Open Thread Petroleum, May 29, 2018

D Coyne Uncategorized

For anybody who regularly comments at Peak Oil Barrel,  I am open to guest posts, just email me at peakoilbarrel@gmail.com.  Maybe a short outline or synopsis first, to see if I like the post, then just email the post after the outline/synopsis is approved.  Thanks.

Comments related to Oil and natural gas in this thread please. Thank you.

187 thoughts to “Open Thread Petroleum, May 29, 2018”

    1. Thanks Matt.

      Is it possible output has declined due to a lack of investment? It seems a Hubbert Linearization on just the data points since production left the plateau may not be very accurate, about a 4 Gb URR looks roughly correct for an HL on 2003-2016 data, the past 4 years have not been a normal time in Venezuela and I would expect this would affect oil output.

      Fernando Leanme’s input would be interesting as he is pretty familiar with Venezuela.

      1. Production dropped because they allowed reservoir pressure to drop below the asphaltine deposition boundary. The field has a large gas cap, an oil leg, and an aquifer which loses permeability and porosity with depth.

        PDVSA management is mostly political hacks with very poor engineering skills, many of them are into corruption schemes, compressor and pump maintenance are a mess, and a field like that requires careful management, I think that if prices are above $80 and the tax environment isn’t onerous the reserves can be squeezed up to about 53% RF (4.5 billion ultimate) but that would take drilling dozens of new wells, and getting compression and water injection back to a reasonable level. Recovering that oil would take another 40 years.

        To design a recovery plan it would take about $10-20 million investment only in geoscience and engineering, and about two years, before the operator can go project approval and to front end engineering.

        I forgot: I have published a paper on a nearby reservoir and served as advisor to engineers running reservoir models for a few Furrial trend fields. The best well I saw flowed consistently over 20,000 BOPD for years. It was so hot I recommended coolers be installed on the well flowline because we had trouble with NGL going into the gas phase when the well was tested.

        1. The Hubbert Linearization assumes a US type of investment environment. The point here is that when conventional oil peaks in countries with political or other socio-economic limitations there are negative feed-back loops which do not allow to get at the remaining oil easily. Remember Bakhtiari’s WOCAP model?
          The oil price drop in 2014 – which was partially caused by surplus US shale oil clogging up inventories because US refineries couldn’t absorb this extra light oil anymore – made it only worse

          Impact of oil production decline and low oil prices: Venezuela (part 1)
          http://crudeoilpeak.info/impact-of-oil-production-decline-and-low-oil-prices-venezuela

          1. I dont know anything about a WOCAP model, nor do I get into Hubert Linearization.

            I do know how to take an existing field, study it for real with a team of geoscientists and engineers, and put together a plan to optimize its future development to maximize present value for the owner and the state.

            Linearization simply assumes a very steady operating environment, and a large enough number of reservoirs to apply a statistical method which I think is a bit too coarse for the type of work I do.

            In Venezuela’s case the problem isn’t caused by oil prices, it’s caused by an incredibly incompetent, corrupt, and criminal administration by communists receiving advice from the Castro dictatorship and foreign Marxists such as Alfredo Serrano Mancilla.

            The sheer stupidity and criminality of the regime is hard to describe, but you may get a taste if you read an 800 page report issued yesterday by an expert commission which concluded Maduro and a long list of names in his regime should be indicted for crimes against humanity by the international criminal court.

            When I wrote that El Furrial can be redeveloped to recover almost a billion barrels of additional crude and condensate I didn’t mention the CAPEX required, which would run into the USD billions. This is simply a bit beyond the understanding of most people (even most petroleum engineers would be a bit lost trying to figure out what to do).

          2. Matt,

            If Maduro remains in power long term, then your 3.5 Gb estimate might be correct. My main point is that if there was a US investment environment, I think your estimate is probably too low. A stable capitalist regime might be able to get a URR more like Fernando estimates (4.5 Gb), but it would require a large capital investment, my estimate is between at 4 Gb, but as Fernando suggests the HL method is not very good and often underestimates URR.

            In addition, Fernando is actually knowledgeable about how these fields might be produced, so his estimate would be far better than mine.

            I am also doubtful that oil prices will remain low long term, I expect Brent oil prices will gradually rise to $150/b in 2017US$ by 2027 though clearly a straight line increase is the most unlikely path, there will be a lot of volatility between now and 2027 and the zigs and zags are impossible to predict.

            4. From the Aljazeera piece: “The international response was quick; the administration of US President Donald Trump placed tough new sanctions.

              Trump signed an executive order imposing new penalties that bar US companies or citizens from buying debts issued by the government and state-run oil company PDVSA. ”

              Isn’t this all a bit rich when the USA continues to import, what, half a million barrels a day of Venezuelan oil?

            5. Im not the corporate press, and I understand communist dictatorships are ruthless, cruel, inhumane, barbaric and can be genocidal. The fact that the Castro family has ruled Cuba for almost six decades while destroying the country is sufficient proof.

              If anybody is interested in browsing through Maduro’s record, a panel of legal experts just presented an 800 page report documenting Maduro’s crimes against humanity. The report names Maduro as well as his main supporters. It is being submitted to the international criminal court for their consideration.

              Here is the link to the executive summary

              http://www.oas.org/documents/eng/press/Venezuela-Executive-Summary.pdf

              Meanwhile the Canadian government added additional individuals to the sanctions list. Included were several low level government functionaries which served as stooges who served as fronts for money laundering schemes used by the regime in Canada.

              China’s and Russia’s wishes have little to do with Maduro’s survival. If the issue goes to the Security Council the Russians will veto, China will probably abstain. But actions against Maduro won’t really require UN approval because the regime will not be recognized by over 50 nations as of January 2019. And at that point the USA can strip away its control over Citgo and any oil shipments the Maduro regime intends to sell. A simple naval blockade approved by a government in exile will take care of the problem.

            6. Fernando—
              You escaped Cuba (or were traded) as the Right Wing Dictatorship fell, and being one of the elite, were shipped to a fascist dictatorship in Spain.

              As with all, your opinion has attachments.
              But not to be discarded–

            7. No sir. I lived almost 8 years in Cuba after Castro took over.

              Maybe you should u derstand that I’m used to being insulted, denigrated, and abused by people like you. I’ve been experiencing it for almost six decades.

              And I’ll simply continue to expose your political beliefs as an inhuman monstrosity, an evil cancer, and probably the biggest threat faced by humanity.

            8. I don’t remember reading any complaints you had about Pinochet’s Chile or Galtieri’s Argentina. If you do have a concern for humanity it seems to be a rather narrow and ideologically defined slice of it.
              How do you feel about Suharto, or are your concerns for humanity limited to Latin American communists?
              You are not concerned with humanity. You are concerned with yourself. It’s easy to see.

            9. I was born in Cuba, I was abused and insulted by communists in Cuba. I imagine that if I had lived in chile I would have remained there and I would have voted for Piñera, who won the last elections.

              Unfortunately Cuba is ruled by a corrupt, evil, and cancerous communist dictatorship, so there’s no democracy and the only means we have to overthrow it is to document its abuses, point out the Castro family remains in power, and it’s spreading its evil in Venezuela, Nicaragua, and other nations. This makes the Castro dictatorship a clear and present danger to the USA and other free nations.

            10. Survivalist:

              As far as I know, Galtieri and Pinochet are gone for some time now. It seems a little pointless to me talk about them now.

              On the other hand, Cuba´s and Venezuela´s dictatorships are very much alive today.

            11. Brazilian Guy- not pointless because Pinochet and Samosa are Trumps kind of guys, and he is alive and kicking.
              Never forget tyranny.

            12. As far as I know, Galtieri and Pinochet are gone for some time now. It seems a little pointless to me talk about them now.

              Really now? So Brazilian Guy, then what do say about this, eh? Maybe we shouldn’t talk about this either, or the role the US government had in it.

              The Brazilian military regime was the authoritarian military dictatorship that ruled Brazil from April 1, 1964 to March 15, 1985. It began with the 1964 coup d’état led by the Armed Forces against the administration of the President João Goulart, who had assumed the office after being vice-president, upon the resignation of the democratically elected president Jânio Quadros, and ended when José Sarney took office on March 15, 1985 as President. The military revolt was fomented by Magalhães Pinto, Adhemar de Barros, and Carlos Lacerda (who had already participated in the conspiracy to depose Getúlio Vargas in 1945), Governors of Minas Gerais, São Paulo, and Guanabara. The coup was also supported by the Embassy and State Department of the United States.

              Source Wikipedia
              But I actually lived through all of it in person. So I don’t have a lot of sympathy for Fernando’s rather selective anti authoritarian views. I hate all authoritarians with a passion and that includes the current Brazilian and US administrations.

              I recommend reading this book!

              On Tyranny: Twenty Lessons from the Twentieth Century
              by Timothy Snyder

            13. Communists are today’s main threat to human freedom and well being. They sheer lack of morals shows very well when they pop up like roaches singing in defense of the most vicious and destructive dictatorships. Over this weekend we are seeing Ortega kill dozens of protesters in Nicaragua as the communist dictatorships in Cuba and Venezuela continue their abuses. Let’s be clear, these guys are incredibly dangerous, the core of their evil movement is in Cuba, and it must be destroyed.

            14. Fred Magyar:

              You really want to use wikipedia as a historical source ?

              I´ve been here in Brazil my entire life, You don´t need to explain to me what happened in 1964.

              If you want to explain it to the others, I could help, but it would take much more space than a Ctrl-C/Ctrl-V from Wikipedia.

            15. So, Fernando, what do you think of the protestor-killing, rights-suppressing absolute monarchy / religious theocracy in Saudi Arabia?

              I can already guess based on your previous bullshitting: you probably have no problem with it. You are very selective in your outrage. It’s actually pretty sad.

            16. I´ve been here in Brazil my entire life, You don´t need to explain to me what happened in 1964.

              The Wikipedia quote wasn’t intended to educate you personally, it was just a quick note to give some context to the rest of the readers of this blog as to why I think Fernando’s views are more than a bit selective.

              And as I mentioned, I personally lived through that particular event in Brazilian History myself, so I certainly didn’t need Wikipedia to enlighten me as to what life was like during that period.

              And while I despise the corruption of Lula and Rousseff, you will be hard pressed if you try to convince me that Temer is any better.

              I’m sure you’re familiar with this popular saying:

              A merda é sempre a mesma, só mudam as moscas…

            17. The Bleating Sheeple

              All so-called governments are (by definition) authoritarian to various degrees within their respective geopolitical glorified open-air prison constructs like Brazil, China, Russia, USA, and everyone’s favourite, Palestine, etc., with their heads’– Trump, Pinochet, Stalin, etc.– authorities being all merely a matter of style and degree.

              Voting for that is a bleat of appoval for your pen’s authority and those people you victimize by it.

  2. As someone who has been out of the peak oil loop for almost a decade now, I’d love to see an update of the world petroleum situation.

    I’ve revised my view since repudiating the peak oil hypothesis in 2009, after several years of following the updates. When I thought the forecasters had nailed it, it turned out they were spectacularly wrong, but this led to my rejecting wholesale the assumptions behind the forecasts. This was not the reasonable thing to do.

    I now see it as an undeniable inevitability, but, unfortunately, as utterly unforecastable, to coin a clunky phrase. This is not a good thing.

    I notice gasoline prices in our area (New England) are way up again.

    1. I have been following the peak oil debate since 2005. Estimates of the peak
      vary from 2017 to 2040 and beyond. My views have changed a great deal as
      well. The main source of debate is so called unconventional and frontier
      oil. These oils were known to exist 50 years ago, but the cost of
      extraction was too high to have them classified as reserves (the subset of
      resources that can be extracted at a profit). For me, peak oil is about the cost of extraction rising faster than the market price of oil.

      In my opinion macro economic trends from peak oil abound. Some notable trends are: lower wages (contributing to greater wealth inequality), decreased margins in the oil industry, greater corruption, and increased political instability.

      In my view, Dennis is one of the most careful forecasters. I believe that
      oil prices will be below his estimates (we are working on a new paper, but
      you can look at this one:
      https://link.springer.com/article/10.1007%2Fs41247-016-0016-6),
      so that peak oil should come on the front side of his 2023-2027 estimate.

      1. Thanks Schinzy.

        I think we may see $150/b in 2023, consider the amount the economy as a whole can afford. From 2011-2014 average Brent prices were about $112/b in 2016 $. About 30 billion barrels of oil were consumed each year, for a $3383 M total spent in 2016$ (market exchange rates), average World GDP in 2016$ over the 2011-2014 period was $68882 million so about 5% of World income was spent on oil with no significant ill effects. The IMF forecasts World GDP in 2016$ (market exchange rates) to be about 93000 million in 2023. I expect oil output will be about 85 Mb/d or 31 Gb per year.

        At $150/b this would be $4653 billion in 2016 $ spent on oil or about 5% of World real income.

        This is why I believe you may be incorrect about oil prices. I also believe higher oil prices will spur the transition to alternatives to fossil fuel, that’s a plus in my opinion.

          1. Mushalik.

            Is the value of Brazilian currency different than in the 2011-14 time frame.

            The value of the US Dollar has a big impact on US prices. Intentionally weakened in wake of 2008 crash led to highest sustained oil prices in US ever, 2011-14.

            1. Shallow sand,

              The economic crash in 2008/9 led to reduced oil prices, the World economy recovered from 2011-2014 (World real GDP growth rate was about 2.6%/year). The oil price was high because that was the oil price needed to balance supply and demand on the World market. Eventually it led to oversupply in late 2014 and prices crashed, that’s the story, exchange rates had little to do with it.

              https://fred.stlouisfed.org/series/DEXBZUS

              For Brazil, their currency is currently very weak relative to 2014, by nearly a factor of 1.6, so they are probably seeing very high oil prices in the local currency (Reals), equivalent to roughly $120/b back in 2014. In the mean time per capita real GDP has fallen in Brazil since 2014.

              https://fred.stlouisfed.org/series/NYGDPPCAPKDBRA

              Not a pretty picture.

          2. Matt,

            The high oil prices combined with other political and social problems are what has lead to the truck strikes in Brazil. Were there truck strikes in Brazil from 2011-2014 when Brent averaged $112/b (2016$)?

            Maybe I missed it. 🙂

            Actually income has fallen and the Brazilian Real is weaker than in 2014, so that oil is relatively expensive now in Brazil.

            1. Were there truck strikes in Brazil from 2011-2014 when Brent averaged $112/b (2016$)?

              Maybe I missed it. ?

              I spent a lot of time in Brazil in the period between 2012 and 2016. The shape of the political corruption scandals was becoming public knowledge. For example The Lava Jato (car wash), Petrobras, massive fraud in the world cup stadium construction fiascos, etc, etc…

              The writing was definitely on the wall even then. There was plenty of economic and social strife with protests and strikes in all sectors nationwide.

              Unfortunately in Portuguese but anyone can Google Translate:
              This is pretty much what the major headlines looked like in Brazil 2014 before the World Cup.

              https://brasil.elpais.com/brasil/2014/05/21/politica/1400696438_164932.html

              Uma onda de greves sacode o Brasil às vésperas da Copa do Mundo
              Motoristas de ônibus, professores e policiais param suas atividades. Funcionários do metrô e servidores públicos federais ameaçam paralisação

              IMHO, corruption aside a lot of this was due to the Lula and Rousseff presidencies promising the sky to the lower classes by putting all their eggs in the Petrobras economic basket and then having the misfortune of the shit hitting the fan on their watches and no longer being able to fulfill many of those promises. The people felt badly cheated and they showed their discontent.

              I think this is a real danger going forward with any economy that does not diversify from a fossil fuel based economy.

              Cheers!

            2. It’s the resource curse. Any country which depends on resource extraction for its economy will crash hard when the resource depletes or a cheaper substitute is found.

              Within the US, the state of Wyoming is riding for a huge crash, as it’s almost entirely dependent on coal, oil, and gas. They haven’t even bothered to have income tax or sales tax. They have a tiny population and a tiny economy other than resource extraction, so the state’s likely to go bankrupt when the resource money dries up.

            3. Wyoming might be a good place for wind and solar?

              Also has a large tourist industry relative to the state’s population, given most of Yellowstone and the Teton’s are located within Wyoming.

              Jackson Hole is also a pretty popular travel destination, especially for very wealthy people.

              I have not looked up the numbers, might be worthwhile to check into the things I mentioned?

              Edit: Looks like Wyoming has tremendous wind energy potential and a decent amount of solar energy potential. Enough to supply almost 90 times the state’s current electric demand. I assume a lot of CAPEX required.

              Mining is #1 GDP and provides a huge chunk of WY tax receipts. Government employs something like 69,000 of the state’s approximately 290,000 workers, from what I find online.

      2. Thanks for responding.

        The main source of debate is so called unconventional and frontier
        oil. These oils were known to exist 50 years ago, but the cost of
        extraction was too high to have them classified as reserves (the subset of
        resources that can be extracted at a profit)….For me, peak oil is about the cost of extraction rising faster than the market price of oil.

        This is for me a source of disturbance, as it means we’ll never be able to predict accurately how much of this “reserve” will move into the economy and at what cost.

        The fact that we’ve simply blown through over ten years of oilsands from Canada and LTO from the Bakken and elsewhere, with nothing going toward planning for “the vision of the upcoming decline” (to paraphrase Colin Campbell) is simply mind-bogglingly irresponsible.

        1. Michael

          Certainly the United States has done nothing to plan for peak oil.
          We looked at getting to train from Chicago to Auburn to see the Duesenburg museum. The only trains leave in the evening from Chicago and leave Waterloo in the morning. So you would have to stay over 2 nights for a trip you could do in a day if there were a decent rail service.

          Compare the same journey in Britain or Europe and there would be many trains you could catch in the morning and late in the evening in either direction.

          http://ojp.nationalrail.co.uk/service/timesandfares/LUT/YRK/tomorrow/0630/dep

          many European cities have electric trams

          https://www.iamsterdam.com/en/plan-your-trip/getting-around/public-transport/tram

          Unfortunately London ripped up all it’s trams and that is why our pollution is so bad.

          2. I didn’t find London pollution to be that bad. Mexico City, Harbin (China) and Caracas just before the end of the dry season are awful.

            1. Try Cairo in winter in the chamsin season. You’re coughing black dots for 4 weeks after having this a few days.

      3. Schinzy, it’s very interesting that you’re thinking 2023 for peak oil, because that’s around the time I’m pinning for peak demand based on a substitution-effect model.

    2. The big picture is that peak demand is coming. This is due to ongoing drops in the price of electric vehicles, which decreases the price of substitution. Meanwhile the cost of producing oil is rising as the “easy oil” is used up and the remaining oil is more expensive to produce. After a while the production cost exceeds the substitution cost, and the oil business becomes unprofitable.

      I have a bunch of detailed models of this, but the details may be disputed. What’s not in dispute among serious people is that the two curves (substitution price and production price) are crossing.

    1. Just beat me to it, Jeff. I just read the G&M article and thought, “I should post this link for POB”.

      I am a coast dwelling BCer that supports the pipeline expansion so I often get lambasted. I have always thought it beyond ironic that the Lower Mainland, our largest polluter and consumer of FF and emitter of GH effects, is supposedly opposed to the expansion. My son works in Alberta and lives just upstream from me. 2 on and 2wk off shift so we see each other a great deal. Excellent Union job with full bennies, and most importantly respect; for his credentials, work ethic, and experience. Many Canadian city folks do not understand the importance of our resource industries for the country. They believe wealth is created by FIRE, or some kind of magic set of prosperity laws. Yet, the same nay sayers complain bitterly about site C hydro anmd rising gas prices.

      1. Thanks for the perspective Paulo. Is the opinion divide on this issue among BCer’s along urban/rural lines primarily, in your estimation?

        1. Sorry for the delay, Hickory. I have been building a house.

          I’m not sure about the divide, actually. On one hand it is urban/rural, but I just don’t know. I think it is more NIMBY, but with an actual fear of a tanker accident, (which I share, by the way). NIMBY, and self-delusion with a dash of ignorance and a heavy shake 0f opinion. Lots of opinion.

          But here is a short story you might find amusing. My neighbour, an old retired ironworker with a pickled brain from too much booze over the years, came up with the following idea. (Now, this is a guy who has worked all his life in industrial settings including the oil sands….and is just getting his boat ready that burns 20 gallons/hour on cruise), informed me that he is against the pipeline and that Canada needs to immediately shut down the Alberta oil industry for the sake of the planet. Dumbfounded, I asked him about the disconnect having worked his whole life in the industry and being a current, and large consumer of FF? I asked him if he accepted the hypocrisy of running his gas guzzling boat all summer while putting hundreds of thousands of people out of work? I believe my exact words were, “You fucking hypocrite, you had a whole lifetime of kicking the can and consuming, and are still the biggest FF consumer I know, but you expect my kid to lose his job? Go fuck yourself you …..idiot”. (You get the jist of it). I.Lost.It.

          So, I don’t know. I see the protestors like Suzuki who own millions of dollars worth of homes and properties, and kids who are in their teens who should be in school instead of the protest camp, and First Nations who have never held a job but are professional protestors…all in a city famous for its fossil fuel gridlock. I simply do not understand it anymore, but I know hypocrisy when I see it.

          The one thing…the one thing they always say is that if there was little FF to burn, alternatives would immediately arrive to save our way of life with nary a blink. I usually opine about right after the riots and die-offs.

          That is my point. My neighour drives an SUV Mercedes piece of crap, and we drive a Yaris with a 1.5 litre engine. He has an old GMC PU to haul his boat that gets 8 mpg (high test), while I drive an ’86 Toyota PU for building. I use 7 gallons of fuel in my boat every summer, which fills our freezer with salmon, and I run a walk-behind BCS rototiller and a small Belarus tractor with an 11hp Honda gas engine….maybe once per week, and he said, “But you have a roto tiller and a lawn mower”. Never mind we grow our food with the tiller.

          So, Hickory, I think many people are just effing stupid and want to feel good and self-righteous. I have a buddy who drives a giant 1 ton PU, everywhere, because he is so overweight. He has a boat and and and. And he is against the pipeline and rails about it on facebook (which I have only been told about because I don’t do FB and never will). he does not see the hypocrisy.

          It is becoming like the Civil War. People and their relationships are fracturing over it.

          I always say, “WE are all part of the problem, all of us; me, you, and everyone else. Come and talk to me about it when you sell the PU and start running an EV. Meanwhile, if you’re Canadian you’ve been burning bitumen for years so stick a cork in it”. 🙂

          1. Paulo. This is a very good post.

            So many just seem to believe everything will magically all work out.

            Living a FF free life is not easy for those in US or Canada.

            The mayor of NY is suing Big Oil while traveling in a FF powered large SUV, in a helicopter and in jets.

            Disconnect.

          2. Well said. I see a similar disconnect on the subject of fracking. It is politically correct around urban USA to be dead set against it. But people still want to be able to vacation in Europe, or drive to the mountains to camp, or travel far for a concert or family reunion.
            Or build a home for an affordable price. Or eat bananas.
            Most have no clue how expensive fuel would be in N. America currently without fracking.
            Its a matter of time until they find out, due to depletion.

            I sure hope the tankers don’t reek havoc up along your beautiful passages.

            1. On top of that, I have no doubt that at least some of the same people who complain about fracking are also upset that gasoline is at or near $3.00 per gallon and are convinced that “Big Oil” and OPEC are again “price gouging”.

              There is a lot of production coming from US and Canada because those are two places where spending in excess of cash flow can go on for multiple years.

              Not looking like even $80 Brent is enough to goose most international (outside US and Canada) producing areas.

            2. On top of that, I have no doubt that at least some of the same people who complain about fracking are also upset that gasoline is at or near $3.00 per gallon and are convinced that “Big Oil” and OPEC are again “price gouging”.

              I think $10.00 per gallon would still be cheap.

              There are plenty of places in the world where it is over $8.00 per gallon already.

              The whole idea of a transportation system based on privately owned gas guzzling SUVs and PUs is probably going the way of the Dodo, sooner or later.

            3. 1 PV panel produces enough energy over it’s lifetime to push an EV 70,000 miles.
              That is equivalent to $8400 in gasoline at 3$/gallon and 25 mpg. Since the panel costs less than $300, I think we have a winner.

            4. I have done calculation to determine cost/mile for propulsion using PV energy from my roof using real production data and actual system cost. I made one assumption in these calculations- the kWh/100 mile consumption for EV I used was 33, which is on the high end of currently available full EV’s [see table on this page- https://www.corporatemonkeycpa.com/2017/12/09/how-to-calculate-your-ev-cost-per-mile/ ]

              My results, with one panel facing SW on the roof at 38 degree N 10 miles inland Calif coast, comes out to be-
              2.6 cents/mile if you use 20 yr panel life
              1.7 cents/mile if you use 30 yr panel life

              For comparison, if you calculate gasoline cost/mile, assuming 30 mpg and $3/gallon, you get-
              10 cents/mile

              Thats pretty compelling, even if you live in an area with half of much annual solar potential.

            5. Thanks for that, Hickory. I’ve done similar calculations repeatedly. It turns out the biggest effect on the numbers is actually the interest rate you assume on the panels (either for a loan or foregone investment interest). If interest rates are low, as they are now, EVs are a no-brainer and everyone should switch next time they buy a car.

              Which is probably why all EVs have waiting lists and are hard to get.

            6. Nathanael- I didn’t consider interest rates at all, since I just outright purchased the system ($800 per panel including all system costs, installation and tax).
              But sure, interest costs and opportunity cost and panel performance over time, and decommissioning/recycling costs would all be relevant factors in a more complex analysis. So would the maintenance cost differences between an EV and ICE.

            7. Yes, $5.00 here due mostly due to taxes, and it’s still cheap. It wouldn’t bother me to see $10.00 if the tourism would decline as a result. However, it would sure hurt for awhile.

              This is funny. A few years ago I bought a cool little fishing kayak after reading about Florida guys fishing for marlin from kayaks. Last year I hooked a twenty# coho and it was straight Keystone Cops mayhem. It circled around and around the boat with my rod trying to follow, jumping and taking runs, with my wife taking pictures from shore. I lost the fish, of course. Next one I head for shore, get out, and see what’s what.

              Conclusion: If it gets too expensive to run my 16′ home made epoxy boat due to oil price increase, I will build a rowboat and eat more omelets for supper. Since reading the Long Emergency so many years ago, and PO.com days, I/we have adjusted our lifestyle and made many many plans for resiliency and for my family. Not everything has worked out as I thought it might. 🙂

              The latest incarnation is building a small rental (done) and getting my HAM ticket. I now have access to the full amatuer spectrum and started on my Advanced (Canadian certifications) which will allow me to design and construct up to 1,000 watts, including repeaters. Also, I am now the official (hah) local emergency comm director and really enjoy the new people I have met along the way. Some of the Hams doing the instructing and mentoring are unbelieveably intelligent and helpful. It has been a great learning experience and I highly recommend it to anyone. The new base station will work just fine on car battery with a panel for charging, as backup. or, out the wall on a dedicated circuit. The cell towers might go down in a quake as could the power poles, but I’ll be able to communicate and do reports out into the Island Net trunk system.

            8. As a former commercial fisherman in Micronesia, fuel was a major issue– gallons per hour was the rate measured. We really rated props and speeds. Most boats were useless.
              I also drive a Yaris– in rural Oregon.
              I’m fuel dependent.
              A F250 is a economy vehicle around here.
              Most are empty.

            9. I’ve been diving off my kayak for the last 20 years. I’m getting a bit too old now but I even used to paddle out to Gulf Stream down in the Keys, with friends in the past. We got some strange looks from people fishing from their power boats when we told them we had come by kayak from shore.

              BTW, its not so much the distance. It’s the risk of the weather turning unexpectedly… This is Florida

            10. Have you considered an electric outboard motor? They’re pretty awesome.

          3. OK, your racist attacks on First Nations tell me something I didn’t want to know about you.

            FWIW, I’m driving an electric car, using 100% renewable electricity, heating my home with electricity too. I think that damn stupid tar sands industry needs to be shut down, and you can’t call me a hypocrfite. I am not part of the problem.

      2. Well, I believe the lower mainland is not all opposed to pipelines. We like ours in Texas, and think all should have them?

    2. Oh, good grief. This is going to sink the Trudeau government, since in 2021 nobody will want to buy the worthless pipeline.

  4. I don’t know whether this was posted in February 2018, but this report from Energy Aspects shows on page 9:

    Drop in investment shows up from 2019 onwards
    2019 project additions are the lowest this decade, just when underlying declines have doubled
    2019 sees nearly 3 mb/d of new refinery capacity additions, just when upstream capacity additions dwindle
    https://www.ief.org/_resources/files/events/the-eight-iea-ief-opec-symposium-on-energy-outlooks/presentations/session-3-amrita-sen.pdf

  5. Any thoughts on if this could make a difference in the industry.

    http://www.321gold.com/editorials/moriarty/moriarty052418.html

    Interestingly enough given all the oil ever produced in history, we know where there is twice as much oil today and we ignore it. Conventional oil recovery only extracts 35% of the OOIP (Original Oil In Place). That means two thirds of all the oil ever discovered is still sitting in the ground at the bottom of the wells. Given a $1.72 trillion size market yearly, it seems pretty obvious to me that even a tiny increase in oil recovery would mean billions of dollars in revenue and profit. Estimates put the trapped oil at 6 trillion, with a T, barrels of oil. At today’s prices, that is $420 trillion potential in recovered oil.

    Titan Oil Recovery has an oil recovery system that works. It has been tested on 81 injector wells with a 98% success rate. A paper written for the SPE (Society of Petroleum Engineers) by Husky Energy showed production increases of 225%, 450%, 100%, and 533% on different wells. Another SPE paper by Venoco, Inc demonstrated increases of 300%, 15%, 27% and 752%. Tests in over 100 wells showed average increases of 127% with an 89% success rate.

    1. The game is afoot! Paper says there are two criteria for success. One is “mobile” oil, and two is a specific form of microbe. Which means how much is it applicable to which fields? Fed into waterlift, where it works it’s magic. And how is that effective where water is about all your getting out now? Also, not applicable for condensate or gas. I’m pretty confused. Of course, that is a natural state.

    2. Sounds interesting, if the biological component of the process is not too slow. But what’s the EROEI? Falling EROEI of the total energy system is the key factor that is too often neglected. If EROEI falls low enough, we will find ourselves thrown “back in time” even if lots of energy remains to be recovered.

      Here’s is a perspective I found from a source other than self-serving promotors trying to drum up funds from investors, although I regret it is not very recent:

      http://www.abc.net.au/science/articles/2006/05/11/2242350.htm

      Determining the oil-in-place in an oil or gas reservoir is not a simple process. It involves advanced technology and a large amount of uncertainty. Even if we get the proportion of original oil-in-place right (and it only rarely amounts more than 25% of the total rock volume of the reservoir) then we still have to make an estimate of how much of that oil is reasonably (cost-effectively) extractable. Using current techniques this percentage varies tremendously depending on the type of reservoir. In many Middle Eastern limestone reservoirs the recovery factor may be as low as 10 to 15% of an imprecisely-known initial value. Recovery factors of 40 to 60% may be achieved in Australian sandstone oil reservoirs.

      And here is something else:

      http://alfin2300.blogspot.com/2012/11/the-best-place-to-look-for-new-oil-is.html

      Microbial oil recovery is one of the least utilised, but promising, techniques. Here is more on the “Titan Process,” listed in the topmost chart above as the most economical method of recovery of those listed.
      More than 20,000 wells are abandoned every year in the U.S. as they become non-commercial. Approximately 285,000 shut-in wells in the U.S. are potential targets for MEOR revival. Internationally there are about 800,000 more shut-in wells, a significant percentage of which may benefit from the Titan Process.

      …The Titan Process is unique because it does not require the microbes to excrete anything. The microbes are induced to become interactive with trapped oil causing it to break into smaller droplets with reduced interfacial tension (“frictional” effects between oil and water), so that oil can flow more freely through the rock formation. The oil characteristics do not change, but the flow characteristics and relative permeability to oil are significantly improved. _OilVoice

      More recent, and specifically about the Titan process, but still five and a half years ago and they are still trying to raise funds. If this is really a game changer, I am suspicious as to why nearly the whole industry still continues to ignore it more than five years later. That sounds like more than just the mistake of initially speaking with the wrong people in a company. Over the last 20 years, I have forgotten how many little companies I have read about with “breakthrough” technologies that soon faded from public view. I have learned to be skeptical.

      As the conventional fields draw down, more and more of our oil will come from unconventional sources or processes with dismally low EROEI. The EROEI of coal, uranium, and natural gas is also falling. Even without storage, PV cells are only single digit. Wind is often cited as 18 to 1, but there are way too many factors omitted from that calculation. Wind has huge problems that most people optimistically gloss over. Assuming the worst doomer fantasy of nuclear war never comes to pass, we are still looking at a huge crisis. I think the grandchildren of today’s young adults will live in a world that would be unrecognizable to people today. Sure, there might be some breakthrough in fusion or LENR or dual fluid reactors, but it is already too late to avoid a world shaking crisis, and the material golden age of the late 20th century will not be seen again, not only because of declining supplies of fossil fuels and uranium, but of silver (for high efficiency PV cells), copper for the electrical infrastructure, and other finite non-renewables. Instead of facing the harsh reality that our way of life, the whole of Late Modern civilization, is about to hit the wall, apparently at full speed, people continue to grasp at straws. We should all be downsizing or preparing to downsize. Modernity is over.

      1. You’re dead wrong about EREOI on solar. I don’t know why people tend to lie about that, but solar panels tend to last 40 years, and their overall EREOI is in excess of 35.

        Maybe you’re just using out-of-date numbers? Older solar panels used more energy in manufacturing *and* produced less energy. Also, most people underestimated their lifespan (which is still happening).

    3. I see baloney about magic oil recovery processes once in a while, and also stuff like this which recycles old ideas, as well as people selling all sorts of gadgets, weird looking beam pumps, and emulsion additives that work without adding any heat whatsoever. Thus far nothing seems to work. The best technology that’s emerged in the last 30 years is the cell phone, so we can have all employees in a short leash 100% of the time.

        1. I’ve been in research guidance committees, and I’ve seen some ideas which yielded very interesting results. But I’m not sure if I can discuss them here. Let’s just say that some gadgets and fluids do have some potential, but there’s a lot of research left to be done. And these ideas only reduce decline rates, they don’t increase field rate that much.

    1. F the infowars link!

      But the Art Berman talk . . . . everyone on this board NEEDS TO LISTEN TO THIS!

      The end of this interview makes me think that everything is being thrown at this LTO phenomenon, and it’s incredibly desperate.

      1. Yes it seems the IOCs don’t have a lot of options, and really it’s narrower than LTO that they are all piling into, it’s just Permian. Recent lease sales have not been that great; Uruguay – no takers, Brazil pre-salt – only Shell, UK – 61 leases, mostly low cost seismic reanalysis and only 320 mmbbls expected new, I think there were a couple of others that were delayed because of low interest.

        I hope if things do start going south it’s after 2020 and there are some people in the US administration who actually have a clue how to respond.

        1. Interesting timing. The limiting factor on the great energy transition is either battery factories or electric car factories, or possibly lithium “mining”. If we assume that the current rate exponential growth in both is maintained, and that batteries are directed preferentially to the trucking business (which would see the greatest savings in fuel costs), we should expect a peak in demand circa 2023. We could easily have very expensive oil before 2023, though.

          The question I have is, will very expensive oil cause more investment in electric car factories and battery factories, or are we already building them as fast as the world can manage (i.e. is the construction limited by investment funding, or by something else like training and expertise).

    2. Does Art Berman think there will be a major uptick in discoveries if oil price rises enough or not? I can’t really figure it out, he seems to say not the for USA, but then maybe yes for the world overall, but if so he doesn’t say where.

            1. I just read that article about Halcon Resources. I can’t help thinking that a country that allows this to happen–the tone of the article makes it seem this is pretty routine–deserves any suffering it gets.

            2. Yeah, the US has designed its legal system specifically to allow this sort of spend/flip/declare bankruptcy/take golden parachute scam.

              Australian bankruptcy laws don’t allow it. US bankruptcy laws encourage it.

              It’s pretty gross.

      1. IEA projections are a joke. They’ve underestimated solar, wind, batteries, and electric cars by factors so large that it’s absurd, and they’ve done so for decades.

        A simple exponential curve fit works better.

    2. Some takeaways:
      “the call on OPEC crude climbs back to 32.3 mb/d, 610 kb/d more than the group is currently pumping. From now through the end of the year, the call on OPEC stands an average 580 kb/d above April output, implying steep stock draws should OPEC crude output remain at current levels.” (p.14). Will be interesting to see what the net effect will be if (part) of the cut is removed and Venezuela continues south.

      “Crude stocks continued to decline in Saudi Arabia, by 3.9 mb m-o-m, to their lowest level in more than eight years…” “Short-term floating storage fell by a further 0.9 mb to 9 mb during April, its lowest level in nearly 10 years” (see p.31). A dude on twitter claimed there was lots of oil in tankers. Can’t remember whom – probably someone unimportant.

      Stocks of refined products are assumed to draw in 2Q2018 (more so than oil), crude oil stocks draw mainly in 3Q but still some draw of products (see p.40). Seems to me that product stocks will be low in 4Q.

    1. I haven’t seen any charts regarding WTI Midland vs WTI Gulf Coast, though I heard that is higher, still, than WTI Cushing. Or, maybe I have been reading too many trashy articles.

          1. Guym and others.

            I assume the PB issues are screwing all lower 48 US producers?

            WTI Brent spread is now over $9.

            Our posted price, as well as almost all others, is based off WTI.

            If so, thanks shale dudes.

          2. PB issues…

            I read that the producers that have paid for long term pipeline capacity are alright. I guess that includes all the large companies. I don’t know about smaller companies who sell to traders, even they might have take-a-way contracts for existing production?

            It’s only new production that I’m sure will have to take the discount.

            And I don’t know if there are any companies that have hedges at the Cushing price but are having to sell at the Midland price? That could be expensive.

            1. But, isn’t PB overproduction affecting the WTI Brent spread?

              Has to be IMO.

              So our buyer is likely killing it right now, buying our crude priced based on WTI, and then selling it to the refinery at a price near Brent.

            2. Yes I see what you mean, yes too much Permian oil is keeping the WTI price down
              Brent-WTI spread closed at $9.29 today

            4. There is probably some hope that constraints (plethora) will moderate growth until 2019. Hopefully, port availability will be enough to handle current growth. Another glut is likely to ensue from the latter part of 2019 until port capability has been increased in 2020. But, who knows, and thankfully I am not in charge of this weird fire drill.

            5. Guym,

              The average well in the Permian needs about $72/b at the wellhead to make a decent profit (60 month payout), to make a good profit (to account for risk) would require about $82/b (36 month payout).

              I imagine for those who have not locked in pipeline access that there will be little incentive to drill new wells with about $57/b at the wellhead (WTI minus $10/b spread).

              So rational oil producers (of which there may be few in the tight oil business) will not be expanding production in this environment, unless they drill average wells that are better than the Permian basin LTO average.

              I would say getting more than a 600 kb/d increase in Permian output in 2018 is looking unlikely. In fact, 400 kb/d may be a challenge due to pipeline constraints.

            6. I think it is at 400 now, probably over. Rough guess. Texas production increase is mainly driven by the Permian. Permian covers Texas and New Mexico. Both at the end of 2017 were 4,521. End of March, they are 4793, or a 272 increase. Eagle Ford may have risen some, but other fields in Texas have probably decreased. The discount did not start looking ugly until the end of April. Matter of fact, there was a brief period as the new pipeline was finalized that the discount decreased for a short period of time in April. So, I add another 150 to that 272 for April. May (probably another 150k during that time) the discount looks scary, but decisions don’t move quickly, usually. I may be wrong on May, but I am guessing 600k is not out of the ballpark, and could be, very possibly, be much higher. Though, I would expect it to drop some before year end, or, at least, by mid 2019 So, average for the year may be much lower than 600k.

  11. Saudi Arabia has raised domestic fuel prices, but I guess it’s still to early to see any change in demand.

    IEA Oil Market Report: 16th May 2018 Demand Fundamentals (page 5)
    The impact of higher prices on demand in several developing countries are likely to be stronger than in
    the past. Many of them took advantage of lower prices after 2014 to reduce or eliminate subsidies; e.g.
    Indonesia removed gasoline subsidies in 2015 and reduced diesel subsidies in 2016 and the most recent
    notable example was in Saudi Arabia where gasoline prices were approximately doubled on 1 January.

    2018-01-04 (Bloomberg) Saudi Arabia is raising retail fuel prices to “gradually” align them with international rates in an effort to curb domestic consumption, Energy Minister Khalid Al-Falih

    1. That was a 2012 article. Currently, some can be done for $8000, without compressor. Or, less expensive is to buy used converted. EVs are better deals, but it’s an option. World won’t end if we run low on gasoline for awhile. You can buy very cheap conversion kits, but gas does explode if not handled right.

    2. Guym,

      What kind of range for natural gas car? Are there a lot of filling stations in Texas for natural gas vehicles? Seems an EV might be more convenient.

      1. You can run a worthless old ICE car for 50k miles and more for next to no maintenance. Parts are cheap and mechanics ubiquitous.
        A valueless EV is so for a reason. No one has a clue how to fix it and all its widgetry costs a king’s ransom to replace.
        Let’s start with a battery replacement that costs the same as a recon’d engine…

        1. How odd: a comment in which every statement is false.

          Is it fair to call them lies? Perhaps that implies that the person telling them KNOWS they’re false. But who would think an ICE that’s old enough to be worthless can be run with next to no maintenance, and that fuel costs would be negligible??

          1. Nick,
            Our popular old TV programme in the U.K. Top Gear has many times made play of buying a car and driving it 100 miles for less than the train ticket. The point I wish to make is that the long aftermarket in ICE cars is by far the most import aspect of personal transport, not the price of fuel or that of the new vehicle. Most of the world just needs to get around: nothing fancy and barely a nod to aesthetics.
            You know that your mate’s old banger for £1,000 will probably go for a few years and the local garage has all the spares. This is the norm the world over. An old car’s biggest liability is the lights and brakes, and these are cheap as chips. If the engine didn’t work it wouldn’t be there in the first place.
            Better I think to consider the cost of running a car with no nominal value, which is surely for the time being petrol or diesel powered.

            1. You know that your mate’s old banger for £1,000 will probably go for a few years

              Ah, if only that was so!

              Now, old ICE cars are cheaper to own and operate, overall, than new ones. But…so are used EVs. EVs will always be cheaper, if you include all the costs.

              Especially if you include the cost of your mate’s son losing a leg in an oil war in Iraq.

            2. I think the economics and even the “culture” of older cars is changing and will continue to change more rapidly to the discouragement of their use.

              A friend recently bought a 2004 VW Golf. It was a little ragged but seemed sound. After a few months the car started doing an odd thing: the engine stops randomly on the road for a few seconds and then starts up again. It doesn’t leave a code in the ODB2 computer.

              Who on earth is ever going to fix that car? The engine mapping software is so complex and the number of sensors in the car defies imagination. Another friend had a 10 year old Ford that had the “Check Engine” light come on. The dealer had the car for NINE WEEKS and each week the estimate went up another few hundred dollars. Finally the dealer called and asked her to come to the shop. When she got there they offered her two options; (1) a repair estimate that exceeded the value of the car and lacked a time estimate or (2) they would put it back together will all of the old parts and there would be no charge. When she got the car back the light was out and she traded it in on a newer car.

              People are not going to tolerate that situation happily and it will only get worse as these cars get older and the electronic parts become unavailable.

            3. Yair,

              “People are not going to tolerate that situation happily and it will only get worse as these cars get older and the electronic parts become unavailable.”

              Instead of a car imagine when a $500,000 Cat dozer, just off warranty, starts throwing codes on the Queensland /NT border . . . and Mother Caterpillar will not give full access to diagnostic software.

              The whole earthmoving industry is starting to be held ransom by proprietary software. I hear several contractors will not take computerized machinery into remote areas and instead buy known “good models”, some perhaps thirty years old and rebuild them for outback work.

              Cheers.

        2. The fully electric Tesla Model S sedan is now available with an infinite mile warranty. That’s the latest from the automaker, which says that the new warranty now covers the drive unit — essentially the car’s engine — for the same 8-year, unlimited-mile term as the battery warranty.

          There are already reports of Teslas being used in the taxi and limo service with over 500,000 miles on them.
          You seem to have some misconceptions about the need to replace the batteries, that’s simply not been the case.

          An ICE car has over 2,000 moving parts an EV about 20.

          Check out Trump supporting, climate change denying,
          Jack Rickard’s EVTV archives.
          http://media3.ev-tv.me/news051118-iPhone.mp4

      2. Dennis-The mileage was quoted as 250 miles. Plenty of charging stations around me, but not that much further south. An EV would be more practical. I’m just looking at other options. If we went to close to zero gas in a fast span, this would be a good add on. As manufacturing enough EVs to replace ICE would take forever. Point is, doomsday is not close.

        1. Guym,

          Not quite sure about forever. I think the EVs could be produced just as fast as ICEV, there are actually fewer parts, probably batteries would be the bottleneck.
          Just a matter of ICEV manufacturers realizing that people will buy EVs, it will take 5 to 10 years before this is apparent, but if peak oil arrives in the next 7 years as I expect and supplies start to become tight in 4 or 5 years at most, oil prices will rise and the game will change.

          A key will be when OPEC/Russia claims they are going to increase production and the World sees that spare capacity is 1 Mb/d rather than 2.5 Mb/d, that may be a game changer. Also US LTO increases slowing down around 2020 may make people question the “Saudi America” myth.

          1. probably batteries would be the bottleneck
            Bingo!
            We have a winner—–

          2. I agree with Hightrekker. A short comment from him; I will try to make some more comments to elaborate as to why I agree.

            So to make the 1-1.2 billion vehicles the current need is both coal and iron ore extraction, both aboundant, and they had to be scaled up to make enough steel over over decades. Sure some synthetic or natural rubber had to be added and maybe some plastic and aluminium after a while as a luxury (and/or light weight) component to make a car. Add some copper to the mix due to cars being increasingly electronic. But to scale up lithium, cobalt, nickel and copper mining to the desired level to make 300-550 kg lithium battery packs. It is going to take a lot of time. We are not talking about Apple or Intel here relying on realtively small amounts of silicon and silver; mining is a notoriously slow industry. Add rare magnets which are also needed and in fact 90% sourced from China (Toyota is trying find alternatives to just that) and we got a challenge. Lithium is being scaled up now and is aboundant, but for the other raw materials I am not too sure. Which is felt by Tesla and all the other car manufacturers. They dont’t want to pay too much for their batteries and thus production increases are slow and expensive. Just my opinion.

            In Norway demand is sky high for electric cars due to massive subsidies compared to fossil fuel cars and also government sponsored marketing if I dare say. The cars still can’t be delivered, 6 months – 1 year+ delivery time with economic models like Tesla model 3 and Opel Ampera (which could have sold 10 000 cars here I am told) just not available. And the trend is that EV cars are getting more expensive than anticipated.

            1. Yeah, battery technology is still in a state of flux. Lot of things still shaking out. However everyone and his brother is pouring massive amounts of capital into developing EVs so it is logical to assume that a big part of that investment is going into the battery supply chain.

              To put things into perspective the Tesla Model S, has only been in production for 5 years. And Volkswagen just put in a 48 billion dollar order for batteries to power its new EV fleet.

              Here is a recent article on battery technology development. BTW, Cobalt seems to be on the way to being phased out.

              https://www.renewableenergyworld.com/ugc/articles/2018/03/12/lithiumion-holding-evs-back-or-driving-their-future.html

            2. Thanks,

              Cobalt is a bottle neck; it is needed in the future according to Umicore (Belgium). I guess it is just a stance to secure low priced supplies for now (not sure though, but I have have worked with strategic sourcing in the past so it kind of smells…). Henry Ford argued for several fuels in order to keep competition on their toes and secure low priced fuel for his cars for example.

            3. A reminder about battery materials: they are recycled. Gasoline is not.

              Today the most recycled material in the economy is lead from car batteries.

            4. Jim Wrote:
              ” reminder about battery materials: they are recycled. Gasoline is not. Today the most recycled material in the economy is lead from car batteries.”

              Not really. Lead from Deep cycled LA batteries is usually not recycled into new deep cycled batteries. The lead in batteries becomes too contaminated for use in Deep cycle batteries again. OK for car batteries but only virgin lead is used in deep cycle batteries. But no way are going use car (electric start) batteries for powering homes, backup grid storage or EV’s.

              Currently the cost to recycle lithium batteries is about 5 times the cost of using virgin\mined lithium. Currently spent Lithium batteries are just processed to extract\recycle the cobalt. The rest ends up in a land fill.

              FWIW: Moore’s law for Batteries is about 40 years. It takes about 40 years for batteries to double capacity. Also Lithium is is the most energetic element for use in batteries. At best improvement will come from better electrolytes & better anodes that will increase the number of cycles and reduce fire/explosion risks.

              Unless something completely new technology that does not require chemical reactions with the battery electrodes, Battery tech has likely peaked or is near peak for weight to price to energy density.

              For higher energy density, new tech will need to come from fuel cells or something not yet discovered.

              That said. Lots like the world wasted its last opportunity reduce its dependance on fossil fuels. 2007-2008 should have been a wakeup call to revise infrastructure and efficiency for higher energy costs. The world has wasted 10 years and accomplished nothing. Now it appears that energy prices will be return to marching back up to the $150/bbl range, as supply constraints return. All the world has managed to do is double its debt, and waste 10 years, watching reality TV shows.

            5. Hi TechGuy.
              That’s what this whole setup is about; wasted opportunities, lives, communities, planet.
              It’s a shit-for-brains culture.
              Even if 10 years wasn’t wasted in certain ways, it would be wasted in others.

            6. Lithium “mining”, of the brine evaporation variety, is actually very quick to ramp up — the problem has been financing. It takes about 2 years from financing to operation for a brine evaporation system.

              Cobalt is slower. However, the main source of cobalt is as a nickel byproduct, and at the moment there is no shortage of nickel. There’s serious effort to reduce the cobalt usage in EV batteries to get it down to where the nickel:cobalt ratio in the batteries is higher than the nickel:cobalt ratio in the ore, which will solve the problem.

              Aluminum is in high supply.

              Manganese is another question but apparently there are no shortages on the horizon.

        2. Point is, doomsday is not close.

          Perhaps. But, regardless of how close doomsday is, or is not, if you wait until it actually arrives, you’ve already missed the boat.

          The writing is on the wall in gigantic red letters everywhere you look. It is hard to understand how it is that people don’t seem to quite get it, yet.

          EVs are not just cars. They are a potentially massive mobile energy storage solution. That is the real game changer.

          Check out what ecotricty in the UK has been up to,https://www.youtube.com/watch?v=yKgcZAs-1tc

    3. During the 04-08 oil shock a company developed a hybrid-electric retrofit conversion for ICEs. IIRC it attached to the power train between the engine and the wheels, and provided regenerative braking. I think it didn’t quite catch the wave. But…if we have an extended high oil price plateau, we’ll see conversions like that again. Battery costs have dropped dramatically, so I think it would make sense to take it further, to a plug-in hybrid.

      I suspect that they’d be more cost effective than NG conversions.

    4. Home EV conversions are pretty effective. I know some people who’ve done them. They work better with older cars, though. (Less fancy computer stuff to retrofit.)

    1. I took a look at his website, and found his analysis of a 100% renewable grid.

      It was highly unrealistic. He assumed that the only way to handle seasonal shortfalls was with pumped hydro or chemical batteries, and neglected such things as “wind-gas”, Demand Side management, or extended transmission grids. That’s silly. Such an analysis will inevitably tell you that a 100% renewable grid is way, way too expensive.

      Sigh.

    2. That’s pretty much in line with my, much more fuzzy, ideas around this. Didn’t think it would go down too well with the EV proponents here. He presents really well too. I think the work by Kummel (2nd law of Economics) and Hall (EROI etc.) fits in well with explaining how energy can be low cost but also all important. I don’t fully get the cause-effect relationship for energy to GDP, but it seems strong no matter what technology is being used, so maybe the way GDP is measured means it really comes out as a measurement of energy used. He said at the end there’s a choice between continuing BAU or stopping climate change but we can’t do both, but quite likely we can’t do either. With OECD GDP growth probably starting to average negative numbers in the early 20s but CO2 still accelerating, and the frequency and/or consequences of related extreme weather events maybe also on the rise faster than expected, we’re likely to find out fairly soon.

  14. EIA has 4168Kpd for Texas production in March. I posted last thread an estimate of 4161 based on pending data analysis. Within 10k, so ringer number two in a row. Total US production 10,474kpd for March is within 14k barrels of the weekly for the end of March. Brent/WTI spread is close to $10 now. We should soon see what the real port capabilities are soon. Insanity will prevail. Resistance is futile.

    Permian discount to Houston, now 21.75:Testing break evens, and just started.

    https://pbs.twimg.com/media/DeiH_UzX4AAG17t.jpg

    1. Just a continuation of 2015-17 drilling insanity. Just hoping $55-65 WTI holds, although temporary $80 Brent and $40 WTI would be interesting.

      1. Its actually very possible, if the completions keep up, and world demand keeps up. As it is, some traders are going to be extremely profitable turning WTI into Brent in shipping it.

  15. US crude oil production for April at 10,474 kb/day. Up +215 kb/day from March 10,259 (revised from 10,264)
    https://www.eia.gov/petroleum/production/#oil-tab

    Midland WTI – Gulf Coast MEH spread now at -$21.75
    Bloomberg chart https://pbs.twimg.com/media/DeiH_UzX4AAG17t.jpg

    Brent – Midland WTI spread
    https://pbs.twimg.com/media/DeiMN9zUwAA9hMV.jpg

    U.S. Petroleum Balance Sheet
    EIA pdf file http://ir.eia.gov/wpsr/overview.pdf
    Saxo Bank chart summary https://pbs.twimg.com/media/DeiLqqsWkAErk7I.jpg

    1. The price differentials indicate that WTI MEH has a premium of around $4 to WTI. I guess.

  16. 2018-05-31 (EIA) Gasoline futures prices are below distillate futures prices, rare for this time of year
    U.S. distillate inventories have fallen since January and were estimated to have fallen lower than the five-year range as of May 18. Similarly, distillate stocks in major trading hubs in northwest Europe and Singapore were lower than their respective five-year ranges as of May 24.
    https://www.eia.gov/todayinenergy/detail.php?id=36413#

  19. Canada, Alberta AER, Total Crude Oil and Equivalent Production at 3.17 million barrels per day in April, down -0.3 month/month
    Partly due to maintenance at a Syncrude upgrader.
    (2017 average 3.18 m b/day)
    Chart: https://pbs.twimg.com/media/DeofLnnXkAAk-eO.jpg

    Canada, Alberta AER, crude oil closing stocks at 67.5 million barrels in April, down -3 month/month
    Chart: https://pbs.twimg.com/media/Deog5wTXcAA7VUB.jpg

    EIA – Movements of Crude Oil by Rail – U.S. Imports from Canada (kb/day) to March
    Chart: https://pbs.twimg.com/media/Deogd7OW4AApDxv.jpg
    EIA per month: https://www.eia.gov/dnav/pet/PET_MOVE_RAILNA_A_EPC0_RAIL_MBBL_M.htm

    1. A small part of Canada overall comes from offshore Newfoundland. There Hebron is ramping up but the total production isn’t rising so fast as the other three on line projects are declining. Hibernia has done much better than expected but now looks like it’s entering its terminal decline phase for oil. All of its gas has been injected as there is no way to get it to shore or process offshore (ice bergs play a big part in limiting the options there) but they may be coming up with something now with the oil depleting. The two gas projects offshore Nova Scotia have not gone so great and look like they might be shut down and decommissioned soon, the Deep Panuke field in particular has only produced intermittently after a delayed start-up and might last only about 5-6 years instead of the planned (I think) 12-15.

      Data from http://www.cnlopb.ca/information/statistics.php#rm

  20. https://www.oilandgas360.com/no-quick-fix-for-the-expensive-bottleneck-in-the-permian-basin/

    As good info on throttling back on the Permian is not likely to come from producers, other reliable sources can give a clue. Quotes from Bernadette Johnson, vice president of market intelligence at Drillinginfo has recently been quoted by the Dallas News in several articles.

    “We can drill a well anywhere in the Permian in less than 30 days. We can bring that well online within a couple of months. It takes 18 months to bring on a new pipeline…it’s not a quick fix.”

    Industry experts are counting on higher oil production from the US and Saudi Arabia to soften price increases. For the US that means more oil from the Permian Basin.

    “Permian is going to be tough,” Johnson said. “It’s going to have to come from somewhere else. And for that to happen, it probably needs a price higher than $70.”

    I think that is about the strongest info we will get on it until about September and October when the production info for June and July are reported by EIA. Although, I will be watching EIA weeklies to see if any adjustment to growth starts showing. Based on the fact most of the growth is projected by EIA to come from the Permian, I think there will be some reluctance to adjust projections.

    For prices to rise significantly, there will have to be two facts that replace myths. One is that the Permian will produce enough to cover shortages. Based on my understanding, it couldn’t come close if it made expectations, but that’s the myth. That it can not come close will be apparent the last quarter of this year.

    Prices will rise towards the end of the year, as a result of fact one, but will still be capped by myth number two. That is, OPEC’s (Saudi Arabia and a few others) spare capacity is 2.5 million barrels. Hence, at any time, they can turn the taps on an recover any shortages within a short time. I don’t think that myth will be dispelled until sometime in 2019. By that time, it wont matter whether it is WTI, Brent, or OPEC basket, oil will be north of $100. And inventory levels will not be healthy.

    This is simply a reiteration of what Dennis stated above, but additional views included.

  21. EIA US monthly inventories of crude oil plus total oil products: down -10.4 million barrels in March month/month
    Without the compressed gases: ethane, propane or butane, which were down -3.4
    Also without the SPR which was down -2.0
    Crude oil down -0.07 million barrels
    chart: https://pbs.twimg.com/media/DetrTDpXUAAwPKK.jpg

  22. https://www.platts.com/latest-news/oil/houston/buckeye-cancels-open-season-for-600000-bd-permian-10403970

    I may be selling the short term capability of oil exports short at 3 million a day. Reading the last paragraph on this one, they are only storage and quick loading away from a one million increase a day in Corpus Christi. I think Texas City has something similar. The first phase of the VLCC is due online the later part of 2019, now. If it creeps over 3 million a day exports, I think we will see the WTI/Brent spread decreasing. Permian is still going to be discounted for new oil, but the ones with pipeline capability will be sitting pretty.

    Most of the stuff in the Eagle Ford will be priced closer to Houston and Corpus WTI prices, as the oil lines already go there, mostly.

    1. GuyM:
      “Most of the stuff in the Eagle Ford will be priced closer to Houston and Corpus WTI prices”

      LTO will always sell at at discount to WTI. Comparing WTI to LTO is like comparing Gold to Silver.

      1. I said priced closer, like my royalty statements depict. My March check indicates it was sold at a premium to the average Cushing price. My LTO is closer to 34 API. And which WTI are you referring to? WTI Midland, WTI Cushing, or WTI MEH? Cushing is what is the “standard”. WTI Midland has a huge discount, MEH has a premium.

    1. Fascinating. The electric truck market is going to be even stronger than I thought.

      There are a lot of companies moving into that market, and that’s good but I hope Tesla manages to get their Semi into mass production ASAP.

      1. No cells for mass production of a Truck in the short term. Giga Factory cell production is booked out for the M3. Basically, EV production in volume is dependent on pak production ramp-up hundreds of fold. Tesla, Koreans and BYD have a head start. Most others in catchup mode. If there is an oil spike EV’s will be gold for a while.

  25. Flip this Shale Well [Company]
    https://www.desmogblog.com/2018/05/29/flip-well-fracking-shale-halcon-resources-floyd-wilson\

    “What Wilson learned from the bankruptcy is likely what he’s known all along. The key to flipping a shale oil company is to make big promises, find some oil and gas, and pump as much of it as possible, all while funding the endeavor with debt.”

    “his company then loses even as he earns more than $7 million a year in compensation”

    “reality is that most shale oil fields in America have never been profitable. As the saying in the industry goes, “You can’t fix bad rock.” But you can sell it”

    “while the investors get burned and $280 billion gets squandered, the fracking CEOs walk away very rich along with the deal makers on Wall Street.”

    “Even when shale oil CEOs like Wilson do fall, and wipe out billions in other people’s money, their falls seem to be cushioned with more cash.”

    LOL! It not about Oil, its all about OPM: Other Peoples Money!

    1. Yep. We figured this out several years ago. I was explaining it to Republican state legislators before we got fracking banned in NY.

      Even if you can do shale fracking responsibly, these land-flippers will not do so — they’re crooks first and foremost, so of course they cut corners and ignore environmental laws, before retiring to the Cayman Islands or whereever.

    2. TechGuy,

      If my failing memory serves me here, Halcon used to be Petrohawk and Petrohawk went into the Eagle Ford really early and got hold of lots of land which was sold for BIG bucks–$14 billion comes to mind.

      I think I’m channeling Rockman here.

      1. Its not about one particular shale company. Its all of them. None of them make any real money, and all of them are load up in debt. They use OPM (other People Money) and the execs pay themselves handsome salaries using Borrowed OPM that they will never payback. Its a SCAM!

    1. Looks like the accelerating decline from late 2015 which was stopped when OPEC opened all the taps and a few big projects started coming on line, especially Russia, ME and Canada. There’s nothing like as much as that available now. If Art Berman is right about USA LTO we might be in a bit of trouble and fighting accelerating decline with not enough in the queue to come on line, and still less in attractive recent discoveries. There is Brazil but they seem to be disintegrating at the moment (I predict a major accident in the next 12 months). I think it might be exacerbated by a coming gas and LNG shortage (just from demand increase and possible supply decline – but could easily be magnified by geopolitical problems).

    2. Yes as you know, production returning from outage has been a part of the story. Holding up the overall level of production.
      2016 Iran came back from sanctions +800 kb/day
      2017 Libya and Nigeria came back from their outages a combined +700 kb/day

      1. Yes, except you don’t know that. Just assume. The russians have a dozen or so fields that can ramp up, but for the Saudis it is more a mystery how they have all this reserve capacity. I dont’t trust what they are saying for 1 cent. That is just me.

        Both countries have the burden of keeping up investment enough to keep 10-11 mill barrels/d of oil production not declining and there is then supposedly also a slack for growth. The countries are too proud to admit they have a problem anyway, so there is no way of knowing for certain.

        1. Kolbeinh

          No i don’t just assume. According to secondary sources Saudi Arabia were producing 10.6 at the end of 2016. They then said they would cut production at the beginning of 2017 to support prices. They did just that.

          http://www.opec.org/opec_web/en/publications/4054.htm

          Now you can look at all the countries production and do your own research as to which ones are wrong.

    1. Guym,

      Thanks. So takeaway capacity (including rail) plus local refinery is 3700 kb/d, my model (assuming low oil prices under $75/b in 2107$ for Brent until Aug 2019) suggests this level of output may not be surpassed until Aug 2019, note that many of these analyses use the EIA’s DPR which overestimates Permian output. After 3400 kb/d is reached in Dec 2018, then rail will need to be used, also I don’t know if the output matches well with local refinery capacity, we are at about 3100 kb/d in the Permian now (including about 550 kb/d of conventional output). If Platt’s numbers are accurate for pipeline capacity, it is not clear why the Midland prices are so low, seems there should be enough pipeline capacity at present. Perhaps these spreads are futures prices anticipating future bottlenecks.

      1. Per my analysis above, Texas production is at, or over 3.4. So, at this point they are past pipeline and local refinery, and hitting the rails. Rail has a theoretical limit of 315k, but note that there is competition for that capacity. Hence, the big discount, and I am sure local refineries are taking advantage, too. I read one article that stated possibilities the Houston spread may get to $26. The intermediaries are going to make some money.

        1. Guym,

          Do you have Permian output at 3.4 Mb/d? I would estimate Permian conventional at 550 kb and EIA has Permian tight oil at 2450 kb/d in April 2018, so I get 3000 kb/d for Texas and New Mexico Permian Basin output in April 2018. Not sure beyond April. The trend since Nov 2017 for Permian LTO output has been an annual rate of increase of 400 kb/d. Agree that a lot of the rail is being used for frack sand, so that capacity may not be there for rail. There supposedly is 300 kb/d of local refinery capacity so even without rail there is 3.4 Mb/d between pipeline and refinery. So if those numbers are right there is still 400 kb/d of room for growth after April 2018.

          Not clear why the spreads are so high.

          1. Most reports and pipeline usage had Permian at 2800k the beginning of the year. If production has increased about 600k, then production would be 3.4. That it would be about 600k would stand to reason backing out GOM and other growth from EIA weeklies, which were spot on to monthly production at the end of March. That the projected pipeline plus local refinery is 3.4, would give another way of looking at production in the 3.4 or over range. Discounts happen when it can’t be sent through the pipelines, or used locally. The discounts are happening to the tune of about 12 to Cushing, and over 20 to MEH. Therefore, it has exceeded the 3.4 capacity.

            1. Guym,

              I have Permian output (TX and NM) at 2870 kb/d in Dec 2017, from Dec 2017 to April 2018 Permian LTO output has increased by 130 kb/d based on EIA tight oil data. If we assume conventional Permian output has been flat over that period, then we have 3000 kb/d in April 2018. The Drilling Productivity Report estimates are based on a model which I do not think is very good (3122 kb/d for April 2018). I would not consider the DPR estimates for April and May 2018 credible. After April, I don’t think we have great estimates, but as I said the trend from Nov 2017 to April 2018 for Permian LTO was about 400 kb/d annual increase in Permian LTO output.

            2. I agree, Permian was close to 2800 the end of 2017. Your saying the Permian only increased 130k barrels from the first of the year to now? Texas plus New Mexico almost increased 300k through March, with a slow start. I add about 300k for April and May. That is an estimate, but it is in line with EIA weeklies, which are spot on for March monthlies. So, why would they have huge discounts? If pipelines weren’t full, the only discount would be pipeline transportation costs. Dallas News quoted above, says they are using trains now. The rise for Texas production from Feb to March was slightly over 150k bbls.

        2. Per my analysis above, Texas production is at, or over 3.4.

          I must wonder where you got that figure. The EIA has Texas production in March at 4,168,000. Anyway, I will have a post out tomorrow with a chart of Texas production through March 2018.

          1. Sorry, meant Permian, not Texas. I know what Texas did, as I posted my analysis on that above.

            1. Can you provide a link to your analysis or give the time and date?

              I don’t see 3.4 Mb/d for Permian output DPR has 3.3 for June 2018, but that is not a good estimate. The EIA’s tight oil estimate is best. That’s 2450 kb/d LTO in April 2018 with an assumption that the flat output of about 550 kb/d of conventional output from Jan to Sept 2017 has continued through April 2018.

  31. I figure some of you oil guys that don’t wander over to the back of the bus non-petroleum side of the site might enjoy this.

    For any of you wusses with high end four wheel drives, big 4wd pickup trucks, here is how real men in a real car got their 2WD out to the oil rig in days long ago. Nothing stopped these guys.

    https://www.youtube.com/embed/nq2jY1trxqg?rel=0

  33. So, what I think is happening now is that the oil market is out of control due to too much demand and not enough supply really. Neither SA or Russia want to be blamed for this, and the core is that SA has a serious decline problem and that Russia can’t cover for this. Can’t be backed up by hard facts unfortunately but maybe this idea has not been launched frequent enough. There is something about these government responses from all major nations that makes me a bit uncomfortable about this peak oil thing. From my perspective it sure coming soon, unless extreme investments are made I assume in a 2019+ timeframe.

    1. Kolbeinh,

      I think Canada, Brazil, US, KSA, Russia, and Iraqi C+C increases in output may more than offset declines from other producers (Venezuela, Mexico, China, and North Sea mostly) for about 4-7 more years, there might be a plateau from 2023 to 2029 (I call the peak the midpoint of the plateau in 2025/6, but the actual 12 month centered average peak could fall anywhere from 2023 to 2029 in my opinion.
      That’s my best guess, if resources are smaller than I assume peak oil may arrive before 2023 and if they are larger than I assume the peak might be after 2029, but I doubt the peak will be before 2020 or after 2033. My central URR estimate for World C+C is 3400 Gb with 2800 Gb of conventional C+C (conventional means not LTO and not oil sands), 500 Gb of oil sands in Canada and Venezuela (250 Gb each) and 100 Gb of LTO (50 Gb from US). The Oil Shock Model was developed by Paul Pukite, and my analysis using Paul’s model is presented in the chart that follows.

  34. It seems that at least some of the Permian pipelines are full and that rail capacity might also be busy. But I’ve not had time to read what all of the pipeline companies are saying.

    2018-06-04 (Platts) Plains All American, which is already trucking volumes from the Permian, said it sees limited opportunities for offering CBR services from its McCamey, Texas terminal, which can move up to 15,000 b/d as transloading facilities in the basin are geared more towards handling frac sand.
    https://www.platts.com/latest-news/oil/houston/permian-tracker-pipeline-build-out-to-support-27991719

    2018-05-08 Plains All American Pipeline LP (PAA) Q1 2018 Results – Earnings Call Transcript
    Our 2018 guidance incorporated an expectation that Permian takeaway capacity would likely experience constraints in the second half of 2018 and the first half of 2019. This is materializing earlier than expected. Although we have capacity in our gathering in intra-basin systems, the rapid production growth has substantially filled the Permian long-haul pipelines sooner than expected and has created constraints in some of our Delaware Basin intra-basin pipelines. We’ve been accelerating projects to address these constraints but long-haul constraints will likely remain until additional takeaway capacity projects such as our Sunrise Loop and Extension and Cactus II are complete. You will note that we chose to leave guidance for 2018 unchanged.
    https://seekingalpha.com/article/4171558-plains-american-pipeline-lp-paa-q1-2018-results-earnings-call-transcript?part=single

    1. It’s complicated as there are different estimates for Permian takeaway capacity. Plus using drag reducing agents and adding more pumps has increased capacity but it costs more

      Trafigura chart https://pbs.twimg.com/media/De3_-efUYAAzsdy.jpg

      Permian crude oil Production and Takeaway Capacity
      RBN Energy chart https://pbs.twimg.com/media/DaCFbgDV4AAKrcl.jpg
      Permian natural gas Production and Takeaway Capacity
      RBN Energy chart https://pbs.twimg.com/media/De3BBVoVAAEaLpH.jpg

      Platts chart https://www.platts.com/IM.Platts.Content/InsightAnalysis/RSSFeed/Images/2018/060418-permian-pipeline-tracker-l.jpg

      2. 2018-06-03 (RBN Energy) Permian natural gas production growth at that pace would max out capacity (including demand and exports) by fall of this year.
        https://rbnenergy.com/blame-it-on-texas-natural-gas-basis-implications-of-permian-production-and-takeaway-capacity

        Also Trafigura should know something as they are in the Permian oil export business. Trafigura has been the largest U.S. crude and condensate exporter over the past year.
        Trafigura chart https://pbs.twimg.com/media/De3_-efUYAAzsdy.jpg

  35. I wonder if this is true, or will it turn out to be just a rumour?

    2018-06-04 (Platts) Venezuela’s PDVSA has notified eight international customers it will not be able to meet its full crude supply commitments in June, a PDVSA official told S&P Global Platts Monday.
    The source, who spoke on the condition of anonymity, said PDVSA is contractually obligated to supply 1.495 million b/d to those customers in June, but only has 694,000 b/d available for export.
    https://www.platts.com/latest-news/oil/caracas-venezuela/pdvsa-tells-crude-buyers-it-cannot-meet-full-21057038

    1. Wow, maybe that’s why Russia and KSA are talking about increased output.

        1. I’m pretty sure this year is so far well down on last for both oil and gas, but it usually picks up in the second half and some are kept secret until the annual reports, or like Shell’s Whale last year in case of upcoming lease bids.

    2. I wonder how much Conoco’s stranglehold in the Caribbean would have affected production.

  36. ANP released Brazil totals for April – C&C up 40 kbpd from March, but still down slightly for this year and 130 below the peak in December 2016. There are two new platforms ramping up: PetroBras 74 (Buzios 1, 150 kbpd nameplate, started on 28th April) and Petrojarl 1 (for Atlanta, I think 20 kbpd limited by well capacity, heavy oil 14 API), but they didn’t contribute much for April.

  37. Am I reading too much into this? There are rolling gas shortages in Canada:http://www.cbc.ca/news/canada/london/london-gas-stations-dry-1.4692403

    The first one was Calgary, and the Calgary Sun’s first coverage had Syncrude refusing to comment on where maintenance was or estimate a timeline.

    http://calgarysun.com/business/local-business/multiple-petro-canada-stations-in-calgary-running-dry-in-gas-shortage/wcm/a7541f20-dff7-4b0f-93b9-42a9f77db0bb

    Why did they not have enough stockpile? Why did they provide the latter details they gave the CBC when first asked? Why were their customers not forewarned?

    Now this – again, planned maintenance, and ran out of stockpile because it took two weeks longer than expected. That’s seems reasonable. Except again, surely they could have seen the stocks getting low, and this would have been a press piece worth some industry spokesperson saying “hey local drivers, the warm weather means driving is up and demands is high, but gas supply is running low due to unexpected longer maintenance. We’ll probably make it, but we’d ask you to limit to necessary and planned trips for now”. Or something? Like if planned road maintenance dragged on, right?

    My eyebrows are just raised that they’ve hit problem they didn’t foresee on a scale they would drive an investment stampede away from the patch again, so they’re being mum.

    The slightest hiccup in the price spread or pipeline approvals and the papers shriek predictions of impending shortages the fault of environmentalists and ahem, “First Nations who don’t have real jobs” – so why does known maintenance bottlenecks not get the same predictions?

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