Texas RRC oil and Gas Production Data

The Texas Railroad Comission has released their oil and gas production data for November. As most of you know, the Texas RRC data is always incomplete. Some data is updated immediately but the rest trickles in slowly, sometimes taking many months to years to complete. Nevertheless we can glean some indication of what is happening from what data is reported. That is, if production is increasing, then the incomplete month to month data should be increasing. And it is, but very slowly.

The last data point in all charts below is November 2014 and the oil is in barrels per day.

Texas RRC Crude Only

Texas crude only is still increasing but the increase rate seems to be slowing down.

Texas RRC Condensate

It is rather hard to tell what condensate is doing but the rate if increase, if any, seems to be slowing.

Texas RRC C+C

Combining the two we see a an increase but not quite as great as the EIA seems to believe. The EIA data is only through October. Last month the EIA altered their estimate of Texas C+C and lowered the estimated increase quite a bit. This month they reverted back to their old habits. They have June production up 82 kbd, July up 67 kbd, August up 45 kbd, September and October both up 48 kbd. I believe those figures are all quite optimistic.

All gas data is in MCF with the last data point November 2014.

Texas RRC Gas Well Gas

Texas gas well gas peaked back in January of 2009 and bottomed out in December of that same year. Then started to increase before peaking again in November of 2011. It has been mostly down since then.

Texas RRC Associated Gas

Texas associated gas feinted a peak back in September of 2013 but turned back up again in only a couple of months. Now we seem to have another peak in August 2014. Will it hold? If oil production drops then there is little doubt that it will. Associated gas comes up with the oil. So what happened in September to cause associated gas to drop?Texas RRC Total Gas

Combining the two we get Texas total gas. Associated gas has kept Texas total gas from peaking… so far. But with both oil and gas prices extremely low it appears we have reached at least another temporary peak in Texas gas production.

News: The Truth Behind the Bakken: A Mathematician’s Take

Below are two graphs from this link. This article is too long to copy and paste but there is some very good data here you need to read. It puts the Bakken in a different light… if prices stay low.

Bakken Break EvenBakken Returns

Thought for the day: Peak oil will be the point in time when more oil is produced than has ever been produced in the history of the world, or ever will be in the future of the world. It is far more likely that this period will be thought of as a time of an oil glut rather than  a time of an oil shortage.

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523 Responses to Texas RRC oil and Gas Production Data

  1. Paulo says:

    Your thought of the day is bang on. I will pass this on, with the ‘total liquids’ reminder attached.

    • Don says:

      That quote is correct only if you believe in Hubbert’s symmetrical curve. If you subscribe to Ugo Bardi’s more credible “Seneca Cliff” scenario, then the 50% point is reached well before the peak.

      • Don, please tell me why the shape of the curve would change what I wrote? I am firmly convinced that Ugo’s Seneca Cliff is exactly what we will see, or more correctly what we are seeing right now. I believe we are well past 50% of total URR right now. And I do mean well past 50%. But peak oil will be the point in time when more oil is produced than has ever been produced in the history of the world, or ever will be in the future of the world. Why would the shape of the curve change that?

        For goodness sake, think about it man. The peak will be, by definition, the point when more oil is produced than any other time in history. That is the very definition of a peak. And when we are at the peak, when there is more oil coming out of the ground than at any point in history, there will be every reason to be exuberant, every reason to believe the glut will continue. Theye will very likely be no reason for tha average cornucopian to preceive the coming disaster.

        • I’m not sure a peak will necessarily be associated with a glut. It could be much worse: demand increases and production can’t satisfy it, which leads to price increases, but the price we need is too high, efficiency/demand destruction AND replacement sources kick in.

          I visualize a point when people begin to purchase small hybrids, airplanes and ships move slower, and people move into smaller houses closer to work. And this can be driven by market forces rather than fear of world temperatures.

          Does this mental model make sense?

          • ChiefEngineer says:

            The world is at least another 6 to 8 years away from peak oil. The lack of demand will be the reason because of new transportation efficiencies. Not an inability to produce more affordable oil. By 2030 most new vehicles will not be oil based powered and their CO2 output will be reduced by 90%. These changes to come are already locked in. The technology and cost are not an issue.

            The Democrats want you to take your statins and the Republicans want you to eat more fast food. Neither one fixes the cause.

            • Anon says:

              Six years? How? The math didn’t work beyond 2015 with shale operating at $90, mostly because of the decline problems with shale and stagnant at best production outside the US. With shale shut down and all of the good stuff already drilled…yeah, no. Not going to overtake whatever shale peaks at before the drilling moratorium shows up.

              There’s a big problem with replacing cheap supergiant fields with all the various hyper-expensive and/or low quality projects around the world.

              • Jeffrey J. Brown says:

                Yep. Excluding the US, we have not seen an increase in global C+C production, even as annual Brent crude oil prices doubled from $55 in 2005 to the $110 range for 2011 to 2013 inclusive. In other words, the trillions of dollars equivalent spent worldwide on upstream capex only served to keep non-US global C+C production at or below the 2005 production rate.

                And if we exclude some plausible estimates for global condensate production from the total global C+C numbers, it’s quite likely that actual global crude oil production (45 and lower API gravity crude) effectively peaked in 2005, while global natural gas production and associated liquids, condensate and NGL, have (so far) continued to increase.

              • Jeffrey J. Brown says:

                And at the IEA’s estimate for the gross decline rate from existing oil wells worldwide (9%/year), in order to simply maintain current production for 11 years*, the global industry has to replace the productive equivalent of every currently producing oil well in the world over the next 11 years–from the Americas to the North Sea, to Russia to the Middle East.

                *At a 9%/year decline rate, existing production would be down to 37% of current production in 11 years, since we would be declining against a falling production level, but I am stipulating a “steady state” production scenario.

            • What will power most vehicles in 15 years if they are not powered by fossil fuels? Nuclear power and electricity stored in batteries? Or do you envision liquid fuels such as biodiesel.

              • ChiefEngineer says:

                The future is about the demand side, not the supply side.

                http://www.greencarreports.com/news/1096226_breaking-chevrolet-bolt-concept-200-mile-electric-car-to-target-tesla-reports

                Today for less $10,000 one can install enough grid tied solar panels that will last more than 25 years to power the average persons transportation needs.

                Most of you can’t see the forest because of all the trees.

                • Really? I live in a tall apartment building near a really nice beach. Do you think I could put the panels on top of the parking garage? All I have to do is get the condo board to let me use the football fields and the tennis courts, right?

                  • ChiefEngineer says:

                    With the beauty of capitalism someone else will produce your needed solar energy. I have plenty of room on the roof of my home here in Huntington Beach.

                  • We already have solar power, and very high electric bills. But the solar power here is used as a counterpoint to hydro. When solar goes out hydro picks up the load. Because available hydro sites are limited the solar power penetration is at the top end, and it just takes too much subsidy. Wind is also at the maximum penetration unless they commit to use more gas turbines. But those are too expensive.

                  • Nick G says:

                    Fernando.

                    Mark Twain said: “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

                    Solar power in Spain is expensive because the program was mismanaged.

                    Look at solar with a wider perspective.

              • Old farmer mac says:

                I comment a lot about the marketing of oil and the price of it and so forth but generally keep my mouth shut about the actual technical aspects of getting it out of the ground having no expertise in that area.

                But I DO have expertise in agriculture and everybody can take this to the bank.

                Barring an honest to Jesus REVOLUTION in microbiology such that biofuels can be produced after some new fashion other than raising crops out in the open- biofuels are NOT GOING TO SCALE to the equivalent of more than a very minor fraction of the net energy equivalent of current day oil and gas production.

                It is highly unlikely we will ever see biofuels manufactured in quantities equivalent to ten million barrels of oil a day unless by some miracle they can be produced in nice sunny deserts by feeding some nasty water ( sewage would be ideal ) into some sort of green house type of factory that cranks out some sort of microorganism with a high oil content. Now if this sort of thing can be accomplished -which is possible but doubtful- and it can be built out by the hundreds of square miles- biofuels might be the answer to the continuation of business as usual.

                My guess is that it would be easier and cheaper by miles to build solar farms and wind farms and use the juice to power up chemical factories and manufacture liquid fuels from co2 and water.

                The physical resources needed to grow enough crops to supply both food and biofuel for the business as usual world simply do not exist.

                The most important two inputs needed are arable land and clean water both of which are already in short supply and getting significantly shorter on an annual basis.

                If the land and water were available we would still be up the creek without a paddle in terms of machinery, fertilizers , pesticides, transportation and so forth.

                The people who think organic farming can support business as usual for seven billion people have their heads so far up their butts in terms of understanding the nature of the problem it is pretty much a waste of time even talking to them.

                Farms are NOT ecosystems. You remove things from a farm —–they have to be replaced.

                Move a hundred bushels of wheat or corn off the premises the macro and micro nutrients have to be replaced. The only way this can be done ON THE GRAND SCALE necessary is with imported manufactured fertilizer while also maintaining the necessary levels of production associated with business as usual.

                Some progress is being made in getting by with less fertilizer, pesticide, fuel, electricity, containers,machinery etc. But this is a slow incremental process.

                You might as well ask a typical woman in a western country to take up prostitution as to go back to a small time farm lifestyle. It just isn’t in the cards. We will continue to have one or two percent of the people involved in actually growing food in industrialized countries until it is impossible to continue to grow it this way.

                Then the fecal matter will be hit the fan.

                Given the problems we are looking at involving peak oil, peak water, desertification, loss of farmland to development , growing population , iffy climate etc we will be extremely lucky if we can just maintain food production at a level adequate to prevent mass starvation.

                Personally I believe that unless population peaks and declines substantially sooner than the demographers predict starvation on the grand scale is baked in.

                There will be no miracle crops that produce sustainable huge quantities of biomass on land that is not also suitable for producing one kind or another of food crop.

                There are plenty of pro ag people out there who say this is possible but they are simply lying their asses off or possibly in more charitable terms fooling themselves.

                People are notorious for fooling themselves when their salary is at stake.

                Anybody acquainted with even the abcs of ecology and agriculture as an industry can understand why.

                First off there are no examples of deserts or tundras etc that exhibit high bioproductivity.

                IF MOTHER NATURE hasn’t turned a desert or a tundra or alpine landscape into a rip-roaring snorting biofactory even once in the past hundred million years on this planet the odds of farmers- even the kind with doctorates in botany and microbiology and genetic engineering – accomplishing this feat are one in a zillion.

                Farming steep mountainsides is simply out of the question except by hand on terraces built at enormous expense or by grazing surefooted animals.

                Any land farmed with machinery must be free enough of stone outcroppings wet swampy areas etc to such an extent that machinery can be used. If it is not already highly productive – then water or essential nutrients are not available for one reason or another. Supplying the water and nutrients to such land at low enough cost to use it to grow biomass to burn is out of the question.

                Just harvesting and hauling biomass crops to a processing plant is an extremely energy intensive process.

                Biofuels will never amount to much in terms of business as usual on the world stage until after we adopt a low energy high efficiency lifestyle globally- assuming we are able and WILLING to adopt such a lifestyle soon enough to avoid going mad max.

                A few countries with great climates and lots of land and relatively few people might be able to make a domestic go of biofuels in the medium and near term.

              • wharf rat says:

                “We already have solar power, and very high electric bills.”

                Rat has grid-tied solar, and no electric bills after California started cap and dividend ; B4 that, about $50/year for the grid.

            • Six to eight years away from peak oil? Then you need to explain where this growth will come from? But first you need to explain where the growth will come from just to keep us even as most oil producing countries are now in decline. But we will need enough oil to overcome this decline then enough more to keep growing for six to eight years.

              It is easy just to say “six to eight more years”. But when it comes to explaining where all this new oil will come from it becomes a bit more difficult.

              • ChiefEngineer says:

                Canada, United States and Mexico can all produce more for starters with applied Capital.

                Forty-Five years after the United States first peaked. Here we are again!

                Where are all the naysayers from TOD today ? The world is flooded with oil and at a lower than recent historic price. Oh, we will consume this excess. It’s the law of mother nature.

                • i was never too worried about peak oil until I realized exploration wasn’t paying off. This meant oil companies collectively weren’t finding oil to produce in the future. And this trend continues today.

                  The industry is filling the gap with marginal resources. The bulk of these marginal fields require around $80 to $100 and upwards.

                  You know, I got the feeling that we have too many innocents who don’t realize we are in a very tight spot.

                  • John B says:

                    No need for exploration. I know where you can get another 2 trillion barrels.

                    http://www.cbsnews.com/news/the-oil-sands-of-alberta/

                  • John B, I’m a petroleum engineer, and I’ve worked a bit on extra heavy oil. Those two trillion barrels aren’t recoverable.

                  • John B says:

                    Sure, no offense but there were plenty of people “in the know” that said you couldn’t get anything. They were wrong of course.

                    When the head of Shell Canada says the estimates could be 2 trillion or higher, I tend to believe he knows what he’s talking about. They are the ones out there producing the stuff now. They are in the best position to know.

                  • I never said or wrote we couldn’t get anything. I did my first heavy oil report in 1978, by then we already had in house steam injection results we could use to prepare pilot field developments.

                    Question: did you read Shell expected 2 trillion barrels to be produced? Or are you slipping a decimal?

                  • Dennis Coyne says:

                    Hi Fernando,

                    JohnB is confusing oil in place with recoverable resources. In the article he linked to it says there are 175 Gb of reserve but a lot more than that is buried beneath the surface, as much as 2 trillion barrels.

                    JohnB has jumped to the conclusion that if the oil is there that 100% of it can be recovered. Perhaps you can convince him that it is unlikely that more than 300 Gb will be recovered, and even this amount will likely take 100 years or more to recover. On a side note, I have read that the OOIP for Orinoco is about 1800 Gb, using your 8% estimate, that would imply a URR of about 144 Gb, does that seem to be a reasonable estimate for Orinoco extra heavy? What do you think of a 350 Gb URR estimate for Canadian oil sands?

                    I am trying to reconcile the 500 Gb estimate by Jean Laherrere for extra heavy oil with the information you have shared with me.

                  • Dennis, the OOIP is around 1.3 trillion BSTO. A birdie told me there were some wells drilled into this volume which found fresh water rather than oil (fresh water and oil look similar in old well logs). So the 1.3 has an error bar of unknown extent.

                    The recovery factor depends a lot on three factors: whether they use steam or some sort of EOR. The timing for EOR implementation in the high graded blocks they try to produce at the current time (because they are getting water influx, and water kills EOR), and the detailed pay geometry. This means the eventual recovery factor, on a global basis, could be anything between 5 % and 20 %.

                    As Ron P mentioned the extra heavy pools should be treated separately. It takes about 7 to 10 years to get one of these mega projects to produce from the point we start conceptual engineering.

                • Dennis Coyne says:

                  Hi Fernando,

                  I really appreciate the information. I model extra heavy oil much differently than lighter oil which I will call C+C less extra heavy, because conventional is used differently by different authors. My model for Orinoco, Canadian oil sands and the combined “extra heavy” oil from both is shown below. It is based in part on Canadian oil sands development to date and Canadian Association of Petroleum Producers (CAPP) forecasts and the assumption that Venezuela will be roughly analogous with a delay.

              • Ron, I think it comes down to a person’s perception of what it takes to move forward with prospects in deep water, heavy oil, and tight formations.

                What I saw reviewing real projects was a fairly large family of prospective investments which needed over say $100 per barrel.

                I wouldn’t touch most of the brazil presalt for less than $110 unless it was a smallish four to six well pilot. The heavy oil projects really need an upgrader, or a regular diluent supply, and that’s a bit expensive.
                And you know the light tight oil story better than most people. So you know where this takes us. We just need higher prices or else the wheels fall off.

                • Dennis Coyne says:

                  Hi Fernando,

                  You are much better versed in the real world of the oil industry than me. If oil prices quickly get back to the EIA’s Annual Energy Outlook Reference Case for Brent Crude prices, by rising at say 15% per year until reaching the reference case level and then rising from there along the reference case path, does a URR of 2200 Gb for conventional (no extra heavy included) C+C seem reasonable or does my 2700 Gb guess seem more reasonable? Chart with AEO cases below with real oil prices per barrel in 2014$. (ignore Bak scen case), assume oil prices continue to rise at reference case rate (about 3%/year) or higher (5%)beyond 2040.

                  • What’s your remaining? Or what’s the current cumulative? 1300?

                  • Dennis Coyne says:

                    Hi Fernando,

                    Current cumulative conventional C+C produced is about 1240 Gb ( and 10 Gb of extra heavy for a total C+C of 1250 Gb).
                    So for the low case we would have remaining conventional URR of 960 Gb, and for the high case 1460 Gb.

                  • I like the high case better. You could push that to 2850-3000 ultimate technical. But that does require we get radical and drill wells all over the place.

                  • Dennis Coyne says:

                    Hi Fernando,

                    I appreciate the input. Thanks!

                • Dennis Coyne says:

                  Hi Fernando,

                  Just to make sure I am understanding you correctly,

                  When you say 3000 Gb of technical, are you excluding extra heavy oil? So if you agree that 500 Gb of extra heavy is reasonable (but should be modelled separately) we would have a total world URR for C+C of 3500 Gb?

                  Just wanted to be sure because sometimes my questions are not stated very clearly.

              • Anonymous says:

                Oilshale!

                • Dennis Coyne says:

                  Hi Anonymous,

                  If you are talking about kerogen, that will be very expensive and requires a lot of water which is in short supply near the Green River shale.

                  One trillion barrels sounds impressive, but if it costs $500/b (2014$) to produce, then we will not produce much of it.

          • Dennis Coyne says:

            Hi Fernando,

            It makes sense to me. In fact it may be the only thing that saves us because many intelligent people are not convinced that the people who are experts on climate change can be believed. It is really too bad that the approach used by tobacco companies for 40 years to sow doubt about the science behind the dangers of cigarette smoking is being used in the case of climate change with the same successful results.

            High prices for fossil fuels is the only viable solution to both climate change and peak fossil fuels.

            • Dennis, there are experts in climate change and there are political scientists who claim they are experts. The whole issue seems to revolve around attribution. And I happen to think many of the famous scientists are full of bull dinky when it comes to issues as climate sensitivity. This has nothing to do with cigarette smoking. Furthermore, we are running out of fossil fuels, which means we will set the breaks due to market forces. This in turn means the end of oil is a bigger crisis than global warming.

              • Dennis Coyne says:

                Hi Fernando,

                There are others with intelligence who disagree with your assessment. Often engineers have very limited understanding of biology and ecology and think they know more than everyone else. The climate scientists that I refer to have hard science backgrounds in geophysics or geochemistry or biology. I don’t put a lot of faith in the analyses by political scientists and economists. Usually engineers use a generous factor of safety in the face of uncertainty, it is not clear why this would not be the case where policy affecting the entire planet is concerned. I agree that peak oil is a problem, the solution to both problems is similar, move away from fossil fuels as quickly as possible.

                • I’m used to having others who disagree with my opinions. But a call to authority just doesn’t work. I don’t believe the 97 % bs, I think Mann is unreliable, Hansen is old, and so on and so forth. On the other hand I’m ok with Isaac and Zeke. They aren’t political scientists.

                  • Dennis Coyne says:

                    Hi Fernando,

                    I agree that just because someone has a PhD in science does not mean they are correct.

                    There are a lot more than two scientists in the field of climate science, as I said I have read pretty extensively and although I am not expert, the case seems very solid based on the scientific evidence. It generally is considered wise to err on the side of caution when faced with uncertainty. Perhaps where you studied engineering factors of safety were considered bad practice.

                  • Dennis Coyne says:

                    Who are Isaac and Zeke?

                  • Zeke is an energy systems analyst and environmental economist with a strong interest in conservation and efficiency. He was previously the chief scientist at C3, an energy management and efficiency company. He also cofounded Efficiency 2.0, a behavior-based energy efficiency company. He received a bachelor’s degree from Grinnell College, a master’s degree in environmental science from Vrije Universiteit in the Netherlands, and another master’s degree in environmental management from the Yale School of Forestry and Environmental Studies. He has published papers in the fields of environmental economics, energy modeling, and climate science.

                    http://berkeleyearth.org/team/zeke-hausfather

                  • Stories about global warming pepper the covers of magazines and newspapers on a weekly if not daily basis. But when Isaac Held entered the field of climate studies in the early 1970s, researchers were just beginning to publicize claims that human activities were generating pollutants that could dramatically change the Earth’s climate. Motivated by a desire to understand climate change, Held, now a senior research scientist at the Geophysical Fluid Dynamics Laboratory (GFDL) in Princeton, NJ, has focused on both theoretical and applied atmospheric science. He has explored the scale of cyclones and anticyclones, landscape effects on atmospheric circulation, factors controlling the temperature gradient between the poles and the equator, and overall mechanisms and impacts of global warming.

                    Held is best known for modeling Hadley cells, which describe the properties of atmospheric circulation in Earth’s equatorial zone. His three decades of research have garnered him numerous awards, and in 2003, Held was elected to the National Academy of Sciences. His Inaugural Article, published in a recent issue of PNAS (1), deals specifically with projected climate change in Africa’s Sahel region, the transition zone between the Sahara desert and the rainforests of Central Africa and the Guinean Coast.

                    http://www.princeton.edu/aos/people/faculty/isaac_held/

                    http://www.gfdl.noaa.gov/blog/isaac-held/

                    http://journals.ametsoc.org/doi/abs/10.1175/JCLI-D-11-00050.1

            • Boomer II says:

              High prices for fossil fuels is the only viable solution to both climate change and peak fossil fuels.

              We know the economics will discourage oil use. Now whether it will be soon enough to make a difference in climate change is another matter. However, at least we do have that. The deniers may not want to pay attention to any temperature research, but they can’t do much about declining quantities of oil and/or prices too high for consumers to buy much oil.

              • Dennis Coyne says:

                Hi Boomer II,

                I would suggest choosing other words that foster civil discussion. Those that disagree with the mainstream view on climate science don’t like the term “denier” which is used as a pejorative. Name calling tends to produce more heat than light.

                • Really Dennis, “denier” is name calling? How about “stupid shitheads who don’t believe in science”. Now that is name calling.

                  • Dennis Coyne says:

                    Agreed. Not sure much is accomplished in either case if the aim is to get someone with an opposing view to listen to what you have to say. Anything else is a waste of time in my opinion.

                • Boomer II says:

                  I see your point. I wasn’t sure how to identify them. I should use “skeptics.”

                  • Dennis Coyne says:

                    I believe that skeptic is preferred, though perhaps someone in that camp could correct me.

                  • John B says:

                    How about “Chicken Little’s Smarter Brother”.

                  • I’m a skeptic. I’ve seen too much bs coming from both the government and the media not to be skeptic about things. Besides, I spent too much time being there, where it was happening, and I saw it misreported. The first time I tried to correct a blatant lie in a newspaper was in 1979 (LA times). They ignored me, of course. When it cones to the climate warming zingy the best option is to ignore the media and politicians, as well as the more political scientists, like say Mann and Spencer. Dabblers like Cook who wrote the 97% paper are not worth the time.

          • Old farmer mac says:

            Your thinking makes great sense.

            The problem is that oil supplies may decline faster than we CAN adapt.

            While a few people are able to focus on the long term the vast majority of people are followers who think ”they ” will take care of it -whatever ”it” might be. Peak oil, ebola, bad hair day. Whatever.

            Adopting a more energy efficient lifestyle overall will take a substantial amount of time. I fear that energy supply in the form of oil in particular will shrink faster than we WILL change our ways.

            It might not even be POSSIBLE to change our ways fast enough to deal with the peak oil problem- although I personally believe we could deal with peak oil from a technical point of view.

            We COULD mandate all new cars getting forty mpg next year and make it stick and we could build a lot of mass transit instead of more highways. But we WON’T .We COULD mandate much better insulated houses starting a few months down the road. But we WON’T.

            The bottom line in my opinion is that is we will not move fast enough on energy conservation and renewables to avoid a truly major world wide crisis.

            I realize a lot of my commentary may seem either juvenile or condescending to the folks who comment regularly.

            But there are sure to be a non commenting visitors and regular readers who are just now beginning to think about all the things we talk about in this forum. Some of them are probably kids -hopefully at least.

            Newbies need a lot of detail that old hands take for granted.

            • Doug Leighton says:

              Then there`s 2 billion plus mouths to feed in the next 40 years. Perhaps we`re looking at depleting ground water, decimation of ocean fisheries, soil degradation, more crappy (erratic) weather from global warming, etc. Not to be pessimistic or anything.

              • Anonymous says:

                Doug, there ain’t no perhaps in anything you’ve mentioned there. It’s pretty much dead certainty! I’ve been watching coral die off for years. There is sea level rise happening in my back yard and severe drought where I was in Brazil. The science is incontrovertible!

            • ezrydermike says:

              we did mandate new cars to get 40+mpg but not until 2018

              http://www.c2es.org/federal/executive/vehicle-standards#ldv_2012_to_2025

              • Old farmer mac says:

                An AVERAGE FUEL ECONOMY has been mandated.Whether the mandate will stick is another question.

                The regulations as written still allow the manufacture of cars that get considerably less than even twenty mpg.

                And unnecessarily heavy oversized fuel hog trucks used as cars are still going to be legal.

                • Dennis Coyne says:

                  Hi OFM,

                  When gas prices are $6/gal in 2014$, do you think a lot of people will be driving pickup trucks when they don’t need one for work? Higher taxes like they have in Europe are the best way forward, in fact Obama should hold out on Keystone and demand a carbon tax as a condition for approving it. Any veto would probably be overridden though, so this would be unlikely to work, he would have to count votes in the Senate carefully, before he persues such a strategy.

                  • Opposing keystone is fairly useless, the gulf coast is supplied by venezuelan crude with identical properties.

                  • Dennis Coyne says:

                    Fernando,

                    I agree. At some point the US should use carbon taxes to speed the transition from fossil fuels, this is just one way to attempt to accomplish that. The republicans want the Keystone XL, democrats want a carbon tax or cap and trade, or some means of reducing carbon emissions, so allow Keystone XL on the condition of some kind of carbon emissions reduction policy.

                  • Stanley Choi says:

                    Newsweek in 1975: “Tornado outbreak blamed on global cooling”

                    Time in 1977: “How to Survive the Coming Ice Age”

                    First it’s Global Cooling then Global Warming then Global Climate Change (which of course has been occurring for 4 billion years), seems like the “scientists” who like to claim they know everything are running out of euphemisms . . . LOL 😉

                    Those that control and enforce all aspects of energy, control the world.

                    So you need to follow the money of what you are saying; cap & trade and carbon tax, those are pure redistribution of wealth schemes rife with left-wing corruption.

                    There’s simply no reason to gut and destroy our standards of living with such nonsense anyway as there has been no warming increase in global temperatures for the past 17 years, and counting.

                    Like most reasonable folks. I am a firm believer in keeping our planet, air, water, environment clean. However, I am also a firm believer in truth and honesty. When liberals and progressives began using Global cooling/warming/change to frame their arguments as opposed to “Clean” it became overwhelmingly obvious their agenda is strictly about unrestrained control and power.

                  • Boomer II says:

                    There’s simply no reason to gut and destroy our standards of living with such nonsense anyway as there has been no warming increase in global temperatures for the past 17 years, and counting.

                    You realize you are posting in a peak oil forum, don’t you?

                    Our standard of living is going to change because of declining sources of cheap oil.

                  • When liberals and progressives began using Global cooling/warming/change to frame their arguments as opposed to “Clean” it became overwhelmingly obvious their agenda is strictly about unrestrained control and power.

                    I would think that you climate change deniers could come with a better line of bullshit than that. The vast majority of climate scientist are not in any position of power, they are mostly academics who just want to do good science.

                  • Techsan says:

                    Quoting MSM publications is not the same as citing scientific journals. MSM rags such as Time and Newsweek are looking for “oh-wow” stuff that gets attention and sells magazines; they’ve been telling us that flying cars are just around the corner for 50 years.

                    Since you call yourself “a firm believer in truth and honesty” (me, too), let me just note that it is NEVER truthful to state as a fact what somebody else’s motivation is. We simply do not know, and cannot know, what another person thinks or is motivated by; of course, we can guess, but we must remember that such guesses are highly error-prone.

                  • I don’t have a problem with a carbon tax. But this should also rationalize the accounts, which requires elimination of subsidies for ethanol, wind, solar, and other renewables. The tax revenue should be used to reduce income taxes.

                  • Dennis Coyne says:

                    Hi Fernando,

                    As long as all subsidies are removed for both fossil fuels and alternatives, I agree with your position on a carbon tax, I believe the revenue should be used to reduce taxes, or possibly improve infrastructure for the power grid, rail, light rail, better urban design, in other words things that might help the transition as fossil fuels deplete. There are some cases where the market does not maximize benefits relative to costs and in those cases, and only those cases there should be government intervention, but it should be minimized as much as possible.

            • Boomer II says:

              Okay, so most of us here think price of oil will keep rising (even if in fits and starts) so that it becomes increasingly unaffordable for most people.

              Now, they have alternatives. If they have money, they can buy more fuel efficient vehicles. If they don’t have money, they decrease driving.

              What I am most concerned about is them not understanding why the price of oil puts it out of their reach. If they are told that there is oil, but there are conspiracies to keep them from getting it, then maybe they will choose to get mad rather than take constructive action. That will get them nowhere.

              Perhaps there will be a point where Fox News and the like will change their tune, tell the masses the oil is disappearing, and they need to conserve. I’m not expecting to see or hear that any time soon, but maybe when there is little to be gained by anyone by pretending oil is unlimited, the average citizen will accept it as a reality and make the necessary changes.

              • thrig says:

                Decrease driving in an environment that in no way hinders driving? That might take some doing.

                http://www.strongtowns.org/journal/2015/1/19/drive-like-your-kids-live-here

                Cute sign, though. Hmm, let’s see, elsewhere, Cuomo is dumping most of a $5.4 billion windfall towards helping drivers not pay for higher tolls. Heh. Ah, and finally, the NY DMV revoked the license of Ahmad Abu-Zayedeh. Not sure why that took so many hearings and over 15 months to get done, seems a reasonable step in the wake of a 3-year-old being mowed down by one of you car drivers. Maybe one year negligent homicide charges as well? One can dream…

            • Ilambiquated says:

              We COULD mandate all new cars getting forty mpg next year and make it stick and we could build a lot of mass transit instead of more highways. But we WON’T .We COULD mandate much better insulated houses starting a few months down the road. But we WON’T.

              I guess by “we” you are referring to America. I wouldn’t be so sure about the rest of the world. The Germans adopted the simple policy of taxing the crap out of energy back in 2000. It has a way of focusing minds on reducing waste, and transfers money to government coffers from energy producers as well.

            • ezrydermike says:

              drive at night and charge during the day!

              “BMW and Volkswagen on Thursday announced they are teaming up to create nearly 100 electric vehicle charging stations along heavily traveled roads on the East and West Coasts.

              The companies are working with ChargePoint, the largest electric vehicle charging network, on the effort. The publicly available stations will be added to ChargePoint’s existing network of more than 20,000 charging spots in North America, and can be accessed by anyone with a ChargePoint or ChargeNow Card, or with the ChargePoint mobile app.”

              http://www.pcmag.com/article2/0,2817,2475613,00.asp

        • Dennis Coyne says:

          Hi Ron,

          Could you give us your estimate of World URR for C+C? Jean Laherrere estimates about 2700 Gb. So far the world has produced 1250 Gb of C+C.
          A Hubbert linearization(HL) of World conventional C+C (where conventional excludes extra heavy resources) suggests a URR of 2500 Gb, which would be a minimum level because the HL method tends to underestimate the URR.

          Chew (see below) reviews unconventional fossil fuels in the paper below:

          Chew KJ. 2014 The future of
          oil: unconventional fossil fuels. Phil. Trans. R.
          Soc. A 372: 20120324
          http://dx.doi.org/10.1098/rsta.2012.0324

          http://rsta.royalsocietypublishing.org/content/372/2006/20120324

          He estimates about 300 Gb from Canadian oil sands and 300 Gb from the Orinoco belt. Fernando thinks the Orinoco estimate should be lower, at about 150 Gb, if we split the difference the estimate roughly matches Jean Laherrere’s 500 Gb URR estimate for extra heavy(XH) C+C.

          The USGS estimates about 3000 Gb for conventional C+C URR, if we split the difference between the USGS and HL estimates we would have 2750 Gb of conventional C+C and 500 Gb of XH C+C for a 3250 Gb URR.

          We are not well past 50% of World C+C URR, we are at 45% of conventional and 38% of all C+C.

          • My estimate of world URR would be between 2,000 and 2,200 GB of conventional oil. Counting extra heavy oil and oil sands only confuses things because any increase in production from these two sources will be slow and will not help mitigate the peak very much. You must have had heard the phrase: “It’s not the size of the tank that matters, it’s the size of the tap.”

            The decline of the world’s major oil fields

            1. The world’s 507 giant oil fields comprise a little over one percent of all oil fields, but produce 60 percent of current world supply (2005). (A giant field is defined as having more than 500 million barrels of ultimately recoverable resources of conventional crude. Heavy oil deposits are not included in the study.)

            5. Now, here’s the key insight from the study. An evaluation of giant fields by date of peak shows that new technologies applied to those fields has kept their production higher for longer only to lead to more rapid declines later. As the world’s giant fields continue to age and more start to decline, we can therefore expect the annual decline in their rate of production to worsen. Land-based and offshore giants that went into decline in the last decade showed annual production declines on average above 10 percent.

            Sixty percent of the world’s oil comes from fields that are all very old and are either in decline or have been kept from decline by very massive infill drilling as in Russia. But now that party is about to end.

            There is just no question that the decline curve in all these fields will be extremely steep. All the new stuff, shale oil, deep water oil and very small fields already have a very steep decline curve.

            Dennis, I just don’t pull this stuff out of my ass. I have been studying this for almost 15 years. I have analyzed the output of every major oil producer in the world and I see an imminent peak. If you think production will keep climbing, or plateau for ten to twenty years, then you need to explain where you think all this oil will come from. The coming decline is set in stone, it will definitely happen. But what you are saying is all these vast reserves will be tapped to keep production up or perhaps even increasing.

            Where Dennis, will all this new oil come from?

            • Boomer II says:

              So we hit peak or plateau very soon. What do you think happens next in the US?

              Will there be widespread recognition of this and a plan for the future?

              Will the “drill baby, drill” politicians acknowledge it or when they claim it’s all a plot organized by someone?

              I know some of you expect chaos, as the masses rebel. But others feel that if the decline is gradual enough, people can adjust.

              So it seems there are two factors: whether there will be an acknowledgement of peak oil and how peak oil begins to impact the consumer.

              Thoughts?

              • Dennis Coyne says:

                Hi Boomer II,

                The peak will only be recognized 5 to 10 years after it has occurred. One problem is that the initial decline will be gradual and people will think that output will go back up in the future. The second problem is that lots of other stuff is called “oil” and that will hide the peak in C+C to some degree. A third issue is that prices will increase and there may be an increase in extraction rates in response which will either slow the decline or possibly keep us on a plateau for a few years.

                To me chaos might occur once the peak is widely recognized, in the mean time there will be an economic slowdown.

                The one possible thing that might mitigate the economic slowdown is that higher fossil fuel prices might lead to more demand for wind, solar, EVs, public transportation, and other positive infrastructure development (less fossil fuel focused) which might boost the economy and offset some of the drag caused by high fossil fuel prices. This effect may help some, but is likely to require a crisis before it really has a significant effect.

                • John B says:

                  Hi Dennis,

                  Didn’t the peak in conventional oil already happen 10 years ago?

                  Where is the chaos, and economic meltdown?
                  I mean any more than usual.

                • Dennis Coyne says:

                  Hi JohnB,

                  That depends on one’s definition of conventional oil. My definition is all C+C except extra heavy oil. I think the peak in conventional oil may have been 2014, though the data is not in, and the quantity of extra heavy oil produced is hard to estimate (we have good data for Canada, but not very good estimates for Venezuela).

                  It is better to just look at C+C output and the most reliable source for this data is the US EIA. I would look at the trailing 12 month moving average to determine the peak and I would not call a peak until we have fallen to 96% of that peak using a 12 month moving average, otherwise we may just be on an undulating plateau. Chart below with World C+C from EIA.

                  • John B says:

                    If you subtract tight oil production, then crude oil peaked in 2005.

                    Most experts consider tight oil “unconventional”.

                    http://www.eia.gov/todayinenergy/detail.cfm?id=15571

                    http://www.indexmundi.com/energy.aspx?product=oil&graph=production

                  • Dennis Coyne says:

                    Hi JohnB,

                    There are many experts and almost every one has a different definition of “conventional oil”. I will follow Jean Laherrere who wisely avoids the term all together. I divide oil by API gravity into two buckets, the first bucket has oil with API greater than 10 degrees will be called C+C less extra heavy(XH) or C+C-XH, the second has API gravity of 10 degrees or less and is called extra heavy oil.

                    How the oil is produced is of little consequence, the properties of the oil are what is important. Once produced, LTO oil is no different from “conventional oil” of the same gravity and sulfur content.

                    The peak of C+C is what is important, output data on extra heavy oil is hard to find because the data from Venezuela is not very good, so far, we have not seen a peak in the 12 month moving average of World C+C output.


                  • John B says:
                    January 22, 2015 at 5:12 pm

                    If you subtract tight oil production, then crude oil peaked in 2005.

                    Most experts consider tight oil “unconventional”.

                    That is true. The exploitation of Bakken tight oil is a secondary recovery phenomena. When the primary approaches fade away one goes to the secondary.

                    A Bakken reservoir is clearly a different classification of oil.

                    As an example, one could characterize the uranium found in sea-water as part of the total resource allocation for that element. But we don’t because the effort needed to extract U from sea-water is much more elaborate.

                    Some logic and rational thought needs to be applied here.

                  • Dennis Coyne says:

                    Hi Paul,

                    LTO is definitely more expensive than other onshore conventional resources.

                    I think it is much simpler to bracket the types of oil by their viscosity. This has the benefit that on oil shock model can be used for less viscous oil (Laherrere’s C+C less extra heavy), because the speed with which these resources can be developed and extracted is somewhat similar and a second model for the extra heavy oil fro Canadian and Venezuelan oil sands. It would be too much work to separate evry different type of oil and model it separately (deep water, polar, offshore, onshore, LTO, etc.). In addition, the amount of LTO likely to be recovered is on the order of 50 to 100 Gb, more or less a rounding error in the grand scheme, so when I model the World I just roll it in with C+C minus extra heavy.

            • Dennis Coyne says:

              Hi Ron,

              Your estimate of conventional resources is too low. It is at least 2500 Gb. I have also been studying this for a long time, as has Jean Laherrere, I agree that a peak may be here or will arrive soon.
              I also agree that a long plateau is unlikely, but I also didn’t think the Bakken and Eagle Ford would produce as much oil as they have when I considered the matter a few years ago.

              The USGS and others have estimated conventional URR at 3000 Gb, the oil will come from a combination of new discoveries plus reserve growth. I think 3000 Gb is on the high side but 2600 Gb of conventional C+C would be my most conservative estimate. If the extraction rate from producing reserves remains at about the 2014 level and the World URR is 3000 GB (2500 Gb conventional + 500 Gb extra heavy) World output could look like the following.

            • Like I mentioned, engineering teams seem to draw up their plans to arrive at an eventual decline factor around 10 %.

              I have observed the way they work, and they lay out infill programs, water injection capacity, artificial lift systems, and other items, and then they run economics, and in large fields I’ll be darned if they don’t land back at the same overall shape.

              I also found that very aggressive management with a short term outlook drives the project to a higher design peak and much faster declines. They compress field life, overspend on facilities, and make an overall mess out of things. But they get their bonuses.


          • Jean Laherrere estimates about 2700 Gb.

            DC, As you are aware, the Oil Shock model needs a good estimate of discoveries to project future oil production. Laherrere was one of the few sources for discovery and URR estimates, and I could only wiggle out estimates of 2100 Gb from Laherrere in the past.

            However, 2100 Gb was clearly a low-ball estimate for a URR according to the oil shock model results and that’s why I upped the estimate to 2800 Gb for what I published.

            I remember the time from 2005 to 2010 where I spent a lot of time trying to work a 2100 Gb number for it to make sense, but finally gave up and moved the discovery URR upward.

            It is good to see Laherrere going with 2800 Gb for conventional now, as it does seem to make more sense. I blame it on too much reliance on Hubbert Linearization, which is really underpowered as an analysis tool.

            • TechGuy says:

              FWIW: Perhaps bucketing Oil production by costs would provide a better insight. Even if URR is 2800, I suspect that last 800 Bbbl is significantly more expensive to deliver to the market than the first 1.5 Tbbl oil produced (and to be produced) .Much of that additional oil may never be brought to market. The World has a glut of $300 per bbl oil but is starving for $10 per bbl oil. Economics will prove to be the keystone in future production. I don’t believe the economy can support Oil above $80 for any significant time. For the past 10 years, Central banks have been printing money and have lowered interests to near zero to prop up the global economy. They can’t do that indefinitely.

              • Jeffrey J. Brown says:

                And in any case, the depletion rate, i.e., the rate at which we consume remaining recoverable reserves, is almost certainly increasing, year by year.

                • Dennis Coyne says:

                  Rather than reserves (which increase as resources are developed) I better metric is recoverable resources, the depletion rate of recoverable resources is definitely increasing if output remains flat, it could level off if output falls, it depends on the decline rate.

              • Doug Leighton says:

                “Perhaps bucketing oil production by costs would provide a better insight.” Yes, of course it would. Comparing a barrel of oil from the Barents Sea with one from southern Alberta is totally ridiculous: As is putting heavy and light oil in the same general category. Having stood on an platform in the North Sea and watched the look of disgust on an engineers face as she let expensive heavy oil filter through her fingers, I understand your point.

                • Dennis Coyne says:

                  Hi Doug,

                  Whether the oil is heavy or light does not always determine cost, there is a lot of light oil which is expensive to produce. The model I use treats the extra heavy oil separately and uses CAPP estimates for Canadian bitumen, and the best estimates I could find (from Jean Laherrere) for Orinoco oil. The Hubbert Linearization method of estimating URR tend to underestimate the URR and this points to 2500 Gb for conventional (no extra heavy oil) C+C. USGS estimates 3000 Gb of conventional, we could deduct Laherrere’s estimate of overstated OPEC resources (300 Gb), and that would leave 2700 Gb of conventional oil.

                  • Doug Leighton says:

                    “Whether the oil is heavy or light does not always determine cost….” That’s pretty obvious when you stick ALWAYS into the equation. How about comparing the percentage of heavy oil projects that have been shelved vs conventional light. BP just blew a bundle on Ugnu (North Slope) and I see reports of heavy oil projects cancelled every day.

                  • Dennis Coyne says:

                    Hi Doug,

                    I do not have any oil field experience so you will have to bear with me. I agree that high cost projects will be shelved, and that extra heavy oil on average is more expensive than the average barrel of conventional oil (where I include all C+C except extra heavy oil in my definition of conventional). My point was that many LTO plays are very expensive and I believe many ultra deep water projects are expensive as well. There are not really a lot of inexpensive wells left to be drilled.
                    Do you expect that drilling will not continue? I doubt that is the case, the projects will be done if oil companies think they will be profitable, we could probably agree on that, but you often surprise me 🙂

                  • Did the UGnu die?

                  • Doug Leighton says:

                    Fernanda,

                    “Did Ugnu (North Slope) die.“ No, it didn`t die, it was killed. 🙂

                  • Doug Leighton says:

                    Dennis, “Do you expect that drilling will not continue?“ Come on Dennis, of course drilling will continue. BUT, TechGuy made an excellent point… at least in my opinion. Obviously iffy projects are in jeopardy and by iffy I mean ones of questionable long term economics. The Kazakhstan Kashagan Field is a perfect example: Simple as that.

                  • Dennis Coyne says:

                    Hi Doug,

                    I agree that Techguy’s point that oil will be expensive is correct. I think that his suggestion that 800 Gb of conventional will need $300/b (2014$) to be produced may overstate the case, but you and Fernando may have a better feel for this. My guess would be $150-$250/b to reach 2500 Gb of conventional, but my hope is that $300/b may be closer to the mark, those prices will move us more quickly to other low carbon sources of energy. In my view high prices are a good thing.

                  • Doug L, did ConocoPhillips pokey around with a West S electric heater project?

                  • Doug Leighton says:

                    Fernando, In permitting stage with with first oil in early 2017. Estimated peak production of 9,000 barrels of oil per day. Now called 1H NEWS (Northeast West Sak) Weird name!

                  • I did some work for a presentation to the state government on the electric heater potential. I had a young venezuelan petroleum engineer run a simple mechanistic CMG model, but I don’t recall seeing such rates unless they preheat for a really long time. That BP project sure was a bit problematic. I’m sorry for those guys.

              • shallow sand says:

                I think focusing on cost to discover and recover is most the most important analysis. For example, I was always under the impression that deep water had high CAPEX, but low OPEX. Some recent posts on this site have indicated that OPEX is also very high.

                The fact that many of the projects majors are looking at these days require more than $100 per bbl is a serious problem. Sorry to state the obvious, but if consumption world wide rises due to current lower prices, a shortage could actually occur not too far off.

                • Dennis Coyne says:

                  Hi Shallowsands,

                  As long as the market is allowed to determine prices, as oil becomes scarce prices rise and consumption decreases. It would be better id the US government recognized the impending fossil fuel scarcity and raised taxes on fossil fuels to speed the transition to alternatives. We will have to wait until the peak is apparent even to Fox News, before this is likely to occur.

                  • I think there’s going to be a panic the day the Saudis announce they can’t raise production anymore.

                  • Toolpush says:

                    Yeah Fernando,

                    That should be an interesting day indeed.

                    Today on CNBC, some character was claiming that SA may/will increase oil production to 12.5mmbpd. Obviously talking down the price.
                    Dreams Dreams

            • Dennis Coyne says:

              Hi WHT,

              Jean Laherrere estimates 2200 Gb for conventional and 500 Gb for extra heavy oil, so I was not clear, 2700 Gb is for all C+C including extra heavy oil. HL by my estimate points to 2500 Gb for C+C less XH, but usually this is too low so a better guess would be 2750 Gb of conventional and 500 to 600 Gb of extra heavy oil. Some think this is too optimistic and a few think it is pessimistic, so maybe it is about right. Hopefully oil prices will rise enough that we will leave 500 Gb in the ground.

              • DC, Thanks for the clarification. If you get about 2750 Gb and I am at about at 2800 Gb, we are pretty much singing the same tune.

                I also used the Shell Oil discovery (BOE) estimates as a balance to the Lahererre data, weighing both the pessimistic and optimistic side of what each categorized as conventional crude oil.

                I agree that the economic aspects of the lowest-grade or most difficult to extract 500 Gb will have a role in the dynamics of how it plays out.

                • Dennis Coyne says:

                  Hi WHT,

                  I was under the impression that the Shell data was barrels of oil equivalent, though if we assume that was a C+C+NGL estimate and further assume about 400 Gb for an NGL URR we would have about 3100 Gb for shell. I was also under the impression that your 2800 Gb URR included NGL, but I may not have that right, mostly I think we agree, and the difference in outcome between 2700 or 2800 Gb is negligible. Higher URR estimates of extra heavy oil would change little before 2050, they might slow decline rate marginally, but high prices will be the main thing that moves the world beyond fossil fuel, a gradual increase would make the transition less problematic, but may increase climate issues in the long run. So as fast an increase in fossil fuel prices as possible without economic collapse would be best in my view, probably 7-8% per year.

          • Dennis, you know my position on OPEC Middle East, North African Reserves. Would you mind telling me what yours is. Just how close is the below chart?

            You say 2700 GB of which 1250 has already been produced. That leaves 1450 GB to be produced. So could you fill in the blanks for me?
            OPEC remaining reserves__________________
            Non OPEC remaining reserves_______________
            Of course by reserves I mean economically recoverable reserves.
            Just your wild ass guess would be fine.

            • Dennis Coyne says:

              Hi Ron,

              I haven’t really broken it down that way. The World HL of conventional (C+C less extra heavy) crude results in a URR of 2500 Gb. Jean Laherrere did two separate HL analyses for OPEC and non-OPEC. See page 21 and 22 of paper at link below:

              http://aspofrance.viabloga.com/files/JL_2013_oilgasprodforecasts.pdf

              For OPEC he gets 1200 Gb and non-OPEC 1400 Gb for the World HL he uses too long an interval and gets an incorrect estimate of 2200 Gb. Using 1993-2013 we get 2500 Gb, we will call it OPEC 1250 Gb and non-OPEC 1450 Gb for my 2700 Gb estimate for World URR. There were many estimating a URR of 2000 Gb in 2005, I expect URR to increase to 2700 Gb in the future for conventional C+C. HL in chart below.

              • TechGuy says:

                Infill drilling is holding up that decline curve and creating a false decline slope. KSA is watering up fast. I think the decline curve will start to steeping in an couple of years.

                • They have projects to add new wells in undeveloped areas. But the cost is increasing.

                  I keep hearing there’s a lot of reluctance on their part to ever go above 12 million barrels per day.

                  • They have projects to add new wells in undeveloped areas. But the cost is increasing.

                    Manifa and Khurais were the last of Saudi’s undeveloped fields to go on line. There are no more. They are still drilling wells in developed areas however. Saudi’s infill drilling program has been underway for well over a decade now.

                  • I guess it depends on how one defines infills. I have a friend working on a field capacity expansion project. But he is limited on what he can discuss. One issue we debated about Aramco practices was the use of peripheral versus pattern floods. One could argue a pattern implementation is “infill”. But I don’t keep track of that work.
                    On the other hand they have undeveloped light oil field reservoirs near Riyadh? Or are those tapped?

                • Dennis Coyne says:

                  Hi Tech guy,

                  That is not a decline curve. It is P/Q on the vertical axis and Q on the horizontal where P is annual output and Q is cumulative output. If we assume the 2500 Gb estimate is correct (I think it is too low) and use the oil shock model to estimate future output with the assumption that extraction rates from producing reserves remain close to 2014 levels we can plot the P/Q vs Q and compare with the HL.

                  The model predicts that the P/Q vs Q will fall below the HL estimate for a time and gradually return to the predicted line. This illustrates part of the problem with the HL method, it fits a line to a curve which is concave up as the URR is approached, this is why it tends to underestimate the eventual URR.

                  • TechGuy says:

                    Yes I know an HL curve isn’t a decline curve. but its the infill drilling that has delay declines which is altering the HL curve to be better than it really is. Consider if I have a bucket of water. an punch a few holes in it. As the bucket drains the flow slows as the pressure falls. Left to its own the decline rate rate would roughly match a bell shape. Now to speed up the process I can add a plunger to speed up the flow to maintain the flow artificially. However the real amount of volume present in the bucket is unchanged. HL is presumes that extraction from a field represents a bell curve, but infill drilling has change that to be a mirror of the chi square curve where the downsize slope will be steeper because technology has postponed the natural decline slope. At best Technology may have improved the amount of oil that can be extracted that will have a small influence in URR.

                    Either late 2013 or early in 2014 I posted some Armaco presentations that showed that the oil column in the Arab-D area had declined to about 30 feet. I recall correctly that back in 2004 that Arab-D oil column was about 400 or 500 feet. Without the massive amount of infill drilling KSA production would have been a fraction of what it is.

                  • Dennis Coyne says:

                    Hi Techguy,

                    If you look at US Lower48 output after the peak the P/Q vs Q plot did not steepen as you suggest except in the short term from 1970 to 1980 (95,000 to 125,000 MMb), I doubt that this will happen for the World either.

                  • TechGuy says:

                    DC Wrote:
                    “If you look at US Lower48 output after the peak the P/Q vs Q plot did not steepen as you suggest except in the short term from 1970 to 1980 (95,000 to 125,000 MMb), I doubt that this will happen for the World either.”

                    Right, because the declines were not steep and there was still a lot of oil to be tapped. Technology also made advancements during that period, and rising oil processed also helped.

                    The difference is that world production is still relying on the 10 or so supergiants discovered over 50 years ago. Once the infill drilling has run its course it will impossible to make up for their declines. To add even more pain, these fields are also sources of the cheapest oil to bring to market.

                    If infill drilling had not been used, the production of all these wells would be considerably less, and would have impacted the HL curve.

                    The best analogy I can think of at the moment, is that a poor man that has saved for decades can play the part of a rich man for a short period. He can simply burn through is years of savings to appear to be much much wealthier than he really is. After his savings are depleted, The facade quickly disappears. We are likely doing the same with infill drilling.

            • Dennis Coyne says:

              For remaining resources, OPEC about 750 Gb, and non-OPEC about 700 Gb. This includes future discoveries and reserve growth.

      • robert wilson says:

        According to Ivanhoe Hubbert did not believe in a symmetrical curve. http://hubbert.mines.edu

        • Anon says:

          Even the curve in Hubbert’s original paper isn’t true symmetrical. He was pretty agnostic as to what the shape would be and there is no real way to predict it because of all the information problems.

          The “ten squares” math doesn’t change, though. If you distort it into a plateau via rapid cannibalization of long-tail reserves for current numbers, you will fall fast. I expect that to happen in Russia as they are the poster child for this.

          The other variable is OPEC reserves and the degree of lying involved.

  2. Allan H says:

    The way I try to make sense of Texas RRC’s delayed reporting system is the following.
    I take the end points for each month reported and use those to form the slope of production increase or decrease. Using this method the Texas RRC Crude Only graph shows a lessened slope of increased production compared to the complete data in the 2012 region. Essentially it would indicate production is sloping off but not decreasing yet.

    This method assumes that the laggards in reporting are all about the same and conversely the timely reporters are similar from month to month. It also assumes that new wells are distributed evenly across the reporting set.

    This method shows that the EIA estimate for the C+C could be between 200,oo0 and 300,000 bbl/day higher than reality.

  3. nNgass says:

    A lengthy article entitles “Shale and Wall Street” was written in Feb 2013. It is amazing how accurate it describes the basic fundamentals leading to the present financial shale problem.

    http://shalebubble.org/wp-content/uploads/2013/02/SWS-report-FINAL.pdf

    Excerpt from the executive summary:
    In 2011, shale mergers and acquisitions (M&A) accounted for $46.5B in deals and became one of the largest profit centers for some Wall Street investment banks. This anomaly bears scrutiny since shale wells were considerably underperforming
    in dollar terms during this time. Analysts and investment bankers, nevertheless, emerged as some of the most vocal proponents of shale exploitation. By ensuring that production continued at a frenzied pace, in spite of poor well
    performance (in dollar terms), a glut in the market for natural gas resulted and priceswere
    driven to new lows. In 2011, U.S. demand for natural gas was exceeded by supply by a factor of four.

    It is highly unlikely that market-savvy bankers did not recognize that by overproducing natural gas a glut would occur with a concomitant severe price decline.
    This price decline, however, opened the door for significant transactional deals worth billions of dollars and thereby secured further large fees for the investment banks involved. The recent natural gas market glut was largely effected through overproduction of natural gas in order to meet financial analyst’s production targets and to provide cash flow to support operators’ imprudent leverage positions

  4. SW says:

    ” Peak oil will be the point in time when more oil is produced than has ever been produced in the history of the world, or ever will be in the future of the world. It is far more likely that this period will be thought of as a time of an oil glut rather than a time of an oil shortage”. Oilgasm.

    • Old farmer mac says:

      Oilgasm!

      Damn I wish I had thought of that first!

    • TechGuy says:

      “t is far more likely that this period will be thought of as a time of an oil glut rather than a time of an oil shortage”

      That would apply to the 1990’s when the price of oil collapsed. The peak of oil production with the lowest cost was 1999. Since then prices have rise as demand out paced production. Despite the recent collapse of Oil, its still far more expensive than it was in 1999 and we’ll never see the price/supply ratio as we did in the 1990’s. We certainly are not in a oil glut. Consumption as fallen because of price, because customers have purchased more efficient vehicles, decrease in high consumption activities (ie vacation some place distant), or purchase less goods and services.

  5. Thomas says:

    It’s interesting that most break-even calculations recently quoted on this site seem to imply a return requirement of 20 %. That’s actually a pretty high RoE for most industries. If you’re willing to live with 10 %, break-even price is quite a bit lower. And if you’ve already invested and are stuck with your sunk costs, an ex post 0 % return isn’t so horrible either, because it means you haven’t actually lost money (apart from inflation, which is sort of negligible right now).

    Could it be that the lower break-even prices tossed around by other sources are simply caused by different definitions of the concept, i.e. use lower return requirements or profit = 0 (0% return)?

    • Watcher says:

      Or maybe those lower breakevens tossed around by sources are to find buyers for positions they or their clients are desperate to unload.

      I’d say the odds of that are higher, yes?

      • Ves says:

        Reminds of mid 90’s when Russians were selling fantastic fur coats in Mediterranean just to survive.
        I asked “How much, even though who needs fur coat on +30C?” The guy said: “Davai, Davai” (Give me, Give me” whatever you think)

        the same like these high cost oil peddling investment schemes at the moment: Give me whatever you think and don’t you worry about breakeven. 🙂

        • Watcher says:

          Better example, Greeks buying London real estate in 2011. No inspection. No negotiation. Just Get The Money Out Of Greece.

      • You are saying it must be some kind of pump and dump. They are pumping something up in hopes of dumping it at a higher price later. I can’t imagine what kind of equities Casey Research, or their clients would be looking to unload by advertising the fact that some Bakken drillers are in deep shit.

        I believe some Bakken drillers are in deep shit but I cannot think of any investment that would benefit from this fact. Please enlighten me, just what kind of “positions” are you talking about.

        • Watcher says:

          Positions already held.

          I would not call it pump in this environment. I’d call it fighting a rear guard action to slow the bleeding as exits take place.

          As for specific instruments they might have put clients in who now are looking for the door from, one would guess the big 4 oil services ETFs — OIH, IEZ, PXJ, XES. Some mutual funds have bylaws that specify minimum % holdings in various asset allocation profiles. They may or may not permit ETFs vs HAL or SLB.

          But in general, the rationale at the morning meeting would be “get information on wires to slow the bleeding so our clients lose less on the way out”. And then for damn sure get on the phones to out clients and do some hand holding.

    • Thomas, that’s a pretty good observation. The 20 % IRR hurdle is used as a fairly primitive risk weighting device. A typical approach is to layout unrisked costs, production, prices and taxes. This yields a net cash flow table, which is in turn discounted at 20 % (but the discount factor is lower in larger companies, I have seen some which use unmentionably low factors).

      I think the use of a very high discount rate is a mistake. A sounder approach is to use the company’s cost of capital (including shareholder returns), and to risk the other inputs. Given today’s computer power it’s fairly easy to generate multiple runs and generate puts of present value versus ranges of costs, prices, and other variables.

      I wrote about this previously because engineers have to optimize field developments. And optimization carried out with a very high discount rate leads to errors. The engineers design wells and fields with very “peaky” rates and extremely fast declines. This in turn reduces the true present value to the corporation.

      I have consulted for companies with managers who just couldn’t see how this works. They were raised a certain way, can’t learn to use tools and methods we developed for more powerful computers, and this is why we keep seeing the use of unsound practices.

      Based on conversations and discussions I had over the years, it seems European companies are a bit better. Shell and Statoil are very sharp in this area. Petrobras is very good at buying the software they need, but I’m not sure if they use it properly.

      And I’m not aware of any USA companies with management which really knows how to use sophisticated risk analysis. The last time I talked to Exxon engineers about this topic they didn’t seem to be too inclined to perform detailed risk runs. But maybe they were keeping that confidential. Exxon types are extremely sharp but tend to share information in slugs. Sometimes they share a lot, sometimes they clam.

  6. SRSrocco says:

    AGREED… Peak Oil is Here, the world just doesn’t know it yet.

    That being said, here is something a bit OFF TOPIC as Old Farmer Mac likes to say:

    Germany’s Bundesbank Resumes Gold Repatriation; Transfers 120 Tonnes Of Physical Gold From Paris And NY Fed

    The Bundesbank successfully continued and further stepped up its transfers of gold last year. In 2014, 120 tonnes of gold were transferred to Frankfurt am Main from storage locations abroad: 35 tonnes from Paris and 85 tonnes from New York. “Implementation of our new gold storage plan is proceeding smoothly. Operations are running very much according to schedule,” said Carl-Ludwig Thiele, Member of the Executive Board of the Deutsche Bundesbank.
    http://www.zerohedge.com/news/2015-01-19/bundesbank-resumes-gold-repatriation-transfers-120-tonnes-physical-gold-paris-and-ny

    While I imagine there are folks here that are SICK & TIRED of me posting about GOLD, I thought this was a notable event as it destroys the silly notion by the less informed mortals that CENTRAL BANKS give a RATS AZZ about GOLD.

    We have some very wise Energy folks in here who have made remarks saying that GOLD doesn’t matter anymore…LOL. Well, someone better tell these Central Banks that as they are behaving in quite the opposite fashion.

    Furthermore, when PEAK OIL arrives (probably very soon) then GDP growth is impossible. What happens to the theory of NET PRESENT VALUE in a falling energy supply environment??? What does that do to perceived value of Stocks, Bonds, Retirement Accounts and all the other assorted paper garbage?

    We certainly live in interesting times….

    steve

    • Old farmer mac says:

      I use lot of caps because you can’t underline or use italics on this blog. Some people have found a way to make their comments partly BOLD – heavy and dark but not caps. I don’t know how to do BOLD.

      I am not personally a gold nut but I do have a little gold in the form of jewelry mostly and intend to hang onto it as an emergency currency.

      In times past I would have tried to have a stash of gold but nowadays I maintain a stash of firearms ammunition fertilizer diesel fuel pesticides salt sugar canning jars hardware of various sorts – on and on. If I ever need to BUY a few pounds of beans or flour there is little doubt in my mind I can barter shotgun shells or rifle or pistol ammunition as easily as I could gold- at least in my part of the world.

      Gold is magic because it has the legend of universal acceptance behind it. Now if nobody had ever heard of gold and I were to find a ton of someplace the only people who would want it would be physicists and chemists etc interested in investigating the properties of a previously unknown mineral.

      With people believing in gold far more fervently than most bible thumpers actually believe in Jesus it lends the aura of incontestable wealth and power to a central bank that possesses it in quantity.

      The perception of strength is often times as good as the actual possession of it. A fly that is sufficiently well camouflaged to pass for a wasp is ac safe from most predators and has an enormous advantage over a real wasp in not having to invest in the metabolically expensive weaponry.

      People are hardly ever totally rational but most people who understand that gold is not intrinsically valuable for the most part also understand that this lack of intrinsic value just doesn’t matter- so long as most OTHER people continue to believe in the magic of gold.

      A country that possesses a lot of gold is a country that also has the the world convinced it is a wealthy country. The more gold the wealthier.Gold builds confidence the way a military parade builds confidence.

      But but BUT – gold cannot really be used for money anymore because there simply isn’t enough gold to use it that way in the form of coins.

      The solution that bankers invented consists of offering pieces of paper instead of actual gold – each piece of paper theoretically redeemable for a specified amount of actual physical gold. The idea is to print hundreds or thousands or millions of pieces of paper for each real unit of gold – a thousand dollars or euros or whatever for each ounce or even gram of actual gold.

      Now as it turned out this system has worked like a charm in lots of places for extended periods of time.

      But it has a couple of very dangerous flaws.

      One is that it makes it almost impossible for a government to inflate it’s currency while silmantaneously actually backing that currency via redemption in real honest to Jesus gold.

      No major modern government to my knowledge has managed to resist the temptation to inflate it’s currency- sooner or later the advantages of embracing inflation simply overwhelm the advantages of maintaining a totally stable currency. The politicians involved are able to reap big short term rewards while putting of paying for those rewards until they are either dead or at least safely retired so they go for the inflation.

      Inflated money simply cannot be redeemed for gold – the quantity of gold backing the money is minute in respect to the quantity of the money. So sooner or later the folks foreign and domestic who are in possession of the money insist on redeeming it for physical gold. Impossible. Just flat out can’t be done no siree.

      Then there is the problem that gold may and often does appreciate in terms of any currency or all currencies for various reasons. Now if Uncle Sam has gold backed dollars and gold goes UP on the world market then all them there red commie Chinermen and A RABS and dope peddlers and eeverybody else including our FRIENDS will insist on turning in their dollars for Uncle’s gold.

      Can’t have that either no siree either way the gold is GONE.

      Now eventually the worlds fiat currencies are going to fold one at a time or in bunches or maybe even all of them at once.

      When this time comes – when everybody has more or less lost faith in dollars and euros and marks of various sorts – will the Saudi royal family still sell oil for gold ?

      I suspect they will to some substantial extent.

      Now will UNCLE send the calvary to save their royal asses the way he did when Saddam Hussein got to big for his britches and accept payment in gold- gold that is inedible and can’t be used in any sort of fuel tank either?

      I guess Uncle might accept SOME gold but more than likely he will want OIL.

      The heirs of Jesus on earth didn’t build cathedrals because they wanted to live in cold drafty stone buildings unsuited for use as fortresses in time of war. They built them to impress the foot soldiers – the lay believers – of the power of God and his church. It worked like a charm too.

      Faith and enthusiasm and morale are very powerful force multipliers.

      A large portion of the people of the world still believe in gold.

      Whether they will continue to believe in it is in my opinion somewhat questionable.

      But for now enough people still believe in it that central bankers and wealthy individuals are placing humongous bets on it.

      IF the dollar becomes worthless in my lifetime- and I believe it MIGHT but that the odds are very good it won’t happen before I get personally recycled – then I would accept some gold for some of my stuff. But mostly I would try to trade for actual goods or services. A whole lot of goods would disappear from the market pretty quick- non perishable goods that would be priceless at some point -you cannot trade gold for what is no longer available.

      • Verwimp says:

        Bold should workt this way, I believe: Bold And underline should be like this: Underline, no?

      • SRSrocco says:

        Farmer Mac,

        You always have a wonderful way with a explaining yourself in long winded-fashion… which I admire. However, your so-called ASSUMPTION that the U.S. Dollar will not become worthless in your lifetime is a NICE ONE, but I would kindly like to remind you that some of the TOP MINDS in finance as well as the clowns at the NY FED and U.S. Treasury didn’t see the entire U.S. Investment Banking Industry go down the toilet or the collapse of the Housing Market.

        So, assumptions are nice right up until the time they are TOTALLY MEANINGLESS.

        Of course I don’t have a crystal ball as to the demise of the Dollar any better than you, but if we look around what is taking place in competing countries, we don’t have to ASSUME anything. The BRIC countries are already working around the Dollar, and I don’t see this as a mutli-decade event, but rather a matter of years.

        So, if you think you are going to see GOD in the next few years, you might have underestimated the current weakness of the Dollar even though its INDEX is heading exponentially higher presently. The Dollar is behaving like a Cancerous Tumor right before it takes out its host.

        steve

        • Old farmer mac says:

          Well now,

          As far as the time span involved is concerned I won’t likely be here more than another two decades and even that long assumes excellent luck on my part.

          Insofar as God is concerned I am very happy that I am totally confident that I am not at risk of being tossed into an eternal fire or subjected to kissing his holy ass forever and ever since I don’t believe in him. God is sort of like gold- his power is all in the head of the person thinking about him. Ditto gold. Preachers and bankers make a good thing out of our irrational beliefs – so while I do not believe in gold I recognize that because other people DO – gold is important. EXTREMELY important.

          But not as important as amber waves of grain and purple mountains majesty and armored divisions and aircraft carriers. Not as important as the tar sands which we will be needing very badly indeed for a long time- until we figure to a politically workable way to get away from oil.

          I am a firm believer in inflation – I expect a runaway inflation sooner or later.It might be quibbling to say that I expect a runaway inflation and still expect the dollar to maintain SOME value but my guess is that yankee dollars will not become WORTHLESS unless and until the USA suffers outright collapse. That could happen but my opinion is that if any country survives in recognizable form it will be the USA.

          I would not be surprised to see the dollar depreciate by fifty to ninety percent in the next two decades.

          When the housing market went to hell in a hand basket it was the housing market that went to hell…………. NOT the dollar.

          I have acquaintances who happened to have some substantial stashes of dollars handy who bought houses for twenty five cents or less on the dollar compared to previous prices. These houses are nov instantly salable for cash at double to triple what they paid for them. I wish I had had enough cash handy to buy a couple of them.

          Of course our local housing market never went totally haywire since it was possible to build new all around this area. AFFORDABLE new construction prevented the price of old existing housing from going into the stratosphere the way it did in many parts of the country.

          You may be right that things will fall apart within the next few years. Some things are easily predicted – contrary to what Yogi sez’ but getting the timing right is still anybody’s guess.

          Yours is as good as mine or anybody else’s.

          It has been my experience that when people talk about stuff like banking and gold and peak oil etc that the typical potential reader lacks background familiarity with these subjects.

          So I tend to go over board putting in enough color and detail to help any body new to a particular topic get their head around the broad outlines in a few paragraphs. IF there is one thing I am sure of in respect to gold for instance it is that the average person who reads this blog has little idea of the pro’s and cons of gold as a currency or a currency backstop.

          Any former teacher will tell you it is almost impossible to overestimate the ignorance of the public in respect to any matter not of immediate interest to us.

          This remark is not intended a slight to the audience here but rather as recognition that we suffer immensely these days from over specialization and sensory overload .

          So we never bother to learn the abc’s of a hell of a lot of important subjects unless they impact our lives directly. Gold impacts us all but the average person on the street has a near zero understanding of banking itself – never mind the interaction of gold and banking.

          People who don’t need the explanatory background can just skip over my comments.

          Electrons are so cheap we can toss them around like parade confetti these days.

          If you can point me to an intelligible shorter general outline of the problems and advantages associated with gold I will just copy and paste it with credit next time. 😉

      • Boomer II says:

        I’d rather have farmable land and water than gold.

        • SRSrocco says:

          Boomer….LOL. That’s what they all say when still invested in either Stocks, Bonds & Retirement accounts.

          I would imagine after the collapse of the Dollar, people will gladly take GOLD & SILVER in exchange for Farmland and Water. See how far ones Retirement Funds or worthless Federal Reserve Fiat Notes will buy Farmland or water.

          LOL…steve

          • Boomer II says:

            Boomer….LOL. That’s what they all say when still invested in either Stocks, Bonds & Retirement accounts.

            I think people like Ted Turner are very smart. They are buying up huge tracks of land. If the world collapses, that will be far more useful than gold.

              • Caelan MacIntyre says:

                I wonder what will happen when governpimps are not around to uphold land-theft of the commons.
                I have a feeling, or maybe just hope, that peak oil is about to dump large-scale centralized governments. Kick them to the curb.
                Some so-called landowners are just squatters on the commons. Loiterers by their own laws.

                “The commons is a general term referring to the cultural and natural resources accessible to all members of a society, including natural materials such as air, water, and a habitable earth. These resources are held in common, not owned privately.” ~ Wikipedia

                • Old farmer mac says:

                  BIG GOVERNMENT is scary. Not many things scare me more.

                  But we are probably considerably safer on an all around basis with it than without it.

                  • Caelan MacIntyre says:

                    Safer compared to what and/or in what sense?

                    Sometimes I reflect on the concept of draw-down. Things often seem really great until there’s nothing left of what these things rely on and plunder and pillage.

                    It’s like that metaphor of falling from a significant height– say, a skyscraper– with no parachute: Everything is fine until one hits the pavement. Everything is fine until it’s not. The symbiosis of large gov’t and large business appears like that, drawing down, appearing safe, until it’s not.

          • Old farmer mac says:

            True- you could sell a farm for gold in the event the dollar becomes worthless- but there are at least two serious problems with this scenario.

            One is that if things get so bad that you NEED gold- as opposed to hundred dollar bills- then there may well be no civil authority to enforce the sale and possession of the farm.If there is such existing authority it will insist on payment of taxes in gold as well.

            THERE JUST AIN’T ENOUGH GOLD.

            Incidentally most farms in a country such as the US would be worth either a fortune or nearly worthless depending on location soil weather etc.

            You can grow wheat or corn on high dry plains with irrigation. Without it – and without fertilizer and transportation such a farm will not be worth much at all.

            A little place like mine – well suited to a large variety of crops plenty of rain mostly and a reliable stream on the place -plus a much more agreeable climate- and closer to a population center- will be valuable.

            In the worst case , valuable as place to fort up.

            In the worst extremity I could hook up with four or five younger guys with wives and one or two small kids and we could all get by-by which I mean we probably wouldn’t starve or freeze. I would make damned sure the kids and wives loved me above almost all things by being a good old guy helping with educating the kids and teaching the guys how to farm by hand. Hopefully that would ensure that my little band would continue to give me something to eat rather than knocking me in the head and feeding me to a pig.

            IN the END gold is a useful tool but it is not going to ever be the basis of currency and trade again. Not unless about ninety nine point nine percent of us are dead.

            I sure wouldn’t mind having a few pounds rather than a few ounces!!!

          • Anon says:

            Why gold and silver? They have no inherent value outside of industrial purposes, which would be nigh-nonexistent in a situation where the dollar is not being used anymore.

            Precious metals as currency depend entirely on how much someone values them at. It’s different from fiat currencies, which depend on the value of the government in question requiring payment in them. The guy with resources not only has to value the gold more than, say, food – he has to be convinced that whoever he needs to get something from values the gold more than food.

            If things are that far gone, you want water, agricultural land and valuable skills (specialized or organizational polymath).

        • Ilambiquated says:

          Unfortunately your claim to that land wouldn’t be worth anything without a government backed deed.

          • Boomer II says:

            Gold is only worth what people say it is worth. Farmable land has intrinsic value and can keep things alive. I’d still rather be atop a plot of land than have gold but no access to land.

            I see gold the way I see artwork. It has value when it has value, but you can’t eat it. Plus you’ve still got to make sure after each trade that the gold is actually gold rather than a fake (well, I suppose you can still trade fake gold, just like you can trade paper money — someone just has to accept it).

      • Dennis Coyne says:

        Hi OFM,

        For italics use “” quote “” and substitute b for I for bold. Leave out the quotation marks, underline doesn’t work. Look at the “You may use these html tags and attributes” box below the comment box B is bold I is italics use the example in the box at the beginning and add /I or /B with chevrons at the end.

        • Dennis Coyne says:

          Hmm,

          The left and right arrow or less than and greater than symbols above the , and . on the keyboard have to surround an “I” at the beginning and a “/I” at the end of an italicized quote or surround a “B” at the beginning and a “/B” at the end of a bold quote. “less than” symbol “B” “greater than” symbol bold “less than” “/B” “greater than”. Maybe that will be understandable. Or not.

  7. SRSrocco says:

    I took some of Rune’s excellent charts and put together a summary of the Disaster coming to the Bakken in my article BLINKING RED LIGHT: Big Trouble Ahead For Bakken Oil Production

    http://srsroccoreport.com/blinking-red-light-big-trouble-ahead-for-bakken-oil-production/blinking-red-light-big-trouble-ahead-for-bakken-oil-production/

    Also, I posted a very interesting chart showing the INBOUND & OUTBOUND migration of people in various states. Looks like North Dakota ranks 5th in the highest OUTBOUND rate in the United States at 61%.

    steve

  8. E Auden says:

    Growing pains or pouring good money after bad?

    “The intermittent nature of renewable energy sources like solar power presents a range of challenges to utilities, depending on their grid’s size and design. Kauai’s difficulty is most acute when clouds drift over a solar plant. That can slash a plant’s power output by 70 to 80 percent in less than a minute. If the plant is providing a substantial share of the grid’s power, that rapid power loss can cause the frequency of the grid’s alternating current to drop well below 60 hertz, damaging customer equipment or even causing a blackout.”

    http://www.technologyreview.com/news/534266/hawaiis-solar-push-strains-the-grid/

    • Nick G says:

      Batteries represent the traditional utility approach: invest in expensive central equipment to solve problems.

      Instead, they could use Demand Side Management (aka Demand Response) which is far cheaper: when a cloud drifts overhead, AC units cycle off (their load just disappeared), EVs stop charging, commercial freezers raise cycle off for a few minutes, etc.

      This can be implemented with smart meters; central utility telecom; or just sensors which detect a small decline in grid frequency.

      • wimbi says:

        Any power engineer can think up a whole pile of things/processes to handle short transients, What you say, plus spinning reserves(flywheels) plus water turbine with fast nozzle, and gas turbine, preferably with compressed air inlet boost, and on and on and on.
        My guess that optimum is a combo of several such, different for each locality,

        But my real point is that the whole situation is a fast transient. When we start off on a new thing, like switching from horse to car or ff’s to solar, we run into a thorn bush of bothers, all of which we overcome or simply avoid after a little experience– as long as we aren’t too stiff-headed to learn from experience.

        Stiff- headed is a non-short non-transient. Robots?

    • John B says:

      First off, it’s pretty amazing that a community has reached 80% solar. A lot of naysayers said that wasn’t possible. With regards to battery storage, a better setup would be to have distributed storage located in the same buildings as the solar panels. Lithium batteries are very compact.

      • islandboy says:

        Read again: “Kauai’s difficulty is most acute when clouds drift over a solar plant. That can slash a plant’s power output by 70 to 80 percent in less than a minute. If the plant is providing a substantial share of the grid’s power, …….”. Nothing said about ” community has reached 80% solar.”

        While I wish that were true, AFAIK the countries in the world with the highest solar contribution to the grid, Germany and Italy are nowhere near 80%. Germany’s record is about 50% of total power use coming from solar on one very sunny day (high supply) which just happened also to be a public holiday in Germany (very low demand). I saw a figure somewhere that italy got some 7.5% of their total electrical energy from solar PV last year (might be 2013) and AFAIK that is the highest for any country. IIRC the US state of California gets a healthy contribution from solar (mostly PV) but nowhere remotely near even 50%.

        I would deduce that any country/community that has power or energy shares higher than those above, is probably off-grid.

        Alan from the islands

        • Nick G says:

          “When the second plant comes online this summer, peak solar output on Kauai will approach 80 percent of power generation on some days, according to Brad Rockwell, the utility’s power supply manager.”

          • so peak will reach 80 % of daylight, roughly 40 %

          • islandboy says:

            My apologies. I stand corrected. That’s what happens when youn respond to a comment in a thread without first reading the source article.

            This is very interesting news and as a resident of an island with a peak demand in the region of 600MW according to a graph on page 14 of this information booklet (PDF), I plan to follow this as closely as possible.

            A contract has just been signed for Gamesa to supply and install 12 2MW turbines to expand the local state owned wind farm, located where the wind resource has resulted in a capacity factor for the turbines of something like 30%. There is currently a great deal of bickering about what form a long overdue replacement for some 380MW of baseload should take and how it is going to be financed, bearing in mind that the regulators have denied the local utilty a rate increase.

            There is also a 20MW solar plant in the pipeline but my hope is that solar wil become the backbone of daytime demand as it seems is becoming the case in Kauai. It will be interesting to see how the technical challenges play out.

            Alan from the islands

            • Toolpush says:

              Alan,

              There is currently a great deal of bickering about what form a long overdue replacement for some 380MW of baseload should take and how it is going to be financed,

              LNG would have to be the first option for base load and back up for the renewables, but I think you are saying, where is the money coming from.

              • Ilambiquated says:

                Is LNG import really an option for an island that small? The population is only about 65K.

                • islandboy says:

                  Depends on which of the islands you’re referring to. The original source of this thread is Kauai but I brought up the fact that their experience with the challenges posed for island grids with high penetrations of solar PV might be of interest to us where I live, an island with a peak power demand about ten times the size of Kauai and a population about forty times as large (2.7 million).

                  Having said that, the size of the local grid poses another dilemma. With a peak demand of 600MW, it is not desireble to have any single plant larger than about 10% of that or 60MW, for reasons that it will have to have back up of equal size in the event of a failure or downtime for scheduled maintenance.

                  GE and Siemens do not make combined cycle gas turbine plants for electricity generation that small. The only CCGT plant on the island is a 120MW set consisting of two 40MW GTs and a 40MW ST. If the plan outlined in my post further down is implemented and a 190MW gas turbine powered plant is built, that is going to require that at least 190MW spare apacity exists on a 600MW grid. Looking at it another way, about one quarter of the total capacity of the grid would have to be idle all the time, assuming 800MW capacity to allow for the loss of 190MW without needing to shed load.

                  Alan from he islands

                  • You don’t have to buy GE or Siemens. In the oil industry we use all sorts of turbine packages. I don’t keep track of the details, but I recall having platforms and plants using Solar, Sulzer, Rolls Royce, Allison…

                • Toolpush says:

                  Ilambiquated,

                  Hawaii, is planning to import LNG from Canada (avoid Jones Act) in 40ft ISO containers. So small quantities are no problem, as they would not be using bulk carriers.

            • If the regulator is denying a rate increase the better option is to build a high thermal efficiency coal plant and import the coal from Colombia.

              I think you are too late to play in the LNG market for that much base load, although that would have been an excellent solution (you could have bought it from the Trinidad plant).

              LNG should be imported to replace diesel in those turbines. The turbines can be supplemented with regular turbines which work well in tandem with wind power.

              I don’t think you can, as a country, afford much solar power, but maybe you can talk the europeans into financing a demonstration plant so you get performance data over a few years.

              And of course you could try developing small hydro. My great grandparents had a micro hydro facility in Oriente, in Cuba, hooked up to a small generator and an ice making machine. It was a really profitable idea. But that was 100 years ago.

              • Nick G says:

                Solar is cheaper than the status quo, which is diesel generation.

                Solar PV has the advantage of being scalable in relatively small increments, which is a big advantage to a financially strapped utility.

            • islandboy says:

              Thanks for the input guys. As it stands, the prime minister appointed a technical team headed by a technocrat with very strong ties to her party, albeit a guy who has been appointed to boards of state run organisations over the years bt never run or office.

              In September they announced how the problem was boing to be tackled, including plans for a natural gas fired gas turbine and coal plant using coal from Colombia! Since the announcement, the utility has been complaining that they need good financials to be able to arrange financing and that denial of the rate increase is puting their whole part of the project in jeapordy.

              I am concerned that the LNG part of the project will not maximizet the use of the energy available from te LNG. To do this a state of the art facility would have to be set up to use as much of the cooling available from regasification to do things like provide chilled water for commerce and industry. Definitely use the cooling available to cool the intake air for the gas turbines , increasing their thermal efficiency. Using the waste heat from the power plant as the heat source for the regasification rather than drawing the heat from the ocean or burning some of the fuel just to reheat the gas would be a much more efficient use of the availble fuel.

              I did a quick internet search when I first thought about it and saw where using the cooling available from re-gasification to cool the turbine intake air was the aim of one project while using the waste heat from the turbines as the heat source was the aim of another. I also found whee there seem to be patent applications for both ideas. This is one reason I dislike patents. Without any prior knowledge I came up with the idea of a fully integrated LNG regasification, chilled water, power and process heat plant all by myself (depending on how much cooling/waste heat is available after air intake cooling and re-gasification). IMO, with 7+ billion people on the planet, the odds of someone else coming up with an idea like that in a era of expensive scarce enegy are pretty good. IMO it’s obvious or should be to any engineer thinking outside the box and should not be patenable!

              Alan from the islands

              • Alan, i had an engineering professor who started a business to ship frozen shrimp in containers attached to an LNG carrier. The shrimp were frozen using the boil off.

    • Caelan MacIntyre says:

      “Animals don’t do what humans do via speech, namely, make a symbol stand in for the thing. As Tim Ingold puts it, ‘they do not impose a conceptual grid on the flow of experience and hence do not encode that experience in symbolic forms.’ ” ~ John Zerzan

      Self-domesticated Humans– fundamentally wild— ostensibly evolved within simple, small-scale, visceral, laterally hierarchic band and tribal hunting-and-gathering free-roaming contexts and, as such, seem in fundamental dissonance with the symbolic, layered, distancing, detached cage of systemic (‘dystemic’) complexity that they have welded like a prison around and between themselves and nature, and where, over time, they have managed to become increasingly and dangerously out of scale, synch, control, and touch with their world, spirit, and the complex manifestations, like Fukushima’s ongoing nuclear disaster, via their capacity for complexity, and amplified and exacerbated by sociopolitical/hierarchical and usually-illegitimate contrivances that tap status, control and fear dynamics– king, knight, pawn; leader, police, employee… Where, once upon a time, this ‘superape’ capacity that allowed them to survive and thrive brilliantly on the plains of what is now called Africa, seems to have, paradoxically, boomeranged, and is now, by a slow death-of-a-thousand-cuts from a slow-build-of-a-thousand-(dubious)-decisions and unintended consequences over time, threatening their very survival.

    • Schinzy says:

      The big problem for utilities is that when renewable energy and storage are cheaper than retail utility prices people and/or communities will go off grid. Cheap electrical storage is coming fast see:
      http://www.isentropic.co.uk/.

      • TechGuy says:

        Schinzy Wrote:
        “The big problem for utilities is that when renewable energy and storage are cheaper than retail utility prices people and/or communities will go off grid. Cheap electrical storage is coming fast see:”

        That does not make any sense. If consumers could install cheaper power, what would prevent the power companies from using the same technology? The Power companies can install the same equipment as consumers.

        Cheap electricity storage is a fanatasy, just as nuclear power was going to produce electricity “too cheap to meter”. Renewable power will also never be cheap.

        • John B says:

          The nuclear power quote is a myth. Look it up.

          The power companies want to charge a premium, so they can make a profit. Consumers may be able to DIY it, and save money.

          Also, the power companies may not have access to private buildings where the solar panels, and storage tech can be sited.

          http://www.businessinsider.com/barclays-downgrades-utilities-on-solar-threat-2014-5

          • TechGuy says:

            “The power companies want to charge a premium, so they can make a profit. Consumers may be able to DIY it, and save money.”

            Consumers will never be able to produce electricity at a lower cost than a power company. Power companies will always have better pricing, and better tech, and better expertise than consumers. Consumers will by Cheap, consumer grade equipment that will not last and need to be replaced frequently. Power companies will invest for longer time horizons than consumers, by purchase commerical/industrial grade equipment that will last decades.

            What your suggesting is equivalent to consumers building DIY vehicles, or electronics. Consumers buy manufactured goods, they don’t make them on their own. Most of the PV systems installed are grid tied systems and do not produce anywhere near the amount of power consumed in a household. They slap on a few Kilowatts of PV panels,but consume 3 to 4 times the amount of power that those panels produce on a good sunny day. The Average home would need a roof four to tens times bigger just to provide enough square footage to put enough panels on there roof to meet their consumption demand.

            “Also, the power companies may not have access to private buildings where the solar panels, and storage tech can be sited.”

            Neither do the majority of people living in cities. Try setting up a solar power system in an apartment or condo complex with limited space or limited roof space. it “ain’t” happening!

            Hell, I give up. I might as well be arguing with a box of rocks.

            • John B says:

              No, what I’m suggesting is that a consumer may be able to BUY a car, and not have to take the bus.

              Many consumer solar systems produce more power than the consumer uses.

              Speaking from experience, we use about 6kwh/day. We live in a sunny area, so a 1kw array (5 @200w panels) does just fine. There’s probably room on the roof for 30 panels.

              How about you change your nic to “NonTechGuy”.

              And there’s plenty of condos installing solar now.

              http://www.gosolarcalifornia.ca.gov/solar_basics/rights.php

              • TechGuy says:

                “Speaking from experience, we use about 6kwh/day. We live in a sunny area, so a 1kw array (5 @200w panels) does just fine. There’s probably room on the roof for 30 panels.”

                So your excluding your transportation energy inputs (roughly about 30Kwh/day just for transportation for the avg. American)? You do drive an electric vehicle, right?

                The Average American household uses about 30kwh/d (or 903 kwh per month from EIA), excluding transportion. You use only 1/5 of the power used by a typical American family, or you are simply mistaken on how much your energy consumption is. You are probably also used even less, since there is storage and conversion losses (probably about 5% to 7% of 1Kw PV output) . My guess is that if you’re off-grid than you also have a backup generator.

                I also doubt you get 6kwh/d from your 1 kw system. In very very sunny Australia the best output is about 5 Kwh/d. The Average in AU is about 4 kwh/d. I believe in the US its about 3.2 kwh/d from a 1kw PV system.

                http://www.solarchoice.net.au/blog/how-much-energy-will-my-solar-cells-produce/

                What works for you won’t apply to the majority of consumers. Probably less than 10% of the population has the means to install an system, either because of money, location or other issues. Less then 1% has the means to address transportation needs using solar as the power source.

                • Dennis Coyne says:

                  I only use about 300 kwh per month. 150 kwh/month seems low to me, I am pretty frugal, but I do not have PV, perhaps I would cut back more if I did, it would be a stretch to get under 200 kwh/month I think. I do not have an electric car.

                  Where are you getting your transportation number for electricity?

                  A typical car needs 34 kwh per 100 miles, a typical round trip commute is about 50 miles or less so that would be 17 kwh per day for commuting, for me the commute would be less, about 20 miles per day or roughly 7 kwh/d.

                  For a grid tied system you would need enough average solar output to supply your needs.

                  • TechGuy says:

                    “Where are you getting your transportation number for electricity?”

                    I’ve seen this number in multiple articles. But it is for gasoline vehicles with an average MPG of about 24. EV cars, do consume less, about 17 Kwh/d, but I am not sure that figure is entirely correct since it exclude enviromental controls (heating in winter and AC in the summer). Real world consumption for EV vehicles is probably near 20 Kwh/d. However there are no EV minivans, vans or pickup trucks. No everyone is going to drive a small EV car. Plumbers, electricians, carpenters, etc all need VANs, or at least minivans to haul thier tools and materials to jobs sites. Families with Kids are going to continue to drive a Minivan or larger than small EV car.

                    The other issue is Solar EV powered vehicles is that most people work during the day. To make home PV systems viable for EV’s everyone would need to switch to the night shift so they can leave there EV charge at home during the day.

                    In light of these issues, the Grid is not going away as John B proposes.

                  • Boomer II says:

                    The other issue is Solar EV powered vehicles is that most people work during the day. To make home PV systems viable for EV’s everyone would need to switch to the night shift so they can leave there EV charge at home during the day.

                    Why couldn’t the vehicles be charging at work while they are sitting in a parking lot? The lots can have solar chargers, too, right?

                  • Nick G says:

                    The real-world experience with electric sedans is that they consume 300 to 350 watt-hours per mile, including everything: AC, heat, etc.

                    US light vehicles drive 2.9T miles per year, per the Federal Highway Administration, and there are about 230M light vehicles: that’s 12,600 miles per year per vehicle, or 34.5 miles per day.

                    .34 kWh per mile x 34.5 miles = 11.7 kWh per day for transportation.

        • islandboy says:

          Cheap is relative. There are a growing number of places where renewble energy is cheaper than fossil fuel generated electricity. Everything I’ve read says that solar PV with batteries is cheaper in the long run than running a diesel genset, Of course the diesel genset costs a fraction of an off grid solar PV setup so, it is often the path taken.

          You say, “If consumers could install cheaper power, what would prevent the power companies from using the same technology? The Power companies can install the same equipment as consumers.” As a thought excersise, flip the script and say consumers can install the same equipment as the power companies. When you look at a coal plant or a combined cycle gas turbine or nuclear reactor the previous statement is patently false. That is the big difference with solar PV and unless a battery is invented that only works at the megawatt scale, energy storage will not be that much more expensive for households than it is for power companies. With solar PV in particular, conumers can “roll their own” without paying a huge penalty.

          In my neck of the woods, where we have to pay for electricity generated by ancient, oil fired steam plants as well as huge non technical losses (A 2012 document speaks to reducing losses due to theft from 13% to 6% by 2016), solar PV is looking very good for those who don’t have to store to benefit from it.

          Alan rom the islands

          • Toolpush says:

            Island Boy,

            Is this what you are looking for? It will be interesting to see how it stands up.

            http://www.greencarcongress.com/2015/01/20150122-eos.html

            Eos Energy Storage introduces grid-scale battery system at $160/kWh

            Eos Energy Storage announced the commercial availability of its MW-scale Aurora system for deliveries starting in 2016. Eos’s standard Aurora 1000|4000 product, a containerized 1 MW DC battery system providing four continuous hours of discharge, offers a cost-effective energy storage solution competitive with gas peaking generation and utility distribution infrastructure. The Aurora 1000|4000 will be sold at a price of $160/kWh in volume.

    • From the article:

      “Power fluctuations from a first large plant installed in 2012 have already largely burned out the big batteries installed to keep solar from destabilizing the island’s grid.”

      That’s with solar power delivering less than 1/3 of the peak demand. Looks to me like this coop just needs a couple of smart EEs to set their feet on the ground, and get their heads out of the clouds. This is an interesting debacle.

      • Nick G says:

        Yeah, as noted above batteries aren’t really the best first choice.

        Least of all lead-acid.

      • John B says:

        Very simple. For every watt of solar added to the grid, require an amp hour of storage. That would still be cheaper than a Cat Genset running $5/gallon diesel.

        • It doesn’t work. I’m not sure about the enviromental issues, but if they have the topography they ought to consider pumped water storage. That’s really expensive but it seems feasible for say 12 hours’ worth.

          The alternative is to build a coal powered baseload plant and sell those solar panels to Californians. They can get the coal from Alaska.

          • John B says:

            No need for baseload. Storage can support night time load, which is much less than day time. Day time peak sunlight recharges the batteries. It works perfectly. Solar with storage is the future.

            • I guess Hawaiians go to sleep early. Here in Spain the winter evening peak starts right at sunset.

              I imagine it must be nice to live in an island paradise and lay on the beach, watch the stars, and play the ukulele.

  9. Watcher says:

    Yo Ron, or maybe Rune or Enno . . . what % of new wells drilled stand up at the end of the first month with avg daily flow that month of 500 or 600 or 700 bpd or 800 bpd. This goes to the heart of the last chart of this Ronpost.

    Getting tired of “a lot of wells are profitable at $XX/barrel”. Let’s quantify what % = “a lot”. I suspect we’re going to see numbers like 4% are profitable at Bakken prices of $28/b.

    • Watcher says:

      BTW if you pitch 4% to lenders, there ain’t gonna be any of them. As in 0.

    • They will use the futures markets to hedge. I believe the market says prices will rise. Therefore the cut off is a bit higher than current prices.

  10. The Wet One says:

    In case anyone needs evidence that the world in headed into the crapper (I know most of us don’t but for those who do) here’s this: http://www.vox.com/2015/1/20/7826245/oceans-mass-extinction

    I suspect the biggest factor will be the change in ocean acidity going forward, but we’ll see.

    Man, it’s such an interesting world we live in!

    • SRSrocco says:

      The Wet One,

      If you really want to put a gun to your head, then I recommend listening to a half a dozen of Guy McPherson’s interviews at NatureBatsLast.com. He is of the opinion that we head into a Mass Extinction Event within the next two decades. And for even more FUN, he believes there is a slim chance that it could occur in a few years if we get the 50 Gigaton Methane Burb from the Arctic Ocean.

      I actually think Guy’s work is pretty logical.

      steve

      • clueless says:

        Good news. The Greenland Ice Sheet is currently larger than the 1990-2011 mean for this date.
        http://www.dmi.dk/en/groenland/maalinger/greenland-ice-sheet-surface-mass-budget/

        • Synapsid says:

          clueless,

          That would be cheerful news if it weren’t for that word “surface.” The mass balance for the ice sheet, not just its surface, is negative; Greenland loses about 200 cubic kilometers of ice each year. That’s more than Antarctica loses, I believe–Antarctica’s mass balance is negative too.

      • Sam Taylor says:

        Steve

        I view Guy MacPherson as kind of the counterpoint to climate change deniers, in that he’s something of a rapturist/climate change extremist. He basically ignores any negative feedback, cherry picks only the most depressing parts of the studies he reads and generally strays outside the accepted limits of what the data/science says. This is not to say that climate change isn’t a significant problem, with very real potential for significant harm to come our way if we do nothing about it (5C would probably be close to apocalyptic), but runaway climate feedbacks and near term human extinction within a timescale of decades are extremely unlikely events. It’s more likely that climate change will play out over a time period of a century or two, and those aged maybe 40+ likely won’t be too strongly impacted.

        • The Wet One says:

          That may be so. But he paints a cool horror show. I’m reading it here:

          http://guymcpherson.com/2014/01/climate-change-summary-and-update/

          On these matters time shall tell what exactly will come to pass. Time and the unfolding of actual history is a lot more reliable than the multitude of guesses, no matter how well founded scientifically. That said, those who deny that there is change afoot, and deny any possibility that Homo colossus may be the cause are clearly smoking too much whacky tabacky. We’ll see how it comes out. We will see (note, we means our species, not necessarily the present generation thereof either).

          • The Wet One says:

            And now, after reading the page, I see that I was there about 2 months ago. Sigh. Guess that was a wasted lunch hour on something I’ve read already. Ah well. A good refresher on how it’s all going to heck. Even if it is the most extreme interpretation of the data out there (thanks for that generous pebble of salt Sam Taylor!).

            Still, it’s a beautiful day here today. Sun’s up and shining. It’s unseasonably warm (lol!) and I’m in a pretty good mood despite reading that depressing litany of ills plaguing the world. Ahh…. Good to be me! I’m even still employed despite the cratering of oil prices and my job being directly at risk because of that (no I don’t work in the oil industry). So I’ll enjoy this day while it lasts.

          • Old farmer mac says:

            Those of us who ”deny any possibility that Homo colossus may be the cause are clearly smoking too much whacky tabacky” are actually clearly smoking too little.

            Wacky tobacco has the effect of lowering intellectual inhibitions – of allowing a tightly cocooned mind to venture out of it’s cocoon and consider new possibilities.

            This scares anally retentive types who don’t know any more about dope than they do climate and thus still believe a joint will turn them into raving maniacs- or even worse , sex fiends..

            ” Reality is for people who can’t handle their dope.”

            Don’t know who said it first.

        • Anonymous says:

          thank you. thank you. the dude also cavorts with Vandana Shiva.
          http://www.fertilegroundinstitute.org/

        • SRSrocco says:

          Sam Taylor,

          After I researched many of his points and the climate scientists that he quotes, I don’t view him as CHERRY PICKING. However, we all interpret info differently, so I will leave it at that.

          Anyhow, if we do see a totally ICE FREE Arctic Ocean in September in the next following years, we may have to RETHINK the notion of CHERRY PICKING.

          steve

          • Caelan MacIntyre says:

            If we feel that we must stop this runaway trainwreck-in-progress, then cherry picking seems fair game as part of the bag of tricks. It’s a war, a war against Mother Earth.

        • Caelan MacIntyre says:

          I’d previously suggested, under my Tribe Of Pangaea moniker, over at The Oil Drum, to the effect to cheat to help stop a system that cheats.
          The way I see it is if you have to stop/reverse a particular (culture/systemic) mass/momentum, it helps to be as, or more, massive/momentous as, or than, it.

          So Guy MacPherson ‘as kind of the counterpoint’ seems to feed into this idea.

          • The way I see it is if you have to stop/reverse a particular (culture/systemic) mass/momentum, it helps to be as, or more, massive/momentous as, or than, it.

            You know, if I had any idea about what the hell you are talking about, then I might agree with you. But then again, if I knew exactly what you are talking about, it is just as likely that I would disagree. 😉

            • Caelan MacIntyre says:

              I don’t blame you. It’s late at night over here in Nova Scotia, and I need my sleep. I’ll try to catch you later in the week. Sleep well.

      • The Wet One says:

        BTW, what’s happening with methane seeps from the ocean floor? I never really got a good grasp of the results of that emergency mission to the Arctic to study this.

        Anyone know? Got a link?

        Thanks!

        • Sam Taylor says:

          I thought that the general consensus was that these were naturally occurring seeps which have been active for a while now. The Russian craters I’m less sure about.

          • Doug Leighton says:
          • SRSrocco says:

            Sam Taylor,

            The “Concensus” on methane such as David Archer is kind of like the IEA & EIA — professional sources, either providing (incorrect or out of date) data due to “Politics or Orthodox mentalities”.

            Paul Beckwith, climate scientist at Ottawa, intelligently dissects the orthodox SLOW METHANE RELEASE notion by Archer and et al very nicely in many interviews.

            David Archer is probably a nice chap, but doesn’t do any actual on site location study such as several Russian and American climate scientists who are quite worried about the changes in negative changes to the Siberian Arctic Shelf.

            steve

        • Strummer says:

          Regarding the arctic methane issue, there are lots of interviews with Dr. Natalia Shakova on youtube. She’s often being ridiculed by the denialist crowd, and it’s true that some of her data is incomplete/uncertain, but if her assumptions are correct, we could be truly screwed in a few decades.

          What worries me most is that the main opposition to her arguments seems to be based on the following argument: it has been much warmer many times in the past, and the siberian methane did not release catastrophically, so it won’t release this time either.

          However, from what I’ve read, the inundation of the East Siberian Arctic Shelf happened relatively recently (20,000 – 10,000 bp, at the end of the last ice age), so the geology can not be compared to any past warming episodes.

        • It’s hoopla. I worked in the area and that’s been happening forever. I noticed they get a methane Bomb Panic in the media every two-three months. That russian chick in Alaska gets press, and then it goes into hibernation.

          I think we need to see what the satellite acquisition data shows over the next few years, but I worry more about gradual methane increases from coal mining, rice paddies, and the gas vented in areas where the industry uses “cowboy” practices.

      • He is of the opinion that we head into a Mass Extinction Event within the next two decades.

        Hey! This is just crazy. We have been in the Sixth Extinction for about 500 years now but it has recently started to accelerate greatly.

        The Sixth Extinction Is Here

        More than 320 terrestrial vertebrates have become extinct since 1500, according to the researchers at Stanford University. Surviving species have declined in abundance by about 25 percent, particularly devastating the ranks of large animals like elephants, rhinoceroses and polar bears.

        Or for a great 9 minute youtube video on the Sixth Extinction go here:
        The Sixth Extinction We are in the Sixth Great Extinction!

        • Tom Fugate says:

          Ron,
          McPherson thinks Homo sapiens are going to go extinct within the next two decades due to the planet becoming too hot to support humans. You have said you believe Homo sapiens will not go extinct any time soon so I suspect you disagree.

          • clueless says:

            The older you get the wiser you get (supposedly). For example, I have learned that most people believe that chicken little was right.

          • Yes, I strongly disagree with that position. Humans will likely go extinct sometime in the next 20 to 50 million years but they are in no position to go extinct anytime soon.

            People who say humans will go extinct in the near future simply do not understand why a species goes extinct.

            No species has ever gone extinct due to overpopulation. They go extinct for the exact opposite reason, under-population.

            No species has ever gone extinct because its habitat was too large. The human habitat is every habitable place on earth.

            No species has ever gone extinct because it was able to adapt to almost any climate as humans are. Species go extinct because they cannot adapt.

            The earth may get hot, very hot. But if it gets so hot that no megafauna can survive then humans will be the very last of all megafauna to go extinct.

            • Strummer says:

              McPherson assumes the whole planet heating to 35 degrees Celsius wet bulb temperature, which is unsurvivable by humans. Which would mean that the only habitat would be undergound.

              https://robertscribbler.wordpress.com/2013/08/06/ocean-heat-dome-steams-coastal-china-shanghai-to-near-very-dangerous-35-degree-celsius-wet-bulb-temperatures-this-week/

              • Nick G says:

                Faced with temps like that, mumans will try geo-engineering- sulfur in the atmostphere, particulates, etc. Maybe a little nuclear winter.

                I wouldn’t suggest risky things like that for climate change any time soon – phasing out fossil fuels is far, far cheaper and safer. But, as Ron says, humans won’t be standing still…

                • Nick G says:

                  uhhmmm…”humans”…

                • Strummer says:

                  That’s a question of the speed at which the increase happens. If Dr. Shakhova’s worst assumptions turn out correct, and the siberian arctic methane gun fires abruptly, there won’t be any time or resources for geoengineering in the midst of a complete civilisational breakdown that would happen in a few decades.

                  • Nick G says:

                    Volcanoes have succeeded in cooling the earth dramatically in a matter of months. I haven’t spent a lot of time looking at geo-engineering, but I suspect that some of the options are cheap and fast. At the silly Watcher-esque extreme, a small nuclear winter…

                  • Caelan MacIntyre says:

                    If the Permian-Triassic extinction event(s) knocked out some of the arthropods and similar events to it occur this time around, it could indeed spell extinction for humans as well.
                    Guy McPherson is also known for the nuclear-issues mention. Aside from extraplanetary radiation, previous extinction events didn’t have to contend with human-derived dangers like that.

                    If governpimps run out of oil, taxes and growth, what happens to the nuke stuff?

                  • The Permian extinction was a natural event that literally took over a million years. It was the time of the Siberian Traps, the greatest period of volcanism the world has ever known.

                    From Wiki: A recent hypothesis put forward is that the volcanism was a trigger that led to an explosion of the growth of Methanosarcina, a microbe that then spewed enormous amounts of methane into Earth’s atmosphere.

                    Yes I agree. If we ever had another period of such volcanism, and if it lasted over a million years again, it could indeed wipe out the human race.

                  • Boomer II says:

                    If we ever had another period of such volcanism, and if it lasted over a million years again, it could indeed wipe out the human race.

                    Over the next million years, any number of things might wipe out the human race and probably will. I’m not sure we’re biologically programmed to stay the same for that long a time.

                  • Cae says:

                    So we have a little more than just 30 years or so to go extinct? That’s reassuring.
                    Anyway, if we go extinct in 30 years, Guy, who will be about 85, can shake his finger at all of us and say, “I told you so.”.

                  • Boomer, if we were hit by a comet, or an all out nuclear war so poisoned the atmosphere that all life was destroyed, then yes the human race could be wiped out. A comet is not likely however, but I cannot speculate on an all out nuclear war.

                    But other than such an event it is highly unlikely that anything will wipe out the human race. No matter what the disaster, short of the afore mentioned disasters, it is unlikely to wipe out everyone.

                    And no species is programmed to stay the same for any given length of time. Biology just don’t work that way.

                  • Boomer II says:

                    I definitely don’t expect the human race to be wiped out any time soon. However, a million years is a long time so I am not as confident about what will happen that far out.

                    What I was suggesting is that in a million years, homo sapiens may evolve into something different enough to be classified as a different species.

                  • Boomer II says:

                    I think a million years would be enough time for homo sapiens to evolve into something else.

                    Lasting evolutionary change takes about one million years

                    “Most species change so much that they rarely ever last more than 1-10 million years before going extinct, or developing into a new species, the scientists noted.”

                    http://oregonstate.edu/ua/ncs/archives/2011/aug/lasting-evolutionary-change-takes-about-one-million-years

            • SRSrocco says:

              Ron,

              For KICKS & GIGGLES, let me throw this one at you. You worked in the Oil industry, so your insight and wisdom is highly valued and appreciated on this site.

              However, your sentence, “People who say humans will go extinct in the near future simply do not understand why a species goes extinct”… leads me to believe your Oil Industry background is of better quality than say Guy Mcpherson, who was a Professor Emeritus of Conservation Biology.

              So, I gather his line of work-education gives him LESS of a quality opinion than your work-education in the Oil Industry. Did I get that one right?

              Just thought I run that one by you.

              steve

              • Old farmer mac says:

                Professors are as apt to go overboard as anybody else. I have met a few including a couple of the most famous dormers personally. Their dire predictions may yet come true but … not yet. So far at least.

                Even the most reputable of scientists sometimes deliberately exaggerate their beliefs in order to attract attention. We don”t think too much of it when a real estate agent says a vacation house has ” the prettiest view in the world” or that the presidential candidate promises us all a chicken and a car and a free insurance policy as well.

                Wisdom requires that you investigate opposing views and contradictory evidence.

                While I agree with Ron that we will not go extinct anytime soon I disagree with him in respect to flat out economic collapse.

                I admit he may be right. I just judge the evidence indicating that some societies have a shot at pulling thru overshoot more or less whole if severely chastened is stronger than he thinks it is.

                Time will tell.

                Plain old chance – the roll of the cosmic dice- will determine the outcome.

                • Allan H says:

                  Scientists look at boundary values (extremes of possibilities). I can see McPherson’s reasoning since we face a whole baker’s dozen of devastating effects.
                  Fact is we don’t know if people will go extinct soon or not. Just the fact that there is a chance should raise all the red flags and the hair on the back of the neck of all reasoning people. It should cause us to work tremendously hard to even avoid the problems of population overshoot let alone the plethora of other devastating problems.

                  Since we are not working very hard at solving any of these problems we are guaranteed the natural solution of an extreme population drop. That is what happens on this planet with population overshoot or major environmental changes.

                  Whether all this predicaments will lead to human extinction is unknown. It depends on how bad the problems get and how hard people fight nature. The harder they fight nature, the greater the eventual fall.

                  • Fact is we don’t know if people will go extinct soon or not.

                    Well, we do not know if a comet will smash into the earth destroying all life soon or not. But we do that there is no reason to believe any of the problems we face today will cause human extinction. There is absolutely nothing on the horizon that is capable of totally wiping out all human life on earth. Killing off 90%, 95% or even 99% of all human life on earth, not likely but it could happen. But even if 99% got wiped out that would still leave 72 million people alive.

                    Allan, it is not enough to say that it could happen. If you think it could happen then you need to explain how it could happen. How are you going to wipe out 100%? Barring a 20 mile wide comet of course. Now that could happen, but it is just not very likely.

                  • Caelan MacIntyre says:

                    Ironically perhaps, if you dramatically whittle down a relatively-large population, then it eventually becomes small enough for extinction to threaten it, yes?

                    Apparently the Permian-Triassic extinction event was a series of events.
                    So, in our case, what might some of them be?
                    Nukes, climate change, flooding, mass migration/starvation, wars, famine, disease, eco-degradation, anoxic events, keystone-species die-offs, geoengineering attempts gone wrong, unpredictable domino effects from all of the above… What else?

                  • Caelan, I have already agreed that if we have another million year volcanism, like we had during the great Permian extenction, then that could indeed wipe out the human race.

                    But let me get this straight, you are comparing what is happening today with what happened to cause the great Permian extinction? Do you expect it to last over one million years as that one did?

                  • TechGuy says:

                    Ron Wrote:
                    “Well, we do not know if a comet will smash into the earth destroying all life soon or not. But we do that there is no reason to believe any of the problems we face today will cause human extinction. ”

                    Loss of 440+ Nuclear reactors and containment of the spent fuel pools? I take that you consider that we will not face WW3 when the global economy begins to collapse?

                    I am sure that not matter what happens that we will still be able to keep all those reactors cooled and properly maintained. /sarc

                    I think after the economic collapse begins +90% of all species will go extinct within the next 100 years (or less) and most likely human will not be excluded from the extinction list. Humans will certainly apply a scorched earth policy when the trouble begins. After all, we are the ultimate “suicide” species.

              • Steve, what the hell is “Conservation Biology”? I have never heard of that one. But anyway I don’t buy the argument “appeal to authority”. If you have a reason to believe that humans will go extinct then state that reason. Don’t give me this shit that “this man is an authority and you are not. Therefore your argument is wrong and his is right.” That is no argument at all and you should know better than than to try that shit.

                If you have an argument, then make it, don’t try the “appeal to authority” crap.

                And what makes a Conservation Biologists an expert on global warming? Why does he think the earth will get so hot that people cannot survive anywhere on earth? The earth once got so hot palm trees grew in the Arctic and Antarctic. But the dinosaurs survived by simply moving further north and south, away from the equator.

                I think it is extremely presumptuous to assume the earth will get that hot. Give me some peer review papers that agrees with him on that subject, papers from climatologists rather than biologists.

            • Sam Taylor says:

              Ron,

              There are also two ways for a species to go extinct. One way is for every member of that species to die off without producing any surviving offspring. Another way is for that species to have children which eventually evolve into a different species. I’m sure many of our ancestor species are now totally extinct, but we’re still here. In our case I think 1 might be more likely than 2, but you never know.

              • There are also two ways for a species to go extinct. One way is for every member of that species to die off without producing any surviving offspring.

                Sam, that is not a reason. The reason would by why they produced no offspring. Animals just don’t stop reproducing offspring without a reason.

                Another way is for that species to have children which eventually evolve into a different species.

                Children just don’t evolve into a different species. That never happens. Speciation happens but takes many hundreds of generations. Phenotypical change can happen in a very few generations as we can see in dogs. But the inability to interbreed, which is necessary for speciaion takes hundreds of generations. And that is almost always caused by genetic drift.

                There are far more than two reasons why animals go extinct and you have not named even one. Climate change can cause a species to go extinct. A species can be driven into extinction by being out-competed for food and territory by another species. Loss of habitat has been the primary cause as of late. Humans are taking over their habitat. Or a species can simply be killed off by humans.

                • Sam Taylor says:

                  Ron,

                  I was speaking in general terms. It’s likely that very many of the species in your and my direct lineage, in the distant past, are extinct. But we, their descendants, are still here. So I guess in that way I probably should have said two types of extinction. The one where all members of that species just die and disppear and it’s a dead end in terms of the family tree, and the one where eventually genetic drift produces future offspring which could not interbreed with their distant forbears, which is still extinction, but the family tree continues. Does that make more sense?

                  • Yes that makes more sense however… New species don’t usually just change or evolve into another species. What usually happened, in evolutionary history, is part of a species got separated and eventually evolved into another species.

                    In Madagascar there are over 50 species of lemurs still living and many more species extinct. The reason there are so many is that the sea level, many times in the past, has risen and cut the island into two different islands. Separated, many species changed into other species. And here is the strange part, some species look almost exactly alike yet cannot interbreed. The reason is that during the many thousands of years they were separated genetic drift changed their DNA so much that they are no longer able to interbreed.

                    Another strange point. In Africa there are many types of baboons. Some look radically different than others. But they all can interbreed. Like dogs, great phenotypical differences does not mean they cannot interbreed.

                    Humans will never evolve into another species as long as our numbers are in the billions, or even millions. The gene pool is just way too large. To explain this would take a chapter in a book, far more time and space than I have right now.

            • Preston says:

              Ron,

              Many projections for human population predict a peak and rapid fall – with the peak a few years after peak oil. Most of those projections are based on widespread famine due to energy issues – but obviously climate change could add to the problem.

              http://www.theguardian.com/commentisfree/2014/sep/02/limits-to-growth-was-right-new-research-shows-were-nearing-collapse

              Also, Overpopulation can cause extinction – think of bacteria growing in a petri dish – the population follows a nice steady growth to a peak followed by rapid extinction. The same thing happens with reindeer in an isolated area with no predators.

              Now 20 to 40 years to kill everyone? That doesn’t sound possible. There have got to be some survivors; but with a greatly reduced population and all the easy energy used up life is going to be very hard. A few humans may hang on for up to a thousand years, but no way anyone will still be around in 20-40 million years.

              To think we can somehow survive a mass extinction event just isn’t plausible.

              • Boomer II says:

                What I have tossed out is the idea that as the few (the 1%) grab most of the world’s wealth, that development (1) slows down resource consumption (poor people don’t use as much, which is worse for them but better for the environment) and (2) likely hastens the die off of weaker populations.

                Therefore, as significant numbers of people die off, there’s even less consumption, perhaps less pollution, and definitely more resources available for those who survive.

                So you have a big reduction in human population, but the group of people who survive get to have what has been left behind. And what they have to work with will probably be sufficient to keep them going. (I’m not talking about 40 or 50 million years — but at least into the foreseeable future. 100s of years? 1000s of years? I won’t try to speculate.)

                There have been some maps recently doing a risk assessment of climate change. Some areas will be hit harder than others.

                Seems like there is a population number that can be supported by Earth. Not billions of people living like middle class Americans, but likely a much smaller number of people living a more modest lifestyle.

                • Preston says:

                  In the chaos, most of the 1% will not be able to maintain power – at least some of the 99% wont just lie down and die. Also manufacturing technology is likely to be lost, we and our food crops would need to make it without most manufactured goods.

                  Worse, It’s looking like we have passed a tripping point on global warming. The methane tied up in Siberia and in hydrates is starting to be released. That process will continue even if humans stopped using fossil fuels completely. The amount of carbon stored in places like that is higher than all the carbon in all the fossil fuel humans have burned so far. It looks like the climate will just keep getting worse over the next few thousand years. In the Permian mass extinction 98% of species went extinct, how could we survive that?

                  BTW, if you didn’t see it, in the limits to growth update I linked above that way back in 1972 they predicted peak industrial output per capita would happen in 2015. That seems about right if oil peaks. They showed population peaking about 10 years later.

                  • Boomer II says:

                    In the chaos, most of the 1% will not be able to maintain power – at least some of the 99% wont just lie down and die.

                    You know, throughout history the number of times the masses have overthrown their leaders has been relatively small. We’ve had populations dying and starving and having much less than the people on the top and yet the masses don’t rise up all that often.

                    Religion is probably part of it. If you have been led to believe those on the top deserve what they have, or that God tells you to follow them, or that what happens in this life is less important than what happens in the afterlife, then maybe you endure, or serve, and don’t go and kill off your leaders.

                    Right now, I’d venture to say the 1% don’t really deserve 1/2 of the world’s wealth, but we’ve been letting them collect it and even pass laws allowing them to collect more of it. They keep accumulating more and more, but other than a few Occupy Wall Street protests, who has been organizing to prevent the shift of wealth from the poor and middle class to the top 1%?

                    And when the Tea Party types claim they plan to fight, who do they say they will fight? Not the wealthy, but the gays, the immigrants, the black President, the liberals.

                  • Boomer II says:

                    I think as resources dwindle, there were be some chaos and some fighting.

                    But based on what I have seen happening around the world, I think it will be the rich and the middle class (what is left of the middle class) turning on the poor rather than the poor turning on the rich.

                    And I think that process is already happening, primarily through wealth accumulation, but also via wars at various levels.

                  • Boomer II says:

                    Think about wars. Usually it is the people at the top, or the leaders of any movement, who send off a group of people below them (perhaps recruited from the lower classes) to do the fighting for them.

                    In the process, the wars take out people on both sides.

                    Wars don’t kill off a lot of rich people, but they do kill off the armies and citizens of both sides.

                    Why would this dynamic change? If there is chaos, and there is fighting, I am guessing the people dying from them won’t be the wealthy.

              • Mi>Also, Overpopulation can cause extinction – think of bacteria growing in a petri dish – the population follows a nice steady growth to a peak followed by rapid extinction. The same thing happens with reindeer in an isolated area with no predators.

                Not in the natural world. Reindeer did not go extinct simply because all of them on St. Matthew Island died off. There are reindeer in many other parts of the world. Likewise humans may all die off on many isolated islands but because they occupy virtually every other niche in the world they will not go extinct.

                No species of bacteria has ever gone extinct simply because all of them in one petri dish died off. Goodness man, think for one minute about what you wrote before hitting the post button.

                There has never been an extinction in the natural world caused by overpopulation.

                To think we can somehow survive a mass extinction event just isn’t plausible.

                I never said they could not survive a mass extinction event. In fact I specifically stated that a comet could wipe out all life on earth. And any event that kills all life on earth will quite obviously kill humans as well.

                But it is simply not plausible to believe that humans will go extinct due to natural causes. There will always be survivors. There will be survivors in the Amazon jungle, in the New Guinea jungle, in the high Arctic and in many isolated other places.

                People who believe humans will go extinct due to overpopulation or other natural causes simply haven’t a clue as to why species go extinct.

                • Preston says:

                  Global warming alone is the event – no comet is necessary. The amazon will be a desert, there will be no survivors there. Yes, a few may hang on for awhile – but not millions of years.

                  • Nonsense! It has happened before, more than once.
                    Mid-Cretaceous Period
                    ca. 120 to 90 Million Years Ago

                    Breadfruit trees apparently grew as far north as Greenland (55° N), and in the oceans, warm water corals grew farther away from the equator in both hemispheres.

                    And it was even warmer for a long period during the Jurassic.

                    Gasping for Breath in the Jurassic Era

                    During the Jurassic, abrupt global warming of between 9 and 18 Fahrenheit (5 and 10 degrees Celsius) was associated with severe environmental change. Many organisms went extinct and the global carbon cycle was thrown off balance. One of the most intriguing effects was that the oxygen content of the oceans became drastically reduced, and this caused many marine species to die off.

                    The important take away here is that animals that were able to move north or south, away from the equator, did not die-off.

                    Global warming will cause havoc. Many species, those unable to move to cooler climate may go extinct. But animals that are mobile, able to move with with the changing climate, will not go extinct.

                    The idea that global warming will cause human extinction is really quite absurd.

                    If you think the average world temperature will rise more than 18 degrees F, 10 degrees C, then you need to link to a few reputable climate scientists that agree with you.

                  • Boomer II says:

                    That, too, has been my takeaway from the GW articles. Some areas will become uninhabitable, but not every place in the world. So some places on the planet should still be able to support some humans.

                    The problems with GW, as I understand the articles, is that change is coming faster than at previous points in history. Rather than letting the planet continue to rapidly warm and then dealing with the consequences, there’s a big group of folks who suggest we moderate our lifestyles instead to use less carbon to at least slow down or limit GW.

                    And that is what the deniers object to most: moderating our lifestyles to limit CO2 release. But depletion of oil will force a lifestyle moderation anyway.

                  • Preston says:

                    Ron,
                    To much heat and the oceans basically rot and start spewing H2S into the atmosphere. Humans and all of our food sources can not tolerate H2S . There are a few animals and plants that live is swaps that can tolerate H2S and yes assuming they can migrate fast enough many of those may survive, just not us.

                    No one can really predict the future, so who knows. Maybe there are some negative feedback loops that will kick in. Or maybe we could build huge domed cities and grow food in green houses (less water, and no pesticide) but I doubt it – surviving is not going to be easy.

                  • Preston, you need to get real. Predictions, by reputable climate scientists, put the temperature rise by 2100 at less half of what it was during the Jurassic global warming. It is just not going t get that hot. Humans are adaptable.

                    You just seem to have an extinction mind set. That is just your very amateur opinion. I believe in science and the science just does not support it.

                  • Caelan MacIntyre says:

                    We seem to have a lot of ‘perfect storms’, though, and we also seem to be doing our utmost to tease/taunt them out.
                    We are apparently already in a sixth mass extinction event: There seems to be a kind of built-in cavalier/casual attitude about stuff like that in the context of discussing EV’s and whatnot, as though EV’s are more important than loss of species and soils and stable climate.

                • Preston says:

                  Ron,

                  This is from wikipedia about what happened after CO2 levels rose at the end of the Permian triggered greenhouse warming.

                  “A severe anoxic event at the end of the Permian would have allowed sulfate-reducing bacteria to thrive, causing the production of large amounts of hydrogen sulfide in the anoxic ocean. Upwelling of this water may have released massive hydrogen sulfide emissions into the atmosphere. This would poison terrestrial plants and animals, as well as severely weaken the ozone layer, exposing much of the life that remained to fatal levels of UV radiation.[124] Indeed, biomarker evidence for anaerobic photosynthesis by Chlorobiaceae (green sulfur bacteria) from the Late-Permian into the Early Triassic indicates that hydrogen sulfide did upwell into shallow waters because these bacteria are restricted to the photic zone and use sulfide as an electron donor.

                  This hypothesis has the advantage of explaining the mass extinction of plants,which would have added to the methane levels, & which ought otherwise to have thrived in an atmosphere with a high level of carbon dioxide. Fossil spores from the end-Permian further support the theory: many show deformities that could have been caused by ultraviolet radiation, which would have been more intense after hydrogen sulfide emissions weakened the ozone layer.”

                  Yes, I may have been spending too much time at that guymcphearson’s site. I had been watching methane levels out of concern and a few years ago they leveled off a bit. But now it is back to a hockystick like rise and it does seem like nothing we can do will stop it at this point. I am a big believer in real science, its just with so much political flack most scientests are too timid to speak out unless they are 100% sure of their facts and no one can be 100% sure what will happen.

    • This is very depressing. This guy is like the robot in “Hitchhiker’s guide to the Galaxy” .

      • Sam Taylor says:

        In a way it’s impressive. For a primarily land dwelling ape to be able to cause the extinction of marine dwelling species really is something. Impressive but depressing.

        My main problem with the science study is where they say that a mass ocean extinction is “far from inevitable”. Given our history as a species, I think it is very close to inevitable, since it’s what we do.

  11. Dennis Coyne says:

    Hi All,

    In the Eagle Ford Play 240 new oil wells were added from Dec 4, 2014 to Jan 7, 2015 according to the Texas Railroad commission. From Nov 6 to Dec 4, 185 oil wells were added. In October 243 wells were added.
    From Jan 2014 to Jan 2015 an average of 212.75 oil wells per month were added to the Eagle Ford.
    Model below uses similar oil price assumptions to my Bakken Model with 130 new wells from 2015-2034.
    For the Eagle Ford relatively flat output can only be maintained to early 2018 with 160 new wells/month and then output falls by 11% to 2020. Then the number of new wells needs to be reduced for continued profitability and output falls faster until 2022 when the number of new wells added stabilizes at 75 new wells per month. ERR(economically recoverable resources) are about 7Gb.

    • BC says:

      Good work, Dennis.

    • Dennis Coyne says:

      Hi BC,

      Thanks. I took a look at Baker Hughes oil rig counts in the Eagle Ford, the average rig over the past 52 weeks drilled about 12.85 wells per year, based on my scenario above about 160 new wells per month will keep output relatively flat until 2018 and if rig efficiency is unchanged 150 rigs should be enough to accomplish this. The average oil rig count for the past year was 199 rigs and in mid July the oil rig count was 207 in the Eagle Ford. For the week ending 1/16/2015 the oil rig count had fallen to 174. Since the beginning of November the oil rigs have fallen from 206 to 174 or by about 3 oil rigs per week. If the fall continues at the rate of the past 11 weeks we will reach 150 oil rigs in about 8 weeks (mid March). One thing I left out of my Eagle Ford model was an increase in new well EUR due to a focus on sweet spots, so the model may prove low if this occurs. I doubt it would change things by much and there are multiple assumptions which could be incorrect in any case.

    • Thirunagar says:

      Can someone comment on this article from Seeking Alpha?

      http://seekingalpha.com/article/2830076-the-main-bearish-thesis-on-crude

      The powerful uptrend in rig productivity is pretty evident in all these regions. The number of barrels/day in new production added per rig is increasing mightily, with increases adding to 400%-500% or more since 2009. For context, an increase in rig productivity of a mere 100% would mean that for one to get the same production increase, one would need just half the rigs.

      It’s evident that if these increases continue unabated, a significant drop in rig numbers might not produce a significant drop in new production. This on the other hand can have bearish implications for crude prices. It can also have catastrophic implications for oil services companies (NYSEARCA:OIH) running/holding those rigs.

      Dennis, you have been recording off late that the actual numbers are higher than what your model suggests. Can it be because of the higher well productivity? If that is the case, then we don’t need as many new wells as currently assumed in this forum?

      • Dennis Coyne says:

        Hi Thirinagar,

        The rig efficiency has increased since 2009, but based on comments by oilmen such as Mike, this has reached its limit. It is possible that well productivity(EUR) has increased, but this also has likely reached its limit, both Bakken and Eagle Ford models have 2014 wells modelled with increased well productivity. For the Eagle Ford, this stopped in Nov 2014 and was assumed to remain constant(no change in new well EUR) until Oct 2016. Then new well EUR gradually decreases over 12 months reaching a maximum annual rate of decrease of 14.5%. This is a guess on my part which could be wrong, it is based on an assumed TRR of 7.2 Gb and that well productivity will decline as the sweet spots get fully drilled up.

        If a higher TRR is assumed such as 8.6 Gb and the maximum annual rate of decrease
        of new well estimated ultimate recovery (EUR) is lower at 8.1%/year, and all other assumptions are unchanged (35,000 wells maximum), then 160 new wells per month can be added until May 2029 when 35,000 wells have been drilled. Chart below with this more optimistic scenario, note that David Hughes estimates about 8 to 9 Gb URR from the Eagle Ford, this new scenario is about 8.5 Gb ERR, oil price assumptions are similar to the Bakken scenario presented recently.

      • Here’s a plug for a friend’s software package with some information about learning curves:

        http://www.caesarsystems.com/knowledge/modeling-efficiency-gains-learning-unconventional-projects/

    • Jeffrey J. Brown says:

      Have any of you guys calculated the initial 12 month cumulative production per well by year for the Bakken and Eagle Ford?

      If it’s possible to calculate the data, it would be interesting to see the initial 12 month cumulative production per well for wells completed in 2009 through 2013, in terms of average and median values by year.

      • Dennis Coyne says:

        Hi Jeff,

        I do not have very good well data for the Eagle Ford. As I am sure you know, but others may not, it is pretty difficult to dig this data out of the RRC of TX website.

        In Texas output is reported by lease and in most cases there are many wells drilled on an individual lease with different start dates, so untangling this data is difficult.

        To develop my Eagle Ford well profile I found leases with single wells that has been operating for at least 6 months, only about 500 wells were used which started producing between 2010 and 2013, this was done 18 months ago and has not been updated to reflect changes in well productivity, I have adjusted the well profile upward over time so that the actual Eagle Ford output matches the model to some degree, but there is more guesswork than for the Bakken where we have much better data. Chart with cumulative well profiles by year fo North Dakota Bakken/Three Forks.

        • Jeffrey J. Brown says:

          So the 10 month cumulative production per well for the Bakken/Three Forks has increased by 20% from 2010 to 2014, from 70,000 BO to 84,000 BO?

          Wouldn’t this be a best metric for increasing drilling/completion productivity? Of course, this would be somewhat at odds with the per rig calculation.

          • Jeffrey J. Brown says:

            Incidentally, I assume that this is the average value. Would the median chart show something different?

            • Dennis Coyne says:

              Hi Jeff,

              The median tends to be lower, but the relative values will be similar. I do not do my modelling based on the number of rigs, and I think this is not a good metric for the Bakken which is constrained by fracking capacity rather than rigs. I use the same average well profile from March 2008 to March 2014 and the model matches the data pretty well. From March 2014 to Feb 2015 I increase the well profile by 1% each month to attempt to match the model with output data. The model is still a little low through Nov 2014. Too much work to put in month by month well profiles, but I might try it at some point. This would just be from Jan 2013 to Nov 2014, if it is done at all.

              Thanks for the suggestion.

            • Jeffrey J. Brown says:

              Question #2, do you guys have estimated median and average per well production numbers for Bakken and Eagle Ford C+C production for 2014?

              • Dennis Coyne says:

                Hi Jeff,

                If you have access to drilling info, you can get the Eagle Ford data more easily than I can (I do not have access to drilling info). For the Bakken I have done the averages for wells which started producing through March 2014, this gives us wells with at least 6 months of output data. See my charts below.

        • Dennis Coyne says:

          Hi Jeff,

          There were fewer wells drilled in the earlier years so the overall 2010 to 2014 average profile is as shown in the chart below. These are cumulative average well profiles. At 10 months the average 2014 well has a 83 kb cumulative output and the average well for 2010 to 2014 has a 75 kb cumulative output at 10 months, about an 11% increase of the 2014 well over the average well.

          If I rework the model I will find the 2008 to 2012 average well profile and estimate average monthly well profiles for Jan 2013 to Sept 2014, but it will take some time. I might do something more simple to speed the process.

        • Thirunagar says:

          Thanks Dennis.. really appreciate it.

          I dont understand why this diagram is so different from the well productivity graph. While I can certainly understand that the well productivity is improving, it is nowhere near the 400% increase that is reported in the seeking alpha article. What am I missing?

          • Dennis Coyne says:

            The EIA assumes that drilling rigs are the crucial variable, this is a mistake for LTO plays. The drilling rigs got ahead of the fracking crews and more fracking capacity was added to keep up with the 200 rigs in the Bakken. The ramp up in output per rig is due to the increase in the capacity to get more wells fracked per month. Rig efficiency was not really the correct story. The important metric is how many new wells start producing each month, over the past 12 months in the Bakken this has been about 11 wells brought online per rig per year, the bottle neck is the number of wells that can be fracked per month. Low prices are resulting in fewer wells being fracked, winter weather also slows this process in North Dakota.

          • Jeffrey J. Brown says:

            Even to the extent that we appear to be seeing a 20% increase in initial 10 month cumulative production, from 2010 to 2014, one has to wonder to what degree the increase was influenced by operators: (1) Finding the sweet spots and (2) Focusing drilling efforts in those areas.

            • Dennis Coyne says:

              Hi Jeff,

              I agree completely, once they run out of room in the sweet spots or down space too aggressively the EUR of the average well will decrease.

              It is difficult to guess when this will occur or what the rate of decrease will be once it does.

              My models assume this decrease in new well EUR begins in 2016 and the rate of decrease gradually increases over a 12 month period when it reaches its maximum annual rate of decrease of about 8% per year.

              Reality will no doubt be much more complex than this, my model is relatively simple in this regard.

          • coffeeguyzz says:

            Thirunager,
            In 2007 in the Bakken, there were about 200 new wells added, the majority being the much less productive vertical wells. The EIA chart may be a little misleading if it includes them in with the more productive horizontals.

      • Dennis Coyne says:

        Hi Jeff,

        I looked at wells by month from Dec 2012 to March 2014 for cumulatives for 6 months to 20 months, 12 month cumulative is the dashed line.

        • Dennis Coyne says:

          Longer term chart for average cumulative output at 3, 6, 9 and 12 months for North Dakota Bakken/Three Forks.

      • Jeffrey, I just did a survey and calculation of 5,912 North Dakota wells. That is all wells with well numbers above 20000 that actually listed their productin. I found the average second month production was 395 barrels per well per day. That puts the first year’s production, (second month thru thirteenth month), at about 281 barrels per day. (The first month is almost always only a partial month.)

        • Dennis Coyne says:

          Thanks Ron.

          That is a good way to do it, just ignore month 1, so about 102 kb for the first full 12 months of production. For some reason when I use Bakken and Three Forks wells I get about 80 kb for 2010 to 2014 wells, but using month 1 to 12 (which really amounts to 11.5 months) I get 84 kb and dividing by 350 days (due to the missing half month) I get a 240 kb/d average output for the first 11.5 months for the average Bakken/Three Forks well from 2010 to 2014. I do not use any specific well ID cutoff for my data.

        • Jeffrey J. Brown says:

          I was actually wondering about the average and median values for all producing wells in the Bakken, as of 2014.

          • Dennis Coyne says:

            Hi Jeff,

            It is not clear why you would want to include very old wells that used different fracking methods. I only have data back to August 2007.
            For the first 12 months for wells which started producing from August 2007 to Nov 2013 average cumulative output is 82,272 b and median output is 70,433 b. This is based on wells that have 13 months of output data through Oct 2013 and includes 6,521 wells. I used first 12 months plus one half of 13th month output because the average 1st month well only has 1/2 month of output.

            If we leave out 2013 wells and find the average and median 12 month cumulative for wells which started producing between Aug 2007 and Dec 2012 we get an average of 79,782 b and a median of 68,387 b for a dataset of 4890 wells.

            The average 12 month cumulative output for 2013 wells is 89,737 b or about 12.5% higher than the average 2007-2012 Bakken well. For the first 10 months of output for the average 2014 well output was 7.2% higher than 2013. So Jeff’s 20% estimate for 2014 wells compared to 2007-2012 wells is spot on.

            • Jeffrey J. Brown says:

              Actually, the average and median production rates, in barrels per day in 2014, for wells completed 2007 to 2014 inclusive, would be fine. I assume that the average is still a little over 100 bpd and the median is less than 100 bpd.

              • Dennis Coyne says:

                Hi Jeff,

                We don’t know the 12 month output for wells which started producing in 2014, because we only have 10.5 months of data. For the wells that we have at least 12 months of data for, the average first 12 months of output was 225 b/d and the median was 193 b/d. If you are just looking for the average yearly output for all producing wells just look at the NDIC data at link below
                https://www.dmr.nd.gov/oilgas/stats/historicalbakkenoilstats.pdf
                For 2014 it’s about 127 b/d/well. Maybe that was what you were looking for, it is not clear. There is not an easy way to find the “median” you are looking for.

        • Let me think…..why not use the first 12 months and half the 13th month to estimate the first year’s production?

          • Dennis Coyne says:

            Hi Fernando,

            Excellent idea. That gives us 86 kb cumulative output the average first 12 months output for wells which started producing between 2010 and 2014.
            So an average daily output of 235 b/d for the fist 12 months.

      • Here is the production per county. The daily oil per well is for the second month.

  12. Andy Hamilton says:

    Baker Hughes just announced 7000 job losses:
    http://www.businessinsider.com.au/r-baker-hughes-to-lay-off-7000-staff-as-oil-prices-slump-2015-1

    ”Oilfield services provider Baker Hughes Inc said it expects to lay off about 7,000 employees, days after industry leader Schlumberger Ltd said it would cut jobs as drilling activity slows due to a steep fall in oil prices.”

    ”Schlumberger warned on Friday that the oil price drop was likely to have a “significantly more dramatic” impact on North America than on the rest of the world.”

    Really? You don’t say……..

    • Watcher says:

      >>
      ”Schlumberger warned on Friday that the oil price drop was likely to have a “significantly more dramatic” impact on North America than on the rest of the world.”
      >>

      Almost as if someone prefers it thus.

  13. Sam Taylor says:

    http://seekingalpha.com/article/2822816-eagle-ford-currently-losing-about-80-85-million-per-day

    That’s got to be hurting someone, even if the producers are hedged, $80 million a day is a lot.

  14. Dean says:

    Using the latest RRC data up to T and the previous data up to T-1, I computed the amount of corrections that each month should undergo to be close to the real data. In doing this, I consider only the last 24 months (older months have only negligible corrections): what I did was to sum for each month the corrections which took place in the previous “h” months, where I put h=24 for computational simplicity.
    For example, the correction for the last month (which is one subject to the highest degree of corrections over time) were equal to 475748 bbl/day (only oil , no condensate).
    By doing this for all the past 24 months, I reconstructed the supposed “real” Texas oil production data. The result is the figure attached to this comment.

    • Dean says:

      here is condensate

      • Dean says:

        here is total natural gas,

        • Dean says:

          and finally my C+C compared to the EIA.

          Some brief comments: oil, condensate and natural gas seem to have all plateaued (which is reasonable). Given that the fall in the number of rigs started in December (particularly in Texas), December oil production data will be very interesting to watch.

          • Watcher says:

            Not Dec, Feb. Takes 2+ months to get the well done.

          • Dennis Coyne says:

            Hi DeanDean,

            Great work. So to your eye only the last two months of EIA estimates for Texas C+C look overly optimistic, by about 150 kb/d in Oct 2014, is that about right?

            • Dennis Coyne says:

              Hi Dean,

              Is it possible to see how your estimate from 3 or 6 months ago compares with your current estimate? Do your estimates tend to be on the low side (they increase over time) or high side (newer estimates are lower) or neutral ( they move up and down at random)?

              • Nick G says:

                In other words, if you do a retrospective analysis, can you find a secondary correction factor?

                • Dean says:

                  Dear Dennis, Nick,

                  find below the plot containing the vintage differences between EIA and my data from April 2014 till the latest for November 2014 (that I posted alone in a tag below): as you see there does not seem to be any systematic bias and the differences are random (sometimes my estimates are higher and EIA lower, and viceversa)

                  Regards, Dean

                  • Dean says:

                    however, I can say that the variability of the differences has decreased over time: find below the average difference for the last five corrected months from the April vintage till the November vintage:

                    Apr 2014 93
                    May 2014 239
                    Jun 2014 -137
                    Jul 2014 -50
                    Aug 2014 -80
                    Sep 2014 -75
                    Oct 2014 24
                    nov 2014 47

            • Dean says:

              yes, find below the monthly differences between EIA and my estimates (in kb/day):
              EIA – Dean
              Jan 2014 -31
              Feb 2014 -31
              Mar 2014 -19
              Apr 2014 -17
              May 2014 -20
              Jun 2014 -14
              Jul 2014 12
              Aug 2014 13
              Sep 2014 80
              Oct 2014 145

              • Dean says:

                and here a plot with the monthly differences between EIA and my estimates (in kb/day) starting from December 2010

                • Dean says:

                  Till June 2014, on average, my estimates for Texas oil production were higher than EIA. Since July 2014, EIA has become extremely optimistic about oil production there, and honestly I find these optimistic estimates difficult to justify

                  • Dennis Coyne says:

                    Hi Dean,

                    Thanks for all that info. Your method looks good, sometimes the EIA makes bad estimates I guess, in the past they have been pretty good. Maybe they are assuming the rate of increase has not changed when in fact the rate of increase is either slowing or has gone negative.

          • Toolpush says:

            What am I missing?

            North Dakota steady for last two months.
            Texas steady to down.
            In the next few months, ND oil production should rise, due to better weather for fraccing, before we drop off in drilled holes takes effect. If Texas is steady to down in October, and since then Texas has lost 138 drilling rigs.
            These are the two largest producing states going nowhere, so where is this massive oil glut in the US coming from?

            • Production is still above demand. A worldwide cut of about 1.5 mmbopd will do the trick.

              In 2014 demand grew about 1 mmbopd, but production grew by 2 mmbopd (I think that’s for all liquids).

              This year demand is supposed to grow by slightly more than 1 million BOPd. So, if production increases we will continue to see oversupply and low prices. The question is whether non opec producers drop production slightly or continue to overproduce.

              The balance can be impacted by producers other than the light tight oil “fracking” outfits in the USA. Many of them will be watching the futures markets to decide what to do. This means they may not cut back nearly as much as one would expect given today’s price levels. It’s too complex to know what will really happen.

              • Dennis Coyne says:

                Hi Fernando,

                Agree completely, my guess is that C+C output will be flat because so far increases in US and Canadian C+C have more than offset declines elsewhere, with low prices I think US and Canadian increases will be smaller and declines elsewhere will be larger due to a cutback in CAPEX. It is indeed complex, and your guess would be better than mine. One problem with IEA data is they do not adjust biofuels and NGL for their lower energy content, so there all liquids numbers are inflated, the numbers should be presented in GJ or barrels of oil equivalent (boe) and they are not.

                • Exactly. And we also have to consider end products. I used to focus only on the produced hydrocarbons, but then I had to start working with really complex heavy oil projects. And I learned a ton from the refining and marketing team. The best approach would be to segregate production by molecule type and their market. The market for asphalt molecules is a world apart from ethane molecule markets. I suspect these agencies try to mask the detail so we don’t get to see what’s going on.

              • John Keller says:

                Were any of you guys in the industry in 1986? The guy running Princeton Energy Advisors thinks today’s plunge looks very similar to then. After which, demand surged due to high prices. At the time, OPEC had lots of spare capacity to handle whereas today it doesn’t really.

                • John Keller says:

                  correction, due to low prices

                  • Patrick R says:

                    Difference then was that driving markets were not yet saturated in OECD countries. Any demand surge can only come from developing world now.

                  • Toolpush says:

                    Yep,

                    I was there, I took a 16 month holiday, which took me half way around the world, at a very slow rate I my add.
                    And this is totally different. In 1986 a lot of very cheap oil had been held off the market during the early 80’s, and then released. This time around, we have relative expensive oil increasing supply, and the excess is not that great, thought the projections scared people.

                  • AlexS says:

                    Prior to 1986, OPEC production declined from 30mb/d in 1979 to 15.9mb/d in 1985, or by 14.1mb/d. Even assuming that capacity utilization was close to 100% in 1979, that some capacity was destroyed as a result of the war between Iran and Iraq, and that no new capacity was added in OPEC countries between 1979 and 1985, we can confidently suppose that there was at least 12mb/d of OPEC spare capacity in 1985. That was equal to about 21% of global demand (57.5mb/d).
                    Saudi Arabia alone had cut its oil production from 10.3mb/d in 1980 to 3.6mb/d in 1985. The monthly low for Saudi output in mid-1985 was 2.5mb/d. meaning that at some point the country used only 25% of its capacity, and the average rate for 1985 was 35%.
                    Even after Saudi Arabia altered its policy of defending oil prices by restricting supply and chose to defend market share, it only increased production to 5.2mb/d in 1986 and again reduced it to 4.6mb/d in 1987. Thereafter, Saudi and OPEC production (and market share) were gradually increasing, but significant spare capacity existed until the end of the 90’s, which kept prices low for a decade and a half.

                    Today, sustainable OPEC spare capacity is only 3.45mb/d (according to the IEA definition), only 3.7% of global demand. So the current oil price plunge has little similarity with the mid-80’s. And unlike that time, the current surplus in the oil market will be eliminated in the next 2 years.

                  • Today, sustainable OPEC spare capacity is only 3.45mb/d (according to the IEA definition), only 3.7% of global demand.

                    And just which OPEC nation, or nations, is holding 3.45 million barrels per day off the market. Really, OPEC spare capacity is a joke.

                  • Jeffrey J. Brown says:

                    Re: OPEC Spare Capacity

                    As annual Brent crude oil prices rose from $25 in 2oo2 to $55 in 2005, Global Net Exports (GNE*) rose from 39 mbpd in 2002 to 46 mbpd in 2005.

                    As annual Brent crude oil prices rose from $55 in 2005 to the $110 range for 2011 to 2013 inclusive, GNE fell from 46 mbpd in 2005 to 43 mbpd in 2013.

                    Methinks that there was a material amount of export spare capacity in the 2002 to 2005 time frame, but I have severe doubts about the 2011 to 2013 time frame. Of course, there were some recent production disruptions related to political unrest, e.g. Libya, and some sanctions, e.g., Iran, but those factors are always at play to some extent.

                    In any case, depletion marches on, and in my estimation total remaining post-2005 Global CNE (Cumulative Net Exports) have fallen by about 30% since 2005 (through 2013).

                    *Top 33 net exporters in 2005, total petroleum liquids + other liquids, EIA

                • I was around, was asked to prepare revised budgets for a region within a large multinational’s operations.

                  Check AlexS comment. It gets a 10.

    • watcher says:

      Down since August. Sounds right.

  15. BC says:

    It required the energy sector consuming an increasing of 2-2.4MMbbl/day to produce 3-3.5MMbbl/day since 2012, the period during which production achieved a super-exponential rate of growth, which was the fastest 5-year rate since 1927 and 1937.

    That is, at some point between 2012 and the peak in the change rate in mid- to late 2013 and in absolute terms to date, it required consuming more than half of the incremental oil production, and at an accelerating rate of consumption, to produce what is merely an additional net ~500Kbbl/day to date.

    In other words, gents, the shale boom/bubble peaked in 2013 and is in the early phase of an “anti-bubble”, which typically results in a return to the level at which the super-exponential rate of acceleration commenced (and sometimes overshoots), implying an eventual return to production of 5-6MMbbl/day (and a proportional decline in oil consumption along the way of 2MMbbl or more).

    Note that during 1975-79, it required consuming ~30-40% of production for the increase in production over the 4- to 5-year period.

    The typical “anti-bubble” trajectory retraces the super-exponential acceleration in 30-35% of the period of the boom/bubble, suggesting that the crash in production ahead will bottom out as soon as summer-fall 2016 to winter-spring 2017.

    Put differently, we are seeing a dramatic decline in the differential change rate of increase in production per oil consumed to achieve the increase in production, i.e., a surge in the liquid fossil fuel energy consumed to achieve diminish returns to production.

    The boom is over, gents. The post-Oil Age epoch’s bust is dead ahead.

    The probability is rising for a US recession and an equity bear market in 2015; therefore, the Fed cannot raise rates, as the fiscal deficit is set to increase, requiring the Fed to resume QEternity to fund the incremental deficit to prevent M3 and nominal GDP from contracting hereafter with decelerating CPI (and the GDP deflator) as a result of the crash in the price of oil.

    Stay tuned . . .

    • Watcher says:

      There are narratives to defend. Postponing rate increases threatens the buoyant growth narrative.

      Much easier to raise rates 1/8% on the Fed Funds, not touch the Prime, and send money to shale lenders. And do that last part quietly.

      • BC says:

        True, Watcher, but Fed funds futures imply no increase above the current funds target before Oct-Nov, but the economy might be decelerating to or below stall speed before that.

        A very reliable spread proxy I use implies no Fed rate hike before Jun-Jul, if for the foreseeable future.

        And, yes, a token increase in the Fed funds upper target band would be meaningless but allow the Fed to maintain “forward giddiness”.

        And, yes, I will not be surprised to see a Fed bailout of the TBTE banks that have ramped up C&I loans and thus contributed to the shale bubble.

        • The Wet One says:

          TBTE = Too Big To ????

          I know of Too Big To Fail, but TBTE is a new one for me.

          Care to lift the veil of ignorance from my eyes?

          Thanks!

          • BC says:

            TBTF = Too Big to Exist (TBTE) when it comes to the Anglo-American and European, Rockefeller-Rothschild int’l banking syndicate. 🙂

        • Watcher says:

          If the destruction of the shale industry proves as powerful an event as is possible, there will be no rate increases, and probably some targeted QE.

    • Where did you get that information?

  16. Jeffrey J. Brown says:

    Booming US auto sales:

    http://www.cnbc.com/id/102351888

    • Ves says:

      as Berlusconi would say: “What crisis? Restaurants are full” LOL

    • thrig says:

      Oh boy, now they can afford to sit around in cars more!

      http://www.latimes.com/science/sciencenow/la-sci-sn-sitting-health-20150119-story.html

      … whoops. Better chow down on that vitamin D, eh? Hopefully it might make up for all that car sitting.

      • Allan H says:

        I sit the act of sitting or the act of sitting very still? Does wiggling about or doing isometrics in the chair help? Parents are always telling their children to sit still, should we call DYFUS about them?

        Since we sleep for about 8 hours a day, that is sedentary and very healthy.
        This sure throws a curve into meditation (another supposedly healthy endeavor).
        Maybe that is why the old chairs were just made of plain hard wood and uncomfortable -gets you moving sooner.
        On the more positive side: Be the speaker not the audience (watch old George Carlin videos to see someone get a workout just speaking to people – watch them standing up).
        Eat breakfast standing at the kitchen counter.
        I don’t think this refers to horseback riding or moto-cross riders.
        Housework is even more healthy with this new info.
        Bosses that tell you to stop just standing around and get back to work need a seminar on this one.
        Sell that riding mower and go back to the push mower.

        So eat your organic veggies for breakfast standing up then run to catch the bus or train. Have a bladder problem that makes you get up often to go to the bathroom. Find a tanning salon that lets you stand up for the treatment. Forget things a lot so you have to go back for them (adds miles). Forget the bank machines, go inside and wait in line.

        And just remember, if you have been stood up lately, maybe it’s a good thing.

    • Watcher says:

      near 0% interest car loans whose delinquency is already climbing

      • Jeffrey J. Brown says:

        But a perpetual rate of increase in: car sales, the economy and in our consumption of a finite fossil fuel resource bases sounds more appealing.

        • Watcher says:

          hey, 0% financed SUVs burn oil just as well as those for which cash was paid. I’m good with that.

    • TechGuy says:

      “Booming US auto sales:”

      Yes, on the availablity of easy subprime auto loans. Auto Loan delinquencies are rising. I am sure that with all the oil sector job losses, the boom in auto sales won’t last very long. and probably reverse before the summer. To boot, the healthcare sector layoffs are about to begin.

  17. ezrydermike says:

    meanwhile, down in the GOM…

    “The U.S. Justice Department urged a federal judge on Tuesday to impose the maximum $13.7 billion fine on BP for its role in the 2010 Gulf of Mexico oil spill. But attorneys for the oil giant said such a penalty would cause undue harm to the company.”
    http://www.nola.com/business/index.ssf/2015/01/bp_fighting_penalty_2010_gulf.html

    • ezrydermike says:

      last week the ruling on the quantity spilled was finalized

      “A federal judge in New Orleans ruled Thursday that 3.19 million barrels of oil were spilled during the 2010 Gulf of Mexico oil disaster. The ruling means BP now faces up to $13.7 billion in pollution fines for the spill, well below the amount federal prosecutors want the company to pay.

      U.S. District Court Judge Carl Barbier acknowledged in his ruling “there is no way to know with precision” how much oil flowed into the Gulf during the disaster.

      Barbier decided on the 3.19 million barrel amount after reviewing evidence presented in October 2013 in the civil trial over the disastrous spill.

      The federal government argued that 4.19 million barrels of oil were spilled following the Macondo well blowout in April 2010. BP said 2.45 million barrels were spilled.”

      http://www.nola.com/business/index.ssf/2015/01/federal_judge_rules_319_millio.html#incart_story_package

  18. Old farmer mac says:

    http://www.usatoday.com/story/money/2015/01/19/gas-oil-five-dollar-gallon/21865975/

    Former Shell HIGH MUCKETY MUCK says oil will go back to a hundred bucks within a year or two at the most and probably up from there.

    He is on the natural gas band wagon these days.

    I can see gas becoming very popular with big time trucking companies, government and lots of businesses that use vehicles in such a way that refueling is easy once a fuel station is available at or near home base.

    But I think pure electric and plug in hybrid cars are going to out compete gas as far as Joe Sixpack is concerned.It is not likely to ever be economical to fuel up at home where as plugging is easy and even cheap. And fueling up at a service station is going to be a tedious process.Probably out of the question on the aggravation factor for most people with only a few stations at first and everybody with a NG car trying to use them at the same peak hours.

    Before too long we are going to be seeing plug in parking spots at stores and upscale professional offices.
    ( The shyster can charge up his own Tesla and write off the juice and charger as a client perk.??????)
    Put in a couple of ones or some quarters or swipe a card and buy your junk and come back out with another ten to forty or fifty miles in the battery. Some upscale places will charge you up for free to get your business. A restaurant with a typical twenty buck and up tab could easily afford a couple of dollars worth of juice in order to attract another fifty bucks ( party of two ) or more in business.Some electric car owners would make a habit of patronizing such a place and return again and again assuming the food and service are up to standards.

    Concrete trucks and school buses and bulldozers and big farm tractors are a different story. The fuel savings will easily justify the inconvenience of CNG.

    • Toolpush says:

      OFM,

      I can’t agree with you more, light duty personal transport vehicles should not use enough fuel to make CNG an economic choice. so as long as the battery makers can produce an acceptable product, than the light personal transport market can be filled electric vehicles.
      As you point out, heavy trucks, especially return to base operations, can/will be filled by CNG/LNG, and the heavy truck market is the small end of the Nat gas market. Stationary gensets, are being supplied with CNG by truck. The class 1 railways are all experimenting with LNG, shipping companies especially coastal ships are being converted to LNG, and mining trucks are also being supplied with LNG.
      The big toys are going Nat gas, the small toys can go electric, or just more efficient ICEs. It will depend on hoe scarce oil becomes.

  19. aws. says:

    BONANZA… wonder if the presentation will touch on production declines?

    The shale gas bonanza: opportunities and challenges

    with Denis Lavoie, Natural Resources Canada

    The search for oil and gas is taking us to new settings on the Canadian landscape, testing the limits of our technology and geological knowledge. Among the more publicly discussed of these innovative ventures has been the exploration in shale, where large quantities of natural gas may be found. Researchers with the Geological Survey of Canada are beginning to understand how unconventional sources of oil and gas form in these underground structures, which will be important to assessing the challenges of extracting these resources.

    Denis Lavoie, an expert on the oil and gas potential of the sedimentary rocks of Eastern and Northern Canada, will explain just how much we know — and don’t know — about operating under these conditions. As a research scientist at the Quebec Office of the Geological Survey of Canada, Lavoie leads projects on the conventional hydrocarbon potential in Arctic regions, as well as on shale gas and tight oil exploration and development in southern Canada. He served as an external expert in hearings that investigated shale gas potential in Southern Quebec, seismic exploration in the St. Lawrence estuary and that produced the first quantitative assessment of the conventional oil and gas potential in Eastern Canada.

    Organized by: The Partnership Group for Science and Engineering (PAGSE) and Mr. Joe Comartin, Deputy Speaker of the House of Commons.
    Supported by: CANARIE inc. and Natural Sciences and Engineering Research Council (NSERC)

    Patrons:
    –the Speaker of the Senate
    –the Speaker of the House of Commons

    February 3, 2015, 7:30 am – 8:30 am
    Location: Parliamentary Dining Room, Centre Block
    Cost: No charge to Members of the House of Commons, Senators and Media. All others $25. Payment must be made in advance by credit card.

  20. aws. says:

    Jan 22: Social, Responsible, and Impact Investing: How to Influence Positive Change With Your Wealth

    Time: 12-1 pm, Location: HUB Ottawa, 71 Bank St, 6th Floor, Register HERE!

    Money is a powerful driver of change. Whether it was divestment from South Africa in response to apartheid regime, or the recent fossil fuel divestment campaign, capital markets are a great tool to influence change. By providing insight into their processes and businesses, our presenters will provide knowledge on why you should consider a socially responsible investing mandate, and how you can pursue it.

    Topics to be Covered:

    – Conventional investment portfolios assume continuous fossil fueled economy, which cannot continue given climate urgency and carbon pricing.
    – Investment portfolio is an asset that individuals can use for change if they invest in sustainable enterprises.
    – Future expectations of sustainable investments, trends and insights.
    – Policy changes expected and their impact on investments.
    – Investment options, including local options.

  21. robert wilson says:

    It has been more that 50 years since Charles Galton Darwin published The Next Million Years http://eindtijdinbeeld.nl/EiB-Bibliotheek/Boeken/The_Next_Million_Years__how_to_kill_off_excess_population___1953_.pdf

    • FunnelFan says:

      Shared by my Facebook friends here in Houston.

      • Fred Magyar says:

        Wasn’t this a popular bumper sticker in Texas at one time?
        “Drive fast and freeze a Yankee” What goes around comes around…
        The oil age is over folks it’s a new world!

      • Ilambiquated says:

        Well if I’m buying gas it’s my money they’re losing so…

        • Ilambiquated says:

          Oh wait, I’m sure the oilmen were heartbroken that consumers were going broke buying gas.

          • Toolpush says:

            Ilambiquated et al,

            I am a little taken back by the venom in the three comments here. I realize the love and endearment the US vehicle owner places on his/her own over grown, over weight inefficient means of transport, but the I find it amazing that educated people would continue to drive such vehicles that were sending them broke, instead of taking the normal path of changing to smaller more efficient means, like the rest of the world. Now I realize it is just un-American to downsize, but I can’t believe that people let their own emotional preference get in the way of their own personal survival as apparently many people in the US have done, and then as a result of their own bad choices, blame the people that are actually doing their best to supply their basic needs.
            One thing I learnt when I was young, jobs that people like to do, usually do not pay very well. On the other hand, jobs that people don’t like, usually do pay well. The drilling game funny enough is a job that many people do not like to do, as it is dirty hard work, time away from family and work around the clock, with a strict military type order on command, and with job security as good as the next up and down cycle. Most people these prefer to have a nice clean job sitting behind a computer, and going home to mum every night, or a job that gives them a nice warm fuzzy feeling, such as teaching or nursing type jobs.

            I suppose most people consider the bumper stickers to be a personal affront to the northern states. The bumper sticker actually came out in reply to government restrictions to drilling, and therefore the oil producing states perceived these restrictions to be putting obstacle in the way of a solution to the US oil supply during the 70’s. Yanks were perceived to = government.

            On a more personal note, I am also one of those statistics that we are so eagerly reading about with the declining rig rate. Fortunately due to old contacts I may have life line, but at the speed things are changing, I will not count my chickens too soon.

            A very water melon nephew on mine, said to me once. “In a lot of peoples eyes, being in the fossil fuel industry, I work for the devil”. My reply was, “you are the devil, as you are the consumer”. So fellas, when you are finished gloating about all those out of work oilmen, just take a look in the mirror one day, and have a good look at that devil you see.

            • shallow sand says:

              Toolpush, I admit I am conflicted. I hate to see anyone lose a job. However, I also want to see new wells slow enough to convince the traders to bid oil back up to a higher level. If I haven’t made it clear enough, the shale companies draw my ire as I feel they were reckless and overproduced and have continued to talk the price down in trying to convince the bankers that they could keep drilling at $10 below the current price. Notice there have been few willing to bs and claim they can make it at $30, and now appears maybe price is trying to find a bottom. Just tell the truth and maybe price doesn’t go below $60-65?

              I guess self interest wins out. I suppose if we didn’t have all of this central bank manipulation, maybe the swings would not be so wild . Starting to think US qe drove oil too high, and now everyone else’s is driving oil too low.

              I can relate to the devil quote. Kinds of like the one, “Don’t complain about farmers with your mouth full.” Don’t complain about oil workers with your tank full, if a car, motorbike, etc is in your garage, or the like.

              Hang in there toolpush and hope things go well for you.

    • Watcher says:

      “Over a lavish buffet lunch recently at the Petroleum Club of Midland, the talk was woeful and full of conspiracy theories about how the Saudis were refusing to cut supplies to vanquish the surging American oil industry.

      “At $45 a barrel, it shuts down nearly every project,” Steve J. McCoy, Latshaw Drilling’s director of business development, told Mr. Pruett and his guests. “The Saudis understand, and they are killing us.”

      Mr. Pruett nodded in agreement, adding, “They are trash-talking the price of oil down.””

      Mr. McCoy could get his butt fired over that quote.

      • Watcher says:

        One more time, with feeling:

        “At $45 a barrel, it shuts down nearly every project”

  22. islandboy says:

    Trouble on the periphery?

    Fury in Pakistan as petrol crisis brings roads to a halt

    “Officials say the shortage was sparked earlier this month when banks refused to extend further credit to Pakistan State Oil (PSO), forcing the state-owned fuel supplier to slash imports.

    Anger is growing over the shortage amongst Pakistanis — who already have to deal with chronic power cuts that can see them struggle without electricity for 12 hours a day or more — at a time of a global glut in oil supplies.”

    I see this as a preview of coming attractions in my neck of the woods and this is one reason I think EVs aren’t happening soon enough. Since, as I believe most of us here do, that TS is going to HTF long before there are significant amounts of EVs on the roads, I am leaning heavily towards something like Nissan’s eNV200. Problem is, what happens when you’re the only guy in town with an EV during a protracted fuel shortage?

    Onr answer: You make yoursel available to help your local precint/police station with their transport issues?

    Alan from the islands

    • Fred Magyar says:

      From the article:

      “Where will we go when there is no electricity and no petrol? Better that this government resign.”

      That in a nutshell is a problem that people the world over have yet to wrap their minds around. It doesn’t matter who is in the halls of power (pun intended) there is no government that can print energy

      People will have to start accepting the fact that their expectations and wants are completely out of synch with their needs. Until that starts to happen I expect a lot of strife and struggle in the coming years. Perhaps more and more people will learn how to live with and manage the energy provided by those currently much maligned intermittent alternative energy sources…

      • wimbi says:

        Funny. Long ago I used to do business in India, Pak, and Bangla.

        I always admired their ability to just get along on what was there.

        I was delighted to see an old, super-simple jumpin johnny diesel familiar to me as a farm kid, creeping along the road pulling a long train of ox carts, wagons, whatever, all crammed with people going to town. That johnny, for one, was earning its cooking oil, or whatever it was eating at the time.

        I was trying to sell solar. No luck. Maybe their brains were too kooked by the intense sunlight to be able to think much.

        “Only mad dogs and englishmen go out in the midday sun.”

        • Ilambiquated says:

          Maybe you should try again, the Pakistani government just changed its mind about solar.

          http://www.brecorder.com/fuel-a-energy/193:pakistan/1140085:government-to-pull-solar-energy-into-national-power-grid/

          • wimbi says:

            “Just changed its mind”?

            Astounding! Where has its mind been this last 40 yrs, when I was having no luck.

            Have to point out that what I was selling then was not PV, it was a concentrator/heat engine. Worked very well indeed on solar or cow dung.

            Problem was it was weird in its design. Despite the fact that it sat there and worked for sure, and I was selling them for anybody to buy and dissect, nobody either here or there had ever seen such a thing so–

            “I don’t understand it, so it must not be any good.”

            And, it’s still there, still works, and still ignored.

            So, body and spirit broken, I spend my last hours writing stuff like this.

            And —having a hell of a lot of fun putting PV into the hands of the adjacent hillbillies.

            They don’t even pretend to understand anything.
            “Does it work? Yea, how can I git some of them thangs”

            • Watcher says:

              Ah so you’re in the solar business.

              • wimbi says:

                Yep. Here’s my business plan.

                go out to the shop, find one or two people who know which way to twist a bolt. Put them to work on any one of my millions of great ideas. One at the moment is wood/trash pyrolyzer. Helper and I play around with it until it works.

                This one works just fine. I would love to buy one.

                Run the gas thru a Honda and charge my batteries on cloudy days (months).

                Give plans away to any passer by, and hope somebody picks it up and turns it into a product.

                That’s the plan. Any investors?

  23. Toolpush says:

    Good article from RBN on drilling cut backs and increasing production.
    Not sure how much I believe, after seeing the real numbers coming below what the wish list numbers call for.

    https://rbnenergy.com/rig-cuts-deep-output-high-crude-producers-cut-budgets-but-expand-production-in-2015
    Rig Cuts Deep, Output High! – Crude Producers Cut Budgets But Expand Production In 2015

    • Toolpush says:

      And here is the table I intended to post first

      • AlexS says:

        And there will be more cuts:

        “BHP Cuts U.S. Shale Rigs as Oil to Iron Ore Prices Slip

        BHP Billiton Ltd. (BHP), the biggest overseas investor in U.S. shale, will cut the number of its rigs there by about 40 percent as plunging petroleum prices add to concerns about lower iron ore earnings.
        Drilling and development spending on U.S. onshore oil and gas fell to $1.9 billion in the six months to Dec. 31 from $2.1 billion a year ago, the Melbourne-based company said today in a statement. BHP will cut the number of active rigs to 16 from 26 by July, it said. ”

        http://www.bloomberg.com/news/2015-01-20/bhp-cuts-u-s-shale-spending-as-oil-to-iron-ore-prices-decline.html

        • Toolpush says:

          And BHP are claiming they will have a 50% increase in liquids.

          Onshore US development activity
          Onshore US drilling and development expenditure totalled US$1.9 billion in the December 2014 half year. In
          response to weaker prices, the Company will reduce its operated rig count from 26 at period end to 16 by the end
          of the 2015 financial year. An update to the drilling and development expenditure budget for the 2015 financial year
          will be provided with the release of our interim results in February 2015.
          The majority of the revised drilling program will be focused on our liquids-rich Black Hawk acreage with activity in
          the Permian and Hawkville limited to the retention of core acreage. The Company’s dry gas development program
          will be reduced to one operated rig in the Haynesville, with a focus on continued drilling and completions
          optimisation ahead of full field development.
          The reduction in drilling activity will not impact 2015 financial year production guidance and we remain confident
          that shale liquids volumes will rise by approximately 50 per cent in the period.

          Taken from BHP BILLITON OPERATIONAL REVIEW
          FOR THE HALF YEAR ENDED 31 DECEMBER 2014

          • Watcher says:

            Tooldood, only thing I can imagine here is these guys are oil men and have put on their optimism cloaks and WTI is going to be $110 by August in their world and THAT is the source of their oil production projections.

          • AlexS says:

            Oil companies usually compare average 2015 (projected) numbers with preliminary 2014 average estimate, which shows solid growth. However if we compare 2015 guidance with actual end-2014 output, there will be very modest growth, or no growth at all.

            The EIA recently recognized that:
            “Given the rapid growth in oil production throughout 2014, the year-over-year comparisons between 2015 and 2014 oil production overstate projected growth in 2015 relative to levels at the end of 2014. For example, U.S. oil production in December 2014 is estimated at 9.2 million barrels per day, only slightly below the average daily 2015 production level in EIA’s STEO forecast. In considering its U.S. production forecast, EIA recognizes that tight U.S. oil production, a key component of lower-48 onshore production, is more sensitive to short-term price movements than production in the Federal Gulf of Mexico, which is expected to increase through 2016 as production from projects nearing completion begins, or Alaska production that is expected to continue its gradual long-term decline.”
            http://www.eia.gov/petroleum/weekly/archive/2015/150114/includes/analysis_print.cfm
            According to EIA’s January STEO, Lower 48 States onshore C+C production is expected to increase by 0.58mbd in 2015 vs. 2014 (+8.6%). However, Dec.2015 production (9.16mbd) is expected to be even slightly lower than Dec.14 (9.18mbd).

            Same things we can see at the company level.

            Halcon guidance:
            “Halcón’s spending for 2015 is projected at between $375 – 425 million, representing a steep decline from 2014 numbers of $950 million. Even with these drastic cuts, the company anticipates that production in 2015 will increase to an average of 40,000-45,000 barrels per day. This is compared to 43,554 b/d in the third quarter of 2014.”
            http://eaglefordshale.com/news/halcon-plans-reduce-rigs-2015/

            Diamondback Energy:
            “Diamondback forecasts 2015 production to average between 26.0 and 28.0 Mboe/d. The 2015 production guidance range for Diamondback represents approximately 40% growth at the midpoint as compared to 2014 production”.
            But projected 2015 output was already almost reached by the end of 2014:
            “Diamondback’s Q4 2014 production increased 25% to 25.7 Mboe/d”

            http://ir.diamondbackenergy.com/releasedetail.cfm?ReleaseID=891132

            And we should note that most companies assume average 2015 WTI price at $65-70/bbl (the lowest number I’ve seen was $60) and more than half of their sales are hedged at much higher prices.

            Let’s suppose that WTI stays at $45/bbl for two years. What would be U.S. tight oil production by the end of 2016?

      • Ronald Walter says:

        Goodrich Petroleum has a share price of 2.69 usd and a per share earnings of -4.10 usd. They’re going to need some help in the future if they are losing over four dollars per share.

        Anadarko Petroleum is at 77.77 per share and a share earnings of -4.32.

        Occidental Petroleum is at 78 with earnings of 7.22 per share.

        Goofiest market you’ll ever see. It’ll probably smash and crash, the Texas fiasco will look like a picnic grounds.

        Read the old Barron’s on line, the stuff from ca. 1930.

        Before synthetic oil for engine lubrication, a five quart oil change would be necessary every 1500 miles on a V-8 engine in 1970 year automobiles, gas in the oil if it all goes wrong. In the age of synthetic oil, the quality of the oil is far better, the synthesized vintage is the way to go, you can drive a car and change oil every fifteen thousand miles. The engine builds are far superior to your great-grandfathers knock and ping with 90 octane gas in the gas guzzler. 108 octane is what they needed with some lead in it to deposit on the valves so they wouldn’t wear out the engine in no time. Huge savings in oil and consumption thanks to synthetic oil, reduces labor by a country mile.

        Honda engines are incredible products.

        Burn that oil, step on the gas until it’s gone.

        162 rig count in the Williston Basin, up five.

      • Gerd says:

        Toolpush:

        I think there is a timing aspect that is missing here. Oil initially went down to $60 in December and several companies made announcements regarding reductions at that time. Then in January oil dropped under $50 and very few of these companies have updated their forecasts. I think the final updated production numbers will be even less. I understand that most of these companies have significant debts and those debts come up for renewal in March. I don’t see the lines increasing so companies may have to cut back further to keep their lenders happy. I haven’t seen many updated production forecasts recently, I think companies are waiting for year-end results and bank negotiations to be complete and I think we will get a lot of updates in late February and early March.

        I also agree with your comment up-thread that production is essentially flat in Texas and ND at year-end. I don’t think the media has caught on to that story yet. Once that story gets traction, perhaps in another month or so, the speculators will switch from short to long and oil should start moving up.

      • clueless says:

        EnCana’s (#21) numbers look a little askew – they account for 50% of the total production increase. Rig count down 28%, expenses have to be down on a per rig basis, but they have increased capex. Maybe they have agreed to buy some production in place, which would make the seller’s production go down by a like amount. But, without further analysis, they sure look like an outlier.

        • Watcher says:

          In this environment, “capex” is an interesting label. Maybe “debtex” would be better.

      • Doodlebugger says:

        Toolpush and Mike: I wonder if you could get one of those guys to tell the truth about their production with a gun at their head.
        They are effectively saying that they are going to offset that 66% first year decline plus add capacity with 50% fewer wells. Who do they think is going to swallow that? But hey they sold the bond guys and the Asians that the boom was going to go on forever. There must be another sucker ready to step in, right?
        Meanwhile you and I have once again to pick up the pieces, tighten our belts and keep marching on reassuring our employees that we are going to hang in there looking for that next conventional oilfield.

        • Watcher says:

          They are constructing a narrative, and it is pointed at rollover lenders.

          It’s all based on $100 oil by June. They pitch that to the bridge loan pimps and they forward it to their clients.

          If $100 doesn’t happen, the lenders lose even more money. The salaries, get paid.

  24. Old farmer mac says:

    http://www.ft.com/intl/cms/s/0/6f6436a2-a0ae-11e4-8ad8-00144feab7de.html?siteedition=intl#axzz3PSMTLKSh

    People who wonder about whether the Chinese are smart enough to lend wisely might want to read THE ART OF WAR.

    In terms of the BIG PICTURE there are lots more reasons to ” loan” money than just to help develop a trading partner and reap a mutual benefit.

    Destabilizing a country such as Venezuela might be a worthwhile goal in the eyes of Chinese leaders thinking about being a superpower. It is hard to imagine what a future world court dominated by Asians on a democratic basis -by population – might decide about old debts. It is not so hard to imagine what the Pentagon would want to do in the event of Chinese troops landing in South America.

    • I have watched the Chinese behavior in Venezuela for over 15 years. And I don’t think they intended to destabilize the Chavez regime. But Maduro is behaving like he’s crazy, and the Chinese felt they had little choice when he showed up in Beijing to beg for loans in early January.

  25. Longtimber says:

    Much of this was posted when WTI > 90.
    http://bakkenboomorbust.com/

    • tfark45 says:

      Im not quite sure what your comment means, but all data on the site is current to date, as soon as state and federal numbers become available, all data is lagging 1 to 2 months. I have the daily price of bakken oil updated every few days and WTI once a week. As of lately I think we all get the current story, bust!

  26. Watcher says:

    The ECB has control of the price this morning. Popping the euro took down the dollar a smidgeon.

    Of course that was just the leaked plan. Might not even happen.

    Again, sportsfans, the dollar is an aileron. If it is deflected as a control surface, the aircraft increases its roll. The level is not definitive. The first derivative is.

  27. ezrydermike says:

    Heinberg over at PCI takes a shot out putting it all together.

    “Folks who pay attention to energy and climate issues are regularly treated to two competing depictions of society’s energy options.* On one hand, the fossil fuel industry claims that its products deliver unique economic benefits, and that giving up coal, oil, and natural gas in favor of renewable energy sources like solar and wind will entail sacrifice and suffering (this gives a flavor of their argument). Saving the climate may not be worth the trouble, they say, unless we can find affordable ways to capture and sequester carbon as we continue burning fossil fuels.

    On the other hand, at least some renewable energy proponents tell us there is plenty of wind and sun, the fuel is free, and the only thing standing between us and a climate-protected world of plentiful, sustainable, “green” energy, jobs, and economic growth is the political clout of the coal, oil, and gas industries (here is a taste of that line of thought).

    Which message is right? Will our energy future be fueled by fossils (with or without carbon capture technology), or powered by abundant, renewable wind and sunlight? Does the truth lie somewhere between these extremes—that is, does an “all of the above” energy future await us? Or is our energy destiny located in a Terra Incognita that neither fossil fuel promoters nor renewable energy advocates talk much about? As maddening as it may be, the latter conclusion may be the one best supported by the facts.”

    http://www.postcarbon.org/our-renewable-future-essay/

    • Boomer II says:

      That’s a great piece and should be required reading as we discuss these issues. I like this best:

      But I’ve concluded that many of us, like Koningstein and Fork, have been asking the wrong questions of renewables. We’ve been demanding that they continue to power a growth-based consumer economy that is inherently unsustainable for a variety of reasons (the most obvious one being that we live on a small planet with finite resources). The fact that renewables can’t do that shouldn’t actually be surprising.

      And again, I will toss out that income inequality is, as an unintentional consequence, shrinking per capita energy consumption by reducing the amount of money available for consumption. I don’t think this is the optimum approach to getting people to live simpler, less energy intensive lives, but take away their spending abilities, take away government spending, and you reduce lifestyles quite a bit.

      The austerity measures advocated by those on the right reduce spending. Reduced spending constrains growth. Constrain growth and you use less energy.

      • I’m for population control. We need to teach third world countries to stop growing population as if they were gerbils. Eventually we should strive to reduce population and make sure we avoid communism, fascism, and other such systems which are very inclined to use dictatorship and human right abuses.

        • Fred Magyar says:

          We need to teach third world countries to stop growing population as if they were gerbils.

          Who is this WEI you speak of, Kemosabe?!

          • Ves says:

            We = Sushi loving singles in lulu pants that get in V8 Escalade and drive 10 miles to get $5 Chai Latte 🙂

            • Watcher says:

              And donate to the Sierra Club.

              • Watcher says:

                And take a tax deduction for it.

                • Ronald Walter says:

                  All men are not created equal, it is a pigment of the imagination to think that everyone is created equal; just like Abe Lincoln said in the Gettysburg Address, ‘dedicated to the proposition that all men are created equal’.

                  It’s just not true.

                  Hey, life just ain’t fair.

                  Look at all of the misery in the oil field these days, you’d think it was the end of oil or sumthun.

          • We first worlders, of course.

        • Boomer II says:

          I’m for population control. We need to teach third world countries to stop growing population as if they were gerbils. Eventually we should strive to reduce population and make sure we avoid communism, fascism, and other such systems which are very inclined to use dictatorship and human right abuses.

          For their own benefit, birth control would be good. But in terms of energy consumption, it’s the world’s middle class that is the biggest problem. Getting rid of people, but having those who are left consuming resources at a rapid rate isn’t a good thing, either.

          • Boomer II says:

            I should point out that when I said constraining growth, I wasn’t talking about population growth. I was talking about economic growth.

            Transfer most of the world’s wealth to just a few people, and then everyone else has to belt-tighten: No more airplane vacations. No more road trips. No more big houses.

          • Sure. But the middle class makes the money. And we do have to keep those giant crowds of poor people from getting larger. It’s for their own good. Many poor nations will do much better if they don’t increase population. For example, let’s say a country like Jamaica. Or Bangladesh. It’s simple.

        • Doug Leighton says:

          “We need to teach third world countries to stop growing population as if they were gerbils.”

          Really? I’ve traveled in Third World countries a fair amount but have yet to meet many people in these places who think they need lessons from First World countries on family planning. Rather, Prima Donna pronouncements from countries where one percent of the population have hoarded most of the wealth might even be regarded with skepticism by poorly educated people who should know better. 😉

          • I’m not the First World. And I don’t have any problems whatsoever calling shots the way I see them. I guess it must be my prior history as a very poor refugee from a communist dictatorship. I don’t have any baggage about white man’s burden or anything like that.

            When you get a chance read “My battle with the roaches in Kazahstan”.

        • islandboy says:

          Hmmmm? I think I’ll raise my hand since i think my little corner of the planet qualifies as Third World. To illustrate what I consider to be the crux of the problem here’s a short narative.

          Just a couple of weeks ago I was in the company of three charming young ladies two of whom had no children, the other as far as i could surmise has two. The one with the children was the one least known to me but, she was quite a talker, letting us know that despite the fact that she had seen her “monthly visitor” she still “felt pregnant”. AFAIK she is an unemployed and her two children ae for different fathers neither of whom is her current “partner” yet still she was being very cavalier about the possibilty of being pregnant!

          The documentary “Blind Spot” (youtube link) deals with the psychology of our predicament quite a bit, with many of the persons interviewed trying to explain either why we should be doing stuff or why as a civilisation we seem to have his blind spot that is sort of keeping us in a trance. IMO Jason Bradford puts it best (link to Jason’s explanation) basically that the idea of growth as a norm has become entrenched over the past couple of centuries. Excluding those of us who are “Peak Oil Aware”, my new aquantance along with the rest of the world doesn’t have a problem with adding more “consumers” to the world’s population.

          Good luck with “We” teaching anybody anything as it relates to limits to growth, especialy considering all the vested interests who want “us” to consume more so that they make more money, vested interests that have access to mass media.

          Alan from the islands

          • My experience shows it’s possible to reduce population growth. We did an experimental program, developed by a lady anthropologist who studied third world poor populations.

            So we financed a multiple approach, focusing on teaching young girls about contraceptives, distributing the pill, and setting up school meals and scholarships to keep them in school. We also had to fight local priests who encouraged no family planning. But we did manage to make a dent. The aim was to have, long term, a less crowded setting and lower crime. But chavez interrupted the experiment, we stopped financing the program, and that’s it.

            • Dennis Coyne says:

              Hi Fernando,

              Your ideas on population sound good to me. We can educate and make birth control and women’s health clinics free and it may do some good. Not everyone will choose to have fewer children, but the world is making some progress and there are policies which will allow more progress on reducing the total fertility ratio to 1.75 births per woman.

              • Dennis, they weren’t my ideas. The lady anthropologist I mentioned used to lecture us when she requested budget approval for her budgets. In Brazil they had tremendous success using soap opera female role models with two children. The key seems to be to focus on the females of the species. The males seem to be less easy to convince.

                By the way, she also collected data on the links between baby size and crime rates. The girls in higher crime areas were having LONGER babies. They seem to prefer big guys so their children can survive Gang fights and muggings . Venezuela’s crime rate is astronomical. Another data set: crime rate rose as poverty dropped under Chavez. It’s a really good anthropology lab.

            • Ilambiquated says:

              This sounds likely to me. Birth rates do sometimes fall quickly. Look at Iran and Bangladesh in the late seventies and early eighties.

              The UN predicts there will be 11 bn people on the planet by 2100. But this prediction includes adding 730m people — 10% of the current world population — to Nigeria, which is about as big as Texas and New Mexico together.

              Even if this turns out to be materially sustainable, it seems to me Nigerians might start feeling a little crowded and cut their birth rate.

            • islandboy says:

              And then you have this:

              Let children develop: No condom distribution policy under my leadership – Education Minister

              “Education Minister, Ronald Thwaites has reiterated that under his leadership, there will be no policy allowing the wide scale distribution of condoms in schools.”

              Of course Mr Thwaites is an attorney at law who used to have a radio talk show and was also a Catholic Deacon before entering politics so it’s no surprise he’s following the Popes line!

              On the other hand, this little island has a popular music industry that belies it’s size and has reached all corners of the globe thanks mainly to a guy called Bob Marley. The current crop of local pop stars (I would cringe if i called them musicians or artistes) is the most over sexed bunch on the planet and don’t seem to be able to put together (heaven forbid they actually write this shit) a number without the mention of copulation or some erotic part of the male or female anatomy. I swear they are on a mission to outdo the US rap genre at this sex thing and guess what? The teenagers are just laping up all this sexually explicit content so much so that I wonder how much time they spend each day NOT thinking about sex! But noooo, we must let the children develop and dare not distribute condoms in schools, lest we encourage the kids to actually do stuff, as if they need any more freakin encouragement than they’re already getting through pop music, cable TV, advertising and whatever else!

              Rant off.

              Alan from the islands

              • robert wilson says:

                I ran the Ventura County California chapter of Zero Population Growth (ZPG) about 45 years ago. We had fun. Had some good programs on energy resources, smog, vasectomies etc. Accomplished nothing. Garrett Hardin probably accomplished more than anyone but he is hardly remembered today

              • robert wilson says:

                I recall that after the Haiti hurricane, there was hysterical fear that some of the relief money might go to Planned Parenthood. https://www.google.com/?gws_rd=ssl#q=haiti+population

      • Boomer II says:

        I wonder, too, if taking away income, taking away jobs, and taking away opportunities serves to lower expectations. If people think they will have a rising lifestyle and they don’t get it, they get mad at someone. If they come to realize they won’t get much in their lifetimes, will they accept what they get and instead turn to focusing on the afterlife?

        Can you make the world very unequal and then offer religion as the alternative?

        • Doug Leighton says:

          Well I will continue to practice IR-RELIGION as in the absence of religion, an indifference towards religion, a rejection of religion, and quiet hostility towards religion. So, if you choose, you can realize you won’t get much in your lifetime, accept what you do get and focus on the afterlife. I guess this presupposes your afterlife is a desirable place or state and not dwelling in Purgatory or burning in Hell for all Eternity. “Can you make the world very unequal and then offer religion as the alternative?“ Of course you can, it`s been done for millennia.

          • Watcher says:

            OTOH inequality is natural.

            Everyone doesn’t have the same muscles or IQ.

            • wimbi says:

              The guy with average muscle gets along ok. The guy with average IQ, doesn’t.

              But then–the lesson I got from the Navy- The same deck ape who, left alone, tended to ruin himself and anybody nearby, when under control of somebody who was under control, could handle the 40mm ammo just fine.

              Problem, as always thruout history, How to arrange it so the ones who know what follows what keep those who don’t on a short enough string.

          • Old farmer mac says:

            I am about as big a Darwinist as there is to be found anywhere. PC makes me laugh loud and deep. Multiculturalism is not for me.

            NEVERTHELESS- religion is a natural phenomenon – not an artificial one. It is universal across all cultures. If there someday comes into existence a society composed of mathematical physicists only I firmly believe that it will create or develop a belief system that serves as a defacto religion since such a belief system seems to be a necessity for the proper functioning of the group social mind.

            It might clarify what I am trying to say if one considers the role of state in authoritarian societies- the state becomes a defacto god that the people can believe in and are ENCOURAGED to believe in.

            I correspond with a few very very seriously educated environmentalists and once you get to know them well enough that they know you will never betray their confidence they will acknowledge that they are defacto worshipers of the biosphere in general- that nature is their god- although they do not impute any sense of intelligence or control or consciousness to nature.

            We are SOCIAL animals and while I tend to get a belly laugh out of many foolish things psychologists sociologists etc say there is a clearly defined and legitimate and fast evolving understanding of the behavior of social animals.

            A social animal of the ” higher ” sorts necessarily means an animal that has herd or pack or school or flock leaders and followers. Leaders are generally scarce and followers can in a very real sense be said to WORSHIP really GOOD leaders.

            Anybody who doubts the truth of this statement has never read very much in history. Robert E Lee and Patton were leaders of possessed of such status that their men looked at them as gods.IF I were a black person I would think of men such as Gandhi and Martin Luther King as god like.

            Millions of people more or less literally worshiped Hitler , Stalin, Mao , Castro etc etc. The fact that Hitler was one evil sob is not relevant to this discussion.I betray my own underlying religious mindset simply by using the word evil. No serious student of life would even use the word except for than built in underlying mindset. Eating babies is ” evil ” only in the sense that eating our own offspring is bad for humans. Many other species eat babies – their own as well as others. Nature is not only indifferent to the concept of good and evil- Nature is not even sentiment and thus even mentioning nature and evil in the same sentence is a waste of time.It has never bothered me to eat baby rabbits or very young chickens that are still under the care of their mothers. No doubt the mothers think of me as evil to the extent they can think.Chickens and rabbits exhibit the very most basic rudiments of intelligent behavior at least and thus in my view can be said to think just a TINY LITTLE BIT in the simplest of simple terms..

            It is very hard to find words to explain these things in a few paragraphs but in essence we without a doubt have a NEED to look up to leaders, to believe in leaders, to have implicit deep trust in our leaders. There is no great mystery involved in the origin of such a need. We have lived for the last few million years at least as social apes gradually evolving into new model apes right along. In every band all along the way there has been a leader or a very small clique of leaders and many times as many followers.

            We can train horses and dogs because they are programmed by evolution to accept being ” told” what to do by alpha dogs and horses. They accept us as alphas having no choice in the matter. We constantly cull out the ones who refuse our control thus guaranteeing that the rest will in effect ” worship” us -meaning do what WE want.

            So – while gold has little intrinsic value it has enormous power over the minds of men. Gods don’t have to be real to be very very effective tools of the priests who know how to use them.

            And like it or not religions have proven to be extremely resilient tough organizational ( or organizational modes0 that have historically enabled followers and believers to band together to outcompete outsiders. That some religions have and are holding some societies back is NOT evidence of this being an incorrect interpretation. Evolution is constantly creating and destroying new physical and behavioral features in all living animals . Some times a given feature works. Sometimes it doesn’t. Winners and losers, that is about as short a summary of evolution as can be devised.

            When the shit hits the fan as it eventually must I am very very glad I will be on excellent terms with the local folks around here who are pious Protestant Christians.None – ZERO of my irreligious acquaintances ever come by with a few kind words and a home cooked meal for me and my old Daddy. This is not to say they are incapable of such behavior or that they don’t exhibit it to CLOSER acquaintances.

            But some of the pious Baptists who come to visit us are young folk who hardly even know who we are except thru the words of their parents.

            The church out on the hill where most of the old local folks are buried is the core institution that holds what is left of a truly local society together. I have stopped a vicious fight between neighbors by pointing out to both parties that their parents are buried within a few feet of each other and that if they were still alive they would be ASHAMED of their fighting.

            There is no doubt in my mind that God as such is a figment of the collective imagination but WOW- talk about an ALPHA leader – no real human can ever come close. The fact that gods don’t exist except in the minds of their followers is utterly irrelevant. Martin Luther King and Gandhi and Robert E Lee existed ( or exist ) mostly in the minds of the men who worship them – no more than an extremely minute fraction of their followers ever actually saw them in the flesh.Seeing God in the flesh would reduce him in the eyes of humans rather than enhance him. Presidents and dictators surround themselves with security and flunkies for more reasons than just their own personal safety. The rabble will not look up to a powerful leader who hobnobs more than on very rare occasions with the rabble.Such a leader is a contradiction in terms. A powerful leader must be somewhat remote. Not even existing is about as remote as remote can get.;-)

            Religion is something we are going to have to DEAL with in the same way as we deal with other behavioral issues on the grand scale. It will NEVER go away; one god or suite of gods or another will pass out of favor from time to time ( on a historical time scale) but the evidence clearly indicates that a new one or a bunch of new ones will emerge.

            Given that things could go haywire in modern society almost anytime from tomorrow to a century down the road it is a good idea to be on at least nominally friendly terms with local religious folks. The investment is modest in relation to the potential payoff.

            I post on the net under an acronym mostly for this reason. I don’t want to cause any friends and relatives any pain and distress worrying about me burning in hell forever or create any local enemies.

            • Doug Leighton says:

              Don’t worry Mac, after a few decades in Purgatory you’ll be put on the path to Heaven: There are a few impure thoughts to be purged first of course. But, for the record, the people I know who are most likely to do a good turn to a stranger are Heathens like me. Not that we have a hope in Hell of ever seeing those Pearly Gates. 😉

              • Watcher says:

                There was an official announcement out of the Vatican that you can reduce the time you spend in Purgatory by becoming a follower of the Pope on Twitter.

            • The Wet One says:

              OFM, I’ve been wanting to say this for a few days now but haven’t.

              However, since you’ve proved it yet again, and I’ve copied and pasted your entire post elsewhere on the Web, I have to relay it to you as well.

              You are, without a doubt, the smartest and wisest human being I have the honour of consorting with in any fashion whatsoever. Your insights into the human condition and the nature of things are remarkable. Granted, this may well be the estimation of a fool and worth nothing, but I’m willing to bet what credibility I have on this statement.

              I’ve met and heard from a lot of smart people in my days and in my readings, here and elsewhere, you’re a standout amongst them all.

              I feel truly privileged to have the opportunity to hear what you have to say on just about any topic. Those who know you in person and your father are blessed beyond reckoning.

              May sunshine, gentle rains, books and the goodwill of humankind always be readily available to you Old Farmer Mac. I’m sure you don’t need much more than that to do well under any circumstances and unlike many of us, I don’t think you really need much more to have a life you consider worth living.

              It is a blessing to hear what you have to say about anything.

              Okay, I’ll get my nose out of your butt now.

      • wimbi says:

        And then Heinberg goes on to say the obvious. Plan and prepare right now to get within the renewable energy income we have. Use whatever ff’s we are allowed in order to do it, and quit the silly waste of ff’s to do nothing but get more ff’s to get yet more toys that use even more ff’s to do stuff that shouldn’t be done at all and make us less, not more, happy.

        Executive summary- knock off the stupidity, people.

        I also recommend highly the comment on Heinberg’s piece which argues we are in for it for certain, and only thing to do is hunker down and learn survival skills so that at least some will survive the die-off that’s already baked into the cake.

        I add my personal note- doing all the stuff recommended as right to do is not only really right, but also really possible, and most of all, really fun.

  28. DCB says:

    Wayy back on 10 20 14 ZH put out :
    http://www.zerohedge.com/news/2014-10-29/why-75-most-important-number-us-economic-hope
    Heh,, $75. Blew right through that.
    In the article it has OPEC oil price breakeven numbers on a chart :
    http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/10-overflow/20141028_shale2.jpg
    Price needed to keep Debt/GDP even (in two years).
    Kuwait $69
    UAE $86
    Qatar $80
    Saudi $88
    Russia $108
    Algeria $109
    Angola $145
    Iraq $I36
    Iran $141
    Nigeria $182
    Lybia $230

    None of those are close to breakeven @ current price .

    • Which explains why large oil companies use $80 to $100 per barrel for lng term planning. And they don’t use the 20% IRR the inexperienced mathematicians prefer.

    • Anon says:

      The difference is what kind of reserves they have. The Gulf states have small populations and gigantic reserves. Nigeria and Iran are essentially broke. Russia will be broke shortly.

  29. Old farmer mac says:

    http://www.businessinsider.com/zach-schreiber-oil-short-profit-2015-1

    I am not a conspiracy nut but I do believe that there are plenty of people in the oil industry- people at the top- who knew the glut was coming.

    It is hard to believe this guy could have figured it out while the top dogs at the super majors missed it. The fact that they were cutting capex right and left for a good long while before the price crash is a strong indication that they knew the market was oversupplied.

    This is not to say they knew how MUCH oversupplied. I suppose most of the execs in the industry have been surprised by how far prices have fallen.

    • Old farmer, one of the most frustrating things I experienced was seeing a fool with cheap money come and piss on a deal we were trying to make. We had a much more careful approach, but we had to walk away. And that son of a gun lost every penny.

      I think the big boys must have been frustrated by the overheated activity driven by cheap money and large service company technology services.

  30. Old farmer mac says:

    People in the oil biz are somehow or another still finding places to put stash it.

    Inventories are continuing to climb.

    http://www.wsj.com/articles/oil-ticks-higher-but-oversupply-concerns-persist-1421822468

    I suppose this is an indication everybody wants to have as much on hand as possible rather than as little as possible.
    If the industry really is expecting prices to go even lower then everybody should be trying to empty out storage facilities rather than filling them to the last possible drop.

    Storing more oil week after week only makes sense if the expectation is that the price is going to go up.

    I would bet right now that prices will be going up at least a little over the next few months barring an economic meltdown.

    • Edgy says:

      Bloomberg. OPEC Will Blink in Battle With U.S. Shale Drillers, Poll Shows

      “U.S. shale drillers won’t scale back output quickly enough for OPEC to avoid production cuts this year, according to a quarterly poll of Bloomberg subscribers.

      Forty-nine percent of analysts, traders and investors surveyed said the Organization of Petroleum Exporting Countries will have to lower its production target this year, while 34 percent said shale drillers will lower output in time. Seventeen percent weren’t sure.”

      • Opec production totals 36 million including condensates and all. Light tight producers are about 3 to 4 million. That leaves lots of others with the ability to blink.

        The cut has to be about 1.5 mmbopd. The trick is to figure out who cuts and by how much. I propose Mexico, Venezuela, Canada, Colombia, and Russia as good candidates.

      • Ves says:

        We can only know who blinks first if have info who issued more pink slips, shale or opec. otherwise that poll is pure BS.

        • Watcher says:

          Not only that but a shale industry destruction can take consumption down and manufacture a price fall justification that doesn’t match up with the time frame.

          But there will be an entire Wall Street entity leaping to point at it and say whew, supply and demand must still be real.

          • Dennis Coyne says:

            Hi Watcher,

            You think supply and demand are not real? You cannot be serious.

            • Watcher says:

              Well, we can entertain the matter for a moment.

              Of all items across the planet on a daily basis that are bought and sold, I’ll assert that the vast majority of transactions take place at a price that does not reflect any sort of supply and demand dynamic.

              A share of Apple will trade today at a price that will be different from tomorrow’s price with no change in abundance or scarcity of Apple shares over that 24 hour period.

              And no, there is no “in the long run the price will reflect supply and demand” because the long run is NOT defined as some period of time required to see a price that reflects supply and demand. “The long run”, rather, is defined as a period of time required to have a transaction take place where the price did NOT reflect supply and demand. When that period of time takes place, “the long run” has been seen and the proof is in place.

              • Dennis Coyne says:

                Watcher,

                Expectations matter. The expected future price is a part of the decision making process of both consumers and businesses. The actual future price is unknown, but the expected future price is based on present and past prices.

                Actual prices are adjusted all the time based on sales, when sales are low prices go down, when sales are good (and supplies are short) prices will go up. The price at which goods are sold will affect profits and future supplies.

                If you are referring to the problem of no centralized mechanism determining market clearing prices, that is certainly a theoretical problem. The theoretical supply and demand model is not perfect, and very few models of social behavior are. There certainly is demand for goods and a supply that meets that demand (and price is the mechanism used to bring those roughly into balance.

              • Watcher, I admire a lot of your posts but in this case you are simply wrong… and I mean dead wrong.

                In all things there is definitely a “long run” and a “short run”. Prices swing wide in the short run but in the long run they always follow supply and demand. The idea that the price of any commodity is not determined by supply and demand is rather quaint. Such a position can only be asserted by a person who has no idea how the real market works. Sorry to say that but it is the simple truth.

                When the price is too high sales drop and a surplus develops. That surplus causes holders of that product to drop their price in order to sell their product. Likewise when the price is too low producers of such a product will stop producing so much of that product until the price rises enough to make it economical to produce that product.

                No better example of this can be stated than the case of oil prices in 2008 and 2009. In 2008 the price of oil rose to over $140 a barrel. People all over the world started cutting back on their oil production. A huge surplus developed. That caused the bottom to fall out of oil prices. This in turn caused producers to stop producing so much oil. When that happened the price recovered.

                Watcher just look at the price chart for 2008 and 2009. Then look at the production chart for the same period. If that don’t convince you that supply and demand determines the price then nothing will. Low price increases demand and decreases supply. High price decreases demand and increases supply.

                It is just so damn simple it is silly. End of story.

  31. Jeffrey J. Brown says:

    Some fascinating, and scary, articles on the water crisis in Sao Paulo, the largest city in the Americas:

    http://peakoil.com/forums/viewtopic.php?f=45&t=70883

    • Fred Magyar says:

      Yeah, I was just there… There are 20 million Paulistas that are no longer quite so skeptical about climate change.

      • Jeffrey J. Brown says:

        I suppose the closest analogue in the US, in the near term, would be Las Vegas, but that’s a very small percentage of the people affected by the drought in Brazil.

        Is the Brazilian government making some kind of contingency plan to truck water in, or is that even feasible?

        It seems to me that the they have to make plans for: (1) Mass evacuations; (2) Trucking water in or (3) Mass casualties if they don’t do anything (assuming a lack of sufficient rain).

        • Ronald Walter says:

          There is an ocean beach there, so all they have to do is truck on down to the beach and douse themselves with some ocean water and spend some time in the sun to dry off, since there has been no rain. The way it works, but as soon as you go to the beach to swim and dry off in the hot sun, it will probably rain. The solution is to head to the beach for some sun, surf, and sand and watch the clouds overcast the sky and rain. Problem solved, head to the beach with beer and it is going to rain. Crops are saved, everybody has water again.

          The obvious deforestation of the rain forest along the Amazon River is, in reality, extensive, and is visible via satellite at Google maps.

          • notanoilman says:

            If you are thinking of the beach I visited you DO NOT want to go in the water! There was an awful lot of stuff bobbing around. The beach was good, though, and the sights wonderful 😉

            NAOM

            • Fred Magyar says:

              If you are thinking of the beach I visited you DO NOT want to go in the water!

              I guess it wasn’t this one, eh? No development of any kind allowed here!

              • notanoilman says:

                Ahhhh, my kind of beach 🙂 Reminds me of a couple I have visited in Colombia. Now, where’s the tank filing station?

                NAOM

                • Fred Magyar says:

                  Now, where’s the tank filing station?

                  Tanks are for wusses! No tanks… Free diving >;-)
                  But if you absolutely must have tanks the nearest station is 40 km away.

        • Fred Magyar says:

          Is the Brazilian government making some kind of contingency plan to truck water in, or is that even feasible?

          Trucking water to 20 million people is not considered feasible. The contingency plans should have been made 25 years ago, they weren’t.

          Things might get interesting soon, standby. I think a lot of people are praying very hard for rain right now. Unfortunately their deities of choice seem to be busy with other projects at the moment… I hate to see what the dry season has in store.

          Ironically there have been heavy rains and flash floods in many parts of the city but not in the areas where the reservoirs are located. If I were in charge of things I’d start an immediate program of setting up rain catchment systems off every available roof and then using solar PV powered pumps to circulate the water through sand and pebble beds for filtration and treating the water with ordinary household bleach.

          • The contingency plans should have been made 25 years ago, they weren’t.

            I know you are talking about Sao Paulo, but I cannot help think about peak oil. The contingency plans should have been made 25 years ago, they weren’t.

  32. Jeffrey J. Brown says:

    Three interesting headlines on Drudge this morning:

    Keel laid for ‘most luxurious cruise ship ever’…

    Gallon Of Gas Now Cheaper Than Sparkling Water…

    National average to hit $1.99 this week…

  33. Old farmer mac says:

    One more natural decline rate estimate from a person qualified to comment- this from a Reuter’s article quoting a Total executive.

    ””There is a natural decline of five percent a year from existing fields around the world. That means by 2030 more than half of the existing global oil production will disappear. There is an enormous amount of money that needs to be invested to get another 50 million barrels per day of new production.”

    Either electric cars take over or there is going to be one hell of a boom in the shoe business.

    In case anybody knows- is there yet such a thing on the American market as an electric bicycle with actual dealerships and service and parts available that sells electric bikes for less than the price of a pretty decent used car?

    I would like to have one but don’t trust Chinese internet marketers to be in business three or four years down the road or to honor warranties etc.

    And I am not going to pay twenty five or thirty percent of the price of a cheap new car for a bicycle with three percent of the materials and labor embedded in it. The price of them at REPUTABLE LOCAL businesses is in my estimation sure to come down fast enough that it makes better sense to continue to use a car for trips I could make on an electric bike for another four or five years.

    The calculus would be different for a person who can get rid of his car in favor of the bike. That won’t work for me.Gotta have a truck or give up the farm lifestyle and gotta have a car to save fuel and wear and tear on the truck.

    My guess is that in five years the equivalent of a present day four grand electric bike will cost only two grand and give better service and go farther between charges etc.I can’t save two grand in five years riding a bicycle -not enough short trips living out in the boonies -and if I delay the purchase until then I will at that time have a brand new bike with a full warranty rather than one five years old and ready for a new battery etc.

    • Jeffrey J. Brown says:

      The IEA puts the global decline rate from existing wells at 9%/year.

      • Watcher says:

        Yeah I am storing that number too. It’s a big deal, though it would be nice to know their methodology.

      • Doug Leighton says:

        “The IEA puts the global decline rate from existing wells at 9%/year.”

        I wonder it that’s a bit high? I also wonder what the global depletion rate is. I’m most familiar with the North Slope and Norwegian North Sea fields and (as I’ve reluctantly admitted to Dennis) both have developed longer and flatter production tails than I imagined possible 10 years ago. On the other hand, I still think Ron is correct when he predicts a steeper future decline curve than is normally expected. Oilfield “creaming” has become a fine art and the result is relatively sustained high production rates at the price of high depletion rates. Of course all here know this.

        • Jeffrey J. Brown says:

          Here’s the source, the excellent column by Jack Kemp:

          Breakeven and shut-in prices for oil wells: Kemp

          http://www.reuters.com/article/2015/01/14/us-oil-shale-prices-kemp-idUSKBN0KN07C20150114

          DECLINE RATES

          Breakeven rates are critical because production from existing wells is not stable. Output declines over time in a fairly predictable way, a phenomenon known as the decline curve.

          Output from existing fields around the world would decline around 9 percent per year in the absence of new drilling or other capital expenditure to increase recovery, according to the International Energy Agency’s World Energy Outlook 2013.

          The IEA’s average 9 percent decline rate was calculated by analysing output from more than 1,600 conventional oilfields around the globe. Shale wells, however, exhibit much faster decline rates.

          North Dakota’s Department of Mineral Resources estimates output from a typical Bakken well falls 65 percent by the end of the first year, another 35 percent by the end of the second, 15 percent more by the end of the third, and 10 percent per year thereafter.

          In a world where the marginal barrel of oil is supplied by shale, rather than conventional fields, breakeven rates are critical to sustaining output levels even in the short term because the industry must keep drilling new wells simply to reduce the rapidly falling output from existing holes.

          • Watcher says:

            John Kemp. Jack Kemp went to that great gold standard in the sky some years back.

          • Old farmer mac says:

            The lowest decline rate I have seen mentioned recently by somebody in the industry has been five percent. Is anybody with expertise saying the rate is higher than nine percent?

            Of course there can be no close agreement since the term is not tightly defined and different folks are using different methods or definitions.

        • The key is “in the absence of drilling or ANY other capital expenditure”. When a field starts declining we spend a lot of time gathering and analyzing data, and this usually yields small things we can do to slow down decline. I have been involved in a couple of cases in which we managed to reverse decline.

          But this takes investment. We do sidetracks, put in better artificial lift, fracture wells, re complete down to zones we abandoned, inject polymers, and do all sorts of gyrations to maximize oil in the tank. This means the two figures aren’t incompatible. One could say fields with only OPEX and tiny CAPEX declines at 9 %, and these same fields will have a 5 % decline with some investment. Reversing decline is incredibly hard.

    • clueless says:

      Polaris just bought a US company that makes them and is going to expand production. But, I think that it is going to be closer to a motorcycle than a bike, so I do not know what the price will be.

    • Longtimber says:

      We sell these along with PV Charging Station. made in Florida and Likely best bang for $.
      http://www.prodecotech.com/ Note that Ebikes in US will launch from standstill. In Europe they are pedal assist. only ie. you have to pedal 1st. What’s nice is you don’t have to mess with gears when crossing town in stop & go. . Leave it in high, and use the motor to get up to speed.

    • ezrydermike says:

      these guys look interesting

      http://www.currietech.com/about-us/

  34. Ves says:

    So Euros decided to print (openly) this morning. We predicted that one right.

    • Watcher says:

      It’s a tad muted. September end point. That was a surprise. Hard to see how the Germans are tolerating this.

      • Ves says:

        I could believe that there were calls for 2-3trillion QE from some parties so the delivered 1 trillion would be considered as German level of tolerance.

      • Ilambiquated says:

        The Germans are very much on board with the European project. It was never going to be easy.

  35. Watcher says:

    Whoever Metron is, assuming they’re legit, this tidbit trumps the ECB:

    http://headlines.ransquawk.com/headlines/latest-greek-election-poll-from-metron-analysis-shows-syriza-increasing-its-lead-over-the-incumbent-new-democracy-party-to-5-3-22-01-2015

    That’s 5.3% up from 3.5%, and easing the obstacle of finding 50% in a coalition.

  36. Watcher says:

    We have evisceration of the Euro and GBP this morning and a lesser smack on the yen, which of course takes the dollar up and yup, oil down. The 10 yr note tacks on 3 bps in dollar sympathy, of course.

    These are big smacks, btw. Euro now at 1.13. Enroute parity. Hard to see how oil rallies with the dollar being pushed up that strongly.

  37. Watcher says:

    Twitter Rumor:

    King Abdullah has passed away.

    • Anon says:

      He does that about every six weeks.

    • Jeffrey J. Brown says:

      Some background info in a 1/5/15 article follows, and a good book on Saudi Arabia is “On Saudi Arabia.”

      I have long thought that a good description for Saudi Arabia is that it is, to use a physics term, metastable, i.e., superficially stable, but actually inherently unstable.

      Saudi Arabia’s Succession Time Bomb

      http://www.slate.com/blogs/the_world_/2015/01/05/saudi_king_abdullah_hospitalized_the_king_is_very_old_his_successors_are.html

      Since the first king of modern Saudi Arabia, Abdulaziz, died in 1953, the country has been ruled by five of his sons in roughly descending age order. There were quite a few options available: Abdulaziz, who cemented alliances with tribal leaders by marrying their daughters, fathered 45 sons by at least 22 wives as well as an unknown number of daughters.

      But the first generation of sons is getting up there in years. Salman, who is next in line for the throne and is thought to be Abdulaziz’s 25th son, is 79. In May, Abdullah took the unprecedented step of naming his youngest brother, Prince Muqrin, as deputy heir, making him second in line for the throne. The choice, which leapfrogged some older brothers, reportedly prompted some grumbling among palace insiders over the fact that Muqrin’s mother was a Yemeni concubine who was never formally married to Abdulaziz. But he’s a close adviser to Abdullah, has diplomatic experience, and at 69, is a spring chicken by House of Saud standards.

      Sooner or later, of course, the crown will have to move to the next generation. At that point, things may get a little dicey. Under Saudi succession law, the king has to be a male descendant of Abdulaziz, but beyond that, the incumbent king has wide latitude to determine his successor. Given that many of the brothers took after Dad or even exceeded him—King Saud, the second king, had 53 sons—there are now thousands of these descendants, many of whom have senior government positions, and the potential for palace intrigue is high.

      In the meantime, whoever sits on the throne will have his hands full, as the coming years have the potential to be among the most transformative in the nation’s history. The country’s longtime dominance of global oil markets is being challenged by new projects in Africa, the United States, and the Arctic, and the government is now pursuing a risky strategy of keeping oil prices low to discourage new exploration and preserve its market share. (This has the added benefit of making life miserable for petrostates Russia and Iran, opponents of Saudi Arabia in the proxy war over Syria, which has those governments smelling a Washington-Riyadh conspiracy.)

       

      • Jeffrey J. Brown says:

        Book description for “On Saudi Arabia” from Amazon:

        From the Pulitzer Prize–winning reporter who has spent the last thirty years writing about Saudi Arabia—as diplomatic correspondent, foreign editor, and then publisher of The Wall Street Journal—an important and timely book that explores all facets of life in this shrouded Kingdom: its tribal past, its complicated present, its precarious future.

        Through observation, anecdote, extensive interviews, and analysis Karen Elliot House navigates the maze in which Saudi citizens find themselves trapped and reveals the mysterious nation that is the world’s largest exporter of oil, critical to global stability, and a source of Islamic terrorists.

        In her probing and sharp-eyed portrait, we see Saudi Arabia, one of the last absolute monarchies in the world, considered to be the final bulwark against revolution in the region, as threatened by multiple fissures and forces, its levers of power controlled by a handful of elderly Al Saud princes with an average age of 77 years and an extended family of some 7,000 princes. Yet at least 60 percent of the increasingly restive population they rule is under the age of 20.

        The author writes that oil-rich Saudi Arabia has become a rundown welfare state. The public pays no taxes; gets free education and health care; and receives subsidized water, electricity, and energy (a gallon of gasoline is cheaper in the Kingdom than a bottle of water), with its petrodollars buying less and less loyalty. House makes clear that the royal family also uses Islam’s requirement of obedience to Allah—and by extension to earthly rulers—to perpetuate Al Saud rule.

        Behind the Saudi facade of order and obedience, today’s Saudi youth, frustrated by social conformity, are reaching out to one another and to a wider world beyond their cloistered country. Some 50 percent of Saudi youth is on the Internet; 5.1 million Saudis are on Facebook.

        To write this book, the author interviewed most of the key members of the very private royal family. She writes about King Abdullah’s modest efforts to relax some of the kingdom’s most oppressive social restrictions; women are now allowed to acquire photo ID cards, finally giving them an identity independent from their male guardians, and are newly able to register their own businesses but are still forbidden to drive and are barred from most jobs.

        With extraordinary access to Saudis—from key religious leaders and dissident imams to women at university and impoverished widows, from government officials and political dissidents to young successful Saudis and those who chose the path of terrorism—House argues that most Saudis do not want democracy but seek change nevertheless; they want a government that provides basic services without subjecting citizens to the indignity of begging princes for handouts; a government less corrupt and more transparent in how it spends hundreds of billions of annual oil revenue; a kingdom ruled by law, not royal whim.

        In House’s assessment of Saudi Arabia’s future, she compares the country today to the Soviet Union before Mikhail Gorbachev arrived with reform policies that proved too little too late after decades of stagnation under one aged and infirm Soviet leader after another. She discusses what the next generation of royal princes might bring and the choices the kingdom faces: continued economic and social stultification with growing risk of instability, or an opening of society to individual initiative and enterprise with the risk that this, too, undermines the Al Saud hold on power.

        A riveting book—informed, authoritative, illuminating—about a country that could well be on the brink, and an in-depth examination of what all this portends for Saudi Arabia’s future, and for our own.

    • Jeffrey J. Brown says:

      NBC confirmed that he passed away.

  38. shallow sand says:

    CNN story on Williston, ND. Most interviewed optimistic. However, man from Liberia interviewed was fired and given 24 hours to vacate company housing. Service company owner who has been in state’s oil industry since 1979 predicts down to 50 rigs in June and 20,000 jobs lost by June.

    The same in EFS and Permian would surely result in US production at end of 2015 being lower than beginning of 2015?

    • Watcher says:

      shallowguy, we are focused here. It’s 3 lousy weeks into 2015. We’ve seen it coming for months and are almost chomping at the bit to see official output numbers down.

      In contrast, those companies are scrambling to find rollover loans to keep them going (where “keep them going” is defined as “keep their salaries being paid”), and keeping them going means oil flows.

      It’s not a helluva lot different from a Fed bailout. This would be some other bailout. As long as someone will lend them the money to drill, they know they can walk away with a bankruptcy and stick that lender. In the meantime, yes, salaries are being paid and THAT is the primary goal of every pitch trip into the lender underwriter.

      The lenders are not focused yet. They will be.

      • shallow sand says:

        Watcher, it is interesting how every so often a little truth creeps out of the mouth of someone on the ground. I think toolpush might have posted that the finance folks won’t “get it” until q1 numbers come out in April. CLR stock keeps going up. Wonder why? No oil hedges.

    • Anon says:

      Much, much lower. The trend has been to lose ~ half of existing production from a frack region each year. If Bakken is 1.3 million bpd and you stop drilling all together, you’re down at least 700,000 within the year. Eagle Ford is 1.7 million, so whack another 800,000.

      The Permian is different because a lot of the wells are conventional but it will certainly lose ground. A So unless you think we’re making up 2 million+ bpd somewhere else, yeah, the US will be down large from prices getting rid of the frackers.

      • Watcher says:

        Dood, that is quite a bit steeper than makes sense. Drilling stops, some bankruptcies get filed, you lose the new flow and you lose oh maybe 40% of already existing flow while the courts make sense of each claim. That’s not 700K. Maybe 400K off year 1. More year 2. 450K out of Bakken after 2 yrs is credible if price holds . . . .

        However. After 12 months of it, the B word shows up.

  39. ezrydermike says:

    anyone see this?


    Cleanup is underway after nearly 3 million gallons of brine, a salty, toxic byproduct of oil and natural gas production, leaked from a pipeline in western North Dakota, the largest spill of its kind in the state since the current energy boom began.

    The full environmental impact of the spill, which contaminated two creeks, might not be clear for months. Some previous saltwater spills have taken years to clean up. A contractor hired by the pipeline operator will be on site Thursday, assessing the damage.”

    http://www.petoskeynews.com/news/nation/cleanup-underway-for-nearly-m-gallon-pipeline-saltwater-spill-in/article_a0f60739-ef83-5e0b-a3cd-feab620b2c12.html

    • Boomer II says:

      While this is a brine spill, this is why the some of the landowners on the ground in Nebraska and Canada don’t want pipelines running through their property.

      They don’t trust the oil industry to do a good job of keeping their land safe.

    • Boomer II says:

      Here’s more on why some Nebraska farmers and ranchers are fighting the pipeline going through their property.

      http://www.nytimes.com/2015/01/23/us/defending-family-farm-traditions-in-battle-against-keystone-pipeline.html

      • Mike says:

        I remember a 60 minutes segment years ago about all the grease that restaurants in New York City dump into storm water drainage systems, intentionally; there is enough French fry and chicken fat under New York City to float a super tanker. I have been there, you can smell the stench venting out of manhole covers. Its enough to gag a big maggot.

        The worldwide oil industry yanks about 91 million barrels of nasty oil out the ground each day and moves it around the world pretty damn efficiently. Its remarkable, really, how efficiently. It is the height of hypocrisy to be criticizing my industry for an occasional dribble of salt water on the ground. North Dakota, this time of year, is a pretty hostile environment to be operating in. Pipelines and flow lines can stretch and contract several feet in one day due to temperature changes.

        So for anybody, anywhere, at 2 dollar gasoline prices, to be chirping how the oil industry can not be “trusted” to keep the land “safe,” you may kiss my Texas ass.

        Mike

        • Boomer II says:

          What those ranchers and farmers are saying is that they don’t want the pipeline on their property.

          And they don’t want it there because of the possibility of spills.

          Seems like, as landowners, they do have the right to say they don’t want it.

        • SW says:

          Well Mike, I respect your hard work. But I don’t give a rat’s ass about $2 gas. In my view $2 gas is obscene. But I am really not in the mood for any lecture about how environmentally conscious the extractive industries are. I’m not out to demonize the people who work in them but let’s get real. The gulf of Mexico is a disgrace. The stuff that has gone on in South and Central America. Nigeria. Good lord. Maybe you can call it collateral damage. A necessary evil. But don’t piss down my back and say its raining.

          • shallow sand says:

            SW. Not that you want my 2 cents, but I agree that if there were no environmental regulations, things would be a real mess. On the other hand, rather than constantly writing new laws that are so complex that even the regulators cannot understand them, try having the regulators enforce the ones that are on the books, and enforce them evenly? Also, simplification might be helpful.

            Have seen them look the other way when they shouldn’t, and have seen them make a mountain out of a molehill. Also have seen them start on a spill like a house on fire, and then lose interest. Have seen them define a road ditch as a navigable water. Have seen them give one guy territory that five could not adequately cover. Have seen too many government people involved in a 5 barrel spill. IMO those at the top of the agencies are political people who do not have the proper background. Easy to see why things can then go afoul without trained and knowledgeable leadership.

            Bottom line, can’t paint operators w a broad brush. There are good and bad from mom and pops to the super majors. And just because there is a spill doesn’t mean the operator is bad. When you are in a freeze and thaw area, you will have leaks. That is why you have to diligently monitor and if you find one jump on immediately.

          • Mike says:

            SW, I have to go back to work and I don’t have time to get in a chicken fight with you about the environment and my industry. I should not have posted; I get pissed off with folks that have nothing better to do than to paroooze the internet looking for bad things to say about my history. It reminds me of buzzards and road kill.

            My industry has made some messes, you bet. Its nasty stuff. I live and swim and surf and fish in the Gulf of Mexico, with a big G, and the only thing disgraceful about it is all the shit that America’s heartland dumps into it via the Mississippi river. I am very fond of the Gulf, with a big G; I work very hard to protect it. I am plenty fine with you not coming back if you don’t want. Until the Macondo accident fully 90% of the worlds oil spills that have historically fouled the worlds oceans and beaches were caused by shipping, not production and exploration. I’ve been to Nigeria and all over S. America and the only messes I saw were from poor indigents destroying oil related infrastructure for fuel, or protest. There in no oil in Central American to speak of. Its beautiful there.

            Life has its hiccups. Lets ALL have a mess free day.

            Mike

  40. Old farmer mac says:

    This is a question for the guys who are actually out in the field in the oil industry.

    We keep hearing that tar sands or oil sands production can be ramped up only at a relatively slow pace.

    Nobody ever seems to say exactly WHY this is so.

    If the territory with oil sands extends for many miles beyond the spots actually being produced TODAY- which is so far as I know the case- WHAT is stopping anybody with the capital and political muscle to get the necessary permits from just moving a few miles away and starting up another million barrels a day of production – from scratch? By from scratch I mean new roads new housing new fire department police department and everything else ?

    What is to stop a second company from moving a few MORE miles and starting a THIRD operation from scratch?

    Now maybe there is not enough investment money available to make it happen. Or maybe it CAN’T happen for some reason having to do with the geology and technology involved??

    • Ves says:

      requires:
      1) Stable (and high) price long term.
      2) Export pipelines

      • Old farmer mac says:

        Not to argue- but there is nothing stopping the building of pipelines except the lack of construction permits.

        And if an investment of a billion is worthwhile with oil at a hundred then another billion would ALSO be worth while. Depletion is going to take legacy oil off the market pretty fast.

        So – let me rephrase my question- If investors are confident of a profit and willing to pour ENOUGH money FAST ENOUGH into tar sands can they be ramped up fast?

        • Ves says:

          In order to build pipelines you have to have agreement to whom are you going to sell and under what terms. There is not point of building the pipeline if you don’t know these two things.

          ” If investors are confident of a profit and willing to pour ENOUGH money FAST ENOUGH into tar sands can they be ramped up fast?”

          I am not sure what is fast enough? 1 year, 5 year.? I am bad with numbers but on the top of my head I think it took them 10 years to get to 1mil bpd. but somebody can correct me if I am wrong.

        • Doug Leighton says:

          “…………can they be ramped up fast?”

          I guess it depends on what you mean by fast. It generally takes a decade to develop complex off shore oil/gas deposits. Is that fast or slow? Big mines in Canada normally take a decade or two to reach production. To me that’s slow but to young guys it’s normal.

          Currently there are about 10,000 trucks per day hauling accommodation, pipe etc. to the Fort McMuray area so perhaps it’s already fast. However, constraints are many including permitting, environmental restrictions (export pipelines as mentioned) and lack of skilled labor. Besides, the easy (shallow) stuff which involves open pit mining is largely spoken for. Next they’re forced to chase deeper deposits (via in situ extraction), which will ultimately account for 80 percent of oil sands development — a slow process (I guess).

          By the way, “oil sands” is a euphemism for tar sands. It’s like calling clear-cut logging “tree farming”.

          • Watcher says:

            Trucks!

          • Миша says:

            By the way, “oil sands” is a euphemism for tar sands. It’s like calling clear-cut logging “tree farming”.

            4 tons of bitumen get 1 barrel of oil in the cracking. 4 tonne of bitumen = 1 barrel of oil. Often in the reserves confused bitumen and oil

            • Doug Leighton says:

              Hi Misha,

              I didn’t bother getting into that but yes tar sands (oil sands) is the euphemism for bitumen: a euphemism for a euphemism as it were. Isn’t the English language interesting?

              Cheers, Doug

          • Old farmer mac says:

            Depending on who is doing it and where clear cut logging IS tree farming.

            The landowners in most parts of this country who engage in the practice generally replant the land with a new crop -most often a mono crop – of new trees.

            As a matter of fact they are COMPELLED to do so by well enforced law in all the southeastern states. I am not sure about western and northern states but they are probably as well regulated in this respect as southern states.

            Sometimes some clear cut land is left to regenerate naturally for particular reasons such as to create habitat for deer and game animals. A hundred acres of clear cut and nine hundred acres of climax forest or near climax forest left undisturbed is far more productive of animals such as deer grouse foxes rabbits song birds etc right across the board than a thousand acres left undisturbed.

            This is not to say that commercially operated forest lands are ecologically desirable in comparison to undisturbed forests. Logging can potentially damage or destroy forest ecologies even when well managed by current day regulatory standards even in a country such as the US.

            Such damage is widespread and on going but minimal in comparison to what it would be if not regulated.

            There is no doubt that loggers if left to do it their way will destroy a forest without thought for the future.Happens all the time in developing countries.

            We are going to have to get used to the idea of using more and more forested land as crop land with a crop of trees on it. Wood is the premier cheap renewable building material and fuel and it can be made into or used as a component in thousands of other products.

            Foresty management is going to be a growth career in coming decades.

            • Old farmer mac says:

              Now back to the question.

              Is there any reason involving the laws of nature or the geology of the tar sands that would prevent production being ramped up TWICE as fast – or three times as fast ?

              Assuming the human element could be taken care of – permits to do the work being the most critical other than financing in my estimation.

              If it takes ten years start to finish to get a mine producing then starting three new mines would mean three new mines all coming on the same year.

              • Doug Leighton says:

                “If it takes ten years start to finish to get a mine producing then starting three new mines would mean three new mines all coming on the same year.” Yes and that is exactly what is happening in Alberta right now; multiple bitumen mines starting at the same time.

                “Is there any reason involving the laws of nature or the geology of the tar sands that would prevent production being ramped up TWICE as fast – or three times as fast ?” No.

                I’d guess that you don’t want to get onto the topic of greenhouse gasses and other associated environmental issues?

    • Old farmer, do you want the short version or the long version? The short version is that extra heavy oil requires dilution and quite often heating. Things get pretty complicated when we have to secure diluent. If we use steam to heat we design for about 3 to 1 steam to oil ratio.

      I don’t think there’s acreage in Canada to set up a 1 mmbopd project on a single tract using wells. There’s acreage available in Venezuela, with multiple sands, so each pad can develop say three “sands”, which gives 18 producing wells per pad covering a 2.5 mile by 1 mile area. Each producer requires an injector, so that’s 36 wells per pad if you want a high recovery factor in the very best acreage. The wells use 8 inch flowlines, all the steel is special grades. So are the valves, seals, you name it. To crank up your target volume we would need about 100 pads. And a 200,000 b/d diluent supply. This requires LARGE pipelines. The diluted crude oil is blended to make a ~18 degree mix.

      Now you got to decide…do you upgrade in venezuela or do you ship the diluted crude? Who is going to buy it? There’s a limit to the volumes refineries will take, they choke on the heavy molecules. So let’s upgrade in Venezuela 900,000 BOPd and dilute 100,000. The 300,000 bopd is an optimized upgrader size (set by the four drum Coker). An upgrader costs about $15 billion usd. So we need $45 billion. But they use so much labor and cause so much impact we have to build them in series. So we take 12 years AFTER we cut first steel for the first upgrader before the last one starts up.

      That’s the short version.

    • Dennis Coyne says:

      Canadian Association of Petroleum Producers (CAPP) forecast for 2014 can be found at link below

      http://www.capp.ca/getdoc.aspx?DocId=247759&DT=NTV

      On page 7 of that report I got data for the oil sands forecast to 2030, chart below.

  41. Old farmer mac says:

    The king really is (almost for dead sure ) dead this time.

    http://www.foxnews.com/world/2015/01/22/king-abdullah-saudi-arabia-dead-at-0-state-tv-reports/

    Fox hit my google news bookmark first but it will be every where in a few minutes

  42. Toolpush says:

    I feel the low oil price may already be having some affect on US oil use. I realize last year was affected by the weather, but Gas up 8.7%, Diesel up 12.5% and Jet-A1 up 7.6% from last year. It will not need too much of this sort of growth to gobble up any surplus that may exist.

    http://www.eia.gov/petroleum/supply/weekly/pdf/highlights.pdf

    Total products supplied over the last four-week period averaged 19.7
    million barrels per day, up by 4.9% from the same period last year. Over
    the last four weeks, motor gasoline product supplied averaged over
    9.0 million barrels per day, up by 8.7% from the same period last year.
    Distillate fuel product supplied averaged 3.9 million barrels per day over
    the last four weeks, up by 12.5% from the same period last year. Jet fuel
    product supplied is up 7.6% compared to the same four-week period last
    year.

  43. B says:

    Alaska’s new governor Bill Walker (who is an independent; Alaska voters got rid of their Republican governor last November) gave the annual State of the State Address to the Alaska legislature on Wednesday. Then, in an uncommon, but not entirely unusual, turn of events, he gave a separate “State of the Budget” Address to the legislature on Thursday. Here are some excerpts from both speeches that deal with energy.

    Ever thought about doing a post about recent developments in Alaska, Ron? Politicians there see a low price of oil as a major concern to the state, not just for the near-term economic consequences, but also because low prices are more likely to kill exploration projects aimed at finding new sources of oil to keep TAPS operational.

    The State of the State Address

    [Excerpt from address]
    The price of oil has dropped by more than 50 percent over the past six months.

    This has moved us from a $7 million-per-day deficit just six months ago to a $10 million-per-day deficit today.

    This is unsustainable. It’s unacceptable. We can and we will do better.

    This isn’t the first time our young state has been through tough times.

    Many of you in this room served during the days of $9-a-barrel oil during the recession of the 1980s.

    Today, we have fewer than 500,000 barrels per day flowing through the pipeline. The impact of the low prices is intensified by low production.

    Today, we are faced with a $3.5 billion deficit, and using $10 million every day from our savings.

    Some might call this a crisis. I call this a challenge and an opportunity. We have an opportunity to make impactful and constructive changes; to challenge the traditional ways of doing business….

    Every growing economy in the world has one thing in common, and that is low-cost energy. This administration will not rest until Alaska is squarely on the road to becoming an economic powerhouse thanks to low-cost energy that will bolster and diversify our economy.

    This Legislature has done good work in this area over the past few years. From wisely incentivizing natural gas storage in Cook Inlet, to recognizing the importance of a large-diameter gas line, to investing in renewable energy projects and conservation, your leadership has made a difference.

    Now it is time for even bolder steps.

    Thirty-seven years ago, Donna and I cheered and actually danced in the streets with hundreds of Alaskans as the first barrel of oil from Prudhoe Bay arrived in Valdez.

    A few short months later, Donna and I were married and I began working on a large volume gas line and LNG project.

    Alaska, it is time to build the gasline to provide gas to Alaskans and liquefied natural gas to world markets.

    Under my administration, we will finally begin building the Alaska gas line to tidewater.

    It will be done with Alaska hire to the maximum extent allowed under the law.

    And it will comply with Alaska’s constitutional mandate that our resources be developed for the maximum use and benefit of Alaskans.

    I was honored to have the president of a major Japanese energy consortium travel from Tokyo to Juneau last month for our inauguration.

    I met with this Japanese delegation the following morning as my first official meeting as your governor.

    About 10 days later, they returned to Juneau with a memorandum of understanding.

    Since signing that MOU, other significant LNG buyers in Asia have contacted me expressing similar interest.

    In fact, on our way to church on Christmas Eve, I received such a call from a major Japanese company.

    The gas is available. The market is responding. And as we know, Alaska is the crossroads of the world. It’s time we engage those markets, diversify our economy, create long-term fiscal stability and job growth.

    And it’s beyond time to complete the work those in this room have started on this critical project….

    Alaska has trillions of dollars of value trapped under our ground and in our waters.

    Since taking office on December 1st, I have twice been to Washington, D.C., for meetings at the highest level to discuss the infrastructure and regulatory advances we need to fully develop our resources.

    The potential of our oil fields and mining prospects are nearly limitless. But we can’t keep having the same fights with national leaders and expect a different result.
    [End of excerpt]

    The State of the Budget Address

    [Excerpt from address]
    As you know, about 90 percent of the State’s general fund comes from oil revenue. This means Alaska’s State government funding has two drivers: oil price and oil production. Unfortunately, neither is going in our favor. In recent months, the price of a barrel of crude oil has fallen dramatically.

    While we cannot fix oil prices, we can fix government. The State budget passed last session was set when oil prices were at $110 per barrel. Several months later, oil prices dropped sharply, and have stayed at about $50 since the start of the new year.

    Compounding the low price effects is the flow of oil in the pipeline. The Trans Alaska Pipeline System is currently only flowing at 25 percent of its peak production. With oil worth only about half what it was when our current State budget was developed, a $3.5 billion gap has formed between the amount being spent and the amount of oil revenue the State receives.

    The operating and capital budget passed last session totaled $6.1 billion, with expected revenue at $2.6 billion, or even less, if the price continues to drop….

    Fortunately, and to your credit, the men and women in this room set aside a significant portion of revenues in recent years. Thanks to your foresight, Alaska has $14 billion in available savings. This gives us a bridge, but at current spending levels and with oil prices where they are, that bridge will only last three years. If prices rise to levels projected by the Department of Revenue, this would mean the savings bridge would carry us five to six years….

    Since being sworn in on December 1st, I have met with about six members of President Obama’s Cabinet and explained to each of them that I am the Governor of a State whose revenues are about 90 percent dependent on oil, and we have an oil pipeline that is three-quarters empty. I had the same conversation with President Obama on December 5th. I told them all that I will be very aggressive in getting more oil into that pipeline. That is because Alaska is an owner state, thanks to the statehood compact.

    Since December 1st, I have also held a dozen meetings with representatives of the oil industry. I invited presidents of two large independent oil companies here to Juneau to discuss their interests in Alaska. I told them I am prepared to do whatever I can to assist them with the federal regulatory process. I met with Secretary of the Department of the Interior Sally Jewell to specifically convey my intent to work alongside these companies as they continue to explore for more oil.

    In the past two months, I have met with the Alaska Oil and Gas Association twice, and as recently as this morning, I hosted a breakfast at the Governor’s House for the AOGA board, and delivered this same message.

    I want to fully utilize all of Alaska’s infrastructure, including the Alaska Railroad, the Alaska Marine Highway System vessels and the Trans Alaska Oil Pipeline.
    [End of excerpt]

    • Boomer II says:

      Is there much yet to develop in Alaska? The state can ask Washington to work with it and not let regulations get in the way, but what resources can the state still produce?

      At what point does Alaska decide its future needs to move away from oil?

      • B says:

        ANWR. Only after that has been opened and has reached a peak in production will you see the state move even just one millimeter down on the path to moving away from oil.

        • Boomer II says:

          I have been opposed to drilling ANWR. I have wanted the area protected.

          Aside from my environmental concerns, I have wanted that oil to stay in the ground as long as possible because I knew if it was drilled, it would be pissed away the same as other oil projects. I have also assumed it would get drilled when it was the last of the oil. I’ve figured that when it ran out elsewhere, there would be a big push to drill there.

          And I suppose when the ANWR is finally drilled, it’s a signal both about the loss of oil elsewhere, and the fact that we’re willing to sacrifice environmental concerns for oil.

          Sadly, I think we’re already there. I’d like to protect those animals. I’d like to protect the planet. If Alaska doesn’t care about the changes happening to its climate and its potential tourism businesses, then it will be hard to convince them the value of leaving the area undrilled.

          • robert wilson says:

            If the oil available from ANWR (if any) is to be produced it will likely need to be evaluated and developed before the pipeline freezes or is closed for economic reasons. Was KIC-1 a dry hole?

      • There’s some heavy oil potential, but it’s going to take $100 per barrel and a lot of smart engineering. I would guess there’s more oil offshore, and a bit to pick up using CO2 from the gas plant. And the ANWR, which requires we get a pragmatic regime in Washington.

        I also saw a wild eyed fracker in Anchorage a few years ago. But I’m not sure what happened to him.

    • Ilambiquated says:

      I have met with about six members of President Obama’s Cabinet and explained to each of them that I am the Governor of a State whose revenues are about 90 percent dependent on oil, and we have an oil pipeline that is three-quarters empty.

      I am sure they were amazed to hear this.

  44. Toolpush says:

    I am worried now.

    Our friend Daniel Yergin, on CNBC, just said oil in 12 months will be higher than it is today.
    Normally he is always talking the price down, and it is still above the famous , One Yergin, we used to have such fun with?

    • Jeffrey J. Brown says:

      I remember having a discussion years ago on The Oil Drum in regard to how to interpret a Yergin call for higher prices.

      His track record regarding lower prices is pretty clear: Within one to two years of Yergin’s prediction for a specific (lower) oil price, the actual price tended to trade at about twice his predicted price.

    • John Keller says:

      Ha! My thought exactly. That guy has been wrong for so long.

      • He’s a nice guy. I met him in the 90s when he was making the TV series, he gave me his book, signed and everything. Then my boss borrowed it, and I never saw him again.

  45. Ronald Walter says:

    With a coupon plan, I buy gasoline at about 1.25 per gallon these days, if I work it right, gas is a dollar per gallon with coupons.

    About the same or less than bottled water.

    Gasoline is kind of a bargain these days, you finally get your money’s worth.

    Gold priced at 1294, oil at 47, 1294/47=27.5 barrels for each troy ounce of gold if you are trading gold for oil. Bargain of the century.

    17 dollars for an ounce of silver, three ounces of silver buys a barrel of oil. At a dollar for an ounce of silver in 1955, oil is approximately 3 dollars per barrel in silver coin.

    Oil at 30 dollars and silver at 17 fiat dollars, oil is less than two dollars per barrel, two one ounce walking liberty silver coins will buy a barrel of oil and there will be fifty cents in change due back to the buyer.

    Probably where the price should be with the current glut. Consumers will be happy, not as many drive offs and theft of gasoline. It is really a win win, the oil companies need to grin and bear it, that’s the reality.

    Can’t really fool the precious metal commodity markets.

    • clueless says:

      Ronald – If I gave you a coupon for $100,000 and said go buy a new oil lease, find some new oil and pump it out, refine it and give me 1 gallon of gasoline, do you think you could? How about a $1 million coupon? Maybe a $5 million coupon would get it done – if you were lucky. By the way, if you have coupons that will get you a gallon of gasoline for $1, then congratulations, you are the richest man on earth. Call Forbes.

  46. Old farmer mac says:

    http://www.chron.com/news/world/article/Austerity-battered-Greeks-favor-radical-left-6035022.php

    If you read this well written article carefully you will see that the leftists who are probably going to win the election are promising the impossible- or to be more accurate , at least calling for the impossible. They are for instance saying they will not get rid of the countless government employees which in Greece in particular are noteworthy for doing nothing useful.

    Government is necessary but government for the sake of padding payrolls is not a workable solution to Greek problems.

    They are probably right – in my opinion certainly right- that the Greece cannot repay her debts and that one way or another they will have to be written off.

    My guess is that this will be accomplished by the ECB printing enough money to buy up these debts -the net effect of this is that the creditors AS SUCH will be made whole on the face of it- while the rest of the Euro union will pay in the form of inflation.The inflation in turn will be masked partly or totally by weak demand pushing the prices of goods and services down across the board.

    At some point there is a strong possibility the printing presses will be run hard and steady when all else has failed. Inflation will be obvious enough at that point and will delay a final crash for a few weeks or months- maybe even for years. It depends on how skillfully the governments thru the central banks manage the financial situation and how the rest of the cards fall- cards such as energy supplies, climate troubles, wars ,embargoes, and the ” wrong ” parties winning control.

    There is a possibility that deliberate long term but controlled inflation might even allow the various governments involved to weather the debt crisis.The classic solution to a long term debt with a low interest rate is to simply inflate it out of existence.

    It is for this reason that I have NEVER been able to understand why managers of big money invest long term in low interest paper- regardless of the creditworthiness of the borrower.

    My veterinarian saved our favorite hound dog from antifreeze poisoning by pumping him full of JOHN DIESEL- one hundred and ninety proof grain alcohol. I never thought I would see any creature go from staggering sick as hell to falling down happy drunk so fast in my life. The iv dose was calculated to just almost kill him but to save him because a dog’s liver preferentially processes the alcohol first and the antifreeze- which is a powerful liver poison- is passed out thru the kidneys without being metabolized.

    Definition of a physician- a veterinarian with limited training thus allowed to treat only one species.

    • Fred Magyar says:

      My veterinarian saved our favorite hound dog from antifreeze poisoning by pumping him full of JOHN DIESEL- one hundred and ninety proof grain alcohol. I never thought I would see any creature go from staggering sick as hell to falling down happy drunk so fast in my life. The iv dose was calculated to just almost kill him but to save him because a dog’s liver preferentially processes the alcohol first and the antifreeze- which is a powerful liver poison- is passed out thru the kidneys without being metabolized.

      Definition of a physician- a veterinarian with limited training thus allowed to treat only one species.

      I’m sending that to two very close friends of mine, one is a Veterinarian and the other an M.D.

  47. John Keller says:

    Finally, the world is waking up to the Wall Street shale promotion. This confirms a lot of what some old timers on this board have been preaching and what I have witnessed in company financial results. Coffeeguyz should pay attention.

    http://www.bloomberg.com/news/2015-01-23/tests-for-oil-guisher-seens-as-misleading-to-investors.html

    • This only reflects the lack of proper understanding of the technical issues involved, and poor regulations. When we drill offshore exploration wells we have to test them for a short period of time, based on those results we decide whether to drill additional holes, and eventually the test results are used to design and build very expensive platforms. The same happens in remote onshore locations.

      This means we do have tools and techniques we can use to establish (with some margin of error) the well productivity. The horizontal fractured wells are more complex, but there are ways to test them to get better data. Whether companies do it or not is a different issue. And whether gamblers go for wide open tests is their decision. I think some of this can be solved by a better quality test procedure. The results can be kept tight until a report is ready for release.

      A little tale: many years ago I had a competitor drilling a well in a very expensive and remote area. The well results could be used to bid on open acreage. So we tasked a satellite to take photos as it went over the drill site. And we managed to figure out the results by analyzing the flare from space. Lucky for us they tested for several days, it was summer, and there were no clouds. And we won the bid. It was really slick.

  48. “A little tale: many years ago I had a competitor drilling a well in a very expensive and remote area. The well results could be used to bid on open acreage. So we tasked a satellite to take photos as it went over the drill site. And we managed to figure out the results by analyzing the flare from space. Lucky for us they tested for several days, it was summer, and there were no clouds. And we won the bid. It was really slick.”

    Notice how the unethical practices at the bottom likely spread to the oil industry as a whole. Or is it the other way around?

    No matter, we can do a good job of figuring out what is going on even with the rampant deception of the players.

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