OPEC + Different EIA Data

The latest OPEC Monthly Oil Market Report is out. There were no big surprises.

OPEC 12

OPEC crude only production was up 23,000 bpd in May but that was after April had been revised upward by 110,000 bpd.

Saudi Arabia

Almost no change is Saudi production, down 5,000 bpd to 10,107,000 bpd.

Iraq

Iraq had the largest change of all, up 105,000 bpd to 3,800,000 bpd.

Kuwait

Kuwait suffered the largest drop in May, down 77,000 bpd to 2,685,000 bpd.

Secondary Sources

Above are the total changes for all OPEC countries. The top chart, “Secondary Sources” is the one I always use.

OPEC is expecting world oil supply to grow by 680,000 bpd in 2015.

World Oil Supply Non-OPEC oil supply in 2015 is projected to grow by 0.68 mb/d, in line with the previous forecast and below last year’s strong growth of 2.17 mb/d. OPEC NGLs are forecast to grow by 0.19 mb/d to average 6.02 mb/d in 2015, following growth of 0.18 mb/d in 2014. In May, OPEC production rose to 30.98 mb/d, up by 0.02 mb/d, according to secondary sources.

However world oil supply fell in May. They are talking all liquids here.

World oil supply Preliminary data indicates that global oil supply decreased by 0.27 mb/d to average 94.06 mb/d in May 2015 compared with the previous month. The decline of non-OPEC supply in May decreased global oil output, which was partially offset by an increase in OPEC production. The share of OPEC crude oil in total global production increased slightly to 32.9% in May compared with the previous month at 32.8%. Estimates are based on preliminary data for non-OPEC supply and OPEC NGLs, while estimates for OPEC crude production come from secondary sources.

World Oil Supply

Updated oil production charts of all twelve OPEC countries can be found at OPEC Charts.

Looking at the USA we get a mixed picture from the EIA.

US Weekly C+C

The EIA’s Weekly Group says US C+C production is soaring. They have US production, in early June, at 9,610,000 bpd and rising. Since the last week in April they have total US production up by 227,000 barrels per day.

DPR Total Shale

However over across the hall at the EIA, where the shale folks work, they say US Shale oil peaked in April and was down over 115,755 barrels per day in June. And since shale is where all the action is then we could expect total US production to be down by at least that amount.

The weekly folks say total US C+C production was up 227,000 barres per day since April while the shale folks say production was down 115,755 bpd and then will be down by another 93,000 bpd by the time July rolls around. Anyway the difference between what the weekly EIA folks say and what the shale EIA folks say is over 342,000 barrels per day. I think we can safely say that one of them is just flat out wrong.

STOE USA

The above is from the EIA’s Short Term Energy Outlook which came out Tuesday. They have US Total Liquids up 80,000 bpd April to June. But they have all liquids peaking at that point and in a slight decline until October of 2016.

Of course shale production is not total C+C production and total C+C production is not total liquids production but they should all three go up or down together. Shale is where all the action is and total C+C and total liquids should follow shale, not in lock step of course but pretty close. But the idea of different groups at the EIA all coming up with different production numbers is getting a little absurd. It is, and should be, causing a lot of people to lose any confidence in anything the EIA does publish.

STOE Non-OPEC

The EIA’s Short Term Energy Outlook has Non-OPEC total liquids peaking in October at 58,600,000 bpd before dropping over a million barrels per day in January, February and March, then heading back to new highs reaching 59,080,000 bpd in October 2016.

Sustainability, Transition, Carrying Capacity or whatever. There has been a lot of discussion on these subjects in the comments section lately. I plan on a post on these subjects in late June or early July. In the meantime I am cramming in every article, youtube video and article I can find on the subject. I watched two great ones last night, they are Mate Hagens latest on the subject: 

Energy, Credit and the End of Growth, Nathan Hagens and

Nate Hagens – Turning 21 in the Anthropocene

The first, 25 minutes long is basically a short version of the second, 56 minutes long. But both are very good an have some very alarming stats in them. Anyway, as I said I am boning up on the subject. I will not be joining much of the ongoing discussion on these subjects but will save my opinions until the post in about a month or less. But in the meantime I will be posting more links to other people’s opinions on this subject.

Notice: If the North Dakota NDIC data comes out by Friday, I will have a new post shortly after. If not, it will likely be Monday or later before I have anything to publish.

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240 Responses to OPEC + Different EIA Data

  1. Watcher says:

    Holy Crap, huge diff Nigeria 2ndary vs direct.

    • Not really. There are just 35,000 bpd difference in the two for May. Nigeria likely just under reported April. Anyway those “Direct Communication” numbers always have to be taken with a grain of salt.

  2. clueless says:

    Ron, re: “Sustainability, Transition, Carrying Capacity or whatever.” You have given yourself an impossible task. Because all knowledge, anywhere in the world, is now transferable to everyone else in the world in seconds [the internet], the knowledge base of humans is rising at a parabolic rate (very exponentially). So, no collection of say 1 million people reading 10 million articles per day will ever be able to predict or forecast what is going to happen. That being said, computers that can think and solve problems faster than humans will become the norm. And, as Nate stated that manufacturing is becoming a smaller portion of the pyramid – that is the best thing. Manufacturing continues to grow at a fast rate [with fewer and fewer people required] and it will grow much faster in the future. Humans will manufacture robots, and the robots will manufacture everything else [and then the robots will begin to build and improve on themselves]. For the most part, human work will become virtually just services in the not too distant future. And the computers that can think – well, it might be some form of cold nuclear fusion, or something, but energy will be the least of our worries because of their [the computers] new inventions. As humans become less and less useful and necessary, some humans will want to eliminate most of the other humans. Maybe through birth rate control, which has already started – Germany and Japan for example. Or maybe through other methods. Then the robots eliminate the remaining humans. Just my wild ass guess.

    • Clueless, I am still a long way from forming my conclusions and what I will put in that post. But it will clearly be way different from your opinions. While energy is not our only worry it will nevertheless be right up there near the top. Cold fusion? Are you serious?

      Manufacturing in the US is in serious decline. We now have almost as many people as bartenders and waiters as we do people working in manufacturing. We, the USA, manufacture less but consume more. When a nation consumes more and more and manufactures less and less, then that is a recipe for disaster.

      It is a myth that robots will one day manufacture robots. Robots contain computers that require large clean rooms to create the chips and large lasers to etch them. Lathes and milling machines are required to build all the mechanical components. Tiny capacitors are made with precision machines and tiny inductors are made with copper wire so thin you almost need a microscope to see it. A robot cannot do all that, it takes skilled men, women, precious metals and modern machinery to build a robot. Richard Feynman must have had some kind of lapse in cognition when he proposed that a robot might build a smaller robot which might build a smaller robot which…

      But talking about robots is getting off the subject, the future of humanity is the subject. So I will try to stick to that.

      • Nick G says:

        We now have almost as many people as bartenders and waiters as we do people working in manufacturing.

        This is true. Labor productivity has risen dramatically, and manufacturing employment has dropped sharply.

        We, the USA, manufacture less but consume more.

        Not really. US manufacturing output is higher than it ever has been. We import a lot of stuff, but we also manufacture a lot of stuff, some of which we export: cars, planes, refined oil, etc.

        The decline in manufacturing employment is deceptive – it’s not the same as actual manufacturing output: the stuff they make.

        • clueless says:

          Nick – Thank you!! One of the biggest myths EVER is that US manufacturing is down. It is up hugely since the 1950’s. As I have mentioned before, my wife and I of 49 years have no children. However, during that 49 years, I have never run across anyone who said: “I hope that my newborn son someday can obtain a good union job knitting socks at the local mill.” No. US manufacturing is epitomized by Elon Musk: high tech manufacturing with fewer and fewer people.
          Ron – you missed the TOTAL point. It is not how many people are employed, it is about what you produce with the people that you have.

          • One of the biggest myths EVER is that US manufacturing is down. It is up hugely since the 1950’s.

            Sorry Clueless but I just flat don’t believe that. You must not be from Detroit, or Pittsburgh, or anywhere in the South where there used to be a cotton mill in every town. And there were garment manufactures in every town also. Now all it is all made in India, or China, or wherever.

            And just google it. There are hundreds of articles like this one:
            Why Factory Jobs Are Shrinking Everywhere

            A report from the Boston Consulting Group last week suggested the U.S. had become the second-most-competitive manufacturing location among the 25 largest manufacturing exporters worldwide. While that news is welcome, most of the lost U.S. manufacturing jobs in recent decades aren’t coming back. In 1970, more than a quarter of U.S. employees worked in manufacturing. By 2010, only one in 10 did.

            Really Clueless, it’s not just about what is produced, it is the whole big picture. Employment is the biggest part of that picture but how much is produced also. In 1950 you could walk into a five and dime and 99% of everything in that store would have been produced in the USA. Now walk into WalMart and perhaps 1% of the goods there are produced in the USA. And you say: It is up hugely since the 1950’s. Good God, give me a fucking break!

            And you say manufacturing is

            • coffeeguyzz says:

              Clueless, Mr. Patterson

              There is a thread of commonality regarding actual manufactured output coupled with increased employment in regards to this ‘shale revolution’,
              The increasingly lowered cost of raw materials as well as cost of energy is starting to offset cheaper offshore labor in making USA more economically attractive for manufacturing.
              Newly built or proposed complexes such as the three ethane crackers tentavely scheduled for the Marcellus area bodes well for a wide range of downstream plants using this extremely inexpensive feedstock.
              Lowered costs for electricity generation boosts American competitiveness in steelmaking and other related industries.

            • sam Taylor says:

              Ron,

              The manufacturing data are available from places like the bls or st Louis fed data pages. The US is unambiguously manufacturing more than ever before according to these data. Yes, fewer people proportionately are employed in manufacturing, but this is because more and more human labour is being replaced or complemented with external energy sources, thus increasing productivity.

              However in most of the advanced counties (uk, much of europe, recently the USA) productivity has been stagnant or declining, just at the same time as energy and electricity use per capita has been roughly stagnant. Personally i think it’s very likely that the two are related, though I’ve yet to see energy factors mentioned in any of the articles I’ve thus far seen on the productivity data.

              • SatansBestFriend says:

                How is China’s economy growing if the USA is manufacturing more? Isn’t the USA running a trade deficit with china?

                Europe and USA are consumers; Asia are manufacturers. That is the undeniable circulation of money in the global economy.

                I work at an undisclosed place that has just replaced it’s staff with offshore indian workers because they are much cheaper. And labor costs are your biggest expense in a human labor intensive industry.

                Any manufacturing companies that don’t offshore their work are at a competitive disadvantage due to labor costs, slave labor policies and environmental arbitrage (china don’t care if you pour your poo poo in the river).

                As long as cheap liquid fuels are available!

                Where is all the work for the billions in China and India coming from?

                Yes, high end items like planes and military will come from USA, etc.

                Satan has returned, and he is pissed off!
                SatansBestFriend

                • Sam Taylor says:

                  It is growing because the USA consumption has increased vastly more than it’s industrial output. You might me making 2 as much, but if you’re consuming 4x as much then that extra has to come from somewhere.

                  As Yanis Varoufakis has said, the US is like a ‘global minotaur’, into which energy and resouces go and nothing leaves in return.

              • Dennis Coyne says:

                Hi Ron,

                US real industrial output per capita (US Population) has mostly increased since 1950, but it stalled around 2000 at 98 got to 100 in 2007 and was back to 99 in 2007, chart is indexed to 2007=100 ( the high point through 2014).

                Note that this chart is not output per worker (productivity), it is real industrial output divided by US population.

                Fred data for industrial output at link below:

                http://research.stlouisfed.org/fred2/series/INDPRO#

                Population data from UN to 2009:

                http://esa.un.org/wpp/

                Population for 2010 to 2014 from US census (most current data V2014):

                http://www.census.gov/popest/data/index.html

              • Yes, I am sure the dollar value of production has increased dramatically since 1950. After all, the population has more than doubled. But even the per capita has increased somewhat but still not nearly as much as the per capita consumption has increased. But the percentage of us consumer goods manufactured in the USA verses the the percentage produced abroad has decreased dramatically.

                As I said, just walk into any WalMart and try to find a “Made in the USA” label. I dare you, try it. You may find one or two but they will be outnumbered by “Made in China or India or Bangladesh or wherever” by at least 100 to 1.

                In my hometown of Huntsville, AL there used to be 13 Cotton Mills in the early part of the last century. During my youth, the 40s and 50, there were three. But there was also a shoe plant, a stove plant, a farm equipment plant and I am sure a few more. Now they are all gone.

                Toyota has an engine assembly plant here and that’s about it. Of course NASA’s Marshall Space Flight Center and the Army’s Redstone Arsenal are located here. They and the associated space industry contractors have far more than replaced the disappearing manufacturing industry. But that has not been the case in Detroit and other blue collar towns. .

                • Dennis Coyne says:

                  Hi Fernando,

                  Not many illegal aliens work in industry, mostly service industries and farming. I don’t think that affects industrial output or population, so not really relevant to my chart.

                  • The illegals are included in the “per capita”. Illegal aliens tend to do low level jobs, work as farm hands, domestics, dishwashers, etc. These are very low value added jobs. Because I’m an immigrant I know the system very well, and I did a ton of odd jobs trying to get through college. Illegals do work legal residents can do, but are exploited mercilessly. This is one reason why the bush administration didn’t try to close the flood, it was convenient for his buddies who exploit illegals. Legalizing their status is stupid because it encourages more illegals to come in. And leftists love them because they know eventually they’ll have a voting block of poor, uneducated people with a tradition of dependence on government handouts. Which means those statistics will get worse.

                  • Nick G says:

                    Illegals do work legal residents can do, but are exploited mercilessly. This is one reason why the bush administration didn’t try to close the flood, it was convenient for his buddies who exploit illegals.

                    Yes, except it wasn’t ONE reason, it was the PRIMARY reason.

                    If anyone really cared about illegal immigration, they’d do something to improve education and upward mobility inside Mexico, so that desperate poor people didn’t need to leave their home country to make some kind of living.

                • Nick G says:

                  Ron,

                  It’s true that some industries have seen big losses to off-shoring. You can see how US manufacturing output growth leveled off about 15 years ago when China joined the WTO. That’s when US manufacturing employment started to drop more quickly – when growth in output stalled.

                  Still, your intuition is simply not a good guide. As both exports and imports grow, fewer things will be both produced AND consumed locally. In 1950 you didn’t expect to see most things stamped “Made in Alabama”, right? That was a big change from 100 years before.

                  More importantly, even if no offshoring OR globalization happened in the last 50 years, most of those plants would have disappeared anyway: each plant would be making 3x as much, with 25% as many workers.

                • Dennis Coyne says:

                  Hi Ron,

                  You are correct that real consumption per capita has grown somewhat faster than industrial output per capita.

                  Average per capita growth rates 1950-2014
                  _______________________________
                  consumption per capita= 2.2% per year
                  industrial output per cap=1.9% per year

                  From 1951 to 1981, these grew at about the same rate on average but they started to diverge after that point. Chart below has the ratio of per capita consumption to per capita industrial output with each value indexed at 1978=100 data from 1950 to 2014.

                  A simple explanation for this is that we are consuming more service goods because most families have two adults working. This leads to more business for house cleaners, landscapers, more dinners at restaurants and more money to go on vacations to hotels or bed and breakfasts. So more of the consumption is spent on services than in the past due to two wage earners per family. This is at least a part of the explanation for the change since 1981.

                  Chart below

              • Nick G says:

                fewer people proportionately are employed in manufacturing, but this is because more and more human labour is being replaced or complemented with external energy sources, thus increasing productivity.

                That’s really, really not the case. Engineers working in manufacturing are simply not doing that: substituting human labor with extrasomatic energy. They’re improving the way work is done, with better design.

                Here’s a classic example: the 1794 hand operated cotton gin. Cotton processing became far less time consuming, and it had nothing to do with energy inputs, just better design.

                Now, substituting human labor with extrasomatic energy has often been very, very important, but it’s not the primary thing in recent changes in manufacturing productivity.

                However in most of the advanced counties (uk, much of europe, recently the USA) productivity has been stagnant or declining, just at the same time as energy and electricity use per capita has been roughly stagnant.

                No, manufacturing labor productivity growth has not even slowed down, let alone stopped. You’re thinking of overall economy-wide stats.

                • Sam Taylor says:

                  Nick,

                  That is not the case. This paper by Taylor ( http://www.un.org/en/development/desa/policy/wess/wess_bg_papers/bp_wess2010_taylor.pdf ) fairly convincingly shows that recent improvements in labour productivity have been achieved by substituting exosomatic energy for human labour. A more thorough discussion can be found in this paper by the same authoer and others ( http://epub.wu.ac.at/3842/1/Rezai.pdf ).

                  In the UK manufacturing productivity has been stagnant since 2008, see chart 2 here ( http://www.ons.gov.uk/ons/dcp171766_381512.pdf ).

                  Design plays a role, but energy is probably more important.

                  • Nick G says:

                    The first paper doesn’t demonstrate that increasing energy uses causes increasing manufacturing labor productivity (the 2nd paper doesn’t seem to provide any primary evidence at all for this general idea – it seems to just assume it for purposes of their models).

                    First, they show a correlation between economic growth and growth in energy consumption. But, in a world of cheap energy, economic growth causes energy consumption growth, not the other way around: people get more income and buy cars. Industry ships more stuff. With cheap energy, they just burn more fuel. If energy were constrained, they’d find ways to entertain themselves, and get stuff where it needs to be, while not using proportionately greater energy. In particular, if fossil fuels were constrained, they’d switch to cheaper, cleaner alternatives.

                    2nd, they’re talking about the overall economy, not manufacturing.

                    3rd, their analysis primarily looks at the growth curve for developing economies: this doesn’t apply to mature economies in the same way. For instance, Vehicle Miles Traveled in the US has been pretty flat for years.

                    As for UK manufacturing productivity:the article doesn’t seem to support your argument, except perhaps in the last 3 years. They say: “Manufacturing productivity has grown by 2.8% on average per annum since 1948 – compared with
                    1.5% in the services industry. The 2008-09 economic downturn resulted in heavy declines in productivity in both manufacturing and services, neither of which have recovered to pre-crisis trend
                    growth rates. Figure 2 shows the impact is greater for manufacturing, but nevertheless, over the long term, manufacturing productivity continues to compare favourably to that in the services industry and the economy as a whole.”

                    In any case, US manufacturing labor productivity has been growing just as fast as always. I suspect the same is true in Germany.

                  • Nick G says:

                    Let me clarify: manufacturing labor productivity is measured by labor per unit of product. So, if production rises, and energy consumption rises, labor productivity hasn’t necessarily changed.

                    If your truck load doubles, the driver productivity might double, and the energy consumed might go up by maybe 30% due to tire flexing and increased power needed for acceleration (most of truck energy consumption is aerodynamic). That’s if fuel is cheap. If it’s expensive, you’ll anticipate an increase in fuel costs, and buy tires that are more efficient, streamline your truck, maybe even move to rail.

                    But if you redesign the assembly of a widget in order to reduce the number of hand motions of the assembly worker, you increase manufacturing labor productivity but you don’t increase energy consumption.

              • TechGuy says:

                SamTaylor:

                “The manufacturing data are available from places like the bls or st Louis fed data pages. The US is unambiguously manufacturing more than ever before according to these data. Yes, fewer people proportionately are employed in manufacturing, but this is because more and more human labour is being replaced or complemented with external energy sources, thus increasing productivity.”

                Not really. First a lot of data from the BLS and the Fed is Manufactured. Most finished US goods are made up of foreign made products. US Cars contain lots of foreign made parts. This is not attributed to the data reported by the BLS/FED.

                If you look around your home pretty much everything you have is made overseas. If you look inside product that actually says “Made in USA” (if you can find one), just about all of the parts inside will be foreign made.

                If what you said was true, than just about all products will have the “Made in USA” tag instead of the “Made in China” Tag.

                “Who are you going to believe [the BLS/FED], or your lying eyes?”
                – Groucho Marx

                • Nick G says:

                  US Cars contain lots of foreign made parts. This is not attributed to the data reported by the BLS/FED.

                  I’d be interested to see some evidence for that. My understanding is that they account for the origin of parts.

    • SatansBestFriend says:

      Computers are things that simply process instructions, that are written by human programmers, according to the boolean algebra that is available on the cpu.

      They are better at performing these instructions faster and more reliably than humans can do them.

      They are so far terrible at adapting to new situations that they haven’t been programmed by a human to deal with.

      The idea that robots/computers will soon have human minds is absurd, since no humans understand how the human brain works.

      Also, human programmers are very prone to making mistakes (software bugs). We are on Microsoft Windows 10 or something and mine still crashes or has some error regularly.

      Operating system programming is astronomically more trivial compared to trying to model the human brain.

      Robots will be a part of our culture (undoubtedly since they already are) but they will be mindless emotionless drones as far as the eye can see.

      I love Alan Turing, but the Turing Test just showed that machines can fake human intelligence if they are programmed by humans to do so, with algorithms that work for the test.

      Satan is Real!
      SatansBestFriend

    • Boomer II says:

      As humans become less and less useful and necessary, some humans will want to eliminate most of the other humans.

      Yes, I think that will happen. The rich are amassing a lot of wealth and assets and don’t need lots of people to sustain them. So you’ll have a process where you’ll have relatively small enclaves of very wealthy people who don’t need to care about or bother with the rest of the world. They don’t need much human labor to keep them at the top of their pyramids.

      Now, that’s unfortunate for the 99.9% of people who aren’t wealthy, but it is better for the planet because with fewer people there is less consumption and resource destruction.

    • thrig says:

      Malware and spam are also transferable to everyone who interacts with the Internet, but these drawbacks and diminishing returns are scarcely, if ever, mentioned under the standard narrative of progress, nor the huge costs necessary to design and manufacture the next generation of chips, among other such concerns. While the exponential rise in funny cat photos and other such augmentations of the human intellect may doubtless cheer some, others may recall when NASA had the most trafficked web server on the Internet. Speaking of which, what ever happened to space travel? Is it taking a breather for a decade, or four? Or does progress now point to bluetooth-enabled skillets with smartphone integration?

      • MarbleZeppelin says:

        Manned space travel has been replaced by robotic exploration, which makes sense. At this point there is little advantage to putting a man far out into space, mostly just a PR and ego thing now that computers and robotic probes can do a great job of exploring much cheaper, longer and do not need a return ticket.
        There is a lot going on at NASA, just not as popular with the people since they are too busy watching singing competitions and “reality” shows. No thought involved so they can escape the hum drum and stress for a while.
        There is also no national agenda that machines cannot fulfill right now.
        The real ground breaking work is being done at the environmental and biological level now, so interest is not high in the popular mind.

        • Excellent point. I have been saying this for nearly 30 years, when I was developing a proposal for my son to do a science project on space exploration (which he turned down). A fast overview of cost and benefit showed robotic exploration was the way to go. The space shuttle and the international space station were blunders.

          • John B says:

            The Earth will likely get hit by an ELE Asteroid long before the Sun begins to fuse Helium. Either way, we should learn how to live in space.

            It’s usually better to not wait until the last minute.

            • Either way, we should learn how to live in space.

              That’s going to be one hell of a learning curve, there is no air in space. When you go to space, you must take everything you will consume while there, with you from earth. That includes the air you will need to breath, the water you will drink. And if you ever step outside without your space suit, you will explode.

  3. Philip Backus says:

    Hi Ron, As to the last graph do you find any evidence that would support this projection in any real way? If so please tell me. Again congrats on making the list…more than well deserved in my opinion.Lots of good debate, peer review of connents, and a backup with good evidence. Much respect, Philip

  4. Dr. Don says:

    Yes we have all lost confidence in anything the government says. That’s what happens when you start lying you just can’t stop.

    • Watcher says:

      There are layers to that. Govt employees don’t look in the mirror every morning to shave and know they are going to get on the Metro and go to work that day to lie to the public.

      The mechanism has to be systemic. Redefinitions, seasonal adjustments, interpretation of regulations.

      “It is in the interests of no one to enforce that regulation.” And thus mark to market was not enforced and changed. The result? Nobody died. They might have otherwise.

      But after one applauds the event for avoiding death, one must not get carried away with the applause. It’s still absurd whimsy and deception. Don’t find yourself believing your own propaganda.

      As for oil reporting . . . come on, guys. This stuff has been pumping 100 years. Do you really think that after 100 years of methodology development the number of barrels flowing can’t be counted? The presence of dispute and variance points obviously at some agenda in place. For the stuff above, OPEC governments would usually want to under-report output because of their production quota. The exception being, of course, Iran.

      One does wonder what the agenda is for whatever/whoever secondary sources are. No reason to think they are clean.

    • Dennis Coyne says:

      Hi All,

      The Short term energy outlook matches the weekly output data quite well. The weekly data is a pretty rough guess and it is never revised so the weekly mistakes look very bad. The monthly data does get revised and is the EIA’s best current guess, the Drilling Productivity report is not very good at all and does get revised eventually, but for Jan to April has badly overestimated output.

      For the Bakken Three Forks North Dakota has 1130 kb/d and Montana about 47 kb/d for a total of 1180 kb/d in March, the Drilling Productivity Report(DPR) guesses that output is 1312 kb/d, about 11% too high.

      For the Eagle Ford we have to guess, but my Feb 2015 guess was about 1410 kb/d and March was probably similar based on completion data from the RRC (oil wells on schedule as reported by the RRC, not sure of the accuracy). The DPR has the eagle ford at 1711 kb/d in March 2015, I think this is too high by 21%.

      I have no guess for the Niobrara so we will assume that the DPR is correct for that LTO play and for the Permian Basin as well because I do not have New Mexico data, only Texas.

      For the Bakken/Three Forks and Eagle Ford the DPR is about 420 kb/d too high. The July 2015 estimate in the DPR is likely to be more accurate than March for the Bakken/Three Forks and Eagle Ford, but they will still be 170 kb/d too high.

      I have said this before, the DPR is not very good. The monthly energy review (MER) is not perfect, but it is much better than the DPR. The weekly estimate are also pretty bad, but they are better if the 4 week averages are used (this averages out the bad readings, the individual weekly data is very noisy and I ignore that data.)

      • AlexS says:

        Dennis,

        In the DPR, they give estimates for “Bakken region”, “Eagle Ford region”, etc., so they include production in those regions outside of the named plays
        Still, their estimates are not good

        • Dennis Coyne says:

          Hi AlexS,

          Thanks, I had missed that footnote. That makes it harder to judge the DPR, and makes the report less useful. As most of the changes in output in these “regions” are due to LTO output, the best way to attempt to judge the report is to look at changes in output rather than the absolute levels of output. For the Bakken region, we could take all North Dakota and Montana output, for the Eagle Ford it is a bit trickier, I would probably just consider the changes in output.

          I find the DPR pretty useless, probably will just ignore it.

  5. Nick G says:

    Ron,

    Can I make a suggestion? If you’re going to listen to people who are worried about credit problems, you should really read the generally accepted wisdom on the subject, which has to include:

    “This Time Is Different: Eight Centuries of Financial Folly”.

    We see that the world has seen credit bubbles for many centuries. Banks default. Countries default. Some countries continually default: Greece has been defaulting every 25 years, for 200 years.

    It’s nothing new.

    • Nick, I do regard debt, not necessarily credit, to be a very serious problem.

      The difference between credit and debt is essentially a story of “before” and “after.” Credit is the ability to borrow money, while debt is the result of borrowing money. When you use credit, you create debt. And the more responsible you are at managing your debt, the more access you may have to credit in the future.

      However there are more serious problems facing the world. I will be talking about those other problems in my post on the subject of collapse or sustainability, not debt.

      • Nick G says:

        It’s kind of a chicken and egg thing.

        People are worried about a credit crunch, caused by excess debt.

        • Hickory says:

          I have been observing this monetary/debt issue for awhile, and pose the following possibility-
          Is not the accumulation of excessive debt just a manifestation of a culture overreaching in its attempt to grow, borrowing capital to push the boundaries of growth beyond what it could accomplish with more conservative levels of spending? If so, we should expect debt to be an escalating issue as we bounce up against the global limits of resources and exceed the carrying capacity of the earth.
          Debt [excessive] can thus be seen as a symptom of an economic system reaching its peak.

          • Nick G says:

            Is not the accumulation of excessive debt just a manifestation of a culture overreaching in its attempt to grow

            Not really. If we were reaching limits to growth due to commodity scarcity, the prices of commodities would be high, and we’d be seeing inflation. We’re not.

        • old farmer mac says:

          I have bought my own copy of ”This Time It’s Different”.

          The long term norm in respect to debt and government is about like the norm involving governments and war. Peace is more common than war but war is pretty much always with us.

          Government defaults are far far more common than most people suspect – probably at least an order of magnitude more common. Most of the governments that have defaulted have survived and gone right back to borrowing within fairly short order.

          My take is that debt is a hell of a problem but nothing more than a pimple on the ass of the resource depletion problem and the environmental destruction problem.

          Most of the debts that exist these days are NEVER going to be paid. In essence all this means is that the people who own the debt are not nearly as rich as they think they are. Their gilt edged bonds are not going to be redeemable for more than a fraction – maybe a small fraction -of their face value at some point.

          Nobody knows how the politics of debt are going to work out. Conservatives exhibit a tendency in some cases to turn into liberals once they quit paying taxes and start living off of the largesse of the welfare state – social security , medicare medicaid now Ocare reduced property taxes etc etc. .

          I am not argueing that the money given to any one individual is all that important but rather that many tens of millions of people are getting or going to get these tax paid bennies- and this country is after all more of a democracy than a plutocracy regardless of the opinions of some members of this forum.

          Social Security passed, Medicare passed, Ocare passed. Rental assistance passed. Food stamps passed. Free school lunches passed. Universal tax paid education passed. Government subsidies enabling people to buy houses for almost nothing down passed. Civil Service passed.

          Such things are seldom taken away once granted. I am not sure the welfare class , the working class, the middle class and the old folks can FORCE the government to continue to pay for their bennies- FOR MY BENNIES since I am now an old fart myself – but I think betting against the power of the ballot box is a foolish bet. My bet is on the people rather than the one percent in the end

          Wealth – real wealth – is far more likely to be redistributed over time than it is to continue to accumulate in the hands of the top one percent. The fact that the one percent OWNS so much does not mean that same one percent can actually spend what they own. A rich individual can wear only so many clothes, live in so many houses and drive only so many cars and eat only so much.

          Whatever they discard trickles down. I know people who work by the hour for peanuts who drive luxury cars – older ones to be sure but still very much luxury cars.

          If it helps to think of a rich man as a dog covered with ticks and fleas and the ticks and fleas consisting of his lawyer , cpa, dentist, tailor, mechanic, pool boy, gardener, etc etc – then so be it. Most of the price of a yacht goes to pay the wages of the people who supply the materials in it and who actually build it.

          We hear that APPLE is worth so many billion bucks – but let us suppose Apple vanished off the face of the earth tomorrow. There would NOT be a shortage of computers or smart phones for more than a few weeks, maybe not even that long. What I am getting at is that a FEW of the people who own APPLE can cash out. The vast majority cannot. If the majority all tried to cash out the price of APPLE would crash in a flash.

          Likewise all the debt held by the various owners of it cannot be redeemed. There is no real wealth in existence with which to buy up the debts of the world.. In essence… most debt is nearly worthless … and nearly nothing is all it will bring if it must be sold once the world figures out it CANNOT be repaid.

          The most the owner of a big bundle of debt can hope for in my opinion is to keep on collecting the interest. If the interest rate is four percent and inflation is raising the prices of the things he buys by four percent he is losing not only in terms of current cash income but also likely to lose his capital as well some years down the road. When things get bad nobody is going to want to buy his bonds.

          There will be a general round of defaults.

          After a very few years the big players, mostly governments, that default will be borrowing again.

          • Rune Likvern says:

            OFM,
            Interesting observations and thoughts.

            ”After a very few years the big players, mostly governments, that default will be borrowing again.”

            From whom?

            • old farmer mac says:

              The same people they borrowed from before- the people of the country.The people of other countries. In some cases the money is IN EFFECT borrowed from every body who owns the currency of that particular country by means of that country simply PRINTING more currency. Each unit printed reduces the value of each previously existing unit.

              MONEY is not a concrete physical resource. IF I loan you a dollar and you deliberately fail to repay me, basically all this means is that you earned that dollar by swindling me rather than working for it. This does not change the amount of existing physical or concrete resources in the world- it only redistributes them.

              If it helps think of the history of a troubled family that fights with the various members going their own way. After a while they very often get together again. I have known of some children being bailed out three times over a couple of decades or so by forgiving parents who have managed to forget that they were not repaid the first two times.

              I have friends who are landlords who occasionally fail to collect a few months rent. The VALUE of the housing for that period was not LOST – it was merely collected by or transferred to the dead beat tenant.

              The really DISRUPTIVE problem with default is the effect it has on CONFIDENCE- it takes a good while for people to start lending again. But they inevitably do start lending again. Basically they have little choice except to either lend or undertake the DIRECT management of their excess earnings.

              When a bank loses a million bucks loaning it to somebody living really high on the hog who spends it to support his flashy lifestyle and then loses his high dollar job – the loss of the bank becomes the ( past ) INCOME of the person who consumed that million. The defaulting borrower IN EFFECT EARNS the million the bank loses. There is no getting back the life he lived on that money.He CONSUMED it.

              Think in terms of chemistry. The atoms and molecules involved in a reaction are NEVER lost into the ether. They just wind up in DIFFERENT places.

              Money that is not repaid does not DESTROY anything with a physical existence- not in a direct sense at least.

              The world is a fluid place with old fortunes always being lost and new ones always being created, often out of the ruins of the old.

              Specialization is the KEY or one of the KEY components of all economies more advanced than those of hunter gatherers. The more SPECIALIZED you get to be the LESS time you have to become expert in managing any excess assets you cannot use directly in your own line of work. Hence you either loan these assets or buy an ownership interest in some other specialist business enterprises. Lending simplifies this choice enormously – so long as the borrower does NOT default and the government does NOT inflate the hell out of the money.

              Sorry I cannot do a very clear job of compressing these concepts into a few short sentences.

              Read the book if you have time.If you don’t then you are experiencing an up close and personal encounter with the specialization trap , lol.

              It IS a real eyeopener- because it is based on little known hard historical data that is NOT going to be refuted.

          • Strummer says:

            “A rich individual can wear only so many clothes, live in so many houses and drive only so many cars and eat only so much.”

            But he can own unlimited amount of land, homes, apartment houses to rent out, factories, mines and all other sorts of real capital.

            • Ralph says:

              The amount of land, homes, factories etc. is limited. None one is making new land (apart from China in the South China Sea) and the more the rich own, the less for the rest of us. Owning land is meaningless unless it is used productively, and to grow food or house people so that rent can be charged . In a finite world the rich can only get richer by making the rest of us poorer, and in a contracting world, the we will be getting a lot poorer .

              • old farmer mac says:

                ” In a finite world the rich can only get richer by making the rest of us poorer, ”

                This has proven to be patently untrue so far and will likely prove to be untrue for some time to come yet.

                The long term is a different ball game and you may be right in the long term. Or the people of the world may just seize the accumulated wealth of the one percent. If they do , they will find out it is MOSTLY a mirage.

                They may not OWN all that wealth but in effect they are CONSUMING it just the same to a very substantial extent in a very real sense. They live in the houses , they stay in the hotels and resorts, they eat in the restaurants.

                When I was a poor kid I played with home made slingshots and my Daddy’s real farming tools. When I got old enough and big enough I MADE a go cart out of an old garden tiller engine , some boards, some iron wheelbarrow wheels and some assorted bits and pieces of scrapped machinery.

                The poor kids around here these days have their own televisions and computers. My part time farm hands kid has a motor bike , a computer, a cell phone and a tv of his own. My part time farm hand has air conditioning in the ” trailer” he lives in.

                I was back home as a university grad well before we ever had an air conditioner in our family home.

                We could have had ac many years sooner – but the real difference is that we are savers and investors where as my farm hand is a day to day CONSUMER who refuses to think more than a couple of days ahead. Generally speaking he wants to borrow fifty or a hundred bucks to manage his child support bill on the day it is due.

                I loan it to him, month after month, and he pays it back via my withholding half his daily pay for the next few days. We only work a few hours at a time and seldom more than two days consecutively. He works for other people as well of course.

                • Strummer says:

                  “If they do , they will find out it is MOSTLY a mirage.”

                  When you look at the history of civilization, the vast majority of it was spent living in feudalism, or similar forms of society. When you own land, water sources, resource mines, you can control whole civilizations. The current “free society”, without slavery or serfdom is a tiny, almost negligible fragment of history. Those empires have lasted for thousands of years, and the wealth of their ruling classes was definitely not a mirage.

                  • old farmer mac says:

                    The wealth of the one percent class is in a very real sense a mirage in many cases. The people that own EXON own something that is damned near irreplaceable,at least in the short to medium term, but the people that own Apple own a mirage of sorts.

                    If Apple were to disappear in a puff of smoke a few weeks there would still be PLENTY of computers and plenty of software available.

                    Ditto brand names such as Coca Cola. When times get really tight people will start buying generic or store branded soft drinks – if they are can afford soft drinks at all.

                    The Apple and Coca Cola sort of wealth has no solid foundation in physical reality in the sense that Exon owns real physical assets. Patents and copyrights eventually expire. Reputations are not forever.

                    This is not to say that I expect either Apple or Coca Cola to go broke anytime soon.I don’t.

                    When peak oil eventually takes a huge bite out of the ass of business as usual- and it WILL eventually – airline stocks are going to go pretty close to ZERO barring a miracle on the synthetic fuel front.

                    The population of Tokyo is going to start declining pretty soon unless maybe the yokels from the villages move to the big Nipponese Apple. With fewer and fewer residents but the housing stock little diminished, the price of a house in Japan is going to start falling like a rock one of these days.

                    Lets suppose all us relatively poor folks could just seize the wealth of the entire one percent. Just HOW does anybody suppose this would raise their living standard over the long haul? Doing this would merely TRANSFER the ownership of these rich folks to the rabble – the rest of us. Doing so would not increase the number of houses or the numbers of doctors or the amount of food in stores or the number of flights in and out of the local airport.

                    Sears and Roebuck was the big retail dog when I was a kid. You bought a lot of your stuff stuff from Sears sight unseen since the local stores did not and could not stock all the things in that big catalog. Sears will soon be history. ILLUSORY wealth, Sears stock. In a sense.

            • old farmer mac says:

              ”But he can own unlimited amount of land, homes, apartment houses to rent out, factories, mines and all other sorts of real capital.”

              OR he can LOAN his money on these assets – which is vastly simpler and easier to do. Becoming a competent lender is VASTLY simpler than becoming a competent manager of many different kinds of assets. See my six o four comment just upthread. Specialization is both a boon and a bear trap.

          • Anonymous says:

            “Wealth – real wealth – is far more likely to be redistributed over time than it is to continue to accumulate in the hands of the top one percent. ”

            Not true. The nature of capitalism is that wealth flows upward over time, especially when return on capital > the growth rate. Marx and Piketty are worth a read. People forget that Marx was an astute observer of capital, and that he got it more or less correct. Whether or not capital will go peacefully is a different story.

            The only reason wealth has been distributed downwards is thanks to those programs you stated.

            • old farmer mac says:

              History says different. I am not fond of the very rich or even the moderately rich element but they do not have a permanent lock on the resources of the world.

              Every once in a while they lose their heads as well as their riches. History is NOT over. And the OWNERSHIP of most of the corporate wealth in a country such as the USA is actually pretty well distributed among the middle class in the form of pension funds , retirement accounts and other paper assets.

              Let us not forget that a married couple who are teachers in a lot of public school districts are actually quite well off considering that they get pensions and health care etc.I know a few who have combined salaries close to one hundred and fifty grand – for two hundred twenty days work.

              The one percent does not actually LIVE all that much better than the professional middle class or even the upper portion of the working class. I am a VERY long way from well off but I have cable internet cell phone a car and money enough to eat out etc. I have central heat and air conditioning and a SUPERB view and a large lawn. I can afford a housekeeper once a week.I could do a bit of traveling if I were free of family obligations.

              Generally speaking I find that most people who complain endlessly about the rich don’t make much effort to get to be well off themselves. I have plenty of acquaintances who have spent enough on beer and cigarettes over the years to have gotten moderately rich if they had invested their bad habit money.

              When you get right down to it, except by the standards of the envious , I am rich myself according to any sensible and realistic standard. I sure as hell would not trade lives with a rich man who lived as recently as even seventy five years ago. Lots of health issues that might have killed me back then are minor problems today.

              Except for the badly overpopulated third world countries most people have been getting to be BETTER OFF in recent times in comparison to the rich. Unfortunately this trend has been reversed recently in most well off countries. But there is no particular reason except pessimism to believe this reversal will stand forever.

    • Sam Taylor says:

      The aftermath of which work was Reinhart and Rogoff constructing their completely nonsensical 95% public debt to GDP ratio, with that famous and deeply flawed paper, the result of which has gone on to cause so much harm in so many unforseen ways around the globe.

      However the book itself is decent enough.

    • SatansBestFriend says:

      Yes, debt defaults have happened throughout history. That is good evidence why we can expect it to happen again, when guys like Krugman tell us there are no problems with going into debt.

      That doesn’t mean we shouldn’t be concerned.

      The global monetary system is fiat dollars + credit. The vast majority of the money supply is credit extended by banks and governments.

      If people/governments start defaulting, the global money supply is going to DEFLATE.

      Then interest rates will likely sky rocket, because people will be scared to lend their DEFLATED currency to anyone who can’t pay them back.

      No big deal, right Nick G?

      stop ignoring Satan,
      SatansBestFriend

      • Nick G says:

        No one is saying that another credit crunch induced Great Recession would be “no big deal”. Krugman doesn’t say that – he says that that risks of doing nothing/austerity are rather greater than the risks of stimulating the economy.

        The general idea: we’ve faced credit & debt bubbles/crunches many times before, and we’ll have more in the future. It won’t be fun, but we’ll get through them.

        • SatansBestFriend says:

          We only owe the money too ourselves and interest rates are at all time lows.

          Krugman

          Sorry Nick, I interpreted your previous post as saying debt defaults weren’t a big deal.

    • TechGuy says:

      Nick Wrote:
      “We see that the world has seen credit bubbles for many centuries. Banks default. Countries default. Some countries continually default: Greece has been defaulting every 25 years, for 200 years.”

      Exccept nearly every country is now swimmng in debt and becoming insolvent at the same time. Its very likely when one Major industrial power defaults, the rest will follow like dominos. The last time this happened, the world plunged into the great depression, which lead to WW2.

      2000 – Stock bubble crisis
      2008- Housing Bubble crisis
      2015-2017? Sovereign debt crisis (I don’t know when it will begin, but it will eventually happen)

      Where do interest rates go when there is a financial crisis, and interest rates are already set at zero?

  6. AlexS says:

    Some interesting information on Saudi Arabia’s oil production capacity.
    Key takeaways:
    – The Kingdome is not planning to increase capacity
    – The sharp increase in drilling activity is aimed at maintaining current capacity, not increasing it
    – Saudi Arabia cannot produce 12-12.5 mbd (estimated level of production capacity) with existing wells, it should drill new wells to get there (probably, a lot of new wells).
    – the decline rate of the existing production base is 4-6% p.a.

    KSA stops oil expansion program, switches to natural gas

    http://www.saudigazette.com.sa/index.cfm?method=home.regcon&contentID=20111125112714

    JEDDAH — Saudi Arabia has stopped $100bn expansion of its oil production capacity after reaching a target of 12m barrels a day, the Financial Times said on Thursday.
    The Times said in an online story that the Kingdom believes new oil resources like Libya will meet rising demand.
    The Times quoted Khalid Al-Falih, chief executive of the state-owned Saudi Aramco, as saying that pressure on the Kingdom to raise its output capacity had “substantially reduced.”
    It said the comment was an indication that Saudi Arabia is not pushing ahead “with an assumed expansion plan” to produce 15 million barrels a day by the end of 2020.
    Including the oil fields in the neutral zone between Saudi Arabia and Kuwait, Riyadh can produce up to 12.5 million barrels a day, the Times said.
    “The comments put a cap at least temporarily on a $100bn expansion program that started in the early 2000s when Saudi was able to produce about 8.5m b/d,” the Times said.
    Riyadh boosted its oil output to 10 million barrels a day earlier this year, the highest in 30 years, to compensate for the loss of production in Libya, the Times said.
    “There was pressure on the Kingdom and Saudi Aramco to raise production [capacity]. That pressure, I think, has been substantially reduced,” it quoted Al-Falih as saying.
    Falih told the Times and Saudi Aramco was shifting its spending priorities from oil production into natural gas, refining and the chemicals business. “The downstream [refining] is increasingly growing in scale to equal, and sometimes eclipse, the level of spending we are doing in upstream [oil production],” he said.
    ========================================================

    Saudi oil minister ‘100 percent comfortable’ with market: al-Hayat newspaper

    Jun 5, 2015
    http://www.reuters.com/article/2015/06/05/us-opec-meeting-naimi-idUSKBN0OL08F20150605

    Saudi Arabian Oil Minister Ali al-Naimi said he was “100 percent comfortable” with the oil market, in terms of supply and demand, the Saudi-owned al-Hayat newspaper reported on Friday.
    ………………………………………..
    “I know the oil trading sector well, today the world consumes 93 million barrels per day (bpd) and if we deduct liquids and others, the global consumption reaches 75 million bpd and the annual natural decline rate is 10 percent which means the world loses every year 7.5 million bpd so you can compensate these volumes through drilling new wells.”
    Naimi also defended the decision taken at OPEC’s last meeting in November not to cut production in the face of falling prices, saying it was built on predictions that had proven to be true.
    Saudi Arabia, the world’s top oil exporter, had said at the time it would no longer cut production to keep oil prices high.
    Naimi also said Saudi Arabia’s spare capacity was still at the level of 1.5 million bpd.
    “The basic system of our production capacity is that we need if we wanted to go up to 12 or 12.5 million bpd, which is our production capacity, we need 90 days to move rigs from exploration work over to drill new wells to raise production. Its an estimation we have done in the past, but many people don’t want to understand this and claim we don’t have production capacity at this level and this is not true.”
    In answer to a question about whether the kingdom had increased the rate of its drilling lately Naimi said: “What is being said is not true, in reality the natural rate of decline in wells in Saudi is the lowest in the world, between 4 and 6 percent”
    ======================================

    Will Saudi Boost Oil Capacity? Naimi’s Retort: Show me 10% Return

    6/4/2015
    http://www.rigzone.com/news/oil_gas/a/138951/Will_Saudi_Boost_Oil_Capacity_Naimis_Retort_Show_me_10_Return
    VIENNA. June 4 (Reuters) – When it comes to whether Saudi Arabia will invest billions of dollars to increase its ability to pump more oil, boosting the world’s only large stand-by reserve, minister Ali al-Naimi has a quick answer: show me the return.
    Naimi, speaking informally to reporters in Vienna on Thursday, was asked whether the kingdom needs to lift its capacity now that it is pumping crude at its fastest rate in over three decades to meet a resurgence in demand.
    The country last embarked on a $100 billion push to raise its capacity a decade ago amid a price boom fuelled by China’s growth. It can now pump as much as 12.5 million barrels per day (bpd), scarcely 2 million bpd above current output.
    With casual banter, Naimi responded: “Is there demand for Saudi crude? Can you guarantee it? If I go and put a dollar, will you guarantee that I would get 10 percent on that dollar?”
    He added: “I don’t want 16 percent, just 10 – can you guarantee that?”
    While his comment sheds little light on the kingdom’s internal discussions about possible future investments, the question is more relevant than ever as the world’s spare reserve shrinks to its smallest in seven years just as unprecedented regional political tensions are raising new risks.
    Some analysts warn that the recent price crash – which has reignited demand and slammed the brakes on much global investment – may be sowing the seeds of another supply squeeze as early as next year.
    It may also reflect the financial considerations being made by the world’s biggest oil exporter as it navigates a new market order, one it created last year by saying the kingdom would no longer cut its own production to shore up prices – although it will continue to meet new demand from its customers.
    Saudi officials have consistently brushed aside questions of new upstream investment. After finishing the kingdom’s programme to add nearly 4 million bpd of capacity in 2009, Saudi officials and oil company executives have talked on and off about the possibility of targeting another boost to 15 million bpd by 2020, but those plans were shelved several years ago as demand growth cooled and new supplies emerged.
    Not that the kingdom has been idle. It launched a $35 billion five-year exploration and production investment plan in 2012 meant to sustain its current capacity.
    While the number of U.S. oil rigs has fallen by more than half since last year due to low prices, those drilling in the Middle East have risen to near the highest in records going back to 1975, according to Baker Hughes data.
    More than 400 rigs are operating in the region, a more than 10 percent rise from 2013, with just over half of those in Saudi Arabia.
    Much of Saudi Arabia’s international influence has derived from a role often described as the oil equivalent of a major central bank, since it holds nearly all of the world’s spare capacity – an emergency reserve that this year has dwindled to its lowest since 2008 as the kingdom steps up output to cover shortfalls in places such as Iran and Libya.
    “There’s not a lot of spare capacity left in the world.” said Dr. Gary Ross. executive chairman of New York-based PIRA Energy Group. “The last time they pursued this kind of philosophy in 1985 they had 10 million bpd of spare capacity.”

    • – The sharp increase in drilling activity is aimed at maintaining current capacity, not increasing it.

      – the decline rate of the existing production base is 4-6% p.a.

      Those new wells are going into those same fields where the decline rate from existing wells is 4-6% p.a. They are not finding new oil, just sucking oil from the old wells a lot faster. That can be compared to being able to write withdrawal slips a lot faster in order to get your money out of the bank a lot faster.

      • Doug Leighton says:

        “They are not finding new oil, just sucking oil from the old wells a lot faster.” Which is exactly what you’ve been saying for how long now? And in how many places is the same thing happening?

      • They are going into the same fields, but I believe they are justified in part by increasing recovery factor and in part by rate acceleration effects (this is the way it usually works).

        If you guys want me to I can sketch a simple diagram to show you how this could work in a high quality carbonate reservoir interbeded with lower quality rocks.

        • Doug Leighton says:

          What are “rate acceleration effects”? Is this the same as “creaming”? I remember re-shooting old reservoirs a couple of times to identify pockets of oil/gas so valuable reserves wouldn’t be stranded when the field was finally abandoned. Never heard the phrase “rate acceleration effect”. Of course my background was exploration rather than production. And drilling horizontal holes along the crest of reservoirs was only done after I had retired, as far as I know.

          • Dough, let’s say we have a field with 20 producers and 14 injectors. We run the reservoir model using three geomodels, 25 times each. That gives us a 75 run ensemble. The p50 result is 52 % recovery factor.

            Then we spot 5 extra producers and 8 extra injectors. Run the same three geomodels by 25 runs. The ensemble P50 result is 55 % recovery factor. But having the ability to cycle pore volumes of water at a faster pace accelerates recovery. The case with 13 extra wells requires 28 years to reach the economic limit versus 34 years for the “base case”. So we get the oil production curve front loaded with a steeper decline.

            The eventual choice depends on the economic analysis. Quite often when we see oil prices climb we tend to do this type of project. It’s a partial rate acceleration and partial improved sweep effect.

        • I have no doubt that some oil will be recovered that would eventually be left behind has no infill wells been drilled. I have no idea what percentage of total recovery this might be but I would bet it would not be very high.

          Yes, I would be very interested in any light you could lend on this subject.

    • shallow sand says:

      AlexS. Very interesting. When traders realize there is no spare capacity outside of what is shut in due to war, such as Libya, price could spike. I figured if KSA could ramp up to 12 million they might have done it if they wanted to bury the competition. I wonder if about 10.5 million is the max.

      Not to go way off topic but I noticed Plains Marketing LP did not have a posting for either Williston Basin Light Sweet or sour today. Does that relate to your post at the end of the last thread about strong Midwest demand rapidly moving up basis?

      • AlexS says:

        shallow sand,

        Plains Marketing LP is no longer publishing data for Bakken crude. From their bulletin:

        “Effective 6-1-2015 Plains Marketing L.P. will no longer publish the following Postings: Williston Basin Sweet, Williston Basin Sour, Wyoming General Sour, Wyoming Asphaltic Sour, Utah Black Wax, Colorado Western, DJ Basin”

        Plains’ data is very close to ND DMR numbers for Bakken sweet crude, both represent wellhead prices.
        Their latest data show a narrowing of the differential between Bakken wellhead price and WTI from $15-18 in June 2014 – mid-April 2015 to $10-11 in mid-April – May 2015. I do not know what exactly caused a sharp rise in Bakken crude price in mid-April. In May it was trading near $50/bbl, which means that most of the Bakken new output is now breaking even at the single well level (but not at corporate cashflow level).

        As regards the “Clearbrook, Minnesota WTC-BAK” (mentioned in the article I reposted in the previous thread) it is several dollars higher than wellhead price and is now close to WTI. It’s the price at pipeline hub at Clearbrook, Minnesota, and I think it close to Platts’ data for Bakken crude.

        Williston Sweet crude vs. WTI price
        Source: Plains Marketing LP, EIA

    • Enno Peters says:

      Very interesting Alex, thanks.

      I was really surprised to see the level of clarity in the words of al-Naimi:
      – Spare capacity. So the spare capacity is just the possibility to drill new wells in existing fields. I don’t think that anywhere else in the world spare production capacity is defined as including additional production facilities that can be build. In this sense, how much spare capacity does the US have? I guess also at least 1m bpd.
      – Return on a dollar. Also a very interesting statement: “Can you guarantee me a 10% return?”. How does this reconcile with the “break-even” costs mentioned everywhere of less than $10/bbl in Saudi Arabia. It shows that the cost of new production in SA is also much higher now, which makes of course also perfectly sense.

      Now that a larger share of new world production is coming from unconventional sources, the natural annual decline rate must have been creeping upwards. For the US, I estimate it must be quite close to 20% now: According to Ron’s recent article, the US has roughly 5.5 m bpd in shale, and 4.1 m bpd in conventional production. If the shale decline is similar as in the Bakken, where the total field declines with 30% a year, and the conventional part declines with just 6% annually, we are already at almost 20%. That means that the natural decline rate in the US has grown a few percentage points a year.

      • Jeffrey J. Brown says:

        If the shale decline is similar as in the Bakken, where the total field declines with 30% a year, and the conventional part declines with just 6% annually, we are already at almost 20%

        I agree that approximately 20%/year is probably a reasonable estimate for the current gross decline rate from existing US oil production, in the absence of new wells.

        If we stipulate a steady state US production rate, a 20%/year gross decline rate would require the US to approximately put on line the productive equivalent of current Saudi C+C production roughly every five years, just to maintain current US C+C production for five years.

        As I have previously mentioned, according to the EIA the observed rate of decline in Louisiana’s annual marketed natural gas production from 2012 to 2014 was 20%/year (falling from 8.1 BCF/day in 2012 to 5.4 BCF/day in 2014). This would be the net change in production, after new wells were added. The gross decline rate (from existing wells in 2012 and 2013) would be even higher. Citi Research put the overall gross decline rate from existing production at about 24%/year.

        The EIA put US dry natural gas production at 70 BCF/day in 2014 (25.7 TCF/year). At a 24%/year gross decline rate*, in order to maintain current US dry gas production, the US has to put on line the productive equivalent of total Middle East 2013 dry natural gas production (23 TCF) over the next four years (again assuming a steady state production rate, so that we would be declining against a constant production level).

        *At 24%/year, we need about 17 BCF/day or about 6 TCF/year of new dry gas production, just to maintain current US dry gas production; or in other words, we would approximately need the productive equivalent of a new Marcellus Play every single year.

      • Mike says:

        Enno, 5.5M BOPD, really? I don’t doubt that but if you have time to break that down per the 3 shale regions, I’d be plenty grateful. Thank you.

        Mike

        • Enno says:

          Hey Mike,
          Probably not all of it is shale, but I just follow Ron’s numbers here, from his previous post:
          http://peakoilbarrel.com/the-eias-drilling-productivity-report/

          • Mike says:

            Of course, Enno; I should have taken the time to look. Its the PB production that throws the total unconventional production # much higher than I imagined. I agree with you, and am sure MBP would as well, some of that stuff out there is really pretty conventional, just drilled unconventionally.

            Thanks.
            Mike

          • Dennis Coyne says:

            Hi Enno and Mike,

            The DPR for March was too high by at least 400 kb/d.

            My Guesses for March 2015

            Eagle Ford ….. 1400 kb/d
            Bakken/TF …. 1180 kb/d (includes MT and ND)
            Permian …. 1300 kb/d (assumes NM Permian = 200 kb/d)
            Big 3 total ….. 3880 kb/d
            Others ……….. 550 kb/d
            Grand total …… 4430 kb/d

            Others are Niobrara, Haynesville, Marcellus, and Utica formations where I simply used the Drilling Productivity report’s guesses.

            For the Permian basin my guess is that the Texas portion has about 1500 kb/d total and that 400 kb/d is conventional output, so 1100 kb/d for LTO TX plus 200 kb/d (very rough guess) LTO New Mexico, for 1300 kb/d total LTO. For comparison the DPR estimates 1600 kb/d LTO for the permian basin (if we assume the conventional output is included in the 2000 kb/d DPR Permian Basin guess).

    • wake says:

      I saw but cannot refind his comments on natural rate of decline, which he put at 4% for SA and 10% globally

      I do not know if that term has a definition, and I know the issue has been discussed recently here.

      I am curious about whether natureal means no new holes or workovers or what
      I am curious about global rate of decline
      1. with no activity
      2. with workovers and additional drilling within existing fields but no new fields

      I wondered if he had shed light on that

      • Depends on what you define as a “workover”. In most operations we carry a workover expense line item. This is fully tax deductible and doesn’t have to add reserves (it’s only intended to bring the well to top conditions).

    • John Keller says:

      Oil is headed higher. Every news article these days focuses on oil supply. Every day there is a mention of glut. However, nobody is talking about demand except Saudi Arabia. Texas, which represents 10% of US gasoline demand, had gasoline tax receipts up 10% in January y-o-y. Looking at import numbers, China was up 700k (it was down in May because of refinery turnarounds), India up 300k, Japan up 300k. US is probably up 500k. World oil demand is probably up over 2mm barrels per day. 2nd half of the year is seasonally stronger for oil demand. VLCC tanker rates are hitting highs not seen in many years. On Frontline LTD’s conference call, the CEO said he did not see any African cargoes having difficulty finding homes.

      • shallow sand says:

        IEA just put out report expecting world wide demand to be up 1.4 million bopd in 2015 from 700,ooo in 2014, or roughly double.

        Some issues I see in keeping up with demand growth spurred by lower prices:

        1. US appears to have leveled off, but working through completion backlog is helping offset decline. When that backlog is worked off, could be a big drop. Note Apache, which has zero rigs running in EFS, but is still working through well completions there.

        2. As Ron showed in last post, world wide rig count has dropped quite a bit in last year. Assume many of those are longer term, higher EUR wells than US shale.

        3. In conjunction with 2., majors have cut CAPEX big time and seem to be favoring a return to US shale.

        4. Recent reports about Canada indicate many tar sands projects put on hold. Trade group seeing lower output in 5-15 year range (although I think comments here indicated the trade group is not always very accurate with projections).

        5. As Mike has stated quite often US shale will struggle with volatility and unpredictable oil prices.

        6. US natural gas prices seem to be stuck below $3. Until that changes, also puts pressure on US “oil” shale as gas production does less to help with economics than it does at $5+. Would seem to apply more to EFS and Permian than Bakken.

        7. US shale firms are debt laden. If interest rates rise over next 5 years, puts a lot of pressure on bonds, maybe be more difficult to borrow more.

        8. In conjunction with 7., there have to be major reserve write downs coming in early 2016, if not before. PV10 has to take a bath. If WTI stays below $70 through year end, I guess PV10 drops by half or more for US shale companies. Again, just a guess, but if this is the case, many will owe nearly as much or more than PV10. Would think that would surely limit new development.

        9. I admit I know little about North Sea, but from what I read, appears that production is suffering greatly and therefore likely that decline continue.

        10. Alaska looks like it will continue to decline.

        11. Brazil’s state owned oil company is a mess.

        12. Venezuela is a huge mess, as Fernando and others point out often. I am surprised their production is relatively flat. I could see an almost complete shut down occurring there, or something similar to Libya.

        13. Nigeria, Angola and Algeria struggling with low prices, majors investing less.

        14. KSA talk of ramping up production significantly appears to be just that, based on AlexS notes above.

        15. Libya is a mess.

        16. Iraq is growing production, but can that be counted on? From news reports, Iraqi Army is losing, US bringing in more support.

        17. Iran apparently going to add 1 million bopd, but that assumes deal with US and that they can ramp up that fast.

        I think oil market has discounted much of the above. Pretty much everything I note above is from information Ron and or others have posted/discussed here. I again thank Ron and many others for all the work, input and information shared.

        • Dennis Coyne says:

          Hi Shallow sands,

          Nice summary.

          In almost every case, higher oil prices tends to fix many of the problems. The lower the oil output, the higher the oil price will go, so many of the problems are self correcting.

        • Fabio says:

          18. Past oil supply/demand predictions have been a huge mess, no reason to think present ones won’t be a mess either

  7. Anonymous says:

    Saudi Arabia has wisely decided not to push ahead for a few reasons:
    1) Additional increases in production capacity will hasten the decline of its existing fields and shorten the lifespan of the monarchy.
    2) Additional production is likely to come from the neutral zone. Kuwait wouldn’t be too happy, and it might mean the end of OPEC.
    3) They can’t run their budget at low prices, so why would they want to boost supply by some 3 million over the next 5 years? The fracking boom has created a supply glut that will eventually be overcome by increasing demand. Saudi Arabia would rather sell 11~ million bpd in 2020 for $130~ a barrel than sell 15 million bpd at $85 or $90.

    2014 will be the last year, outside of a tremendous recession, where the increase of supply outweighed the increase in demand. A growth of 680k and a growing demand of 1.5 mllion means increasing price, period.

    All won’t be lost, however. I figure that Iraq, Iran, and potentially Kazakhstan can keep prices from getting too out of hand for at least the next 5 years.

    After 2020 the chance of a major oil-facilitated economic collapse increases every year. If we get through this period, we’ll see an end to growth and de-growth in most places around the world. Whether this means, necessarily, a drop in standard of living will be determined by politics.

    • Doug Leighton says:

      “Additional production is likely to come from the neutral zone. Kuwait wouldn’t be too happy, and it might mean the end of OPEC.”

      Why do you expect much additional production from the neutral zone and why would Kuwait be upset by any increased production from this area? An engineer friend of mine who works there on behalf of Kuwait suggests the opposite.

      Khafji was expected to average 270,000 bpd for 2013, so combined output from the partitioned zone likely fell to below 500,000 bpd. Last year, reported production reached 570,000 bpd. And Chevron was expected to commence their Wafra steamflood last year which could potentially produce a maximum of 80,000 bpd but no one has said Chevron plans to reach this target (Wafra contains heavy oil and not likely to be very profitable at current prices). In fact, I’ve never seen anything indicating significant new Saudi production coming from the neutral zone. Khafji was planned to maintain a maximum sustainable capacity of 300,000 bbls (with a fair amount of associated gas). I think the shutdown was related to some serious problems associated with this gas.

      • Anonymous says:

        Hm, okay, I looked into it in a bit more detail and you’re right.

        In any case, Saudi Arabia’s decision not to further build up its capacity will have a tremendous impact on prices in the coming years.

      • Saudi Arabia also has to manage its natural gas supply. I hear that may be the critical driver for them in the future.

  8. ezrydermike says:

    Ron,

    There is a lot of information over at resilience dot org

    • Thanks Ezrydermike, I used to check Resilience.org on a regular basis but then for some reason I just got out of that habit. But I just checked it today and there is an article on renewables by Richard Heinberg that is pretty good.

      • I’m leaning towards advocacy of geothermal power. It needs a lot of work, but it sure looks like a viable option in areas with hot rocks.

      • old farmer mac says:

        Resilience is mostly about other stuff but the site does run a good many excellent articles about fossil fuels. It is well worth bookmarking and visiting occasionally.

        It is also a superb source of links to TONS of other good sites.

      • Nick G says:

        The article by Heinberg is, as usual, not rigorous. He makes broad statements that are just unrealistic.

        For instance he states that iron making (and high temperature processing for solar panels and wind turbines) requires coal or natural gas, and that electricity is unproven. Oddly enough, most steel in the US is made with only electricity.

        He says silly stuff, like that PO means that food production must be localized. Apparently he’s never heard of trains, or electric trucks for short range movement of freight – despite the fact that electric trucks are an old and proven technology – heck, GM sold them very successfully from 1912 to 1918!

        He says that the preponderance of the research literature says that renewables will reduce mobility, increase the cost of goods production, and reduce the volume of goods production. Really? Peer-reviewed, rigorous research that contradicts the obvious fact that EVs are cheaper and better than ICEs, or that fossil fuels are far more expensive than wind and solar, even now before their cost plummet even more?

        Really not.

        • Oddly enough, most steel in the US is made with only electricity.

          Woah! Just a cotton minute here Nick. An electric blast furnace?

          STEEL: From Start to Finish

          Starting one minute into this six minute video: From bituminous coal we create coke….We seal the coal in air tight ovens, bake for 12 to 16 hours and remove it from the ovens as solid pellets of carbon… Then the mix the carbon pellets with the iron ore in a blast furnace…

          Nick that is how iron is made, and steel is made from that iron. It is made using mostly coal. No, steel is not made using only electricity.

          I knew you would have trouble with Heinberg’s article Nick. But I never dreamed you would say something like, “most steel in the US is made with only electricity”.

          There is no such thing as an electric blast furnace because the very definition of a blast furnace is a furnace where the ore is mixed with coke and blasted with air.

          And I don’t have the data but I would bet you ten to one that the coal is heated and turned to coke with natural gas. And that the iron is heated with gas as well when it is made into steel. Electric heat is extremely inefficient. Why on earth would they use electric heat when gas is so much cheaper?

          • old farmer mac says:

            Most of the steel made in the USA is recycled from scrap and this recycled steel is made almost entirely in electric furnaces. It has been a LONG time since I looked into this but I am thinking steel is recycled at about a ninety percent rate.

            Of course some virgin steel must be made from scratch using coke or charcoal so long as the amount needed continues to grow.

            If it becomes necessary we can produce enough biofuels to meet on the farm and food distribution needs but we sure as hell aren’t ever going to grow enough field crops to maintain the automotive centric lifestyle.

            Fertilizers in general and nitrates in particular are the killer resource issue when it comes to industrial agriculture.At some point we may well HAVE to recycle our sewage to recover the nutrients in it. That time could come within the life time of the younger folks in this forum unless the world population crashes and we give up most of our meat consumption.

            Food production is NOT going to be localized within the foreseeable future to any substantial extent so long as we have giant cities located in places such as Chicago and New York.

            The grain that forms the base layer of our food industry cannot be grown in sufficient quantities on the land available nearby using current technologies or any that are likely to be invented any time soon. There is not enough land nearby and the climate is all wrong for most crops.

            The technocopians who talk about vertical farms are dreaming because the capital expense involved in building high rise buildings means it just isn’t going to happen. NEVER MIND the fact that only one quarter or less of the space inside would get adequate sun. The rest would have to be artificially lit. Transporting food from far away fields will be cheaper by a mile for the foreseeable future..

            Most of the talk about food miles is bullshit except in the case of foods such as fresh air freighted fruits and veggies. Trains and heavy trucks move food efficiently enough for now at least. The family autos used to make trip after trip to the store consume the vast bulk of the energy used in transporting food.

            • You make steel from iron. When you recycle steel you are not making steel.

              • Nick G says:

                You can think of it that way if you want, but it will be your own private definition.

                The steel industry (and everyone else) very much thinks that they’re making steel, when they recycle scrap.

                In the same way, the car industry thinks that its making cars, even though 90% their materials are recycled.

                And the paper industry thinks it’s making paper, even when the bulk of their input is recycled.

                And eventually, the great majority of steel production will be recycled from scrap.

                And, the relatively small amount of iron needed can be produced with electrolytic hydrogen.

                This stuff is basic, well-known chemistry. Heinberg is just making stuff up.

          • clueless says:

            Ron – You are behind the times. It is electric arc furnaces [not blast furnaces]. It requires a different iron ore input, which Cliffs Natural Resources and others are providing. Check out Nucor Steel for example. Are you aware of Google??

            • Wake says:

              Well, the original comment from nick did say iron rather than steel

              and electric arc is from scrap

              • Nick G says:

                No, it just referred to Heinberg’s claim about iron, in which he said silly things about the impossibility of using electricity for high temperature industrial processes.

          • Nick G says:

            I don’t have the data but I would bet you ten to one that the coal is heated and turned to coke with natural gas. And that the iron is heated with gas as well when it is made into steel.

            That would be a terrible bet. First, IIRC the coal and iron are heated by burning coal – I’m pretty sure no natural gas is used.

            More importantly, when electric arc furnaces are used to make the majority of US produced steel, they use electricity – no natural gas.

            Electric heat is extremely inefficient. Why on earth would they use electric heat when gas is so much cheaper?

            That’s a good question. Part of the answer may be that natural gas hasn’t always been cheap, and the infrastructure of steel mills are very long term investments. Mostly it’s that electricity is very clean, convenient, and powerful. And, if you locate your plant in the right place, or operate at night, the power can be very cheap. I’ve often heard the sound of the steel mill a mile away, operating at night.

            • old farmer mac says:

              The bottom line is that if we consider the manufacture of steel on a world wide basis, Ron does have his facts straight. If we think it is ok to call steel made from scrap new, then he is still basically correct in saying gas is used to make steel- a LOT of gas is burnt to generate electricity.

              Tempest in a tea kettle.

              So long as iron ore is mined, coal and limestone will also be mined and all burnt together to make the iron intermediate product. Mining iron ore is a MONSTER of an industry.

              • Nick G says:

                Mac,

                Take a look at the Heinberg article. He’s claiming that in the long run renewable electricity won’t work for making affordable steel (and PV, and wind turbines). Now, he refers to pig iron, but unless you’re thinking only of wrought iron fences, we’re really talking about steel. And, in the long run, making affordable steel (or electricity) doesn’t require coal.

                Here’s the detail, broken down by sentence. He says:

                “The industrial sector:

                1) Making pig iron—the main ingredient in steel—requires blast furnaces.

                2) Making cement requires 100-meter-long kilns that operate at 1500 degrees C.

                3)In principle it is possible to produce high heat for these purposes with electricity or giant solar collectors, but nobody does it that way now because it would be much more expensive than burning coal or natural gas.

                false: Electric arc furnaces are used to produce high heat.

                4) Crucially, current manufacturing processes for building solar panels and wind turbines also depend upon high-temperature industrial processes fueled by oil, coal, and natural gas.

                false: PV and wind turbines absolutely use high temp processes powered by electricity.

                5) Again, alternative ways of producing this heat are feasible in principle—but the result would probably be significantly higher-cost solar and wind power. 6) And there are no demonstration projects to show us just how easy or hard this would be.”

                false: steel mills and aluminium smelters have been using cheap electricity for many decades. PV manufacturers are doing the same.

      • ezrydermike says:

        They do have a variety of things there.

        Note: I have not been able to post any of their articles here. The http address just doesn’t seem to stick for me.

  9. coffeeguyzz says:

    Mr. Patterson

    A somewhat OT followup to your comments months ago re Josh Fox’s integrity issues …
    Apparently, TV host Stuart Varney told Fox in a live interview the other day that he, Varney, lit his tap water afire years ago on his property in that area. Fox directly responded by calling him a liar.
    Interesting times.

  10. shallow sand says:

    Story in Washington Post about oil and gas industry workers losing jobs in OK. Might be worth a link.

    Would like to hear from those who know, what happens to the 1,000+ rigs that have been stacked? I have seen photos of yards full of them and I think Mike referenced that recently also.

    Assume there is no sudden resurgence of returning rigs to the field? How long can they sit idle before major expenses are required to get them going again?

    Also read a Bloomberg article on Apache. Title of story says “Not afraid of OPEC”. In body of story find Apache has went from 91 rigs running to 12. They are running zero rigs in EFS, however they are still completing wells there, hope to be done with that before year end.

    Finally, I took a quick glance at ND website. Thought maybe rig drop there had ended, but today at 77, with an XTO rig to stack. Counted XTO has 10 rigs running. Thought they were going to keep 13 running? Wonder if they have had a change of heart on drilling in the Bakken?

    • What happened? The North Dakota rig count dropped by 5 overnight. It may return later today. It sometimes does. But this is the first time I have ever seen it this low. I once saw a 79 but that was only briefly. That was a few weeks ago and by the end of the day it was back over 80.

      • Toolpush says:

        With the North Dakota gov posting 77 working rigs, with 7 of them MIRU. Baker Hughes tomorrow, maybe posting North Dakota as 70 actively drilling rigs?

    • Mike says:

      Shallow, all that iron can sit a long time and be OK; they’ll have folks out there starting engines and generators, etc., doing repairs, even chipping and painting. The problem will be bringing qualified men back in the fold to roll those rigs out and get them turning to the right again. The longer this downturn lasts the more difficult that will be. Folks have to work to eat and they will find work, somewhere else other than the oilfield. Least us not forget the significance that price volatility will now play in keeping a strong workforce on constant standby.

      Mike

      • Dennis Coyne says:

        Hi Mike,

        What do you think about the idea of the RRC getting together with the NDIC to control US oil output. The RRC already has the power to do this and the NDIC could probably get the power granted to it by the ND legislature. The NDIC could just follow the lead of the RRC (there doesn’t need to be a formal agreement), but it would help to reduce price volatility if there was some control over output.

        The RRC once had this role in the World (prior to 1970), then the role was handed to OPEC and they have dropped the ball, maybe the RRC should step to the plate?

        • Mike says:

          Dennis, I remember the days of oil allowables very well in Texas. From a regulatory standpoint allowables are still very doable. From an operational standpoint, however, I do not believe restricting production rates from LTO wells (and that is essentially all we’ve pretty much got left to do, it appears) is very doable. Controlling LTO development could better be achieved by density and spacing regulations, in other words, restricting the number of wells drilled.

          Which would suit me plumb to death, actually. The shale industry will not have learned it’s lesson regarding how supply surpluses affect prices and price volatility. Ms. Red Queen, she never goes away. As soon as prices increase, those shale wanks will be frac’ing everything but the kitchen sink and prices will go back down again.

          If you want me to sign a petition to restrict LTO production, I’ll sign it and so will all my dead friends. The shale oil industry is pretty powerful, however, and we’ll never get ‘er done. Instead what we can hope for, for the sake of price stability, is that sweet spot saturation, and debt, will ultimately slow down LTO production going forward.

          Mike

          • Watcher says:

            Why isn’t there more automation of oil tasks?

            • Watcher, because we are allergic to integrated circuits. However, I’m designing a robot arm to put pipe dope on the pin end with a small brush. And I think we can replace toolpushers with a couple of small speakers connected to software able to curse and ask for a coffee pot in 26 languages.

              • Watcher says:

                Shrug. Tasks that are repetitive and well paid get automated. Tasks that are not well paid . . . there’s no point — the meatbot is already cheap.

                • MarbleZeppelin says:

                  High end scientific research,analysis and testing, mass building or cars and other products, producing engineering solutions and graphic, mass data collection, guidance systems, and medical systems are all great places to apply robotic and automated systems.
                  Why waste time automating oil and gas drilling when we know they will soon be fading away? People automate and use robotics in businesses that are growing and that have a future. Oil production, gas production and coal have no long term future. They are a declining industry not worth investing too much time, thought, energy or resources in forcing forward.

              • Most tasks arent repetitive enough. Deep water drill ships have more automation, justified by the high day rates and the fact that drill ships move up and down and sway from side to side.

                The smaller rigs used onshore don’t justify it. This is looked at continuously. At one time I worked in an onshore operation where we videotaped the crew motions and used stop watches to see how we could make them work more efficiently, or replace them with remotely controlled tools. I suspect you just don’t understand how things get done. Did you ever visit a rig?

                • Mike says:

                  Watcher, please; give this robot thing a rest. And the dumb, automated, self drivable truck idea? Junk that altogether. Fernando is correct. You have to visit a rig, and the oilfield in general, to know how it works and to understand the complexity of it. Robots might work in the toothpaste business, not in the oilfield.

                  Besides, roughnecks would always be picking fights with robots in the beer joint every evening, then there would have to be more robots come out to pick up all the pieces and put the beat up robots back together again; it just wouldn’t work.

                  Mike

          • Dennis Coyne says:

            Hi Mike,

            I think we should put you in charge. 🙂

            Controlling the number of wells drilled would be fine, if LTO wells cannot be choked back with causing operational difficulties. One way to do it might be to tell companies what their allowable will be for the next 6 months and let the companies plan their completions accordingly to get the allowed output for the fewest dollars spent.

            I am missing exactly why the allowables wouldn’t work well and your planning idea is undoubtedly better for a whole bunch of reasons that I don’t fully understand.

            It just seems that Texas has the tools needed to reduce oil price volatility, it is a matter of realizing that they should be used.
            The oil industry would benefit, they shoot themselves in the foot by standing in the way. The general public would no doubt be opposed so the oil companies would have to sell the idea to the public. They have pretty good marketing departments, they could pull it off.

            • Mike says:

              Dennis, I think restricting flow on newly frac’ed wells is potentially problematic to the reservoir (if that is what folks want to call shale); maybe not. In any case, once those wells go on rod lift it is easy to set a maximum allowable per well.

              Controlling an out of control LTO business is a reasonable idea. Its a good idea. It would support oil price stability, enable long term planning for the management of remaining conventional resources and the more predictable development of unconventional resources. Price stability is vital to the energy security of our country. A healthy, sustainable oil and gas industry provides jobs. Conservation of our hydrocarbon resources is vital to the long term well being of our children.

              I agree with your plan, Dennis, especially putting me in charge. First thing I’d do is make all those shale boys pay off their credit card bills, then we’d all go to bullshit management classes. If they got overdrawn at the bank, they’d have to take time outs! I like it. I could get a new pickup with Shale Czar stickers on the front doors.

              Would I have to go to North Dakota in the winter?

              Mike

              • I think it’s ok to choke a well. I’m not sure about regulations in the USA, but in many locations we flow back keeping rates controlled to make sure the flare stays lit, but doesn’t get too hot. I used to do well completions and tests, but I used to have a pretty decent flowline, choke manifold, more flowline, separator, flare, a set of tanks to hold water, plastic lined pits, and things like that. I got the feeling nowadays they let wells vent? And they flare gas for a long time? I’m not used to working like that.

    • Rigs can be stacked for a long time. Its useful to do it away from the ocean and in a dry climate. Back in the 80s I saw rig engines, pumps, blow out preventers and draw works get cannibalized for spares.

      I’ve started reading about geothermal power, and it sure seems like it has potential. But geothermal would probably use large rigs set up for high temperature mud returns.

      • HVACman says:

        Ground source heat pump bore holes….that’s where out-of-work oil/gas field hands found work back in the late 90’s, at least around here in California. Easy work (relatively). Drill a 5″ hole 300 feet deep. No casing. No BOP. No developing. No fracking. Just drill, drop in the 1″ HDPE tubing, backfill with thermally-enhanced bentonite, then spud in at the next hole location 20 feet away. Repeat for one hole per ton for as many tons of cooling/heating has been specified.

        All those drillers disappeared and went back to the oil/gas fields when oil $ started creeping up in 2003-2004. I keep hoping they’ll pop up again around here and the borefield prices will drop again to something justifying GSHP’s. I’m getting tired of designing yet-another-office-building with yet-more-packaged-roof-top HVAC units.

        • old farmer mac says:

          I seem to remember hearing about the oil guys boring for hvac guys before.

          But it sure seems unlikely that you could move a rig designed to bore oil wells from one site to another for such small jobs. Just getting the rig down the highway to most construction sites would be a major problem and impossible in many or most cases.

          What kind of machinery were these guys using? My guess is that the rigs were the truck mounted sort used to drill water wells. These rigs run about 500k used to a million bucks these days. I doubt there are very many spare ones sitting around. It takes only two or three guys to run one of them.

          • HVACman says:

            You’re right, OFM. GSHP drilling rigs are completely different than oil rigs. GSHP drilling rigs are truck-mounted similar to water-well drill rigs, but specifically built for minimalist drilling and fitting into tight spaces near buildings, with the racks of drill pipe right on the truck and no provisions for setting casing. You only have to go down 300 feet max. I think I heard they cost about $750K new back in the early 2000’s. But the drillers – the hands working the machinery – were mostly oil-gas guys (they were all guys). Typical crew is two, plus sometimes a geeky mechanical engineer getting in the way and poking around the spoils to see what type of strata is below. For the workers, it was probably like going from operating a D9 Cat to a Bobcat, but work is work and a pay check is a pay check.

            Here’s a link to a photo of the type of rigs I saw on the job sites a few years ago, though this rig is about half the size.
            http://www.fs-architects.com/pages/portfolio/s1/gallery/p36.0geothermal-0923.jpg

        • I’ve sketched the following in my head:

          1. Drill horizontal well pairs with a 2000 meter horizontal leg at around 3000 meters vertical depth, into a hot rock target. Complete them with 30 fracture jobs using small propant and a lot of extra water. Wells have to be fracked simultaneously to establish fracture communication between wells.

          2. Complete wells with a tubing string and 5 isolation packers to segregate the wellbores into five 400 m sections.

          3. Circulate water between wells for about a week and make sure everything works as planned.

          4. Circulate supercritical co2 until the returns have very low water content.

          5. Hook up the well pair to a power generation plant which uses the hot co2 returns to heat a working fluid and power turbines used to generate electricity.

          6. A rough target would be to extract about 10 MW from a well pair. That would allow this technology to be extremely competitive with solar.

          • HVACman says:

            Power Systems like what you describe have been done before – using waste heat from industrial processes, hot water from natural geothermal “hot springs”, solar thermal, etc. What you’re talking about is a closed-cycle organic Rankine-cycle (ORC) power-generating system. Not sure about the viability of using CO2 for the heat transfer fluid. Gasses have poor heat transfer properties compared to liquids. Probably would be better with water injection. The “organic” fluid in the closed-cycle system is usually some form of commercial refrigerant, like R-134a. Here’s a Wiki link:

            https://en.wikipedia.org/wiki/Organic_Rankine_cycle

            At 3000 meters depth, unless it is a a geothermal “hot spot”, the ground temperature probably is under 200 deg. F. The thermodynamic efficiency will be pretty low, as it is proportional to the difference in absolute temperature between the heat source and the heat sink (usually outdoor air temperature). Figure 660 deg. R heat source, 530 deg. R heat sink. Max theoretical efficiency = approx. 130/530 = 24%. Probably would be a lot less. The ORC systems out there usually use some form of “regenerator” heat exchanger to improve efficiency a bit. A whole lot of hardware to make this work…Mostly, commercial geothermal power works well at natural hot spots like the Geysers in CA, which can create 350 deg. F steam. See link below. Note they drill down to about 12,000 feet – close to your 3000 meter proposal.

            http://www.geysers.com/numbers.aspx

            • coffeeguyzz says:

              HVAC

              According to the latest EOR research being done by the UND folks at the EERC, normal Bakken formation temperature ranges from 110 to 129C. The depth goes from 8,500′ to 10,000′, I believe.
              This ties in with their findings that the elevated temperatures are a big factor in EOR attempts.
              If their observations that ethane may be the optimal component in EOR prove correct, future recovery may be very significant.

            • I’m not discussing co2 in the gas phase, it would have to be done using a supercritical fluid. This takes advantage of the density difference heading south versus coming north. The focus is on keeping the system as simple as possible. The co2 has certain advantages. For example, if it’s lost in the micro fracture environment we can claim credit for co2 sequestration. But the really added bonus is the ability to open up on the producer, increase the heat rate, and generate more power. This concept has load following ability to some extent. I’m more worried about the fractures tapping a large volume, and having packers and valve seals that work very well at 200 degrees C.

  11. AlexS says:

    EIA long-term oil production forecast by region + EIA DPR data for key tight oil plays located in these regions
    Source: http://www.eia.gov/analysis/petroleum/crudetypes/

  12. AlexS says:

    Gulf coast and EFS

  13. AlexS says:

    Southwest and Permian

  14. AlexS says:

    Rocky mountain and Niobrara

    • Dennis Coyne says:

      Hi AlexS,

      The EIA forecasts are not very good, the work by David Hughes in Drilling Deeper is far superior, imo.

      A scenario for the Eagle Ford is below. It assumes an 8.5 % annual rate of decrease in new well EUR starting in August 2015, new wells added per month are 170 each month from June 2015 to Dec 2021, the # of new wells completed each month are shown on the right axis. Real oil prices rise from $60/b (WTI) in 2015$ in August 2015 at an annual rate of increase of 6.8% and reach $100/b in June 2023 and $213/b in Dec 2034 after which oil prices remain at $213/b. The oil prices are in 2015$.

      • Dennis Coyne says:

        Bakken Scenario, the oil price assumptions are different from the Eagle Ford scenario, prices rise more quickly, but remain flat after reaching $148/b in 2020.

        At some point I will harmonize the two scenarios with the same oil price assumptions.
        I think the scenario used here is more realistic, but think that oil prices will continue to rise to $200/b by the middle of 2022 and then will remain flat until the economy crashes or the transition to electric transport accelerates, such a transition will reduce demand for oil and may moderate oil prices and eventually cause them to fall.

        Such a scenario is too optimistic (though a there may be a small likelihood, 15% probability) in my view, a depression by 2030 due to economic disruption is more likely.

        Bakken/Three Forks of North Dakota scenario below.

  15. islandboy says:

    France begins nuclear bailout

    “ast week, the French government announced plans to inject cash into Areva, the firm that constructs nuclear plants in the country. It is a desperate attempt to ward off the inevitable: bankruptcy.

    The French nuclear power sector has always been a top priority for government officials ever since the practically forgotten (and failed) Messmer Plan of the early 1970s. With few orders for nuclear reactors on the books and tremendous cost overruns for the EPR plant under construction in Flamanville, Areva now faces a financially dismal future.

    As a result, the French government is officially (press release in French) looking into “reorganizing the French nuclear industry” with a strategic partnership between Areva and EDF, the former state power monopolist. The deal would not make the order books look better by ramping up international demand. Instead, it would absorb losses by spreading them across the merged new company – and eventually transferring them (at least in part) into tax budgets. The deal would at least settle a dispute over whether EDF or Areva should cover cost overruns for the ERP reactor under construction in Flamanville.”

    Also covered by Bloomberg

    France’s Nuclear Decline Exposed as Areva Confronts Cash Crunch

    ” (Bloomberg) — For decades France’s nuclear industry was seen as a source of economic strength, providing cheap power for factories, high-tech exports and tens of thousands of well-paid jobs. Today, it’s looking more like a liability.

    Electricite de France SA, the world’s largest nuclear operator, must spend $63 billion over the next decade to keep the country’s aging fleet of 58 reactors running safely. More urgently, nuclear engineer Areva SA, touted as an export champion for a new atomic age, has lost billions from a project in Finland and investments in African uranium mines, raising the prospect of a state bailout.

    As renewable energy prices continue to fall, the future of nuclear is looking increasingly uncertain. A big advantage that renewables have is the ability to finance and build small increments. No need for mega financing of a mega plant with the specter of mega cost overruns. As a matter of fact, a little digging reveals that, solar in particular, is more likely to come in under budget than over budget.

    • old farmer mac says:

      The only thing that scares me more that nukes is no nukes.

      I wonder how much France would have to spend over the next decade to replace that nuclear juice importing coal, gas and oil.

      Methinks it would be substantially more than sixty three billion.And they would have to earn it by exporting something substantial. Wine and tourism are not going to support large economies much longer. There are wineries popping up like mushrooms just about anyplace in the USA where grapes will grow.Ditto the rest of the world it seems to me.

      If war comes the lights will stay on in France unless somebody manages to take out her nukes. I doubt that could be done without resorting to using nukes to do it.

      The lights will be going out just about every where else in Europe if the tankers and freighters don’t sail and the Russians shut off the gas.

      Direct hits with big conventional ( guided ) bombs are routinely accomplished these days – unless the target is well defended by a modern military establishment. France seems to have first class military stuff in quantities ample to defend herself and if she doesn’t have the necessary latest gadget in her home grown inventory – then her good buddy Uncle Sam will give make up the shortage if necessary.

      • Areva’s problems are not that big a deal, they got into a new reactor design and didn’t follow the stringent quality checks they should have had. It doesn’t mean the basic reactor design is wrong, but evidently they reached a bit too far.

        Nuclear power will eventually make a comeback, but there’s a need to develop smaller improved modular reactors.

        And long term I am starting to think the best answer may be geothermal power. I’ve been reading reports written by researchers at Los Alamos, and now I’m in the MIT shelves, and it sure looks like it has a lot of potential.

        Geothermal is not like the solar industry, it doesn’t have corporations with deep pockets lobbying and paying for fake reports and cheerleading to get ever increasing subsidies.

        • TechGuy says:

          Fern wrote:
          “Geothermal is not like the solar industry, it doesn’t have corporations with deep pockets lobbying and paying for fake reports and cheerleading to get ever increasing subsidies.”

          Its not widely available. You need a “hot spot” to set it up. Mineral deposits are a huge problem as they build up on the pipes and condensers making then inefficient.

          http://physics.ucsd.edu/do-the-math/2012/01/warm-and-fuzzy-on-geothermal/

          Geothermal also suffers from intermittency when there is insufficient heat output. Not all locations have a constant heat output. For electric generation, the rock needs to be very hot. Geothermal for heating is more widely available.

          http://www.conserve-energy-future.com/Disadvantages_GeothermalEnergy.php

          Unfortunately there is no easy and cheap subsitutue for fossil fuels. They are simply natures ultimate high density energy source (except perhaps for fissile material formed in supernovas)

          • See the system I describe above. No intermittency. It has baseload performance with the ability to follow a load for hours. The working fluid is supercritical CO2, which doesn’t form scales.

            I plan to ask a friend who has the full non isothermal model to run some cases for hot spots in California, New Mexico, Nevada, Spain, and Japan. If we see this work at target energy extraction I’m going to write a formal proposal for a young group of Venezuelan engineers to do the work in a third country but deliver the results to the USA DOE. Maybe we can link up with Los Alamos. Those guys know the science very well, but I suspect we know more about the reservoir model and drilling side.

        • scrub puller says:

          Yair . . .

          Geothermal is not traveling too well over here.

          This is one of many projects . . . .http://www.petratherm.com.au/projects/paralana

          Cheers.

          • Thanks for the information. The test well data shows my target 10 mw per well pair may be too low.

            The other information tells me the idea is pretty darned good. The key to the process is the use of co2 (this was already worked out at Los Alamos). The other improvement is the use of a horizontal well pair connected by fractures. Thus far all the experimental tests used vertical wells. What we need is to combine the Los Alamos expertise with the oil company overall horizontal drilling and fracking know how.

            I guess you all realize the supercritical co2 delivers a quantum leap in performance because it eliminates scales and should allow significtant ability to load follow? This technology is a really nice fit to wind.

  16. old farmer mac says:

    When discussing renewables one of the most often cited reasons for saying they will not work is that backup generating capacity is too expensive.

    It is seldom mentioned in such discussions but we ROUTINELY spend megabucks on all sorts of capacity that is not fully utilized. School buses run only about twenty hours a week ten months out of the year. Freeways are generally almost abandoned in the wee hours in most places. Five and ten year old bulldozers are common with only a couple of thousand hours on the meter. I once bought a decommissioned fire truck to convert it into a working farm truck that was forty years old – with ONLY twenty thousand miles on it.

    Most restaurants stay open long hours but do ninety percent of their business in a couple of two hour daily time slots. The average automobile is driven less than two hours out of twenty four.

    Paying for gas peak load plants in order to EXTEND the life of our gas supply is NOT going to break our economic backs.

    • Yes Mac, but the fact is that solar and wind have unique problems. Biofuels, hydro, and methane from pig doodoo are in a different class. What I read in this blog is a really zany push for solar based on fallacies. Wind is a little better than solar but it also suffers from intermittency. From a system design standpoint the intermittency is a killer.

      • old farmer mac says:

        I understand that the problem is a cast iron bitch.

        But we ARE going to run out of gas and oil at affordable prices most likely imo within the next two decades. Coal prices will probably spike as well.

        I know for a fact that in many places with fuel supply problems they already shut down and fire up a good bit of their generating capacity once or twice a day – so it CAN be done. I know it is hard on the machinery due to thermal cycling and the component materials eventually cracking and failing due to lots of start ups.

        But DOING WITHOUT is going to be harder than dealing with intermittent power.

        You being an engineer you have the engineers mindset that YOU must solve the problem. But the CUSTOMER will solve half or more of the intermittency problem by adapting to the new normal.

        Insulation and thermal storage in new construction will take care of most of the intermittency issue in new construction going forward in respect to heating and cooling loads. Smart appliances will take care of some more. Batteries will take care of a bit more after that.

        http://www.marketwatch.com/story/gm-to-reveal-plan-for-secondary-use-of-chevy-volt-vehicle-battery-2015-06-11

        My own guess is that unless the economy collapses sooner, electric cars will be selling like ice water in hell within five to ten years. Oil depletes . Batteries get cheaper.Wind gets cheaper. Solar is getting cheaper by leaps and bounds.

        Pumped storage works without a shadow of a doubt. Totally off the shelf.

        And while the greenie weenies are able to stop the construction of pumped storage facilities FOR NOW they WILL NOT be able to stop the roll out of this solution later on.

        Most of the greenie weenies are not that committed in the first place and they will switch sides and INSIST on pumped storage once they experience their first rolling blackout.

        There are lots of good sites in my part of the world. I have looked at a lot of maps and there are suitable sites in LOTS of places- just about any place in fact with running water and mountain ridges and valleys could be used if the political calculus works out in favor of so using it.

        Some of my relatives a couple of generations back were forcibly kicked off their land to create federal parks-mostly just to support JOBS programs at that time. Nothing new about this. It will happen again when the political situation calls for it.

        Enough of these potential pumped hypo sites WILL be used if it gets down to the nitty gritty of doing without steady electricity. The owners and the greenie weenies won’t have a prayer when the general public wants these places taken by means of eminent domain if necessary.

        I am using the derogatory term greenie weenie to emphasize that environmentalists are going to be outnumbered twenty to one when the shit hits the fan. I am somewhat of a greenie myself.

        MY good buddy and attorney sums this up nicely. His daughters who just recently finished up at snooty universities want bike paths and little electric cars and sustainable lifestyles – for everybody but themselves. They are committed to the exact point at which that commitment starts impinging on their own cushy lifestyles.

        If their air conditioning ever fails due to a black out on a really hot miserably humid southern night the next day they will come out in favor of MORE coal plants – or whatever it takes. He knows his kids.

        • MarbleZeppelin says:

          The individual knows much more than the politicians or the big business groups. You are correct OFM in that the solutions will come from the public and not so much from the government or business until forced to do so.

          I think that a major hindrance to conversion to solar and wind energy is that it breaks the current business model. The mining, refining, transporting, storing, burning and distributing will be converted to self-collection with back distribution, small scale collection, distribution locally and distribution for storage and re-distribution. That mining, refining, transporting, burning and distributing allowed profit along a long chain of large companies to a consumer.
          Now the consumer can be the provider or partial provider, the local town can be a provider, a small company can be a provider. The mining, refining and transporting will now be severely limited to infrastructure buildout, thus highly reduced since no continuous fuel source is needed.
          Thus the whole business model will be changed and change meets high resistance since it changes who gets the profits and how much.

          • Boomer II says:

            Thus the whole business model will be changed and change meets high resistance since it changes who gets the profits and how much.

            And that’s why Silicon Valley types are involved. They’ve disrupted entire industries in the past and want to do it again.

            • MarbleZeppelin says:

              Yes, the loss of the typewriter was so shameful. That and the adding machine or old style cash register. 🙂 Ooops, forgot newspapers and some direct retailing, that did change with the internet.
              I think the previous “disruption” actually enhanced business, which is happening with the current business disruption. In this case though, the dying fossil fuel business will be disrupted and fade away faster without using up so much money and resources uselessly. New businesses will bloom and a new form of BAU will continue for a while.

              • MarbleZeppelin says:

                That is right, I haven’t used my slide rules in a very long time. Went the way of the buggy whip. A whole industry just gone.

              • Boomer II says:

                Among the businesses I know about that have been massively disrupted as a result of the digital age have been music, publishing, photography, advertising (which then affected businesses like newspapers and magazines), television, travel agencies. Now we’re seeing disruptions in taxi services and hotels.

                These are just off the top of my head. I’ll have to do some research.

                My point is that they have no loyalty to fossil fuels and will happily disrupt those businesses.

                • they may develop a new boiler fed by old used computer cases?

                • MarbleZeppelin says:

                  Yes, computing quickly moved beyond the scientific and accounting stage and is now pervasive in most levels of technology, culture and society.
                  Digital photography is much easier to use and is good enough quality to take over. DVD’s, though fragile like the old records, changed the movie industry, giving them a new avenue for profit.
                  MPG music, though lower quality than the older LP’s and CD’s, is so convenient that nobody cared about the lower quality.
                  Cell phones and then broad based internet access have had the biggest effect on society and personal activity. The chattering great ape is now in la-la land because it can chatter 24/7 to other apes no matter where they are.
                  Business people are now enslaved to their smartphones. Instant communications has a big psychological downside.

        • Fred Magyar says:

          If their air conditioning ever fails due to a black out on a really hot miserably humid southern night the next day they will come out in favor of MORE coal plants – or whatever it takes. He knows his kids.

          Hey OFM, I know some kids myself and am a dad too. Sorry I don’t buy that at all! I believe that even when the Shit really Hits The Fan, many of those kids will actually rise to the occasion! Are you of the opinion that no twenty year olds ever became heroes during the World Wars?

          • old farmer mac says:

            Fred I agree that a hell of a lot of kids WILL rise to the occasion. But THIS particular guys kids won’t- not when it comes down to their own comfort.

            They can and will march for gay rights and donate to save whales and they are in favor of renewable energy.They don’t really care how much it costs because they have enough income that their electricity bill is of no consequence to them. But they have a GOD GIVEN RIGHT (SARC) to a hot shower and a cool den after the marching is over.

            They will vote for nukes and coal if the power ever goes off. My personal opinion is that two thirds of their peers will do the same.

            Maybe I am too cynical. Unfortunately these GOOD and very intelligent young women have near zero training in the sciences.

            They do not have a gut level understanding of the gravity of the fossil fuel and environmental situation comparable to yours- or mine.They majored in business and law.

            It is a TRULY unfortunate fact that we are a scientifically illiterate society, taken all the way around.

            • MarbleZeppelin says:

              Why would they not just ask for a back up generator?

            • wimbi says:

              I am fortunate to have two highly competent granddaughters living right down the road.

              They have taken to helping us grandparents without any asking. And they know all about solar PV, since both grandpa and father have an “excessive” array of them.

              Their friends do too. In fact, solar is a big thing around here, and the installers are overbusy.

              The one just about ready to go off to a shockingly expensive university drove me to the dentist this week in our Leaf- “A real cool car”-, and I was very happy to see she was a perfect driver- defined as making every move exactly as I would have done.

              I went thru college on the GI bill- that is, free. One would have thought that that would have taught everybody how important it is to make it EASY for talented young people to get an education, regardless of wealth of parents. The payback to the whole society is far greater than the pay.

      • Nick G says:

        Intermittency is a very old problem for the grid: it’s called customer demand. Customers are unpredictable on the individual level, and they change their demand all the time without telling the utility. But, in the aggregate they’re pretty predictable, and there are a lot of effective methods for dealing with this variance.

        Wind and solar variance is surprisingly similar to demand-side variance, and all of the time-tested tools of the grid system operators work on it as well.

        One of those is overbuilding. Mac is right – we overbuild a lot of things, and that includes the current grid. Average demand is about 450GW, but total capacity is well over 1,000GW.

        • wimbi says:

          So far, I have easily adapted to intermittency. Heating/cooling can coast a while.

          Only problem is long periods of cloud in winter. My solution is the pyrolyzer, which uses wood and house trash to make a fuel gas that drives a honda generator.

          Still a work in progress, but I see no barrier to getting it satisfactory in every way.

          Other local people, far younger and more energetic, have taken to the idea, and are trying their own variants. The more the better.

          • Boomer II says:

            Here’s one example of a large company with plans to go off-grid and what to use for back-up power.

            Microsoft Sees Data Centers Transforming the Power Grid: The research is part of Microsoft’s focus on distributed power, part of a larger vision to break new ground in integrating cloud computing and distributed energy generation. The company hopes to place data centers alongside sources of renewable energy, creating “data plants” than operate with no connection to the utility power grid, using methane or other gases from landfills and water treatment plants. Microsoft is also researching the use of data center racks with on-board fuel cells, and even a distributed network of in-home data furnaces that use server exhaust to heat living spaces.

    • However they say production was down in May.

      Oil Market Report

      Global oil supplies fell by 155 kb/d in May to 96 mb/d on lower non-OPEC output, but remained at a steep 3.0 mb/d above last year. Annual growth slowed marginally from March and April and remained roughly split between non-OPEC and OPEC countries. The forecast of non-OPEC supply growth for 2015 have been raised to 1 mb/d.

  17. learner2 says:

    With Canada down, US production flat/down, which non OPEC region is increasing by 1mb/d? Especially when it fell 155kb/d already when everyone has been desperate to raise volume to compensate for price?

  18. Ron Short says:

    “Located about 30 miles north of the Texas capital in a deeply conservative county, the city of Georgetown will be powered 100 percent by renewable energy within the next couple years. Georgetown’s residents and elected officials made the decision to invest in two large renewable energy projects, one solar and one wind, not because they reduced greenhouse gas emissions or sent a message about the viability of renewable energy — but because it just made sense, according to Mayor Dale Ross.”

    http://thinkprogress.org/climate/2015/06/11/3666649/georgetown-texas-one-hundred-percent-renewable/

    • old farmer mac says:

      I SUPPOSE the good people of Georgetown understand depletion and price inflation as well as liberal democrats. 😉

      Not to mention the collection (recapture ? ) of tax money as subsidies while the subsidies are still good.

      Texas is fortunate in being big enough to manage the grid in state and also having excellent wind and sun resources PLUS local gas – that can be SOLD out of state rather than burnt to generate electricity for instate use.

      Personally I am convinced that any place with good wind and sun – Texas has both- will soon find it economical to substitute renewables for fossil fuels.

      Rust and depletion never sleep and when depletion bites fossil fuel prices ARE eventually going to go up- and then up some more.And some more after that.

      • Mike says:

        Georgetown is joined at the hip with Austin, the liberal mecca of the SW. They like feel good green stuff up there, but wander all over the board with it all the time. For instance, 80% of the people that live in Georgetown work in Austin and more gasoline is pissed off making that commute every day (the fastest growing region in the US) than in the entire DFW metroplex, I’d bet. They’ve tried to get a light rail system between the two places for 40 years and can’t do it because nobody wants to spend the money and they like sitting in their cars for 2 1/2 hours a day instead. So back and forth they go, like little ants. Now they are going to switch to 100% renewables in a couple of years?

        Yeah, right.

        So goes the renewable argument. Make my electricity anyway you can but leave my transportation out of it.

        FYI, that’s not the mesas of W. Texas up there, nor the coastal plains. Those windmills will sit up there 200 days a year doing nothing but getting bird poop on them.

        If anybody wants to buy Austin, holler; I think most of the rest of Texas would sell it to you, cheap.

        Mike

        • shallow sand says:

          When I first read that I thought it was about George West in Live Oak County and I thought what the heck? Then I read it again.

    • It’s bs. They will be hooked to the grid and will be told the juice is “renewable”, but renewables in Texas can’t deliver 100 % of the supply. I have properties near Dallas and Houston and I see what’s on offer, it’s just a sales pitch to make customers feel “green”.

      I think there’s a huge amount of lies and propaganda pouring forth as the global warming hysteria crowd pushes for a Paris deal to make us decarbonize and donate our children as slaves to the president of Mauritius. They are going to fail.

      • MarbleZeppelin says:

        Fernando, are you a shill for the fossil fuel industry?

      • Fred Magyar says:

        They are going to fail.

        You keep saying that and perhaps they will. However, your petroleum based ideology already has failed and you can’t seem to offer any real solutions for the future either.

        • islandboy says:

          I remember back in 1981 when the first IBM PC came out. I was in college and computers were something you heard about but, never really saw. By the time I finished college, geeks in my neck of the woods, were getting their hands on Sinclair ZX 80s and 81s, Tandy TRS 80s, Texas Instruments TI 99s and Commodore VIC 20s and C64s. In my final year in college I did some assembly machine language programing and BASIC programming, on what I think was a TI 99.

          At that time IBM ruled the roost and was one of the most valuable and most admired companies in the world. My first job involved diagnosis and repair IBM PCs as a repair technician so, I can safely say I witnessed the whole PC revolution first hand. As PCs became networked and client/server networks evolved, there were people who said that PCs would never replace mainframes. Roughly 30 years since I first touched a real computer and 20 years since my first exposure to the Internet, the former undisputed king of the hill, now has to play second fiddle to companies like Google, Microsoft, Apple and Oracle. While mainframes still exist they certainly do not enjoy the dominant position they once did and in my neck of the woods, I doubt very much there is a single instance where any remaining mainframe could not be replaced by a PC server, much less a small server farm. .

          So, as I post this from my $200 laptop, using the data connection of my Android smart phone by way of a USB tether I am reminded of those people who, when the most powerful PC was less powerful and far less capable than my smart phone, said that PCs would never replace mainframes. A few people that post here remind me of them.

        • I don’t have “petroleum based ideology”. Is that supposed to be a joke? Does it bother you to be brought down to earth and be faced with reality? Would it help if I use kinder words to tear down the bs about renewables?

          • MarbleZeppelin says:

            It might help if you actually used some real information to back up your claims and referenced it. Right now all we hear from you is idealogy.

          • Fred Magyar says:

            You are a petroleum engineer, how could you not have a petroleum ideology?

            As I said the people who are advocating renewables may indeed fail big time. But since this is a peak oil site and you admit that oil is finite and that that has consequences for our current modus operandi, I don’t quite get the impression that you accept that reality either.

            Plus you keep saying things like :

            I think there’s a huge amount of lies and propaganda pouring forth as the global warming hysteria crowd pushes for a Paris deal to make us decarbonize and donate our children as slaves to the president of Mauritius. They are going to fail.

            That is not a rational statement it is a purely ideological one and it is not based on anything that you know for sure. You obviously have vested interests in the continuation of BAU. I could be wrong, but I strongly suspect that BAU is coming to an end. YMMV!

            • islandboy says:

              Fred, implicit in many of Fernando’s statements, particularly regarding renewables is a belief that BAU will and can continue. Statements along the lines of “A modern industrial economy cannot be run on renewables” are a case in point.

              If collapse is unavoidable, as even our host here suggests, then there won’t be any “modern industrial economy” left to be run on anything! In a post a little further up I chronicle the almost miraculous changes I have witnessed in computer technology over my adult life. Just the difference between my first dial-up connection to the Internet in 1995 and the wireless mobile data connection that I am using right now is amazing enough! Based on that, I am certain that there will be momentous changes in energy and transportation over the next twenty years.

              What we end up with may be as amazing, when compared to what we have now, as smartphones are when compared to the mainframe computers of my childhood. We could also end up back in the Olduvai Gorge! Who knows?

              • Boomer II says:

                Fred, implicit in many of Fernando’s statements, particularly regarding renewables is a belief that BAU will and can continue. Statements along the lines of “A modern industrial economy cannot be run on renewables” are a case in point.

                That’s what I don’t understand either. If we believe peak oil will result in the end of business as usual, then what’s the harm in looking for solutions that might work in a vastly different world?

                • Boomer II says:

                  It’s bit like someone with a rampant infection given the choice between losing a few limbs or dying.

                  Some people might choose to die rather than live with fewer limbs, but many others would likely take the amputations over dying.

              • Fred Magyar says:

                Fred, implicit in many of Fernando’s statements, particularly regarding renewables is a belief that BAU will and can continue. Statements along the lines of “A modern industrial economy cannot be run on renewables” are a case in point.

                Funny he keeps clinging to the past because the G7 leaders are starting to move on… maybe climate change is a massive hoax but the G7 at least can see the writing on the wall with regards the end of fossil fuels, even if Fernando can’t…

                http://in.reuters.com/article/2015/06/08/g7-summit-idINKBN0OO25120150608

                G7 leaders bid ‘Auf Wiedersehen’ to carbon fuels

                • Don’t be silly. I believe we are running out of cheap energy. I also happen not to fall for baloney. Now please make an argument linking to clean technica and truth out. I have fun reading that trash.

                  • Nick G says:

                    “When you account for the health and climate costs – as well as the rising price of fossil fuels – wind, water and solar are half the cost of conventional systems,” Jacobson said. “A conversion of this scale would also create jobs, stabilize fuel prices, reduce pollution-related health problems and eliminate emissions from the United States. There is very little downside to a conversion, at least based on this science.”
                    http://news.stanford.edu/pr/2015/pr-50states-renewable-energy-060815.html

            • There IS a huge amount of lies and propaganda. It’s not my fault you fall for it. Are you sure Iraq had WMD?

              • Nick G says:

                The UN had specific observations and data for it’s assertions that there were no WMD.

                If you feel that that data and calculations exist for these anti-renewable assertions, please provide them.

              • Boomer II says:

                There IS a huge amount of lies and propaganda.

                But you seem to even discount solar use in locations that have no grid. There are places where solar is the cheapest energy source available because it doesn’t need a grid and doesn’t need fuel, and you don’t even acknowledge those situations.

                And there are situations where solar can charge batteries and nothing else is available. That, too, is a good use of solar, but you don’t acknowledge that.

                You don’t seem to be able to conceive any possible current uses for solar, even though there are. It’s all a conspiracy to you.

          • Time to do something Leanne. Tiresome to see you spout off without any analysis.

            • Sorry webby. Other than a few charts and comments, and some stories, I can’t put down anything. I got too much confidential material in my head, and it takes too much work to keep it apart from public content.

              • Nick G says:

                Be serious.

                There’s nothing proprietary about the volume of batteries you feel is needed. Please, just give the terawatt-hour capacity that you feel is needed, with supporting calculations.

  19. ezrydermike says:

    Stanford engineers develop state-by-state plan to convert U.S. to 100% clean, renewable energy by 2050

    http://news.stanford.edu/pr/2015/pr-50states-renewable-energy-060815.html

    The Solutions Project accelerates the transition to 100% clean, renewable energy for all people and purposes. To achieve this mission, we engage the public, celebrate and convene leaders, and advance partnerships and policies that make strides on the road to 100%. We implement this integrated model at the state level. To maintain our national reach, we develop inspired content, amplify stories and media, and create opportunities to celebrate and activate leadership across the country.

    http://thesolutionsproject.org/

    100% clean and renewable wind, water, and sunlight (WWS) all-sector energy roadmaps for
    the 50 United States

    Broader context

    This paper presents a consistent set of roadmaps for converting the energy infrastructures of each of the 50 United States to 100% wind, water, and sunlight(WWS) for all purposes (electricity, transportation, heating/cooling, and industry) by 2050. Such conversions are obtained by first projecting conventional power demand to 2050 in each sector then electrifying the sector, assuming the use of some electrolytic hydrogen in transportation and industry and applying modest end-use energy efficiency improvements. Such state conversions may reduce conventional 2050 U.S.-averaged power demand by B39%, with most reductions due to the efficiency of electricity over combustion and the rest due to modest end-use energy efficiency improvements. The conversions are found to be technically and economically feasible with little downside. They nearly eliminate energy-related U.S. air pollution and climate-relevant emissions and their
    resulting health and environmental costs while creating jobs, stabilizing energy prices, and minimizing land requirements. These benefits have not previously been quantified for the 50 states. Their elucidation may reduce the social and political barriers to implementing clean-energy policies for replacing
    conventional combustible and nuclear fuels. Several such policies are proposed herein for each energy sector.

    http://web.stanford.edu/group/efmh/jacobson/Articles/I/USStatesWWS.pdf

    • ezrydermike says:

      repost.

      NREL Renewable Electricity
      Futures Study

      http://www.nrel.gov/docs/fy12osti/52409-1.pdf

    • It’s 133 pages of baloney.

      • Nick G says:

        So, give us some numbers and calculations.

        • ezrydermike says:

          He did. 133 = baloney.
          Did leave out the other 3 pdf’s though, so maybe 3 pdf = salami.
          Besides all those commies at the NREL just sit around waiting for their watermelons to ripen anyway.
          And don’t me started on those Stanford guys, they’re in California!

          • Nick G says:

            I like that.

            A lot of food-related metaphors…or maybe it’s my diet talking…

          • It’s baloney. I could tell right away when I saw it was linked to a site asking for donations. And the work itself was incredibly amateurish. This is understandable because we are dealing with college professors. They lack the skills for that type of work.

            Let me give you a hint: that type of study has to include a pretty serious discussion about costs. But they delivered almost zero. It’s a joke.

            • Nick G says:

              Okay, what page has the discussion that you feel is lacking? And what costs would you include? Please give the specific quantities, with calculations.

              • ezrydermike says:

                Fernando is full of baloney. He hasn’t looked at the Stanford paper from web.stanfor.edu except maye to judge how many pages are in the pdf file. That web link is direct to the Energy & Environmental Science paper, there aren’t any solicitations for money. The comment about college professors is just a bs throw in for comedic effect I suppose

                http://web.stanford.edu/group/efmh/jacobson/Articles/I/USStatesWWS.pdf

                • Fred Magyar says:

                  Yeah, Fernando can’t possibly have read that paper in its entirety!

                  While it is possible that a paper in the Journal of The Royal Society of Chemistry could be based on an erroneous premise, the data may be dubious and the actual calculations incorrect at least they are there in black and white for the whole world to see. And they do talk about costs.

                  Fernando doesn’t argue with any of the data or numbers that the authors have provided. All he can do is tell us its BS! He says:

                  Let me give you a hint: that type of study has to include a pretty serious discussion about costs. But they delivered almost zero. It’s a joke.

                  I do wish The Great Wise One, would tell us the true costs to society of continuing with BAU? Or continuing to invest in fossil fuels and exactly how sustainable that is? Does he have the numbers on any of that?

                  He has nothing to offer but claims that no one other than himself is serious. Surely it is he that must be joking!

  20. Jeffrey J. Brown says:

    IMF quits Greece talks amid ‘air of unreality’ as deal unravels

    http://www.ft.com/intl/cms/s/0/830f9be4-1055-11e5-ad5a-00144feabdc0.html#axzz3co2PYNZ8

    Interesting comment by “Speedbird,”

    All these disingenuous assurances that “a deal will be agreed within a few days” are attempts to avoid taking responsibility for the inevitable consequences of a default and Grexit.  Everyone wants to be seen as the optimist. Nobody wants to be seen as the person or group responsible for the consequences.  All of this is merely maneuvering to avoid getting tarred with the brush of responsibility now that the can has reached the end of the road.

    • Jef says:

      “Everyone wants to be seen as the optimist. Nobody wants to be seen as the person or group responsible for the consequences.”

      This says all you need to know about “renewables”

      ANd there WILL be consequences.

      • Nick G says:

        “When you account for the health and climate costs – as well as the rising price of fossil fuels – wind, water and solar are half the cost of conventional systems,” Jacobson said. “A conversion of this scale would also create jobs, stabilize fuel prices, reduce pollution-related health problems and eliminate emissions from the United States. There is very little downside to a conversion, at least based on this science.”

        http://news.stanford.edu/pr/2015/pr-50states-renewable-energy-060815.html

  21. old farmer mac says:

    Greece isn’t the only major hot spot that could upset the business as usual apple cart.

    http://money.cnn.com/2015/02/20/news/economy/venezuela-economy-inflation/?iid=EL

    I wonder how many big banks have substantial amounts still at risk in deals tied one way or another to Venezuela.

    • Almost none. Venezuelan bond debt is about $130 billion plus probably $30 billion to the Chinese. The government has over $10 billion in unpaid bills to suppliers. Venezuelan bonds are junk, have already been discounted, and the vultures are waiting for default sometime later this year. Inflation is now running over 100 percent, and there are former government officials claiming over $200 billion was stolen during the last 15 years. Oil production is bound to drop simply because the government lacks cash, pdvsa professionals are fleeing, and foreign companies can’t invest.

  22. Ronald walter says:

    49770 yen for a metric ton of oil on its way to Japan.

    Divide by 124, you have 401 dollars per metric ton.

    Divide by 7.3, 55 dollars per barrel for oil bought by the Japanese.

    Japan receives a ten cent per gallon discount for cash sales.

    IOW, Japan has something of value to trade for oil, meets a demand.

  23. old farmer mac says:

    The enemy occasionally speaks the truth but tries not to do so in public. Nevertheless what is said does get around these days.

    I just ran across this little gem at Chris Nelders blog.

    ”The vice president of integration at oil services giant Schlumberger notes that four out of every 10 frack clusters are duds. Geologist Pete Stark, a vice president of industry relations at IHS–yes, that IHS, where famous peak oil pooh-pooher Daniel Yergin is the spokesman for its CERA unit–actually said what we in the peak oil camp have been saying for years: “The decline rate is a potential show stopper after a while…You just can’t keep up with it.”

    I hope some of the hands on guys will have something to say about this four in ten fracking failure rate.

    Fernando is probably the only regular here , other than yours truly, who has devoted much time to the study of communism. His knowledge dwarfs mine given mine is all second hand via reading.

    Russian refugees who managed to get out and write about their experiences have had a lot to say about the art of gleaning real information from a state operated press. But they stayed after it and were able to assemble a fairly decent picture of what was going on in their country simply by noting what WAS printed and made sense ( as opposed to nonsense) about problems in their country. SOME of the actual facts had a way of slipping thru along with the manufactured message.

    The most famous example I can remember is a story about all the cars the rich capitalists forced the poor people in Detroit to manufacture for their capitalist pig masters. MILLIONS and MILLIONS of cars year after year, with pictures of a jammed parking lot reaching out of sight. Pictures of a jammed freeway. I guess the brave man who made this” mistake” was sent to Siberia on the grounds of stupidity if not treason.

    IF anybody with an open mind really wants to know the truth about peak oil, it is acknowledged at least occasionally by folks such as YERGIN.

    Oil is selling for about two YERGINS these days. My bet it is that oil will be selling for three YERGINS again within a year or two.

  24. Jeffrey J. Brown says:

    What puzzles me is how well production profiles like what we see in the Bakken are supposed to work in much higher operating costs around the world. In the Bakken, the average well produces a little more than 100 bpd, while the median production rate is less than 100 bpd, with an overall very rapid decline rate.

    My comment up the thread about US decline rates:

    http://peakoilbarrel.com/opec-the-eia-and-other-news/comment-page-1/#comment-520916

    • shallow sand says:

      Jeffrey: It is questionable that most of those wells work in the United States. I will start believing they will work when I see companies keep production relatively flat while being at least cash flow neutral.

      The remainder of this year might provide some clues, but the companies report financials about two months after the end of quarter/year. So like US production data, nothing is going to be known immediately.

      It surprised the heck out of me when I saw a couple drilling rigs working our area recently. After a little inquiry, I learned they were both investor promotions. There is still a lot of money floating around, apparently.

      As I have stated many times, we are in a high OPEX area. Do not see how drilling here makes any sense at all. I cannot figure out how it makes sense in the Bakken either, based on the limited number of lease operating statements I have reviewed.

    • They’ll work with higher prices in areas where costs aren’t that much higher and the government provides incentives such as zero royalty and a straightforward corporate income tax. I think I can structure a production sharing agreement which ought to work in Argentina and Russia at $150 per barrel.

  25. Jeffrey J. Brown says:

    Five G7 nations increased their coal use over a five-year period, research shows
    Britain, Germany, Italy, Japan and France burned more coal between 2009 and 2013 and demanded poor countries slash their carbon emissions

    http://www.theguardian.com/environment/2015/jun/08/five-g7-nations-increased-their-coal-use-over-a-five-year-period-research-shows

    Five of the world’s seven richest countries have increased their coal use in the last five years despite demanding that poor countries slash their carbon emissions to avoid catastrophic climate change, new research shows.

    Britain, Germany, Italy, Japan and France together burned 16% more coal in 2013 than 2009 and are planning to further increase construction of coal-fired power stations. Only the US and Canada of the G7 countries meeting on Monday in Berlin have reduced coal consumption since the Copenhagen climate summit in 2009.

    The US has reduced its coal consumption by 8% largely because of fracking for shale gas. Overall, the G7 countries reduced coal consumption by less than 1% between 2009-2013, the Oxfam research shows.

    The briefing paper comes as nearly 200 countries meet in Bonn ahead of crunch climate talks in Paris later this year, and shows that G7 coal plants emit twice as much CO2 as the entire African continent annually, and 10 times as much as the 48 least developed countries put together.

    • Nick G says:

      Yeah, no question that the rich countries need to do much, much more.

      On the other hand, the G-7 as a group reduced coal consumption over that time period, so that’s a bit encouraging.

    • TechGuy says:

      http://www.energytrendsinsider.com/2013/08/20/king-coal-gets-fatter-while-the-us-goes-on-a-diet/
      China’s consumption of Coal dwarfs US consumption. The US and the rest of the West have moved industrial production to Asia to avoid regulations. Its “Quick look over here” while the saleman switches the item with junk when your not looking. We buy iPads, iPhones, Steel, and plastic pumpkins from Asia from the cheapest labor and most polluting factories in the world. However since it’s “sight-unseen” nobody cares or thinks it’s a problem. If western consumption of products made in China was included the Western pollution statistics, it remains as the king polluter! After all its western consumers that are buying the junk made in China!

      Law of unintended consequences strikes again:
      At some point Asia, have taken over all production and the jobs will leave the west hanging and destitute, as well as increasing global pollution. Its the classic wealth to rags in a couple of generations played out on a global scale. That said, this plan is backfiring, as the Asia becomes too polluted for human habitation.

  26. shallow sand says:

    ND down 22,000 bopd. I notice NDIC website is down.

  27. AlexS says:

    ND Bakken production in April was below September 2014 level

  28. learner2 says:

    WTI not showing much of a move on this.. Could be wall street shenanigans i guess.

  29. Ronald Walter says:

    BNSF Week 22

    Petroleum carloads at 9,654. It is an increase of more than 500 carloads in the same week of 2014. Demand is steady, the supply remains. The stats do show a decrease in total petroleum carloads at approximately 1,400 less than in 2014. Somebody is still buying oil and plenty of consumers using oil products.

    If everybody had to return to the land to rustle up some grub, the die-off would gain speed, the velocity would increase greatly in just a few days. Be very thankful it isn’t happening, it would be a day of reckoning and a rude awakening.

    Too wet to plow, too windy to pick rock.

    Picked fresh asparagus last night and will definitely have it with bacon later on in the day.

    • Kam says:

      “Petroleum carloads at 9,654. It is an increase of more than 500 carloads in the same week of 2014.”
      “The stats do show a decrease in total petroleum carloads at approximately 1,400 less than in 2014.”

      OK. Let’s say that oil production didn’t drop to zero. The rest is noise 🙂

  30. I have a Bakken Post ready to go but I am waiting on The Director’s Cut. For some reason there seems to be a delay. I guess Lynn Helms is having problems.

    • shallow sand says:

      Ron, you may have noticed, but ND shed two more rigs, currently at 75

  31. Keith says:

    Good that you highlight the difference in figures given by 2 separate parts of the EIA.

    Jeffrey Brown comments on declines in unconventional wells. The EIA drilling productivity report gives estimates of decline from legacy wells. They fit well with the number of wells drilled and published decline curves. For example, the decline from legacy wells reached 347 000 bopd per month in May. That is why the weekly EIA number suggesting a large production increase has to be wrong.

    Thirdly, regarding crude transported by rail, as also pointed out here by Ronald Walter, the year to date figures are very similar to those in January – May 2014. At that point in time, US light tight oil production was 13% less than it was in December 2014.

    Rail transport of crude is mainly from the Bakken. The implication is that Bakken production is down around 160 000 bopd from the peak in December 2014. Extrapolating to major frac plays, US production is down 500 000 bopd.

  32. BC says:

    For the record, Nick G misses the point about deindustrialization, the secular trend of real GDP per capita, etc., meaning that Ron’s inference that he was vindicated is categorically correct.

    Moreover, the larger inference is that the implied potential trend rate of real GDP per capita will not permit sufficiently fast enough growth to sustain the current rate of growth of US oil production per capita since 2008-09, which in turn implies that neither can we sustain the simultaneous build out and maintenance to necessary scale of “renewables” hereafter.

    We are 35-45 years too late to sustain our western living standard per capita for the bottom 90%+ of households.

    https://www.singularityweblog.com/martin-ford-on-technological-unemployment/

    http://www.technologyreview.com/featuredstory/515926/how-technology-is-destroying-jobs/

    http://www.businessinsider.com/bill-gates-bots-are-taking-away-jobs-2014-3

    http://www.economist.com/news/briefing/21594264-previous-technological-innovation-has-always-delivered-more-long-run-employment-not-less

    http://www.pewinternet.org/2014/08/06/future-of-jobs/

    http://www.theguardian.com/technology/2015/feb/09/robots-manual-jobs-now-people-skills-take-over-your-job

    http://www.futuristspeaker.com/2014/07/the-growing-dangers-of-technological-unemployment-and-the-re-skilling-of-america/

    And there is a back story to Peak Oil, deindustrialization, financialization, feminization, and deskilling of the economy and labor force that has been operative for nearly half a century but has become particularly important since 2000-07, and it is only recently being recognized and publicly discussed by the 1-4% of public intellectuals and mass-social influentials.

    Accelerating automation and elimination of paid employment and purchasing power as a result of the emerging S-curve techno-economic paradigm will be no less a once-in-history effect than when Neanderthals encountered modern humans; Mesoamerican peoples first came in contact with Europeans; and agrarians faced the effects of industrialization.

    More importantly, intelligent systems, Big Data analytics, biometrics, robotics, bioinformatics, nano-electronic sensors, medical telepresence, etc., will cause the most disruption for the sectors of the economy that have grown the most since the 1980s and deindustrialization, financialization, feminization, etc., including health care, education, financial services, retail, and gov’t, sectors with employees that are 65% to 80-85% females.

    This meme or metanarrative is virtually unknown among the mass public; therefore, it is not even within the spectrum of issues for the electorate to know about, which means that the captured political caste and those charged with constructing the political messaging are under no obligation to acknowledge the existence of the phenomena and thus to be obligated to propose policies to address the once-in-history effects.

    • Nick G says:

      For the record, Nick G misses the point about deindustrialization, the secular trend of real GDP per capita, etc., meaning that Ron’s inference that he was vindicated is categorically correct.

      Um, no.

      What I said was that your data doesn’t support the idea of “deindustrialization”. The charts you created for manufacturing show an absolute increase in output over the last 30 years.

      Further, I’d be curious what you included in those charts: I haven’t seen any evidence anywhere for an almost 80% drop in US manufacturing in the 1970’s. I can only guess that you didn’t include some of the things that are normally included, but these seem to be custom charts, so only you can tell us that.

      Here’s the data for 1979 to present. We see that US manufacturing output has grown 2.7% per year over the period 1979 to 2011, with labor productivity growing 4.2% per year and labor hours falling by 1.4% per year.

      1979-2011 1979-1990 1990-2000 2000-2007 2007-2011 2009-2010 2010-2011
      United States Output per hour 4.2 3.0 4.3 6.1 3.8 11.2 2.0
      Output 2.7 2.3 4.2 2.9 -0.3 11.2 4.3
      Hours -1.4 -0.6 -0.1 -3.1 -3.9 0.0 2.2

      http://www.bls.gov/news.release/prod4.t01.htm

    • Nick G says:

      the larger inference is that the implied potential trend rate of real GDP per capita will not permit sufficiently fast enough growth to sustain the current rate of growth of US oil production per capita since 2008-09, which in turn implies that neither can we sustain the simultaneous build out and maintenance to necessary scale of “renewables” hereafter.

      This makes no sense. It only makes sense if you believe that oil has mystical powers, and that the US economy can only work if oil production and consumption don’t change at all. It also confuses Peak Oil and the transition away from FF for power generation.

      In fact, businesses and consumers investment in things that save them money, and that only accelerates during hard times. If oil prices rise then people will invest in cheaper and better alternatives, like EVs.

      And, EVs work just fine with power generated from Fossil Fuels. We need to transition to renewables to deal with Climate Change, but that’s a separate issue.

    • Nick G says:

      And here’s a FRED chart showing absolute manufacturing output since 1987. We see a substantial increase.

      On the other hand, production has leveled off per capita, and that’s ok. Americans decided about 40 years ago that they had enough cars, and washer/dryers, and purchases of these kinds of hard goods plateaued. Car sales haven’t gone up in 40 years. And, in fact, it’s what we want, right? For consumption of hard goods to level off?

    • Nick G says:

      Ah, here’s a chart from 1967 to present, from the Federal Reserve (http://www.federalreserve.gov/releases/g17/Current/g17.pdf page 4). We see that both industrial production and manufacturing output have risen sharply:

      • BC says:

        Per capita, Nick G.

        If per-capita capital formation, production of goods and services, and purchasing power of labor after taxes, price changes, and debt services is not growing, the economy and country is not wealthier but the converse.

        Further, when the per-capita distribution of the gains from growth of debt to wages and GDP since the 1970s-80s go overwhelmingly disproportionately to the top 0.001-1% to 10%, by definition the vast majority of the population is dependent upon the unsustainable increase in debt to wages, GDP, profits, and gov’t receipts, i.e., the economy is consuming capital and future growth at an increasing rate, which precludes any real growth per capita and maintaining the living standard for the bottom 90%+.

        Now that debt to wages, GDP, profits, and gov’t receipts can no longer grow, by definition there can be no further real growth per capita for the economy and society as a whole.

        http://www.marketwatch.com/story/high-tech-solar-projects-fail-to-deliver-2015-06-13

        http://www.greentechmedia.com/articles/read/google-engineers-explain-why-they-stopped-rd-in-renewable-energy

        By extension, therefore, this means that there can be no further profitable growth of so-called “renewables” at the necessary scale to permit sustaining the standard of living for the bottom 90%+, which then presumes that we cannot sustain the profitable growth of shale production per capita hereafter.

        My suspicion is that you don’t understand the constraints of net energy per capita and the log-limited exergetic bound of, and diminishing returns to, our complex, high-tech, high-entropy civilization, which ceased growing in the late 1990s to early 2000s, and it had little to do with the “choice” of the bottom 90% to consume less per capita and per household.

        This metanarrative is antithetical to the “comfort zone” of virtually all of the competing memes vetted and permitted to be presented by Wall St., The City, and Frankfurt, the Establishment technocrats and ministerial intellectual elites, corporate managerial caste, the imperial political caste, and the mass-media influentials.

        I would add as a parenthetical that I am deeply sympathetic to an economy and society based on solar, wind, geothermal, etc., progressively taxing net energy consumption per capita/household to replace taxes on labor, production, savings, and productive capital formation to pay for the build out of the necessary infrastructure to scale. But we would have had to begin the process 40-50 years ago to overcome the exergetic constraints to scale now facing the economy, society, and now global civilization. Virtually NO ONE is now sufficiently informed, socially and culturally conditioned, nor economically and financially incentivized to internalized the values, objectives, and expectations of such a society.

        And I have lived long enough to know that this is not an accident.

        • Nick G says:

          Per capita

          Ok. The US still has not deindustrialized, even on a per capita basis. US manufacturing output has grown 2.7% per year over the period 1979 to 2011 (with labor productivity growing 4.2% per year and labor hours falling by 1.4% per year).

          Let me say that again: US manufacturing output has grown 2.7% per year over the period 1979 to 2011. That’s much faster than population growth, which is between 1 and 1.5% over that period.

          I agree that income inequality is a bad thing. But that has little to do with whether people can afford to buy EVs.

          EVs are cheaper than ICEs. People won’t have much trouble affording them.

        • Caelan MacIntyre says:

          I have referred back and responded to this thread, which seems rather important, over here.

  33. Denis says:

    Hi,
    Where can I find OPEC members seperately oil export by destinations?

    Regards,
    Denis

  34. Pingback: My TFSA Update June 2015 - Is There Really A Big Oil Glut?

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