid the fate of her predecessors. “The White Dove”, “The Robber Bridegroom” and “Fitcher’s Bird” (also called “Fowler’s Fowl”) are tales similar to “Bluebeard ».
    Bluebeard announces that he must leave for the country and gives the keys of the château (castle) to his wife. She is able to open any door in the house with them, each of which contain some of his riches, except for an underground chamber that he strictly forbids her to enter lest she suffer his wrath. He then goes away and leaves the house and the keys in her hands. She invites her sister, Anne, and her friends and cousins over for a party. However, she is eventually overcome with the desire to see what the forbidden room holds; and she sneaks away from the party and ventures into the room.

    She immediately discovers the room is filled with blood and the murdered corpses of Bluebeard’s former wives hung on hooks from the walls. Horrified, she drops the key in the blood and flees the room. She tries to wash the blood from the key, but the key is magical and the blood cannot be removed. Fearing for her life, she reveals her husband’s secret to her visiting sister, and they plan to both flee the next morning, but Bluebeard unexpectedly comes back and finds the bloody key. In a blind rage, he threatens to kill her on the spot, but she asks for one last prayer with her sister Anne. At the last moment, as Bluebeard is about to deliver the fatal blow, the brothers of the wife and her sister Anne arrive and kill Bluebeard. The wife inherits his fortune and castle, and has the dead wives buried. She uses the fortune to have her other siblings married, and eventually remarries herself, to a man she loves, and moves on from her horrible experience with Bluebeard.

    best regards

    • Guy M says:

      So, not to be confused with Blackbeard. Blackbeard was the pirate, and Bluebeard was the ultimate misogynist.

    • Watcher says:

      Alice and Looking Glass is likely not required reading in all languages so Red Queen references may mean nothing to non English types. Significant lesson.

    • George Kaplan says:

      Thanks, always good to learn new stuff like that. I remember the film, though not for particularly good reasons, I don’t think Richard Burton at his best.

  14. OFM says:

    This link doesn’t have much to do with petroleum, but I’m hoping WHUT or Dennis or Schinzy will see it here and answer it, considering the call for review thread is now stale.


    I take it that the new book will lay out a framework for estimating the likelihood of such an event as a super volcano eruption more accurately than has been possible in the past, and do this by tying together messy noisy data from various separate scientific fields that are not usually taken into simultaneous account by people who make such predictions.

    No matter how you go about modeling a possible future scenario, any scenario, there will likely always be more data that might be relevant than is used in doing the modeling. I’m thinking the book will be , in part, about ways to take such previously known but unusable data and incorporate it into improved models.

    I’m ready to venture a guess that it will be VERY useful to people who are wondering about the future of the oil industry, if they happen to be technically competent to make proper use of it.

    SO….. Will the book be useful in that it will help refine existing estimates of volcanic super eruptions, or so called black swan economic events, or war breaking out unexpectedly ?

  15. Jeff says:

    IEA monthly oil market report (OMR) is out:

    “Meanwhile, detailed analysis of the global balance shows that in 2017 each quarter will show a deficit, other than a tiny build in 1Q17, and, for the year as a whole, stocks will fall by 0.3 mb/d. This assumes OPEC crude oil production remaining at 32.7 mb/d. Data is of course subject to revision, but we can now clearly see a major reduction in floating storage, oil in transit, and stocks held in some independent areas. In the OECD, the five-year average stock overhang is now down to 170 mb from 318 mb at the end of January and stocks have fallen in months when they normally increase, offsetting net builds in China. In the case of China, there is always a margin for error in data that is often derived rather than reported, but crude imports have fallen every month since June and the implied net build for China’s stocks in September was relatively small at 100 kb/d.”

    IEA expects a balanced market in 2018 but their assumption on US production is probably a bit too high. They release the public report 2 weeks from now so will have to wait and check their numbers but I think that previous reports assumed US LTO and offshore to grow quite significantly in 2018. Also, I don’t think they have included KSA November cut which should affect stocks in Q1 2018.

    • The Castro dictatorship’s foreign relations minister smirked at a recent meeting that USA could forget about Venezuela, because Maduro could hold power until oil prices recover. The ongoing decline of production is hitting the Castro Mafia pretty hard, but they think they’ll retain their nearly colonial hold on Venezuela. Whatt they may not be factoring in is the continuous decline.

      About a week ago I read that PDVSA is running low on natural gas to generate electricity, which in turn slows down oil production, which leads to lower natural gas production. Hopefully they’ve entered a death spiral from which they can’t recover and Maduro will fall.

    • Jeff says:

      I had a look at the report from last month. More than half of the global growth next year is expected to come from US. Not much offshore (GoM) but quite a lot of LTO (TX, ND), NGLs and “other”.

      From OMR Sept ed.: “Producers even cut seven oil rigs in August following oil’s decline to around $42/bbl at the end of June. Since then, WTI has recovered to around $49/bbl, a level likely to prevent further declines. US crude oil production is forecast to grow by an average 360 kb/d this year and 850 kb/d in 2018. Additional NGLs output takes total supplies 470 kb/d and 1.1 mb/d higher, respectively.”

      • George Kaplan says:

        EIA STEO has GoM increase for next year at about 70 kbpd, down from 160 kbpd in January. They still have production rising to 1820 in May and then 1850 in December (but coming down with each new release now); that is only possible with no decline in any mature fields and instantaneous start up to nameplate of both Stampede and Big Foot.

  16. Guy M says:

    Question for someone who knows more about cracking than I do. If we continue to try to produce more distillates to better the distillate inventory, won’t we wind up with more of an increase in gasoline inventories?

    • George Kaplan says:

      About thirty years ago I had a period doing a bit of work on refineries, and I’ve forgotten most of it, so not an expert and treat this accordingly. Cracking usually takes fuel oil which has a high C to H ratio and either takes out some of the C (that’s fluid cat cracking) or adds some H (that’s hydrocracking); the added H often ultimately comes from natural gas (that is partly why there is refinery gain – natural gas is being added to the mix and, actually ends up getting counted twice in hydrocarbon production numbers. Distillates boil a bit higher than fuel oil (has a bit lower C to H ratio) and gasoline a bit higher still (i.e. more H again). There’s is a bit of flexibility in what product you get (but not unlimited) so it’s possible to adjust the mix to some extent. Note that the world in general is getting heavier, even if the USA is getting lighter, so more gasoline with the distillate isn’t necessarily a bad thing overall, and with the USA now able to export balancing the mix is easier (the recent increase in USA exports might reflect this). Also the split between gasoline and distillate demand is much more elastic than the overall oil demand – small price differences from diesel to gasoline can quickly change the usage (not so long ago the UK had relatively cheaper diesel, but now it’s pretty much parity on an energy basis as demand and supply balance has changed). The bigger question might be if there will be sufficient cracking capacity as the oil gets heavier, but I think generally there will be as a lot of the producer nations have been developing their own refining capacity tailored to their particular oil.

    • clueless says:

      I think it depends on what you mean. For example, if refiners absolutely need more diesel, so instead of refining 16 million bbl/day, they ramp up to 17 million bbl/day, then they will get more diesel and more gasoline.

      I do know that the refiners used to tweak the refineries to produce a higher gasoline/diesel ratio during the summer and a lower gasoline/diesel ratio during the winter [especially when more heating oil (diesel) was being used out east, but now, a lot of that heating oil has been converted to natural gas]. So, if they have already tweaked their refineries, running more crude thru the refinery is about all they can do.

      I do not know for sure what the tweak was, but it was not huge. If I had to take a WAG, I would say maybe 68%/32% during the summer, and 64%/36% during the winter [using WTI as opposed to heavier Venezuelan crude].

      Looking at today’s report from the EIA, we are importing a trivial amount of diesel. Maybe someone here knows, but I do not know – Is that because there is very little diesel available on the world market, or is that because the US refiners are confident that with their heavier crude input, they can produce enough diesel domestically? Because total diesel inventories are somewhat below average, I would guess the former.

  17. Don Westlund says:


    The guys at Core Labs had an investor presentation a couple of weeks ago where they talked about Russia. Most analysts over the last five years have been wrong on Russia. Most thought they would never get that much above 10 mbpd. As you know most of these fields are old/mature. Russia was able to use short term low tech solution to enhance production. Frack the field and put in an electrical submersible pump. It worked very well, better than most had thought it would work. Core Labs thinks that these types of work overs sets them up for a hard decline. They see a possibility for a net decline rate for Russia at 7% a year and half out.

    At the 3:25 mark they talk about Russia

    • Eulenspiegel says:

      Does this additional help to increase the total recovery rate?

    • Watcher says:

      Link didn’t work, demanded registration.

      Fracking is low tech now? I thought it was a yankee know-how uber techno miracle.

      OTOH, maybe this was meant:

      • wake says:

        that Russian replacement of fracking by chemical reaction that produces gas is interesting. Any of the technical people here care to comment at all?

        The Rockman on TOD used to say fire flood was something that worked if you could get it right, which he said was impossible. but the expanding gasses were powerful

        • Fire flooding produces acid gases, they eat the producing wells’ steel casing and tubing. There are other problems as well, and this is why the industry leans towards polymers, CO2, and natural gas liquid injection.

          Russian fields can’t be lumped together in one single group. Simple low tech hydraulic fracturing works well in fields with low permeability sandstones.

          Russia has large unexploited condensate/NGL resources in the Jurassic which lies under the large Cretaceous gas fields, but that requires high prices. I see they are fiddling around a bit with these reservoirs, but they haven’t invested in full development. I suppose those will be developed in the 20’s and 30’s.

  18. Guy M says:


    Quotes Ron.

    Food for thought: if OPEC and Russia see the eventual demise of the oil industry, would they not want the highest possible price while it lasts? Manipulating the market has a negative connotation with the US, but it is their modus operandi.

    • No, it actually quotes Dennis. They still refer to all posts from PeakOilBarrel as being from me when they are actually from Dennis or a guest poster. Here is the article they refer to:

      U.S. Shale Could Peak Before 2025 By Ron Patterson – Mar 25, 2017, 10:00 AM CDT

      And that article was written by Dennis Coyne, not Ron Patterson. If I had written the article, I would have had shale peaking long before 2025.

      • Guy M says:

        So, they used your name in vain,🙁.

      • Dennis Coyne says:

        Hi GuyM,

        In that post I assume that oil prices rise to about $75/b (65-85) by Jan 2022.

        Clearly nobody knows the future price of oil. Based on USGS TRR estimates for US LTO and the oil price assumptions, US LTO may peak (if the assumptions are correct) between 2019 (low oil price scenario) and 2022 (high price scenario).

        Both of these dates are before 2025, my best guess in March 2017 was about 2021, with the peak for US LTO at about 6.5 Mb/d. Output in Aug 2017 (at an oil price under $55/b) was about 4.75 Mb/d. I think higher oil prices (above $75/b) will increase US LTO output by another 1.75 Mb/d over the 2017 to 2021 period, followed by decline.

        • Guy M says:

          I believe it has another significant peak to it. It’s will take a lot more time, because EIA and Goldman Sucks won’t quit creating imaginary numbers. September will be worse, because of Harvey, and a very low completion count for Texas, with a lot of completions being vertical. Don’t expect much more activity, as it is the end of the year. Completions, at this point, won’t add much to year end figures.

        • George Kaplan says:

          Don’t think I’ve seen this linked here – may be relevant, I tend not to take much notice of these finance only type predictions that don’t even give a nod to possible geological influences and seem to take as read some kind of deterministic, technical and therefore predictable price forecast. Sometimes they come out correct but I’d bet no more than random chance.



          Still, Vitol feels that the current U.S. crude oil production growth is unsustainable beyond 2018.

          Vitol is anticipating an increase in US crude production of 0.5 to 0.6 million bpd in 2018, at which point the increase in production would cause cost inflation, rendering at least some of today’s current production projects unprofitable. And according to Vitol, some are barely profitable as it is.

          “If you look at the economics on most of the big Permian players, not many of them make a lot of money,” Taylor said, speaking to Reuters.

      • Dennis Coyne says:

        Hi Ron,

        When would you have it peaking? My low oil price scenario was 2019 for the peak. All scenarios are too low in Aug 2017 by about 500 kb/d. (4.25 Mb/d vs 4.75 Mb/d actual output). The current US LTO peak is Aug 2017, until next month 🙂

        • Guy M says:

          Peak, so far, was in May. EIA July numbers are more than suspect, August and September had Harvey, and completions in Texas were very low for August and September.

          • Dennis coyne says:

            Hi GuyM,

            The peak for US LTO was Aug 2017 according to EIA tight oil production estimates.

            • Guy M says:

              9 months will prove that wrong. Common sense should. Completions in Texas were down, and Eagle Ford was largely shut in for awhile, and production is up? Initial Texas production should be out in about four days. I’ll update then. July 2017 initial production was less than July 2016 initial production, but EIA still put it about 300k over what is currently reported for July of 2016 even by their count. They can play this game for about a year, and then they don’t have to explain anything later, because by that point, nobody cares.

              • Dennis coyne says:

                The initial reported production by the RRC is usually 550 kb/d too low.

                The initial EIA estimate is far better than reported RRC output. Not perfect but within 3% rather than low by 15% or more.

                • Guy M says:

                  It was that way for 2016, also. Eia adjusted it up to close to actual. Both EIA numbers for July 2016 and current posting for RRC are about the same now. They are 300k barrels below what EIA is estimating for July 2017. Even though the initial reporting for July 2016 is higher than the initial reporting of 2017. Quite obviously one is wrong. As 2016 is now historical data, I would think that one is more correct.
                  Condensate for July 2017 was 8,641,731. I did not write down the condensate for July 2016, but it was running over 9 million barrels through most of 2016. So, let’s just say they ere equal. EIA has Texas production at 3,161,000 for July 2016, which is their CURRENT figure. They have July 2017 at 3,474,000. Actual RRC data shows 3,110,000, which is not that different from EIA’s number. But 2017 is 300k more, because? Sorry, Dennis, I edited my post while you were replying, and answered your objections in this post.

                  • Dennis coyne says:

                    The EIA estimate does not change very much usually 2 to 3% at most.

                    The RRC initial estimate gets revised up for 12 to 18 months. In the end it ends up being within 2 or 3% of the initial EIA estimate.

                  • Dennis coyne says:

                    Hi GuyM,

                    When you say the initial reporting for July 2016, do you mean the data initially reported on Sept 2016?

                  • Dennis coyne says:

                    Hi Guym

                    That report does not give condensate output.

                    EIA reports C+C the Texas report you link to reports crude only.

                    Apples to oranges comparison.

                  • Dennis coyne says:

                    The initial July 2016 estimate by the RRC has been revised up 12 %

                  • Dennis Coyne says:

                    Hi GuyM,

                    The RRC data bounces around quite a lot and the data for the most recent month especially, tells us very little.

                    In Sept 2016 the EIA reported Texas output for July 2016 (the most recent estimate at that time) as 3161 kb/d. Currently the July 2016 for TX C+C by the EIA is 3161 kb/d. This estimate is a bit higher than the currently reported RRC estimate for July 2016 C+C (3110 kb/d), but the RRC estimate for July 2016 may increase a bit more over time.

                    In any case, we will see how US LTO output will change over the next 9 months.

                    I get my tight oil output estimates from the link below:


                    In Texas, the wells that were being completed in July 2017 may have been more productive on average than wells completed in July 2016. If completions drop by 10%, but average well productivity of newly completed wells increased by 15%, then output might increase by roughly 5%.

                    In any case, we will find out in the future what has occurred with US and Texas C+C output. In the past EIA estimates have been pretty good.

                    Occasionally the EIA estimates are a much too high, in June 2015, the April 2015 EIA Texas C+C estimate was about 6% too high (compared to the current April 2015 EIA TX C+C estimate). By contrast the initial RRC estimate for April 2015 was about 25% to low.

                  • Dennis Coyne says:

                    Hi Guy M,

                    In Sept 2016 the initial RRC estimate for July 2016 was 2753 kb/d.

                    In Sept 2017, the RRC estimated July 2017 C+C output at 2708 kb/d.

                    So the estimates are indeed very close.

                    The “correction factor” varies month to month it is not fixed because the percent of production reported in a timely manner by Texas oil producers is not fixed, it varies month to month.

          • Dennis Coyne says:

            Hi Guy M,

            I took a look back at some of the data that Dean Fantazzini collects and you are correct that since April 2017 the EIA data for Texas has probably been too high. There was a noticeable shift in the difference between the initial EIA estimate and the RRC initial estimate over the past 3 months from about 450 kb/d to 700 kb/d, so it is quite possible the most recent EIA TX C+C estimate is too high by about 300 kb/d as you suggest.

            Chart below has correction by Dean Fantazzini using last 3 months of Texas RRC initial estimates and using past 13 months of Texas RRC initial estimates (in each case using most recent 24 months of data reported in each of the past 3 or 13 months by the RRC). I prefer the most recent 13 months, there was a change in the correction factors (a shift to lower values, about 16 months ago(April 2016).

            The Chart below is based on data provided by Dean Fantazzini.

            Clicking on chart gives a larger view.

        • I already picked the peak, 2015. So I was slightly off, but not by all that much as you can clearly see by the chart. I think we are on the peak plateau right now. The actual 12-month peak could be anywhere from 2017 to 2019 but no later than that. Well, in my humble opinion anyway.

          • Dennis Coyne says:

            Hi Ron,

            The question was about US LTO, you have picked the World C+C peak, but as far as I remember you have not said anything recently about US LTO except that it will be before 2025.

            So far the 12 month centered average for US LTO peaked in June 2015.

            If US LTO output continues at the August output level (4750 kb/d) for 5 months, then a new 12 month centered average peak will be reached by Aug 2017 (average output from Feb 2017 to Jan 2018). US LTO output has risen about 600 kb/d over the past 12 months so an assumption of no further US LTO output increases over the next 5 months is a conservative estimate in my view.

          • Javier says:

            Hi Ron,

            I agree that Peak Oil was reached in 2015. Looking at yearly production using EIA data for world C+C production, production remains at ~ 80.5 million barrels per day, including the first 6 months of 2017. Until production can go to 81.0 million barrels per day, we remain in Peak Oil. An undulating plateau is still Peak Oil.

            Most people think production will go up and Peak Oil won’t take place for decades. After all the 30-year trend is clearly positive and some people only look at that. I don’t. Even though the capability to produce more oil remains, I think economic factors, production limitations, and depletion will determine this constituting the Peak Oil. The real test will take place when oil prices rise significantly in the future. I anticipate the decrease in demand resulting from higher prices will prevent oil production from increasing significantly on a yearly basis.

            Data in the graph good to Sept 2017 EIA MoER (table 11.1b).

            • Eulenspiegel says:

              We still have a projected oil growth of about 1.5 million barrel a year the next few years – mostly driven by China and India. Even with China promoting electric cars aggressivly it will take a few years until you see the dent in chinese demand.

              There are still reserves sitting in oil tanks and floting storage – but production has to climb or we have 100$+ oil already in 2019.

              Times will get interesting.

              • Javier says:

                Every period of 3 years or longer without an increase in oil production has been accompanied or followed by global slow economic growth, and economic crisis in large regions. Whether cause or consequence, if in 2018 there’s no increase in oil production we might have another serious economic situation developing.

                • Dennis Coyne says:

                  Hi Javier,

                  Possibly there will be a slowdown in economic growth, the Global Financial Crisis of 2008-2009 was a particularly severe crisis, the most severe since the Great Depression.

                  From 1990 to 1994 the trailing 12 month average of World C+C output was relatively flat with low economic growth rates from 1990-1993, but no economic crisis. The relationship is far from simple, there may be slower growth or the transition may present new opportunities that enhance growth, slower growth seems more likely to me and eventually there may be a severe recession, this is uncharted territory has World Oil output has never peaked before, though we did see a severe decline from 1980 to 1982 with relatively little increase until 1986 (63 Mb/d down to 53 Mb/d in 1982 and only 54 Mb/d at the end of 1985). Over this period real economic growth fell from 4% in 1978 to 0.4% in 1982, but rose to 5% by 1984.

                  Unless there is another major war in the middle east (or a Great Depression) a fall in World C+C output like 1980-1982 (18% decline in output over 2.5 years) is unlikely before 2040.

                  • Javier says:

                    From 1990 to 1994 the trailing 12 month average of World C+C output was relatively flat with low economic growth rates from 1990-1993, but no economic crisis.

                    We have not studied the same economic history. The early 90’s were characterized by poor economic performance in most of the Western World. Australia and New Zealand entered recession. Finland and Sweden had their worst recession in over 60 years. Germany had a very tough period with high interest rates and poor performance after reunification. The UK didn’t grow between 1990-93, and in 1992 the UK sterling pound was forced out of the exchange rate mechanism. Other European countries also had recession at this time. Even in the USA George H. W. Bush failed his reelection due to the poor economy, despite winning the Gulf War. This is known as Early 1990s recession

                    Your exception is not such.

                  • Dennis coyne says:

                    Hi Javier,

                    World Real GDP increased at about 2% per year on average over that period. It was a slow growth period and the slow GDP growth may have been the reason for slow growth in oil output. It was followed by an increase in GDP growth.

                    You may have cause and effect reversed. In any case in the past GDP/barrel increased at higher rates than would be needed for a slow growth in GDP of 2 to 2.5% per year.

            • Dennis Coyne says:

              Hi Javier,

              For climate 30 year trends are appropriate as we do not understand the reasons for the internal variability of the climate system very well.

              So if 12 month average output reaches 81 Mb/d, then it is a new peak?

              What is special about 81 Mb/d?

              If there was a “peak plateau” from 2015-2020, the sensible place to call the peak would be 2017-2018, if we are going to arbitrarily define the plateau as 12 month average output between 80 and 81 Mb/d. From your chart it is clear we are on a plateau at present (as was also the case from 2005-2010). Perhaps we will remain on this plateau for a few years and output will decrease and perhaps output will increase further when/if oil prices rise.

              I think it likely that if oil prices increase above $80/b (likely by Oct 2018) that World C+C output will increase above 82 Mb/d and possibly increase to as much as 85 Mb/d by 2025 unless a severe World recession occurs between now and 2025. After that output is likely to decline. A plateau scenario with output between 80 and 82 Mb/d (defined arbitrarily) might be extended to 2030 (that is the centered 12 month average World C+C output falls to less than 80 Mb/d by 2031). Both the plateau to 2030 and peak at 85 Mb/d are optimistic in my view, a peak at 83 Mb/d (between 2022 and 2024) or a plateau (80-82 Mb/d) to 2027 would be my best guess.

              • Javier says:

                Hi Dennis,

                There’s no accepted definition, but to me if production reaches a plateau and doesn’t increase further, the peak date is the year the plateau is reached, not its center or end. Significant oil production increase ended in 2015 so far. Small incremental temporary increases don’t change that.

                While a few hundred thousand barrels per day aren’t going to change the picture, if production goes above 81 Mb/d then it is clear that the peak wasn’t reached at 80 in 2015. Production has been increasing at ~ 1 Mb/d per year, so 1 Mb/d difference is significant enough.

                Oil models are almost as bad as climate models, and nobody knows what oil prices are going to do or if oil production is going up or not. I’ll remain convinced that the 2015 Peak Oil call is good until the data proves otherwise. I’ve seen a lot of people predicting oil production increases since 2015, but they haven’t taken place.

                The problem with your model is that a prolonged plateau in oil production is so far incompatible with economic performance, so the severe world recession that invalidates your model is already baked in your model. You require a new economy that hasn’t been demonstrated yet.

                • Dennis Coyne says:

                  Hi Javier,

                  The economy is not well understood, but during the 1978-1987 period, the World real GDP per barrel of World oil that was produced increased at a rate of 3.9% per year on average over those years.

                  If World oil output is flat at the 2016 level until 2029 and World real GDP grows at about 2.4% per year in 2017 and gradually falls to 2% per year by 2029, then real GDP per barrel of oil produced would increase at 2.2% per year (far lower than the 1978-1987 rate of growth). The rate of growth of real GDP per barrel of oil produced has increased at a rate of 1.8% per year from 1988 to 2014. From 2004 to 2008 the rate of increase was 3.3% per year.

                  So there is past economic data that suggests a plateau to 2029 might be possible. There is also a more likely possibility that World oil output will increase to 82 Mb/d between 2020 and 2023 and then gradually decline from 2025 to 2030 (1% per year decline on average, starting slowly with a gradual increase in decline rate).

                  I agree that like predictions of future Global Temperature, oil output and/or price predictions are likely to be imprecise.

                  As far as a recession invalidating the model, that is silly. A model makes some underlying assumptions. As most people understand that future economic rates of growth are difficult to predict, I make the simplifying assumption that the forecasts of international agencies such as the IMF or World Bank are roughly correct, but assume growth rates will be somewhat less than they predict because their past predictions for real GDP growth have usually been high by about 0.5%.

                  If their is a major recession that occurs, demand will be lower, prices will fall and output will be lower. Provide me with the correct date for a future recession and the growth rate in real GDP and a scenario can easily be devised that approximates future output.

                  My crystal ball is in the shop, maybe yours is working 🙂

                  • Javier says:

                    Dennis, a recession is not the only scenario that invalidates your model. Recession is both cause and consequence of oil consumption reduction. A recession can be brought by an oil price shock, while at the same time it reduces oil consumption regardless of price. So strong oil price increases, non-oil related poor economic performance, or simply inability to increase oil production at a given price point, all lead to a different scenario to your model.

                    If I remember your model correctly, it predicts that in ~ 12 years oil production should be similar to now, either through a plateau or through modest increase followed by modest decrease, depending on oil price. In my modest opinion such a model requires fair economic performance under oil production circumstances that have been associated to poor economic performance in the past.

                    You claim that our economy is going to decouple from oil use enough to allow it. Perhaps, but I am not convinced. The decrease in oil intensity has taken place mostly while using more oil, not less. A big part of it is a transition to a more mature economy more dependent on services, while production was being shifted to other countries, and increased, not decreased. An actual stagnation or decrease of oil-dependent production might not be compatible with an increase in services, and prevent a continuation of the decoupling.

                  • Dennis coyne says:

                    Hi Javier,

                    I have not made any decoupling claim, so please do not make things up.

                    Most of the scenarios have assumed no recession as I have difficulty predicting the date.
                    Recessions are variable in their intensity. The 1990 to 1994 recession was relatively mild on average for the World. A recession like that would simply help to keep oil prices low.

                    Less oil has been used over time per constant dollar of GDP produced, other forms of energy have been substituted for oil and energy in general is being used more efficiently.
                    There will never be a decoupling of the economy from energy that is absurd.
                    Energy will continue to be used more efficiently unless a ramp up in solar power makes it relatively abundent 100 years from now as population declines due to a lower TFR of 1.7.

                    On oil use increasing, this was not the case from 2005 to 2010 but Real GDP per barrel of oil continued to increase. This is mostly driven by real oil prices. During periods when oil prices have been high the rate of growth of GDP per barrel is usually higher. Rising oil prices if oil output remains on plateau is likely to lead to faster growth in GDP per barrel. Real oil prices above $100/b caused few problems from 2011 to 2014 World Real GDP grew 2 to 3%. Oil prices decreased due to oversupply which I do not think will occur again prior to 2030. A severe recession prior to 2030 would be one possible cause for oversupply due to lack of demand.

            • Dennis Coyne says:

              Hi Javier,

              There were three main scenarios presented in my July 2015 post, and 3 other scenarios based on the medium scenario (from
              pessimistic to optimistic with a “realistic” middle case).

              Post at


              Spreadsheets with the scenarios are linked in the post.

              Reality might fall anywhere between the low and high scenarios if the low to high URR estimates are roughly correct. Note however that I underestimated future extraction rates at least through 2016 so potentially peak output could be above the 80 Mb/d level shown in the chart below, perhaps as high as 85 Mb/d, but 83 Mb/d seems a more reasonable guess to me (probably between 2021 and 2024). An undulating plateau between 2015 and 2029 is also a possibility, but if we define the upper limit as 81.5 Mb/d, then I doubt this scenario will be followed, I think a new peak above 82 Mb/d some time after 2019 is likely. So the scenarios presented in 2015 were too pessimistic.

              • Dennis Coyne says:

                The other scenarios based on the medium (3400 Gb URR) scenario in chart below.

              • Javier says:

                Hi Dennis,

                Thank you for posting your model again. You know I am not too fond of trying to model very complex, multi-variable phenomena when there is very limited knowledge of some of the variables.

                A very serious alternative to your Hubbert-type approach is the Seneca cliff collapse observed in some overshooting systems.

                So how can you say where reality might fall if you can’t possibly know if decline is going to be Hubbert-like or Seneca-like? The answer is by making assumptions. Your model, any complex model, rests on a bunch of unstated assumptions. the probability that one of them will not be true is extremely high, and the moment one is not true, the scenario becomes completely different and the model is worthless.

                I rather stick to the data and the evidence and make limited predictions that rest on as few assumptions as possible. The downward slope of Peak Oil is something we can’t possibly imagine, much less model.

                In late 2014 it became clear to me that Oil had entered endgame. The LTO scheme was not a solution but a dilatory maneuver. Cheap-to-extract oil has reached a limit and is declining, and expensive-to-extract oil won’t do. It doesn’t matter how much oil is left. It doesn’t matter that we could extract a lot more than we do. The more we extract the less economic output we have left for other things, so we will extract as little as we can and still function, while we try to do with less oil. But as there are no cheap alternatives to cheap-to-extract oil for transportation we will reach a point when the economic world will awake to the end of growth, and the end of interest rates. There will be a huge run out of paper wealth into solid wealth, with the mother of all inflations and the end of financing, and that will be the end of civilization as we know it. Try to model that.

                That’s why I predicted 2015 as Peak Oil. Perhaps I am wrong and a higher production can be reached, as you say. The capacity is there, but I don’t see the conditions as favorable. We have already seen the return of Iran production, and significant recovery from Libya and Nigeria, without a global increase. The downward potential is big and depletion is likely to accelerate.

                And even if I am wrong with a 2015 Peak Oil, I don’t think it will matter much, as it would be just a temporary delay.

                • @whut says:

                  Javier said:

                  “You know I am not too fond of trying to model very complex, multi-variable phenomena when there is very limited knowledge of some of the variables.”

                  People aren’t usually fond of things that they can’t do well. This includes when they do not understand how to reason with limited knowledge avaailable (the discipline of probability) .

          • Dennis Coyne says:

            Hi Ron,

            How would you define “peak plateau”? Would it be a 12 month output average of 80-81 Mb/d? Or maybe 79-82 Mb/d?

  19. Guy M says:

    Another reality disconnect on the EIA weekly. Shows production down during Nate, but only 87k.

    • George Kaplan says:

      BSEE numbers are going to be over 300 kbpd so I don’t know where they get that number from, maybe they just counted the first day of outages in their weekly numbers.

  20. Energy News says:

    Chinese September crude oil imports back above 9 million b/day
    Reuters chart in tonnes: https://pbs.twimg.com/media/DL_WFnIVoAExIEl.jpg

  21. George Kaplan says:

    EIA twip has total crude and products down 1.7 mmbbls or 0.2%, which is quite a bit less than the trend (crude down 2.7 – -0.8%, gasoline up 2.5 – 1.1%, distillate down 1.5 – -1.1%).
    With USA crude export in full swing now I wonder if these numbers are quite as important to traders for setting prices, or to the media for headlines. There don’t seem to be quite as many Thursday stories saying “oil rises/slides on unexpected/expected stock build/decline”


    • Guy M says:

      Most probably know the numbers are total BS by now, its the press who still treat it as gospel, and, of course, Goldman Sucks.

  22. gordon mackenzie says:

    I appreciate these posts but I always feel the graphs are misleading at first glance because the production axis does not show zero. It seems to me like this is done to sensationalise the results.
    For example at first glance it looks like Algeria production has totally collapsed but it is only actually down about 30% or so.
    Sorry but as an Engineer in a different field this graphical misrepresentation is an issue that always bothers me.
    Another common area I see this is when business magazines try to show explosive share price growth.

    • Sorry Gordon, but as I stated when I started this site four years ago I stressed that my charts would never be zero-based unless the data actually went to near zero. I stated then that my intent was to emphasize the change in production. As an engineer, you should always be aware of where the vertical axis starts. After all, I am not the only one to not use zero-based charts. It is really the norm in this area of reporting.

      • WeekendPeak says:

        I always thought that the whole “zero based” thing was a bit silly. First of all people tend to only look at one axis – the Y axis when zero based charts are discussed. If one wanted to be pure and be truly zero based the X axis would have to be zero based also – but to what? JC’s birthday? the start of mankind? When the earth first got formed? When the universe started? In any scenario the chart would be just a dot which is useless.
        Somewhat similar with the Y axis. Why not plot sea levels starting from zero – just to be “pure”? Again, the chart would be a straight line or a dot, depending on how you’d chose your X-axis.
        I think clear formatting and indications of scale, and preferably charts of the same data over different timeframes, are much more useful (and not sensational).

  23. Peter Mason says:

    Bit of a kick up in north Dakota. Highest daily oil since March 2016. And two charts on Lynn Helms report for the first time. Snazzy. Not near the old peak though.

    • Energy News says:

      There was an increase in activity in May and June. That’s when the new pipeline started and so it might be due to that?

  24. Watcher says:


    “The FT notes that talks about a private sale to foreign governments – including China – and other investors have gathered pace in recent weeks, according to five people familiar with the IPO preparations, amid growing concerns about the feasibility of an international listing.”

    The absurdity of reporter thinking is just silly. This is civilization’s lifeblood of which they have most — and money is created from nothingness. They have the first. The second is only a matter of convenience.

    haha there is no face at risk here.

    And btw, in the article it’s clear that sale to “governments” means sale to Sovereign Wealth Funds. The largest of those is Norway’s — funded by oil. Oh and I’ll have to recheck but I do believe the 2nd largest belongs to . . . hahahahahaha KSA.

    • Watcher says:

      No not quite.

      2nd is UAE, from oil

      3rd China, which is an investment fund and not really an SWF, but it listed as non commodity based and 3rd place

      4th is Kuwait, from oil

      and 5th is KSA, from oil

      Oil is pretty much paying for oil — because that’s the only way to be independent of QE whimsy. This excludes the China entry. Somewhat hilarious. One is reminded of poker saying about looking around the table to figure out who the sucker is and can’t. China should think about that.

    • They could try an auction, 0.5 % of Aramco auctioned every 6 months for 10 years.

  25. Energy News says:

    US Baker Hughes Rig Count (Oct 13)
    Oil rigs fall by -5 to 743 and gas rigs fall by -2 to 185 also miscellaneous -1
    Regions: GoM -2, Permian +1, Wiliston +1, Eagle Ford -6, Niobrara -1, Barnett -4

    • Guy M says:

      Yeah, it will probably keep going down til the end of the year.

      • Dennis Coyne says:

        Hi GuyM,

        Depends on oil prices, my WAG over the next 12 months the oil rig count in the US will be between 730 and 760, roughly a plateau around 745+/-15 oil rigs. This is based on an expectation of gradually rising (10%/year) oil prices starting in May 2018 and $45/b to $60/b from Sept 2017 to May 2018.

  26. Guy M says:


    Oil at $10 a barrel by 2022, according to this genius. Of course, the government can always outlaw ICEs, like they are doing in other countries. Good luck with that.

    • Dennis coyne says:

      I agree 2022 is not a good estimate, maybe 2045-2050.

      • Guy M says:

        I try to live in today, I will be pushing up daisies long before then.

        • Dennis Coyne says:

          Hi Guy M,

          Long before then, the oil peak will be clear (by at least 2030 it should be obvious, probably 5 to 10 years in the rear view mirror). Oil prices will rise and EV sales will increase fairly rapidly over the 2020-2030 period. I doubt it will be enough to bring down oil prices to $10/b, though possibly oil prices may fall from $120/b in 2024 to $80/b in 2030, if EVs ramp up as quickly as I foresee (25%/year increase in EV sales for 10 to 15 years).

    • islandboy says:

      Funny that you should post that! In a response to watcher up-thread I was thinking of including a link to something similar but I was in a hurry to go out and didn’t bother. There’s another “genius” responsible for the following headline (video embedded at link):

      $25 oil is coming, and a new world order along with it, think tanks says

      The world as we know it, will be no longer. The balance of power on a global scale will shift. All in the next decade.

      Sounds dramatic right? But independent think tank RethinkX says it’s be true because of rapid advances in technology, and specifically the advent of self-drive or autonomous cars.

      First and foremost, RethinkX co-founder and Stanford University economist and professor Tony Seba told CNBC’s “Street Signs” that the rise of self-driving cars will see oil demand plummet, the price of that commodity drop to $25 a barrel, and oil producers left without the political or financial capital they have today.

      “Oil demand will peak 2021-2020 and will go down by 100 million barrels, and will go down to 70 million barrels within 10 years. And essentially what that means is that the new equilibrium price in the oil markets is going to be $25. So if you produce oil and you can’t compete at $25, essentially you are holding stranded assets,” Seba said.

      “At $25 that means deep-water, sands and shale oil fields, most of them are going to be stranded. And also, all the refineries and the pipelines associated with these expensive oil are going to be also stranded. And that is going to reshape, of course, worldwide oil geopolitics and so on.”

      It’s a big call, but if you look at what’s behind Seba’s premise, it comes down to money.

      He said the world will not stop driving altogether, people will just switch to self-driving electric vehicles, which will become a much larger part of the sharing economy. And these electric vehicles are going to cost less to both buy and run.

      “The day that autonomous vehicles are approved, the combination of ride hailing, electric and autonomous means that it’s going to be 10 times cheaper, up to 10 times cheaper, to use a robo-taxi, a transport as a service car, than it is to own a car,” he said.

      Essentially, he is saying that the active US car fleet will shrink to 10% of current levels by 2030, in that a sizable chunk of VMT will be shared cars (Transport as a Service -TaaS) many of which will be electric. The quote on “oil demand ” figures is strange in that it says “Oil demand will peak 2021-2020 and will go down by 100 million barrels, and will go down to 70 million barrels within 10 years. ” Examination of the Report Rethinking Transportation 2020-2030 from RethinkX on page 40 it says

      U.S. oil demand from passenger road transport drops by 90% by 2030

      Using the EIA’s BAU forecasts as the baseline, the results of our analysis indicate that oil consumption from U.S. passenger vehicles will decline from over 8 million bpd in 2020 to under 1 million bpd in 2030. Over 7 million bpd of oil demand will be eliminated by the TaaS disruption. The implication is that around 90% of the U.S. passenger vehicle market demand for oil will evaporate within a decade.

      and on page 41

      Global oil demand peaks in 2020 at 100 million bpd and plunges to around 70 million bpd by 2030

      For our global oil demand scenario, we applied the annual rate of change in light-, medium- and heavy-duty transport oil demand in the U.S. to the oil demand forecasts in China and Europe in the same year, and to the rest of the world with a four-year delay. Figure 11 shows the outcome of this analysis: global oil demand will drop from 100 million bpd in 2020 to 70 million bpd in 2030. That is, total global oil demand will decrease by about 30% in a decade.

      Maybe it’s all just crazy talk. Maybe not.

      • Guy M says:

        Could be possible for me. Just have to ditch my self employment and find some menial, less paying job. Sell my vacation place. Then I can ride share with someone who may even be more irritable than myself (if that’s possible). Yeah, ride sharing will be here next month, at least.

        • Nick G says:

          I don’t think he’s talking about car-pooling. Carpooling is significant at about 11% of commuting, but I don’t really see it expanding.

          He’s talking about car-sharing, which is Uber/Lyft and taxis, but with autonomous EVs that operate with much, much higher VMT per vehicle.

          • Guy M says:

            Thanks. Still sounds pretty complicated for rush hour traffic.

            • Dennis Coyne says:

              Hi GuyM,

              I test drove a Tesla in rush hour traffic in Boston (weekday between 5:30 and 6:30 PM, Mass Pike westbound for those who know Boston). The Autopilot mode worked surprisingly well.

      • Watcher says:

        This kind of consumption drop is actually likely.

        Price goes lower, oil doesn’t flow. People kill each other for oil (food) by the billions.

        The reduced population doesn’t burn as much oil.

        • Guy M says:

          Makes more sense.

          • islandboy says:

            Let’s revisit this in another five years. By then the trends should be indicative of what’s possible or likely. I’ve lived through enough transitions and disruptions in my 55 plus years to not write this sort of stuff off. Remember Polaroid, Kodak, Bell & Howell (16 mm movies), VHS, 8 tracks, cassettes, Cathode Ray Tube TVs, vinyl records and turntables, typewriters, mechanical cash registers, rotary dial telephones, vacuum tube electronics and probably lots more? That’s just during my living memory. I never experienced steam ships or steam trains except for a ride on The Bluebell Railway that my British mother took my siblings and I on, during a one year stay in the UK back in the late sixties. Can’t think of any other reason why I would remember anything called “The Bluebell Railway”. I cannot recall ever seeing and have never flown in a large passenger airliner that wasn’t a jet.

            “Over and out”.

            • HuntingtonBeach says:

              “vinyl records and turntables”

              Hell, at this point I think you can add CD’s and DVD’s to your list

              • Hightrekker says:

                Actually vinyl is making a huge comeback.
                Audio aficionados like the analog richness.

                Contemporary cruise missiles are accurate by comparison. Still, precision weapons never do seem capable of assassinating specific individuals (Saddam, Osama, Qaddafi), even when hundreds are dropped. And ray guns have not materialized—surely not for lack of trying. We can assume the Pentagon has spent billions on death ray research, but the closest they’ve come so far are lasers that might, if aimed correctly, blind an enemy gunner looking directly at the beam. Aside from being unsporting, this is pathetic: lasers are a fifties technology. Phasers that can be set to stun do not appear to be on the drawing boards; and when it comes to infantry combat, the preferred weapon almost everywhere remains the AK-47, a Soviet design named for the year it was introduced: 1947.

            • Watcher says:

              Have you looked around at all the SSTs still flying?

              And how many manned moon landings there have been since the 1970s?

              • Hightrekker says:

                Of Flying Cars and the Declining Rate of Profit


                It was right around 1970 when the increase in the number of scientific papers published in the world—a figure that had doubled every fifteen years since, roughly, 1685—began leveling off. The same was true of books and patents.

                Toffler’s use of acceleration was particularly unfortunate. For most of human history, the top speed at which human beings could travel had been around 25 miles per hour. By 1900 it had increased to 100 miles per hour, and for the next seventy years it did seem to be increasing exponentially. By the time Toffler was writing, in 1970, the record for the fastest speed at which any human had traveled stood at roughly 25,000 mph, achieved by the crew of Apollo 10 in 1969, just one year before. At such an exponential rate, it must have seemed reasonable to assume that within a matter of decades, humanity would be exploring other solar systems.

                Since 1970, no further increase has occurred. The record for the fastest a human has ever traveled remains with the crew of Apollo 10. True, the commercial airliner Concorde, which first flew in 1969, reached a maximum speed of 1,400 mph. And the Soviet Tupolev Tu-144, which flew first, reached an even faster speed of 1,553 mph. But those speeds not only have failed to increase; they have decreased since the Tupolev Tu-144 was cancelled and the Concorde was abandoned.

                • Dennis Coyne says:

                  Hi Hightrekker,

                  Perhaps a levelling in the rate of growth in publishing has to do with a slowing in the rate of population growth. We will have to wait for the warp drive to see another big jump in travel speed.

                  For now we should focus on sustainability on this planet, though research on interstellar travel could continue.

                  Maybe Einstein was wrong, though so far observational evidence confirms his theories (as far as I know, I am not an expert).

                  • Hightrekker says:

                    I agree, survival is what is important now.
                    Population overshoot, runaway climate change, ecological collapse, resource constraints, superstition based economic systems, etc. are first priority.

                  • Dennis Coyne says:

                    Hi Hightrekker,

                    Superstition based economic systems?

                    Political Economics is a complex subject and experimentation is difficult and an understanding of political economics affects the behavior of people making theories (even those that are accurate) obsolete over time.

      • GoneFishing says:

        Being a forward thinker but not being the genius Tony Seba is, I think he is pushing the time line by a few years. Not to say this could not happen in specific countries or happen in regions to a large degree by 2030. The key here is his assertion that the number of cars will fall, making the transistion quite possible.
        I don’t quite understand how the number of cars could fall that far but I don’t have detailed access to his methods. Maybe rush hour will be more distributed over time or people will just not go to work.
        I do agree to the high potential of major changes in transport and energy the next 12 years.

        His claim that oil will drop to 70 million barrels per day production by 2030 is better than some peak oil predictions and might just be in line with depletion anyway. When there is less demand for it, the pricey oil will not be pumped. Every time the price of oil goes up, further transistion away will occur. A self defeating situation.

        His ideas on using relatively small storage batteries to disrupt the grid system are quite astute.

        • islandboy says:

          Fair amount of detail available in the 77 page report from RethinkX.

          • Dennis Coyne says:

            Hi islandboy,

            I have read it. It is a matter of assuming high growth rates will continue, I think there will be growth, but believe the rate of growth will decelerate.

      • Dennis Coyne says:

        Hi islandboy,

        Tony Seba’s vision may be correct, but it is a World market and I think the transiltion will be slower than he envisions. I hope I am wrong and Seba is correct.

        Hope is nice, but policy solutions should not be based on hope alone.

        • Nick G says:

          I’d be a little surprised if things moved as quickly as Seba is projecting. On the other hand….

          Isn’t China moving faster to EVs than we expected?

          • Dennis Coyne says:

            Hi Nick,

            Yes much of the World is moving faster than the US and China is moving faster than I would have guessed 3 years ago.

            As I said, I hope I am incorrect, but Seba seems overly optimistic to me.

        • Hightrekker says:

          Seba is a techo narcissist.
          But the more EV’s the better.

      • Dennis Coyne says:

        Hi Islandboy,

        It is unclear when autonomous vehicles will be approved. I agree that EVs may rapidly take market share, but the takeoff of TAAS depends critically on self driving cars.

        It is unclear when autonomous vehicles will be approved for general use. I doubt 2020, but possibly by 2025. Lyft and Uber might allow for easy car pooling (ride sharing) and this might take off in urban areas cutting the need for passenger vehicles by half. Many families with several vehicles may be able to cut the number of cars owned to one or even to zero (vacations could be done in a rental vehicle.)

        • islandboy says:

          I find the subject of car sharing/TaaS intriguing due to the fact that we already have something that vaguely resembles that in Jamaica. Public transport is being taken over by cars. In the capital city there are four main public transport options:

          1) Buses owned and operated by the state owned Jamaica Urban Transit Company. Mostly 40ft, 57 seaters.

          2) Minibuses, privately owned by JUTC franchise holders, consisting of 15 seater “Hi-Aces” (Toyota HiAce or equivalent) or 26-30 seater “Coasters” (Toyota Coaster or equivalent).

          3) Route taxis, privately owned cars or minivans seating up to 7.

          4) Standard Taxi, privately owned car, minivan or minibus.

          The JUTC buses, supposedly run on timetables, therefore they supposedly leave their origins at a specified time. Frequency varies with some “premium” commuter routes having up to 4 trips each way per day. High frequency routes supposedly have a bus every five to fifteen minutes. They are not convenient if your trip doesn’t match their timetable and travel times can be very long during the rush hour periods.

          Minibuses run by franchise holders do not adhere to any timetable I am aware of. They wait at their point of origin till every space is occupied before they move. They are typically packed very tight, more so during the rush hour periods, are very competitive
          and can often be seen jostling for passengers (racing) along the routes they run.

          Route taxis are very close to shared rides as far as I can see. They run on the same routes and charge about the same as the transit buses but, are far more frequent and the drivers find creative ways of beating traffic, reducing trip times during rush hour periods. For example they will ask if any body is coming off before a particular junction and take a quicker route to that junction using less traveled roads if not. At a major transport hub near where I live, I have seen several cars arrive, discharge their passengers, re-load and depart in the space of ten minutes or so. They are definitely the option of choice for people in as hurry who can’t afford a “chartered” taxi.

          Standard taxis charge according to the distance/time of the trip with the minimum fare being about three times as much as a transit bus fare and doubling late at night.

          It is the explosion in the volume of route taxis that I find intriguing since they are providing convenient, quick, if not comfortable access to transport for many people who may never be able to purchase a car. Could it happen in the developed world? Who knows? As for self driving cars, I don’t know how they could co-exist in jurisdictions with lots of super aggressive taxi drivers. They might have a hard time competing.

      • George Kaplan says:

        That Seba stuff reads uncomfortably like an example that Tainter would give of what might happen just before everything goes down the pan.

        • Nick G says:

          It’s good to keep in mind that Tainter’s analysis primarily applies to agricultural societies where annual growth rates were around .01%, and high growth empires were Ponzi schemes, stealing from the neighbors in a growing circle until the circle reached the limits of communication and control, and then they collapsed. The surpluses created at the center of the empires allowed brief periods of high creativity which survive in our historical memory and make the empires seem glamorous, but they were very rough on the serfs and slaves whose exploitation levels were even higher than usual – life was better for the average person after the collapse.

          Tainter is NOT an expert in modern energy sources.

          • George Kaplan says:

            I really don’t care.

          • Eulenspiegel says:

            It’s not always easy than that.
            Empires invested a lot in agriculture, too, to make them more efficient. Of cause it was often done by using slaves and serfs – but they tried big farms with efficient structures, opposed to the small fields of an agricultural tribe society.

            The oldest empires where build on farming alone – Babylon for example invested much more in channels for watering farmland than in it’s famous walls and temples. When the water management broke down finally, these empires where history.

            On the long run, they accumulated too much salt in their earth – but that’s a thing many countries doing now, too.

            So, these empires haven’t been about plundering, but technology and building. The same with Egypt, old cultures in India and even the roman empire invested lots in agriculture.

            On the american continent, the Maya and Inca where about “High tech agriculture” of their time using hundreds of miles of channels or “swimming farms” in lakes.

            All this could break down in series of bad events – invastions that destroyed the government structures necesary to organize the maintaining, or a string of bad weather years causing hunger and civil unrest.

            It’s bad to go the Venezuelan way if your life depends on a 200 mile long man made river needing all time maintainence.

            • Nick G says:

              Interesting. Well, a few thoughts:

              Have you seen the charts showing economic growth through human history? They show growth of maybe .1% per year up through around 1500. I wonder how these civilizations figure into those historical analyses: do they assume that net growth is very small after the collapses? Or that regional civilizations don’t affect the whole world very much?

              I’m not sure that the word “empire” works for many of the civilizations you discussed. I was talking about civilizations like Rome, which expanded at the expense of their neighbors rather than through organic, internal growth.

              I agree that even empires like Rome did some innovation: roads, cement, waterworks, etc. But, did they increase the farm output per farm worker? I think that wasn’t significant for Rome. For the ones you mentioned, I don’t know – I’d be curious to hear what the research says. I think that really agriculture was the area that mattered – for even the most affluent of ancient civilizations, agriculture was still something like 95% of the daily work and economy.

              • Eulenspiegel says:

                Rome had big farms, owned by merchant men and aristocrats. They specialized in certain crops or beverage (wine or oil). Together with streets you get an economic of scale. If you plant 1000 olive trees, you can work much more efficient as if you have only 3.

                And good streets alone allow less wast of food due to transport losses.

                Rome was slow on using machines, because of too many slaves. But they still used some, mainly watermills.

                They needed the empire to get slaves – that was their thing. When the expension stalled after Titus, they still stayed about 400 years – that’s not a one shot kingdom like Alexander the Great. And 400 years can’t be done by stripmining and plundering, you need sustainable structure to do this.

                Rome had more than 1 million people – and it wasn’t the only big city in the empire.
                This size was in Europe again reached in industrial revolution London – to show the level of organization in the roman empire.

                For the other empires – Babylon had wars with Egypt , Hattus (today Turkey) and kingdoms from today Iran. With the no road infrastructure of this time this is comparable to send a carrier fleet to the other side of the world today.

          • twocats says:

            thanks heavens we aren’t a high-growth empire based on ponzi schemes and stealing from neighbors in a growing circle…

      • I guess I need to make a list of metals used in EV batteries and start buying contracts for delivery in five years at a significant increase above today’s prices.

  27. Guy M says:

    May have something, yes. I am quite sure by 2030, it would be pretty questionable if I should drive anymore. Although, my great grandmother drove until she was 95. She only stopped, because we begged her to stop. I know that, by then, all of my oil will be sucked out of the ground, and I could give a flip about oil price. We know that the per capita age is growing. Have there been any studies to see how driving age affects gasoline demand, or will affect it?
    By then I will be ready to participate in using someone else’s self driving vehicle.

  28. Guy M says:

    Interesting, Dennis, when you reply to me, there is no reply button to respond to you. Not that it is necessary, just interesting.

  29. shallow sand says:

    Ok, so BNP Paribas will no longer finance shale and tar sands. Presume all other European banks are there or headed that way.

    Iraq is amassing troops at the edge of the Kurdish region.



    Demand growth of over 3 million BOPD 2017-2018.

    No supply risks?

    • Ves says:

      SS “Trump-Iran, Iraq is amassing troops at the edge of the Kurdish region, No supply risks?”

      Not at this moment. That’s why it is only worth $4-5 price increase in the last 2 weeks. It would be way more if the risk is real. It is only rhetoric at this point. Idea is to load insults, spread panic and observe reaction of competitors and partners. Everyone is using the same tactic: Kim, Rouhani, Trump..
      Kirkuk (lots of oil) changed hands and not a shot fired.
      Should be slow but steady oil price rise.

  30. FreddyW says:


    Here are my Bakken updates. For oil production there is not that much new to report except that oil production for 2013 and 2012 increased a bit.

    • FreddyW says:

      And here is the GOR graph.

    • FreddyW says:

      Average number of producing days went up compared to previous month for most years. It explains the increase in oil production for 2012 but not all of 2013. So something else happened there. But it is not any large increases we are talking about.

    • Dennis Coyne says:

      Hi Freddy W,

      It is difficult to distinguish 2014 and 2016 on that chart, could you use red for 2016 or a dashed line, the colors are too close for 2014 an 2016 or maybe I am color blind.

      • FreddyW says:

        Hmm. Maybe you are color blind? 2014 is greenish and 2016 light blue. 2016 has the highest GOR.

        Ok you mean the production graph of course. 2016 is not visible there (current production 202) so you only see 2014.

  31. FreddyW says:

    A bit old so you may have seen it already. But if you haven´t then I highly recommend you to read the global oil supply report from HSBC:

    YouTube clip:

    The report:

    It contains a lot of interesting information. For example on page 15 we can see that oil field discovery rate has dropped from around 20% to only 5% in 2015. Saying that it has fallen of a cliff is not an exaggeration.

  32. Energy News says:

    I was just having a quick look at countries that have come back from outages, sanctions, conflict, wildfires. Not sure if this list is complete?

  33. john keller says:

    Venezuela has $4.4 billion to pay in the next 3 weeks. The country didn’t pay $350mm in interest due last week. The country will default soon if not in the next month.

    • Watcher says:

      Only rules/common law based edicts say that a choice not to repay one loan is a total default on all loans. They really don’t borrow much money. Their debt as a percentage of GDP is far lower than the United States or other countries.

      Suppose they choose to service Russian or Chinese debt and ignore the New York debt? The New York banks will sue and try to confiscate assets, but suppose there aren’t any of any significance reachable by the courts? CITGO is essentially owned by Rosneft now, if not in title then via bond array. Those weren’t debentures. Ven could be judgement proof.

      We have covered this before. From the perspective of sovereign finance there is nothing banks hate worse than the thought of countries not being in debt. Ven simply doesn’t borrow much money. The banking narrative would be population suffers when countries don’t borrow money. There really isn’t any reason that has to be so, but they are hardly impartial.

      I would be astonished if they can’t find four billion dollars to service Russian or Chinese debt. If it’s some other kind of debt pending it shouldn’t matter to them.

      • John Keller says:

        $4 billion isn’t to service Russian or Chinese debt. That is already being serviced with oil. I wouldn’t be astonished at all if they default. Other bond traders obviously wouldn’t be either given the price action of the bonds. I didn’t even mention the affects recent US sanctions. Venezuela is finally tapped out. We’ll know soon enough how this plays out.

      • Venezuela’s GDP is plummeting as the Castromadurista dictatorship continues destroying the country. This morning the Bolivar Fuerte is quoted at 33350 to the USA dollar in the black market, the world bank estimated the fiscal deficit is about 20% of GDP, inflation is running at above 500%, and its likely over 50% of the population is in extreme poverty and going hungry.

        As shown on the chart in this post, oil production is plummeting, this in turn leads to lower natural gas liquids production, which in turn leads to shortages of LPG used for cooking. The LPG shortage is causing a surge in the use of firewood obtained by cutting down whatever trees are handy, this in turn is stripping the country side and causing an enviromental disaster which can lead to high levels of soil erosion.

        The National Bank is printing money like crazy, but they refuse to increase larger denomination bills in circulation. They also fail to publish statistics, so it’s hard to figure out what’s going on. I believe GDP must be around $200 billion at this time, but I’m not sure. What I do know is that debt payments are due, and Maduro has been flying around trying to beg for money and help. The Maduro dictatorship tries to make debt payments because a lot of that debt is held by its friends who benefit from purchasing it at heavy discounts. Thus the debt is used to loot the national treasury and channel it overseas or to the Cuban dictatorship.

        The close relationship between the Castro Mafia and the Maduro regime is well known, therefore a peaceful resolution of the crisis should involve a concerted effort to put pressure on Castro. This means Obama’s moves to become friendlier and visit Cuba was not only stupid, it was criminal, because it helped a regime which is highly instrumental in the crimes against humanity we see in Venezuela.

  34. Hightrekker says:

    GS could find it in change in the couch in the board room.
    And they are betting on Ven– along with the Chinese.
    Heavy Oil Refinery should come on line next year.

    • Watcher says:

      Bingo. It would be astonishing if 1) the money is owed to Russia/China and can’t get funded and 2) that funding isn’t iterative.

      People think money matters. It can’t anymore. It just is something cooperatively agreed to. You think it would be absurd for Russia and China to fund the interest on their own loan? Have a look at the ECB and IMF and Greece.

  35. OFM says:

    I’m as ready to believe in change as just about anybody, and I’m convinced that so long as BAU holds, the we will be riding in SOME self driving electric cars in ten years in SOME places.

    But it’s hard to believe Tony Seba is predicting that autonomous electric cars will TAKE OVER by 2030. Is this his literal position, or is he saying such cars will represent half of new car sales, or what, exactly?

    Consider that if a new car sold in 2025 is in good condition, and the price of gasoline collapses, and with it, the price of used conventional cars as the result of autonomous electric cars gaining market share by leaps and bounds, well…….

    I could buy myself a hot rod conventional convertible for almost NOTHING, and gas it up for maybe twenty bucks………. But by then I’ll be too old to drive it. 🙁

    And like most guys, I kind of LIKE being in charge, and driving means being in charge to at least some extent.

    Maybe by 2040 electrics will really and truly dominate the new car market and constitute most of the automobile and light truck fleet.

    It’s one thing for the public to embrace digital music and smart phones, which are basically disposable consumer goods, and cost so little that they are easy to buy, and easy to dispose of, since they don’t come attached to mortgage sized loans.

    People are creatures of habit, and I don’t see people changing so fast when it comes to such drastic changes in their economic behavior and personal preferences.

    Why should Joe Sixpack go for a new electric when he could get a fully tricked out like new land yacht for almost nothing, and gas it up for almost nothing? There will be PLENTY of feedback that will slow the sale of electric cars.

    But if we get a series of Pearl Harbor Wake Up Events, events that connect with the side of our collective head like a muggers brick, the electric car revolution could happen even faster, as fast as the batteries could be built.

    Maybe the best thing for us, as a whole, would be a couple of smallish but HOT oil wars. It sounds really crude to say that a few thousand of our young people dying for the sake of access to oil would be a GOOD thing, but in the END……….. A small war or two might be the wake up call that prevents something FAR WORSE from happening…… a general economic collapse due to a Seneca Cliff oil supply crisis pushing us into widespread and long lasting hot war scenarios, with people migrating by the tens of millions. The knock on consequences could literally be catastrophic.

    • Dennis Coyne says:

      Hi OFM,

      Read the 77 page report


      There is an executive summary if you don’t have time for the whole thing.

      • OFM says:

        Thanks Dennis,

        I didn’t have this link. It’s easy to miss some important stuff, lol.

        From the summary

        “Taken together, this analysis forecasts a very fast and extensive disruption:
        TaaS will provide 95% of the passenger miles traveled within 10 years
        the widespread regulatory approval of AVs. By 2030, individually owned ICE
        vehicles will still represent 40% of the vehicles in the U.S. vehicle fleet, but
        they will provide just 5% of passenger miles.”

        I can see how a relatively few autonomous cars can be used at very high utilization levels, even approaching ninety percent, as is claimed in the summary.

        But unless the people as a whole, and the economy as a whole, changes dramatically, and I do mean DRAMATICALLY, well, the VAST majority of people aren’t going to want to go anywhere much between midnight and five am, and so any fleet of cars capable of getting the majority of us who must work to work between say six am and nine am, and home again between three pm and six pm simply isn’t going to be used very heavily in the small hours.

        Now I would personally be willing to go to the super market an hour earlier or an hour later to get a significant discount on the price of my ride there and back…. but it would have to be at least three or four bucks for me to do so. I’m not going to eat out at ten pm in order to save a few bucks on the cost of getting to the restaurant and back. I’ll eat out and be on my way home by ten, and so will just about everybody else, except on weekend nights and holidays, etc.

        If these cars are supposed to be so cheap to build and run, and they are so cheap to insure, well then……….. they’ll be affordable to the typical person with a decent income.

        I personally believe that the upper likely limit of utilization of a fleet of autonomous cars that can get the job done will be more like forty or fifty percent than ninety percent. The small hour/ nights are when we sleep question alone puts the upper limit at around sixty to seventy percent in my estimation.

        There’s nothing I can see that will prevent it being practical, if not quite so cheap, for anybody with a decent income to buy an autonomous electric car of his or her own. That way there won’t be any issue at all in respect to availability, or style or options or the smell of the last passenger’s food or body odor, or greasy fingerprints in the car, etc.

        Such a personally owned vehicle won’t be used much more than ten percent of the time, around the clock and around the calendar, unless the owner decides to rent it out.

        I just can’t see us being willing to give up owning our own cars so quickly.

        And then there’s the very real possibility that tens of millions of people are going to have substantial personally owned pv infrastructure, or access to the juice from pv on the roof of their rental home, and want to have a car sitting in their car port or driveway sucking in nearly free juice, so they can withdraw it from their car battery as needed at night,potentially saving a bundle on their electricity bill.

        • Dennis Coyne says:

          Hi OFM,

          So the claim is not 95% utililization, it is 95% of passenger miles will be provided by TaaS. Keep in mind that urban and suburban areas are where most of the passenger miles occur. It is pretty easy to envision that a lot of passenger miles could be provided by TaaS within 10 years of wide approval of AVs.

    • Eulenspiegel says:

      I don’t think gas will become cheap – it’ll be the other way round.

      If demand crashes, all the cost of supply: Pipelines, gas trucks, gas station rent will be broken down to fewer customers.

      Even when oil price gets down to 25$ and demand will be shrinking: Who will invest in new offshore oil? Nobody
      Who will finance big infill drilling programs? Nobody
      Who will finance CO2 injection? Nobody
      Who will continue to maintain canadian oil sand washing? Nobody
      Who will continue to frack oil – especially when the sweet spots are already riddled with wells? Nobody

      So supply can go down even faster than dwindling demand, giving a very bumpy road of oil price.

      Without investing 3 digit billions a year, even 70 million barrels a day can’t be sustained for long. Deep water will break away after 5 years with no new drilling due to decline drives up cost for remanining production too much. And when old giant field run out of secondary production, who will finance advanced recovery? Ghawar produced already much more than initially thought – that doesn’t run on feary dust.

      When driving old speed cars at the weekend, gas price is not that important. It’ll be a hobby like listening to vinyl records, or driving steam trains (here there is such a club on an old side track, driving once a month).

      • Dennis Coyne says:

        Hi Eulenspiegel,

        The price will be driven by demand and supply. There is a lot of demand in the system and it will take time to transition. Higher oil prices will increase the rate that people choose to move to non-oil forms of transport, which will then tend to reduce oil prices due to falling demand, the reduced oil price will tend to reduce supply which puts upward pressure on oil prices and some equilibrium may be reached where the rate of decrease in supply due to geology and oil prices matches the rate of decrease in demand as the transition to electric powered transportation occurs.

        No doubt there will be volatility in oil prices as the market tries to adjust to this new reality. There is unlikely to be some smooth transition, there is more likely to be a great deal of economic disruption and a financial crisis will erupt at some point (date unknown).

  36. shallow sand says:

    In the executive summary he says 95% of 2030 passenger miles traveled will be via electric autonomous vehicles owned by fleet companies, not by individuals.

    So, in 2030 I will daily summon an autonomous electric vehicle to take me to work, to the store, to work trips, to vacations, and all of the other 25,000 miles I drive each year. In my case, I assume there will be an autonomous truck available every time I need to carry something in the bed. So I guess sometimes I might get a single passenger mini car to take me to work, other times if I want to carry a lot it will be a larger vehicle.

    No need for a garage anymore. Half of the vehicles on the road will be traveling passengerless to pick up people like me waiting for a ride?

    • Lloyd says:

      I only put 6000 miles a year on my car (split between me and my wife).
      Those autonomous vehicles are going to be for those of us who live in big cities and don’t want to own a parking space or driveway (only 20% of the homes in my 1920’s era neighborhood have driveways or parking) or pay to park a vehicle when you get where you’re going. Once you add in the various costs of Urban car ownership, you get places like Toronto and New York, where half (or more) of apartment dwellers don’t have cars.

      I think those autonomous vehicles will have individual passenger compartments and storage bins, and will fill a niche for people like me who mainly use the car to go to the grocery store. The money will be made when the costs have been cut to the bone and the slight inconvenience of using someone else’s vehicle is made up for in lower end to end costs.


      • Energy News says:

        Yes I guess there’s a lack of space in most cities. And it sounds like Chinese cities too…

        China’s Relationship With E-Bikes: It’s Complicated – Sixth Tone – May 2016
        Cities have sprawled at an unprecedented pace to house the 1.4 billion people living in China. The United Nations Development Programme estimates that 700 million people will be crowded into a total urban landscape of just 41,000 square kilometers — less than half of one percent of China’s land area — by 2030, so regardless of how much longer the Chinese economy booms, citizens of its cities are bound to have to face the daily challenge of how to move around.
        In some big cities motorcycles are banned and there is a lack of parking space for cars
        The current situation is the product of the country’s wild growth, its traffic woes, and a widening socioeconomic gap.
        It also touches on freedom of mobility. Because an e-bike can usually be bought for around 2,000 yuan (just under $310), it represents an inexpensive way for hundreds of millions of China’s less well-off people to move around, transporting them to schools, workplaces, and possibly even helping to deliver a better quality of life.

    • Dennis Coyne says:

      Hi Shallow sand,

      People in rural areas will be part of the 5% that don’t use TaaS very much, except maybe older folks that may prefer not to drive.

      There are a lot of people that drive less than you, the US average driver drives about 13.5k/year in 2016.

    • GoneFishing says:

      Shallow sand you hit on something I have discussed here before. It is quite probable that car services will have to put on many more miles than private vehicles would, since they will spend a lot of time empty running to the next customer. It will only work well in very dense areas during high demand times, and then you will be lucky to have one available anytime soon. I figure30 to 100 percent more miles driven by a car services than by the private ownership system.
      That would mean a lot more energy wasted on the road and more wear and tear on roads too, as well as vehicles, to achieve a similar result.
      Time for a multi-million dollar study.

      • shallow sand says:


        I understand living in a rural area we are in a distinct minority.

        However, I do have many family and friends who live in metro areas in the US. LA, SF Bay Area, Houston, Dallas, Denver, Chicago, Indianapolis, St. Louis, Atlanta, Raleigh Durham and Tampa. None in NE for some reason?

        Anyway, ALL live in suburbs. ALL commute to work anywhere from 15 minutes to an hour and a half. Almost all live in newer communities that are rapidly growing.

        One example. Relative lives in a burb that has grown from 2,500 to 30,000 in 20 years. He drives 40 minutes one way to work every day. She drives 20 minutes to work one way three days a week to part time job, takes and picks up kids from school and daycare on those days. Shopping is a 5-20 minute drive depending on what they need to buy. He has family spread out through the burbs that they drive to visit. They drive 4+ hours to visit us 4-5 times per year, one way. Kids are involved in after school stuff and driven to and from. Church on Sunday 10 minute drive. They seem to have very similar driving habits to my family.

        OTOH have a friend who lives in middle of major city (went to high school with her). No kids. Doesn’t own a car. Walks to work. Takes bus or train when needed. Sometimes takes cab, but rarely. I suppose autonomous vehicle would cater to her, but it seems her road mileage footprint would just be increased?

        Seems to me most people with families want to live in a residential neighborhood with a yard. Really not different than small town, just a whole bunch of them stuck together.

        Look at Chicago, for example. The Chicago burbs take up several counties. I think most of those folks in those burbs do a lot of driving.

        I am not saying Mr Seba is wrong. However, he is talking about radical changes in lifestyle, IMO. No more just deciding to go somewhere now. All trips will need advanced planning.

        Forget to pick up milk and bread? Sorry, either walk or ride a bike there. Otherwise wait for ride share appointment Tuesday at 6:17 pm.

        • Stephen Hren says:

          I agree with you Shallow Sand. America will probably be the last place to take up ride-sharing autonomous car technology, at least in a large scale way, because of the suburban culture that we have. Urban areas in developing countries seem ripe for this technology, however, as they are very densely packed and car ownership is extremely expensive. There are really no suburbs to speak of in many urban places (thinking of places like Sao Paolo, Mumbai, Shanghai). Smart phone use is very high. Public transit usually suffices but is crowded and unpleasant. Using a car service will be a major upgrade.

          The only way oil would go to $25 a barrel is if it went to $200 first, for quite some time. Not ruling that out, of course, but a radical shift in those of us already accustomed to our own vehicle seems unlikley without serious prodding. I remember working as a bartender in the last decade, and was shocked the first few times the dishwasher showed up in a cab. It cost ten bucks, about a fifth of the money he would make that night, but he needed to get to work and the car was in the shop. So my guess is that this service will fit the needs of the urban lower class in the next decade. Paradoxically, this might keep enough oil available for the middle class suburban set to keep on trucking with their private ICE cars for a good while.

        • Dennis Coyne says:

          Hi Shallow sand,

          Typically about 10 minutes advanced planning is all that is needed.

          • Nick G says:

            In my relatively dense general area, 5 minutes is reliably sufficient notice.

            The car-pooling variation is much cheaper but also slower and less predictable. It seems to be roughly the same cost as mass transit (at least for shorter distances), and somewhat faster and more reliable.

      • Nick G says:

        you will be lucky to have one available anytime soon. I figure30 to 100 percent more miles driven by a car services than by the private ownership system.

        Have you ever tried Uber? I use it quite a bit, in a dense city. Drivers are usually less than a quarter-mile away, and arrive on average in about 3-4 minutes.

        Taxis spend a lot of time driving, because they depend on being hailed from the sidewalk. Smart-phone based car services can sit, waiting for a ride request. Some drivers don’t, amusingly enough – they seem to be addicted to the old, wasteful taxi culture of driving around while waiting for a call. That will change.

        • GoneFishing says:

          Nick, I wasn’t talking about driving around looking for rides. Do a simulation like I did.

          • GoneFishing says:

            The Uber model does not really work, once the drivers figure out they are really making only a few bucks an hour on average. They are burning up their cars (using them as a bank), taking all the risk and not getting much money.

            • Nick G says:

              Have you seen any data or sources on that?

              In my city, per-trip revenues for traditional taxis are higher than for Uber, but the taxi companies charge very high lease rates for the taxi licenses (known as medallions), soaking up all of the revenue. With a high-revenue, high fixed-cost model like this, drivers who work for 80 hours per week can do reasonably well. But, most taxi drivers make far less than minimum wage, sleep in SROs (Single Room Occupancy hotels), and tend to not speak much english.

              Uber drivers, on the other hand, have essentially zero fixed costs, and commonly are part time. They don’t make a lot of money, but it’s more than enough to pay for their time, fuel, and the relatively small per-mile cost of vehicle depreciation/wear & tear.

              Car service has become dramatically faster and more available, and a bit cheaper, since Uber arrived.

              • GoneFishing says:

                Yep, just do an internet search. Plenty on the web.
                Yes, there are a lot of hurting people out there looking for a way to make a buck.

                • Nick G says:

                  I’ve looked at what’s on the web. It seems to be primarily press releases from taxi-company advocates.

                  The reality of taxis in most cities is dismal. The companies have captured the regulators, choked the supply of licenses, driven up costs, exploited the drivers, and provided bad service.

                  Whatever the theoretical differences are between the taxi ride-hail model and the new phone-app model, the reality is that the old model was broken and desperately needed disruption.

          • Nick G says:

            I didn’t notice support in your simulation for the result that service will be slow, and take a lot of lead time. What did I miss?

            It has been my direct observation that Uber service in my city is very fast. That’s what people report to me from other cities, even in exurbs.

            • GoneFishing says:

              What are you talking about? I was talking about the extra miles a driver must travel empty. It is a key energy loser versus private cars that just sit there.
              Look, I know you want this to work but the facts are the drivers and the energy system is taking a hit on this while Uber takes little risk. If it becomes a major mover of people the prices will have to go up and the system will use far more energy than private cars.
              I have no vested interest in the system, just examining the energy end of it as an alternative to private ownership. It doesn’t look good. Often not good for the drivers either.

              • Nick G says:

                Oh, heck I have no vested interest in autonomous EV car sharing. I just like to do good analysis.

                You haven’t presented any evidence that an Uber driver (or autonomous EV Uber) would have to do a lot of driving empty. Again, in my observation, there are a LOT of Uber drivers out there in their active areas (which don’t extend deeply into rural areas). Enough that they don’t have to drive far to pick up requests. In my area, roughly a quarter mile on average. If the average drive is, say, 4 miles, that’s only about a 6% hit.

              • Dennis Coyne says:

                Hi Gonefishing,

                The typical Uber ride often picks up a ride on the other end. In a densely populated area the driver just parks and waits at the end of their ride for a new ride that is nearby.

                For example I caught a ride from Palo Alto to the San Fransisco Airport, the driver was happy we were heading back towards SanFransico as he had just dropped a ride off that had gone from San Francisco to Palo Alto.

                The point is that your assumption that the car service drives around empty half the time is incorrect. In a densely populated area to save cost you can choose to let the car service pick up and drop off others, so rather than driving around with one person in the car (for an owned vehicle) you might have 2 or three riders in the car service car and so reduce energy use.

    • Greenbub says:

      shallow sand, the voice of reason. A little too bearish on crude pricing though, in my opinion.

      • shallow sand says:


        If fundamentals mattered more than news flow, I would agree. Too bearish.

        However, we live in a world much different than my 1980s finance classes.

        I’m not selling yet. Ultimately, fundamentals matter. That is when the bubble pops. Just takes a long time to change the news flow, and USA really needs the lower forever narrative, so IMO oil will stay low till it just cannot.

        • shallow sand says:

          Heck, just now, not making this up, my better half gave me a list of errands to run for her small business, one of which I am supposed to meet a person at a location 15 miles from here. On that deal, both have been busy all week and she just caught guy now.

          So, Seba foresees an autonomous EV that will allow for that, millions of times over?

          Radical change in lifestyle is nexessary.

          • Dennis Coyne says:

            Hi shallow sand,

            It will depend on pricing and how important the convenience is. In the future a lot will be ordered online and could be delivered, reducing errands. In suburban areas, even fairly rural ones, Uber or Lyft are fast and convenient. I used them recently to get to the airport to save on parking cost, they were at my house within 15 minutes of picking up the Smart phone and at the Airport end within 5 minutes. I live in a pretty small town (less than 10,000 residents). Then visiting San Francisco, I used the car services a bunch of times. Much cheaper than renting a car and having to pay to park it.

            Rural areas will be the last to move to TaaS, but EVs might work, where I live an EV with at least 250 mile range would be needed.

  37. Watcher says:

    Scrolling is a bother on tablets.

    Article above noted from ZH that Saudi Aramco may yank its IPO and directly fund from SWFs.

    Guess what, sports fans. The Norwegian SWF, largest on Earth at $1 Trillion, owns 1.3% of all companies’ stock on Earth. Microsoft, Apple, Royal Dutch Shell, Google, Novartis, Nestle. Their biggest holdings. One entity owns 1.3%.

    I noted the others too. All own stocks, like central banks. Oil flows, stocks get bought. And none of this really was going on until last decade. There was not a penny in the Norway SWF til 1996 and it didn’t accumulate that oil money for many yrs after. The other oil money didn’t follow suit until Norway’s caught attention.

    Wall Street will start talking about this eventually. Oil flows or the market collapses. Expect more Tesla layoffs.

  38. Energy News says:

    The highs and lows of US oil plus products inventories. I’m already wondering where the 2018 high will be.

  39. Greenbub says:

    China’s Electric Vehicles Run on Coal! Yes, But …
    By Liam Denning

    “So it takes about seven years to offset the emissions from making the battery, even with all that coal factored in.”


    • Nick G says:

      That’s a misleading quote. This is more important:

      The battery vehicle, in contrast, is an open platform. Its menu of energy options can change dramatically according to the types of generation in your region, whether you’re using centralized or distributed power sources, and even the time of day you charge up.

      US power generation uses much less coal than China. The Chinese are probably more concerned about “criteria” pollution, like NOx, SOx, particulates, etc.

      Most EVs can charge preferentially during periods of high wind and solar generation.

      • Greenbub says:

        I did not intend to mislead, I just had not seen that figure before and thought it important. The author is indeed pro-electric vehicle.

  40. clueless says:

    With a tip of the hat to SS [who is at a disadvantage because he can think], here is my rant on autonomous vehicles that are “on demand.”.

    First question is – how is the charge computed? Miles driven? Time and miles? Trip charge to get you and then take you back, along with miles and time charges? Plus a charge to move auto from final destination?How long before a spur of the moment vehicle can arrive?

    I will start with a random look at when they will NOT work: (1) Teenagers. They change their plans as soon as they leave the house [after giving their parents some bullshit]. ( 2 ) Almost anybody that you see driving a pickup truck, van, small truck, etc. This includes almost all tradesmen – electricians, carpenters, brick layers, plumbers, painters, landscappers, oil field workers, farmers, newspaper delivery, post office, UPS, Fedex, etc. (3) Most service professionals – CPA’s, attorneys, architects, doctors, insurance salesmen, etc. (4) Almost all stay at home soccer moms [tell your wife that if the baby seems sick or if he/she falls and gets hurt,etc., to call an ambulance]. Tell ANY stay at home wife that you are going to monitor her every time she leaves the house with a GPS detailed time and place with an itemized invoice. For that matter, tell it to yourself. (5) Anyone who does not have a credit card. (6) Any child in college. This is just a cursory list.

    How do the car “owners” schedule their cars when they have no idea how long they will be needed?

    Situational problems: (1) I am at work and become sick. The doctor says that if I can get there now, she can see me. After I get there, an hour wait is normal. I leave the doctor with a prescription and go to the nearest pharmacy. They tell me that it will be ready in 45 minutes, so I want to go and pick up some barbequed beef, to go, from a place a half mile away while I wait. Then I go home. (2) My wife is at work. The school calls and says that our daughter who is in the 2nd grade is sick – come and get her now. She normally has a scheduled car pick her up right after work in order to pick up our newborn baby from daycare on the way home. She is now in hell. (3) My golf foursome has a game every tuesday starting at 9 am. We usually play in 4 – 4 1/2 hours, have a couple of beers and head home. About 10 am, lightning strikes nearby and they blow the horn. Play suspended for probably at least 1 1/2 hours. We all want to leave now and need to cancel the prescheduled 3 pm pickups, and we all have different cars because we live north, south, east and west. (4) We go to a birthday party for a friend. The party is from 7 pm to11 pm. AT 8 pm, my wife feels sick and wants to leave NOW! (5) Just as you are about to leave for the airport, the TV says that an ice storm has shut the airport. The auto service company says “tough shit” we had a car at your door at 6 am. (7) Your auto never shows up [just like your cable service], but you had a plane reservation and a $1,500 ticket to the Super Bowl – good luck on collecting damages.

    Finally, professer shithead is going to raise over $2 trillion to obtain 50 million vehicles in order to make this work in some half-assed way, along with programming that is more complex than Fedex, UPS and the airlines combined!

    • shallow sand says:


      One area that surely cannot have bugs in it will be for most working folks who MUST get to work on time or be FIRED.

      Most factories have point systems. Will it be a valid excuse to be late due the autonomous vehicle not showing up on time. Maybe this will be akin to the beater breaking down, might not get points for that if the person running the line buys it.

      Mr Seba I am sure is much smarter than I, he is making a ton of money giving speeches. Great gig. His website says he is a “thought leader.”

      Thought leader differs from intellectual thinker. Intellectual thinkers, so I have read, tend to try to poke holes in everything. They tend to write articles in hopes of being published and paid for same.

      Thought leaders, OTOH come up with a vision, preach about it to the world (hopefully via paid speeches) and are unwilling to bend to criticism of said vision.

      I cannot predict the future, as is proven by my failure to sell my working interests in 2013. I do know I am not looking forward to having to rely on a vehicle showing up when I call it, and hoping it was properly cleaned after someone threw up in it the night before coming home from the tavern (which by the way, is the best use of autonomous vehicles – ending DUI).

      • GoneFishing says:

        If history is any indicator, we will end up with a mix of all the proposed things. I wonder what it will be like to have a lot of robot cars zooming along with people driven cars.

        I have also wondered if multiple LIDAR signals, say at a busy intersection or crowded street, would cause interference and shut down the cars. How do they not interfere with each other?

      • Nick G says:

        Idiots and their infernal combustion engines.

        Any damn fool can see that you can’t depend on unreliable machines to get in your crop, or get to work.

        GET A HORSE!

        • shallow sand says:

          I am not in denial about EV adoption.

          The idea I am not getting is the completely driverless vehicles that are summoned on demand.

          • Nick G says:

            Well, I’m trying to make the point that Uber is working pretty well right now. In my town (and from everything I hear, pretty much the rest of the towns they’e in) they’re very fast, and they’re reliable – a lot more so than traditional taxis, or buses & trains.

            I’m not an expert on autonomous vehicles, but I really can’t see any reason why they won’t work eventually. They’ve been gradually expanding for decades: cruise control, adaptive cruise control, emergency braking, highway lane control. They all work, and emergency braking is saving a lot of lives.

            That’s the point, after all: around the world hundreds of thousands are killed in vehicle crashes every year, and millions are seriously injured. Autonomous vehicles can mostly eliminate that enormous cost in human suffering.

            • GoneFishing says:

              I hope your are right about the safety issue, something which has yet to be proven. I am more interested in the energy issues right now. Looks like a loser to me but that could change.
              Right now when I need a ride I bum one from a neighbor or borrow their car. I have a rental agency 10 miles away that picks me up and takes me home when I need to rent a car at no cost.

              Otherwise my vehicle does fine at less than a quarter dollar per mile and is right there to serve my needs, doesn’t need to travel to find me either. I can even carry a lot of stuff and leave things in it. No fuss, no muss, just go. Good at carrying lumber and other sundry goods (just did that).
              Trying to figure out how I would go kayaking or hiking using Uber or any other car service.
              Now a fully autonomous car would be very handy in kayaking as it could meet up at the other end of the trip on it’s own. If it could handle small back roads and dirt roads, etc.

              I never quite got how many people are upset about a car sitting around most of the time. They didn’t pay for it or own it. It is not hurting anyone just sitting, yet just because some cities can’t figure out how to handle the situation, everyone else is supposed to do it their way. Well, it doesn’t work. Not even close. Not in real life around here or most other places.

          • Dennis Coyne says:

            Hi Shallow sand,

            The driverless vehicle will probably cost less for TaaS because no wages need to be paid to a driver. For running errands, owning your own car might be cheaper, though as TaaS catches on there will be greater likelihood that most services will be clustered in a town center that is easily walkable (maybe even pedestrian only). You get a ride to town, walk to several different stores, etc to take care of errands and then get a ride back home.

            Another possibility is that many families will be able to make do with one vehicle instead of owning 2 or more.

      • Watcher says:

        Back before there was an internet, one wonders, in the absence of a website, where the phrase “thought leader” would appear. Maybe he has that printed on his business card. That would be cool.

      • Lloyd says:

        Hi Shallow and Clueless.
        These issues come up all the time if you live in an urban environment, and have been dealt with by unspoken custom.

        The New York subway system is currently in upheaval: trains continually late, etc. I live in Toronto, and have had my share of Subway problems: part of the trick to riding to work is leaving a margin of error (there is always a variance due to traffic and transfer times not being identical) and the fact that companies make allowances when there is a problem with transit.

        These systems won’t be for everyone, and there will be people who require their own vehicles. No one will force you to take them. Some of us will find that they answer a need.


        • GoneFishing says:

          Sounds like NYC subways are running at capacity. So they are removing seats.


        • Eulenspiegel says:

          In real big cities, you are somewhat forced to use them. Parking slots go on free market, too – and when everyone wants to drive to the city there wouldn’t be enough. So you have to pay – a lot – or drive with the subway. It’s faster during rush hour anyway.

        • We have a tram and bus system, buses seldom run more that 3 minutes late, tram is usually within 30 seconds of schedule. The key is to allow for sufficient time at each stop. This city is suited for plug in hybrids, but all electric vehicles are not practical because winter can be cold, summer is hot, and we have mountains all around us. A drive to the nearest large city in summer time would be an ordeal in an EV, because it involves driving uphill and crossing mountains. It’s very hot on the other side, and I don’t see an EV battery being reliable enough to last the distance with an AC running at the same time. The realistic option is a plug in hybrid with a fairly small battery, which can be used for routine driving. I don’t think driverless vehicles would be an option in the next ten years because we have too many children, old people and nutty bikers mixed into driving decisions.

          • Eulenspiegel says:

            Nutty bikers are a big problem here to – driverless cars will go to creeping speed around university quarter.

            For future electric cars google “Solid state battery car” – E-Car 2.0 is in the making, hot and cold wetter won’t be that bad anymore.

            Hot summers aren’t the big problem – the nameplate maximum consumption of an AC is 800 Watt. With 50-80 kwh capacity this isn’t that problem.

            Up and down is a domain of electric cars – if you aren’t driving completely nuts, you get a lot of energy back driving down on the other side. My electric bicycle manages to return 30% of the energy when I cross a mountain, I think a car can be even more efficient (better electronics) here. I even don’t use up my brakes anymore, compared to the old bike. Normally I changed brake shoes every 2000 km, now I’m at 10000 still counting due to regenerative braking. With cars this effect will be still greater.

            Anyways it’s not a terrain for the commuter cars with tiny battery.

            There has been a competition of drivers of the successor model of my electric bike. They drive it in the mode 50% self / 50% electric in the Alps, and regain all the electric energy on the way down, letting them driving mountain passes without recharging in an “easy way”. So they have a return of about 50%.

            Found a report of Tesla in the mountains, some technophile calculated around:

            Looks like you get back most of the energy on the way down, freeway driving at high speed is more demanding.

    • Dennis Coyne says:

      Hi clueless,

      These are choices that individuals make. In many places people are already using TaaS, and find that it is cheaper than owning a car. Nobody is coming to take away your car 🙂

      As TaaS becomes cheaper and owning a car becomes more expensive in comparison more people may choose TaaS.

      The service is ordered at the last minute on a Smart phone, it is not typically pre-arranged hours in advance.

      For example when you or your wife gets sick, you pull up the Uber app on your smart phone put in the doctor’s office address (or your home address in one case) and the ride picks you up at your location typically within 5 or 10 minutes. When you arrive you are dropped at the door, no need to find parking, if your Doctor’s office has a big parking lot or is in a city with little parking.

      • clueless says:

        Dennis, maybe I see problems where none exist. But, it is hard for me to even imagine the solutions to even the most basic effects of a robust TaaS. For example. I live in Edmond, OK – 90,000 people, mostly residential. Take my neighborhood. Everyone has a 3 car garage and no on street parking is allowed [many autos are parked in driveways]. So, one basic question would be: where do all of the TaaS cars go at night? Right now, in Edmond, I would guess that at about 3 am, there are at least 50,000 autos safely in residential garages, driveways, or in apartment parking lots.

        Of course, one big question is: Who is going to own all of the TaaS cars? Whoever does, needs to make a profit. And insurance on a commercial vehicle costs a lot more.

        There will be some “fun” situations. One December day, you are busy, working in your cubicle in downtown OKC. The highway department says that the roads are starting to freeze over because an unexpected freezing drizzle has started. They advise no travel! How does a TaaS respond? [If my car is parked nearby, I know what I have done.]

        What if someone hacks into the computer control system that keeps track of all of the vehicles and assigns trips to them as they come in? Heck, what happens if there is a glitch? Instead of one auto having a bad battery, they entire fleet is shut down because of a single problem.

        You are all set. The app on your smart phone has all of your info, links to an auto pay, etc. But, now you seem to have lost your phone. Many more phones are lost, etc than car keys.

        But, if people can get it to work such that most people sell their cars and switch, it is certainly okay with me.

        • Nick G says:

          hard for me to even imagine the solutions… no on street parking is allowed … where do all of the TaaS cars go at night?

          Uhmmm..change the law and allow on street parking?

          They advise no travel! How does a TaaS respond?

          Maybe they don’t travel, and save a couple lives? Or, allow only 4x4s? Or, maybe autonomous vehicles will navigate ice so much better than humans that no limits will be needed…

          what happens if there is a glitch?

          Complex train, highway, phone, aviation, and electric systems seem to have not killed us all quite yet.

          Gm is quite proud of the fact that most of it’s vehicles in recent years are equipped with Onstar, which gives central operators quite a bit of control.

          I’m afraid that the Rise Of The Machines is already here…

          • clueless says:

            Nick – flippant answers do not solve problems.

            Here is Aberdeen SD winter snow rules. 2″ or more of snow and a lot of streets must have the cars gone. Tell them to change the law.

            Glitches do not kill people, but they can make your life miserable. Seems like the hurricane in Florida caused a lot of problems, but no deaths(?). Let’s see TaaS handle that. People spent 10 hours in lines to evacuate from the Oroville dam.

            I have Onstar. Its $300/year. Okay, add that cost to TaaS, but now tell me exactly any benefit. And, that will be a full employment model – when there is a problem in a major city, you will need thousands of operators to answer. Good luck!

            And suppose you own a TaaS auto. You buy liability insurance. The insurance company will not let you use it when the authorities advise against driving. If you do, and if you have a claim, they will cancel your policy. I wonder which costs the insurance companies more: (1) You slip and fall on a wet floor in your house; or, (2) you slip and fall on a wet floor in a super market?

            I do not expect any real solutions from you. But, with that in mind, try to figure out another BASIC problem like: How do autonomous cars push the buttons to enter unmaned gated communities?

            Another BASIC problem. What does an autonomous EV do when it is 20 miles from its closest charging station, but 10 miles from your destination, and it needs to re-charge within 35 miles. 10 miles to your destination puts it 30 miles from charging, so 10+30 = 40 range needed. I guess that it pulls over and tells you to get out, or takes you on a ride to the charger.

            I guess that I am simple minded, but I see hundreds of basic problems.

            • Suyog says:

              “How do autonomous cars push the buttons to enter unmaned gated communities?”
              Ans: They don’t. Human gets out of the car and pushes the button, and then gets back in the car. Or the subdivision gives everyone a remote they can use from inside the car.

              “What does an autonomous EV do when it is 20 miles from its closest charging station, but 10 miles from your destination, and it needs to re-charge within 35 miles. 10 miles to your destination puts it 30 miles from charging, so 10+30 = 40 range needed. I guess that it pulls over and tells you to get out, or takes you on a ride to the charger.”
              Ans: The autonomous car will not pick you up if it doesn’t have enough range to go to the charging station after dropping you at your destination.

              Regarding driving in freezing rain, etc how does it matter whether the car is driven by humans or by a computer? If anything a computer driven car will be safer.

              • clueless says:

                Suyog –
                Look, I am stupid a lot, but:

                You live in the back of a gated community and you want an autonomous car to come and get you. By definition, an autonomous car does not have a driver and there is no human in it when it comes to get you. So, there is no human to jump out and push the buttons at the gate which is 1/2 mile from your house.

                With respect to the mileage problem. You are saying that you would have to enter your entire trip prior to an auto showing up???? Impossible! Previously discussed were the complications that will arise when you go shopping, or on almost any trip. You go to a store for something; the vehicle waits; but, now you have to go to another store because the 1st store did not have it, etc, etc.

                The point about freezing weather is NOT that they are safer. I will just concede that. The point is the liability. If you drive yourself in unsafe conditions and run yourself into a bridge abuttment, you cannot sue yourself. But, if an autonomous vehicle has an accident, obviously it was defective and the owner of the auto owes you millions of $’s in damages in order to set an example against such an egregious event ever happening again. You really do not want the money; you just want to prevent it from happening to anyone else.

                • Lloyd says:

                  But, if an autonomous vehicle has an accident, obviously it was defective and the owner of the auto owes you millions of $’s

                  Google’s answer to this is to make their cars painfully rule compliant, so much so that:
                  1) people rear-end them because they do not behave like human drivers, 2)Other drivers “bully” them, because the humans know that the Google car will avoid the accident rather than defend it’s right of way.

                  Your scenarios ignore these facts: if a Google car found that the conditions were unsafe (and I would posit that a self-driving car will be able to quantify how hazardous road conditions are better than a human driver) it wouldn’t drive above an unsafe speed. I picture a sea of Google Cars on one of Toronto’s expressways moving at a consistent 4 miles an hour in the middle of a snowstorm…and it is my strong opinion that this will be much, much safer than a sea of angry, snow-incompetent Toronto drivers in the same conditions. Probably faster as well, because of the lack of accidents.

                  But I am allowing you to drag me into the weeds on this. Once these things are in the wild, as they say, answers will be negotiated. Just as we no longer require a flagman to walk in front of a motorcar to warn people that it is coming, we will eventually have systems that open gates, drop packages with the concierge, and warn you that weather conditions do not allow autonomous cars to travel.

                  And when this happens, you will be able to get out your historic vehicle and drive yourself, if you want.


                  • clueless says:

                    The FDA makes DRUG COMPANY DRUGS PAINFULLY COMPLIANT WITH ALL FDA TESTING TO THE TUNE OF $1 BILLION PER NEW DRUG! And they get sued on every one they bring to market. What planet do you live on!!

                • Suyog says:

                  1. You can track the car on your cell phone. When it arrives at the gate, you push a button to open the gate and let it in. Car tracking in real time can be done today with Uber. In rare cases, a human dispatcher may call you and talk to you.

                  2. You hire a car to go to a store. If you want to go to another store, you hire another car. It is a separate trip. Why does the car have to wait for you? You may have to wait 5 minutes for another car. Big deal.

                  3. The autonomous car owner carries insurance. This is no different from getting into an accident today in a taxi driven by a human. Autonomous car insurance should be cheaper since they will have fewer accidents.

                  • clueless says:

                    Hell – I hate waiting for an elevator. Time my stops – 5 minutes at the liquor store; 5 minutes at the dry cleaners; 5 minutes at Kentucky Fried Chicken; 5 minutes at the drug store; 5 minutes to drop off/pick up my dog at the groomers; 10 minutes at Office Depot; 15 minutes at Lowes/Home Depot (oops – can I get an 8′ board in?); 5 minutes to get a gallon of milk at Braums; 10 minutes at the post office; etc., etc.

                    If the car will not wait, I am fucked! And change my estimate from 50 million on demand cars to 100 million.

                • Battery vehicles don’t work well in very cold weather anyway. You will have to put a butane heater in the vehicle to make sure you stay warm.

                  I think we may see more biofuel production in the future, and it will be used to power hybrid vehicles in areas where an all electric just doesn’t make sense. The biofuel will have to be from sugar cane or other plants genetically modified to make either sugars or oils.

            • Nick G says:

              Of course there are 100s of problems – I can imagine many that are far more fundamental, like the interpretation of hand signals, and navigation in bad weather at night, and on rural roads. I expect some of the implementation of TaaS to be slow and incremental. But, these problems will be solved, one by one, especially those that are completely arbitrary, such as local parking laws.

              To suggest that there are no solutions smacks of “get a horse”. All of the major car companies expect autonomy to mostly succeed, and to transform the car industry.

              • Eulenspiegel says:

                The transfer will be incremental anyhow.

                First will be automatic pilots handling interstate traffic – they’ll warn you 5 minutes before leaving the interstate.

                Fully autonom cars that can handle everything including blizzard and flooding will be last – 1 year before Skynet taking over the world.

                There will be some “soft steering” at some point, where you direct the car on a touch screen for example for parking at a pop concert with advisors, or parking the car offroad in your garden to unload heavy supply direct at your working spot.

                This will be the solution for some emergency driving with driverless cars, you steer them via touchsreen (or VR google), with the command: yes, really drive here now – ouch, there was a ditch under the snow – please call towing service.
                And a driver license will be needed to activate this function – when your 10 year old son uses the car to drive to baseball he can only chose in the childen safe program in 10 predefined targets. And if there’s a blizzard it will stop and send you a whatsapp with the position…

            • Dennis Coyne says:

              Hi Clueless,

              There will be AV’s and some might be used for a ride sharing service. Those that need commercial insurance will get it (those that choose to use their cars for a service like uber or lyft). Many others may choose to keep their car for only personal use.

              For gated communities, either you will meet the car at the gate or the community may install cameras and when you see the car with the proper license plate you will push a button that let’s the car in.

              How do gated communities deal with visitors? I have never lived in or known anyone who lives in a gated community so I really don’t know.

        • Dennis Coyne says:

          Hi Clueless,

          The TaaS vehicles could be parked at the local grocery store, public parking lots or even in driveways (with permission). If you lose your phone you would probably have trouble and might need to catch a ride with a friend’s phone and pay them back.

          As long as you and your friends don’t all lose your phone at the same time, you are fine.

          The hacking problem already exists, security will need to be improved and penalties for hacking that is deemed dangerous will need to be severely punished (as almost anything can be hacked by a skilled hacker.)

          Your neighborhood sounds like it would be perfect for TaaS, but it will take some time to catch on.

          The icey roads will always be a problem, it is not clear how well AVs will do on snow and ice.

    • Stephen Hren says:

      What about parents with small children? None of the Ubers seem equipped with child seats.

  41. Energy News says:

    2017-10-15 Nigeria’s new petrochemical complex expected in 2019 – $14 billion estimated total cost
    The Dangote Refinery will produce 650,000 barrels per day of refined petroleum products to meet all the country’s refined petroleum products needs as well as export to other countries. It will also have petrochemical and fertiliser plants.
    It is regrettable that Nigeria with large crude oil reserves and being the largest crude oil producer and exporter in Africa and eighth in the world, still imports more than 80 per cent of its petroleum products needs.
    Dangote said the target was that in five years time, half of Nigeria’s crude oil production would be refined and exported rather than exporting crude that were creating jobs elsewhere.
    The Lagos State Governor, Akinwunmi Ambode, said the project would create some 235,000 jobs both directly and indirectly.

    The Nigerian National Petroleum Corporation (NNPC) has indefinitely shut down two of the nation’s three refineries due to increase in their operation costs and several maintenance interventions, Daily Trust reports.

  42. George Kaplan says:

    Another highly touted prospective offshore frontier area not looking very good:



    (possible paywall)

  43. Energy News says:

    North Dakota – update through August 2017 – Enno Peters

    • Dennis Coyne says:

      Thanks Energy News and Enno.

      From shaleprofile.com

      Well profile for individual months from Jan 2017 to July 2017. The chart is not very good sorry. The July 2017 well profile is hidden behind the March 2017 well profile, but month 2 average output (in August 2017) for the July 2017 wells is about 750 b/d.

  44. Energy News says:

    The EIA in it’s Drilling Productivity Report is still estimating that the number of completions per month is increasing.
    Chart showing forecasts from various months for the Permian.

  45. Heinrich Leopold says:

    Data from the drilling report came out yesterday and they confirm the rapid increase of the depletion rate in the shale patch (see below chart about the development in the Permian). As the Permian is a recently developed field, the depletion stands currently at close to 80% (much more mature Eagle Ford hovers around 100% depletion), yet it nearly tripled over the last three years (see red line in below chart). The Red Queen has to run now at double speed to stay at the same place as in 2014.

    In economic terms, companies in the Permian have to spend twice more cash for the same production level than three years ago. So, the costs per produced barrel doubled – despite lower costs per rig and well. Companies have to simply deploy more rigs for the same production level.

    Moreover, the depletion rate is rising at a rate of 4% per month or around 50% per year. In other words cost will double again over the next two years. This has serious consequences for shale companies cash flows. Despite reasonable oil and gas prices, share prices perform very poorly.

    In my view, this is a volcano – while still sleeping – yet at high pressure and boiling point. Just waiting to erupt at huge consequences for financial markets. However, the inability of shale companies to increase supply will lead to much higher oil and gas prices over the foreseeable future.

    • Mike says:

      Mr. Leopold, this is outstanding work and I agree with you 110%. This sort of reality check makes the EIA’s predictions regarding production growth ridiculous. Those that so desperately need to make predictions about the future often overlook that the shale oil phenomena in America is being managed entirely by private enterprise and for private enterprise to succeed, it must be profitable. The growth the EIA predicts thru 2018 ignores completely that the shale oil industry has yet, in its existence, been able to generate free cash flow and is facing a massive amount of debt that is maturing in 2019, 2020

      With your permission, sir, I would like to use this graph in my little fledgling blog (my yellow Lab is my only subscriber) and will, of course, credit you. Thank you.

      • daniel says:

        do you have a link to the blog?

        • Mike says:

          Daniel, I have led a very long, oily life that I am very proud of. My Lab tested, surfboard certified blog, if that is what it is, includes anecdotal observations about that life, videos, photos and stories about my time in the blowout business, etc. As an operator for 40 years I have strong opinions about our hydrocarbon future. I am concerned about that future, but not from the standpoint that fossil fuels will cease to play a role in our everyday lives for a long time to come. I believe we will need all the oil the world has left before it’s over.

          It is a very anti-oil crowd here on POB, a hostile crowd, so I doubt many people would enjoy reading what I have to say and for the most part don’t wish to solicit comments. That is what I like about having my own place to vent; whatever I say is always right, so I never have to argue with myself. And my Lab, she is good with everything I say. This, for instance: https://www.oilystuffblog.com/single-post/2017/09/12/Lets-Be-Honest

          • Nick G says:

            Well, what the heck – I left you a couple of thoughts on your Lab-approved blog. I hope they’re helpful.

            • Mike says:

              Thanks, Nick; I am sure your comments would have been very “helpful” but thankfully the anti-fossil fuel/city boy/urbanite/I have no clue how the real world works/ I live in a dream world filters apparently worked quite well.

              There are no oil men, or oil women in New York, so hug a street sign instead. Happy motoring !


              • Nick G says:

                Wow –
                You really are angry.

                I hope you feel better, eventually.

                • Mike says:

                  No, Nick; I am not angry, not at all. I have heard your message before and I find it tiring, that’s all. I am actually feeling fine; I’d invite you to tag along with me this morning in the oilfield but you’d probably be back in the pickup by 9 AM, wore out and wanting to go home. Have a good productive day, sir.

                  • Nick G says:

                    No, Mike, you’re very angry. You’ll be happier when you face that and deal with it.

                    Look at your blog – there’s a lot of anger there. Your comment just above is the same – personal insults.

                    I left two comments on your blog with actual ideas, rather than personal comments, and you didn’t want to listen to them or think about them. As you said earlier, your blog is more about venting than actually thinking about ideas.

                    Which is ok – venting in writing can be therapeutic, especially if you know that’s what you’re doing.

                    Although, as you said before, such writing is less interesting to people who don’t happen to share the same feelings.

                  • Survivalist says:

                    I don’t think Mike sounds angry. His blog is quite nice. I do suspect however that he thinks you’re an idiot. Perhaps a distinction that is lost on you.

                  • Doug Leighton says:

                    Survivalist — Totally agree with you. Mike is one of the most rational commenters here and, Nick IS AN IDIOT! No, I’m not angry.

                  • Nick G says:

                    Yeah, you are. Anybody who calls somebody else an idiot is angry. If they’re not aware that they’re angry, then they’re not aware of their feelings, which is true for most of us, most of the time. Nothing wrong with being angry – it’s the name calling which break common rules of courtesy and debate.

                    The funny thing is that I think I understand why Mike is angry: his industry is in a boom and bust cycle which he thinks either could have been avoided or was artificially amplified.

                    Even funnier: I agree with him. The US should have been much more careful with it’s oil industry, starting after WWII when the US started to import oil in significant quantities. Very irresponsible.

                  • Mike says:

                    Nick, I am a Texas oil and gas producer; you do not like what I represent. You are attempting to discredit my occasional comments here on POB, or the content of my personal blog, by suggesting I am angry. I am not angry. I think if you were to look at my comments and that little blog you would actually see it is kind of a celebration of an entire lifetime in the oil industry, including being involved in worldwide well control events that actually prevented, or limited environmental catastrophes. I am proud of that. I love what I do to make a living and take care of a whole lot of people doing it. You commented on that space because you did not like the little post on fossil fuel hypocrites. You correctly took it personally and wanted to retaliate.

                    I do not boast about the money I make in the oil industry, I am not trying to sell a particular E&P company to anyone, I do not promote the use of hydrocarbons and I believe strongly in conservation of our remaining oil and gas resources and all alternative means to reduce our hydrocarbon footprint. Unusual, wouldn’t you say, for an oily guy? I am a small voice of reason, I think, with regard to the shale phenomena because I do not believe it works economically and therefore will not be a driving factor in our energy future. For private enterprise to be successful in America it must be profitable. The shale industry is not profitable.

                    You are a city boy and spend enormous amounts of time bashing my industry and people that use fossil fuels. By living and functioning in the city I think you are removed from reality. You believe, unrealistically, that others should embrace your kind of world. That is not possible. It will be a very long time before that is possible.

                    I don’t like posting here anymore because of people like yourself, and other incredibly nasty commenters that insult people all the time. But, of course, if you agree with their political idealism, or beliefs, those folks are NOT guilty of personal insults. I think you (what do you actually know, by the way, about the oil industry other than what you read on the internet?) and a handful of others on POB actually believe they can control the content of this blog. There is no civility in our society anymore and this blog actually is representative of that. The moderators, who have similar idealisms as yours, allow it.

                    If you don’t like what I represent, ignore me. I ignore you all the time. If you don’t like my dumb little personal blog, don’t read it. I actually don’t need your “help” and do not need to be ‘lectured’ about fossil fuels. I most certainly don’t need to be “psycho-analyzed” by you; good grief. You seem to be quite enamored with yourself.

                    G’day from S. Texas, Nick.

                    Thank you Survialist, and Mr. Leighton; thank you, sir. I appreciate that a lot.

                    Mike Shellman

              • texas tea says:

                Apache Corp. provides update on Alpine High
                HOUSTON — Apache Corp. has announced steady progress at Alpine High since revealing the discovery last year.

                “When we disclosed Alpine High in September 2016, we had an estimated 2,000-3000 drilling locations,” said John J. Christmann IV, Apache CEO and president. “Today, we are increasing that estimate to at least 5,000 locations, consisting of 3,500+ locations in the wet-gas window, 1,000-plus locations in the dry-gas window and 500-plus locations in the emerging Wolfcamp / Bone Springs oil play.”

                “Each of these plays is highly economic at current commodity prices on a fully-burdened development case scenario, he said.”

                The audio recording and presentation lasted approximately 70 min. and the materials are available for download online at http://www.apachecorp.com.

                that should bring on a non angry response 😜

      • Heinrich Leopold says:

        Mike, thank you for your reply. I welcome the publication of my chart in your report. You could probably mention that the data are from the EIA drilling report. All of the forecasting and production models I know, assume quietly that depletion rates stay the same over time, which is obviously not true and can lead to serious judgment and investment errors. This is exactly my point here. Heinrich

      • Nick G says:

        my yellow Lab is my only subscriber

        So you can say that your blog is Lab tested and approved, together with a picture of the certifying Lab…

      • Dennis Coyne says:

        Hi Mike,

        I agree the EIA forecasts are not very good. Note that the drilling productivity report is also based on a model which is not very good. Heinrich’s chart is based on the numbers from the DPR and may be flawed as well (due to the poor modeling which is the source of the data).

        You are welcome to post a link to your blog here unless you want to keep it private for special guests. I imagine you can limit comments to those you choose.

        I also agree that the oil price will need to rise to $75/b or more before new shale wells (the average well) can be profitable so either the EIA’s oil price forecast is too low or their LTO output forecast is too low.

        Based on Dean Fantazzini’s estimates, Texas C+C output is probably 200 to 300 kb/d lower than the EIA estimate for July 2017. Much of this is probably lower LTO output from the Permian and Eagle Ford than the EIA has estimated.

    • Eulenspiegel says:

      Small question, how do you define depletion rate? Conventional a depletion rate of > 100% isn’t possible, even 90% is huge going from 1000 bpd to 100.

      Other thing “Production from new wells as % from total” of more than 100% doesn’t make any sense to me.

      I’m reeaing much graphs, normally scientific ones, but this one confuses me.

      • Heinrich Leopold says:

        Eulenspiegel, yes it is complex, but not everybody can understand complex matters.

        • Eulenspiegel says:

          Yes, I’m stupid.

          So I can’t understand how new wells produce 105% of total in 4 / 2017 – did the older wells consume oil by pumping it back to the ground?

          Or did they just produce 52.5% of total (105% of old wells), and you scaled it something confusing?

          You can only have 100% – 80% new wells 20% old wells would be a number that makes sense.

          You can increase production by 105%, no problem – but you can’t have a fraction bigger than the total, if everything is positive.

          • Heinrich Leopold says:

            Eulenspiegel, the EIA gives just monthly numbers, which does not give a good overview over a larger time frame. Therefore, I have annualized the data. So, a monthly decline of 5% gives 60% yearly decline. Sometimes it can happen that the monthly decline is far over 8% which then gives annualized more than 100%. Eagle Ford had 140% yearly decline at some point, which indicates the wells are dry within less than one year. It is artificial, yet it gives the main message how deep the decline is and how much this changed over time. However, I will consider another way how to depict the core message in the charts. Below a chart depicting the absolute numbers, yet they do not show how the decline rate based on total production has changed.

            • Eulenspiegel says:

              Ok, that’s explains these strange numbers.

              By the way, if you have 8% monthly decline, you’ll have
              100% * ( 1- 0.92^12 )= 63% yearly decline – if the monthly decline is calculated from the start of the month to the end of the month as I assume from normal statistic reports.
              5% monthly decline gives 46% decline in a year.

      • Watcher says:

        Depletion rate is a somewhat meaningless parameter.

        You’re trying to quote the rate at which an oil field is going empty. You sort of can’t do that if you don’t know how much oil will eventually be produced.

        Visualize it. You produce oil. You subtract it from how much you think can be produced. A day arrives when your calculation says 100% depleted.

        More oil comes up — via technology or a different depth.

        Your calculation of how much could be produced was wrong. Your depletion rates were, too.

        • Do you really think they might find more oil in Cantarell at a different depth? Or in Prudhoe Bay? Or in either with a different technology? What technology would that be?

          Figuring depletion rate is definitely not an exact science. But it sure as hell is not a meaningless parameter either.

          • Watcher says:

            Come on, Ron. You can always cheat. Just change the dimensions of the field.

            • George Kaplan says:

              You can also see your shares plummet, lose your job or even go to gaol when you are found out, which you eventually will be.

              • Watcher says:

                Oh for God’s sake, who is going to send a Saudi royal to jail for redefining the borders of an oil field?

                There was an article in OD some yrs ago using satellite imagery to profile new wells drilled in Ghawar. They were beyond the previous official edge. They flowed oil. They were added to Ghawar’s total.

                Pretty sure Gaddafi did that in east Libya, too. Hell, it’s probably the norm. Not even an exception.

                • George Kaplan says:

                  The OD article was wrong, and field borders aren’t redrawn, there have been changes to recovery ratio numbers (Saudi numbers are very high maybe 75% in some fields). If you want to see what happens to ruling elites when they don’t have as much oil as they have said then wait a couple of years and look at Saudi and Kuwait, maybe Libya is a foretaste – he was raped with a scaffolding pole and shot, gaol would have been preferred I think.

      • Jeff says:

        It´s confusing that depletion and decline are used interchangeably. I interpret the message of the fig as production replacement, i.e. similar to reserve replacement but for flow rather than stock. New production and decline from old production are equal when the blue and red curve intersect. However, decline from LTO is higher in the beginning (decline from legacy wells decrease over time) and it´s possible to increase drilling and completion in Permian. The blue curve may thus stay above the red curve for some time.

        • It´s confusing that depletion and decline are used interchangeably.

          The two terms are used interchangeably only by people who are just too damn stupid to know the difference. Decline is how fast the above ground production is declining. Depletion is how fast the below-ground reservoir is being depleted. They are totally two different things that should be obvious to anyone with half a brain.

          I am deeply sorry for my language. But in my old age I am developing a very low tolerance for stupidity.

          • Jeff says:

            I appreciate that you try to be polite. So of us are not as smart and experienced as you are.

            The “Red Queen” is about decline, not depletion. The figure illustrates decline, not depletion. Yet Heinrich used depletion:
            “Data from the drilling report came out yesterday and they confirm the rapid increase of the depletion rate in the shale patch (see below chart about the development in the Permian). As the Permian is a recently developed field, the depletion stands currently at close to 80% (much more mature Eagle Ford hovers around 100% depletion), yet it nearly tripled over the last three years (see red line in below chart). The Red Queen has to run now at double speed to stay at the same place as in 2014.”

            I can’t see anything in that figure that indicate that depletion is close to 80% and I find it very hard to believe that depletion in Eagle Ford is around 100%.

            • George Kaplan says:

              Depletion is 1/ (R/P); decline is (Pn – Pn-1)/Pn-1 (P production, R reserves). If decline is strictly exponential and there are no reserve changes except from production they are the same number.

            • Heinrich Leopold says:

              Jeff, i should have used the word ‘legacy decline’ consistently over the whole post. The EIA provides just monthly numbers, therefore I have annualized the numbers. The decline can be so fast in one month (more than 10% month over month), that the annualized number goes sometimes over 100%. In 2016 Eagle Ford had 140 % decline annualized in one month. In other words Eagle Ford would have declined to zero production in less than one year, if there would have not been any production from new wells. In any case I have to find another system. I have attached also a chart in absolute numbers to show the real high leverage in the shale patch. Yet, this does not show the change of the decline over time, which is in my view the most important message in the chart.

              • Jeff says:

                No hard feelings, I like your posts and read them. I think we are on the same page overall although not on all the details. I´m a non-native English speaker myself and know that it´s easy to mix up words.

              • George Kaplan says:

                You need to use 1-(1-r)^12 to convert months to years decline, not r*12. If r is small they are about equal, but for LTO r isn’t small by any estimate.

      • I think we need the equation used, and a legend to define the terms in that graph.

        I prefer rate versus cumulative plots when reviewing performance of wells with steep hyperbolic declines. But this has been argued for decades. About 40 years ago I tried developing a dimensionless Q sub t by dividing the rate at any given time over the initial rate. This gave me a way to create a type curve which wasn’t overwheighted by better wells. Later I tried dividing them into groups, and created type curves for each group. Finally I used the group type curves to show how well quality declined over time, which allowed me to predict over a long period of time how the acreage would become less profitable. However, I had an advantage, I also had oil properties and reservoir quality maps, so I could tie performance to other well data. Lucky for me they gave me one of the first HP programmable calculators, access to an IBM38 and three technicians to serve as data monkeys. I guess the idea I’m trying to convey is that this salami can be sliced in different ways, and there’s no unique way that yields a better way to forecast what’s going to happen.

    • islandboy says:


      IIRC you are interested in the NG situation as well. Have you looked at my post on the latest EIA Electric Power monthly? I attempted to do an overview of the change in the US electricity generation mix since 2009. The conclusion was “In total, between 2010 and 2016 coal generating capacity declined by almost 33 GW while natural gas saw an increase of 23.6 GW, wind increased by 45.5 GW and solar by 20.5 GW”. IMHO the replacement of 33 GW of coal fired capacity with over 23 GW of gas fired capacity should have a detectable effect on both the coal and gas markets. In addition the increased use of NG for transport and other uses in the US coupled with the start of LNG exports should eventually result in upward pressure on gas prices, if supplies do not increase along with demand. (Jamaica has converted one CCGT plant from diesel to NG and is to begin construction of a new 190 MW CCGT plant to be supplied with LNG from the US based New Fortress Group, replacing very old steam turbines fired with bunker C fuel oil).

      What is your prognosis for gas prices? The powers that be in Jamaica are counting on them being “lower for longer” but I am not as optimistic.

      • Heinrich Leopold says:

        Islandboy, gas has lost market share in the US electricity generation due to higher prices, yet internationally gas has gained market share and new supply from Australia has been soaked up very quickly as China nearly doubled its gas imports. LNG prices are 50% higher than last year and it depends now on US supply. Legacy decline rate for gas are not as high as for oil (50% or 22 bcf/d) as Utica and Marcellus are relative young plays. In my view this will change as well and we will see this winter a gas upside surprise.

      • Tie the gas price to a long term contract which uses a bunker index averaged over the prior three years. That should cushion price swings. Overall gas prices will increase over time, but you really don’t have a different option, other than what I suggested a couple of years ago: a 500 MW coal plant tied to a 40 year coal contract coming from Santa Marta, Colombia.

  46. George Kaplan says:

    Not much on the GoM oil spill in the media yet. A 9000 bbls spill, cleaned up fairly quickly, but may have a bigger impact on production. Spill was from a main jumper in the subsea template (i.e. something that carries the production flow from one or more of the subsea wells). The LLOG Delta House was at just over 90 kbpd average, and has nameplate of 100, so pretty much at capacity. The subsea field affected was Rigel (by BSEE naming, I’m not sure what LLOG calls it – maybe Delta House). The reports of shut in are a bit confusing: some say 57 kbpd shut-in, some say that’s what’s left on-line (that would agree with recent Rigel production), and some seem to indicate BSEE have called for the whole platform to be stopped. If the cause is unknown it would be sensible to shut-in the other subsea templates if they are of the same design – could be fatigue or manufacturing failure, either of which could produce common mode failures in the other areas. Might take some time to remove the piece, find the problem and replace. Worse case would be if they have to replace a few of them, even worse would be if they have to hill the wells to provide enough barriers to the reservoir pressure before doing the work. I think that would be unlikely but I’m guessing at least partial loss of production for a good few months.

  47. Energy News says:

    2017-10-18 EIA weekly U.S. crude production re-benchmarked -99 kb/day lower – Bloomberg

    Although the EIA says that they re-benchmark when the STEO is released, which was last week.

    Saxo Banks charts are a good summary of the Petroleum Status Report

  48. Stephen Hren says:

    This is a great blog, one of the few places where I actually learn something from the comments, a ton of intelligent people discussing some of the most important issues on the planet. However, the tone of the comments has noticeably deteriorated over the last 3-6 months, with people openly insulting one another when they disagree. Why does everyone seem to have such a big stick up their collective ass lately? We’ve stopped given the other side the benefit of the doubt, maybe the trolls have worn us down. Everyone here is looking for solutions and wants to get at least a glimpse of the truth. How are we going to solve any of these massive problems otherwise?

    • George Kaplan says:

      The thing is though, being rude actually seems to get rid of a lot of the trolls, and being polite just seems to encourage them. Not a great comment on the human condition, but there it is.Ignoring them completely might work as well (emphasis on completely), but I don’t think that’s a realistic possibility. There might also be a tipping point effect where, when somebody who’s decided they have the answer that nobody else has seen even though they haven’t any skill or experience in the subject, says pretty much exactly the same thing (their pet theory) for the n-th time, despite plenty of cogent arguments having been put forward previously contradicting it, then collective patience evaporates.

    • It’s the Trump effect. We have learned, as a result of the last presidential election, that almost half the American electorate is just fucking stupid. So all this pent-up frustration just comes out whenever we hear people just saying very stupid things. We just want to lash out at people who say stupid things because that idiot Trump doesn’t hear us when we lash out at the very stupid and ignorant things he says. We want to be heard so we lash out here, where we will be heard.

      Blame it all on Trump.

      • Nick G says:

        I really think that’s true, except that it’s part of a much longer-term thing.

        We’ve been subjected to 40 years of mind numbing misinformation and scapegoating from right wing media. Trump is their direct result.

  49. George Kaplan says:

    Today I came across an FT article from February discussing the lack of oil and gas discoveries (based on an IHS press release I think). It had the chart below showing how frontier wildcat drilling has fallen off. This was given as evidence of how the oil price has had a big impact on exploration. But to me it indicates the exact opposite – mostly there’s just a bell curve, almost certainly driven by geology, with a bit of noise on top due to normal cycles in the industry plus outside influences – i.e. there was a bit of a jump in 2008 to 2010 and things might be a bit lower than expected now. But if the expectation is that the curve is going to reverse direction and suddenly start increasing I think people are in dreamland.

    ps – the FT don’t like you copying their stuff much but I think a small outtake like this is OK.

    • Dennis Coyne says:

      Hi George,

      Nice chart, thanks, it looks like there may be a bit of correlation with oil price since 1970 and political factors like the suez crisis may have lead to other spikes in exporation (as prices were pretty stable from 1960-1973).

      Perhaps there will be some increase in wildcats if oil prices rise or perhaps there is not much left to find. In any case there are some reserves that are undeveloped, though the amounts are only available to those with access to the IHS database, and those estimates may not be correct.

      The drop from 2011-2014 when oil prices were high may indeed be cause for concern.

      • George Kaplan says:

        Dennis – I think you can get a pretty good idea of what’s left to develop from IOC investor presentations – more so now as a lot of the producer countries have invited IOC involvement. Even Chinese and Russian companies give a list of possible future projects, and usually in English. Also every recent discovery is announced no matter where it is, so unless there are some secret discoveries from way back that are being held back, I’m going to say there aren’t any such, a lot the data IHS has is available. What they do is analysis on the announced numbers to give estimate of sizes, that’s a lot of work, and they may get other stuff from the E&P, though I don’t know why that would be given out to IHS and no-one else – what’s the benefit.

      • George Kaplan says:

        Also to cover myself for the future I should change “reverse direction and suddenly start increasing” to something like “reverse direction and reach new decadal peaks”.

    • Schinzy says:

      Very interesting chart.

      Is it possible that some of the decline from 1960 (when the price of oil was low) to say 2003 could be explained by better seismic so that, possibly fewer wildcats in say 2000 led to more oil?

      It would be interesting to know how the price of a wildcat well changed during this period.

      • George Kaplan says:

        Could be, but if seismic is so good why have success rates for wildcats fallen so much recently, it can tell you if the geology is such that oil would collect but it still can’t tell you if there is any oil there. For the cost I think it has gone up a lot as we’ve moved into deep and ultra-deep in the last 15 years or so. But isn’t the fact that we have moved to ultra-deep with it’s high cost base indicative of there being not much left anywhere else. And after the few ultra-deep areas there’s nowhere to go is there – you can’t have oil without sedimentary rocks.

  50. Dennis Coyne says:

    Hi all,

    A new post is up by George Kaplan


    and a new Open Thread- Non-Petroleum as well


  51. Heinrich Leopold says:

    There is an huge mismatch between the EIA weekly oil supply estimates and the data from the Texan railroad commission RRC (see below chart). As the data indicate, the EIA data suggest a new high in US oil production (red line in below chart). The data from the RRC however see production at a 4 year low, way below its past peak (blue line in below chart).

    I know the RRC data will be always corrected to the upside, yet the correction is usually not more than 200k barrels a day, which still leaves a massive gap of .5 mill bbl/d versus the EIA data. RRC data should be also closer to an all time high. So, something has to give, either the EIA data have to be revised down or RRC is up.

    In my view, the recent data are confirmed by the latest earning data from oil and gas companies, which virtually showed no growth for nearly all companies over the last year. Some companies (BHP) had also huge declines of -15%. This comes despite a nearly 100% increase of capex and drilling activity. Moreover, the companies had massive declines of cash flow from operating activities despite the same level of production from last year.

    My explanation is the fast rising decline rates, which increases the cost per produced barrel exponentially. This creates a financial downward spiral. In the relentless effort to pretend to be able to produce vast quantities of oil and gas at low price – oil and gas production at a mouse click, no hard work needed – the companies have driven themselves into deep financial troubles. The consequences are unbelievable falls in stock prices – 20 fold for WLL, 10 fold for CHK, 5fold for RRC….. As decline rates rise even further, the environment becomes even more unfavourable.

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