Texas RRC Oil and Gas Production

The Texas RRC Oil and Gas production data is out. All the RRC data below is through October 2015 and all the EIA data below is through September 2015.

Important: All the Texas RRC data is incomplete, especially the latter months. They will be revised upward as the Texas RRC gathers more data. The EIA data is what the EIA expects the final data will look like.

Texas C+C

The RRC Crude + Condensate data for October shows a slight decline in October. The EIA says Texas C+C was flat, August to September.

Dean C+C

The above chart is what Dr. Dean Fantazzini estimates the final Texas C+C data will look like.

Dean Correced

Here I have amplified Dean’s estimate in order to give us a close up of what he expects the final data C+C data will look like.

Texas Crude Only

Texas RRC data shows crude only with a slight decline in October.

Dean Oil

This is Dean’s estimate of the final Texas October crude only production.

Texas Condensate

The RRC data shows October condensate a bit lower than September.

Dean Condensate

Dean however sees a slight uptick in October condensate.

Texas Total Gas

Here we have Texas RRC total gas through October along with the EIA’s estimate of Texas final gas production through September.  Notice that the EIA shows a huge uptick in June with a slight down tick in July with a slight uptick in August. The RRC data simply gives no hint that this will be the case when the final data comes in. The RRC data shows a huge down tick in August.

Dean Total Gas

Here is Dean’s projection for the final Texas total gas production. He does not see the huge June uptick that the EIA sees.

Texas Gas Well Gas

Texas RRC has Texas gas well gas in a slow decline.

Texas Assciated Gas

Texas associated gas is what has kept Texas gas production increasing. With the decline in oil rigs and new wells, it is likely that Texas associated gas will start to decline.

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223 Responses to Texas RRC Oil and Gas Production

  1. Dean says:

    Here is the plot comparing my corrected total natural gas vs EIA: differently from the case of C+C, for natural gas we have much more variability and our estimates diverge a little bit more.

    P.S. I am sorry Ron, but I forgot to send you this plot. It will be included in the next monthly update 🙂

    • Dean says:

      Honestly, I do not know where this big jump in June is coming from. Unless the Texas RRC will put forward some major revision in their data in the next months, I find it difficult to justify it this jump by the EIA.

  2. Dennis Coyne says:

    Thanks Ron and Dean,

    Looks like Texas output of oil and natural gas has held up pretty well through October as was also the case in the Bakken, I imagine this will change as winter arrives (though it is late in coming in the Northeast US).

    • Anonymous says:

      Seconded from me to Ron and Dean. The clearest and fairest presentation of oil production data anywhere available. Happy holidays to all.

  3. ezrydermike says:

    Best Wishes to All for the Holiday Season. A big shout out and thank you to Ron for this excellent site. Thanks also to Dennis and the key contributors for providing such great information.

    Finally, special thoughts for Doug.

    • Dennis Coyne says:

      Thanks ezrydermike,

      I wish everyone a Happy Holiday.

      Thank you Ron for a great blog.

      • Caelan MacIntyre says:

        What holiday? What’s that? A ‘charade‘ as this pope guy calls it? Hm, maybe for once I agree with someone from ‘over there’.

        Holidays can be most days of the year. There is no real reason to crunch it all together like this and work like a bunch of slaves for the rest of the year. We only live once, so embrace your lives and make truth and resolve your new year’s resolution!

        Oh, and a polite reminder to get your gifts early this year. Consume for Christ’s sake! That’s why you exist! Give the economy a boost this holiday season, will you? Those corporate wage-slaves in China are counting on it. And don’t wait ’till the last minute. But if you do, you can always trample over people or fight with them for some retail item on boxing day. I guess that’s a good enough name for it, ay? Season’s greetings and God bless.

        Aside from that, many thanks; an out-of-pocket toddy to Ron; and also to the participants in their contributions to a great blog, even if I don’t always agree with them and think they are out to lunch.

        Lastly, if cheap oil is going away, maybe it’s an opportune time to honestly re-evaluate what really matters in life.

        • ezrydermike says:

          Maybe you should disrobe, run out into the woods, eat some roots and shoots and howl at the moon.

          Of course there is always Festivus. It’s for the rest of us. Let the airing of the grievences begin.

        • Caelan MacIntyre says:

          “Festivus is both a parody and a secular holiday celebrated on December 23 that serves as an alternative to participating in the pressures and commercialism of the Christmas season. It has been described as ‘the perfect secular theme for an all-inclusive December gathering’.” ~ Wikipedia


          ~ Image of painting below, by Pawel Kuczynski. (Q: How many energy-slaves is the typical angel?)

      • Toolpush says:

        Dennis and All,

        I will be very non PC and wish everybody a Merry Christmas and a prosperous New Year.

  4. Watcher says:

    4. The repeal of oil export ban and extension of renewable incentives made it into the final version. The ban on US crude oil exports would be repealed, and the administration would be prohibited from restricting exports except in national emergencies and similar circumstances. Also, as part of the agreement on oil exports, the production tax credit (PTC) for wind power installations would be extended through 2019, with a phase-down from 2017 through 2019. The investment tax credit (ITC) for solar installations would be extended for three years, through 2019, at the current rate and would then be phased down through 2021, expiring in 2023 (note that the deadline has also been changed, so that it now applies to projects where construction has started by the expiration date, rather than being put into service by expiration). This represents a significant win for the renewable sector, as discussed in our recent report. Refiners, which are negatively affected by the oil export ban, would get limited consolation from a tax benefit for independent refiners. The bill would also extend the existing biodiesel credit for two years, through 2016, but it does not appear to shift it to a “producer” credit as the Senate had proposed.

    Phase outs imminent and already partially applied.

  5. Ovi says:

    Question for Dean and Ron

    When I look at the RRC September 14 production on the latest October C + C chart, it appears to be about 3.2 Mb/d. The EIA production number is slightly higher at about 3.25 Mb/d, a gap of roughly 50 kb/d. How does that gap close? Clearly the RRC production numbers are slowly increasing. At what point do the EIA numbers merge with the RRC. There is still a slight gap between the RRC and EIA data in September 13 on the latest C+C chart. Does it really take two years to know how much C + C Texas produced? Who has the best info.

    • Dean says:

      Hi Ovi,

      a summary of the problem with the delay of Texas RRc data can be found on my page:


      Regards, Dean

    • Ovi, what you see is what you get. The gap closes a little each month, and yes it takes as long as it indicates on the chart to close the gap. But it closes much faster in the in the latest months. The difference in September is almost half a million barrels per day. The difference in January is now one fifth that amount.

      The merging of the data happens exactly as you see it happening on the chart.

      	  RRC	           EIA 	    Difference
      Jan-15	3,274,322	3,373,000	98,678
      Feb-15	3,345,307	3,462,000	116,693
      Mar-15	3,412,070	3,644,000	231,930
      Apr-15	3,333,304	3,589,000	255,696
      May-15	3,228,647	3,524,000	295,353
      Jun-15	3,158,425	3,460,000	301,575
      Jul-15	3,104,798	3,452,000	347,202
      Aug-15	2,996,930	3,421,000	424,070
      Sep-15	2,942,748	3,421,000	478,252
  6. Peter says:

    In ten years time I doubt very much most people around the world will care about small changes in shale oil production.
    The United States uses 19 million barrels of oil per day. The same population in Germany, Great Britain, France, Poland, the low countries and Scandinavia use 10 million.
    The United States could reduce it’s exorbitant consumption by firstly having the sort of extensive bus services that most European countries have. Ever time a train system can be built up and people would still get to work etc without any real hardship.

    The real problems facing the world are far more difficult to adapt to.


    85% of fishing stock is being over fished and many stocks are collapsing, billions of people will be effected.


    Due to over plowing, over use of fertilizers and not allowing land to lie fallow, vast areas of arable land is being turned into waste land or lost.

    • Anonymous says:

      You tell’em Pete!

    • The usa simply needs to use a fuel tax that climas gradually to make gasoline cost $8 per gallon in today’s dollars, in say 20 years. That should give people time to adapt.

      • Dennis Coyne says:

        Hi Fernando,

        Agree 100%. Probably something similar (half the level in tax per unit energy) on natural gas would make sense (lower because natural gas pollutes less) and on coal maybe double the tax level per unit energy compared to oil (because coal pollutes more).

        Though if we could manage to get the tax on fuel it would be a start.

        I also think the deal might be sweetened by gradually eliminating subsidies for renewables as the fossil fuel tax ramps up, might enable more moderate politicians to sell it to their constituents.

        Compromise can be a beautiful thing as it allows us to make small positive changes.

        • ChiefEngineer says:

          I would take some of the fuel tax money and give a tax credit to oil produces. To make up the difference of oil sold under $45 a barrel level. It would be a mistake for these guys go bankrupted.

          • Caelan MacIntyre says:

            With all this talk of cars, highway infrastructure, taxation, wars, refugees, debt crises, climate change conferences & issues/disagreements, so-called renewables, oil industry (etc.) job cuts, and oil price rises/decreases/volatility, etc., it should be interesting to see how the bloatmeister ungovernment that was built up on cheap oil manages it all, along with its industry symbionts, in the face of peak oil and declining exergy and increasing entropy…

            If I was an anthropologist of the far future with access to a time machine, I’d kill to be right here and now.

            • ChiefEngineer says:

              Caelan, you don’t need to kill or live your life in your 6 year old imagination. You are already here right now. Make something of yourself with the one and only opportunity you have.

              • Caelan MacIntyre says:

                Ya, no kidding. That was part of my point. Did you not get that the time machine was just a leveraging of one of this infantilistic culture’s literary/imaginary devices?
                But now that you mention it, making something grown up of oneself might include transcending that very cultural infantilism that, incidentally, seems to need false or otherwise-dubious ‘leaders’ and ‘chiefs’. I certainly don’t, and might even be ok with farting in their general direction. Maybe even literally. If you catch my drift.

              • Caelan MacIntyre says:

                Emergency Opec meeting aired as Russia braces for sub-$30 oil
                “Oil markets are becoming dangerous with no grown-up in charge. Spare capacity is wafer-thin, despite the glut, and any upset could trigger an oil shock…”

          • Dennis Coyne says:

            Disagree on subsidy for oil producers. The guys that don’t know the game should lose.

            That is the way capitalism is supposed to work.

            • Joe Clarkson says:

              Indeed! A carbon tax should be similar to the one in British Columbia. Users are taxed and the tax is returned to the public relatively uniformly. People who use less carbon save money; people who use more lose money. Net cost to the public as a whole is zero.

              • Dennis Coyne says:

                Hi Joe,

                It could be returned to the public or used to pay down public debt, up to elected officials and what they believe their constituents will prefer.

      • oldfarmermac says:

        I agree about the fuel tax.

        I think it should be phased in over no more than ten years or so. That would give people plenty of time to wear out existing cars and trucks that are less than “easy on gas” and notice enough to pay some serious attention to fuel economy when buying a new vehicle.

        Unfortunately a hell of a lot of the infrastructure in the USA has been built on the ” cheap gasoline forever” sprawl model, and we are going to have a hell of a hard time getting our per capita consumption down anywhere close to European level.

        But we will eventually get down to current day European consumption levels, even as Europeans do even better. We aren’t going do it just because we can.

        We aren’t going to have any choice.

        Fortunately people are not so slow to adapt to change as the naysayers think, when it comes to such things as driving a pure electric or a plug in hybrid car.

        The range limitation and charging time arguments are imo going to go the way of the DODO bird pretty damned quick, so far as the majority of two and three car households are concerned, when gasoline prices go up past four or five bucks per gallon, and as electrics get cheaper, compared to conventional cars..

        Most of the people I know with two or more cars , and I believe this applies to most multi vehicle households, own at least one car that is used almost exclusively for commuting and running local errands.

        When gasoline prices spike, and the threat of RATIONING raises it’s head, people with two or three cars will be VERY happy to consider buying a car such as a LEAF or a VOLT or any one of the dozen other models that will soon be available.

        Someday somebody is going to load a self propelled artillery piece or a full fledged tank on a small ship, or maybe even a very large pleasure boat or work boat, and intercept a couple of supertankers in a narrow spot, and sink both of them.

        Oil tankers aren’t armored, they don’t have military grade fire fighting equipment, and they don’t have military sized crews to operate that equipment.

        The bad guys already have possession of quite a few such heavy duty weapons.

        Some guys I know well, retired soldiers, who put in their twenty years playing with big guns, tell me that sinking a tanker would be a piece of cake if they could just get within range of it.

        Get within three or four miles, broadside, and in five minutes they could fill it full of holes, and set it on fire, from end to end.

        History ain’t over.

        We live in interesting times.

        A few more years down the road, if I am still functional, I will own a good sized pv system, and a plug in hybrid light duty truck, or at least a plug in car similar to a VOLT.

      • Nick G says:

        It’s a good idea: I’d phase it in over 6-7 years.

        The average car is only kept by it’s owner for about 4-5 years. For every new car sale, there are about 3 used car sales.

        So, 6-7 years would give people plenty of time to adapt by changing vehicles.

    • Clueless says:

      Peter, just out of curiosity, are there any countries in Europe that are populated, per square mile, like: Montana, Wyoming, North Dakota, South Dakota, Nebraska, Kansas, Oklahoma, Texas, Utah, Nevada, New Mexico, Arizona, Maine, Oregon, Washington, Idaho, etc. If someone, say in Germany or France, wants to go home for the Holidays, how far is their average trip. How about in the US where people are scattered hundreds, if not thousands of miles apart.
      Comparisons to Europe are useless.

      • Dennis Coyne says:

        Hi Clueless,

        The majority of the US population lives in fairly densely populated areas and can be served by public transportation, there is more to the problem than public transportation.

        Energy is very cheap in the US so it is used less efficiently. This will change.

        • Glenn Stehle says:

          I love public transportation.

          I live in a country that has abundant public transportation.

          Although I have a car sitting out here, I hardly ever use it. Public transportation serves my needs quite nicely.

          As far as I’m concerned, the quicker the private automobile becomes obsolete, the better.

          • Dennis Coyne says:

            Hi Glenn,

            I agree, especially electric rail and train and possibly city busses on overhead wires. Long haul busses that have most seats filled are a good bet as well. A lot of city busses do not do well in MPG per passenger. in the future, small EVs may be more effective in terms of energy use per passenger.

            A combination of decent public transportation (in more densely populated areas) and high efficiency plug in hybrids may be a bridge to take us to a world with lower fossil fuel use. Eventually the World will be forced to get there because of depletion, it will be hard to accomplish in a short period of time, we should get started.

      • Nick G says:

        Yeah, trains are good but they aren’t the answer to everything: it takes a long time to expand their capacity, and many places aren’t dense enough to make sense.

        Buses aren’t any better than cars, for average fuel efficiency. That’s because you have to serve everywhere 24×7, so you have a lot of badly under-utilized buses.

        EVs, Extended Range EVs, and hybrids will be the answer for most people and most trips.

        • Glenn Stehle says:

          Nick G,

          Are you seriously going to try to tell me that a bus that gets 6 MPG and hauls 60 passengers is less fuel efficient than a car that gets 25 MPG and hauls 5 passengers?

          Obviously you’ve never lived in a place where the majority of the people don’t have private cars and must rely on public transportation. The buses don’t run 24 x 7. In the event that a person must go somewhere at night, they take a taxi. And when there are few private autos, there are taxis available at all hours.

          I don’t understand this love affair you have with the private automobile. Surely you’re past the age where you believe a car is going to help you get laid.

          • Javier says:

            Yesterday i was watching an old movie. Humphrey Bogart and Lauren Bacall in “The darkest passage”. Not very good, but I hadn’t seen it before. I was surprised that Boggey bought a bus ticket at SF to go to Phoenix, AZ and when he asked about departure time was told to sit down until enough tickets were sold. That was San Francisco in the US like 75 years ago. It looked to me like a third world country today. But it makes perfect sense that in a not very rich society resources are maximized at the expense of convenience.

          • Nick G says:

            The average existing bus gets closer to 3.5 MPG, and the average ridership in the US is much lower.

            No, I wouldn’t recommend an ICE car – an EV is far better than a bus.

            One of the reasons poor people don’t have much time or flexibility to read to their kids, or go to their school events, or a million other things, is that they’re dependent on mass transit.

            I love trains for commuting or interurban trips. But ad hoc travel, or travel that’s outside main routes? A nightmare.

            Taxis? Yikes: slow, hard to get outside urban centers and expensive. I have hopes for Uber, car sharing, and self-driving cars. But, we’re not there yet.

        • wimbi says:

          Nick. When I was a kid in the ’30-40’s, I and my buddy’s hitched all over with never a problem. It was SOP to just go out to the road and stand there with thumb up. People went cross-country that way.

          Later, in college, after finals, all of us trooped out to the highway, stood in long but fast moving line, hitched rides home. One in front of me always got the Buick and the lady in fur coat, and I got the next one – smelly manure pickup driven by guy unacquainted with baths.

          Same thing in Africa when I did business there much later. I rent a car, start driving, and pretty soon car full of locals, having partytime, and jumping off to immediately fix anything needing it, like out of gas or flat.

          Cooperation is much underutilized but highly effective survival skill, forgotten only recently in our addiction to ff’s and GM propaganda.

          • Nick G says:

            I agree. It was still that way in the 70’s, but things have changed since. Now in the US, people are scared of you – it just doesn’t work.

            • wimbi says:

              So I am told. Wonder if true, seems to me unlikely that average person has changed much.

              Anyhow, easy to see lots of ways to assure rider/driver that the other is a genuine human, and not any kind of nut.

              After all, even my lowly Leaf will start only when the genuine me asks it to.

              • Nick G says:

                Uber is a start. They’ve started a carpooling function.

                Other apps like that, which prequalify users, would work. I believe there are some out there, though I have the impression that they’re having a bit of a hard time getting traction.

      • Peter says:


        That is a fair point, but my guess is no studies have been done in Montana etc about where and how often people drive.
        With that knowledge rail lines can be built and interconnecting bus routes laid on.
        In less densely populated areas of Europe people often drive to the closest town which has a train and continue their journey from there.
        People in Europe do travel long distances to work and do use public transport if it is there.

        • Glenn Stehle says:


          There is a reason why the United States has only about 5% of the world’s population but uses something like 25% of its oil. It came about as a result of many decades of brainwashing.

          The brainwashing began in the 1930s.

          Here is a link to a video that gives an idea of the kind of propaganda Americans have been subjected to by the automobile industry, working hand-in-glove with the petroleum industry, for the past 75 years:

          Futurama 1939 New York World’s Fair “To New Horizons” 1940 General Motors

          After 75 years of this kind of PR it is nye on impossible for someone like Nick G or oldfarmermac to think outside the box, or to imagine any future not dominated by the car culture. The programming is complete. We may not have very happy people, but we do indeed have very happy cars. See, for instance, oldfarmermac’s comment below:


          Much of the future imagined in the 1939 GM positivist puff piece “Futurama” came true, especially the part about suburbs, roads and freeways. But there’s now trouble in paradise.

          Futurama — “the great American way” the film also calls it — has collided head on with reality, and the empire of consumption has a cold, which could easily become pneumonia. The dream of Futurama now runs the risk of morfing into a nightmare. Nevertheless, the futurists cling to the dream like a drowning man in stormy seas clings to a life raft.

          Those who have lived outside the US, in places where most people use public transportation, can immediately recognize that most of the arguments put forth by Nick G and oldfarmermac are specious. Their arguments fall into the Margaret Thatcher type of argumentation: TINA (There Is No Alternative!) But as you and I know, there are alternatives, and quite good ones.

          Mexico uses less than a third of the oil per capita than what the United States does, and people manage to get around just fine.

          Imagine that!

          • Glenn Stehle says:

          • Glenn Stehle says:

            Here’s what GM, in 1939, imagined the future to look like.

          • Glenn Stehle says:

            And this.

          • Glenn Stehle says:

            And this.

            And GM’s imagined future, as it turns out, largely came true.

          • Mexico uses less than a third of the oil per capita than what the United States does, and people manage to get around just fine.

            Are you kidding me? That’s your argument? All we have to do is reduce our economy to the same level as Mexico’s and we will manage to get around just fine on a lot less oil?

            Well you do have a point. Those Mexicans flooding across the border are not driving Cadillacs, or even Chevrolets. They are walking on worn out shoes or are barefooted. The question is, are they getting around just fine?

            • Glenn Stehle says:


              So what’s your argument? That the United States can continue BAU?

              I just don’t see how a country like the United States that has run a cronic trade deficit for over four decades, much of it due to imported oil, can go on forever.

              Will there never be a day of reckoning?

              Will the magic of renewables technology save the day, so that Americans will not have to alter their hallowed “American way of life,” or take a hit to their standard of living?

              • Glenn, don’t try to change the subject. It’s not my argument, it’s your goddamn argument. The statement that the Mexicans are getting around just fine is just stupid. They are not.

                No, we cannot continue with BAU. My argument has never been that we will continue with BAU. But my argument has never been we that will do just fine with a lot less oil. We will do terrible on less oil! And coming down from BAU will be just god awful. We will not do just fine.

                • Glenn Stehle says:

                  Ron Patterson said:

                  The statement that the Mexicans are getting around just fine is just stupid. They are not.

                  Have you ever been to Mexico?

                  Do you have any knowledge of how the transportation system in Mexico operates?

                  I very seldom use my private automobile, and yet I manage to get around just fine, all with public transportation.

                  And if we look at empirical surveys of why Mexicans go to live in the United States, better transportation isn’t among them. Surveys consistently show that over 90% of the Mexicans who go to live in the United States go in search of employment.


                  Public transportation in Mexico is far superior to that in the United States, at least if moving people with less energy is the criterium.

                  • Yes I have been to Mexico.

                    Glenn, you still do not seem to understand why your argument is so stupid. Your argument is:

                    Mexico uses less than a third of the oil per capita than what the United States does, and people manage to get around just fine.

                    The implication is that Mexico uses less than one third the per capita oil as does the US because they use public transportation. That is implicit in this question:

                    Do you have any knowledge of how the transportation system in Mexico operates?

                    Mexico uses less than one third the per capita oil as the US, not because of their transportation system but because of the abject poverty of its citizens.

                    It is called the “Fallacy of Irrelevant Thesis.”

                    Just for reference.

                    Per capita GDP:
                    Mexico $10,326
                    U.S.A. $54,629

                    Median Income:
                    Mexico $4,910
                    U.S.A. $30.616

                  • Caelan MacIntyre says:

                    Glenn, where are you in Mexico?

                  • Glenn Stehle says:


                    So you don’t like the Mexico example?

                    Then how about the UK/Eurpean one that Peter pointed out in his comment above?

                    The United States uses 19 million barrels of oil per day. The same population in Germany, Great Britain, France, Poland, the low countries and Scandinavia use 10 million.

                    The bottom line is that other countries, including Mexico, do a much more efficient job, energywise, of moving people around than what the United States does.

                    And one of the reasons they can do this is because of more fully developed public transportation systems.

                  • Glenn Stehle says:


                    I live in Queretaro, which is about 120 miles north of Mexico City.

                  • Glenn, I do not dispute that the USA has an exceptionally poor public transportation system. That was never in question as far as I was concerned. The point is you gave a very absurd example of the efficiency of Mexico’s public transportation system. That is that they use one third the per capita oil use as does the United States.

                    No, no, no… that proves absolutely nothing about the efficiency of Mexico’s public transportation system.

                    And if you cannot see that this was a fallacious argument then there is there is no point in ever debating anything with you again.

                    If you are going to make a valid argument Glenn, then use valid examples, not bullshit like that.

                  • Glenn Stehle says:


                    Let’s back up to my statement that you took umbrage to:

                    Mexico uses less than a third of the oil per capita than what the United States does, and people manage to get around just fine.

                    Here’s what I meant by that statement.

                    Mexico is covered with an elaborate web of bus routes. One can get from just about any Podunk to any other Podunk using this web of buses, and the cost is very low.

                    For instance, let’s say I want to go from my house in Queretaro to downtown San Miguel de Allende, a small town located about 45 miles from where I live.

                    First I walk to the bus stop which is a couple of blocks from my house. From there I take a local bus to the long-distance bus terminal.

                    The cost is 4 pesos, or about $0.24 USD.

                    The local buses look like this, and are fueled by natural gas.

                    These buses run about every 5 minutes, so there is never much of a wait.

                  • Glenn Stehle says:

                    From the Queretaro bus terminal I take a long-distance bus to the bus terminal in San Miguel de Allende.

                    The cost of this leg of the trip is 40 pesos, or about $2.35 USD.

                    The long-distance buses look like this, and they run every 30 minutes or so. The wait time is therefore never too long.

                    These buses are operated by private companies, which are for-profit enterprises that receive no subsidies from the government.

                  • Glenn Stehle says:

                    Then when I get to San Miguel de Allende I take another local bus from the long-distance bus terminal to downtown. Again, the cost of this is about $0.25 USD, and these buses run every few minutes.

                    The total cost of the trip: $2.85 USD.

                    So like I say, people in Mexico manage to get around just fine, without private automobiles, and for a pittance of what it costs to operate a private automobile.

                    This is what happens in poor countries like Mexico where most people can’t afford the luxury and exorbitant cost of a private automobile.

                    Now compare that to the United States. Let’s say I wanted to go from San Antonio, Texas to Lockhart, Texas, using public transportation. Well of course I couldn’t, because there is no public transportation connecting these two points. The only way is by private automobile, which is very costly and very inefficient, energywise.

                  • Caelan MacIntyre says:

                    “I live in Queretaro, which is about 120 miles north of Mexico City.” ~ Glenn Stehle

                    Cool, how do you like it?

                  • Glenn Stehle says:


                    I love it. I can’t imagine moving back to the United States.

                    But I must admit that I don’t like it as much as I did when I moved here 15 years ago.

                    Since then, the population of Queretaro has about doubled, from a little less than 1 million to a little less than 2 million. So it has much more of a city feel to it than it did before.

                    Mexico is very rapidly becoming globalized. There has been a proliferation of consumer credit, which didn’t exist before. People who are not indebted have a completely different outlook on life than those who are indebted.

                    And the city planners have copied the American model. There’s a great deal of urban sprawl as living in the perifery (sort of what in the US we would call the suburbs) and big box stores and shopping malls have become stylish. And of course the dream of every poor Mexican is to have his own private automobile, so the traffic is much worse.

                    The security situation has also deteriorated greatly. I used to be able to travel anywhere in Mexico I wanted, as it was very safe. I could go to the most remote of little villages in my explorations. I would no longer risk that. There are a lot of don’t-go places where one can get in trouble right quick, and without even looking for it.

                    You, as an anarchist, I think would really enjoy exploring some of the indigenous communities. Many of them have managed to preserve some of their traditional values and communal way of life, which is about as far from capitalism and as close to anarchism as one can find these days.

              • Caelan MacIntyre says:

                I’m unsure we realize exactly what’s in store for us after the peak… which could be right now…

                The casual talk on here about fuel, etc. taxation for example… This of course makes all kinds of implicit assumptions that I’m unsure those who make them are entirely aware of. They throw it out anyway, like at a party over drinks, but to the exclusion of adequate analyses of the intricacies of the system.

                For example, you can’t pay for fuel or taxes without a job (another kind of money sink/knock-on effect for ungovernment)– at least one that feeds into the large-scale ungovernment– that was built on cheap oil, along with many jobs (for the mere maintenance of complexity), not on increasingly-expensive oil or on ‘renewables’.

                For another, you can’t run this kind of society on an entirely-new renewable infrastructure that doesn’t actually exist, even if the current grid could handle it.

                (“But the connections that make society strong, can also make it vulnerable…”)

                • Glenn Stehle says:


                  You make an excellent point.

                  In the United States, or anywhere as far as that is concerned, what are the possiblities of decoupling the aggregate economy from the oil economy?

                  It seems like we should be able to make some progress in this direction, but how much, and at what cost?

                  • Nick G says:

                    what are the possiblities of decoupling the aggregate economy from the oil economy?

                    The ground transportation part is pretty straightforward. Electrify trains, short range trucks and passenger cars. Move freight to rail.

                    That takes care of about 80% of fuel consumption.

              • Peter says:

                Hi Glenn

                In England homes within walking distance to a rail station go for a premium. When a rail line was electrified and train speeds increased, house prices in those towns went up. Driving for an hour or 2, working all day and driving home in the dark and rain is exhausting and dangerous.
                Also average fuel consumption in the US is 28 per imperial gallon in the UK it is 50. Just there the US could save 5 million barrels per day without any additional public transport.

                At $7 per gallon.

                No one in the UK buys things like this.


          • Bob Nickson says:

            One of my favorite cities is Paris France. Inside the peripherique it has a close to perfect level of density. Having shops at street level with offices and residences above make for a very livable city, and I absolutely love the Metro. It is much more convenient than a car.

            I would very much love to live in a city such as Paris where I wouldn’t need to own a car. As it is, my house is within a half mile of the city center of my town, so I can easily walk or bike to most places I need to go. I love that, but there is no way that I can get by without a car. It is a necessity.

            We do have a decent transit system of buses, light rail, and commuter rail. I use it as much as possible when I need to go further than is practical under my own power. I do this by choice. It would be more convenient to drive.

            But I’ve lost my idealism about transit. One Saturday I had to wait two hours at the rail station for the next homeward bound train simply because the bus I took to the station ran 15 minutes late. I missed the train by five minutes.

            That’s one anecdote of many. There is always something or other going on with it. It’s kind of a crap shoot really. You might get to where you need to go near the time you need to get there. Maybe.

            So, it takes twice as long, and if there are two people travelling together, it costs more than taking a car, and that is just the fare, which is about 20-25% of the actual cost. The bus and the heavy rail are diesel, so they aren’t clean either.

            In my opinion, electric cars change the whole equation. In dense cities private automobiles make little sense, but transit, taxis, bikes, and feet work great, but what do you do with vast medium areas like Atlanta, Houston, Phoenix, or low density suburban sprawl? These areas were built for cars. It’s a dumb thing, but it’s the dumb thing we’ve got.

            Which will be cheaper? Abandoning all of this built environment, or switching to electric vehicles? Sure, roads are expensive and need oil to maintain, but asphalt these days is pretty much 100% recycled, at least in my region.

            Electric cars have a lower total cost of ownership right now, and I suspect that within ten years EV’s will just be flat out as cheap or cheaper than combustion cars to buy. That will change everything.

            The U.S. guzzles 1.2 gallons of fuel per car per day, as Glenn noted. That’s a daily range for one car. 107 square feet of solar PV provides sufficient power for that much range – six panels – about the same area footprint as the car.

            For every 19 electric cars on the road, that is one less daily barrel of required oil. That is a barrel of oil that can be used for some other purpose, like manufacturing PV or wind turbines, or to offset production declines.

            I think Ron is very likely right. Human nature has doomed us. We are in overshoot and we will collapse the ecology of the planet upon which we depend, As an isolated question on its own however, I fail to see why a transition to renewably powered electric transport isn’t feasible with the technology we have now at the prices we will have soon. The fleet turns over every fifteen years.

            Economy, politics, social inertia and social upheaval may very well prevent it though.

            We shall see.

            • wimbi says:

              Hm. What I see right here and right now is far more hopeful.

              Local bank will give interest-free loan for purchase of EV.

              EV club has formed to buy in bulk, share rides, provide ICE when longer range needed.

              Local group writes op-eds giving facts and figures justifying EV. I and other EV owners contribute to this with actual daily experience.

              We drive about 20 mi./day, and average about 4.2 miles/kw-hr. Oddly enough, provided by 6 PV panels.

              As I keep saying, I am guessing that the average citizen of USA could get along nicely on maybe 10% of what we use today, given a little sense in using what we have right now in our energy tool kit.

              Reason – we are world champion wasters, so easy to get to be less so.

              Local group is getting together to put up big PV array a short distance out of town on a “reclaimed” coal field, and is dickering with grid owners to allow special rates to EV owners who are planning to demand only solar/wind from the grid.

              • Fred Magyar says:

                Wimbi, you are a green socialist! You are living in a fantasy world. Alternative energy doesn’t work. Give it up already. The only solution to all all our problems is more oil! I guess it’s just too bad that we are near or at ‘Peak Oil’… 🙂

                • wimbi says:


                  “When ignorance is bliss, ’tis folly to be wise”

                  Us hillbillies are having lotsa fun in our fragrant little cloud of fantasy, and hey, way cheaper than dope anyhow.

                  And all grown locally, too.

                  Um, just like the dope.

  7. AlexS says:

    Rather unexpected U.S. rig count.
    Oil rigs: +17
    Gas rigs: -17

    • Enno says:

      I read a comment on SA, and this was also my impression after looking at the Niobrara, that it is up to the operators to classify what their rigs are drilling(gas vs oil). Especially in gassy plays like the Niobrara and Cana rigs may be reclassified between the 2 categories while drilling similar wells.

      • AlexS says:


        I was also thinking that some rigs may have been reclassified from gas to oil.
        Besides, some operators may have to start drilling before year-end to retain their leases.
        In any case, I don’t think that the unexpected increase in oil rigs signals a change in the declining trend.

        • muppet says:

          We built our cities wrong. And with every new Target or Wal Mart we make it worse. We will never be able to build an efficient public transportation system that can serve most people without first taking apart the massive sprawling infrastructure and 3 acre lots that ring most of our cities and even our medium sized towns. But that’s no reason not to start building public transit infrastructure where we can. Some places aren’t without hope.

          • oldfarmermac says:

            Warning, this comment is not for those into sound bites. 😉

            There is little doubt that mass transit is cheap and energy efficient, if the population density is high enough to make it work.

            I have lived in a couple of cities, and used both buses and subways, but avoided them when possible. The buses ran on a hub and spoke arrangement, and it took forever to get where I wanted to go most times.

            Furthermore except at peak hours, they ran only every half hour, or every hour, and not at all in the wee hours. Taking a cab ONCE cost as much as gassing up my car for a week, not to mention standing on the street a block from my place waiting for the bus.

            And while the per passenger per mile fuel economy of a full bus is superb, the fact is that a hell of a lot of buses run almost empty, a lot of the time, with half a dozen or fewer passengers during the off hours being quite a common occurrence.

            Nick might be right about the fuel economy of a city bus fleet compared to the fuel economy of autos, taken all around. The bus company is generally compelled to provide service when customers are few and sometimes non existent.

            When I was into real estate, being CLOSE to a bus line was actually a detriment in terms of renting or selling a house. The sort of tenants you wanted could afford cars, and had drivers permits. The poor folks tended to cluster along the bus routes, and hold the crappy downtown jobs. The trend as a result was that the closer you were to the bus route, the more apt the neighborhood was to go slowly downhill.

            But at least the buses DID them TO WORK and BACK HOME without transferring , and in a reasonable length of time. They ran quite often at rush hours, not much more than five minutes apart in some parts of town.

            And for somebody who COULD get by without a car, they were a REAL bargain.

            The people able to do so simply moved away.

            I know this situation is reversed in some cities where congestion is really bad, and a lot of well paid people use the buses. Gentrification happens too. Just not every time.

            I am in favor of buses and subways etc but agree with Nick that they are not going to be the answer most places in the USA in the medium term.

            First off, it is entirely possible to buy a car, if you need one anyway, that takes you where you want to go, in the city, for an incremental cost that is only a minor fraction of the cost of a bus ticket. A Prius would have gotten me from my apartment to campus a whole week, just for the gasoline, for the price of one days bus tickets. Consider the time and convenience factors, and it is easy to see why I drove my old junker car to classes, because I had to have a car to get to many various places the bus simply did not go. Places I WANTED or needed to go.

            Now consider the infrastructure and sprawl problem, and let’s think a little about how it can at least be minimized, if not actually solved.

            Zoning can be revised to allow businesses to go where the people are.

            There is no real reason why hair dressers, lawyers, dentists, self employed service men such as plumbers, etc etc should have to locate in commercial districts, and kept out of residential neighborhoods.

            We could see the return of the delivery boy, with the internet and smart phone and shopping apps making it really easy for the supermarket to box up your groceries, and deliver them within a fifteen or twenty minute window, for a very modest fee, or no fee at all.

            There really isn’t any reason we should not get snail mail on alternate days, and get by fine with half as many postmen and mail carrying vehicles. Just don’t rehire any that retire, until the goal is met.

            People that have houses close to the jobs that cannot be moved into neighborhoods are going to retire and die, and the people who buy have need of houses close to such jobs will buy them. I have half a dozen new neighbors within a few miles who sold out in northern Virginia for megabucks and moved here to the sticks. All of them sold to somebody who really needed to get close to the federal action in and around DC.

            A good many small businesses can actually be operated from a residence these days with nobody even knowing or giving a damn, and such businesses are going to get to be a lot more common.

            The engineer I use has a desk and a phone in town, but you have to make an appointment to see him in his office. Otherwise he stays home, and you get him on his cell phone or by email. My physician’s commute time is ZERO, he lives above his office, in a rural area with no zoning restrictions, except for heavy industry.

            There is no real reason we could not allow people to use their personal cars to provide public transportation, other than the vested interests of cab operators and bus companies, etc.

            I could see somebody running a bus from my neighborhood to the small town near where I live every morning, to the industrial district, getting there at six thirty so everybody can be punched in at seven, and another to the business district getting there at seven thirty so everybody can be at their desk by eight.

            The owner operator of such a bus could make out like a bandit and still charge less than half as much as a city operated bus. He would park it and go to work just like his passengers ya see. And any way there are no city buses in my local small city . And if there were, the city would not run them out to my neighborhood ten miles from the nearest traffic light anyway.

            And speaking as a sometime gearhead, I can say without a shadow of a doubt that two hundred mpg equivalent cars that will last just about forever are easily within the reach of most suburbanites with their own McCastle today, and that any major car company could have them on dealers lots in three or four years, easy as pie.

            There are ONLY TWO real reasons you cannot buy such a car today. No car company is willing to build them, because the public is not yet ready to buy them. ( They would be very small, and very unfashionable, nerdy nerdy cars, two seats only fore and aft, and not very peppy. )

            The other reason is that our safety mommies will not ALLOW them to be built. THEY would rather see us on bicycles or motorcycles than allow us to own a really small cheap car.

            I hope anybody interested will post additional suggestions, I am writing a book. Seriously. 😉

            And thanks to Ron, and this fine blog, I am getting the benefit of lots of expert technical and social commentary free of charge. 😉

            • ChiefEngineer says:

              “allow us to own a really small cheap car.”

              What ? ? 2016- $12,660- 26city/39hwy


              Beats the hell out of 1971 Ford Pinto, $1919, 70hp, 21city/32hwy – 45 years ago –

              • oldfarmermac says:

                Hi Chief,

                The Spark is a wonderful car compared to Pinto , for sure, in every respect.

                But it ain’t ever gonna get up around a hundred mpg.

                That is going to require shrinking it by half again, meaning fore and aft seating for two etc.

                Go that route with a VERY small engine, etc, and you can actually get a hundred mpg, using light weight materials and keeping the speed down.

                Put a smallish state of the art battery in there, along with the diesel lawn mower motor, and she will get the two hundred mpg equivalent I mentioned.

                Most people seem to believe such a car will never sell in the USA, but consider the sunk investment in suburbia.

                Would you rather ride a damned inconvenient, possibly non existent bus, sharing your commute with the “great unwashed”, waiting at bus stops, transferring, etc, ?

                Moving to downtown is not going to be an option, good cheap downtown housing is non existent.

                Joe and Suzy Suburbanite will have two basic choices. Give up the McMansion, or give up the automobile as we know it today, for something built along the lines of the experimental car VW built a while back. I forget the name of it, but it got well over two hundred mpg.

                My thinking is that we will be downsizing to Spark sized cars , and then downsizing again, because I personally believe oil will eventually go up to two hundred bucks or maybe even more, in current day money.

                I sure as hell will never farm with a mule if I can get diesel for twenty bucks a gallon. Feeding my machinery on days I need it with twenty dollar diesel would still be a hell of a lot cheaper than feeding a mule every day of the year, and paying out five or ten or more times the labor expense to get the same amount of work done.

                (Aside for NICK, if diesel gets THAT expensive, tractors might run on batteries, sure enough. Assuming enough lithium to build them can be found, etc. )

                Gasoline will still be affordable even at ten or fifteen bucks a gallon if you get good enough mileage.

                I expect coal to liquids and or biofuels or made from scratch ( co2 and water ) fuel to keep the price of oil from ever going much above two hundred bucks.

                Prices that high would probably make it profitable to use wind and solar power to manufacture liquid fuel.

                • I could use a two seater with a third seat facing backwards in a hatchback. A 20 KW gasoline engine coupled to a 30 km range battery bank. Maximum speed 90 kmph. But it does have to have heater and AC.

                  • oldfarmermac says:

                    Hi Fernando,

                    I am willing to bet ten dollars to a stale donut you are personally well enough off to own two cars, and could conveniently drive the smaller one almost all the time.

                    How many trips out of ten, on average, do you have TWO passengers instead of only one, or none?

                    If gasoline gets to be tightly rationed, you will want to save every drop possible, even though you are well to do, so as to have it available for the occasional longer trip etc.

                    Those of us who MUST drive but are “hard up” for money will drive whatever has the lowest total cost of operation that we can buy.

                    A brand new car is generally out of the question for the working, driving poor. They necessarily buy older cars.

                    These days in my part of the world, this usually means a mid nineties to early two thousands compact or midsized car.

                    Anything much older means too many repairs, and anything newer means too high a purchase price.

                    One thing that is usually forgotten, or deliberately overlooked, by the mass transit partisans is that many or most working poor people who drive in the USA save a LOT more on housing costs than they spend on their cars.

                    The last place I owned and lived near the big city ( twenty miles one way ) cost me four hundred a month, and it rents now for eight hundred.

                    A reasonably comparable place IN that city today costs three thousand a month, at least, and you would still lack peace and quiet and privacy.

                    You would still need a car too, because you would want to go enough places that owning a car would be cheaper than calling a cab day after day.

                  • oldfarmermac says:

                    Purists and green religion nut cases will scoff at the idea, but there is no reason at all a battery electric vehicle cannot be heated with a small bottle of propane, either throw away or refillable. This would go a LONG way toward solving the cold weather range issue, at very minimal cost.

                    AC is always going to suck up a good bit of power. But cars can be built to minimize the power draw, and a lot of the time they can be precooled while still plugged in, etc.

                    It might be possible to isolate the drivers seating area from the rest of the car interior for instance, using some new tech similar in principle to self latching seat belts. This would probably cut the AC power draw by eighty percent when riding solo.

                    This would be easy to do in a two or three seater fore and aft arranged car. It would be a lot harder with conventional side by side seating and rear seats as well.

                    We forget that once upon a time there was no such thing as parking meters, or service stations.

                    Charging stations, coin or card operated, will eventually be quite common. Cities will install quite a few of them right along side parking meters because they will be money makers, just like the parking meter.

                    Put in four quarters to park an hour , or eight quarters to buy PARKING PLUS EIGHT quarters worth of gasoline equivalent battery charge while you take care of your errand. Plus you could jump in a nice cool car when you finish your business.

                    Some or most of the ideas I post will not come to pass. I am hoping forum members will post their own ideas, or unusual ideas they have run across in other forums.

                    I understand that selectively reflective glass is now available, but still to expensive to use it in automobiles. Such glass combined with the right paint would mean a car sitting or driven in the sun would not heat up like an oven, but still allow the sun to warm up the car on a cold day.

                  • Hell, yes, we could strap a bottle of propane on every EV, add a propane stove and a small chimney. But I’m not sure there’s enough propane to heat a zillion Chinese cars in winter.

                  • Caelan MacIntyre says:

                    How do people come up with these things?

                  • Bob Nickson says:

                    I’m too lazy to try and dig up some real data, but I think heat pumps work just peachy for heating an electric car.

                    Even at worst case, electric resistance heat, I don’t think it would be that bad, especially if the 2017/18 crop like the G2 Leaf, the Chevy Bolt, and the Tesla M3 have 200+ mile ranges as anticipated.

                    At highway speeds 200 mile range is two hours of driving (Leaving a buffer), so if the heater was a 1kW electric resistance heater running at full blast for two hours it would require 2kWh’s which would reduce your range by 6 miles – not that significant in the context of a 200 mile range.

                    A heat pump would be up to 300% more efficient than a resistance heater, so now we are down to a mere 2 mile range reduction.

                    I haven’t tried the experiment yet on how long it takes to warm up the interior of a frozen car with a 1kw electric heater. I intend to, but Winter is not cooperating by showing up this year.

                  • wimbi says:

                    AC with a little more plumbing and controls is a heat pump.

                    Dunna know why my Leaf, with AC, is not rigged up that way. Maybe they figure the straight resistance heat is ok re battery range, and maybe it is.

                    Our car winter heating system is a real good coat. My very good one makes me feel like a knight of the round table- spear proof.

                    Anyhow, the coat is a necessity regardless of mode of transport – unless you are young and foolish, and run around near naked, ending up in the ER, as is so common in college towns.

                    I did that – once.

                • ChiefEngineer says:

                  “But it ain’t ever gonna get up around a hundred mpg.”

                  THE 2016 SPARK EV
                  Electrify your ride

                  $18,496- 82 mile range, 128 city/ 109 hwy


                  solar panels optional

                • Toolpush says:


                  The US has a few physiological problems to get around before small cars ever make the big time. First, seat belts make accidents more survivable and large vehicles are not the only way to safe driving.


                  The Spark, maybe a bad choice. My daughter who is living in the states, is driving a Mirage, 1200cc 3 cylinder stick.She gets just around 50mpg on the freeway, and as most driving over there seems to be freeway driving, it seems to be the relevant number. It is better at 45-50mph.

                  • ChiefEngineer says:

                    Hi Push,

                    The Spark wasn’t meant to be a choice, but an example. Your Mirage just backs up my example that there are low cost options available.

                    “It is better at 45-50mph.”

                    This is another topic that deserves addressing. What is the optimal speed society should embrace? I think 60mph could be expectable with governed new ICE vehicles moving forward. EV’s actually have slower optimal energy speeds than ICE.

                  • Fred Magyar says:

                    Hey Chief, re optimal speed embraced by society, except for highways most city byways in Sao Paulo have limits of 70km for cars and 60km for trucks and buses. Highways have max posted speeds of 120km for cars and 90km fot trucks and buses.

                  • ChiefEngineer says:

                    Hi Fred,

                    “Highways have max posted speeds of 120km for cars and 90km fot trucks and buses.”

                    The above is very similar to what we have here in California at 70mph/55mph. Most vehicles have about a 15 to 20% energy savings reducing from 70 to 60.

  8. shallow sand says:

    I quickly added up 12/14 oil production and 10/15 oil production for the following counties/units, of which each produce at least 5000K bopd. I believe all is conventional production (vertical wells, not high volume fracks).

    Kinder Morgan – SACROC Unit – Scurry Co., TX
    Kinder Morgan – Yates Unit – Pecos Co., TX
    Hess – Seminole San Andreas – Gaines Co., TX
    XTO – Means San Andreas – Andrews Co., TX
    XTO – Fullerton Clearfork – Andrews Co., TX
    Sheridan – company wide production – Andrews Co., TX
    XTO – Hawkins Unit – Wood Co., TX
    Apache – company wide production – Hockley Co., TX
    Chevron – company wide production – Hockley Co., TX
    OXY – company wide production – Hockley Co., TX
    Burlington Resources -Waddell Ranch- Crane Co., TX

    12/14 – 143,772 bopd

    10/15 – 130,405 bopd

    The only two without significant declines were Fullerton Clearfork and Hawkins, both operated by XTO (ExxonMobil).

    I also pulled up some companies/counties that I believe are almost strictly conventional. The first number is 12/14 barrels of oil, the second is 10/15 barrels of oil.

    Identity 12/14 10/15
    Breitburn 365,164 320,828
    Legacy Reserves 285,373 243,270
    Linn 576,470 225,725
    Citation 229,690 204,773
    Mid-Con 55,756 68,055
    Gregg Co. 202,731 165,408
    Rusk Co. 157,106 141,312
    Wichita Co. 179,345 125,666
    Shackleford Co. 50,666 33,004
    Archer Co. 107,957 80,919

    I understand October numbers are not final. However, all that are down were trending down from December, 2014.

    Clearly supports my earlier posts about the decline of US onshore conventional. It is rolling over in TX as the conventional producers are trying their best to survive what shale has wrought. Up 17 oil rigs today. Crazy!

    Is 87 vertical rigs an all time low??

    • Dennis Coyne says:

      Thanks Shallowsand,

      I added up your data
      and 12/14 output was 2,354,030 and 10/15 output was 1,739,365 for all your reporting.

      This is about a 3% per month decline rate and a 30% annual decline rate, yikes!

      No doubt a lot of lower producing wells are being temporarily or permanently abandoned at these oil prices. If oil prices continue lower or even remain at the current level (around $35/b), the LTO plays cannot be far behind.

      Edit: As much of this data is from Texas, I question if we are comparing apples with apples, I just don’t trust the Texas data.

      • shallow sand says:


        I agree possibly on the county data, which comes from a large number of operators, some of whom maybe are late in reporting.

        However, all but Citation are public companies. Citation is a large private company in business since the early 1980s. I feel their numbers are accurate, and as I noted, there were down trends pretty much across the board from December, 2014. Also, many were heading up in 2014. I think the extreme drop in numbers of vertical rigs beginning 12/14 has taken its toll. Just 87 vertical rigs drilling in latest report, I suspect lower than the depths of 1998-1999. The low point on oil rigs per EIA was 108 in July, 1999. Not sure how many of those were non vertical.

        Did you read my Kansas post? Also declining significantly.

        I’ll look at some others and post as I have time.

        • AlexS says:

          shallow sand,

          If your numbers for conventional onshore production are correct, that implies that, at least until recently, conventional accounted for a large part of the decline in total US output. Hence, LTO production was more resilient than we thought.

          • shallow sand says:

            AlexS. I agree. Many LTO producers reported higher Q3 than Q2 production and most were higher in Q2 than Q1. Many, however, are guiding lower for Q4 and 2016.

            As far as my numbers being correct, I am just pulling them off state websites. I am very capable of typographical errors, so if you see something amiss, please point it out.

          • John Keller says:

            I think LTO has held up somewhat because the reduced capex was primarily the result of cost deflation. In 2016, the reduced capex will translate directly into much fewer wells being drilled as there is not much room for lowering costs. So far, the reductions look to be at least 25-30% from 2015 levels.

        • Dennis Coyne says:

          Hi Shallow sand,

          Kansas looks like about a 13% drop, but the numbers are a little different (annual average vs monthly output) so not really an apples to apples comparison.

          • shallow sand says:

            Dennis. Have you reviewed the Kansas Geological Survey website? It has monthly production by county and state wide in Excel.

            • Dennis Coyne says:

              Hi Shallow sand,

              No I just used the numbers you presented. Can one safely assume that most of the oil output in Kansas is conventional?

              • shallow sand says:


                Most is, except for a few counties along the South Central border with Kansas. Harper Co. is the primary horizontal county, I think. It had a big increase in 2014 but stagnated in 2015. Ellis, Russell and Rooks are among the largest conventional producing counties. Maybe take a look at the 2014 and 2014 excel spreadsheets, which list by county and statewide.

            • Dennis Coyne says:

              Hi Shallow sand,

              So if we look back 12 months from the most recent month reported (Sept 2015), the annual decline rate has been 14% in Kansas.
              As you have suggested before, these high decline rates are due to a lack of new wells drilled and possibly to a deferral of workovers due to low oil prices. Chart with Kansas oil output Jan 2013 to Sept 2015 in kilobarrels per day.

  9. shallow sand says:

    Ignored by most, Utah experienced high percentage production growth 2011-2014. It is trending down in 2015.

    All numbers off state website, cumulative barrels of oil:

    2011. 26,277,505.
    2012. 30,204,365
    2013. 35,005,414.
    2014. 40,910,690.
    2015. 25,807,544. Thru 8/15.

    My comment. I think the leg down in July, followed by the further leg down recently will hammer onshore US conventional.

    Big difference between $50-55 well head and $25-30 well head. Make or break for many, us included.

    • I have a hunch those numbers are BOE. I can’t see Utah producing 900,000 BOPD.

    • coffeeguyzz says:


      The Utah numbers are correct. 2014’s 41MM is bout 900k bo/week.
      Gas for the year was 453Bcf.

    • coffeeguyzz says:


      Fernando mistook ( apparently) Utah’s annual 40,000,000 bbl output as equating to 900,000 per day as opposed to it being the weekly output.

      That’s why.

      • AlexS says:

        Utah annual average C+C production (kb/d)
        source: EIA

        2010 68
        2011 72
        2012 83
        2013 96
        2014 112
        Jan-Sep 2015 105

        • Ok, so I blew a zero. If it makes you feel better I only do it once a day, and I no longer have to sign off on anything other than small money transfers to anticommunist organizations.

  10. oldfarmermac says:

    Hi SS,

    Can you say a little something about what is involved in shutting in a stripper well that is running in the red, in terms of how much it would cost to put it back into production a year or two down the road ?

    I have read that some such wells, maybe a lot of them, will never be put back into production, if once idled for any period of time.

    The ONE oil man I know, personally, owns a dozen or so stripper wells outright,land and all, and if he shuts them in, he won’t have to worry about leases at least. But he is only around once in a while, and I haven’t had a chance to talk to him recently.

    I do know from previous conversations that if he has to make any significant repairs, or do any serious maintenance work, he has to hire it done.

    • shallow sand says:


      The costs vary quite a bit, depending on well depth, how corrosive water is, etc. Also, much would depend on the injection system. How long shut down matters a great deal.

      Imagine the difference between idling your tractor, in the elements, for a month or two versus a year or more.

      My observation is that each well likely will have to be worked over, rods, tubing and down hole pump replaced on many. Maybe will need to be sand pumped and acidized. Electric motors would be removed from the wells and injection pumps so as not to be stolen when shut down. They would have to be reinstalled. Same with injection pumps. Electrical can be a concern. Mice like to chew on.

      If roads and locations are not maintained, that would require expense. Many times pumping units are removed from idle wells and used as replacements on producing wells when $ is tight, so that is also a possible issue.

      A large (for our field) operator shut in a large percentage of production (30-40%)I believe in 1998-1999 crash. My understanding they lost money trying to get everything back going again for the next 18 months or so once prices rebounded in 1999.

      Shutting down wells is a last resort, especially with a water flood. The few we have shut in thus far are not floods, or maybe a low volume well in a multi well flood.

      I’d say on a shallow well like ours, $2-15 thousand to reactivate after a year or more idle, depending on what happened down hole and what equipment is still left. Given at $80 oil well head, your are talking probably a $10-15 thousand annual pre tax profit, it is a big decision to make to shut in.

      I would also note some wells can be run intermittently. I hear a lot of that is going on now. Kind of like driving the old work truck every so often to warm the engine, etc.

      I will say I hate to see these wells plugged, given the number we reactivated that were just as economic many times as ones continuously produced. As long as they can be safely T’A, I say short term that makes sense. Two of the most efficient leases we operate are ones we reactivated after them being shut in many years. Others had them, went BK, and they went idle. Many times leases are shut in more based on the overall solvency of the operator, than on how economic they are on their own. I just looked and one is running $9 per Bbl OPEX, the other $16 OPEX for 2015. Wish it was all in that ballpark!

      • I’ve been involved in operations with lots of marginal wells. We wanted to implement a flood, but economics were marginal, so we pulled the jewelry, put in an old kill string, filled with a light hydrocarbon and a nitrogen cap. These wells were monitored once a month for pressures. And some remained shut in for years. Eventually we had used equipment coming off another field and we restarted with a poboy operation. This needs cooperation from the regulators. But it can be done.

        • oldfarmermac says:

          Thanks SS and Fernando.

          I don’t have much at all to say about the hands on end of the industry, because I know so little about it, but guys like you two have enabled me to at least get out of kinder garden and into the first grade.

  11. AlexS says:

    U.S. Oil Output has First Year-on-Year Drop Since 2011, API Says


    U.S. crude production in November posted the first annual decline in almost five years as falling prices curbed investment.
    The U.S. pumped an average 9.11 million barrels of crude a day in November, down 0.8 percent from a year earlier, the American Petroleum Institute said in a monthly report Thursday.

    Production of natural gas liquids rose 6.4 percent from November 2014 to 3.32 million barrels a day, a record for the month and 28,000 barrels short of the all-time high reached in August.
    Total deliveries of fuel, a measure of demand, rose 1.2 percent from a year earlier to the highest November total since 2007.
    Gasoline consumption rose 3.2 percent from a year earlier and jet fuel demand climbed 6.2 percent, while distillate fuel slumped 1 percent and residual fuel use tumbled 46 percent as prices for natural gas declined.

    My comment: The EIA’s preliminary estimate for November is 9.17 mb/d.
    We will know later the exact number, but it seems that the decline in output is accelerating by the end of the year

  12. Political Economist says:

    China’s electricity generating capacity, January-November 2015

  13. Political Economist says:

    Capacity Utilization rates by source of electric power

  14. Political Economist says:

    China’s electricity generation, January through November 2015

    Electricity generation has been converted to rate of generation. For example, China’s total electricity generation in November was 466 terawatt-hours. This is converted to a rate of generation of 647.2 Gigawatt. That is, if 647.2 GW of generating capacity runs 24 hours a day and 30 days a month, it would have generated 466 TWH.

  15. Political Economist says:

    New installation of generating capacity by source of electric power

  16. KL says:

    Shale Oil Production in Bakken, Eagle Ford Held Steady in November: Platts Bentek

    • shallow sand says:

      It appears I am onto something. Most of the US drop in oil production will be due to drops in US conventional oil.

      It is all about financing, IMO.

      How about this scenario, if GS is correct and we go to $20 WTI, re a bakken well in 2016

      Oil sales $12 x 88,000 net barrels. $1,056,000
      Gas sales. 100,000 mcf at $1.00. $100,000

      Gross sales. $1,156,000
      OPEX @ $4.00 $386,000
      Sev tax @ 10%. $115,600
      G & A @ $2.50. $241,665
      Interest at 5%. $375,000

      2016 net. $38,335.00

      I doubt even those prices will be enough to remove all rigs from the Bakken.

    • Heinrich Leopold says:


      However, the fierce battle for market share comes at a price for the US economy. Over 1 trillion USD in oil related equity losses, 500bn in bond devaluation in oil related bonds including private equity bond losses as well as a 10% loss of the general high yield bond market. So, in my estimate the US economy has lost already over 2 trn USD so far. Most of it are paper losses, yet the impact is huge. In effect, the US, Saudi Arabia and Russia are subsidizing the economies in Europe and China. Thank you America and keep going, we can need this stimulus package.

  17. A pretty good article on Seeking Alpha this morning:

    If It Keeps On Raining, The Levee’s Gonna Break

    Venezuela is basically insolvent and after recent elections could see increasing violence and perhaps even a civil war. This should have a relatively small impact on our economy and multinationals. Companies like Ford (NYSE:F) and ConocoPhillips (NYSE:COP) have already taken their lumps and written off their investments in the country for the most part. The tens of billions the Chinese has investment in the country in recent years looks more and more like a very bad bet however.

    • The Chinese didn’t invest ten of billions. They loaned money. Some of the money was stolen or simply disappeared, but they are SUPPOSED to get that money back in oil payments.

      Some of us are pointing out the loan covenants aren’t kosher because the National Assembly didn’t approve them. Therefore what the Chinese risk is having the new National Assembly investigate and reveal the terms, declare them illegal, and tell the Chinese to go fish.

      • Watcher says:

        The Chinese have their own central bank. They can create whatever disappears.

        • It gets better. The loans are supposed to be tied to the purchase of Chinese junk. The Chinese got pissed off when they realized billions were being stolen rather than returning to China to pay for Chinese goods.

  18. John S says:

    Art Berman has a new post up regarding the Permian Basin: http://www.artberman.com/less-than-2-percent-of-permian-basin-is-commercial-at-30-oil/.

    In the “for what it is worth” category tomorrow, the Midland Reporter Telegram will have an opinion piece from Scott Sheffield, Chairman and CEO , of Pioneer Resources about the impact of the end of the export ban. It can be accessed from http://www.mrt.com.

    • shallow sand says:

      John S. I think Pioneer is being kept afloat by a good hedge book, which will not last forever.

      For example, in Q3, oil price before hedges was 42.46, after hedges 62.93. NGLs before hedges 12.39, after 13.67, gas before hedges, 2.53, after 3.40.

      I sometimes wonder if the Permian and OK tight oil plays get more of a pass because they are newer and not as homogeneous as the Bakken and Eagle Ford shale.

    • Glenn Stehle says:

      °°°°Art Berman said:

      To make matters worse, Pioneer and EOG have made outrageous claims about Permian basin reserves in their 3rd quarter 2015 earnings reports that no sensible person should believe. Statements like these simply add to the mistaken idea that tight oil plays get a pass on the laws of physics and economics and that somehow the USA is going to beat Saudi Arabia as the low-cost “swing producer” of the world. I wish that were true but trust me–based on data, that’s not going to happen.

      There is an economic war going on of global proportions, and the geopolitical stakes are enormous. Most of the chest beating falls into the category of war propaganda, and that’s why these guys get away with their outrageous claims.

      °°°°Art Berman said:

      Pioneer’s claim is by far the more preposterous of the two but it wasn’t very long ago (May 2014) that EOG CEO Bill Thomas told investors that his company wasn’t really all that into the Permian basin.

      Right. But up until now there was never a disparaging word from Thomas about the Eagle Ford shale.

      Now that it’s impossible to deny that the Eagle Ford is in decline, time to move on to greener pastures.

  19. coffeeguyzz says:

    John, Shallow, Mr. Stehle

    You folks may want to recognize the analytical process that Art Berman uses in this piece closely resembles numerous others who were consistently shown wrong when early on looking at the Bakken. Please Google back a few years’ predictions to verify this.

    If 98% of Permian is uneconomic at $30, I would be surprised as I would think 100% should be.

    However, all you folks who chart the numbers should see that the big push towards horizontal drilling just started to get underway relatively recently in the Permian, yet Mr. Berman uses the earlier, learning phase wells to make his overall projections.

    These wells will continue to increase in productivity as the costs to drill/complete come down. (Monobore wells alone should show significant improvements).

    30 bucks per is squat.
    Tens of billions of barrels of recoverable resource is not.

    • Glenn Stehle says:


      Well I certainly hope you’re right.

      But these fast talking, wheeler-dealer promoter types in the oil and gas business and their cohorts on Wall Street have been throwing out highly inflated reserve figures for quite some time now.

      For instance, in 2013 the Fort Worth Star Telegram wrote an article titled “Report questions long-term productivity of gas wells in Barnett Shale.”

      Back in the heyday of the Barnett Shale (2005 – 2008) the financial reports of companies active in the Barnett Shale routinely threw out average EURs of 5 BCF per well.

      By the time of the writing of the Star Telegram story in 2013 they had lowered their sites a little bit: to an average of 3 BCF per well.

      However, a study conducted by the U.S. Geological Survey the year before had pegged average EURs in the Barnett Shale at only 1 BCF per well.

      And an “as-yet-unreleased study” of the Barnett Shale by the Bureau of Economic Geology at the University of Texas at Austin, which looked at the performance of 16,000 wells through June 2011, projected an average lifetime production of 1.44 BCF per well.

      Undaunted by all this, the article quotes Gregg Jacob, Devon Energy’s unit manager for the Barnett Shale, as saying “Devon expects its 4,800-plus wells in the Barnett Shale to produce the equivalent of 3 billion cubic feet of gas, natural gas liquids and oil over their lives.”

      • Jeffrey J. Brown says:

        Chesapeake claimed that the Barnett Shale wells on their DFW Airport Lease would produce for “At least 50 years.”

        “At least 50 months” would have been more accurate. Five years after the initial wells were drilled and completed, about half of that initial group of wells were already plugged and abandoned.

    • shallow sand says:

      Coffee. It is tough to analyze the Permian, at least compared to Bakken and EFS. Many different zones. I have seen tremendous wells and wells that wont have cumulative production of 100K BO. Look at the energy net auction site.

      Look at my post above about Pioneer’s 2015 hedging gains.

      Remove those and plug in $18 per BOE, which is where they are today. Pioneer hemorrhages cash at $18 BOE.

      Pricewise we are past the point of arguing about economics. Plug in todays oil, NGL and gas prices into any company’s PDP PV10. See if you can find one US public E&P, outside maybe XOM, that has greater PDP PV10 value than long term debt. If $50 WTI and $2.75/nat gas dropped CLR from $22 billion to $9 billion, where does $34 WTI and $1.75 gas put it?

      This is extreme, and is only getting worse. People who are about to BK are usually in denial.

  20. Homo Fossilifuelus says:

    Answering OFM’s question about the VW concept car, XL1 or whatever it was/is called…some 200+ mpg supposedly:








    $100,000…$120,000…OK, at these prices these are ultra-rich folks’ toys…

    With $1.75/gallon gas in my major U.S metropolitan area(and the price has been sub$2.50 for QUITE a while now) , what incentive is there for our drivers to buy these?

    Is there some sort of ‘conspiracy’ to keep these off U.S. roads…or is it just a case of the existing safety regs getting in the way?

    OK, this ia a VW car…I will ask the obvious:

    1) Will it be a mechanical nightmare to upkeep with super-expensive repair bills?

    2) Can we tryst anything VW says, esp. re furl efficiency? First stories said 300mpg, then 235 mpg, then 200 mpg (highway), then one article claims 180 mpg city…where is the ‘floor’ on the mpg claims…where does the truth lie?

    Back in the 90’s the ‘Al Gore car’ project looked towards ‘real cars’ which got 70-80 mpgs, hopefully at affordable purchase prices, but that government-sponsored effort folded due to lack of Congressional and public support…I imagine the oil companies were not too fond of it either.

    I can imagine if people get poor enough and/or fuel gets expensive enough, fleets of cars similar to the VW XL-1 could be available through Uber and similar services to pick up folks to get here and there summoned by the magic smart phne aps, and paid for the same way. Goods could be delivered to the home for most people…already more and more common due to Amazon etc. Delivery vehicle fleets could be optimized for a combo of hauling the right cube and weight of goods with fuel efficiency…fleets could be CNG-powered, and/or battery power3ed, with fleet refueling/recharging stations.

    Construction workers, farmers, etc. would still be able to but more traditional trucks, maybe aluminum with partial mild EV assist drive trains…folks could rent more traditional long-range ground vehicles for road trips…if they can afford to do so.

    More buses, light rail, intercity passenger trains…

    Change will inevitably happen.

    But, Mac, this proves your point…building the car you describe is possible.

    • oldfarmermac says:

      Yes, a super efficient ( compared to most of today’s cars at least) is entirely possible, and will not necessarily be all that expensive.

      VW built only a handful of these cars, and used a lot of exotic engineering and materials, so naturally it cost a hell of a lot to build them.

      But if a car company scales up production of such a car, and uses MUCH cheaper but somewhat heavier materials, and sacrifices a third or a quarter of the potential fuel economy, and such a car could be built today for about the same money as a Chevy Volt or any plug in hybrid with a good sized battery.It could probably be built for LESS, since it would be smaller and use less of everything in the way of materials.

      And we would have an afforbable car that would go a long way on the battery, or if not partially electrified, would get in the neighborhood of a hundred mpg using a small state of the art infernal combustion engine – at moderate speeds.

      I do not have any better crystal ball than anybody else, but I am utterly convinced that people will be very glad to drive such cars, if the choice is between giving up the suburban McMansion and driving them.

      It IS possible of course that battery tech will improve to the point we can continue to drive cars about as big as we do today, and charge them up mostly with wind and solar power or off peak conventional thermal generation, but there are no guarantees.The lithium supply could turn out to be as big a problem as peak oil.

      The best single thing about a very light, very small two seat fore and aft car is that the tech is off the shelf. Ditto the materials.

      • RDG says:

        “…battery tech will improve to the point we can continue to drive cars…”

        as long as the battery warranty (8 years) and then the car is worth 0 dollars. These are throwaway consumables…a real enviro disaster.

        • Songster says:

          Who told you that? Why would you not recycle the lithium and just replace the battery? Negative much?

      • RDG says:

        “…and charge them up mostly with wind and solar power…”

        LOL…another farce. Wind and solar is a drop in the bucket compared to the future demand on the grid. Got news for you: the enviro loonies have already ensured a massive energy shortage.

        Wind and solar is a waste of time.

        • oldfarmermac says:


          Coal, natural gas , and oil grow back in the ground like potatoes, and will last forever. We will never run short, never run out.

          Every fool knows that.

          Merry Olde England used to be the center of the world coal industry.

          The modern day oil industry was born in a little place called State Park , Pennsylvania.

          I leave it to you to figure out why people go there today, as tourists.

          This is what I actually said.

          ” It IS possible of course that battery tech will improve to the point we can continue to drive cars about as big as we do today, and charge them up mostly with wind and solar power or off peak conventional thermal generation, but there are no guarantees.The lithium supply could turn out to be as big a problem as peak oil. ”

          Has it ever occurred to you that a worn out battery can be replaced in couple of hours, and that a battery powered car doesn’t need a transmission, fuel pump, fuel tank, engine cooling system, exhaust system, etc ?

          Has it ever occurred to you that it doesn’t even need an ENGINE AT ALL?

          None of these parts ever wear out or break, but for some reason garages and auto parts stores are as common as ants at a picnic.

          I have PERSONALLY replaced a couple of dozen engines and transmissions over the years, in vehicles that belonged to me , personally. Craigs List and the swap and sell papers are glutted with ads for cars in need of major repairs.

          You can get them for peanuts and get them going again over a weekend, if you have a garage of your own. I have a garage of my own.

          When it comes time to swap out an ev battery, it won’t be that big a deal.

      • ChiefEngineer says:

        oldfarmermac says: “Yes, the electric model. I failed to make it clear I meant a hundred mpg using an infernal combustion engine only.”

        You can put me in the “enviro loonies” camp. I find Nick the most visionary here and he knows a lot about what he is talking about. The world needs to transfer as much of our transportation that is technically feasible to electric as soon as possible. Starting with the low hanging fruit being personal vehicles, but keep in mind we can do more than one thing at a time. No new coal plants should be built and current plants fazed out. Nuclear needs to be able to carry the base load in the night. Enough grid solar to power up very linked vehicle battery by sunset. NG power plants to balance the load and be used as peakers. The current next step for long haul heavy duty trucks and farm tractors is LNG. Hybrids for local city trucking and buses(currently in use).

        Earlier this week I got an opportunity as a passenger in a 14 month old Tesla S 85 with 14K on the odometer. The owner keep saying “I wish everyone could have one of these”. The 77 year old traded in her Mustang and the fuel cost went from $200 of gasoline to $50 electric. But since last month with the new Tesla chargers next to Costco. She does almost all her charging for free. It can be charged 80% in less than a half hour. The standard price was 89K but she added another 13K in options for a total of 102K. The car is a lot bigger than a Camry type and weighs in at almost 4700 pounds. The center of gravity is very low and unbelievable handling. In the center of the dash sets about a 15 inch touch screen that controls nearly everything.

        Traffic was light and we made a 6 1/2 mile figure 8 though town with traffic signals every half mile. She was always in total control of the vehicle. We must have gone from 0 to the 90 miles per hour range 7 or 8 times. The most amazing thing to me was no engine noise. Nothing. You could feel and see the acceleration, but not hear it. You would only hear the tire road noise starting to be noticeable in the mid 40’s. She hardly ever needed to touch the brake pedal. As soon as she pulled her foot off the accelerator the car would slow fast as it recharged the batteries. I can’t say I have ever been in a quicker car. Our little road trip started with a 43% charge on the battery and ended with 38%. It was truly impressive.

        For me the choice is simple. The planet is on course for cardiac arrest. We either change our ways or let the doomers prevail.

        If you fail to plan, you plan to fail

        • Caelan MacIntyre says:

          This reads almost like a commercial, including the trite token end quips.
          Too easy, misleading.

          “If you fail to plan, you plan to fail” ~ ChiefEngineer

          If we widen the perspective beyond, say, EV’s and EV promo’s, then we’ll be less likely to, as you write, ‘fail to plan… plan to fail’.

          The arguments for things like EV’s rely on implicit assumptions that not many are talking about, perhaps especially those who are plugging EV’s.

          Like those car commercials taken out (via scenes of happy drivers, nature and wide open spaces) of their normal contexts of gridlock, roadkill, pollution, noise, taxation, maintenance (car/highway infrastructure, including bridges), parking issues, vandalism, accidents, fatalities, road-rage, insurance rates, license and registration hassles and fees, urban/suburban/land mis-development/misuse, pedestrian-hostility, congestion, sprawl, and general destruction of nature, etc..

          That’s part of what I mean by ‘too easy, misleading’.

          • ChiefEngineer says:

            I don’t need to promote EV’s. They are on course to replace new ICE in the next 10 to 15 years. Your denial and inability to be part of a modern day society is your loss.

            ICE fossil fuels vehicles are replaceable

        • Caelan MacIntyre says:

          • Fred Magyar says:

            Hey Caelan, I still think you need to factor in disruption a la Uber, Zip Cars and driver less technologies. EVs make a lot of sense in a world where private car ownership for the general public is in the rearview mirror. Nobody needs cars, they need transportation services. Most people in the world live in cities and that is where a combination of public transport, buses, subways etc… together with driverless EVs provided by the future Ubers of the world make the most sense. Disruption is well on the way already.

            • Doug Leighton says:


              China added a record 17 million new cars on the road in 2014 as car ownership reaches 154 million, said the Ministry of Public Security on Tuesday. Strong demand for cars has helped the automobile replace motorcycles as main method of transportation. Cars made up 58.6 percent of total motor vehicles, a sharp rise from 43.9 percent five years ago.

              • ChiefEngineer says:

                17 million new examples of modern civilized humans rejecting Caelan looser doomer personal gardening life alternative.

                • Caelan MacIntyre says:

                  What’s that. The Yes Men do Trump? Hm…
                  I think I like it… Work on it a bit more and update us on the progress.

                  Everybody Hurts

                • Bob Nickson says:

                  Hey now! What you got against gardening?

                  • ChiefEngineer says:

                    Nothing if it’s a hobby. It just never made my top 10 list of careers. More power to you if it’s your calling.

              • Fred Magyar says:

                Reality will set in even for them sooner or later…
                Maintenance, insurance, 100 mile long traffic jams.
                The novelty wears off after a while. And who knows maybe the price of oil will rise again and there are things like fuel rationing could put a damper on all that happy motoring! Happy Holidays from Hollywood Florida where gas is $2.00 a gallon and the roads and shopping malls are overflowing with snowbirds!

                • ChiefEngineer says:

                  Reality is traffic jams beat the hell out of a Caelan garden, donkey & cart(or roller skates), two goats, three chickens and a candle. I’m not really interested in spending Christmas in Doomerville.

                  If you fail to plan, you will become a doomer

                • oldfarmermac says:


                  MAYBE the price of fuel will go up and spoil happy motoring?

                  Maybe the Earth will continue to rotate, ensuring the continuation of the illusion of the sun rising and shining for our benefit.

                  Sometimes your sense of humor is a little to subtle for black and white electrons, Fred.

                • Caelan MacIntyre says:

                  ” ‘Drinking the Kool-Aid‘ is a figure of speech… that refers to a person or group holding an unquestioned belief, argument, or philosophy without critical examination… It can also be used ironically or humorously to refer to accepting an idea or changing a preference due to popularity, peer pressure, or persuasion.” ~ Wikipedia

                  That quoth, ‘Technocopianism’ (including ‘career [over]specialization’ and whatnot), maybe a la Jacque Fresco, in the context of ‘FLOSS’ governance–true governance, transparency and democracy– might work. What might not work, however, is getting our species to work with it, such as if they have been borgged– borgged into a kind of mindless acceptance of the programming; the current status quo as-is that is now flirting with extreme ‘ecopsycosociopathology’.

                  The more people that have been borgged, and therefore rendered essentially ‘hopeless/helpless’, the more likely it seems that Mother Nature is going to be the one to unplug them and bring them back to reality. Unceremoniously.
                  By then, we’ll be lucky if we have any skills and knowledge worth anything and a planet we can live on.

                  In this case, and this is important; it may be that Mother Nature is suggesting to us– to those who care to hear it– that we can’t eat our cake and have it too: We can’t have our technologies without real democracy. If we nevertheless insist on eating our cake and having it too, then we will have to allow the cake to pass through our intestinal tract before we can. And we all know what kind of cake it is we will be eating then. It is similar to the kind of cake we are beginning to eat already. Just wake up and take a look around if you haven’t yet been completely borgged of course.

            • wimbi says:

              Yep, right on, Fred.

              It’s good to see you always saying what needs said so I can simply sit here and not say nothin’ .

              You might find my entry in Community Solutions newsletter amusing:
              Community Solutions

  21. shallow sand says:

    Concerning PDP PV10, I thought it was interesting that people were shocked when BBEP released their internal report showing $1.4 billion PDP PV10 v $3 billion of long term debt.

    What do you all think shale looks like?

    BBEP has really good 2016 hedges. Their stock is at about 50 cents.

    Most of shale doesn’t.

    You can’t take a highly levered business, reduce gross revenue by 2/3, and expect a good result. No amount of hype will overcome that.

    • Doug Leighton says:


      Great response: I know I’ve said it before but Reading Ron’s Blog would be worth it for your comments alone.

      • John S says:


        Friday morning I hope Santa brings you everything you asked for when you sat on his lap at the mall.

        When you sit on the lap of an unconventional oil and gas producer remember that he is probably the business equivalent of a pedofile.

      • Dennis Coyne says:


        • Donn Hewes says:

          I know less than nothing about the business end of these things, but how is it possible to have “really good 2016 hedges”. My crude understanding would be if you where selling and you had a hedge, it would against the price falling?

          • shallow sand says:

            Donn. Companies hedge with counter parties. Those are usually large banks. The there are 3 basic types of hedges.

            SWAP. The producer and counter party agree to a fixed price, say $70 per barrel. If the price goes above $70, the producer pays the counterparty the difference. If it goes below $70, the counterparty pays the producer.

            Cost less collars. These are like SWAPS, but in a range. Say the parties agree to a collar of $60-80. No money changes hands unless the price goes outside the range.

            The third is a floor, or put. The producer pays a premium to the counterparty. Say the producer buys $60 puts. If the price falls below $60, the counterparty pays the producer.

            There are various hybrids and modifications of the above.

            The price levels and cost of puts are based on the futures market. It is now impossible to hedge anything remotely profitable for the shale industry and a good portion of US conventional.

            Furthermore, it is difficult to hedge production past 24 months. This is especially true for shale, with the high declines.

            One concern with SWAPS or collars is in the event of a price spike, the producer produces less barrels than that hedged. That can wind of costing the producer a lot of $$. Also, theses types of hedges can result in very large margin requirements of the producers, but they commonly avoid those by allowing a first lien on production.

            Another problem with hedges is giving up upside. If it were possible, someone who hedged in 2003 for the next ten years at $30 a barrel would be BK, as the price rocketed up, which caused OPEX to also skyrocket.

            Most companies do not hedge past 24 months. Also, they do it in layers so that not as many barrels are hedged n the later years.

            Many companies had significant hedge gains in 2015. There will be much less in 2016 and almost none in 2017.

      • shallow sand says:

        Thank you, Doug.

        Commodities are so volatile. It seems both a blessing and a curse to live in a place where that is about the only thing to invest in outside of stocks and bonds. Maybe I should have gotten into apartments instead, LOL!!

        Hope you have a good holiday, hang in there. I very much appreciate your comments as well.

        • oldfarmermac says:

          If you are willing to work PERSONALLY at managing rental property, and stick to the low end, you are almost dead sure to do quite well.

          But you have to KNOW what you are doing, from a to z, just the same as in any other business.

  22. Watcher says:

    I’m getting comments not appear again, not that this matters.

    Anyone downstream . . . anyone know why people who are not speculators and have no plans to sell in the future for profit (pipelines etc) are choosing to buy oil that allegedly is increasing amounts in alleged storage? More concisely, who and why is oil being bought for the purpose of storing? More penetrating, why are orders being placed for oil not needed?

    If it were a week or two, I suppose monthly contracts are in place. If it’s over a year, what sense does this make? Who made monthly contracts with the Bakken to buy oil they aren’t going to use in an alleged glut?

    • Greenbub says:

      Excellent question.

    • Arceus says:

      Many mysteries surrounding this oil glut. Methinks the price of oil ties into the strength of the dollar which ties into the U.S. remaining king of the hill for as long as they can.

      • Watcher says:

        The dollar is a factor.

        There is also a wiki for “predatory pricing”.

  23. SatansBestFriend says:


    Internet backdoor created by non-usa government found. Potentially been stealing government decrypted transmissions for 3 years.

    • Arceus says:

      Not really surprising at all. I would guess that every government agency and just about every private company (with secrets worth stealing) is compromised by Russia/China hackers. Wasn’t Hillary using a Windows home server?

      • oldfarmermac says:

        Personally I believe it is dead certain that most really large data bases, with the possible exception of most military data bases, have been either been penetrated, or sold out, by insiders.

        It is just too hard to imagine that an outfit as big as a major bank doesn’t have a few people who are willing to take the money, and the salary too. I am not talking about credit card numbers, but rather technically useful information, such as the designs for machinery, or service manuals, or sales figures.

        For instance, if I know how much diesel fuel is delivered in the spring to American farmers, I can come up with a damned good idea how many acres are getting plowed.

        If I were an oil man, and knew how long the drill bits last, and had the sales figures and delivery figures for shipments to a given country in hand for such bits, I could tell you just about everything you would want to know about the maximum level of drilling that is going to occur over the next year or so in that country. ( Predicting the minimum level of drilling this way would not be nearly as accurate, because the customer, if flush with cash, might buy up a lot of expendables now in order to buy cheaper for use later )

        There are probably not over a half a dozen important manufacturers of these bits and it is damned unlikely their sales staff don’t know who is buying them.

  24. AlexS says:

    New Gulf Resources files reorganization plan

    December 18, 2015

    New Gulf Resources and certain subsidiaries have filed voluntary petitions for relief under Chapter 11 of the US Bankruptcy Code in the US Bankruptcy Court for the District of Delaware, to facilitate a pre-arranged restructuring of their balance sheet through a collaborative reorganization plan.

    • shallow sand says:

      AlexS. I hadn’t heard of this company. So I googled them.

      In May of 2014 they bought 3600 BOEPD and 83000 acres from none other than Halcon Resources for $450 million. They financed the entire purchase plus borrowed another $50 million for “corporate purposes”. Talk about bad timing.

      Of course Halcon stock is trading in the 20 cent range, so apparently they didn’t put the $450 million to the best of uses either.

      • John Keller says:

        What is amazing to me, is how many private oil companies backed by PE money that have over $500mm in debt! The credit crunch is going to get crunchier next year.

  25. oldfarmermac says:


    I still believe a hard crash is baked in, but actually the world as a whole is doing a lot better than the pessimists think it is.


    Of course as they say in the money biz, past performance is no guarantee of future performance.

  26. John S says:

    Hi Glenn,

    Last October, My wife and I were fortunate enough to spend 4 1/2 days in San Miguel de Allende. What a charming city! We had a great time and everyone was very gracious and polite.

    The ladies are extremely pretty and very well dressed. I have to say that we were treated far more graciously and kindly than we treat visitors from Mexico in Midland. I look forward to going back. We may go back with our daughter at Spring Break.

    We flew in to Queretaro late at night (spelling?) and took private transportation to our hotel. We returned to the airport via a large van with several other Americans.

    This was my first real trip to a foreign country where I had to communicate in a different language. As I said before everyone was very gracious and helpful.

    As impressions go, I was struck by the number of motorcycles and Chinese scooters that people used. Early in the morning I would see entire families on a scooter : child/father/child/mother/child on one particular instance. I happen to have a Vespa scooter with a sidecar so I am partial to the scooters.

    Any chance you would share why you decided to land in Queretaro?

    • Glenn Stehle says:

      Hi John,

      Yep. San Miguel is great. It’s like the Santa Fe, New Mexico of Mexico.

      There used to be a number of Midlanders who had vacation houses there. Roger Canter had a place there, and if I remember correctly Bobby Holt did too. It was always an attractive destination for those who liked art and to paint themselves, like Roger.

      If you manage to go back and you, your wife or daughter like art, you might try a day trip to Atotonilco. It’s a small rural community about 10 miles from SMA. There’s a small church there that, even though not built until the 18th century, is decorated in the primitive indigenous style. It’s a very different look at Mexico than the big cathedrals like the main one in SMA. I have always preferred popular Mexican art, with its strong indigenous influence, over the art of the creoles and mestizos, which tried so hard to emulate European art.

      The interiors of the churches in SMA have pretty much been gutted of their colonial era artworks. There are a couple of churches in Queretaro, however, where these have been preserved. So you might enjoy a day trip to Queretaro too.

      Also the regional museum in Queretaro has a handful of interesting pieces in its collection. The star of the collection is a prehispanic pot decorated with lacquer. When most people think of lacquer, they typically think Japan. But the indigenous peoples of both Mexico and South America also perfected this technique. There are only a few of these pieces which have survived, and the museum in Queretaro is fortunate to have one.

      After the conquest, the technique survived for a while and was used to decorate wooden articles. But there are only a handful of these still in existence. The only two in Mexico I know of in public collections are in the Museum in Patzquaro and the one in Tepotzotlan. The best examples of this, however, are to be found in New York in the collection of the Hispanic Society and in Madrid in the Museum of the Americas.

      How did I wind up in Queretaro? When I began traveling in Mexico I just by chance happened to make friends with some folks in Queretaro, and so this is where I wound up. It is also very centrally located with excellent public transportation linking it to other cities: 2 hours by bus to Mexico City, 3 hours to Guadalajara, 2 hours to San Luis Potosi, 3 hours to Puebla. I used to travel constantly, so I found this attractive.

    • Glenn Stehle says:

      Hi John,

      Yep. San Miguel is great. It’s like the Santa Fe, New Mexico of Mexico.

      There used to be a number of Midlanders who had vacation houses there. Roger Canter had a place there, and if I remember correctly Bobby Holt did too. It was always an attractive destination for those who liked art and to paint themselves, like Roger.

      If you manage to go back and you, your wife or daughter like art, you might try a day trip to Atotonilco. It’s a small rural community about 10 miles from SMA. There’s a small church there that, even though not built until the 18th century, is decorated in the primitive indigenous style. It’s a very different look at Mexico than the big cathedrals like the main one in SMA. I have always preferred popular Mexican art, with its strong indigenous influence, over the art of the creoles and mestizos, which tried so hard to emulate European art.

    • Glenn Stehle says:

      Hi John,

      Yep. San Miguel is great. It’s like the Santa Fe, New Mexico of Mexico.

      There used to be a number of Midlanders who had vacation houses there. Roger Canter had a place there, and if I remember correctly Bobby Holt did too. It was always an attractive destination for those who liked art and to paint themselves, like Roger.

    • Glenn Stehle says:

      John S,

      Yep. San Miguel is great. It’s like the Santa Fe, New Mexico of Mexico.

      There used to be a number of Midlanders who had vacation houses there. Roger Canter had a place there, and if I remember correctly Bobby Holt did too. It was always an attractive destination for those who liked art and to paint themselves, like Roger.

    • Glenn Stehle says:

      Yes, John S, San Miguel is a great place. It’s like the Santa Fe, NM of Mexico.

      If you manage to go back and you, your wife or daughter like art, you might try a day trip to Atotonilco. It’s a small rural community about 10 miles from SMA. There’s a small church there that, even though not built until the 18th century, is decorated in the primitive indigenous style. It’s a very different look at Mexico than the big cathedrals like the main one in SMA. I have always preferred popular Mexican art, with its strong indigenous influence, over the art of the creoles and mestizos, which tried so hard to emulate European art.

      The interiors of the churches in SMA have pretty much been gutted of their colonial era artworks. There are a couple of churches in Queretaro, however, where these have been preserved. So you might enjoy a day trip to Queretaro too.

      Also the regional museum in Queretaro has a handful of interesting pieces in its collection. The star of the collection is a prehispanic pot decorated with lacquer. When most people think of lacquer, they typically think Japan. But the indigenous peoples of both Mexico and South America also perfected this technique. There are only a few of these pieces which have survived, and the museum in Queretaro is fortunate to have one.

      After the conquest, the indigenous lacquer technique survived for a while and was used to decorate wooden articles. But there are only a handful of these that have survived too. The only two in Mexico I know of in public collections are in the Museum in Patzquaro and the one in Tepotzotlan. The best examples of this, however, are to be found in New York in the collection of the Hispanic Society and in Madrid in the Museum of the Americas.

      How did I wind up in Queretaro? When I began traveling in Mexico I just by chance happened to make friends with some folks in Queretaro, and so this is where I wound up. It is also very centrally located with excellent public transportation linking it to other cities: 2 hours by bus to Mexico City, 3 hours to Guadalajara, 2 hours to San Luis Potosi, 3 hours to Puebla. I used to travel constantly, so I found this attractive.

      • John S says:

        Thank you Glenn,

        My daughter appears to have some real ability in the arts. I think all that you described would be well worth seeing. It’s on my bucket list.

  27. Clueless says:

    I would guess that by now, most can see what is happening and therefore, what is going to happen in the future since the model has been established. The banks are not going to take serious hits. Re: Magnum Hunter and New Gulf Resources.
    I remember seeing some vulture investor discussions back in 2009. They were stating that they would never buy equity in failing companies: they would take control thru the debt. Much more upside possible. So, a company with $1 billion in debt has its bonds trading at say 70 cents on the $ and it is rated junk. The bond funds that hold the debt [their covenants prohibit them from holding “bankrupt” rated debt] sells to novice speculators. Then the debt plunges to 10- 30 cents on the dollar. The investment/hedge funds step in. They can buy $1 billion of debt for $300 million or less, and the are praying that the company does go belly up. If it does, they get 100% of the equity, and agree to put in another $200 million to ride out the storm. A totally non-contested, prearranged bankruptcy. If things come back [even partially], they might own a company worth $2 billion for their $500 million investment.

    • shallow sand says:

      Clueless. You are correct. I might add that the vultures do not appear to be just purchasing the debt. They are trading unsecured debt for second lien debt. I am not sure how this works, but from what I have read, the unsecured bonds have very weak covenants. The vultures give the unsecured bond holders the option of taking pennies on the dollar or becoming subordinate the vultures on all the debt the vultures are able to trade out.

      The vultures better be pretty sharp, however. 1st, they better have a good handle on the assets they are trying to acquire. Second, they better have a good team put together to operate the assets. Third, they better have a better handle on future oil and gas prices than schmucks like me.

      I saw something similar to this up close in the aftermath if the 1998-99 crash. An investor group bought the bad debt from a bank for pennies on the dollar, took assignment of the liens and foreclosed.

      The investor group found out in a hurry that they didn’t quite know what they had bought, and that it wasn’t easy to manage from 1000+ miles away. They had a hell of a field superintendent, but of course they thought they were smarter than him, despite him having grown up in the middle of the field.

      In any event, after burning several million dollars, the sold the assets and I am sure took a big loss. They also screwed up on timing the sale. Had they held on for about 3 more years they could have at least quintupled the sale proceeds. But they knew about as much as I, or really any of us, know about where oil prices are headed.

      I am sure these distressed buyers are real sharks. But sharks can die too.

  28. shallow sand says:

    Thought I’d mention another anecdote.

    Acquired an overriding royalty interest in two leases a few years ago. Not a big deal, produces income of about $800 per year at $80 oil. Have had for many years, one lease sells a tank every month, the other roughly every other month. The wells were drilled in the early 1980s by the company that is still operating the leases. Wells are about 1,800 feet deep.

    I have the production histories on these leases, I bought the interests because the production is just about as flat as I have ever seen. Seemed like a perpetual annuity.

    I noticed awhile back that I have not gotten a check from either lease since August. There has not been an interruption like this ever on either lease. Extremely cold weather is all that has ever affected production. We’ve had none of that so far.

    The leases are about 50 miles from home. I need to drive over and see what’s going on. The operator has 4-5 others in that little field. Wonder if they are all shut down?

    Hope it’s not bye bye ORI for me.

    Folks, this is a bad one. For better or worse, the future of US oil and gas production is horizontal shale/high volume fracking. This bust has US conventional down for the count.

    • John S says:


      The conventional guys are going to make it through this. We are small non-operators and royalty owners too. I am planning to get through this! I still see conventional opportunities in the Permain Basin.

      However, my 10 year old daughter is not going into this business if I can help it!!

  29. oldfarmermac says:

    Off topic

    A few days back we got into a discussion involving whether violence is more common these days than in days gone by. I have always maintained that there is NO GOOD EVIDENCE that people in times past were any more peaceful than today. As a matter of fact, there does not seem to be any good evidence at all that people have ever been any more peaceful than necessary, except when forced to be peaceful by elites of various sorts.

    Tribal leaders and kings have a way of monopolizing violence to the extent they can, lol.

    When it comes to violence, absence of evidence is not evidence of absence.

    On the other hand, there is plenty of evidence that violence was quite common in earlier times.


    ““The new evidence presented here for unequivocal lethal violence on a large scale is put into perspective for the Early Neolithic of Central Europe and, in conjunction with previous results, indicates that massacres of entire communities were not isolated occurrences but rather were frequent features of the last phases of the LBK,” wrote Meyer, et al., in their report.*”

    *“The massacre mass grave of Schöneck-Kilianstädten reveals new insights into collective violence in Early Neolithic Central Europe,” by Christian Meyer, Christian Lohr, Detlef Gronenborn, and Kurt W. Alt., Proceedings of the National Academy of Sciences, 17 August 2015

    • Caelan MacIntyre says:

      Yes and all that alleged historical violence just somehow magically disappeared.
      Like the genes for it were manifest on the outside, on the surface of our skin, to be blown off by the winds of time and change. ‘u^

      • oldfarmermac says:

        The very real history of violence is has been and is coming out because various types of scientists in recent times are able to look for it, more so than in the past.

        What is DISAPPEARING is the peaceful savage meme.

        There never WAS any evidence to support that.

        MORE evidence of this sort emerges on a more or less daily basis.

        ” One excavated mass grave provides the certain evidence that 26 people, half of them adults and half of them children, were bludgeoned in the head by “typical weapon-tools of the time”.* Furthermore, before or after their deaths, many of them were mutilated or tortured by the smashing of their lower leg bones.”

        “Moreover, report Meyer and colleagues, “the significant absence of younger women in the Kilianstädten mass grave may indicate that these were taken captive by the attackers, as also has been suggested for the Asparn/Schletz site in Austria…we suggest that the repeated occurrence of almost indiscriminate massacres, the possible abduction of selected members, and the patterns of torture, mutilation, and careless disposal all fit into the concept of prehistoric warfare as currently understood within anthropology.”*

        The best accepted explanations of the reasons for such violence, at this time, involve resource war.

        • Caelan MacIntyre says:

          In my first foray into this kind of discussion hereon, I encountered some potential problems– possibly with your reference too, since Meyer seems to ring a bell– with the historical interpretations of the apparent violence, as well as the semantics of the word. Perhaps this has changed since then, although it was only a few months ago.
          Nevertheless, I never really bought into the peaceful savage meme per se (even though I imagine bands and tribes likely differed in many ways, including in levels and frequencies of violence), nor necessarily in, for example, Pinker’s apparent contentions.

          Nowadays, it’s violence-by-remote-control and structural/embedded violence– the kinds that can be harder to see, prove and/or agree on, and maybe (as such) easier to ignore.

        • Javier says:

          I’m 100% with you on this OFM,

          Whenever there’s an evolutionary advantage to intraspecies violence, it takes place. Most territorial predators display intraspecific violence. Group predators also display a high level of intraspecific violence against other groups. But curiously animals that are marginal predators, like chimps or meerkats, also display it. The only requirements are that there is a capability for violence and that there is something to be gained from it.

          From a biological point of view that humans were not a species with a high degree of intraspecific violence is inconceivable. The moment Homo sapiens has the means for it, it quickly kills off every other branch of the Hominin tree within a very short time span.

          There is a killer within a lot of our apparently nice human fellows. Yugoslavia was a nice peaceful country, until suddenly the most horrible things started to happen for the most absurd reasons. Do not doubt for a moment that the same thing can happen in any country if enough people feel they can get an advantage by resourcing to violence.

  30. Roberto Rincon, an oil patch service and supply company mogul based in Houston, has been arrested by Federal agents. Rincon apparently owns a chunk of Tradequip, a company with very large contracts in Venezuela.

    I wrote about Rincon here http://21stcenturysocialcritic.blogspot.com.es/2014/07/visit-aruba-with-20000-in-your-pocket.html in a post about the Pollo Carvajal affair. Carvajal is wanted for drug traffic, is a former high official in Chavez’ government, and was a socialist candidate for the National Assembly (I think he won, but I’m not sure).

    The key point here is that, ever since the Carvajal mess in Aruba, USA authorities focused on Rincon, who had loaned his private jet to Carvajal. Earlier this year USA authorities notified European banking authorities a bank in Andorra was being used to launder money out of Venezuela, and these threads are being put together to chase billions being stolen by the Chavistas and their associated drug lords.

    The thing is, these threads in turn lead to PDVSA, its oil industry suppliers and service companies, and pdvsa subsidiaries, including CITGO. I’m going to speculate that we may also see cash being directed to opinion makers and politicians everywhere. Some of the cash seems to flow in a murky fashion to the intended account, some of it comes from contracts or agreements made by the Venezuelan regime, pdvsa, etc, with outside parties.

    For example, I hear actor Danny Glover received $18 million from the Venezuelan government to make a movie, which was never made. So the question is whether Glover just kept the money or “donated funds” to the right targets.

    In conclusion, it seems things are unraveling in Venezuela for the socialists in a big way. Right now I’m able to communicate with extreme left parties in Venezuela who are opposed to Maduro and his gang, so the impact of all this corruption, theft, and alliance with the drug trade is isolating the regime. I think they will react violently, and we will see a high degree of unrest or low grade civil war early in 2016. Typical communists will resort to extreme violence if they think it’s needed, but these guys are worse, they are self appointed communist revolutionaries AND drug lords.

    Link to an article about rincon’s arrest in Spanish


    • Caelan MacIntyre says:

      I briefly met Danny Glover who was ahead of me in a checkout line in Vancouver. He said ‘Hi’ and probably previously caught a conversation with one of the staff in the store about my experiences in China, where I kind of felt like maybe what a famous person might sometimes feel like, (looking quite different with my blue eyes, etc., and rollerblading around everywhere for my personal transportation, and sometimes getting tired of the attention).

    • Another arrest, Abraham Shiera, a Rincon associate was picked up in Coral Gables. It’s also possible they may have picked up Rincon’s son.

      I read a really interesting article says a ny lawyer named Nkrumah was named to defend one of the Maduro narconephews who are in jail in NY. It said Nkrumah was a known Chavez supporter. His fees are being paid by the federal government.

      A separate article says the Venezuelan regime is essentially out of cash, running on fumes and will be broke by February. They have some gold left, though. The question is whether it’s in Cuba or in Caracas?

  31. The low prices are taking their toll.

    Ecopetrol, the largest Colombian producer announced that it will produce 755,000 barrels a day in 2016 vs 760,000/day in third quarter of 2015.
    That does not sound like much a of drop, until you realize that Ecopetrol will be taking over the Rubiales field from a joint venture by not extending their partners contract.That will add 70,000 barrels a day to their production.Or about 35,000 barrels day annualized since it happens mid-year. So adjusted for this their production will decline from 795,000 barrels to 755,000 barrels per day, or a drop of 5%. And that is after spending 4.8 Billion USD. So I am guessing their base decline rate is closer to 10%

    • Interesting case, Rubiales. I looked at that property years ago, penalized its value because of the clause ending the contract. The trap is really odd, it sets up a very thin heavy oil column smeared over a huge area.

      • It seems to be declining quite rapidly and it seems to be as goes Rubiales so goes Columbia in oil production. Not to the same extent as Canterall for Mexico but significant enough.

  32. Watcher says:

    A reminder that a few weeks or months ago at a JP Morgan investment meeting, maybe even annual, a question was posed to management about their exposure to high yield bonds from shale. The answer was “we have offloaded that risk to public investors”.

    What you may not understand is what that can mean in terms of awareness. JPM will have managed accounts. They are authorized to trade client money without informing the client of what has been done for each trade, and of course the theory would be that if the client doesn’t benefit then they will pull their money from the account.

    Well, the account managers are trained and polished in selling ice cream to eskimos. They are professionals at persuading money to stay within the Assets Under Management umbrella and the client is not professional at countering those persuasion techniques.

    The point being, this lending money to shale (in that meeting it was done to service loans already made to shale and keep them current) can be with Other People’s Money and those people may not know, and probably don’t know.

    It’s a new world out there. In 2007 hedge funds and goldman cooperated in arranging short positions in mortgage backed securities and then spread the word those securities were non performing mortgages, DESPITE the fact Goldman had put clients into them to offload their own risk. Do not believe these guys will place client interests above their own. hahahah how absurd would that be.

    And so, stop thinking that pre 2007 Normal in the world still applies. It doesn’t. There are no precedents to what is happening in many things. At the core of the reasons why . . . is scarcity.

    • Jeffrey J. Brown says:

      Methinks a lot of pension funds are facing some pretty large losses on oil and gas bonds.

      • Heinrich Leopold says:


        It is sometimes really surprising how long it takes until changes from the manufacturing floor reach the financial world. I remember when I have worked in a big project for a 250,000 t chemical plant, where some Kalium and Natrium elements in the chemical recovery boiler caused severe plugging in electrical filters. It took one year until banks realized what really happened – bankers do not like to go into factories as this damages their shoes and clothes. As the financial level is where the decision making happens, it took just one year until there was any reaction from the management. In the oil industry, the Kashgan project is also one good example how long it takes until the message gets to the top management. The same now for the shale industry where top managers and bankers realize very late what is going on in their operations. Operation managers can delay payments – and pretend lower costs – and take deliveries without payment for a very long time, especially if the company is big. Bankers and investors realize just now how difficult the situation is. This is the main driver for a production slowdown over the next few months in a big way.

    • RDG says:

      “And so, stop thinking that pre 2007 Normal in the world still applies. It doesn’t. There are no precedents to what is happening in many things. At the core of the reasons why . . . is scarcity.”

      Nah, its more like plain old scams. This entire bogus country is now a financialized ruins…

      The kindergartner’s on this website take on climate science is especially amusing. It’s like a child at the beach in the morning, watching the water get closer and closer, who concludes that everyone will ultimately drown. Very safety conscious, but hardly scientific.

      When it comes to “climate change,” there is really only one number that matters: the Climate Sensitivity. This is the equilibrium temperature change in response to changes of the radiative forcing. In other words, it’s the ultimate increase in global temperature that results when the concentration of carbon dioxide increases by a factor of two.

      The only thing that is known for certain is that, without any feedbacks, the global temperature should increase slightly more than one degree Celsius every time the concentration of carbon dioxide doubles. This result follows from basic physics, and any change from this number for a global system is the result of various feedback effects. Some of these feedbacks (e.g., the clouds) are not very well understood (as discussed in the latest IPCC reports). The numbers that are quoted today are entirely the result of simulations performed by General Circulation Models (a.k.a., “climate models”), which have failed to reproduce the global temperature behavior over the last two decades.

      One thing is pretty certain, however. Ultimately the system that governs global climate must have negative feedbacks at some point. As anyone who is familiar with dynamical systems knows, if the feedbacks were entirely positive, the Earth’s climate would have run away long ago simply due to natural variations in inputs such as solar flux. So while we have determined the limits on the extreme bounds, the overall uncertainties in climate sensitivity still remain quite large.

      Anyone who tells you that the “science is settled” on this topic is either a liar or a fool or both.

      As for Peak Oil, Patterson really doesn’t know what he is talking about either…

      • Glenn Stehle says:

        RDG said:

        The kindergartner’s on this website take on climate science is especially amusing. It’s like a child at the beach in the morning, watching the water get closer and closer, who concludes that everyone will ultimately drown. Very safety conscious, but hardly scientific.

        That certainly seems to be what most of the world’s population has concluded. When the waves start nipping at their feet, they believe they can gather up their beach towels and suntan lotion and head higher up on the beach. And who knows? Maybe they’re right! It certainly wouldn’t be the first time that the “scientific consensus” was proven wrong and the public right.

        Los Amigos de la Tierra called the COP21 conference in Paris a “farse,” and Vía Campesina, the worldwide coordinator of campesino movements , was equally as severe.

        The New Internationalist blasted the Paris deal as an “epic fail on a planetary scale.”

        And back home, due to consumer behavior, the push is underway to roll back the CAFE mandates:

        Surging demand for trucks and SUVs fueled by cheap gasoline is holding back improvements in U.S. fuel economy and greenhouse gas emissions, a government report due out on Wednesday is expected to show.

        The disconnect between consumer demand for larger, less efficient vehicles and the Obama administration’s climate goals sets up a clash between the auto industry and federal regulators.

        Mark Rosekind, who heads the National Highway Traffic Safety Administration, said in a Reuters interview last week the administration will consider automakers’ arguments that the shift away from cars makes it harder to hit the 2025 fleet average fuel economy target of 54.5 miles (87.7 km) per gallon….

        Consumers are responding to signals from gas pumps, where a combination of relatively low taxes – federal gasoline taxes have not gone up since 1993 – and oil unleashed by hydraulic fracturing or fracking have pushed U.S. gasoline prices to an average of just over $2 a gallon – the lowest level in six years.

        In November, fuel efficiency of vehicles purchased fell sharply to 25 mpg – down 0.8 mpg from a peak in August 2014, said University of Michigan researcher Michael Sivak, who tracks fuel efficiency.

        Nearly 59 percent of U.S. vehicle sales this year have been of sport-utility vehicles, pickup trucks or other larger vehicles, up from 54 percent last year, according to industry consultant Autodata Corp.

        Toyota Motor Corp says within two years its RAV4 SUV will displace the Camry mid-size car as its top-selling model in the United States….

        “There is a huge gap looming between government projections and consumer purchases of highly fuel-efficient vehicles,” said Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers – the trade association representing major automakers.


        So mark one up for Team Carbon, because the public has tuned out those warning of peak oil and global warming.

  33. Greenbub says:


    “I know of no one who had predicted that Russian production would rise in 2015, let alone to new record levels,” said Edward Morse, Citigroup’s global head of commodities research. As recently as April, not even the Russian government thought 2015 would break the record.

    • Greenhub, Russian production was up in 2015 but by only a tiny amount, They are basically on a plateau. I was not at all surprised that their increase in production has slowed down dramatically. I have picked 2015 as the Russian peak and so have a lot of other prognosticators. Though I would not be all that surprised if they managed another very tiny increase in 2016. They could but I seriously doubt it.

  34. Daniel says:

    Ron, when I look through previous postings of the Texas data it appears as if the previous months corrections had been higher; i.e. their initial estimates are getting better. Can you confirm this observation at all?



  35. Arceus says:

    Massive Natural Gas Leak in California

    There is currently a massive natural gas leak in the hills above Los Angeles at Aliso Canyon. An estimated 1,128 Metric tons of methane is being emitted from the Aliso Canyon leak per day. Roughly 90,000 metric tons have been emitted since the leak was discovered. Natural gas is 80% methane, which is has more than 70x the global warming impact of carbon dioxide over a 20 year period.

    The Aliso Canyon leak has already increased statewide methane emissions by about 25%, in a state that has pledged to reduce methane emissions by 40% by 2030. There is currently no estimated time that the leak will be plugged. The natural gas leak has already emitted four times what had been reported as lost in natural gas transmission pipeline incidents all year (of course many say this number is way under-reported anyway).

    Natural gas, considered to be cleaner burning than coal, emitting about half as much carbon dioxide per unit of energy generated, making it a climate-friendly replacement for coal. Leaks like this one, however, undermine that argument. Various studies show that when as little as 3 to 4 percent of the total natural gas produced is lost to leakage, it becomes worse for the climate than coal.

    Potential black swan event?

  36. Anyone see the Eagle Ford Reality check Presentation from Post carbon Institute?
    Should kill any remaining Cornucopian arguments about Shale.

  37. Peter says:

    Peak oil will not be the problem some people think it will be.

    If there were no alternatives to oil then the coming peak would be a considerable challenge. However in almost every field there are alternatives that have existed for many years.

    Firstly there are hybrid and electric vehicles which are already being produced. Many large cars cost far more than these smaller economical models. Electric vehicles use no petrol and even with hybrids 12 vehicles would use less fuel than a Ford F150.
    There is nothing to stop people buying these models when they want to. Global scappage of old vehicles is around 70 million per year, so there is vast opportunity for updating with zero emissions vehicles. A global hybrid and electric fleet twice the size of today could use a fifth the amount of fuel.


    The electricity systems of the world are not dependent on oil. All of it can be run with a combination of nuclear, wind, solar, some gas and coal. So no problem there.
    There is massive overuse of fertilizers, pesticides and herbicides and considerable reductions would not impact food yield.



    Anyway an incredible amount of food gets wasted, cut this waste and large saving can be made in all areas.


    Then there are all those people who simply have more than their fair share.


    Airlines charge for extra baggage, but they don’t charge for extra baggage when it comes as fat. If airlines charged at a rate of miles per kilo, people would pay the correct amount for the fuel they use. this would be a great insensitive to slim down and save hundreds of dollars per year.

    All in all peak oil will force us to do the things we should be doing and can do already.

    I’m off to eat my rye crisp bread and salad lunch.

    • Javier says:


      I don’t think you understand Peak Oil. It is not that we run out of oil while keeping the rest intact. In fact we don’t run out of oil at all, we simply stop extracting more and more oil to initiate a decline. The reason is that our economy stops working as it should, so we cannot afford to extract it. But since the economy stops working as it should, we don’t get to replace ICE cars with EV cars, we don’t get to transition successfully from FF to renewable energy and we stop being able to do proper maintenance on what we have, so we start a long decline.

      The Soviet Union underwent an economically induced peak oil in the late 80’s. We all know they had plenty of oil, yet they suffered a peak oil. They sort of recovered because the global economy was still doing well. We won’t be so lucky this time around.

      Global investment in renewable energies is going down because of a combination of economic conditions and renewable energies suffering from a lower return. So we are not going in the right direction. In an ideal world we could transition and keep most of our civilization in place. In the real world it won’t happen. Our capacity to act is diminishing every passing day.

      • Dennis Coyne says:

        Hi Javier,

        Why does the economy stop working in your scenario? When the peak arrives oil becomes scarce and the price increases, then people buy more fuel efficient cars, use more public transport etc. The increase in oil prices will make the decline rate in oil output manageable and may keep prices under $110/b for a few years, gradually the economy will use less oil as oil prices gradually rise. There will probably be considerable oil price volatility which may lead to temporary crises. The best way to avoid this would be to form a World wide oil producers organization to regulate output and reduce oil price volatility. The problem is that there would be cheating on the quotas just as in OPEC so it would not work for long.

        A problem I see with the peak oil crisis that many envision is the steep decline.

        It is a bit of a chicken egg problem, I could see some crisis such as war or a financial crisis reducing economic output and demand for oil, but there is no obvious reason why such crises would be permanent at least over the next 50 years or so.

        The Seneca cliff scenario requires some other crisis besides peak oil to cause a significant reduction in demand for oil. Some think too much debt will be the source of a severe financial crisis, I agree this is possible but not certain.

      • Enno Peters says:

        Which problems are caused by peak oil, that are not caused by peak oil / capita?

    • Peter says:


      I was actually talking about peak oil and how we have all the options in place for using far less oil.
      Do you have comprehension problems? You are obviously so full of your own thoughts you can’t even hear what someone else is saying.

  38. Caelan MacIntyre says:

    “I love it. I can’t imagine moving back to the United States.” ~ Glenn Stehle

    I sometimes listen to a little podcast called ‘The Expat Files’ and he says similar, but less so about Mexico and more about other areas in Central and South America.

    “Mexico is very rapidly becoming globalized. There has been a proliferation of consumer credit, which didn’t exist before. People who are not indebted have a completely different outlook on life than those who are indebted.

    And the city planners have copied the American model. There’s a great deal of urban sprawl as living in the perifery (sort of what in the US we would call the suburbs) and big box stores and shopping malls have become stylish. And of course the dream of every poor Mexican is to have his own private automobile, so the traffic is much worse.” ~ Glenn Stehle

    No surprise there.

    “The security situation has also deteriorated greatly. I used to be able to travel anywhere in Mexico I wanted, as it was very safe. I could go to the most remote of little villages in my explorations. I would no longer risk that. There are a lot of don’t-go places where one can get in trouble right quick, and without even looking for it.” ~ Glenn Stehle

    So we hear.

    “You, as an anarchist, I think would really enjoy exploring some of the indigenous communities. Many of them have managed to preserve some of their traditional values and communal way of life, which is about as far from capitalism and as close to anarchism as one can find these days. ~ Glenn Stehle

    I think so and seemed to unnerve someone I know in Mexico when the idea of living in Chiapas with the Zapatistas was mentioned…
    I really liked their photo-op, if that was them, with the water bottles, conference table, microphones counterpointed with their balaclavas. (The smoking pipes are always a nice touch.)

    Anarchy is right at the front door. The (crony-capitalist plutarchy) elites must go; their legal systems are a whitewash, a brainwash an ethnicwash. Where everyone comes out a mess.

    Neanderthal (translated)
    “Neanderthal and his gray suit.
    Trying to fill up with senseless power.
    It’s up to you now, and without asking…
    Drop everything you’re doing now and
    Look around you…”

  39. Patrick R says:


    ‘Passing remarks in a social setting made to me by a former oil industry CEO and current chairman provided some insight into the growing despair about price: uncertainty about how much of the current plunge is merely the cycle, or something structural.
    In either event, he thought it was only a matter of time before oil went the way coal is going.”

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