Texas RRC November Production Report

The Texas RRC Data Base came out a few days ago. The data is reported through September but of course it is incomplete. The data from the field comes in very slow in Texas and the RRC only reports the data they receive. All data is through September and is in barrels per day.

Texas Crude Only

Crude only has shown a slight downward trend for the last two months. After revision, when the final data comes in, production will likely still be up slightly but if this is any indication, it will be up less than in months past.

Texas Condensate

Texas condensate production started a dramatic slowdown in June of 2013. It actually declined three months in a row, June, July and August of 2013 but then started to recover. But production growth has slowed since that date.

Texas C+C

Adding the two we get what the EIA reports, Crude + Condensate. I have included the EIA’s estimate which is only through August. The EIA is just guessing here of course and this guess seems to be revised by a few barrels every month. Of course they eventually get it right as the dip in October 2013 shows.

Texas Gas Well Gas

Texas gas well gas peaked back in January 2009 and reached a lower peak in November of 2011. But it appears to have peaked unless much higher prices spurs a lot more drilling.

Texas Associated Gas

Texas associated gas is still increasing because oil drilling is still increasing. Texas associated gas accounts for about 22 percent of Texas total gas.

Texas Total Gas

Adding the two we get Texas total gas. Total gas production still appears to be increasing but only slightly.

Other News:

Water is the biggest output of U.S. oil and gas wells

The biggest product of the U.S. petroleum industry is not oil, gas or condensate but water — billions and billions of gallons containing dissolved salts, grease and even naturally occurring radioactive materials…

Argonne estimated that more than 7.5 barrels of water were produced for every barrel of crude, and 260 barrels of water for every million cubic feet of natural gas, based on state and federal records for onshore oil and gas production…

But the vast majority of water from onshore oil and gas wells, accounting for more than 92 percent of all produced water, is re-injected underground to maintain pressure in the reservoir (71 percent) or into non-producing formations for disposal (21 percent).

This is interesting since, in most shale fields, like the Bakken, they do not have injection wells where water is injected just to keep the pressure up. That just doesn’t work very well in tight oil fields. What I think they do is just drill injection wells in permeable rock solely for getting rid of water that comes up with the oil as indicated in the link below. It is from the Bakken permit list. Bold mine.

NDIC Permit List For November 14th, 2014.

#90323 – WHITE OWL ENERGY SERVICES, INC, WHITE OWL JOHNSONS CORNER SWD 1, NENE 23-150N-96W, MCKENZIE CO., 835′ FNL and 360′ FEL, SALT WATER DISPOSAL, BLUE BUTTES, ‘Tight Hole’, 2463′ Ground, API #33-053-90323.

A Different Kind of Oil Crisis

“It is increasingly clear that we have begun a new chapter in the history of the oil markets,” the IEA stated in its November oil market report, observing that the world’s oil supply is outstripping projected oil demand—the opposite of what was happening just over six years ago when oil prices peaked.

For countries whose finances are heavily or almost wholly reliant on high oil prices, it’s a tough time. At current price levels, the national budgets of Iran, Venezuela, Nigeria, Iraq, Libya, Russia and Saudi Arabia will not break even, which could force these countries to burn up precious cash reserves, as well as leading to infighting over market share, upsetting an already fragile world order.

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271 Responses to Texas RRC November Production Report

  1. Northwest Resident says:

    From Newsweek’s “A Different Kind of Oil Crisis”. I read this last night after finding it on Yahoo where it was prominently displayed. I like their opening statement — “In a world that has become acclimated to sky-high oil prices…”. The reason I “like” it is because of how boldly they assert as fact a completely absurd point. I admire the pure propaganda value. From my point of view, the world has NOT acclimated to sky-high oil prices. Rather, the global economy (and national economies) have been devastated by “sky-high” oil prices and by the massive build up of debt that governments used to compensate for those unbearable oil prices. This Newsweek article fit in nicely with other major propaganda pieces that I found on Yahoo doing just one scan last night, one of which by the New York Post blatantly suggested the Peak Oil is an invention of Wall Street which is used to manipulate the price of oil higher so that Wall Street can make larger profits. With articles like these on Yahoo, is it any wonder that the “masses” of regular people are clueless about the real issues behind Peak Oil?

    • Jeffrey J. Brown says:

      The following chart shows steady buildup in total global public debt (much of it financed by accommodative central banks) versus the steady decline in the Ratio of Global Net Exports of oil (GNE) to Chindia’s Net Imports (CNI) from 2002 to 2012 (the same trends continued in 2013, although there were some EIA revisions to prior years for the GNE/CNI Ratio).

      Available Net Exports, the supply of GNE available to importers other than China & India, fell from 41 mbpd in 2005 to 34 mbpd in 2013.

      • Sam Taylor says:

        I’d much prefer to see a similar chart with either inflation adjusted dollars, or preferably change in debt/gdp ratio. I don’t think the debt figure by itself is that instructive.

        • Jeffrey J. Brown says:

          After you finish the graphs you suggested, I’d like to see them.

          In any case, by definition the remaining supply of post-2005 Available CNE (the supply of Cumulative Net Exports of oil available to importers other than China & India) has declined, the question of course is by how much?

          Another way to conceptualize what is going on is that we have, in my opinion, seen a massive increase in total global public debt per barrel of remaining post-2005 Available CNE.

          • Sam Taylor says:

            Well I found this image in the recent geneva report, I guess this is a close enough proxy. Quite worrying.

            http://www.voxeu.org/sites/default/files/image/FromMay2014/lane%20fig1%2026%20sep.png

            • Sam Taylor says:

              How do you go about embedding images? I’m rubbish at html.

              • Watcher says:

                I think there is a google on it for wordpress.

                But then I thought there was google for “Comment Editor” for wordpress, passed it along to Ron, he implemented it — and you notice we don’t have a comment editor?

          • WeekendPeak says:

            A couple of points.
            -One person’s debt is another person’s asset so why not rename Total Global Assets?
            -Depending on the currency in which those assets / debts are denominated the graph will be different.
            -Not all debt is related to oil so to use that as an assumption makes no sense.
            -Is debt/assets only related to exported oil rather than to all oil produced?

            One of the problems with using data instead of a thesis as a starting point is that it may lead to finding relationships which do not exist. In this case Jeff’s GNE concept makes logical sense, or at least is a very interesting and useful way of looking at oil production/imports/exports but I fail to see how this is meaningfully related to global assets / debt.

            Rgds
            WP

            • Jeffrey J. Brown says:

              IMO, central banks, especially in developed countries, have been engaging in massive QE, trying to keep their economies going–some semblance of BAU–despite very expensive oil.

              • WeekendPeak says:

                That is quite likely true but the direct connection between the amount of debt/assets and the marginal price of oil is missing.

                Rgds
                WP

                • Jeffrey J. Brown says:

                  As noted below, in my opinion we are seeing an accelerating rate of decline in the remaining supply of Global CNE (Cumulative Net Exports of oil), and especially an accelerating rate of decline in Available CNE (the supply of Global CNE available to importers other than China & India), at the same time that we continue to see a huge buildup in global debt

                  • Caelan MacIntyre says:

                    The mutant crony-capitalist-plutarchy-nation-state monster is going to try every trick in and outside of the book to survive. Unsure where the ventricular fibrillation kicks in or if it’s already upon us, but it’s likely not going to bode well for everything the monsters’ Captives depend on it for. Pensions? What, me worry?

            • Ilambiquated says:

              One person’s debt is another person’s asset so why not rename Total Global Assets?

              Exactly.

              • jpi says:

                Because those debts will not be paid and the “assests” will vanish into thin air?

                • AugustusGloopius says:

                  I have the same sentiment. Say I lent my friend $30,000 to help him in his business. For a while, I am confident he can pay me back via his business profits. A bit later, his business goes belly up. I can’t expect to get all $30,000 back. What I thought was an asset turned out to be a loss. So while times are good, the Total Global Assets value is fine, but “assets” can disappear, like my friend’s promise. Am I missing something logically? Maybe I am not factoring in the fact that my $30,000 is still in the system somewhere.

                  • Jeffrey J. Brown says:

                    Debts are always paid, if not by the debtor, then by the creditor. Even in cases where debts are paid back with hugely inflated currencies, e.g., the German Hyperinflation, this would be an example of the creditor taking the loss.

                    In any case, my point is that, in my opinion, we are seeing an accelerating rate of decline in the remaining Global CNE (Cumulative Net Exports), and especially an accelerating rate of decline in Available CNE (the supply of Global CNE available to importers other than China & India), at the same time that we continue to see a huge buildup in global debt.

                    My contention is that most debt and equity prices are miss-priced, since they don’t begin to take into account accelerating rates of decline in Global and Available CNE.

                  • Jeffrey J. Brown says:

                    Link to GNE/CNI Ratio graph for 2002 to 2012 follows. The EIA has revised some previous values, but the slope changed pretty much the same, from 2002 to 2013.

                    http://i1095.photobucket.com/albums/i475/westexas/Slide20_zps26112103.jpg

                  • Ilambiquated says:

                    my $30,000 is still in the system somewhere.
                    That’s why bankers have the idea of “senior” and “junior” debt. Senior debt gets paid off.

                    More generally, if you have a an investment (like a bond for example) it has three numbers that determine its value: Price, risk and yield. If you know two you can theoretically calculate the third. The yield is the cash that comes out of the investment. the price is the money you pay to get this cash flow. They risk connects the two.

                  • Caelan MacIntyre says:

                    “…the logic behind money pretty clearly isn’t what the textbook story claims it is. That doesn’t mean that there’s no logic to it at all; what it means is that nobody wants to talk about what it is that money is actually meant to do… I can sum up the matter here in a single sentence: the point of money is that it makes intermediation easy.

                    Intermediation… is the process by which other people insert themselves between the producer and the consumer of any good or service, and take a cut of the proceeds of the transaction. That’s very easy to do in a money economy, because… the intermediaries can simply charge fees for whatever service they claim to provide, and then cash in those fees for whatever goods and services they happen to want.” ~ John Michael Greer

                    “… So money goes toward those who will create even more of it. But, basically economic growth means that you have to find something that was once nature and make it into a good, or was once a gift-relationship and make it into a service. You have to find something that people once got for free or did for themselves or for each other, and then take it away and sell it back to them, somehow. By turning things into commodities, we get cut off from nature in the same ways we are cut off from community.” ~ Charles Eisenstein

                    “Our mainstream money system is based on competition, selfishness, greed, individual gain, instead of cooperative values, altruism, good will…
                    The mainstream money system destroys communities. It affects everything in our lives…

                    One of the biggest hurdles is people’s ignorance of how the mainstream money system works… Mainstream money is issued by banks, and those banks have an agenda… they’re giving a public service in providing a medium of exchange which we all use– we have to use– but at the same time they have a for-profit agenda. And there’s a contradiction there. In fact, if you think about it, the banks issuing money is anti-democratic…

                    If everybody knew the full facts about how money is issued, how it’s put into circulation, who is issuing it, how they have power and control over the economy, and over individuals’ lives, I think there’d be a lot of very unhappy people around.”
                    ~ Francis Ayley

                    “Only after the last tree has been cut down,
                    only after the last river has been poisoned,
                    only after the last fish has been caught,
                    only then will you realize that money cannot be eaten.”
                    ~ The Cree People

                • Ilambiquated says:

                  No, they would end up on the balance sheet of the borrower.

                  Let’s say Alice has assets worth $10 minus $5 debt to Bob. Bob has $15 in assets including the $5 Alice owes him.

                  Total “real” assets 20 dollars, ten each. But Alice has 5 on paper and Bob has 15 on paper because of the debt. Whatever happens to the debt the “real” assets stay the same.

                  Since the net value of the debt is zero on the two balance sheets put together, the fate of the debt is immaterial to the total value of the assets in the system.

                  So if Alice can’t pay her debt she goes bankrupt, Bob gets $5, and there are $20 of real assets in the system and no debt.

                  • Ilambiquated says:

                    If on the other hand Alice simply doesn’t pay back (maybe the debt is forgiven) she ends up with $10 and Bob has $10. The value of debt ends up on her balance sheet.

                  • Doug Leighton says:

                    Ilambiquated, Why can I follow quantum mechanics and the Dirac delta function but not understand the difference between a credit and a debit? Your explanation leaves me totally lost: my fault (not yours). There must have been something in my education that expunged bookkeeping and accounting neurons. Good try anyway.

                  • Watcher says:

                    Quantum mechanics, or auroral plasma fluid dynamics, are utterly trivial compared to the above discussion — that did not even reach the stage where :

                    And then the defaults underway threatened global stability so central banks created money and paid off the loans.

                  • SRSrocco says:

                    Ilambiquated,

                    With all due respect, that is the FUCKING STUPIDEST THING I have ever heard.

                    Steve

                  • SRSrocco says:

                    Furthermore…. 55% of those who owned US Treasuries polled didn’t realize they would lose money if rates increased… lol.

                    Just goes to show you how FRICKEN STUPID American investors really are.

                    Steve

                  • Nick G says:

                    Steve,

                    If rates rise, holders of T-bills lose money on paper (the market value goes down), but they lose nothing if they hold them until maturity.

                  • SRSrocco says:

                    Nick,

                    LOL… the 10 year Treasury won’t be around in ten years.

                    LOL… steve

                  • Ilambiquated says:

                    Doug Leighton

                    If it’s any comfort to you, coming up with this stuff was a major mathematical breakthrough we owe Renaissance Italian bankers. They invented the negative number to do it.

                    When Alice borrows $5 from Bob, they write a big -$5 in her account, indicating she owes $5. This is offset by the +$5 extra cash she now has, so her (net) worth does not change.

                    Bob gets a big +$5 written on his account, but that is offset by the -$5 cash transaction that resulted from him giving $5 to Alice. His net worth doesn’t change either.

                    All very simple. The sums all add up to zero, so no “new money” was created. It’s the magic of negative numbers.

                    The only thing left is the price Alice will pay (interest) and the risk (to Bob) that Alice won’t pay back. See my comment to AugustusGloopius for more on that.

                    (can’t seem to answer directly)

                  • Doug Leighton says:

                    Ilambiquated, interesting history lesson, so I guess bankers are (were) good for something. However, I think I’ll make do with imaginary numbers but, speaking of Italians, in the late 1500s Bombelli set down rules for complex number multiplication. 🙂

    • Watcher says:

      Yahoo is worse than most with their perpetually sunny skies headlines.

      This is why ZeroHedge became big. Quite a lot of people grew intolerant of it.

      Maybe most important of all — it never used to be like this. The emphasis used to be on “dirty laundry” in the media. “If it bleeds, it leads.”

      Now . . . it’s sunny skies and bright horizons.

      • Watcher says:

        We got the bubble headed bleach blonde, comes on at five
        She can tell you ’bout the plane crash with a gleam in her eye
        It’s interesting when people die, give us dirty laundry

        Part of a popular song of decades ago, pointing out how negative media was. See how this has all changed? THIS is part of the disquiet. A switch was flipped in 2008.

        • Northwest Resident says:

          “A switch was flipped in 2008.”

          Watcher, it probably isn’t unreasonable to suspect that after the Lehman collapse and multi-hundred-billion dollar bank bailouts, somebody somewhere decided that a steady stream of propaganda was needed to keep public confidence stabilized. Since the 2008 flipping of that switch that you mention, the propaganda barrage has been incessant and widespread, coming from multiple well established media and news sources. It seems almost impossible that so many media/news outlets suddenly decided on their own to begin denying the grim realities of our global energy situation (and closely associated financial system) all on their own, independently of each other. The flipping of that switch implies a single source of command and control that set off the waves of “feel good, all is well” propaganda through the multiple channels and from multiple sources. Blame Obama for flicking that switch? Oh, please…

          • Watcher says:

            The right wing has generally noticed it and presumed that Obama being elected is what prompted the mostly left wing media to adopt sunny skies and bright horizons as a perspective.

            But they, like the left wing, can’t think deeper, because they have jobs to go to and only see headlines. They don’t have time to read further.

            This was systemic. Not conspiratorial. Systemic. Negative media became the norm because that’s what the audience wanted — dirty laundry. The generalized, universal advertiser base does need their advertising outlets to have good viewership/listenership/readership ratings but the content all of a sudden became compelling. When money is scarce, negative attitude does not induce purchase. Simply that. Lots of lots of people seeing your advertising is important, but only if they buy — and post 2008 with real income accelerating downwards there suddenly ceased to be a normal inclination to do impulse buys.

            And so viewership goal-seeking got trumped by a need to induce purchase inclination. The decision was made . . . imposed . . . on media to emphasize purchase inclination over viewership ratings.

          • Byron Walter says:

            ” …somebody somewhere decided that a steady stream of propaganda was needed to keep public confidence stabilized.”

            NWR, I don’t think that somebody somewhere decided any such thing. I used to work in the medical field and spent time with many very bright people. Nary a one of them had ever heard of peak oil or seemed to grasp the limits to exponential growth. A very intelligent friend of mine (with multiple degrees) recently bought a monster Toyota PU with a V8 engine. He lives where he works and drives the truck primarily for pleasure. I’ve talked with him a little about peak oil and it’s like I’m talking to a wall. He can’t imagine a world where energy constraints change everything about how we live.

            Likewise the media has many (alleged) very bright people but how many have advanced degrees in economics or earth sciences? I think they simply report what they believe to be true.

            Now with oil prices down, it’s definitely “party on” time (and, yeah, I think that low energy prices are picking up where QE left off).

            This winter it will be interesting to see how the NDIC reports play out. I’m betting that these low prices quickly sort out the men from the boys in the LTO arena.

            Byron

          • Northwest Resident says:

            Watcher and Byron, I get your points and they are good ones. But I believe it is a little naïve to believe that there is no central control of propaganda themes being pumped through the many “news” media channels.

            No doubt, much of the propaganda that we see and read originates from reporters and news producers who are short on facts and looking to cater to their respective audiences. I was just reading on the New York Times this morning internal documents (emails, memos, etc…) between oil industry geologists and financial analysts who question the “hype” surrounding shale oil plays. That hype (aka: propaganda) serves the interests of many individuals seeking financial gain, and I think probably falls under the category of systemic.

            But there are many ways to influence news cycles and news content being generated, not all of which require direct marching orders from an editor or media station boss to his reporters, as in “write this, say this”.

            Carl Bernstein says a lot about how the CIA influences what gets printed/disseminated through America mass media channels:

            http://www.carlbernstein.com/magazine_cia_and_media.php

            Wikipedia does an interesting write-up on how intelligence operatives influence America opinion by manipulating news coverage:

            http://en.wikipedia.org/wiki/CIA_influence_on_public_opinion

            Six corporations control 90% of the media in America, and it is naïve to assume that the CEOs or other top level individuals in these organizations do not directly influence what news gets printed and the general themes and content of what news gets published.

            http://www.businessinsider.com/these-6-corporations-control-90-of-the-media-in-america-2012-6

            I got my BA degree in Public Relations. I learned that there are many ways to manipulate mass media to run news and content that promotes unstated goals. These techniques can be used for good or for evil, with “good and evil” often being subjective definitions.

            When the constant drum beat emanating from mass media news sources is “all is well”, “American energy independence”, “the economy has recovered” — and so many other similar themes day in and day out, relentlessly, despite obvious facts that prove otherwise, I find it difficult to believe that there is not some central source driving these propaganda themes. Sure, a lot of reporters and writers who are short on facts jump on the “hype” bandwagon. But at the same time, very few reporters and writers who dig for the facts and who might present a contrary, more fact-based opinion, get nearly as much front-page top-of-the-fold exposure as the propaganda writers. Maybe it is because the advertisers don’t want to see the “bad news” as it might scare their buyers away. But then again, those corporations that run much if not most of the advertising are often under the same umbrella corporation(s) as the news media channels, and are being driven by the same small group of top level decision makers.

            Conspiracy? No, I wouldn’t call it that. Concerted attempt to keep the masses calm, confident in existing financial and government institutions while those very institutions crumble around them? Yes, that is pretty much what it looks like to me.

            • Watcher says:

              “But then again, those corporations that run much if not most of the advertising are often under the same umbrella corporation(s) as the news media channels, and are being driven by the same small group of top level decision makers.”

              Now that . . . is a good case for your position.

              • Old farmer mac says:

                This is one of the relatively few times I am with Watcher (and others who hold similar beliefs) one hundred percent of the way.

                “But then again, those corporations that run much if not most of the advertising are often under the same umbrella corporation(s) as the news media channels, and are being driven by the same small group of top level decision makers.”

                THIS imo is worthy of being engraved in stone above the entrance to any place where public affairs are discussed.

            • Allan H says:

              The mass media is a twisted horror circus. Reminds me of that book/movie “Something Wicked This Way Comes”.
              Haven’t the citizens figured out that very little important useful information is rendered through these outlets? When some good info is actually disseminated it is so surrounded by useless info that most people will not pay much attention.

              But even good information not of much use, since the power to act has mostly been reduced or taken away from the citizenry by corporate/government edicts. Now they expect information to be acted upon by government and when it isn’t then it must not be important or true. There is a huge disconnect now between government and most citizens. News is mostly a twisted form of entertainment at this point, at least at the mass media level.

    • Some Guy says:

      “I like their opening statement — “In a world that has become acclimated to sky-high oil prices…”. The reason I “like” it is because of how boldly they assert as fact a completely absurd point. I admire the pure propaganda value. From my point of view, the world has NOT acclimated to sky-high oil prices.”

      The sad thing is when I read that line, I was giving them credit in my mind for at least acknowledging that prices have been high. Much of what I read in the media claims that oil prices are low and gets worse from there…

      • Northwest Resident says:

        “The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. …In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind.”

        Edward Bernays (the “father” of Public Relations) – 1928

        What was true in 1928 is even more true today, infinitely more so.

        In today’s world, the entire population is sliced and diced into specific target markets, with vast amounts of research conducted into learning just exactly what makes those target markets “tick” — their wants, their needs, their fears, their emotional “hot buttons”. We are being studied like lab rats and decisions are being made that affect us all based on the findings of those studies. In short, we are being manipulated.

        The “opinions of the masses” IS a national security issue. Especially in a time where long trusted institutions are failing, where so many things long taken for granted are on the verge of being taken away.

        A good Public Relations professional must always be looking into the future, studying trends, recognizing potential future crises and preparing media campaigns and other strategies to preempt negative public opinion when those things happen. Seeing a crisis approaching in time allows a PR practitioner to begin subtly laying the psychological groundwork for the more hard-hitting attitude adjusting work that might need to be done later.

        In my opinion, the concentrated focus of propaganda themes that we are being barraged with today from multiple angles and from multiple sources are all derived from the recognition that the world as we know it is on the verge of radical change. And TPTB, whoever they are, have embarked upon a campaign to mold and adjust public opinion, to reset expectations, to manipulate and massage the masses through crises that have yet to unfold. Seeing and recognizing that intense propaganda messages are attempting to prepare us for something really big is pretty good evidence (imo) that something really big is heading our way.

        • Byron Walter says:

          ” …In today’s world, the entire population is sliced and diced into specific target markets, with vast amounts of research conducted into learning just exactly what makes those target markets “tick” — their wants, their needs, their fears, their emotional “hot buttons”. We are being studied like lab rats and decisions are being made that affect us all based on the findings of those studies. In short, we are being manipulated….

          …In my opinion, the concentrated focus of propaganda themes that we are being barraged with today from multiple angles and from multiple sources are all derived from the recognition that the world as we know it is on the verge of radical change. And TPTB, whoever they are, have embarked upon a campaign to mold and adjust public opinion, to reset expectations, to manipulate and massage the masses through crises that have yet to unfold. Seeing and recognizing that intense propaganda messages are attempting to prepare us for something really big is pretty good evidence (imo) that something really big is heading our way.”

          Can’t disagree with the first paragraph. The major cable news channels manage to report (or not report) events framed in a manner that conforms to their political/economic agenda.

          Maybe a year ago Fox brought on some Asian guy that was an astrophysicist (or something that sounded equally impressive). He had done high level research on climate change and his data revealed that human activity had no impact on climate. I googled the guy and found out that he did have an impressive CV. He was also well funded… by ‘big oil’, coal, and the Koch brothers. I’m not saying he was incorrect but perhaps some disclosure was called for 🙂

          The country was ‘tricked’ into the Iraq war. Can’t forget how Judith Miller ended being a White House NeoCon sock puppet.

          On your last comment quoted above, I think that you suggest that there is an overall voice massaging the message as TPTB are aware of some specific rouge wave headed our way. I’m not so certain that I would go that far. Media palavating has been at a rather constant drone for an extended time… through periods calm and crisis.

          So what do you propose this ‘really big’ critter is that’s headed our way. I would guess that if there is a group of insiders that know something specific, we would probably know too. It’s too hard to keep secretes these days.

          Personally I see it as the eventual energy crunch. Most of us have no idea how far up we’ve managed to leverage our lifestyle by the convenience of cheap energy. Hope the down side ride is slow and gentle rather than steep.

          • Byron Walter says:

            Oh, and pardon my spelling…

          • Northwest Resident says:

            Byron — The eventual energy crunch is just exactly what it is. And it isn’t a secret — it is discussed here and on peakoil dot com and on other venues regularly. But it is NOT widespread knowledge, thanks in great part to the very effective propaganda of which I speak that tends to give uninformed individuals wrong information and induces them to believe things are going just fine when in fact things are most definitely not “going just fine”.

            Have you read the 2010 Joint Operating Environment (JOE) created by top military strategists and declassified for common distribution? A lot of discussion in that document pertains to the security challenges (dangers) of a world experiencing energy shortages “as soon as 2015”. Those discussions include not only foreign security challenges, but internal domestic challenges as well. Subsequent to that document’s creation, President Obama issued Directive No. 3025.18, “Defense Support of Civil Authorities,” on Dec. 29, 2010, authorizing U.S. Military forces to be used “to quell civil disturbances … in accordance with applicable law or permitted under emergency authority”. Is the U.S. Military aware of and planning for domestic and foreign security issues related to energy shortages? Sure looks like it.

            The fact that police forces across the country are “militarizing”, getting equipment from the military and beefing up both their defensive and offensive capabilities is I think undisputable. Homeland Security is in a class all by itself. And I guess we can rest assured that NSA is doing their part to keep tabs on potential troublemakers as well.

            Everything points to authorities in the top levels of government, military and industry being well aware of severe issues heading our way and preparing for those eventualities, including but not limited to bombarding the populace with propaganda to manage and mold public opinion and perception as we slide ever closer to that “something big”.

            http://www.fas.org/man/eprint/joe2010.pdf

            http://www.washingtontimes.com/news/2014/may/28/inside-the-ring-directive-outlines-obamas-policy-t/?page=all

            • Byron Walter says:

              ” …Have you read the 2010 Joint Operating Environment (JOE)… “

              No I have not but I did just download it for later review as it looks like it will require a little more attention than usual (for a change). Thanks for the link.

              I’m not sure that the coming energy crisis is the cause for the militarization of law enforcement or the creation of the Utah data farm. Those last two items stem, I believe in part, to 9/11 and the financial crisis. I am sure that TPTB do get how close we came to sinking into a financial whirlpool and that could explain the law enforcement and NSA stuff (plus good business is where you find it). But then energy was a poorly understood component of the 2008 debacle.

              Anyhow if the our ‘leaders’ really do get peak oil, it would represent a massive failure of leadership to not work on mitigating the consequences through education, tax incentives (okay, some of those do exist), and policy.

              BTW, I don’t know where you live in the NW but I do know that it contains spectacular scenery. In an earlier life I had the privilege to travel through Washington state and British Columbia via bicycle. These days my travels have been mostly in a kayak on the Great Lakes.

              • Northwest Resident says:

                Byron — Thanks for the discussion. I appreciate your point of view. BTW, I live southwest of Portland, Oregon about 30 miles or so, in the Chehalem Valley. It is indeed beautiful here, farmland and orchards and world class vineyards everywhere with a big river flowing through it. I never visited your neck of the woods and don’t know that I ever will, but I have friends from there and they assure me it is equally beautiful — but with meaner mosquitos, much meaner… 🙂

              • Nick G says:

                I don’t think that world leaders believe in Peak Oil in the way it’s discussed here.

                But….there’s no question that the US and OECD are badly vulnerable to something like a war between KSA and Iraq. Everyone knows the problem, and our lack of preparation is almost treasonous.

                But, it’s not stupidity. It’s control of elected leaders and media by corporations, and especially by the fossil fuel industry. Look at the Republican Party – it’s almost impossible for somebody to be a Republican politician without agreeing that Climate Change is a hoax. Look at the new leader of the Senate energy committee: Inhofe!!!

      • Nick G says:

        Fuel prices *are* low – at least in the US (and for commercial uses in Europe). They’re *way* low in many places like Venezuela.

        Fuel should be much more heavily taxed to internalize the cost of pollution, supply risk, and military costs of oil.

    • Caelan MacIntyre says:

      Our lives are a fraud, Northwest Resident.
      Even Kunstler doesn’t seem to catch the fundamental seed of the coercive/embedded-violence-based nature of the crony-capitalist governpimp state setups. And now, the mere flapping of butterfly’s wings is approaching hurricane-force, while we all throw our children and grandchildren under the bus for padding/air-bags/shock-absorbers.
      This site amounts to (attempts at) peering at specific angles into the Black Box.
      That it’s about ff/energy/etc. gives it a wider, more concrete perspective than most, perhaps.

  2. Mike just posted on the GOM post, an explanation of what the term “break even” means. He is talking about break even in the oil patch and I think his argument hits the nail on the head. I would invite everyone to read his post, or to have him re-post it here as it will get more exposure on a new post.

    I will yield to him about what “break even” means in the oil patch but I hope everyone understands that “break even” means something entirely different to crude oil exporting nations as indicated in the last link in the above post, “A Different Kind of Oil Crisis”. Break even to exporting nations simply means that above a certain oil price the government has a budget surplus and below that price they have a budget deficit.

    It’s as simple as that.

    • Watcher says:

      Yup. Deficits can be funded by your central bank. You don’t even have to borrow it from the public if you don’t want to. I will have to look into this for Muslim countries. Their religion disallows interest on debt.

      Further, you can always cut spending. Or raise taxes. You don’t have to just sit there and have oil price decide fiscal budgets. It’s a use of “breakeven” that has no meaning.

      • Watcher says:

        Directly from Mike’s text:

        “I can make money producing existing wells with oil prices at 30 dollars a barrel; for lots of conventional guys with better stuff it’s even lower than that. Those kinds of wells will not get shut in and lots of that kind of conventional stuff, for instance infield development wells, will still get drilled even at 50 dollar oil. ”

        But.

        The thing is . . . shale happened because there is no more growth in US conventional. The graphs were all in decline pre shale.

        The Bakken is the poster child of shale. If they get sledgehammered, that destroys the boom narrative. Mike’s conventional fields will percolate along . . . in decline . . . and his people will have jobs, but the US population will grow and oil production will not.

        The narrative being destroyed accelerates the death of shale as people exit the region. Already existing wells do not grow output.

        • Mike says:

          I would argue that shale happened only because of high, stable oil prices, cheap money, and an incredibly successful public relations campaign. It, LTO, has “grown” domestic output the past 6 years, but the “costs” are staggering; money in versus money out, the shale oil industry has yet to make a dime. If it stopped completely, tomorrow, I do not believe it could pay all its debt; inside a year the 3-3 1/2 million barrels it spits out would be down to half of that, the next year, half of that again. That is not something Americans should hang their hats on. Shale oil was never going to keep growing output, not ever. It has it’s merits, LTO, but in the big scheme of things it is just a medium size fart in a big north wind.

          The shale oil industry, I suspect, is feeling a little puny with 75 dollar oil prices. It has had the sniffles for what, 6-7 weeks? You have already pronounced the patient dead and the virus airborne, spreading to the rest of the oil industry. I don’t think so.

          • Watcher says:

            Well you’re right, badly phrased by me re Shale “happened because conventional couldn’t grow.” Shale happened because scarcity driven deflation is like entropy and dragged down interest rates relentlessly, perpetually and the price was high — but were there cheaper conventional alternatives existing, shale would not have happened even with the high price and low interest rates. The effort would have tapped the cheaper conventional.

            “The shale oil industry, I suspect, is feeling a little puny with 75 dollar oil prices. It has had the sniffles for what, 6-7 weeks? You have already pronounced the patient dead and the virus airborne, spreading to the rest of the oil industry. I don’t think so.”

            Well . . . except that you laid out in the para before this one estimates of losing 50% of shale output in a year — and that’s exactly the amount I suggested in my scenario. 50% down, and then another 50% . . . that IS death. You’re suggesting that without embracing my “death” perspective. That number sequence would crash the employment base. The state revenues. And, yes, the “Boom Narrative”. That’s death.

            The only part of this whole thing that seems questionable to me is permanence. Would the Fed backstop the next array of lenders so that they’d be willing to fund drilling at $85/barrel? If the Fed doesn’t, I suspect the lenders will be scarce — and presto, the death is then permanent.

            • Mike says:

              If the shale oil industry were to shut down tomorrow, that would be instant death, you are correct, sir. But that is not going to happen, not just based on a few weeks of slumping oil prices.

              My only point in all this was to remind people that “break even” oil prices is really a meaningless term, in my opinion. The oil industry acts, and reacts, based on what it thinks is going to happen tomorrow, not too much on what happened yesterday. You raise a very good point, however, who is going to fund the 2nd quarter of the shale oil game?

              Gawd, I have muddled thru nine dollar oil, OPEC production increases, 300% increases in costs, increases in taxes and every regulatory authority in the country wanting to run me plumb in to the ground. I never dreamed of asking the government get off my back or to loan me money. If the Federal government ends up having to fund the shale oil industry, I for one am going to be a mad son of a bitch.

              • Watcher says:

                Hell, Mike. They’ve Already Done It With Other Industries!! Banking would not exist if they had not done it.
                Neither would GM.

                But when the time comes, the obfuscation and camouflage will be so deep that they’ll be able to mouth babble that undercuts your confidence in what you think . . . what you KNOW . . . is happening. They’ll redefine things. Rephrase things.

                Oh, and the Fed is not part of the Federal government. That will be step one in throwing curve balls at your outrage.

                • Caelan MacIntyre says:

                  Governpimps own/control the overwhelming majority of the Earth’s oil already, yes?
                  So what about shale. Penny ante

              • Nick G says:

                The Feds fund the SPR (other countries don’t fund oil storage), and military protection for oil imports.

                And the industry doesn’t pay the cost of pollution (CO2, sulfur, particulates, etc).

                • Doug Leighton says:

                  “other countries don’t fund oil storage” Of course they do. China, for example, has 7o odd “storages” in a “3-level system” including state strategic oil reserves, commercial oil bases and regional oil “storages”: Providing a 100 day buffer in case of supply disruptions. Japan, India, South Korea, Italy, Spain, France, etc. all hold reserves. In fact, about 4.1 billion barrels of oil are held in strategic reserves; 1.4 billion is government-controlled.

                • Doug Leighton says:

                  In fact, according to a 2001 agreement, all 28 members of the IEA must have a strategic oil reserve equal to 90 days of prior year’s net oil imports for their respective country and several countries also have agreements to share stockpiles in the event of an emergency.

                  • Watcher says:

                    Is that an IEA thing? Hmm. They have no enforcement arm. I know the EU has such a regulation. Did you mistype?

                  • Doug Leighton says:

                    Watcher, Its kind of laid out below: Level of strategic reserves set by the IEA No idea about enforcement.

                    http://www.sagess.fr/en/commitment/obligations-and-guarantees/aiming-to-be-energy-independent

                  • Nick G says:

                    Yes, there are widespread SPRs, but my understanding is that in the EU, at least, they’re paid for by the oil industry. I’m not sure about China – that would be interesting to verify.

                  • Nick G says:

                    Here’s info from the link you provided:

                    “Every member of the IEA must maintain permanent oil reserves. Each country decides on the ways and management of its reserves. Three principal systems exist:
                    • private reserves: strategic reserve obligations are held entirely by private operators.
                    • state reserves: strategic reserve obligations are handled entirely by the state.
                    • reserve agencies: the strategic reserve obligation is handled by an agency which receives payments from operators to cover its costs.

                    France handles its reserves through a combination of operators and an agency (CPSSP/SAGESS).”

                    So, in the example of France: their reserves are entirely paid for by “operators” (directly, or through an agency paid for by the operators), which I understand to mean the oil industry.

                  • Nick G says:

                    More detail from the same source:

                    “France obliges oil operators who carry out their activities on French territory to ensure a supply of strategic oil reserves equivalent to a percentage of the quantities released for inland consumption in the previous calendar year (28.5% as of July 1, 2011 and 29.5% as of July 1, 2012 in accordance with the European directive, effective January 1, 2013). These reserves for civilian use are distributed throughout,metropolittan France in accordance with an annual plan of storage, as approved by an administrative commission (Commission Interministérielle des Dépôts d’Hydrocarbures) on hydrocarbon deposits (commission interministérielle des dépôts d’hydrocarbures or CIDH).

                    Part of this obligation is ensured by the oil operators. The other part is entrusted to the Comité Professionnel des Stocks Stratégiques Pétroliers (CPSSP), whose exclusive mission is to stockpile and maintain these strategic stocks. The CPSSP delegates the operational management of its mission to SAGESS. The CPSSP and SAGESS, together, are considered the national oil reserve agency. It is for this reason, in the adoption of the new European directive on strategic oil reserves, that SAGESS has been officially nominated the Central Storage Entity (CSE) for France (decree N° 2012-1544, dated December 28, 2012). SAGESS, a privately-held and tightly structured company thus concerns public interest.”

            • Ilambiquated says:

              scarcity driven deflation

              Scarcity of what? Money? Because scarcity of goods drives prices up as the same money chases fewer goods.

              What happened in 2007 /2008 was that trillions of dollars disappeared when the housing market in the US crashed and the paper assets the banks had been allowed to build on that market disappeared, causing a panic.

          • Sam Taylor says:

            Mike,

            In the post that ron linked to, you mentioned that the bakken first started to be developed when oil fell to $40, which is true and a good point. However I’d argue that the more important thing would be the oil price at the time that the rigs were contracted to start the drilling there. I’d wager it was a little higher than $40 at the time. How many wells were then drilled, but not fracked until oil prices rose again?

            Secondly, it’s not only the shale industry that has the sniffles. I was at petex in the UK yesterday, and many of the speakers presenting there were much less optimistic than I’ve seen in the last few years. Many companies now seem to need $100+ oil to grow supply, or even maintain old fields at current levels. Forties in the north sea has only been sustained thanks to heroic drilling by Apache, for example, but that seems under threat now. I think a supply crunch in a year or two and an accompanying price spike seems likely.

            • Watcher says:

              Good input.

              Oil hit $147 summer of 2008 and Mike’s comment was decisions were made to GO at North Dakota that month. Then when price crashed, a lot of money had already been borrowed and contracts signed. They just proceeded and hoped like hell for a reversal.

              The Fed somewhat engineered precisely that via monetary stimulus, not to mention $800 billion in Bush’s TARP legislation.

              I will note that now, with elevated production numbers in NoDak, months of momentum just may not exist anymore at this level of debt. If you don’t drill a solid month of wells, you go into decline instantly. Decline is deadly — because it speaks to the lenders who will be asked to fund the next well.

              • Watcher says:

                Should probably have phrased that if you don’t frack a solid number of wells, because there is a queue.

                • Dennis Coyne says:

                  Hi Watcher,

                  Once the company has invested in drilling a well it will be fracked. If we assume prices remain in the 75 to 80/b range (WTI price) for 6 months or more.
                  The drilling will slow down to 100 wells per month or less and we will see Bakken output decline, same story for Eagle Ford. The decline will only be very steep (20 to 30% per year) if drilling stops completely in the LTO plays. I don’t know if that is likely at the assumed price level, we might see a 5 or 10% decline and 75 new wells per month, time will tell.

                  • Watcher says:

                    You always presume functionality nominal and results become mono variate dependent.

                    Very unlikely. If gov’t doesn’t step in to provide lenders confidence, it doesn’t have to unfold with a decrease in wells. When one bond issue defaults, they are ALL in default from that company. By law. They are all due in full immediately. So they will have to borrow to meet bond redemption cash reqmts, in addition to fund drilling. This sort of thing can avalanche.

                    And this doesn’t even address the ramifications of the boom narrative being hit. In addition to workforce problems, you have rational suppliers looking at things and demanding COD terms for pipe and proppant.

      • Ilambiquated says:

        Their religion disallows interest on debt.

        So does Christianity.

        • Watcher says:

          Christianity has such an edict? I know Islam does. There are special Islamic banks that redefine this or that, but in general they can never pay interest on savings and may never charge interest on loans. “Riba” is absolutely forbidden.

          So an array of Sharia compliant banks now do exist and they are growing.

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

          My observation is a standard method is the bank buys an item and sells it to the customer who was planning to finance the item. They let the customer pay in installments, interest free, but the resell to the customer is priced at a profit. Default is prevented by some side collateral.

          • Ellen Anderson says:

            Christianity DID until the Italian bankers worked out a deal with the Pope. Once upon a time usury was punishable by death. Now you see why.

            • Ilambiquated says:

              Notice that the gold bugs are predicting Apocalypse because the Fed is lending money in a non-usurious way — with no interest. How the world has changed.

              It’s also worth noting that the Rhein Main region — Southern Hessia and Eastern Rhineland Palatinate — was a European business hub in the High Middle Ages, with towns like Frankfurt, Speyer, Mainz Worms etc because there were Jews there, who didn’t mind charging interest.

  3. Ronald Walter says:

    https://www.dmr.nd.gov/oilgas/dailyindex.asp

    When the barrels per day are anywhere between 1000 and 2500, you’ll have drillers drilling for oil, especially in McKenzie County. The recovery of drilling costs will be shortened, more wells will be drilled, the rig count in McKenzie County will remain constant. Not all of the wells, but a good number anyhow.

    365x500bpd=182,500 barrels per year.

    182,500×50 dollars per barrel= 9,125,000 dollars after one year of production at 50 dollars per barrel.

    At 1000 bpd, half of the number of days to reach nine million dollars.

    The drilling in McKenzie County will continue at a very high rate even at 50 dollars per barrel… even more at 80 dollars per barrel.

    • Watcher says:

      The thing is you do seem to know how to do math.

      But you didn’t deduct state production tax, extraction tax, royalty to the land owner (that’s 15+%), salary to the truckers, fees to the water disposal people, gasoline for the equipment, diesel for the trucks . . . all this stuff comes off the oil flow revenue. And then there is interest on the loan that paid to drill the well.

      If the price is $50/barrel, they don’t get to collect all $50.

      • Ronald Walter says:

        Never mind those other numbers, they don’t make it look good.

        Just pay attention to the raw data and raw numbers, makes better graphs.

        All expenses just lengthen the time for realized profits, but those profits are still going to happen in the long haul.

        You forgot the accountants, pollutants, CO2 emissions, land degradation. More hidden costs yet to be counted. So never mind those upfront costs. it’s already money down the drain.

        I know they’re all there, the taxes, the royalties, interest expense, along with the drilling costs, but it is too easy to ignore them. The results you have are then poor, but better than nothing at all.

        • Watcher says:

          Give us clean laundry.

        • nNgass says:

          “All expenses just lengthen the time for realized profits, but those profits are still going to happen in the long haul.” Is there lonh haul in shale oil production? Obviously not since production declines 90% in 3 years.

    • Ronald, the production numbers you read at the link you posted are for the first 24 hours of production. They in no way resemble the one year average. I don’t think there is any way you can even get an idea of first year averages from those numbers but I would guess it would be around .25% or .30% of that number.

    • Dennis Coyne says:

      Ronald,

      About 30% of each barrel sold goes to royalties and taxes, there is also about $12/b of transport costs to get the oil to a refinery, $7/b of OPEX (including $3/b for water disposal). The 30% is on wellhead revenue.

      Let’s take your $50/b oil price (we will assume this is the Brent price). With transport cost it is reduced to $38/b, then pay 30% of that for royalties and taxes, and you are left with $26.60/b, then deduct operating costs and you are left with $19.60 per barrel. The average Bakken well produces 87.5 kb in year 1, that would be a net income of $1.7 million for the first year, each year the revenue needs to be discounted by the required rate of return for the oil company.

      Not a lot of new wells will be drilled at an oil price of $50/b, a few might be drilled at $75/b in the sweetest of sweet spots, but if prices remain at $75/b there will be a big slowdown within 3 or 4 months as the already drilled wells (about 600 or so in the Bakken) get fracked, but very few new wells get drilled, we will see this hit in February or March unless oil prices increase by then.

      • Old farmer mac says:

        Hey guys ,

        Some of you may have read Twain’s essay on the true identity of Shakespeare.In it he says that he absolutely can tell if somebody writing about the gold fields and the American west is telling it from experience or making it up as he goes- BECAUSE he spent time there himself and was able to catch all the little mistakes make by writers without actual on the ground experience.

        It is Twain’s judgement that the guy the literary world accepts as Shakespeare found not possibly have written the plays- because who ever wrote them knew a hell of a lot of stuff somebody from Shakespeare’s station in life simply could not have known.

        I find this to be an extraordinarily powerful argument but the identity of Shakespeare is not what I have on my mind. In his day there was often a person to be found in the Royal Court known as the JESTER. His job in life was to entertain the Court first and foremost but he also possessed a certain amount of freedom that allowed him to make fun of people and institutions and customs rather freely. Talk of that sort would have gotten anybody else thrown into a dungeon more or less on the spot and the keys tossed into the moat.

        The jester often times knew a great deal about what was what and was usually a rather intelligent man. So he was listened to even though he was the jester-ESPECIALLY because he was the jester.Most of the time whatever he had to say was nonsense good for a laugh and every body knew it.But OCCASIONALLY he had something very important to say.

        Ronald is our court jester unless I am a much bigger fool than I think I am and I would bet he is laughing his ass of most of the time while he is composing his comments.But here and there -just as the real jesters of old did- he says something important.

        Read him as the Jester and also as a pundit talking sarcastically about certain realities and you will read him with pleasure and maybe even gain a useful insight here and there.

        NOW GO BACK and read his last two comments again the one at 11:49 am and 12:21pm and think about Jay Leno talking about the follies of the president and congress.

        Ronald is making fun of the establishment and actually doing a damned good job of it considering he is not getting paid.

        Take this one sentence.

        ”Never mind those other numbers, they don’t make it look good.”

        Ronald is poking some fun at the whole industry and the people here who are too dead serious earnest to recognize a joke.

        That line is no more and no less than a comedians sarcastic summary of the entire business case that has make millionaires and billionaires out of some people in the tight oil industry even though the industry itself has probably lost money so far and may continue to lose money in the future.

        • Wake says:

          Though it is a bit off topic, I have read just about everything there is to read on the Shakespeare authorship, and to me it seems pretty easy to see that Oxford is the most likely author behind the Shakespeare pen name, by a long shot. If he didn’t write it all, he sponsored it all. I enjoy thinking about it and talking about it, though no one else I know does.

          To bring it slightly closer to topic, though those in charge of English departments will make you seem crazy if you don’t buy into the orthodox view, the evidence is clear.

          Those in charge of religions, or at least the ones I grew up in, same thing. Very smart people included who never question a core assumption.

          And I think the same for exponential growth in general and peak recourses in particular. I just think many people cannot or do not let new information touch their core assumptions.

          Although maybe I’m just attracted to conspiracies is another explanation….

          • Old farmer mac says:

            The question of who is mad and who is not , the inmate or the keeper of the asylum is one that is always relevant.The establishment has constantly and continuously pictured environmentalists and peak oilers and others possessed of similar convictions and beliefs as suffering from various delusions that they find amusing so long as we are not getting much attention but dangerous if we manage to get out from under the rocks and into the sun..

            The professional literary establishment has it’s head so far up it’s ass it will never ever see daylight in respect to Shakespeare.All the people who have power and status in that establishment have gotten it by playing along in the status quo game and gradually working their way up from undergrad to professor.So they are now all on record as believing Shakespeare – a man without the necessary background living at a time without the media we have today – could have written the plays attributed to him.

            This is about as absurd on the face of it as somebody without any training in shall we say physics either formal or hands on writing a paper on the mechanics of wind turbines and getting it right. Now I could write such a paper -a very simple one of interest to laymen but not to engineers- without any such specific training- if i put a hell of a lot of time into it- because I have the internet and the resources of a vast library system of actual books and periodicals available..

            A historian who wanted to could spend his entire life productively writing about disasters brought about by delusional thinking on the part of the establishment.

            Never mind those other numbers folks they don’t make it look good.And never mind the fact that the only thing we have that for damned sure was written by Shakespeare is a couple of lines that could easily have been written by any literate street urchin…

            They don’t make him look good so just ignore them.

            Don’t pay any attention to the little fat man behind the curtain!

            Listen to the MIGHTY WIZARD!

          • Fred Magyar says:

            I just think many The Vast Majority of people cannot or do not let new information touch their core assumptions.

            There fixed that fer ya! That’s just the way humans are wired and science has know this for a quite a while now. There is plenty of peer reviewed research on this topic.

            Cheers!

      • shallow sand says:

        It would seem that drilling would slow but I wonder if somehow the shale drillers will be able to float even more debt, despite the lower prices. Although their stock prices have fallen, I am surprised the “pure shale play” companies haven’t fallen more. It is also interesting how they have been able to float 20-30 year bonds with production which declines so quickly. Apparently they have just scratched the surface in terms of developing the number of total locations that are out there, and all that undrilled acreage is the long term collateral?

        I have noticed several of the companies have shed most, if not all of their conventional production. That has surprised me as I have watched this develop. I am pretty much in agreement with what Mike posted above.

        Dennis Coyne. Thank you for all of the statistics you provide. You cited a figure above for “average” Bakken production for year one. Do you have those figures for years 2-5? Likewise do you have the same for Eagle Ford? It is interesting how drilling these areas is described as a “manufacturing process”, yet just simply reviewing the state websites shows that there are some very prolific wells and some real duds. That seems more similar to conventional drilling than “manufacturing” to me.

        • Watcher says:

          Two items.

          About 2 weeks ago the sprint to the microphones started from various shills announcing lower and lower and lower breakeven analysis for the shale producers. Unfortunately for them, they spoke too soon — because the price kept falling right through their analysis and left them unable to credibly lower it further and keep a floor under those stock prices.

          Second item is I looked at least cursorily at EOG and Continental junk issuance and I don’t recall seeing any 30 year paper.

          • shallow sand says:

            The majority of CLR per matures in 6-10 years. The most recent quarterly financials do show $700,000,000 maturing in 2044. Still think makes it pretty iffy given steep declines. Will be difficult to pay that debt if this turns out to be a long term price decline like 1986-1998. Still think market cap of $20 billion seems high for 182,000 boepd, with debt levels, steep decline at current oil and Nat gas prices. Maybe because most are convinced price not going lower and maybe headed back up soon. I wonder what oil price will be used to calculate PV10 at year end? Could that choke off more debt issuance? Seems like maybe they can use average for calendar 2014. That will be beneficial to them.

            • Watcher says:

              I looked on Moodys. There was no 30 yr issuance listed, but I only did page 1 for both clr and eog.

              They list 5.9 B in total debt so that 700M would be 12% of total debt. To get an overall average of 6-10 yrs, the other 88% is going to have to mature sooner, and most of what I saw was 5-7 yrs — which makes sense.

              The ugly part of all this is this is not a bank. They are issuing bonds to the public via an underwriter, who would hype the paper. So a rational lending pool might say no, but compensated advisors might put some of their clients into this paper, even if it’s crapola.

              • WeekendPeak says:

                Most debt issued by corporations is not repaid but rolled (so yes, technically it is repaid, but it’s repaid with the proceeds of another bond issue).
                What will be interesting is what yield investors will demand for those bond issues which replace the current debt.
                Rgds
                WP

        • Dennis Coyne says:

          Hi Shallow sand,

          For the Bakken we only have real data out to about 6 years for “modern” Bakken wells (multistage fracks and horizontal wells). Chart below for 2008 to 2014 average Bakken well.

        • Dennis Coyne says:

          For the Eagle Ford I only have real data out to 28 months, I can use a hyperbolic well profile beyond this, but I am less confident than my Bakken data (where we have real data out to 6 or 7 years).

          In fact the well profile has improved over the 2.5 years I have data for (August 2010 to Aug 2012). The data shows for 75 wells drilled from may to August 2012 the EUR was higher than earlier wells, for these wells I only have 15 months of data and the sample size is small. I believe that these well probably reflect current wells best. Chart below based on only 75 wells which started producing in the Eagle Ford between May 2012 and August 2012 (data collected in October 2013).

      • Dennis Coyne says:

        Note that the 87.5 kb in year 1 was a mistake(I remembered incorrectly), current data suggests the average Bakken/Three Forks well produces about 81 kb in the first 12 months and about 270 kb after 10 years, and about 340 kb after 20 years, the well gets shut in at 25 years at about 7 b/d with a final EUR of roughly 360 kb.

        • Nick G says:

          So, only about 22% gets produced in the first first year, but probably 70% of expenses are in the first year.

          It makes sense that they’d be cashflow negative, but that’s not as bad as it sounds.

        • shallow sand says:

          Dennis Coyne: Again for all of the information! The shale plays have many proponents and detractors. Having the information you provide greatly helps with the facts regarding production rates and economics. I assume associated gas helps somewhat, and more in Eagle Ford than Bakken?

          • Dennis Coyne says:

            Yes Rune Likvern has estimated about $3/b net income from associated gas sales per barrel of oil produced in the Bakken. For the Eagle Ford, I would have expected it to be somewhat higher, but when I actually estimated it, the result was similar.

            • Nick G says:

              And about 30% of that is flared, so that could go up.

              I’ve never seen a discussion of the economics of setting up a gathering & distribution network to prevent flaring…

  4. Dean says:

    Using the latest RRC data up to T and the previous data up to T-1, I computed the amount of corrections that each month should undergo to be close to the real data. In doing this, I consider only the last 24 months (older months have only negligible corrections): what I did was to sum for each month the corrections which took place in the previous “h” months, where I put h=24 for computational simplicity.
    For example, the correction for the last month (which is one subject to the highest degree of corrections over time) were equal to 624134 bbl/day (only oil , no condensate).
    By doing this for all the past 24 months, I reconstructed the supposed “real” Texas oil production data. The result is the figure attached to this comment.

    A small warning: after 8 months of these monthly corrections, I want to say that the correction factors have quite a high volatility. For example, the correction for the last month ranged between 350000 bbl/day to 650000 bbl/day. In the next days, time permitting, I will try to use some “average” correction factors and see whether there are some major differences.

    • Dean says:

      here is the corrected data for condensate, which seems to have reached a plateau,

      • Dean says:

        total gas is slowing down its growth,

        • Dean says:

          finally, my corrected C+C vs the EIA (kb/day)

          • D Coyne says:

            Thanks Dean

          • toolpush says:

            Thanks Dean from me as well. Ron’s graphs contain good information, but I find it difficult to pick a trend, and need to rely others for interpretation. Your graphs make everything clear, though I do recognize they may not be exact but are a good approximation.

          • FreddyW says:

            Great work Dean. Very clever. Perhaps if you make an average in monthly production for more than 2 series of data you can get an even better aproximation? As you can see in Ron´s graphs, the monthly increase for a certain month can vary quite a bit between the series of data.

        • Watcher says:

          That’s a good procedure. It provides an instantaneous measure of a parameter that would otherwise force months of delay.

          And Sept looks like the sharpest decline you’ve posted.

  5. Watcher says:

    I’m seeing a new narrative from the small OPEC countries. It goes like this:

    “Look, if we come out of that meeting next week with no production cut at all, the markets are expecting SOMETHING from us and the price will crash. So we HAVE to announce something, anything. Not just walk out with no change.”

    This is what the world has become. Supply and demand matter less than headline reading algorithmic trading response. So call the algorithm writers, find out what they want in a headline, and give it to them — true or not.

    • Watcher says:

      Anyone doubt those oil ministers can trade this in their personal portfolios?

  6. Ronald Walter says:

    Oil at 75 dollars, 117 yen to the dollar, 75×117=8775 yen for 42 gallons of oil.

    Oil at 100, 88 yen to the dollar, back about a year ago or so in January of 2013, 8800 yen for a barrel of oil. At the moment, it is a wash.

    The yen was at 76 in Oct of 2011, October of 2011 had oil prices at 98. A barrel of oil was on sale in Japanese yen, 7448 yen, in 2011.

    http://www.oanda.com/currency/historical-rates/

    http://www.macrotrends.net/1369/crude-oil-price-history-chart

    I used Mr. Peabody’s Wayback Machine.

    A possible scenario:

    If the yen makes its way to 80 of them for a dollar and oil regains some to 80 from the current shellacking, the yen count will be 6400 for a barrel of oil.

    A stronger yen in the future could cause lower oil prices.

    February 2009 had prices under 44 usd and drilling activity was at the nascent stage. It did not come to a screeching halt, the armature was not damaged, it still is spinning nonstop.

    The leases to expire will guarantee drilling activity; the rigs are next door.

    I doubt that the current price of oil is going to be a kill switch this time around.

    The die is cast.

    Had not the price of oil became all foam and froth at 147, a price stability action, an act of Congress, to prevent wild speculation, ‘you can’t do that’, the Bakken would not have had so much attention paid to actual drilling, prospecting, finding oil, production increases that were not projected/expected would have never become a real deal, the play would never had been. When diesel was over 5 dollars per gallon in Tennessee, the farmers went back to mules.

    The oil industry has only itself to blame for increased production from non-conventional plays due to increasing skepticism of the reliability of conventional fields, which are obviously at the end of their rope, looks like from Jean Laherrere’s post. A ‘how’d he do that?’ post. Tough to dig it all out, but it seems to me the that is what I got out of it the most of all. The entire pla(y)net has been mapped for oil reservoirs, it is a known and the projected amounts end up short. Enter the Bakken because the price was high enough to make a buck and a yen too.

    The Bakken’s increased contribution to the supply side represents about 1/77th of the total daily worldwide production, about 1.3 percent, an efficient distribution system became enough to place a checkmate on the price limit. Gotta get that Bakken ethane shipped up to the Athabasca tar sands pronto. You can thank the Burlington Northern and the Canadian Pacific for their efforts.

    Bakken oil products are in the Athabasca tar sands bitumen before it reaches the pipeline, for cryin’ out loud.

    The success of the Bakken play is taking its toll at the moment. The amount of oil in place, yet to be harvested, is more important than the current torrent of monetary mayhem.

    The long term has far more promise.

  7. Watcher says:

    “The amount of oil in place, yet to be harvested, is more important than the current torrent of monetary mayhem. ”

    There is an aspect of “the oil is there, we know it’s there, we just have to go get it”.

    But.

    Without 0% interest rates, without a boom narrative in place, it may cost WTI $250 minus transport costs to get it. That has government subsidy or nationalized industry written all over it.

    You can have the oil provided you have no expectation of profit getting it. Gov’ts WILL do that when starvation threatens. They would have no choice. It will be quite the challenge to see them do it while maintaining a facade of normalcy.

    • Northwest Resident says:

      So true, Watcher. And then, there’s always that little physical reality hurdle of how much energy is required to get an equivalent unit of energy out of the ground. That’s the little inconvenient issue that it will be “interesting” to see (future) nationalized oil companies struggle with. Best of luck to them!

      • Watcher says:

        The EROEI calculations I’ve seen are always a guaranteed trip into amorphous spiral. Inevitably the calculation doesn’t know where to stop. Yes a truck carries oil, but shall we include the calories burned by the driver, the joules burned making his shoes holding the pedal down, the manufacturing joules for the truck factory, the calories burned by the guys building the truck — it all just goes insane.

        The economists wave their hands at physics and say . . . forget that stuff, just track the money. Money has built into it all all those things you don’t know how deeply to calculate (even if we print it from thin air and it changes its value from day to day).

        So it’s flat out hard to get a handle on EROEI.

        • wimbi says:

          Um. Has anybody noticed that energy return -solar is way better than energy return -yet more gobbled-up fossil fuel?

          And about those scientists. They say we gotta leave the ff’s where they are, regardless of anything else, or the biosphere goes up in smoke. How’s that for an energy return?

          Fossil burning people are sinners. Sinners should be burned at the focal point.

          • Watcher says:

            Energy return from volcano lava is probably pretty good, too.

            Haven’t seen any 400 horsepower John Deeres harvesting cornfields with lava fuel, either.

            • Ilambiquated says:

              Those tractors ar a tiny percentage of total energy consumption.

              • Watcher says:

                Somewhat irrelevant in that it is consumption that MUST take place and there is no alternative fuel methodology.

                As is true of jet aircraft. There is no alternative to liquid fuel and there isn’t going to be one. Total consumption, 5-6 mbpd.

                Oh, and I have been remiss. I note often the silliness of waving hands over heads about US oil consumption when it is China’s consumption graph that is a 45 degree angle upwards, but hey, let’s be proper in this. Let’s look at cruise ships and their role in getting Chinese and Indian per capita oil consumption up at US levels where it belongs.

                “China is planning to build its first cruise ship, targeting the nation’s huge aspirational middle class as it looks for new ways of spending its money and vacation time.

                To venture into new waters, Chinese shipping officials have secured the help of Carnival Corp., the world’s largest cruise-ship operator. The Miami-based juggernaut of cruising said on Wednesday it had signed a memorandum of understanding with the China State Shipbuilding Corporation to help design its maiden cruise vessel.”

                Now that’s exciting!

                • wimbi says:

                  You people are not facing facts.

                  Burn the ff’s and the planet cooks.

                  True or not true?

                  The rest of all this jabber is hot air, and real thin at that. dam poor return on investment.

                  PS, Sure there is a substitute for jet fuel. Don’t fly, I haven’t for a decade, and am happier for it.

                  • Watcher says:

                    So you saved some jet fuel for a Chinese adventurer to burn.

                  • Boomer II says:

                    PS, Sure there is a substitute for jet fuel. Don’t fly, I haven’t for a decade, and am happier for it.

                    That’s what I think, too. I don’t accept that humanity as a whole has to keep driving into a wall. Whether people change lifestyles because of global warming, because the fuel runs out, or because they don’t have the money, they adjust. It may be a painful adjustment, but they will do what they have to do with whatever they have to work with.

                    And if the planet becomes uninhabitable, so be it, but unless something catastrophic happens suddenly, life won’t disappear immediately and whatever life remains will keep going for as long as it can keep going.

                  • Ronald Walter says:

                    The first time I flew in a jet plane was 42 years ago. The second time I flew in a jet aircraft to carry passengers to point b from point a was about two years ago. I thought I was never going to fly in an airplane ever again, but I did. I once thought that flying was for the birds, but I changed my mind.

                    You think that the jet is the only one in the air until another jet in flight crosses the flight path probably less than 1000 feet above where the jet is. It is then when you know that it is a sophisticated form of travel. There are no ox carts up there getting in the way.

                    It was in an embraer, a jet manufactured in Brazil. If it’s not Boeing, I’m not going, but I made an exception, might as well, I can’t get to point b unless I board the aircraft. A great airplane, the embraer, it didn’t crash and the landing was the greatest thrill in the world. You make it out of there in one piece, a relief, pure joy. Flying is alright, but landing is better.

                    You are not going to beat 550 mph and be there in less than an hour what takes two days of hard driving.

                    It is the safest form of transportation. It would be foolish to provide all of those passengers with a car and point them in the direction they have to drive when they prefer to fly. They’ll be causing accidents right and left when all they had to do was fly to New York from Boston instead of trying to drive. Why try to drive through all of that traffic when flying is the way to go?

                    The airline industry is not going to go broke. It saves lives.

                    The automobile industry has done its job too, not that they have been doing nothing at all. If the number of highway deaths would have continued at the pace it was at in 1968, there would be over 120,000 highway fatalities each year. Improved highway systems, improved safety standards, improved driving techniques have all contributed to decreased traffic fatalities by a factor of three over a 46 year time span.

                    If jets crashing and burning would cause 33,000 passengers to lose their lives in a year’s time, nobody would fly. The business would nose dive as well. Airplane crashes with a loss rate of a hundred per day would become a disaster.

                    To believe that alternative energy is going to be a solution to the oil dilemma is a flight of fancy, a pipe dream, taking leave of your senses, it is not going to happen. You have Munchhausen by proxy.

                    Solar is for space vehicles with solar panels, not for the earth. Just kidding, solar to make electricity is the next big step, imo. Where the age of oil ends and the energy age begins.

                    If the oil is gone, can’t find any, coal will be the hydrocarbon of choice and it will be used. Steam engines to pull trains, feedstock for power plants, steam shovels, the beat will go on. You’ll be able to do some coal gasification, an cook the coal to make jet fuel, even. Coal is the greatest fuel ever, really. It can make electricity by the ton.

                    If there were no electricity, how could that jet plane take off and fly? All it takes is a spark and voila, you have mass migration 24/7. If you want a jet, in the future, coal will be the energy source to make it all happen if oil becomes too scarce, ain’t none, not enough to go around. It will be just too bad, but that’s the way it goes.

                    Today, right now, there is another 77 million barrels of oil available to get it right another day, so there is really no need to worry at all at this time, but as time goes by, since the consumption will not rest, there might be cause to worry, but the hand wringing can stop until tomorrow when you’ll need another 77 million barrels. Flip flop, it never stops.

                    Eat, drink and be merry for tomorrow may never come.

                  • Watcher says:

                    “You think that the jet is the only one in the air until another jet in flight crosses the flight path probably less than 1000 feet above where the jet is. ”

                    All pilots are trained in the rules for cardinal heading. East traveling aircraft are assigned odd thousand foot altitudes (and 500 feet for VFR) and west are even thousand foot altitudes.

                    This is how you avoid head-on mid-airs where closure rates are so high.

                • Ilambiquated says:

                  Somewhat irrelevant in that it is consumption that MUST take place and there is no alternative fuel methodology.

                  You are being too absolutist. If oil output decreases by 95% there will still be more than enough production to run tractors.

                  Production may well fall drastically in coming years, but I don’t believe for a second that liquid fuels will completely disappear in the next century. That’s not realistic.

                  • Watcher says:

                    That’s Not The Way It Works.

                    China MUST grow. Why would you imagine in your wildest dreams that they would remain content to trail behind the US of A . . . . . . . F O R E V E R? This bizarre perspective just is insane.

                    Tractors is only a little bit of consumption? So what? If production falls, China and India have no reason AT ALL to say . . . oh, production is falling, we’ll maintain current ratios so there can be enough for someone elses tractors. What possible sense does that make? Where does this presumption come from?

                    If production fell 90%, nobody is going to say, well, the US burns 26% with 4% of population so we’ll let that ratio continue and endure more hardship so they can endure less. We’ll shut off some tractors so they can run more of theirs.

                    The world doesn’t run like that. If you chop even 10% of oil production off in a way that makes it clear it is permanent, no one is going to say, okay, we’ll take a 10% cut and leave the Americans out consuming us when they have fewer people to support. This is just an insane perspective.

                  • Boomer II says:

                    China MUST grow. Why would you imagine in your wildest dreams that they would remain content to trail behind the US of A . . . . . . . F O R E V E R? This bizarre perspective just is insane.

                    China had a one-child policy. China is probably more capable of clamping down on consumption than other countries.

                  • Caelan MacIntyre says:

                    Last time I looked, China also has/had a glorified lobster-trap for humans apparently. If recalled correctly, one loses Chinese citizenship if one gets one somewhere else. One can maybe get it back, but not without renouncing the new citizenship. IOW, once you’re out, it’s hard to get back in.

                • Nick G says:

                  Tractors…consumption that MUST take place and there is no alternative fuel methodology. As is true of jet aircraft. There is no alternative to liquid fuel and there isn’t going to be one. Total consumption, 5-6 mbpd.

                  Sheesh. That’s not true at all.

                  First, farmers can grow their own fuel.

                  2nd, synthetic fuel is doable with today’s tech. It might cost $10/gallon, but that’s chump change for an essential thing.

                  3rd, swappable batteries (charged remotely) would work just fine.

                  Aviation is a bit harder, but again, synthetic fuel (from electricity and seawater) would work just fine. Aviation can double it’s fuel efficiency over 40 years, and fuel is about 1/3 of aviation costs today, so the net increase in costs would be pretty small.

                  • Ilambiquated says:

                    Its also notable that temperate farm output has nearly tripled in the last half century, but land used has barely increased. This means a lot less tractoring is going on per unit output.

                    Another point is that food is wasted at an amazing rate. The main reason for this is that it is cheap.

                    Finally, meat consumption could easily be reduced. Rich countries could easily cut consumption by half without any health problems. This would have a huge knockoff effect on agriculture.

                    On the other hand agriculture is threatened by water and topsoil issues as well.

                  • Nick G says:

                    Farmers around the world waste water, because government everywhere seem to think it’s a good idea to give it to them for free.

                    Growing rice in the desert…

                  • Caelan MacIntyre says:

                    Eight Pitfalls in Evaluating Green Energy Solutions

                    “Pitfall 1. Green solutions tend to push us from one set of resources that are a problem today (fossil fuels) to other resources that are likely to be problems in the longer term…

                    Soil quality–erosion of topsoil, depleted minerals, added salt
                    Fresh water–depletion of aquifers that only replenish over thousands of years
                    Deforestation–cutting down trees faster than they regrow
                    Ore quality–depletion of high quality ores, leaving us with low quality ores
                    Extinction of other species–as we build more structures and disturb more land, we remove habitat that other species use, or pollute it
                    Pollution–many types: CO2, heavy metals, noise, smog, fine particles, radiation, etc.
                    Arable land per person, as population continues to rise…

                    The danger in almost every ‘solution’ is that we simply transfer our problems from one area to another…

                    High tech goods tend to use considerable quantities of rare minerals, many of which are quite polluting if they are released into the environment where we work or live. This is a problem both for extraction and for long-term disposal.

                    Pitfall 2. Green solutions that use rare minerals are likely not very scalable because of quantity limits and low recycling rates…

                    Green technologies, including solar panels, wind turbines, and batteries, have pushed resource use toward minerals that were little exploited in the past. If we try to ramp up usage, current mines are likely to deplete rapidly. We will eventually need to add new mines in areas where resource quality is lower and concern about pollution is higher. Costs will be much higher in such mines, making devices using such minerals less affordable, rather than more affordable, in the long run.

                    Pitfall 3. High-cost energy sources are the opposite of the ‘gift that keeps on giving’. Instead, they often represent the ‘subsidy that keeps on taking’…

                    In some sense, the cost producing of an energy product is a measure of diminishing returns… If more resources are used in producing high-cost energy products, fewer resources are available for the rest of the economy. Even if a country tries to hide this situation behind a subsidy, the problem comes back to bite the country. This issue underlies the reason that subsidies tend to ‘keeping on taking’.

                    The dollar amount of subsidies is also concerning. Currently, subsidies for renewables (before the multiplier effect) average at least $48 per barrel equivalent of oil. With the multiplier effect, the dollar amount of subsidies is likely more than the current cost of oil (about $80), and possibly even more than the peak cost of oil in 2008 (about $147). The subsidy (before multiplier effect) per metric ton of oil equivalent amounts to $351. This is far more than the charge for any carbon tax.

                    Pitfall 4. Green technology (including renewables) can only be add-ons to the fossil fuel system.

                    A major reason why green technology can only be add-ons to the fossil fuel system relates to Pitfalls 1 through 3. New devices, such as wind turbines, solar PV, and electric cars aren’t very scalable because of high required subsidies, depletion issues, pollution issues, and other limits that we don’t often think about.

                    A related reason is the fact that even if an energy product is ‘renewable’, it needs long-term maintenance…

                    Given the problems with scalability, there is no way that all current uses of fossil fuels can all be converted to run on renewables. According to BP data, in 2013 renewable energy (including biofuels and hydroelectric) amounted to only 9.4% of total energy use. Wind amounted to 1.1% of world energy use; solar amounted to 0.2% of world energy use.

                    Pitfall 5. We can’t expect oil prices to keep rising because of affordability issues…

                    …wages tend to be affected by high oil prices, because high-priced oil tends to lead to less employment (Figure 3). With wages not rising much, the rate of growth of debt also tends to slow. The result is that products that use oil (such as cars) are less affordable, leading to less demand for oil. This seems to be the issue we are now encountering, with many young people unable to find good-paying jobs.

                    If oil prices decline, rather than rise, this creates a problem for renewables and other green alternatives, because needed subsidies are likely to rise rather than disappear.

                    The other issue with falling oil prices is that oil prices quickly become too low for producers. Producers cut back on new development, leading to a decrease in oil supply in a year or two. Renewables and the electric grid need oil for maintenance, so are likely to be affected as well. Related posts include Low Oil Prices: Sign of a Debt Bubble Collapse, Leading to the End of Oil Supply? and Oil Price Slide – No Good Way Out.

                    Pitfall 6. It is often difficult to get the finances for an electrical system that uses intermittent renewables to work out well…

                    Pitfall 7. Adding intermittent renewables to the electric grid makes the operation of the grid more complex and more difficult to manage. We run the risk of more blackouts and eventual failure of the grid…

                    Pitfall 8. A person needs to be very careful in looking at studies that claim to show favorable performance for intermittent renewables…

                    In my view, ‘standard’ Energy Returned on Energy Invested (EROEI) and Life Cycle Analysis (LCA) calculations tend to overstate the benefits of intermittent renewables, because they do not include a ‘time variable’, and because they do not consider the effect of intermittency. More specialized studies that do include these variables show very concerning results…

                    Conclusion

                    It would be nice to have a way around limits in a finite world. Unfortunately, this is not possible in the long run. At best, green solutions can help us avoid limits for a little while longer.

                    The problem we have is that statements about green energy are often overly optimistic. Cost comparisons are often just plain wrong…

                    There clearly are some green solutions that will work, at least until the resources needed to produce these solutions are exhausted or other limits are reached…

                    In all cases, a clear look at trade-offs needs to be done in advance…

                    Expectations for wind and solar PV need to be reduced. Solar PV and offshore wind are both likely net energy sinks because of storage and balancing needs, if they are added to the electric grid in more than very small amounts. Onshore wind is less bad, but it needs to be evaluated closely in each particular location. The need for large subsidies should be a red flag that costs are likely to be high, both short and long term. Another consideration is that wind is likely to have a short lifespan if oil supplies are interrupted, because of its frequent need for replacement parts from around the world…” ~ Gail Tverberg

                  • Boomer II says:

                    I gave up posting on that forum. It’s mostly about people talking about inevitable doom. They can’t imagine any scenarios where mankind survives. I was reading the comments for the above post and at least one person said Gail Tverberg thinks global warming itself might just be a ploy to hide the fact that oil is running out. If we say we have to stop using oil because of global warming, then people won’t realize it isn’t there anyway.

                  • Nick G says:

                    Oh, my- a collection of emery urban myths.

                    #1, for example. Alternative energy does not generally rely on scarce resources. for instance, rare earths are in no way essential.

                  • Nick G says:

                    Energy, not emery.

                    Actually, that reply covers #2 as well.

                  • Nick G says:

                    Ron, if you could delete the first two sentences of my comment above (starting with “oh my”)I’d appreciate it.

                    We have way more disrespect and snarkiness then we need, and I don’t want to add to it, even when I’m trying to address ideas that are as thoroughly unrealistic as those of Gail Tverberg.

                  • Boomer II says:

                    What you find on that forum is the belief that business as usual can’t survive without oil.

                    So you say, “Great, we don’t want business as usual.”

                    Then they say, “But the world can’t survive without business as usual.”

                    And if you suggest alternatives, you run into a wall. It’s sort of circular thinking: “Business as usual will fail because it is no longer business as usual. And without business as usual, there will be no more business as usual, and the world can’t survive without business as usual.”

            • Stephen Hren says:

              Watcher,

              We’ll be pumping at least 10 MM barrels a day of oil until our grandchildren our dead. No need to worry about fossil fuels for tractors. In the meantime, let’s get the transport that doesn’t need the heavy duty power of oil off of it.

              • Lloyd says:

                “We’ll be pumping at least 10 MM barrels a day of oil until our grandchildren our dead.”

                Shame the US is using almost twice that… and I don’t think you’ll be pumping 10MM barrels for the next 70 years, either…heck, 10 years is probably stretching it.

                -Lloyd

                • Stephen Hren says:

                  Should have clarified that – the collective “we” as in the world will be pumping that much oil (10MM bpd) for a very very long time. The top of a bell curve may decline relatively rapidly, but the tail is very long. The point I was trying to make was that there will be a lot of oil for things that require it like tractors that are actually doing useful work and keeping the world moving. Things like moving individual humans around in 3000 lb vehicles (at best 5% efficient: ave. human 150 lbs but more like 1.5% efficient on average due to ICE inefficiencies) is preposterous. This is what we need to focus on to bring down our fossil fuel use vis a vis peak oil/global climate disruption.

  8. Chris says:

    Maybe OPEC will not act alone…

    Russia and Venezuela to fight low oil price

    • Watcher says:

      Spent a few minutes on Russia’s budget wiki.

      The numbers are all translated to dollars, which means you have to read between some lines, since their society doesn’t use dollars.

      2012 Revs – 2012 Expenses –> 13% of expenses SURPLUS. This had been going on 2000-2007 in greater and greater amounts until the 2008 global shock. They accumulated their own Sovereign Wealth Fund. Surplus resumed 2010 and continued to 2013. Big accumulation. They didn’t just ramp up spending.

      Gross external debt $290 B (2013, 7-12% of GDP depending on definitions). Gross foreign reserves (Sept 2014) $454B. They could pay it all off en masse if they wanted to, but given that debt need only be interest serviced and redeemed at maturity, they probably have an annual demand for such of only $15B. hahaha. That is NOTHING. It’s what, 31 years of debt management just from reserves, with no change? That doesn’t even tap the Sovereign Wealth Fund (they have 2) of sum $175B.

      Trade deficit . . . is a trade surplus, repeatedly . . . exports (2012 (what was oil then?)) $542B and imports (2012) $358B. The export buyers are Netherlands, China, Germany, Italy, Turkey, Ukraine, Belarus and you notice how none of those oil/gas buyers buy in dollars? The 2012 trade surplus was $184B or 51% of imports!!!

      US debt btw about $18 trillion. (Not all of that is foreign, of course, the Fed holds 4 of it) Foreign reserves $143B. haha Trade surplus, err, deficit over $500B per year (2013). Yet debt rating is AAA vs Russia’s BBB. No political influence on that, I’m sure.

      Russia is not being hurt by sanctions, and won’t be as long as oil flows.

  9. Old farmer mac says:

    I think it is pretty likely OPEC will manage some small production cuts but given the internal state of affairs in the individual OPEC countries I would not place a large bet to this effect. Most of them are desperately short of cash and most of the leaders in those countries are depending on maintaining a steady stream of handouts to maintain themselves in power.

    The whole world with very few exceptions seems to have fallen prey to the gimme gimme now now gimmie right now to hell with tomorrow disease…Asking the man on the street who is dependent on those handouts to get by with less for a few months in order to have more later is a tough problem for a politician.

    Then there is the problem of honor among thieves. It is not wholly non existent but it is certainly in very short supply. Thieves cooperate when they have a strong leader. The OPEC countries don’t really have a whole lot of common interests except getting a high price for their oil.Without common interests more compelling that that one issue they drift apart………

    • Watcher says:

      Bank of America just went public with a call for 500K bpd cut from OPEC next week.

      This stuff is seriously playing with fire. Someone is going to trump that. Then someone will come out with a 1 mbpd cut call. And that will get trumped.

      If OPEC announces zero, oil will go to $65 instantly.

    • Nick G says:

      The simple explanation is that KSA is saying to the rest of OPEC: take your share of production cuts, or we’ll do nothing and oil prices will fall further!

  10. Ronald Walter says:

    ”For countries whose finances are heavily or almost wholly reliant on high oil prices, it’s a tough time. At current price levels, the national budgets of Iran, Venezuela, Nigeria, Iraq, Libya, Russia and Saudi Arabia will not break even, which could force these countries to burn up precious cash reserves, as well as leading to infighting over market share, upsetting an already fragile world order.”

    Incriminating, isn’t it?

    Also, the budgets of those countries will not break even. They have to pony up some money from what they have saved in cash.

    It is governments who want a high oil price, improves their financial picture. If it doesn’t go their way, first, they bawl like babies then get madder than hell. Then somebody is supposed to care and bail their asses out of the sling those wise leaders put themselves in.

  11. Old farmer mac says:

    EROEI is a concept that sets limits on what we will be able to do later on when resources are in substantially shorter supply than they are at the moment.For now it is a concept that is of only academic importance.

    If for instance somebody can devise a way to build a coal to liquids plant that powers itself on coal and the plant can be built at an acceptable capital cost then it will get built and it will be a huge commercial success because coal is still so abundant that wasting a few million tons a day is of no consequence in the short term from a business as usual point of view.Nobody gives a damn – with the exception of people worried about the future – about the coal and diesel and natural gas and soil that go into producing ethanol- so long as the inputs are cheap enough that the ethanol can be sold at a profit…

    BUT EROEI is going to assume more importance every year from here on out and it is not going to be too much longer until it starts to really matter from an actual physics and engineering point of view when all sources of energy and resources are in increasingly short supply.

    Now some years ago- I am not sure how many- it took more energy to produce and install a pv panel than it could be expected to produce over its lifetime.So at that time – it was a bad idea to install pv from an EROEI point of view at that time.

    BUT the EROEI argument failed on a practical ground and even on a physicist’s bookkeeping ground in lots of cases.As a practical matter the energy that went into the pv panels was not going to be saved like a miser’s gold and held for a time when it would really be needed. It was mostly frittered away in oversized fuel hog cars, or heating oversized poorly insulated houses , or flying off to see the sights or catch some sun or snow or manufacturing and selling useless junk plain and simple.It is worth mentioning that we never ever hear about EREOI and wasted energy in respect to every day life when renewable energy naysayers have the floor and the microphone.

    From the physicist with a spreadsheet pov the electricity produced by a pv panel is worth anywhere from twice to possibly as much as a thousand times as much as electricity generated at a coal burning power plant.This is because the plant never produces more than fifty percent as much electrical energy as is contained in thermal energy released in burning the coal. Beyond that there is always a substantial amount of energy embedded in the plant and grid and a lot of energy used in getting the coal to the plant. Then there is the loss associated with transmission over distance which seems to be about ten percent.

    But there was no transmission loss in the early days of panels as the energy captured was used on the spot. There was no investment in building and maintaining the grid to get it to that spot, no conversion loss in burning the coal. If that panel was used in a remote spot where hauling in a few gallons of diesel and a portable generator was other wise a necessity – or buying one throw away battery after another was a necessity- the electrical energy might well have actually approached a thousand to one it terms of EROEI compared to the alternate solutions.

    IF you go on vacation to the tropics and spend a thousand bucks on cocktails with little umbrellas in them then it is never considered a waste of either money or energy.But both the money and the energy are gone.

    Someday – a day not too far into the future- we are going to have to deal with some real problems involving energy returned on energy invested.

    IF you happen to live close to a coal mine you can probably get more energy out of a ton of coal by using it directly in a stove in your house that by hauling it a few hundred miles to a power plant and transmitting the juice that same few hundred miles back to your house and running a heat pump with it.

    BUT I WOULD NOT BET on it without spending some time with a pencil or calculator.IF you get your coal in bags a few at a time with a pickup from a store a few miles away you would probably be as well off with the heat pump………….Getting fifteen to eighteen tons at a pop with a triaxle dump truck would move the break even point a lot closer to using the stove..

    • Boomer II says:

      As others have pointed out, we’ve never done a true accounting for EROEI. If you factor in all the energy required to clean up a mess generated by a dirty fuel, then the numbers don’t look as favorable to dense, but dirty energy.

    • Nick G says:

      Wind, solar and nuclear all have very high EROEI. Solar is probably the lowest, but it’s at least 10:1 (very likely it’s much higher), which is more than high enough.

      • Caelan MacIntyre says:

        “…Looking at the full life-cycle energy inputs for nuclear power, it seems to be barely above the minimum EROEI for maintaining society…” ~ Nicole Foss

        “…the clincher is that all of this adds up to make nuclear power rather expensive and uncertain… This is even without the years of expense that we look forward to in guarding and maintaining radioactive hulks of concrete for the rest of civilisation so that they don’t crumble and leak radiation or demolishing the monstrosities and finding a hole to bury them in.” ~ Roger Diamond

        • Nick G says:

          From what I read, EROIE analysis of nuclear is distorted by studies which assume outdated enrichment technology requiring about 20 times more energy. If you only count LCAs with modern centrifuge enrichment, you get a much, much better value.

          BTW, I wouldn’t rely on Nicole Foss (aka Stoneleigh) – she makes very unrealistic basic assumptions about energy. Her theories don’t seem to allow good predictions. Here’s a prediction from November 2008: “We appear to be beginning a market rally at the moment, which should lead to precisely this set of trend reversals. Such a rally is only temporary relief however. It may last for a couple of months, but then the decline should resume with a vengeance.” http://theautomaticearth.blogspot.com/2008/11/debt-rattle-november-29-2008-inflation.html. That was 7 years ago…

          Unusual claims require unusual evidence. I asked Nicole for quantitative support, and she said numbers weren’t useful (“There are far too many numbers in this world that are not worth the paper they’re written on. I build logical models grounded in historical evidence.” http://www.theoildrum.com/node/6976#comment-724950 )!!!

          Finally, I agree that nuclear is riskier and more expensive than wind & solar, but I include it because some people like it better, and it will work if necessary.

      • Sam Taylor says:

        Nick

        Please back this up with references. Most figures I’ve seen in the literate put solar eroei at in a range of about 8 plus or minus a few. This is not “much higher”.

        You might find the following useful

        http://www.cerium.ca/IMG/pdf/lecturestremblayINMAN_-_The_true_cost_of_fossil_fuels_IMP.pdf

        • Nick G says:

          Here’s one discussion:

          Energy payback time (EPBT) is the time it takes for a photovoltaic (PV) system to produce all the energy used throughout its life cycle. A short EPBT corresponds to a high energy return on energy investment (EROI); these two indicators are metrics of sustainability often used in comparative evaluations of different power-generation technologies.

          Early assessments in the 1970s and ’80s showed high EPBT (low EROI) values for prototype systems utilizing large amounts of steel and aluminum and thick silicon wafers produced in small, inefficient production lines. Now, current commercial PV technologies “pay back” the energy used in only six months to two years (depending on the location/solar irradiation and the technology).

          With their expected life times of 30 years, their EROIs range from 15:1 to 60:1, signifying that they return 15 to 60 times more energy than that used during their fabrication and lifetime.

          http://www.bnl.gov/pv/files/pdf/240_SolarToday%20June12_c.pdf

        • Nick G says:

          As far as I can tell, research on E-ROI pretty much stopped for both wind and solar when the researchers concluded that E-ROI was “high enough”. The field just stopped being interesting for those who were publishing. E-ROI has continued to rise sharply in the last 10 years, but we have few new studies.

        • Nick G says:

          I find Charles Hall a useful place to start (he’s the primary source for the EROEIs in that SciAm article), but not a good place to end. He tends to rely uncritically on old studies, and make big handwaving (unquantified) assumptions, like that the risk of catastrophic failure of nuclear power plants reduces their EROEI dramatically .

          • notanoilman says:

            But does not the massive efforts of a clean up count against EROEI?

            NAOM

            • Nick G says:

              Well, it doesn’t really make sense to try to make EROEI account for non-energy components. It’s a specific measure that’s mostly useful to account for market distortions, like subsidies and price controls. If you want a global measure, there’s really not anything better than simple cost analysis.

              And, if you’re going to include something in a quantitative measure like this, you should…quantify it.

              Bottom line, I agree that nuclear is risky, dirtier and costlier than wind & solar. But, it would work if nothing else would.

          • Sam Taylor says:

            Research on wind and solar eroi most certainly continues, and nobody is getting near 60, for solar, honestly.

            The sources for the same article are here:

            http://www.scientificamerican.com/article/eroi-behind-numbers-energy-return-investment/

            Hall is involved in a few but is certainly not the majority.

            • Nick G says:

              Sadly, the only reference for solar is behind a paywall. There is a brief mention of continuing rise in solar’s EROEI.

              It’s worth remembering that 1) PV’s costs and energy inputs are plummeting, 2) there’s a wide range of PV chemistries (I suspect thin film’s (mostly CdTE) EROEI is substantially higher), and 3) this journalist is using an idiosyncratic way of equalizing the value of renewable electricity: he’s dividing the values for heat-engines (coal, nuclear, etc) by roughly 3 in order to account for the greater value of electricity, and the heat-engine losses in power generation. A more conventional approach would essentially triple all of the values.

  12. thrig says:

    A sunny future from _________ (green energy tech) or sobering lessons from a shuttered Google project that could not compete with coal? The engineers muse thusly:

    http://spectrum.ieee.org/energy/renewables/what-it-would-really-take-to-reverse-climate-change

    • Doug Leighton says:

      thrig, Excellent, and something by someone who actually knows and understands what he is talking about:

      “Even if every renewable energy technology advanced as quickly as imagined and they were all applied globally, atmospheric CO2 levels wouldn’t just remain above 350 ppm; they would continue to rise exponentially due to continued fossil fuel use. So our best-case scenario, which was based on our most optimistic forecasts for renewable energy, would still result in severe climate change, with all its dire consequences: shifting climatic zones, freshwater shortages, eroding coasts, and ocean acidification, among others.”

      • Doug Leighton says:

        Meanwhile:

        FOSSIL FUEL PROMISES ARE BEING BROKEN, REPORT SAYS

        http://www.bbc.com/news/uk-politics-29985382

        “World governments have been breaking promises to phase out subsidies for fossil fuels, a report says.”

        • Doug Leighton says:

          And, where are all the environmental incentives going to come from for the “Green Energy” while coal is cheep, while Natural Gas prices are low and, oil prices are down and, in some cases, projected to fall even further ? No, don’t answer that because I already know.

      • Nick G says:

        It’s an odd discussion: they seem to confuse a variation of BAU with a “best-case scenario”. A best case scenario would be a really aggressive taxation and regulation of fossil fuels, which could reduce them much faster than these people are projecting.

        Now, I don’t see any evidence of a really aggressive program at the moment, but let’s be clear about our baseline!

    • Jef says:

      Heck yeah! These Gewgle engineers really cut to the crux of the issue;

      “Yet if we invented a distributed, dispatchable power technology, it could transform the energy marketplace and the roles played by utilities and their customers.”

      By jove I think they may have something here. Why has no one else thought of this? OK everybody, put on your thinking caps and get thinking.

      Oh and while your at it…

      “How will we remove CO2 from the air? We don’t have the answers. Those technologies haven’t been invented yet.”

      But I’m sure they will now that we thought up the idea that it would be good if we did.

      Cheers!
      jef

    • Nick G says:

      Google’s project was very ambitious: they wanted to reduce the cost of wind/solar to below that of old, dirty coal, around 4-5 cents per kWh. I think wind’s current cost of around 5-7 cents is low enough – it’s cheaper than new coal, and much cheaper than coal if you include the cost of pollution (especially CO2).

      • thrig says:

        Such spin! Google’s project was to find alternatives viable in the market. They failed. If those alternatives were as slam-dunk easy as has been espoused by some around here, then why did Google get sent skidding back on their butts by reality?

        Oh, they did not consider an aggressive taxation regime? Of course! Why didn’t they think of that?! Porcine-flinging trebuchet in 3, 2,

        Speaking of which, do you know anything about the solar panel spam I see getting shot down in the maillog at work? I do sometimes wonder who is pushing that.

        • Boomer II says:

          Such spin! Google’s project was to find alternatives viable in the market. They failed. If those alternatives were as slam-dunk easy as has been espoused by some around here, then why did Google get sent skidding back on their butts by reality?

          The alternatives do need to be found, sooner or later. Just as science is advanced whether or not there is a financial payoff.

          As other energy options become more expensive or are reduced/abandoned for pollution, safety, or global warming reasons, technology that wasn’t appealing at one time might grow more appealing later on.

          This can certainly be seen with fracking. The technology has been there. But the oil price didn’t justify it in the past.

        • Nick G says:

          Old dirty coal plants are very cheap to operate.

          If you could find alternatives that were even cheaper, then you would eliminate any controversy over the transition. That was Google’s goal.

          Wind power is cheaper than new coal plants that scrub sulfur, mercury etc. that’s more than cheap enough for me, but it’s not cheap enough for utilities, who would have to pay to shut down the old dirty coal plants.

          We have all the tech we need, right now, to eliminate CO2 omissions at a very reasonable cost.

          Just not for free.

  13. Andy Hamilton says:

    “Everybody is trying to put a very happy spin on their ability to weather $80 oil, but a lot of that is just smoke,” said Daniel Dicker, president of MercBloc Wealth Management Solutions with 25 years’ experience trading crude on the New York Mercantile Exchange. “The shale revolution doesn’t work at $80, period.”

    http://www.bloomberg.com/news/2014-11-20/oil-at-75-means-patches-of-texas-shale-turn-unprofitable.html

    • Watcher says:

      It’s hilarious. The reporter made phone calls to whoever would answer the phone, and a few were aggressive about answering so they could get their latest plummeting breakeven estimate into print and reassure whatever clients they are trying to fleece.

      IHS says all is well down to apparently $50/b haha.

      • Ilambiquated says:

        I think all will be well until Wall Street loses its nerve and stops rolling over the short-term debt of some of the weaker operators. Then we’ll see the “Masters of the Universe” as they like to call themselves, in a panicky stampede, taking down the strong with the weak.

        Nobody will even bother to check it the price is sustainable.

        Or maybe oil will go back up again. Who knows?

        • Watcher says:

          The winter provides camouflage. A scale back in fracking and output has a conveniently timed excuse over the next few months. That is a lot of time to orchestrate intervention.

  14. Caelan MacIntyre says:

    “Crude only has shown a slight downward trend for the last two months.” ~ Ron Patterson

    It looks like a skeletal claw trying to get back what it is losing.

    • Watcher says:

      End of day surge in WTI price over $76 via contract expiration. There was nothing but bad economic news today (implying lower consumption) and the dollar was flat. It was all futures expiration.

  15. Cave Bio says:

    Global average temperatures for October 2014 and year-to-date are highest on record

    http://www.ncdc.noaa.gov/sotc/global/2014/10

    October 2014

    The combined average temperature over global land and ocean surfaces for October 2014 was the highest on record for October, at 0.74°C (1.33°F) above the 20th century average of 14.0°C (57.1°F).

    The global land surface temperature was 1.05°C (1.89°F) above the 20th century average of 9.3°C (48.7°F)—the fifth highest for October on record.

    For the ocean, the October global sea surface temperature was 0.62°C (1.12°F) above the 20th century average of 15.9°C (60.6°F) and the highest for October on record.

    The combined global land and ocean average surface temperature for the January–October period (year-to-date) was 0.68°C (1.22°F) above the 20th century average of 14.1°C (57.4°F). The first ten months of 2014 were the warmest such period on record.

  16. Dennis Coyne says:

    Interesting comment from Rockman over at peakoil.com.

    http://www.ogj.com/articles/uogr/print/volume-2/issue-4/report-pegs-average-eagle-ford-shale-eur-at-168-000-bbl-well.html

    Here are their numbers for “DISTRIBUTION OF EAGLE FORD EUR/WELL IN 2013*. *IN COUNTIES WITH MORE THAN 400 OIL AND GAS WELLS”. What’s really interesting is the variation along trend from county to county:

    DeWitt……..453 wells….EUR Average/well: 334k bbls
    Dimmit……..820 wells….EUR Average/well: 137k bbls
    Gonzales…..486 wells…..EUR Average/well: 198k bbls
    Karnes……..975 wells…..EUR Average/well: 226k bbls
    LaSalle……..755 wells….EUR Average/well: 163k bbls
    McMullan…..455 wells….EUR Average/well: 127k bbls
    Webb……….593 wells….EUR Average/well: 80k bbls

    Here is how the data was collected and analyzed:

    “For each tight oil or shale well with initial production in 2008 or later, and for which at least 4 months of production data is available, the analysis fits monthly production to a decline curve that begins hyperbolic but shifts to exponential after the decline rate reaches 10%/year. The EUR for each well is the sum of past production plus an estimate of future production based on the fitted production decline curve for a 30-year well life.

    Van Wagener noted that EURs generally stabilize after 3 years of production because for many wells in tight formations half the EUR is produced in that period. Per-well EURs based on 3 years of data differ from EURs based on 4 years of data by an average of 6,000 bbl and range from 65,000 bbl higher to 98,000 bbl lower.”

    • Watcher says:

      These numbers look significantly lower than claimed Bakken EURs?

    • Mike says:

      I don’t quite understand why there is any surprise in variation along trend, Dennis; in the Bakken the variations are great as well, yes? Why would the Eagle Ford be any different? Shale is NOT one big homogenous container to stick your straw in and make America energy independent. I know you know that, I wish other people knew that.

      Several days ago I suggested that my periodic research of Eagle Ford shale wells indicated that fewer than 50% of those would even, ever, pay back drilling and completion costs. I believe you said, “interesting,” than gave us the benefit of your research contradicting my statement. I guess if Rockman says it, it must be true, however.

      For the record, these are EUR estimates based on IP’s and “type” decline curve analysis that made life look very peachy for the shale patch in 2013. Respectfully, the E in EUR stands for estimated. Those are guesses. I kind of laugh at anybody that says a guess eventually “stabilizes.” Nobody knows what this nanopore stuff is going to do 10 years from now. Nobody. It might shrivel up like a prune and not give up a drop of oil.

      Again, assuming a typical Eagle Ford shale well with a typical lateral length, and the typical number of frac stages per lateral length NOW costs 7.5 million dollars to drill and complete, including lease acquisition costs, at 100 dollar oil prices that well requires an estimated 147,000 BOE of cumulative production (80% liquids) to pay back those costs back. In 2013 I respectfully suggest those well costs were 9 million dollars per well and required upwards of 175,000 BOE to payout. Based on the data you have posted, in which counties do you believe payout of those shale wells is most likely to occur?

      Three counties, if I may answer that for you: DeWitt, Gonzales and Karnes. The three largest public companies in the entire trend are rooted in those 3 counties, hammering away at this shale stuff and up to their huevos in debt. There are EF wells in those three top producing counties (particularly in DeWitt County where 50 of the all time top EF producing wells exist) that throw the average IP and corresponding type curve EUR guesses, all of skew. I contend that most wells, even in the top producing counties, will struggle to pay out.

      I understand that “payout” is irrelevant to discussion of ultimate recoverable reserves in shale plays, and % of recoverable OOIP and all that hubbub, but in the long run whether a well pays out or not is the real deal as to the viability of the play, in my opinion. Not even shale oil companies can keep drilling wells that don’t pay back costs.

      Mike

      • Watcher says:

        Your 175K barrels number is above 4 of the 7 on that list, and you are quoting 2013 costs at 2013 oil prices.

        I don’t see how this goes on at $75 without gov’t money.

        Letting it die and returning to the oil import market — now that they’ve gone and turned Russia’s 10 million bpd into an enemy — hard to see how that turns into anything other than utter desperation, globally.

        • Mike says:

          Been fishing drill pipe for 2 days with no sleep; forgive my rant. There are smart people on this site and I should not make bold, brash statements like the ones I do about EURS and payouts without submitting the exact data to back it up. I personally don’t need to count all the trees to see a forest, but that is not fair to guys like Dennis and others who do good things with data.

          In my roughneck opinion, none of this shale stuff works at 75 dollars, you are correct. The idea in the exercise is to make money, not lose money or have to rely on a volatile commodity price to be a certain level, and stay at that level, just to “break even.”

          I’ve beat this dead horse enough.

          Mike

          • Marcus says:

            Hi Mike,

            I’m sure I’m not alone in saying that your opinion is very much valued on this site, there are few industry insiders & I’m glad that you are willing to give us your back of the envelope estimates or even your Wild-Ass guesses. Thank you again for your input.

            Marcus.

            • Old farmer mac says:

              Mike ,

              Please keep right on posting as you are. I take your opinions and facts seriously- dead seriously.

              Thanks!

          • Dennis Coyne says:

            Hi Mike,

            I agree 100% with Marcus. Your input is great.

            I did not mean to suggest you are wrong and Rockman is correct. It was to show that another oil insider agrees with what you have been saying all along.

            In fact the Eagle Ford data that I gathered (only 317 wells which started producing from Aug 2010 to Aug 2012) I was overestimating the EUR by using average monthly data. If we use median data the EUR frops from about 190 kb to 160 kb. When the data is divided into 4 groups of about 80 wells each from oldest to newest we see a clear increase in the well profile through 2012 and the later wells suggest an EUR around 200 kb (using monthly median output), but this is based on only 15 months of data for 75 wells, so it could be much lower.

            You are absolutely correct that we do not know what these wells will produce 10 years from now, Rockman thought 150 to 160 kb based on the 28 months of data I have on 317 wells looked reasonable for those 317 wells, we don’t know about the other 7000 Eagle Ford wells.

            The oil and gas journal piece just gives us another data point.

            That article in oil and gas also suggested 2012 wells (about 2700 wells) had an average EUR of 190 kb vs 120 kb in 2010, if we used the median well we would probably get around 160 kb for an EUR. The median 2012 well would not breakeven at $75/b for WTI crude in the Eagle Ford. In 2013 (through June) the average EUR had fallen from 2012 levels to 169 kb. Chart below from oil and gas journal.

            • I think the drop in EUR from 2012 to 2013 is extremely significant.

              • Ilambiquated says:

                Unless there is something seasonal in there. As I read the chart, those were all drilled in Jan and Feb (and the data was collected in June).

                Don’t know what would cause that, but it seems worth considering.

                • Unlikely it would be anything seasonal. The seasons can affect the number of wells drilled but not the EUR of the wells drilled.

                  How much a well will ultimately produce has nothing to do with the season in which it was drilled.

                  • Mike says:

                    Absolutely correct, Ron; weather would not have anything to do with EUR, in my opinion.

                    While we are on the subject of weather, it has absolutely nothing to do with anything in the Eagle Ford in S. Texas, not ever. Granted, when it gets below 50 degrees down here we sometimes close schools, but the oilfield does NOT shut down.

                    If there are seasonal swings in data in North Dakota it has nothing to do with drilling operations. Those roughnecks up there put the t in tough; trucks roll on ice and snow, those rigs are weatherized and keep clicking away thru the year like little energizer bunnies, 24/7. If there is a hold up in the dead of winter its got to do with frac’ing and water. As a kid I was always fascinated by the fact that enormous power plants, or mud pump engines headed for the North Slope of Alaska in the dead of winter were started in Anchorage and trucked north, running the entire time, never to be shut off.

                    Whatever it is in North Dakota that slows the show down in winter; Bless ’em. I get the shivers just thinking about it.

                    M.

      • Shale is NOT one big homogenous container to stick your straw in and make America energy independent. I know you know that, I wish other people knew that.

        Thanks for that post Mike. It is the best one I have read all day. I have a post coming up Sunday that I think will blow a lot of people away. However it is all based on the first 24 hours of production of wells who’s production numbers were published by the NDIC. I have collected the data on over 2150 production wells completed since November 1st 2013.

        The problem I have is I have no idea how the first 24 hours of production translates to the first year production. I know it would vary from well to well but an average would do. I would guess the first years production would be 25 to 30 percent of the first 24 hours production. However that is just a guess that may be way off. If anyone has any idea, or any data on this subject please post it here and/or post me at DarwinianOne at Gmail.com

        • FreddyW says:

          Hi. If the decline curves are the same, then cumulative production is proportionate to IP production. 1/2 IP -> 1/2 cum. prod.

          I look forward to your post on Sunday.

          • That doesn’s help much unless you know the time frame for the initial production. Is that the first 24 hours or the first one month? I cannot believe that the first year’s daily production is anywhere near one half the first 24 hours production. One quarter I could believe but not one half. Or I could believe it is one half the first month’s daily production. What is your definition of IP?

            And remember this is LTO we are talking about here. The figures for LTO would not even resemble the figures for conventional wells.

            • FreddyW says:

              The 1/2 part was just an example. If you have the average 24 h IP rates for earlier years then there are lots of information how those wells have performed. Production profiles, EUR estimates, average 1st year production and so on. So again, for example, 1/2 IP translates into 1/2 cum. prod for any time period. And again, this is only true if the decline rates are the same for different IP´s.

              • FreddyW says:

                With different IP´s I meant that an average well with low IP has the same decline rates an average well with high IP.

              • FreddyW says:

                So the big question is if you can make this assumption. Look at page 57 and 51 in the Drilling deeper report. Compare Divide with the average Bakken well. Peak production ratio is about 550/300=1,8. Now look at EUR ratio; 378/219=1,7. Pretty close. So I would say, YES you can make this assumption.

                • Watcher says:

                  In the interests of monkey wrenches, let’s note that companies might have choked IP differently if they thought it had merit.

        • Ilambiquated says:

          I doubt there’s much profit in comparing the first 24 to the first year. I also wonder how good the data is.

          It probably makes more sense to compare the first 10 days or 30 days.

        • Ronald Walter says:

          When it comes to oil production, in the US of A, Texas is the big dog. T for Texas, T for Tennessee. If Tennessee were the size of Texas, Tennessee would be the big dog, not Texas. Texas has the paste boards, all of the cards, they call the shots.

          A well in the Bakken that was drilled in February began pumping in May, frack wait time, had a low 200 bpd ip, but as time went by, the production increased about 30 percent in the following 4 months.

          A TF well drilled in 2008 or so began with an ipo of 400 bpd, but is now a full 90 percent declined at around 1200 barrels per month, maybe a bit less than that. It was 75 percent declined after three years. Your shark fin graph all over again.

          So, from 400 bpd initial production to 40 bpd after the decline, a six year time period, 72 months, the words paint a picture, one that is not all that pretty. Envision a pig with lipstick, think of Miss Piggy, and then it ain’t all that bad.

          It’s better to look at Polly Anna, she’s beautiful. Polly says all the words you want to hear. Pay attention to what she says, not the ugly truth.

          If you read a daily activity report, I think it was Wednesday’s, all of the permits were in McKenzie, Mountrail, Dunn and Williams counties.

    • FreddyW says:

      Note that the author was unclear and stated only “barrels”. Barrels of what? I would assume it should be barrels of oil and not barrels of oil equivalents. Webb for example produces mostly natural gas if I remember correctly. So thats why the numers are much lower than Bakken which produces mostly oil.

      • Anonymous says:

        Thanks, Marcus.

        Dennis, I get grumpy when I get sleepy; ignore me and BTW, Rockman knows his stuff. You just found some more poop about EF EUR’s that no looky so good to me. You used 30% royalty and tax deducts from NYMEX WTI, and 7.00 a barrel OPEX a while back, I think that is spot on. You can work backwards to see what a EF well requires just to get to payout. The problem is knowing what these wells are actually costing, sans the BS; I think 7.5 million is a good number but hey, I am no shale guy.

        http://www.spe.org/atce/2012/pages/schedule/technical_program/documents/spe158207-page1.pdf

        This paper immediately changed my viewpoint on shale oil and I have never gotten over it. Its a few years old now but I’ll bet you a dollar to a donut it still holds water.

  17. aws. says:

    Québec pose 7 conditions à TransCanada pour son projet Énergie Est

    Sébastien Bovet, Radio Canada, Mise à jour le mercredi 19 novembre 2014 à 17 h 48 HNE

    Radio Canada has obtained a letter from Environment Minister David Heurtel sent to TransCanada in which he lists seven conditions that must be met before his government can accept the Quebec portion of its controversial pipeline project Energy East , which includes an oil port in Cacouna . [Google translate with some cleanup]

    The seventh condition

    Les approvisionnements en gaz naturel pour le Québec sont un enjeu qui devra être sécurisé avant d’approuver tout projet d’oléoduc.

    – Translated: Supplies of natural gas in Quebec are an issue that must be secured [guaranteed] before approving any proposed pipeline.

    Supposedly the Marcellus is to make up for the supply lost on the Mainline that TCPL is repurposing, and renaming as Energy East, to ship dilbit.

    Art Berman mentioned in his recent interview with Kunstler that even Wood Mackenzie (pretty mainstream consultants) are saying the Marcellus peaks in 2020. So it is hard to see how TCPL can ensure a secure supply of methane to meet the needs of Québec after it repurposes the Mainline.

    • Synapsid says:

      aws,

      The Utica underlies the Marcellus and is looking like it will be a major source of NG, and it will be able to utilize the same infrastructure. Good news for Quebec!

      ‘Course, the Utica is going to decline too, in its turn.

    • toolpush says:

      Is that the $2 or $2.50 gas that is going to peak?
      Or were you thinking of the $4 Henry hub price?
      If things get bad they may even find some $8-$10 gas as it was just a few years ago?

      https://rbnenergy.com/50-ways-to-leave-marcellus-the-race-to-increase-take-away-capacity

      “The foundation for the projected growth in Northeast production is strong. Initial production rates and other factors suggest that the break-even gas price for dry Marcellus producers in northeastern Pennsylvania is somewhere around $2.50/MMBTU. The break-even price in the wet Marcellus in southwestern Pennsylvania and northern West Virginia—and in the NGL- and condensate-rich Utica in eastern Ohio—is even lower (about $2/MMBTU or below) because producers there bring in big bucks from the liquids side of their business; for them, revenue from gas is just gravy.”

      I know that last little bit will make Watcher happy, but as the dry gas is still in the money at $2.50, it means they do need NGLs to be profitable, but NGLs just increase the profitability.
      At the moment the Marcellus/Utica is constrained by takeaway cpacity. Until this restraint is lifted, nobody has much of an idea what the potential is.

  18. Old farmer mac says:

    http://in.reuters.com/article/2014/11/20/transcanada-energyeast-quebec-idINL2N0TA1N420141120

    The fact that Canadian provincial governments are dickering the conditions that will satisfy them if the proposed pipeline is to be built is all the confirmation needed to convince me it will get built.

    I am surprised that oil has fallen as far and as fast as it has but with depletion rates across the board of five percent or so it won’t be long until oil is going up again unless the world economy rolls over and dies.

    There just does not appear to be any reasonable expectation of the continuous loss of production being made up at any price less than a hundred bucks give or take a few dollars.In the longer term it will take an even higher price and at some point production will decline no matter what. That eventual max point may not be more than a year or two away.

    Some people do believe perhaps for good reasons that various governments including Uncle Sam will subsidize oil production in order to keep the price down while also maintaining or maybe even growing production a little.

    I am agnostic about whether this will happen;there are so many variables in play politically and economically I would not be surprised either way.

    I will point out however that oil that costs let us say one hundred twenty dollars a barrel to bring to market that is subsidized to sell for one hundred dollars STILL ACTUALLY COSTS ONE TWENTY.

    If the end user does not pay at the pump he will still pay the twenty dollar difference at tax time.

    The act of printing money does not create a free lunch. It just off loads the cost of things purchased with that printed money across the entire tax paying and or money saving economy.Every dollar that is printed dilutes the purchasing power of previously existing dollars.

    • Watcher says:

      How will you know if the economy rolls over and dies?

      The PBoC this morning cut interest rates. One supposes because their GDP growth of 7+% is somehow not enough? No one is asking this question. They are just celebrating another source of increased money supply (and maybe oil consumption).

      It held oil above 76. Actually popped over 77 before fading, as the Euro slammed downward (which lifts the dollar, which does the redenomination thing.

      But the point is, China reports 7% GDP. Yet they cut rates. How will you know if the economy rolls over?

      • Watcher says:

        Oil is now back down to $75.xx. The Euro has been thoroughly smashed today (which elevates the USD, which redenominates blah blah).

        The clamoring pressure on Super Mario to do European QE grows, and it’s quite likely outright illegal for him to do it. So for about three years now he has chosen to just threaten to do it and not actually do it. The Germans are against it, of course.

        A few years ago when California’s budget was in such big trouble (before they found a a way to raise taxes) there was floated a proposal to have Bernanke at the Fed buy California municipal bond issuance. It went far enough that Bernanke released a legal opinion saying it was explicitly illegal for the Fed to buy constituent state debt. That put the issue to bed.

        But not for Mario Draghi at the ECB.

    • Ilambiquated says:

      Every dollar that is printed dilutes the purchasing power of previously existing dollars.

      That’s the point in a deflationary environment. Generally speaking, economic policy is usually oriented towards increasing output, not preserving existing wealth.

    • Watcher says:

      Farmerguy, you believe way too much in money. Printing money erodes its value only against a yardstick, and that yardstick can be influenced buy OTHER currencies and how they move.

      So if you get a central banker who wants to print money and he has a telephone in his possession, he can call other central bankers and orchestrate an activity so that no one’s currency can restrain anyone elses printing. And you think a commodity itself could hold itself up as the ultimate source of stability (gold tries this, but it’s silly) — the ultimate yardstick against which all currencies have to measure themselves?

      Those central banks can print money and buy/short the commodity to move its . . . call it INHERENT PRICE and prevent even it from constraining printing.

      It’s all bullshit. We just have to live with it.

      • Old farmer mac says:

        Actually I have posted many comments indicating that I believe money is a very HANDY way to conduct business but I do not BELIEVE in it as such.

        I think YOU are very very badly mistaken in believing that prices can be ENDLESSLY manipulated and that bankers can pull off all the hat tricks you mention so often.

        This sort of manipulation can work and does work after a limited fashion for a limited period of time.

        But in the end real goods and real services cannot be conjured into existence or kept from disappearing if they exist currently by bankers manipulating money.

        Money is the yardstick after a fashion of course. But if the powers that be divert resources to the oil industry to maintain oil production then those same exact resources are no longer available to any OTHER industry. I cannot use concrete or steel on my farm that has been diverted to the oil fields.

        This diversion reduces the available supply of concrete and steel to all other end users who find themselves thus paying higher prices. Now in a deflationary environment it is true that the nominal prices may not go up much or at all- the inflationary effect may manifest as LESS PRICE DEFLATION.

        Bankers are not magicians who are TRULY exempted from the laws of physics and supply and demand.

        And as somebody else up above pointed out they may not give a damn about the people who have saved money losing purchasing power in an inflationary environment. But the people who actually have that money sure as hell give a damn.

        Unfortunately most of them are too ignorant to understand that when their bank degrades their currency so as to support certain industries everybody else is subjected to some involuntary sex.

        The Japanese working man who has yen in the bank or under his mattress is losing his ass in terms of being able to buy imported goods with his savings as the Jap central bank inflates the Yen.

        Of course they inflated it past decades to such an extent that keeping it where it is may be impossible.At one time Tokyo was supposedly worth more than the ENTIRE USA.

        WHEN THE DOLLAR GROWS STRONGER in relation to let us say what used to be French Francs we can buy more French wine with our dollars but the French can buy LESS American whiskey.

        Inflating and deflating currencies and manipulating exchange rates in the end is no more than a zero sum game minus the house cut. A few people win- Toyota and Toyota employees win if the yen can be further degraded. But everybody holding yen that want imported goods loses.

        These observations hold true regardless of how much more money is like a rubber band that a stout rope that does not stretch.Things can be better fastened and more securely with rope than with rubber bands but rubber ropes will suffice-although when using rubber rope things such as prices and supplies can shift around rather wildly.

        • Watcher says:

          ” I think YOU are very very badly mistaken in believing that prices can be ENDLESSLY manipulated and that bankers can pull off all the hat tricks you mention so often.

          This sort of manipulation can work and does work after a limited fashion for a limited period of time. ”

          So we’re in year 6. When’s the deadline for when it can’t work anymore? Calendar. Not when something happens or when someone decides something. If it hasn’t happened or hasn’t been decided in 6 yrs, when will it be?

          “The Japanese working man who has yen in the bank or under his mattress is losing his ass in terms of being able to buy imported goods with his savings as the Jap central bank inflates the Yen.

          Of course they inflated it past decades to such an extent that keeping it where it is may be impossible.At one time Tokyo was supposedly worth more than the ENTIRE USA.”

          So . . . 6 yrs. But decades are possible?

          “WHEN THE DOLLAR GROWS STRONGER in relation to let us say what used to be French Francs we can buy more French wine with our dollars but the French can buy LESS American whiskey.”

          But they can buy the same amount of wine. And Japanese can buy the same amount of Japanese rice.

          The limit would appear to be the sheer quantity of hard assets that exist. At Some Point – – – the favorite phrase of Zero Hedge – – – it can’t work anymore. But it’s six years now. Going on seven, and the Japs are printing more than anyone ever has as a % of GDP. The PBoC announced a rate cut this morning and about half the civilized world is begging Draghi to QE.

          So . . . how many more years?

  19. Boomer II says:

    I was reading the comments on the article by those Google engineers. There were quite a few pro-nuclear comments.

    I haven’t been a nuclear proponent, but if we are desperate to slow down global warming and people don’t believe renewables and conservation will be enough, will we see more people embrace nuclear? And if so, when?

    I understand the economics of the situation. Nuclear is not cheap or fast. And there can be other issues (e.g., safety, security). But if global warming is a given and we see our options shrinking, will the nuclear bandwagon become widespread?

    • Boomer II says:

      When I say it isn’t cheap or fast, I mean installing power plants. The economics have held it back. It is faster/easier to put in a gas fired plant.

      • Old farmer mac says:

        Nuclear power is going to make a HUGE HUGE comeback – unless there is another Fukushima and another Chernybol and another Three Mile Island.

        OF COURSE more such accidents are statistically certain to come to pass. The only real question is when and where and how often and how many people get killed.

        My expectation is that there will be a desperate wartime type effort to build new nukes within the next decade or two- but NOT because of warming.

        This effort will come about because various countries are going to find out that they cannot REALLY count on importing oil, coal, and gas year after year at predictable and affordable prices.IF the nuclear industry does not suffer any really bad accidents between now and then … Nuclear construction would be the place to be for a young guy willing to live his life on the road.

        AND IF THE DESIGN of new nukes is finally standardized and the permitting process standardized then they can probably be built in half the time it takes currently. Maybe less. The technology has stood still for forty years for all intents and purposes in terms of the actual construction process.

        Most of the components could now be built on assembly lines and ready to install as the plant goes up rather than stick built a piece at a time on site.

        • Ilambiquated says:

          Right now nuclear power is suffering from a slow motion version of the Red Queen problem. Thirty years of non-investment and profit taking have left the fleet ready for retirement. It will take trillions of dollars even to replace the existing plants, and that will have to happen by 2040 at latest, probably sooner.

      • Ilambiquated says:

        I agree with you on this. Building a nuke is a boondoggle and it isn’t getting any better. Massive cost overruns and multi-year delays are the rule, no exceptions. It’s impossible without massive government intervention both for safety and financial reasons. It’s very unpopular with a lot of people, which doesn’t help matters either. Payoff times are immensely long. And it’s always sponsored by unpopular utilities. The disposal issues won’t go away, meaning political arguments will continue.

        A bit off topic, but here’s why I think solar will grow very quickly in coming years:

        Solar is the opposite in almost all these categories. It’s cheap to implement. You can scale down to wristwatch size and up to the GW scale. It is technical simple, just plug and play. Prices are likely to continue falling. Financing it is easy, the return can be calculated accurately decades out, because there are no marginal costs or cleanup costs. Lots of people like it, think its cool or green or whatever. Payoff time is short. Homeowners can do it themselves. It has no side effects (for the end user at least).

        The point here is not to prove that solar is a Good Thing.

        Solar is like weed, it will sprout and grow in the cracks of the existing system. Its zero marginal costs means you can’t outcompete it once it’s installed. Solar’s perceived weakness, that it doesn’t run at night, is financial poison for inflexible older plants. As prices continue to fall, it will choke out its competitors.

        Nuclear power is more like an oak forest. If it is widespread it is hard to compete with. But it needs long term stability to establish itself, and that is not too common in a democracy. so it will only grow in dictatorships.

        • Boomer II says:

          Solar is the opposite in almost all these categories. It’s cheap to implement. You can scale down to wristwatch size and up to the GW scale. It is technical simple, just plug and play. Prices are likely to continue falling. Financing it is easy, the return can be calculated accurately decades out, because there are no marginal costs or cleanup costs. Lots of people like it, think its cool or green or whatever. Payoff time is short. Homeowners can do it themselves. It has no side effects (for the end user at least).

          A big advantage of small solar projects is not being tied to centralized power generation and distribution. All the people talking about “freedom” should theoretically support it for this reason.

  20. Very Important Information Needed! All well data on well completions and wells released from confidential “tight hole” status published by the NDIC lists “BOPD”. This is, I believe, the first 24 hours of production. If anyone has any idea, or any source of information, how this can be translated into the average first one year’s production please let me know. Post the data here or post me at DarwinianOne at Gmail.com.

    I have a post coming up Sunday that I think everyone will like. However if I had any idea how to convert the first 24 hours of production into the average production for the first year it would help. I know it would vary from well to well but surely there must be an average first year’s production that can be derived from this number?

    • Watcher says:

      Ron, it’s important that this data NOT BE derived from some descent model of output.

      It should be derived strictly from averaging known month to month of known wells as they descend, and then average them. Get the real data. Not presumed data.

      • Watcher, the first years output, back in 2012 or 2013 was averaging about 400 barrels per well. I think it rose slightly after that but I have a very strong reason to believe it has now begun to fall. I am interested in what it is now. But what I am far more interested in is what the first 24 hours of production translates into. That is in average barrels per day for the first year. Just a rough estimate would do and I really don’t care how that estimate was derived was derived.

        • Watcher says:

          Ya I misphrased. I meant get a large sample of wells, their IP, and their month to month. Average them all together and then that is a legit prediction of yearly avg expected for a given IP.

          Empirical. Not curve fitted. And seek sophistication by noting variance in the empirical data by locale to generate the relationship of IP to first year’s avg flow/day.

  21. Old farmer mac says:

    Off topic at the moment but I have been rereading an old Scientific American special issue on the origins and rise of modern technologies.

    It seems that the city of Athens with only about a quarter of a million citizens and slaves and hangers on was able to manage to build a fleet of over two hundred of the most advanced warships ever built until that time- the famous triremes- when threatened with a naval invasion. That is almost one warship per thousand people in a society without very much in the way at all of modern technology of any sort -at least modern in any contemporary sense.

    Now I point this out because we spend a lot of time debating what is possible and what is not in the way of adapting to a world short on oil and other fossil fuels.I am not at all sure collapse on the grand scale is not baked in already but so far as I am concerned I do not believe that it is NECESSARILY baked in on a world wide basis.

    If we Yankees were to be convinced our survival depends on a WWII type effort to improve energy efficiency and simply conserve energy and other scarce resources as opposed to using them up frivolously the results could well put us on a path that would be sustainable for at least another fifty to a hundred years- barring a climate catastrophe or WWIII etc of course.

    And while I am no technocopian in fifty more years I expect there would be a lot of technology developed and commercialized that would come across today as pretty close to magic.Combine that with a low birth rate and there could well be enough additional progress made to truly get thru the energy and resource bottleneck and have a long term sustainable industrially based civilization.

    Net zero energy houses should for instance be a piece of cake with much improved insulation and appliances and super duper solar panels and that sort of thing.

    Sewage treatment plants could produce a stream of water to be piped to the country side or nearby greenhouses to be used as irrigation water that contains almost all of the plant nutrients we are currently flushing out to sea.

    • ezrydermike says:

      So, what’s it going to take to convince us ,while we still have the resources left to do something?

      • Old farmer mac says:

        There is a high probability in my opinion that nothing will convince us other than a whole series of figurative muggers bricks upside our collective national head.

        The problem with a muggers brick is that it may kill you or injure you so badly you cannot fend off the mugger never mind implementing effective defensive actions to avoid ANOTHER mugging.

        BUT if we are lucky we will experience these bricks as Pearl Harbor events that convince us that the time to act arrived YESTERDAY .

        I am not complacent but there is in my opinion a real if slim chance that we could get our act together on a wartime economic footing and come thru the crash that is going to wipe out a substantial part of humanity – come thru more or less whole without a major die off and without having to live thru a Somalian style reset.

        In WWII we just quit manufacturing automobiles for all intents and purposes.

        In the future we may just quit manufacturing any automobiles larger than a subcompact with an engine just big enough to get up to forty mph with a tailwind.

        .We could just park all the jets.Period. Except the ones operated by the armed forces of course and we might be able to park most of them as well.The only reason we really need a lot of new houses is that building houses keeps the wheels of commerce turning – construction keeps people working. But we have ample housing available if we double up a bit.We can eat down the food chain and get by growing half as much grain and actually be the healthier for doing so. Bike paths are infinitely cheap compared to paying for a few million barrels of imported oil day after day..AND it is an indisputable fact that people who ride bikes and walk a lot are far healthier than people who don’t get that extra exercise. A thousand dollars spent per capita in a locality putting in bike paths is going to return a five fold savings in treating obesity heart attacks and similar ills over the lifetime of the current population.

        The biggest problem with such an economic upheaval is the issue of employment.

        But it can be solved and might even solve itself. Some of us have a hard time accepting any reference to Nazi Germany but I personally put in a good bit of time studying that era trying to come to a deep understanding of how and why the Nazis got into power and how they managed to build up such an awesomely powerful war machine so fast even though Germany was broke and short of a lot of critical resources.

        Tanks and warplanes are damned near useless but somehow Hitler put just about everybody in a flat busted Germany to work building them in vast quantities.

        So -If that maniac could put a busted and resource short Germany to work doing something more or less useless- I conclude that a similar effort geared towards a useful peaceful end can also succeed in putting every body to work.

        But we won’t be using the output of our effort- assuming we make it- to wage war. We will be using it in large part to eliminate the need to wage war.IF we can build enough wind and solar farms we can get by without imported oil by electrifying our transportation system and powering it with renewable energy.

        If we were to standardize our building codes and permitting processes and do things the way the Germans do them already we could be installing small scale pv systems for HALF what they cost currently us TODAY- with no further progress in the technology.

        In ten years I have very little doubt that the amount of money that is needed to buy one nice car- something along the lines of a Chevy Impala – not a status car but just a nice car- will be enough to make the difference between building a typical mcmansion and a net zero energy house.Ten more grand for the extra labor ten for the pv system and ten more for the extra insulation and extra high quality windows etc. Just another thirty grand inflation adjusted of course.

        AND with the cost of a battery such as the one in a Tesla having fallen by two thirds or so in a decade – people will be using some of that pv power to charge up the family grocery getter.A battery electric car is eventually going to cost LESS than a conventional car since the one part of it that is super expensive is the battery- and the battery is expensive because it is essentially a giant rats maze of electronics controlling the cells. Electronics get cheaper all the time especially as they go generic and scale up in volume. The battery business in terms of big rechargeables is still in short pants. Maybe still in diapers.

        The question is whether we WILL go proactive. There is at least a possibility we will do so.

        But I wouldn’t bet the farm on it.

        There is even a slight chance that the free market itself will take care of the problem for us.Plenty of people including lots of mainstream economists believe the market WILL save us. In principle it COULD.. We are buying more efficient light bulbs mostly on a voluntary basis for instance.But the market is not going to save us because the price signals are going to come too late to allow us to make the necessary changes at the necessary scale in my opinion.WAY TOO LATE.

    • Boomer II says:

      It seems that the city of Athens with only about a quarter of a million citizens and slaves and hangers on was able to manage to build a fleet of over two hundred of the most advanced warships ever built until that time- the famous triremes- when threatened with a naval invasion. That is almost one warship per thousand people in a society without very much in the way at all of modern technology of any sort -at least modern in any contemporary sense.

      Thank goodness someone else points out that great things can be accomplished without oil. The Pyramids were built without oil.

      We have no particular reason to assume the world can’t survive without oil. Of course, we will need to do things differently, but in some cases that might be an improvement.

      Can we support all the people currently in the world without oil? Probably not. But there is no reason to assume that because we can’t support the current number that we can’t support a smaller number.

      • Fred Magyar says:

        Good points! Things were not only accomplished without oil but also without greedy banksters…

      • Old farmer mac says:

        We don’t even have to do it without oil – assuming we do it- because there is still plenty of oil to last us for quite a while if we use it wisely.

        Unfortunately we are not prone to act wisely when it comes to problems that are not of immediate obvious concern.

        We won’t get started until after we get hit with a few bricks..Maybe a whole bunch of bricks.

        Those who say renewable energy cannot replace fossil fuels because they don’t have a sufficiently high multiple return on energy invested don’t seem to realize we aren’t talking about an athletic contest but rather a war where anything goes it terms of winning. We have the earths remaining endowment of fossil fuels available to use to build up the renewables industries -IF we were to choose to do so.

        Renewables don’t have to bootstrap themselves up to the level of sustainability. AND we don’t HAVE to reproduce like rabbits.

        • Boomer II says:

          We don’t even have to do it without oil – assuming we do it- because there is still plenty of oil to last us for quite a while if we use it wisely.

          That’s what I don’t understand about the hardcore peak oil doomers. They don’t want to envision any options. But if we are going to be doomed, as they think, what’s the loss in trying to postpone what they believe is inevitable? I would rather try and fail than to not try and fail.

          I don’t want business as usual anyway. I’ve got enough clothes to last me the rest of my life. I now walk nearly everywhere I need to go. I could survive on local food. I rarely see a doctor and if I run into medical problems which can’t be treated without an oil infrastructure, then it’s my time to go. I don’t need my life to be prolonged.

          We could slash so much excess and inefficiency out of our economic system and be much better for it. If that buys a 100 years of time, then that at least covers my children, my grandchildren, and the unborn still close enough to me to care. I would much better cut the excess and extend life decades or centuries than to go out in a short, excessive blaze of glory.

          • Watcher says:

            Actually, the option and approach is very clear and obvious and the gentle decline types insist on forcing things to the inevitable doom that does not have to happen.

            All you have to do is make a commitment to victory. Then you have generations of life in BAU, or better. The losers die, and the history books you write will make it all very noble.

            • Boomer II says:

              Actually, the option and approach is very clear and obvious and the gentle decline types insist on forcing things to the inevitable doom that does not have to happen.

              All you have to do is make a commitment to victory. Then you have generations of life in BAU, or better. The losers die, and the history books you write will make it all very noble.

              So you’re saying that a group of people will survive and live well? Isn’t that what people other than the hard-core doomers are also saying?

              You may be saying the above with tongue-in-cheek, but I’ve read so many different scenarios about the future, I can’t always tell when someone is kidding.

          • wimbi says:

            I second all of above.

            This little town is going flat out to get off carbon, all together and with the help of the locals with money.

            One I like is the innovation center, which offers basic support to locals with low carbon ideas to get to a going business. I was asked to offer some ideas for development.

            pyrolyzer wood stove. Makes clean gas, leaves charcoal behind to sequester. I have tried it and it is not only easy to do, but also easy to use gas. Burns clean. No smoke, no smell.

            Thermocompressor. Takes that gas, drives a compression process, ends up with compressed gas. Can then use that for a closed brayton cycle, where the expander does all output work, and does not use a lot of work to drive the compressor. System also good for compressed air energy storage for PV backup.
            I made a little thermocompressor as demo. Easy to make (free piston), runs fine.

            etc. worlds of unexploited tech waiting to be noticed.

            • Doug Leighton says:

              Meanwhile, according to the most recent UN estimates, the human population of the world is expected to reach 8 billion people in the spring of 2024, after reaching 7 billion in 2011. The market for your thermocompressors is growing nicely.

              • wimbi says:

                Hell. I wasn’t trying to save humanity from itself, I was just having fun making stuff that uses less carbon.

                I did it because that’s what I do.

                Humanity has just gotta save itself all by itself.

  22. Old farmer mac says:

    http://www.resilience.org/stories/2014-11-16/did-russia-and-china-just-sign-a-death-warrant-for-u-s-lng-exports1

    We are still the big dog but we’re getting gray about the muzzle and stiff in the joints in comparison to what we once were before we shot our feet off by exporting our manufacturing base and converting our skilled workers and well paid laborers into burger flippers and welfare cases.

    Our time as the DOMINANT world power is rapidly drawing to a close.Russia, China, and the rest of Asia simply do not need our couch potato asses for anything except our dollars and since the Chinese are now getting on up there with their own industrialization -ditto the rest of Asia- the necessary customers will be homegrown before too much longer.

    I will say it again after saying it many times before. Barter is clumsy but there is nothing really in the way of a country such as Iran trading a tanker full of oil to a country such as Poland for a few shiploads of wheat.No money needs to change hands at the international level.A sovereign country ”don’t need no stinking badges” to send a ship to sea and to a port in another country that wants to either load or unload that ship.

    The only way the US and friends can stop this sort of thing is to make ever bigger enemies out of the countries we are pushing around economically and politically in order to enforce sanctions.

    The Russians and the Chinese won’t even have to send ships to sea. Where there are pipelines there will also be railroads and the very act of building the pipelines results in the accumulation of industrial muscle on the part of the countries involved in building them.

    Ya learn to drive trucks and operate dozers and excavators and cranes and weld pipe by doing these things. Ya learn to manufacture pipe by manufacturing it.

    I haven’t noticed any big headlines about how we are selling trucks or excavators or welding machines or pipe or much of anything else in the line of heavy industrial machinery to the Russians and Chinese recently.

    Pretty soon the Chinese are going to own whatever is left of the machine tool industry that the Germans don’t manage to hang onto.

    And before too much longer they are going to finally figure out that brand names do matter and start exporting cars and scooters and electric bicycles that actually run and can actually be repaired..

    I am not saying we are finished as a world power but I think we will soon be finished as the bully that can just go around telling most of the world what’s what.

    • Ilambiquated says:

      The whole “Who’s the Greatest Power” thing is getting less and less relevant. Countries are so tightly bound with each other these days their leaders can’t really satisfy their egos at their neighbors cost anymore.

      The United States peaked in relative terms in the late forties. Since then the rest of the world as a whole has more or less steadily outgrown us. In absolute terms, on the other hand, we’ve done pretty well. As a result, most Americans haven’t woken up to the “new” reality and still see the world the way their granddad did.

      Asia is coming to dominate the world because that’s where the people are. You may have seen this map:

      http://io9.com/more-than-half-of-the-worlds-population-lives-inside-t-493103044

      People obsess about China, but then they used to obsess about Japan in the 80s. China is ten times as big, but it still isn’t the whole story.

      By 2050 Africa will have added as many people as are in China today, and China will be an old folk’s home. It may end up being an African century.

    • Doug Leighton says:

      Mac, that seems like an accurate assessment with a couple of minor adjustment. I follow the tool industry closely. China has been the world’s largest producer and consumer of machine tools for quite awhile but, as I’m sure you know, high end stuff comes almost entirely from Germany and Japan – where it is actually manufactured. German tool production remains very strong; no so Japan who have lost market share big time owing to their strong (overpriced?) currency (give Watcher credit here). And I give thanks to all the gods twice every day for fact I acquired a REAL American Bridgeport mill and English Harrison lathe when it was still possible: the GOOD OLD DAYS. Bridgeport is now owned by Hardinge, Inc., (known for lathes) an international company based in NY and as far as I know most of their stuff is actually made in China (sadly) and maybe Taiwan too (less sadly) but could be assembled anywhere.

  23. Ilambiquated says:

    Caelan MacIntyre:

    I consider Tvyberg a loony, but I’ll indulge you with counterarguments:

    1. Translates to “I can’t think of a problem but I bet there is one”. This is the hallmark of engineers that want to run their mouths but never get anything done.

    2. FUD PVs are made of silicon, wind turbines do not use magnets, etc etc. It’s an argument against electricity I suppose, but a weak one.

    3. So economically illiterate I don’t know where to start. There is no reason energy should cheap, and she provides no reason to believe solar and wind won’t be the cheapest energy sources some day.

    4. Simply untrue, vastly generalized. She is saying “I can’t think of a solution, ergo there is none”. Another trait of an incompetent engineer.

    5. No idea where she’s going with this. Some straw man she’s chasing. Electricity is already much cheaper than oil, and that’s where renewables are competing for the time being.

    6. See 4 “I can’t think of a solution, ergo there is none”

    7. FUD, and see 4 and 6.

    8. Yeah, people need to be careful.

    • Old farmer mac says:

      ILAMBIQUATED,

      I am wondering what you are talking about in your 11/22 comment at 8;09 am.

      How about a link to whatever article it is you and Caelan are talking about in this comment?

      • Caelan MacIntyre says:

        “…we shouldn’t use them unless we find a way to pull CO2 out of the atmosphere. ~ Boomer II

        How about planting/encouraging growth of lots of extra plants and stopping (activities that lead to) deforestation/desertification/species extinctions, etc.?
        That seems like the only kind of ‘geoengineering’ that has a proven track record– encouraging and helping nature to regenerate and flourish, such as where it once did.

        It’s not that hard… You don’t even need to be an engineer or an economist. Might even be better that you’re not.

        “…no one here has been talking about the various ideas for geoengineering to moderate global warming.” ~ Boomer II

        Maybe, in part, because the unnatural ones won’t likely work, considering the evidence of our species’ current BAU track-record and trajectory?

        • Nick G says:

          The simple approach would be to grow trees, like we do today for lumber, and bury the wood.

          • Caelan MacIntyre says:

            I think the proper way would be to just let the trees grow naturally and not to ‘bury’ them.

            “Oh, another one of those things that it’s so ‘easy’ to do? Seems your whole future world is built on those things that we don’t do but are so ‘easy’, if we’d only do them.” ~ augjohnson

            • Nick G says:

              If they mature, they stop sequestering carbon.

              And, yes, there are quite a few things that are easy, but we don’t do them because they threaten established interests: EVs are cheaper than ICEs. Sedans are cheaper, easier (and often safer) than SUVs. Demand Side Management (aka Demand Response) is far cheaper for utilities than building new generation capacity – but that doesn’t make money for utility investors.

            • Nick G says:

              And, have you read the comments following you quote? They lay out the same answer: yes, grasshopper, it is easy, if only we can overcome the Koch brothers and their ilk.

              • Caelan MacIntyre says:

                A lot of things look good on paper, Nick, but only on paper. Too many things. I guess that can be the difference between some dreams and reality…
                Reminds me that we once had a neighbor name their wireless network, Flaccid Unicorn…

              • Caelan MacIntyre says:

                “And, have you read the comments following you quote?” ~ Nick G

                Yes, and aroundabout when they were made too. I even backed up a little to this one. We can still back up further to the main comment thread of course. ‘u^

                “If they mature, they stop sequestering carbon. ” ~ Nick G

                My interest or intent behind my previous quote regarding trees was sufficiently less myopic or decontextual than ‘if they mature, they stop sequestering carbon’.
                Missing the forest for the trees is too obvious an expression for this context to invoke so I’ll resist doing so.

    • Caelan MacIntyre says:

      “I consider Tvyberg a loony…” ~ Ilambiquated

      Is that a misspelling and ad-hom to boot, right off the bat? If so, is that supposed to inspire confidence in what you might think of as correct?

      “I can’t think of a problem but I bet there is one”. This is the hallmark of engineers that want to run their mouths but never get anything done. ~ Ilambiquated

      Yes, the world is frog-crock-full of simmering engineering technofetishists bouncing around looking green and busy and ‘getting things done’ to the planet (as it goes to hell in a handbasket ever faster).
      Gotta luv that mindless git ‘er done spirit, come hell or high water, ay? Just git ‘er done I tells ya! Git ‘er done!

      (Hungry for fogs’ legs now…)

      “…PVs are made of silicon, wind turbines do not use magnets, etc etc. It’s an argument against electricity I suppose, but a weak one. ~ Ilambiquated

      Your ®Perfect PVs, made of absolutely nothing but silicon, that come out of nowhere like fiat and sprinkle over to your home as a light Fairydust Technobreeze™ and assemble/install themselves on-location for your convenience?

      “Manufacturers and marketing agencies exploit the fact that every power source carries its own unique portfolio of side effects to create the terms of discussion that best suit their needs. Electric-car makers like to point out, for instance, that their vehicles can be charged from renewable sources, such as solar energy. Even if that were possible to do on a large scale, manufacturing the vast number of photovoltaic cells required would have venomous side effects. Solar cells contain heavy metals, and their manufacturing releases greenhouse gases such as sulfur hexafluoride, which has 23 000 times as much global warming potential as CO2, according to the Intergovernmental Panel on Climate Change. What’s more, fossil fuels are burned in the extraction of the raw materials needed to make solar cells and wind turbines—and for their fabrication, assembly, and maintenance. The same is true for the redundant backup power plants they require. And even more fossil fuel is burned when all this equipment is decommissioned. Electric-car proponents eagerly embrace renewable energy as a scheme to power their machines, but they conveniently ignore the associated environmental repercussions…” ~ Ozzie Zehner

      To say nothing of all kinds of other related issues that are far too often simply ignored or poo-pooed away, often by those commenting behind their lacy veils and hand-fans of anonymity.

      “Traditional communities do not often voluntarily give up or sell the resources on which their communities are based until their communities have been destroyed. They also do not willingly allow their landbases to be damaged so that other resources—gold, oil, and so on—can be extracted. It follows that those who want the resources will do what they can to destroy traditional communities…” ~ Derrick Jensen

      “A low-energy policy allows for a wide choice of lifestyles and cultures. If, on the other hand, a society opts for high energy consumption, its social relations must be dictated by technocracy and will be equally degrading whether labeled capitalist or socialist.”
      ~ Ivan Illich

      • notanoilman says:

        Oh, so no fossil fuels are burned extracting and processing oil and coal. BTW, what heavy metals are used for solar cells?

        NAOM

      • Nick G says:

        The industrial revolution has been enormously liberating. Longer lives, better health, less slavery.

        If you want to see the results of poverty, look at the most conservative and authoritarian of cultures. ISIS is a good example.

        • Caelan MacIntyre says:

          The industrial revolution has been enormously liberating. Longer lives, better health, less slavery. ~ Nick G

          Liberating for who or what? The 1%? The extinct species? Sure, death is liberation…

          But your industrial ‘BAU’ revolution has not yet quite wound down, (as well as its effects, about which you, yourself, have even invoked climate change as a concern) as species get off’ed left right and center, oceans acidify, soils despoil and waterways dead-zone, etc..

          You seem to be standing too close to the pointillist painting and maybe in a bit of a contradiction to boot, to say nothing of your apparent faith in (the stumbling footwork of) a species that has already stepped past some points of no return.
          If you decide to try stepping back from the painting, you may wish to be careful to avoid bumping into the others at the gallery who are standing behind you, and part of the same picture.

          “Using evidence from epidemiology, anthropology, and archaeology, Cohen provides fascinating evidence about the actual effects of civilization on health, suggesting that some aspects of civilization create as many health problems as they prevent or cure.”
          ~ book description for ‘Health and the Rise of Civilization’, by Mark Nathan Cohen

          If you want to see the results of poverty, look at the most conservative and authoritarian of cultures. ISIS is a good example. ~ Nick G

          Chomsky:

          “For Almost 70 Years the U.S. Has Been the World Leader in Spreading Destruction and Misery Across the Planet
          Despite Obama’s noble words, America has imposed vicious dictatorships and supported horrendous crime”

          ISIS is apparently using US military leftovers and maybe even US training, money, previously-US-destabilized (bordering) nations, etc..
          As I’ve remarked hereon recently, ISIS, along with other current and previous disasters worldwide seems, at some levels, like a subset of the American Military Complex superset. We need to factor those kinds of things in, Nick– context and complexity.
          Reality doesn’t just exist inside your head.

          Indeed, the ‘American experiment’ has yet to wind down…

          “Inverted totalitarianism is a term coined by political philosopher Sheldon Wolin in 2003 to describe the emerging form of government of the United States. ” ~ Wikipedia

          • Nick G says:

            Caelan,

            You seriously lost perspective.

            In what place or time. would you prefer to live?

            • Caelan MacIntyre says:

              If I am going to ‘lose’ some perspectives, let it be for gains…

              I will share with you something I’ve been working on for the Permaculture Research Institute, for Permaea and, in part, FOR YOU

              “Humans– fundamentally wild– ostensibly evolved within small-scale, relatively simple, visceral, immediate, laterally hierarchic, democratic band/tribal/hunting-and-gathering free-roaming contexts and, as such, and ironically, seem in fundamental dissonance with the layered, distancing, detached cage of systemic (‘dystemic’) complexity that they have welded like a prison around and between themselves and nature, and where, over time, they have managed to become increasingly and dangerously out of scale, synch, control, and out of touch with their world, their spirit, and the complex manifestations– like Fukushima’s ongoing nuclear disaster– from their capacity for systemic complexity. Where, once upon a long time ago, this ‘superape’ capacity that allowed them to survive and thrive brilliantly on the plains of what is now called ‘Africa’, seems to have, paradoxically, boomeranged, and is now, by a slow death-of-a-thousand-cuts from a slow-build-of-a-thousand-dubious-decisions and unintended consequences over time, threatening their very survival and ability to thrive. Obviously, it’s past time for a rapid paradigm shift, inflection point, murmuration, but of the right kind(s). Question is when, how? Transition Towns is all but crickets over here in Ottawa and Halifax, respectively, and apparently in the USA as well; Occupy has fizzled, fragmented and/or gone underground; we have yet to hear of any Deep Green Resistance resistance (not that we’d necessarily know for sure); David Holmgren, in writing about the consideration of a kind of ‘crash on demand’, mentions in that article that, ‘I am more than ready to acknowledge that ‘our’ collective efforts at positive environmentalism during and since the 1970s have so far failed to catalyse the necessary changes in society…’; and Michael C. Ruppert recently fatally shot himself…”(quote from my Permaean Manifesto)

              The paradox of the human may be found in its capacity for complexity (whereby we inevitably ‘lose control’).

              It is my contention, and that of others, that if we don’t somehow find a way to effectively deal with this paradox fast and soon enough, we may very well find ourselves collapsing (faster) along with the keystones we have already knocked out.

              Technofixes, alone, like carts without horses, are not going to work without fundamental democratic changes; changes that put control back in our hands and lives. Alas, technofixes generally rely on specialists/experts, and therefore rely on some levels of relinquishment of that personal control I’m talking about.
              We’ve also lost local, cultural and community control as well.

              At the same time, and ominously, given our numbers, given that we appear out of scale, (and given our dependence on fossil fuel inputs for example) control may be next-to-impossible without a sufficient population crash.
              I would like nothing better than to be wrong and/or naive, etc., and that’s why I have been working on the formative Permaea.

              I/We need all the help we can get. Consider joining, Nick (and whomever reads this), or creating something like it that interlocks with Permaea, and other ‘off-the-shelf parts’ in a mutually-beneficial democratic way. Its all about us.

        • Caelan MacIntyre says:

          “The industrial revolution has been enormously liberating. Longer lives, better health, less slavery.” ~ Nick G

          “But if the payoffs of the drawdown strategy are spectacular, so are its dan­gers and liabilities. The latter can be grouped into three broad categories: environmental degradation, climate change, and increasing human dependency on a ‘phantom’ carrying capacity.” ~ Richard Heinberg

          This ‘liberation’ appears as a cruel short-term illusion in the face of rampant, uncontrolled drawdown.

          “If someone had designed a work regime perfectly suited to maintaining the power of finance capital, it’s hard to see how they could have done a better job. Real, productive workers are relentlessly squeezed and exploited. The remainder are divided between a terrorised stratum of the, universally reviled, unemployed and a larger stratum who are basically paid to do nothing, in positions designed to make them identify with the perspectives and sensibilities of the ruling class (managers, administrators, etc) – and particularly its financial avatars – but, at the same time, foster a simmering resentment against anyone whose work has clear and undeniable social value. Clearly, the system was never consciously designed. It emerged from almost a century of trial and error. But it is the only explanation for why, despite our technological capacities, we are not all working 3-4 hour days.” ~ David Graeber, ‘ On the Phenomenon of Bullshit Jobs

          • Nick G says:

            It’ s hard to know what to answer, with such a mix of sensible and unrealistic things.

            I disagree with Heinberg about depleting resources, and with Graeber about the value of managers.

            On the other hand, I agree that we need to urgently prevent/reduce Climate Change. Climate Change is the big thing: it has uniquely long feedback lags, which make it very difficult for humans to cope with.

            And, of course, we need much more democracy to help us come to correct public policies. As a group we’re maturing, but we’re doing it slower than we need.

  24. Old farmer mac says:

    http://www.bloomberg.com/news/2014-11-21/u-s-oil-rig-count-drops-to-1-574-baker-hughes-says.html

    I don’t have much use for Yergin since I view him as a mouth piece for BAU but he is nevertheless a superb writer and anybody who is interested in oil should read his books especially The Prize.

    In this article he seems to be saying that drilling rigs are rented or leased for a year at a time. He ought to know.If this is true then it is a good indication that even though a lot of operators may wish they hadn’t leased a rig for a year given current prices they will most likely run it anyway since drilling and selling at say seventy five bucks probably represents a smaller loss than just letting the rig sit there. And of course prices may go back up before the year is out and they may make some money anyway.

    Hopefully some body in the industry will have something to say about typical rig lease terms -how long and how far ahead to start dates and so forth.

    There are probably some older rigs out there that can be profitably taken out of service soon and put into a maintenance facility for an overhaul or maybe even scrapped due to high operating costs and slow drilling speeds compared to newer rigs.

    • Mike says:

      Mr. Mac, I’d like to chime in on that if I may; its raining today in Texas (yahoo!) and I have a sec:

      The phenomenon of long term land rig contracts is fairly new and mostly tied to the stinkin’ shale oil boom, onshore anyway. Offshore there have always been long term contracts for rigs. I don’t know what the penalties are for terminating a lease contract like the ones that might exist in the shale boom but I can assure you smaller shale operators in flank areas are already letting rigs go in S. Texas. Whether they are able to wiggle out of contracts or are simply not renewing contracts I don’t know. I would guess that in most cases contracts for land rigs are for a year, or even two years, but there must be out clauses.

      I think the current rig fleet in the US is actually pretty new and, or newly refurbished and updated. I don’t see too much junk around anymore. Just about all shale rigs have top drives now, instead of rotary tables, to turn drill pipe and steer down hole tools; mud pumps and mud systems must be large and sophisticated to drill long laterals. Lots and lots of rigs I have seen in the shale plays can walk from well to well, even with the derrick still stood up and drill pipe stacked in the derrick. When rigs need to be torn down and moved they require less loads than years ago; the whole drilling process has gotten more efficient.

      There are, I believe, lots of new land rigs being built to service the shale “revolution.” Manufacturing of those rigs is typically also on a contractual basis with big drilling companies. I would imagine some folks are re-thinking a lot of that stuff right now.

      Once of my biggest concerns for the oil business is its ability to support a young work force and I am very concerned another turn down in drilling will send lots of hard working men to more stable careers. In the boom to bust cycles the oil business always looses, and has a hard time regaining, qualified labor and supervision jobs. I think younger people are now looking towards the hydrocarbon business for long term career choices and that is very important. They need many years of training and experience to know what us old farts know. Up until about 5-6 years ago virtually 75% of the people in the industry capable of supervising and managing exploration and production efforts were over 55 years old. That’s improving. I hope we now don’t lose those young men and women.

      Mike

      • Old farmer mac says:

        Thanks Mike for filling us in on the way thinks look from the inside.

        I can only guess at such things since I have no hands on experience in the oil industry.

        Now if somebody has just recently contracted for a rig say three months ago and can’ get out of a year lease it seems pretty likely they will go ahead and run it.That is probably their best option. But if prices are still down nine months from now… that particular rig is going to need a new home for the next twelve months.

        So- Maybe the real drilling slowdown is just now getting started.

        The farming industry is faced with a similar situation in terms of the old guys who can make things work all being at retirement age.

        The biggest difference is that most farmers don’t even have a large enough operation to be training any body in management. The owner generally manages everything himself but may delegate certain jobs such as bookkeeping or equipment maintenance to some particular person.

        Not many young people who aren’t in position to inherit are able to raise enough capital to go into farming in a serious way these days.It is a pretty risky business.

        I guess the land and equipment will wind up in the hands of doctors and lawyers who will organize small corporations and hire management and skilled labor.

  25. Dimly Aware Earthling says:

    Interesting site:

    http://www.worldometers.info/

    What do folks here think of the predictions of:

    39 years left of oil…

    ~~150 years left of NG…

    ~~ 300 years left of coal…

    Let’s put aside the issues of EROEI and diminishing returns and financial issues and pollution…are the authors’ even considering demand growth due to population and increasing ‘standards of living’?

    The Effelump in the room:

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

    • Boomer II says:

      I’ve assumed that we do have enough fossil fuel of various kinds to last us for many years if we use it wisely. However, it’s the global warming thing that messes things up for me. Fossil fuels are there in sufficient amounts given enough conservation, but we shouldn’t use them unless we find a way to pull CO2 out of the atmosphere.

      Of course, no one here has been talking about the various ideas for geoengineering to moderate global warming. Some of them are pretty drastic.

    • Love that site. Some great stats, especially those on forest loss, topsoil loss and desertification. But their estimate of oil left is way off. They are using the standard BP, EIA, IEA estimate which takes OPEC countries at their word. OPEC has about one third the actual reserves they claim.

  26. ezrydermike says:

    some info on water usage……http://www.ewg.org/research/monster-wells

  27. ezrydermike says:

Comments are closed.