Texas RRC Oil & Gas Production

The Texas RRC Data is out. All RRC data below is through May. The EIA data is through April.

Texas C+C

There appears to be an increase in Texas May crude oil production. You will notice that the EIA has departed from their usual practice of just estimating Texas C+C production up about 50,000 bpd for every month for the last six months or so. They have a new method or estimating Texas production which is explained in the first link below the charts.

That new method has Texas C+C production down 64,000 barrels per day in April. The May Texas production data will be out on July 31, in the Petroleum Supply Monthly.

Dean C+C

Dr. Dean Fantazzini has calculated what the data wil eventually look like and given us the 95% confidence bounds. He has Texas C+C basically flat since December.

Texas Crude Only

Texas crude only appears to have had a very good gain in May. 

Dean Oil

 

Dr. Fantazzini has Texas crude only showing only a very tiny gain since December.

Texas Condensate

Texas Condensate was up slightly in May but not nearly as much as crude.

Dean Condensate

 

Dr. Fantazzini has Texas condensate flat to slightly down since December.

Texas Total Gas

Texas total gas was also up in May over the last few months.

Dean Total Gas

Dr. Fantazzini has Texas total gas making a new high in May but only slightly higher than the December peak.

Texas Gas Well Gas

Texas gas well gas was up in May but it still appears to be below the level reached in December.

Texas Associated Gas

The biggest gain of all appears to be in associated gas, or what the RRC refers to as casinghead gas.

The following three charts are also from Dr. Dean Fantazzini. I don’t quite understand them but his definition is below.

Dean T-1Dean T-8Dean T-16

I also attached a plot about the dynamics for the oil (only) correcting factors. As you see, in the last two months, the factors for the closest months T and T-1 have jumped a little: my impression is that in the last two months the RRC is trying to increase the amount of oil data processed. Interestingly, this is not happening for condensate and natural gas, instead.

Below is part of the explanation of how the EIA is now calculating Texas Crude plus Condensate production, hoping to get better accuracy than in the past. If this really interest you then you should click on the link and read the whole article.

How much oil does Texas really produce? The EIA now says it has a better way to count

HOUSTON — The U.S. Energy Information Administration is trying to make its oil production estimates faster and more accurate. That will mean going around Texas’ top industry regulator and straight to the producers to get the numbers.

Recent price swings in crude oil markets have necessitated the shift, said Gary Long, an EIA petroleum engineer, as production has swung faster during the downturn than it did at any point during the long buildup of the shale oil boom.

“We were basically just using a ruler and adding 50,000 (barrels) a day, and that worked pretty well for a while,” he said. “But after the downtown and the talk of the (production) rollover… we thought ‘Our methodology isn’t going to see that.’”…

Accordingly, the EIA has been experimenting with going straight to producers to get its production data. The process would resemble how the group arrives at its natural gas data, Long said.

The top 80 percent or so of producers by the amount of crude they pump would report to the EIA how much they produced across the state. That data would then form the backbone of a production estimate by the EIA, whose analysts would estimate the rest.

“We actually started surveying operators or producers,” Long said, saying that the next monthly estimate may be made using the new methodology if all goes well. “That data has started coming in. We’re looking at it, we’re evaluating it.”

The Fracking revolution has ended any talk of peak oil?

Arizona congressman: We need new energy policy, now

The energy world we live in now was unthinkable just a decade ago. Policy back then was shaped by talk of peak oil and fears of increased reliance on Russian or Middle East imports. President Bush used his State of the Union address that year to push Congress for legislation to reduce environmental oversight and expand domestic drilling. As I remember it, the mood in Washington could best be described as frantic.

So much has changed since then. Domestic development is now booming so fast that Big Oil has set its sight beyond our shores and wants to end the export ban. The underground fracking revolution has ended any talk of “peak” production.



But this next one is even better. Peak oil and global warming are both fading bogyman myths.

Will brutal commodity selloff derail Fed interest rate hike?

Yesterday, WTI got smacked around again, breaking apparently weak support at $50 and briefly dipping to $49 and change before closing barely up once again. WTI has strengthened somewhat this morning, up at $50.87 bbl., a positive jump of 72 cents or slightly less than 1.5 percent on the morning, as of 11 a.m. EDT.

That’s scarcely encouraging, however, given a market that greatly fears a tidal wave of Iranian oil, which may or may not happen anytime soon. Elsewhere, given the continuing, fairly steady rig count in U.S. shale ranges, the bogey man of “peak oil,” like global warming climate change, seems to be one of the many fading myths of our time, at least for the next 10-20 years or so. 

And Dan Yergin says we will reach Peak Oil Demand… in the 2030s.

Cheap Oil and Amazing Cheap Energy: The World According to Dan Yergin

There will be worldwide peak oil demand. We think it’s going to be in the 2030s.

Kemp: North Dakota Oil Well Completions Slow Sharply

No new well completion reports have been filed in North Dakota since July 10, the longest gap this year, according to daily activity records published by the state’s Department of Mineral Resources (DMR).

Completions, rather than wells drilled, provide the best guide to short-term changes in output, since operators can always delay completing a well and putting it into production, either because they are waiting for completion crews to be available or to wait for better prices.

Completion is usually defined as a single operation including the stimulation and testing of a well as well as the installation of surface production equipment (“Dictionary of petroleum exploration, drilling and production” 2014).

North Dakota’s regulators consider a well completed when the first oil is produced through wellhead equipment into tanks from the ultimate producing interval and after the well has been cased.

“In no case shall oil or gas be transported from the lease prior to the filing of a completion report unless approved by the (DMR) director,” according to state rules.

Completions reported to the DMR are published in its daily activity reports. The number of completions reported each day is volatile because operators have some discretion about when to file their forms; there are indications that operators often file a clutch of reports for related wells at the same site at the same time.

If the slump continues over the next few days, it could be a sign that shale producers are deferring putting more wells into production to save cash and wait for better prices.

But the slump did not continue. Today, July 22, there were 28 “Producing Wells Completed” and 9 “Confidential Wells Plugged or Producing”. That brings total wells brought on line in July to 62 putting us on track for a total of 87 wells for July. That is still way below the number required to keep production flat.

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610 Responses to Texas RRC Oil & Gas Production

  1. Jef says:

    Ron – For the life of me I don’t understand why you gave Javier a platform for spewing his personal opinion wrt climate change. There is nothing even remotely accurate about his “beliefs” and comments. If you believe that you need to provide fair and balanced opinions then I suppose next you need to do a feature post on how Abiotic Oil will provide all the oil we will ever need.

    This just in;

    Ocean Temperatures At Record High
    Of all the excess heat that results from people’s emissions, 93.4% goes into oceans. Accordingly, ocean heat has strongly increased over the years.

    http://arctic-news.blogspot.co.nz/2015/07/ocean-temperatures-at-record-high.html

    • Jeff, Javier has had his say but you are correct, it is time to do something about all this denial shit. I am beginning to believe these people should be ignored, not argued with. I am going to start deleting denial crap unless they make a logical argument that makes sense.

      • Boomer II says:

        As I keep pointing out, if they just stuck to pulling out research and let people discuss it, that would be one thing.

        But they always throw in the political stuff because they are convinced there is an intentional, worldwide effort to mislead the world with climate data. It’s not the climate data they appear to be interested in. It’s the political stuff that seems to be the basis of their beliefs.

        • Doug Leighton says:

          I agree. It’s fine to draw attention to especially interesting articles and pass this on to potentially interested people. Personally I doubt ANYONE here is qualified to analyze and critique scientific papers on AGW. I have over 800 papers on pulsar research (going back to 1968), a degree in Engineering Physics, and have followed this subject religiously for 47 years and I am not remotely qualified to critique the science. Too much of this so called debate on AGW is grandstanding that takes up a lot of space in Ron’s Blog.

          • Boomer II says:

            Too much of this so called debate on AGW is grandstanding that takes up a lot of space in Ron’s Blog.

            Since this is a Peak Oil forum, seems to me it is only relevant to the extent that policy changes oil consumption. And so far it doesn’t appear to be doing so.

            Now, we could be discussing whether natural gas should be the energy source of choice for power plants, but again, right now coal is getting phased out because it is dirty, and natural gas is being used more, whether or not it contributes to CO2 in the atmosphere.

            Seems like our focus here is more on resource depletion than on the environmental consequences of resource consumption.

            • wimbi says:

              I had assumed that the consensus had long been that denial per se was to be ignored.

              Myself, I had hoped to see the energy expended here in futile refutation be redirected to potential solutions to the so well-documented depletion of cheap ff’s, and it’s possibly catastrophic economic and climate effects.

              http://phys.org/news/2015-07-solar-power.html

              http://www.resilience.org/stories/2015-07-22/solar-desalination-could-be-a-game-changer-for-california-farms

              • Boomer II says:

                I had assumed that the consensus had long been that denial per se was to be ignored.

                I won’t respond to a new questionable post on the assumption that once it generates responses, it’s hard to delete.

                I have sometimes weighed in after others have done so, primarily to redirect the conversations so that we don’t waste time with them. As I keep pointing out, the lifestyle changes some people fear will be forced upon them because of GW are coming anyway because of economics and resource shortages. The way the world uses fossil fuels is changing and will continue to change. Talking about political conspiracies may make them feel like they are fighting the “good fight” but in reality they have very little control over the changes that are coming. If anything, refusing to adjust will make the changes that more disruptive when they happen. Going from relatively plentiful oil to much less and more expensive is going to be harder if no one has planned for it.

                • wimbi says:

                  Boomer. No offense meant. Thanks for all your good comments.

                  • Boomer II says:

                    Oh, I didn’t assume your comment was directed at me.

                    I was just saying that I, too, avoid commenting on some of the more trollish posts, but if they end up generating a thread that won’t be deleted, I may say something.

            • Brian Rose says:

              Boomer II,

              We should accept this as the general standard in this forum. It is truly a great idea.

              Climate change discussions are highly relevant given that they focus on potential impacts of major policy events, and how they may affect oil demand. There is no need to fill the comment section with debates about the origin of climate change.

              Inevitably, the upcoming global summit on climate change policy will be mentioned and discussed because it will be a major headline. All regular contributors to this site should keep their focus purely on how quickly future demand forecasts can change in light of whatever agreements result from the Paris Summit.

              The Hirsch Report in 2005 is very prescient in this matter. If this years summit yields major progress, and preliminary agreements between the U.S. and China indicate it will, there will be a legitimate impact on future demand.

              A combination of global policy agreement and the natural trend in costs regarding battery costs, EV tech, PV, and wind could combine to make the near future much less terrible – at least relative to what it would have been.

              In 2010 how many of us would have thought that 2015 would be a year when oil prices averaged $50-$60 barrel without a concurrent global economic catastrophe?

              We’re really straddling the line between the Hirsch Reports analysis:

              10 years of lead time developing alternative tech (EVs and renewables) could allow us to scrape by after hard times.

              0 years of lead time would create system wide failure.

              In 2008 we came so close to the edge of the abyss. It is, frankly, amazing the global financial system didn’t collapse.

              Is 2015 just like 2005? Are we legitimately much closer in the development of EVs and renewables now than then?

              We clearly are, but are we even yet in a phase where we can truly say we’ve spent a single year trying to transition? Not really.

              We’re getting close, and a strong global agreement could push us into a true transition.

              The most fascinating and mind consuming topic is really “how close are we to starting a thorough transition?” Given a stable global economy, and the progress in relative costs of batteries, EVs, PV, and wind, we’re close to a turning point.

              But the second the economy goes sour due to an oil crisis will any of it have mattered? A genuine peak event would halt even the strongest transition in its tracks.

              There is a threshold whereby two radically different futures exist for the next 30 years.

              Before that threshold of transition is genuine, truly frightening global financial collapse.

              After that threshold is, granted, a lot of economic pain, but, like in 2008, the system holds together and transition ensues.

              We’re so close to that threshold that a binding global climate change policy could be the thing that sways us from one reality to another. Regardless of climate change’s reality, the results of the Paris summit will have a significant impact on what side of that threshold we find ourselves.

              I cannot commend you enough for making the prescient point that climate change discussion matters in this forum; it matters to the extent that global action on climate change influences our future in regards to peak oil. Discussion should be limited to that topic, and should not sway into debate of what is causing climate change (or whether or not it is even happening for that matter). There are forums for that, and this is not one of them.

          • old farmer mac says:

            I must agree that when the subject is climate science we must leave the details to climate scientists – when the details are about the ACTUAL SCIENCE itself. When it comes to heart surgery we must leave the details to heart surgeons. Ditto just about any really involved subject.

            But climate science does not exist in a vacuum in the sense that it can be done in a lab and the experiments can be easily and cheaply duplicated.

            Climate science right or wrong depends to a huge extent on the assumptions built into it when it comes to FORECASTING the future.

            The forecasts are based on politically determined assumptions. There is simply no way to deny this basic fact. ANY action taken on the basis of these forecasts are politically determined and there will be winners and losers on the vast scale depending on what actions are taken – if any.

            Personally I believe most of the people who do not believe in forced climate change and post comments here are actually capable of thinking for themselves – and ARE thinking. ( Some are obvious trolls of course.)

            Their problem is not that they are incapable thinkers but that they are simply scientifically illiterate. A cursory , mile wide quarter inch deep layman’s knowledge of the sciences MUCH worse than useless when it comes to evaluating climate science. You can USE a computer and fly on a jet and yet be literally illiterate when it comes to the physical sciences.

            Such people simply do not understand the nature of peer review not just over the short term but over the long term as well. They believe everybody is somewhat dishonest and out to get what he can , from their lawyer to their doctor to the man they vote for to their own kids.

            So it is no wonder at all that they believe climate scientists are frauds. A cursory, shallow layman level knowledge of the sciences is quite enough for them to convince themselves that fraud is involved. For every fact supporting change it is very easy to come up with one supporting natural variation- if you do not understand the subject in some depth.

            Let us not forget that NOBODY has ever gone broke overestimating the ignorance and stupidity of the public. I personally know some graduates of VERY well thought of universities who are scientifically illiterate. You can graduate from just about any university excepting one such as MIT or Caltech taking only one so called “survey” course in the sciences. Such a course is just about equivalent to reading a couple of incomprehensible books and immediately forgetting them.

      • Javier says:

        I have only contributed my opinion when there was an ongoing discussion about climate change. I have never brought up the issue since I respect that this is a blog on oil. I do not come to the blog to convince anybody about climate change, I come to learn about peak oil, but I have little to contribute about that since the level of expertise on oil related matters is very high and I don’t usually like to say something when I have little to contribute.

        You have posted several times on climate change so I don’t take any responsibility for “spewing my personal opinion wrt climate change” as if everybody else wasn’t doing the same.

        It is fine with me if there is no discussion on climate change in the blog, but I would think very poorly if the goal is only to have a one-sided view on climate change and dissenting views are discouraged. But of course it is your blog, so it’s your say.

        • OscarThreeKilo says:

          Probably not a good idea to head on into a Mosque and ask if anyone would like to hear your testimony about Jesus.

        • Don Wharton says:

          Javier, your views are complete crap and you have to know that they are vastly different than those of any respected climate scientists. All you are doing is tossing useless noise into the forum here. There are a vast variety of views that are debated in climate science. Your views reflect none of them.

          • Javier says:

            Javier, your views are complete crap and you have to know that they are vastly different than those of any respected climate scientists.

            Thank you for your opinion. I am in the company of such great minds as Freeman Dyson and climatologists with long and fruitful publishing records like Roy Spencer, Richard Lindzen, Judith Curry, Ole Humlum, Fred Singer, Willie Soon, Nicola Scafetta, Friedhelm Steinhilber, Ilya Usoskin, Henrik Svensmark, Sami Solanki, Roger Pielke Jr., Fredrik Ljungqvist, Craig Loehle, Ján Veizer, Zhengyu Liu, Robert Knox, Nic Lewis, John Christy, David Douglass, David Evans, Felix Fitzroy, Bjorn Stevens, and Joanna Haigh, just to cite some of the researchers whose results and/or conclusions clearly contradict key aspects of the IPCC represented model of climate change.

            My views are a lot more shared in the climate scientific community than you are prepared to accept.

            • Dave P says:

              I lol’d when I saw Willie Soon’s name, got undisclosed fossil fuel company backers?! Yep!

              You should see if you can get on their payroll too.

            • thrig says:

              “I am in the company of such great minds as blahbla”

              A rebel! With a brilliant idea! See also: crackpot.

              Now, as to the leavings of your gish gallop, hmm, ah, yes. Roy Spencer, of “Remote Sensing” fame, whose article that “blow[s] a gaping hole in global warming alarmism” (heh) was refuted inside three days. The editor of “Remote Sensing” resigned, agreeing with the critics of the paper. Ouch. Well, if you want to fly the Spencer albatross, I guess you could drop that name.

              Lindzen, lindzen, lindzen. ‘This attitude has strong backing from Richard Lindzen, Professor of Meteorology at the Massachusetts Institute of Technology, who describes Exxon Mobil as “the only principled oil and gas company I know in the US.”‘ — http://news.bbc.co.uk/2/hi/business/6595369.stm

              Principaled contributions to his wallet, doubtless. Wasn’t there some sort of gulf blow-out involving Exxon? The only principled oil and gas company. Indeed.

              Judith Curry is flying a Zero in the Great Marianas Turkey Shoot. https://tamino.wordpress.com/2015/07/03/judith-curry-responds-sort-of-v2/

              Singer? Another bling boy for the Heartland money pump.

              Willie Soon, too soon!

              Nicola Scafetta seems much in tune with the Music of the Spheres (Kepler rebooted as “Tides from Jupiter” for their purported influence on temperatures terrestrial vis-a-vis the Sun), but flunks the Shapiro-Wilk test.

              … this being the point of such gish gallops, is that there is a huge dirty laundry list to slosh through, which is probably why denialists spout them, bear with me here. Mead. Must brew more mead …

              Friedhelm Steinhilber, Ilya Usoskin, Henrik Svensmark, Sami Solanki? Too Soon to tell if this sunny obsession of yours will pay off. Actual climate scientists appear dubious. Henrik in particular thinks rays play a major role in warming, expect for the up-and-to-the-right march of temperatures, set against a decline in cosmic rays. Fail. Oh, he’s a measure-from-the-monster-1998-el-nino Shaq Attacker. Stats fail.

              Roger Pielke… oh, the junior one. Smackdown. http://www.whitehouse.gov/sites/default/files/microsites/ostp/critique_of_pielke_jr_statements_on_drought.pdf

              Fredrik Ljungqvist. Uh… some Milankovitch work that “agrees well” with the work of Mann et al (2008). Nothing, ah, revolutionary here. Can I get a roll on the percussive drum? Thank you.

              Craig Loehle. A Heartland-of-the-unabomber-ad-fame expert who has “never received money from fossil fuel interests” which is an interesting claim given the funding Exxon has forked over to this expert’s employer. If Susie gives it to Mallory who gives it to Craig, it’s not from Susie. QED.

              Why is the isotope geologist Ján Veizer in this list? Oh, Heartland expert.

              Zhengyu Liu, working on “The Holocene temperature conundrum.” Okay, a scientist doing science, probably the best find among all the other lint and chaff you’ve strewn here. Notably, his work does not “change the evidence of human impact on global climate.”

              Robert Knox, the Harry Potter actor… or… ?

              Nic Lewis? Ah, Curry’s wingman in the aforementioned Turkey Shoot.

              John Christy. Didn’t he sign the American Geophysical Union’s warning about humand-caused warming?

              David Douglass. I can only find “Climate forcing by the volcanic eruption of Mount Pinatubo” (2005) which has racked up 0 citations. Publish or perish, David, publish or perish.

              David Evans. Looks like an electrical engineer? Or there’s some emeritus Biologist from Florida… ?

              Felix Fitzroy calls for a “green new deal” to place more emphasis on climate change mitigation (rather than GDP). Okay, that’s great. Who will pay for that? And what does it have to do with climate science?

              Bjorn Stevens looks like a solid cloud scientist, but yet and still and again I’m not seeing anything that would upset the apple cart.

              Joanna Haigh appears to have garnered some fuss over a rejected paper, rejected due to “both factual errors and an overall assessment.” Well, shucks. Better luck next time?

              • Javier says:

                Yet despite your wise arse phrases these people are scientists working for research institutions and doing and publishing science that you are probably not even capable of understanding much less judge. Whether they are right or wrong is not up to you to decide.

                • Don Wharton says:

                  Yes it is for us to judge. We can read. The science literature will reflect the respect with which they are held. The entire list includes no one that is both respected and published with anything that will be the slightest problem for the consensus on global warming.

                • thrig says:

                  Mmm. A more cogent rebuttal would have mentioned the error made by Tamino, but if an easy pitch like that sails on by…

                • Caelan MacIntyre says:

                  “…and doing and publishing science that you are probably not even capable of understanding much less judge.” ~ Javier

                  Javier, while I have not been paying too much attention to your take on the climate change issue, it seems to me that science is about understanding and making it understandable to everyone, not just an elite clique of scientists.

                  • Don Wharton says:

                    Fernado, your appreciation of a mostly anti-science site such as the Daily Caller is precisely why people should have reason to question anything that you have to say about science. If you want to understand what is real then you have to have an epistemology that actually yields knowledge of the real. Do you care about what is real or do you just delight in attacking those who do care about what is real? Your delight in the Daily Caller is polemical extremism that should not appear here.

                  • Caelan MacIntyre says:

                    I can understand how some retired petroleum engineers and the like may be pressed to somehow ‘align’ in their mind what they have spent their entire careers helping to possibly do (cook the planet).

                    Perhaps it’s a bit like an especially-icy Arctic year to somehow ‘align’ with especially-ice-free ones.

                  • You don’t think it’s funny to have a research vessel researching global warming suspend its trek because it’s running into too much ice? I laughed when I saw it, it reminded me of the similar vessel stuck in January 2014 somewhere off Antarctica.

                  • Caelan MacIntyre says:

                    Sure it’s amusing on some level… but given my attitude about governpimps (the ship is nuclear powered, etc.) and the wealth of, often infernal, irony and contradiction that’s out there, it’s like the same old joke over and over again.

                    “in·fer·nal
                    inˈfərnl/
                    adjective
                    1. of, relating to, or characteristic of hell or the underworld. ‘the infernal regions’
                    synonyms: hellish, nether, subterranean, underworld, chthonic, Tartarean…
                    satanic, devilish, diabolical, fiendish, demonic
                    ‘the infernal regions’
                    2. informal
                    irritating and tiresome (used for emphasis).
                    ‘you’re an infernal nuisance’
                    synonyms: damnable, wretched, confounded;” ~ Google dictionary

                    Heaven Hell

            • Don Wharton says:

              Javier, Thanks for proving my point with your list. Singer is senile bloviator saying nothing that can be published for decades. He speaks only to gullible right wingers who like to listen to crackpot nonsense. Dyson has no climate credentials at all. Spencer is a profound incompetent who was given satellite data to process and then proved that he could not understand how to do that. He is now asserting that science is proving young earth creationism. Lindzen is a competent meteorologist who actually got published in cloud science. His most salient paper looked at a particular area of the south Pacific. Virtually every subsequent paper looking at his claims has demonstrated that he was quite wrong when we look at cloud dynamics world wide. Lindzen not being a climate scientist is unfamiliar with paleo-history and the long term climate forcing mechanism that drive it. His major theory has been thoroughly debunked but he is likely the best that you have on this list.

        • Javier, it is like evolution, that is evolution is a fact, the matter is settled. All opposition to evolution is religious or political. I no longer argue with creationists because I know they deny science, they blame the teaching of evolution on politics. That is just dumb. I now just ignore them because they do not deserve my time or attention.

          But I still talk about evolution because it plays such an important part in life on earth. I dismiss the deniers but I am still free to discuss the science.

          Likewise with global warming and climate change. It is a fact, the jury is in and the matter is settled. The opposition to the science is political. But I, and anyone else, is still free to discuss the science because it plays such a very important part in the future of life on earth.

          This blog will continue to discuss global warming and climate change because of the very dramatic effect it is having on our lives and the lives of every other creature on earth. But this blog will no longer be a platform for the political deniers of science to voice their politics and pseudo science.

          • Don Wharton says:

            Ron, you are so right. Evolution has such vast complexities that are becoming increasingly visible. It is a true pleasure reading a writer who can make those nuances visible to a layperson. The passionate philosophical debates on evolutionary science are also quite interesting. I do love debating and discussing those complexities with others. Evolution would be more than a bit off topic here. However, the world of energy is most relevant here. I presume that over 98% of those who come here are like me and support your move to keep the discussion to the real science around energy. It is just like evolution in having much interesting complexity and differences of opinion that are critical for humanity. We just need a modest reduction in the noise that does not deserve our time and attention.

          • Enno says:

            Thanks Ron, I utterly agree.

            Perhaps you can get some help from some of the posters to act as moderators, to ease your burden.

          • Ed says:

            There is a deep link between evolution and energy. Successful species maximise the use of the energy available to them. Populations expand and contract in response to this available energy. and the Human species is no different. Therefore discussing evolution in this context is relevant to the peak oil debate.

            • Futilitist says:

              Hello Ed.

              Great comment. You are talking about the Maximum Power Principle. I’m not sure that has ever been much discussed here. It really should be.

              “That theory, as it is expressed by the maximum power principle, addresses the empirical question of why systems of any type or size organize themselves into the patterns observed. Such a question assumes that physical laws govern system function. It does not assume, for example, that the system comprising economic production is driven by consumers; rather that the whole cycle of production-consumption is structured and driven by physical laws.”
              ~Howard T. Odum

            • Nick G says:

              Well, animal populations do. But they don’t have contraceptives, or insulation.

              Most of the world has reduced it’s fertility below the replacement rate, voluntarily. That wouldn’t be predicted by the MPP.

              The OECD has plateaued in terms of production and consumption of new cars, homes, washer/dryer’s, TV, etc. That wouldn’t be predicted by the MPP.

              • Futilitist says:

                “Well, animal populations do. But they don’t have contraceptives, or insulation.”

                Dream on. Humans are just like all animals. Contraception and insulation don’t really make any difference at all. You are just telling yourself a story.

                “Most of the world has reduced it’s fertility below the replacement rate, voluntarily. That wouldn’t be predicted by the MPP.”

                Yes it would. The fertility rate was not reduced voluntarily. The fertility rate is determined by available net energy. There is less available energy per capita, therefore, less reproduction.

                “The OECD has plateaued in terms of production and consumption of new cars, homes, washer/dryer’s, TV, etc. That wouldn’t be predicted by the MPP.”

                Yes it would. There is less available energy per capita, therefore, less consumption.

                • Nick G says:

                  The fertility rate is determined by available net energy. There is less available energy per capita, therefore, less reproduction.

                  What data suggests to you that there is less available energy per capita??

                  Animal population growth rates are limited by food availability and death rates. Humans have more food per capita than ever – obesity is a growing problem around the world. Death rates, and especially infant mortality rates, are falling around the world. This looks nothing at all like an animal population hitting food limits.

                  • Futilitist says:

                    Hey Nick.

                    I do not want to entertain this discussion on this level.

                    ———-

                    The Maximum Power Principle is one of the most important breakthroughs in the understanding life and evolution on this planet. It is foundational science for understanding our current energy dilemma. I am sorry, but if you don’t understand it, you are ignorant. If it does not inform your views, then you are just wrong.

                    http://jayhanson.us/loop.htm

                    “Today, when one observes the many severe environmental and social problems, it appears that we are rushing towards extinction and are powerless to stop it. Why can’t we save ourselves? To answer that question we only need to integrate three of the key influences on our behavior: biological evolution, overshoot, and a proposed fourth law of thermodynamics called the “Maximum Power Principle”(MPP). The MPP states that biological systems will organize to increase power generation, by degrading more energy, whenever systemic constraints allow it.

                    Living organisms are required by the Second law of thermodynamics (a law like gravity) to deplete (dissipate) available energy (exergy) in order to survive and reproduce. In the discipline of open system thermodynamics, living organisms are called “dissipative structures” because they “dissipate” energy.

                    A dissipative structure is a thermodynamically open system which is operating out of, and often far from, thermodynamic equilibrium in an environment with which it exchanges energy and matter. When dissipative structures occur, they are required by the Second Law of thermodynamics to enhance local energy gradient dissipation.

                    Originally formulated by Lotka and further developed by Odum and Pinkerton, the MPP states that biological systems capture and use energy to build and maintain structures and gradients, which allow additional capture and utilization of energy. One of the great strengths of the MPP is that it directly relates energetics to fitness; organisms maximize fitness by maximizing power. With greater power, there is greater opportunity to allocate energy to reproduction and survival, and therefore, an organism that captures and utilizes more energy than another organism in a population will have a fitness advantage.

                    The best way to survive in such a milieu is not to live in ecological balance with slow growth, but to grow rapidly and be able to fend off competitors as well as take resources from others.

                    Not only are human societies never alone, but regardless of how well they control their own population or act ecologically, they cannot control their neighbors behavior. Each society must confront the real possibility that its neighbors will not live in ecological balance but will grow its numbers and attempt to take the resources from nearby groups. Not only have societies always lived in a changing environment, but they always have neighbors. The best way to survive in such a milieu is not to live in ecological balance with slow growth, but to grow rapidly and be able to fend off competitors as well as take resources from others.

                    To see how this most human dynamic works, imagine an extremely simple world with only two societies and no unoccupied land. Under normal conditions, neither group would have much motivation to take resources from the other. People may be somewhat hungry, but not hungry enough to risk getting killed in order to eat a little better. A few members of either group may die indirectly from food shortages—via disease or infant mortality, for example—but from an individual s perspective, he or she is much more likely to be killed trying to take food from the neighbors than from the usual provisioning shortfalls. Such a constant world would never last for long. Populations would grow and human activity would degrade the land or resources, reducing their abundance. Even if, by sheer luck, all things remained equal, it must be remembered that the climate would never be constant: Times of food stress occur because of changes in the weather, especially over the course of several generations. When a very bad year or series of years occurs, the willingness to risk a fight increases because the likelihood of starving goes up.

                    If one group is much bigger, better organized, or has better fighters among its members and the group faces starvation, the motivation to take over the territory of its neighbor is high, because it is very likely to succeed. Since human groups are never identical, there will always be some groups for whom warfare as a solution is a rational choice in any food crisis, because they are likely to succeed in getting more resources by warring on their neighbors.

                    Now comes the most important part of this overly simplified story: The group with the larger population always has an advantage in any competition over resources, whatever those resources may be. Over the course of human history, one side rarely has better weapons or tactics for any length of time, and most such warfare between smaller societies is attritional. With equal skills and weapons, each side would be expected to kill an equal number of its opponents. Over time, the larger group will finally overwhelm the smaller one. This advantage of size is well recognized by humans all over the world, and they go to great lengths to keep their numbers comparable to their potential enemies. This is observed anthropologically by the universal desire to have many allies, and the common tactic of smaller groups inviting other societies to join them, even in times of food stress.

                    Assume for a moment that by some miracle one of our two groups is full of farsighted, ecological geniuses. They are able to keep their population in check and, moreover, keep it far enough below the carrying capacity that minor changes in the weather, or even longer-term changes in the climate, do not result in food stress. If they need to consume only half of what is available each year, even if there is a terrible year, this group will probably come through the hardship just fine. More important, when a few good years come along, these masterfully ecological people will/not/grow rapidly, because to do so would mean that they would have trouble when the good times end. Think of them as the ecological equivalent of the industrious ants.

                    The second group, on the other hand, is just the opposite—it consists of ecological dimwits. They have no wonderful processes available to control their population. They are forever on the edge of the carrying capacity, they reproduce with abandon, and they frequently suffer food shortages and the inevitable consequences. Think of this bunch as the ecological equivalent of the carefree grasshoppers. When the good years come, they have more children and grow their population rapidly. Twenty years later, they have doubled their numbers and quickly run out of food at the first minor change in the weather. Of course, had this been a group of “noble savages who eschewed warfare, they would have starved to death and only a much smaller and more sustainable group survived. This is not a bunch of noble savages; these are ecological dimwits and they attack their good neighbors in order to save their own skins. Since they now outnumber their good neighbors two to one, the dimwits prevail after heavy attrition on both sides. The “good” ants turn out to be dead ants, and the “bad” grasshoppers inherit the earth. The moral of this fable is that if any group can get itself into ecological balance and stabilize its population even in the face of environmental change, it will be tremendously disadvantaged against societies that do not behave that way. The long-term successful society, in a world with many different societies, will be the one that grows when it can and fights when it runs out of resources. It is useless to live an ecologically sustainable existence in the “Garden of Eden” unless the neighbors do so as well. Only one nonconservationist society in an entire region can begin a process of conflict and expansion by the “grasshoppers” at the expense of the Eden-dwelling “ants”. This smacks of a Darwinian competition—survival of the fittest—between societies. Note that the “fittest” of our two groups was not the more ecological, it was the one that grew faster. The idea of such Darwinian competition is unpalatable to many, especially when the “bad” folks appear to be the winners.”
                    ~Jay Hanson

                    (End part 1)

                  • Nick G says:

                    Well, you said above:

                    “Populations expand and contract in response to this available energy. and the Human species is no different.”

                    And, we have seen that this is just not so.

                    Most of the world has reduced it’s fertility below the replacement rate due to greater affluence and availability of life choices other than child-bearing. The rest of the world’s fertility is falling very fast.

                    Food per capita is expanding to the point that’s it’s unhealthy. Infant mortality is falling, adult death rates are falling, and longevity is increasing.

                    And, extra-somatic

                  • PO Lurker says:

                    Nick is more correct in this conversation.

          • Javier says:

            Javier, it is like evolution, that is evolution is a fact, the matter is settled. All opposition to evolution is religious or political.

            That is a bogus comparison. You are using the false analogy fallacy and the guilt by association fallacy.

            That creationism and disagreement with catastrophic human global warming theory are a false analogy can be demonstrated by the long list of active scientific researchers that are publishing dozens of relevant papers in important peer-reviewed journals challenging crucial aspects of IPCC established AGW theory. Just to cite some of them: Roy Spencer, Richard Lindzen, Judith Curry, Ole Humlum, Fred Singer, Willie Soon, Nicola Scafetta, Friedhelm Steinhilber, Ilya Usoskin, Henrik Svensmark, Sami Solanki, Roger Pielke Jr., Fredrik Ljungqvist, Craig Loehle, Ján Veizer, Zhengyu Liu, Robert Knox, Nic Lewis, John Christy, David Douglass, David Evans, Felix Fitzroy, Bjorn Stevens, and Joanna Haigh.

            You wont be able to provide a similar list of current scientist questioning key aspects of evolutionary theory.

            Your second fallacy is to try to associate people that disagree with catastrophic human global warming theory with creationists so they are guilt by association. No such association exists.

            Time and nature have been disproving CAGW for the last 15 years when warming has barely progressed and climate sensitivity and hence the consequences of warming, has had its average value reduced. This trend is likely to continue and even accentuate over the next two decades. I understand that you don’t like to have your core beliefs challenged.

            I am prepared to place an intellectual bet against you on climate change evolution for the next 15 years subject to annual review. Are you as sure that the world is going to continue warming as I am that it is not?

            • Sam Taylor says:

              “You wont be able to provide a similar list of current scientist questioning key aspects of evolutionary theory.”

              Actually Roy Spencer is quite firmly in the intelligent design camp, so there’s at least one name which would appear on both lists. Which I guess just goes to show what idiotic company you’re keeping.

              As I’ve said elsewhere, I prefer to ridicule you than to engage with you, as I find it both more entertaining and just as constructive. You idiot.

            • BC says:

              At the risk of being ridiculed, I have what I think is a nuanced perspective.

              There is no question that the planet has been warming since the end of the previous ice age, and most especially since the Maunder Minimum in the 17th century.

              There is unquestionably warming associated with the urban heat island effect from deforestation, paving over grasslands, watersheds, and erecting structures of concrete and steel.

              These effects have coincided with the First and Second Industrial Revolutions, the so-called Green Revolution since the 1950s-60s, and the human ape population accelerating from a growth rate of ~0-0.4% for most of our species existence to near 2% in the 1970s and a near halving of the rate since then to date.

              Surely the 600% increase in the number of human apes since the onset of the Industrial Revolution has had AT LEAST an incremental effect on atmospheric warming over the past 60-100 to 150 years.

              But allow me to invite participants to examine the Gleissberg (Jovian orbit), Seuss/de Vries, and Hallstatt cycles (planetary alignments and the possible effect on solar equatorial forcing, solar magnetic effects, and sunspots, as well as geophysical forcing on the Earth’s crust and possible effects related to underwater volcanoes and associated ocean warming) that are largely unknown and certainly not factors discussed as part of the “debate” about atmospheric and ocean warming.

              Note that the previous two convergences of the Gleissberg and Seuss/de Vries cycles were in the late 18th and early to mid-19th centuries, late 16th and early 17th centuries, and late 13th to early 15th centuries.

              Consult the historical record for the climate conditions in Europe, Asia, and Mesoamerica at the time, and note the occurrence of mega-drought conditions that might have caused the collapse of the Maya and Anasazi civilizations, and perhaps the west African empires of Mali and Songhai.

              The larger inference is that there are likely to be natural solar and geophysical forces manifesting IN ADDITION TO the effects from human ape population overshoot of the finite planet Earth. How much human activity is ACTUALLY affecting atmospheric and ocean temperatures beyond the implied natural effects are a subject of inquiry for me.

              But perhaps more importantly, what can be done in the near or intermediate term to make a difference, if any, short of a dramatic decline in human ape population over the current and next generation?

              In this context, I suspect that it is too late to make any difference for the current and next generation even IF the incremental warming is primarily caused by human activity.

              But IF we see a period of lows in average sunspot maxima over the next 2-3 solar cycles (20-33 years) not seen in 200-400 years AND a “pause” in the increase in warming, it might well be that the effects of warming already having occurred (ice melt, sea level rise, etc.), including mega-drought conditions in CA and the US Southwest, are already entrained and will manifest in undesirable, if not catastrophic, ways for a generation or longer hereafter.

              Anyway, I hope that makes sense and avoids the typical reprisals from those inclined to be motivated by ideology and politics.

              The universe/multiverses is/are teaching and I’m still learning (so far). 🙂

              • MarbleZeppelin says:

                Do you have magnitudes (delta W/m2 at TOA) for these cycles and references I can look up. Thanks.

              • Brian Rose says:

                BC,

                The natural effects of changes in solar energy inputs and the various orbital cycles the Earth experiences are the foundation of climate science.

                Our sunspot records actually go back to 1610. Shortly after making the first telescope Galileo Galilei began recording sunspot activity. We have no records before that time, but we have a strong grasp of solar activity cycles from those 400 years of records.

                You are entirely correct that the Little Ice Age occurred during an extended period of little to no sunspot activity. It is accepted science that is used in calculating the influence of solar activity – by means of sunspot activity records. This is a central aspect of climate calculations.

                Climate scientists start with solar activity. It is the very first piece of information that is considered because it informs total solar output during any period. From there the Earth’s various cycles of tilt, precession, etc. are used to determine the total solar influx to Earth’s atmosphere over time.

                Given the natural cycles of the Sun and Earth we SHOULD be in a period of global cooling. All the data we have confirms this; there is zero doubt. The data on Sun activity and Earth’s cycles are well recorded, and climate models accurately predict global average temperatures in the past – including the Little Ice Age.

                Using the data on solar activity and Earth’s natural cycles predicts temperatures faithfully – until the 20th century when a growing anomaly in predicted temperatures appears. This is the very foundation of climate science.

                When all natural cycles are considered (including geological records of volcanic activity, which geologists have highly accurate records of) the Earth should be in a cooling trend, but instead it is in a warming trend that deviates further and further from where global temperatures SHOULD be as time passes.

                We’re only 14 years into 21st century – 13 of those years are the warmest on record, and 2015 is already the single warmest year on record. This is occurring when the planet should be cooling.

                The mystery was to figure out what is causing temperatures to be so radically different than solar activity and Earth’s orbital cycles would predict.

                The only hypothesis that accurately explains this temperature anomaly is the increased concentration of greenhouse gases in the atmosphere.

                The science of greenhouse gases is quite simple and easy to measure – every molecule in existence has a specific, non-changing spectrum of EM waves that it absorbs, and every molecule has a specific, non-changing spectrum of EM waves it emits. These are the physical properties of molecules, and it is why pure gold is always gold no matter where it came from.

                A greenhouse gas is any gas that does not absorb EM waves in the solar spectrum. So solar energy passes right through because the molecule is physically incapable of absorbing it. That solar energy passes through the atmosphere and IS absorbed by the Earth’s surface. Those solar EM waves are re-emitted as infrared energy (another kind of EM wave).

                Greenhouse gases absorb infrared EM waves. This is why they’re called greenhouse gases – they are incapable of absorbing EM waves in the solar spectrum, but do absorb infrared EM waves. Thus making them like the glass pane of a greenhouse – solar energy passes through the glass and is absorbed and re-emitted as infrared energy inside, but glass absorbs infrared waves, so energy comes in and is trapped.

                You can literally go out, buy yourself a spectrometer, and measure these properties of various molecules yourself.

                Anthropogenic climate change is based on this:

                We have strong, accurate records of solar output and total solar influx to Earth over time. Using that data accurately predicts Earth’s past temperatures with extremely high accuracy. Starting in the mid-20th century a growing anomaly in temperatures arises that natural cycles do not account for.

                To explain the anomaly numerous variables are tested -volcanic activity, albedo, pollutants, and many other causes are fully tested. When everything is taken into account there is still a significant temperature anomaly.

                Conveniently, molecules have defined physical properties for what EM waves they can absorb and emit. Some are colloquially referred to as “greenhouse gases” due to the fact that they can’t absorb solar EM waves, but do absorb infrared energy – like a glass pane in a greenhouse. It just so happens that the concentration of one of these greenhouses gases has increased RAPIDLY (on a geological timescale), and the temperature anomalies occur as this happens.

                Even more conveniently, past changes in temperature are also accurately explained only by considering the atmospheres concentration of greenhouse gases in the past.

                That is why the science is so compelling. Every single factor is taken into account, and data for solar activity, Earth’s cycles, volcanic activity, temperature, albedo, pollutants, and greenhouse gas concentrations are thorough and verified through several different sources to ensure their accuracy – from ice cores, tree rings, composition of geologic layers, isotope analysis, and more.

                What climate skeptics don’t understand is that the historical data used is incredibly strong and accurate, and every factor they cite as an explanation is ALREADY TAKEN INTO ACCOUNT. Every possible thing that can impact global temperatures is included. It is not a question of “is it this factor or that factor” it is EVERY factor.

                In a pie chart of the various factors impacting the temperature anomaly that began in the mid-20th century the strongest one, by a very, very large margin, is the rising concentration of greenhouse gases in the atmosphere.

                Hopefully this helps put it into context, or at least provides you with some illumination on the subject.

                Often it isn’t fully laid out for people, so they default to skepticism, which is quite healthy if you ask me. That skepticism is eliminated when the whole process is laid out… or so I hope.

            • Nick G says:

              You wont be able to provide a similar list of current scientist questioning key aspects of evolutionary theory.

              No, because evolution has been around longer, so we’re at a different point in the “evolution” of scientific and social debate. We’re perhaps very roughly at the point evolution was in 1920, around the time of the Scopes trial.

          • MudGod says:

            Ron, why can’t evolution be the unfolding of creationism. why does it have to be either/or. I don’t believe in the virgin birth or the resurrection of a dead man but I was raised in a catholic school for 12 years and they taught both evolution and creationism. For me it all boils down to one simple question, where did the information in our DNA come from. Now here on this physical earth of ours we know that information comes from conscious activity. Now is it possible that this information just popped out of nowhere. Sure, that is possible but the more logical conclusion is that it came from conscious activity.

            • Doug Leighton says:

              “…where did the information in our DNA come from…” The same place that the DNA came from to form frogs, spiders, worms, slugs and chimps: Since we’re basically the same as chimps maybe you could ask them, or Fred.

              • Fred Magyar says:

                Since we’re basically the same as chimps maybe you could ask them, or Fred.

                I’ll defer to both the chimps and bonobos, we seem to be a mosaic of both and we share roughly 98.6% of our genes with them 🙂

                http://goo.gl/VivKmp
                Two African apes are the closest living relatives of humans: the chimpanzee (Pan troglodytes) and the bonobo (Pan paniscus).

                As for the origin of DNA and information it contains…
                Here’s a pretty good reference, despite it being about 15 years old.

                http://www.ncbi.nlm.nih.gov/books/NBK6360/

                Or if you prefer you can always go to the Discovery Institute. 🙂

                http://www.discovery.org/articleFiles/PDFs/DNAPerspectives.pdf

                • Brian Rose says:

                  Fred,

                  Saw your comment below about The Great Disconformity, increased mineral concentrations, and the evolution of shells and other mineral dense structures.

                  That you for posting it!

                  I had never heard about that, and it is an utterly fascinating hypothesis.

                  Afterall, the atoms Earth organisms are composed of just so happen to be the most common available (minus inert noble gases – looking at you Helium and Argon).

                  It makes a good hypothesis that long-term increases in the mineral composition of ocean water would open the possibility of evolving features that utilized them.

                  It’s pretty well understood that the Great Oxidation event allowed for the evolution of aerobic bacteria. A new element/molecule became abundant, and life inevitably found a use for it.

                  Great article everyone should read. For those who skipped over it:

                  http://io9.com/5903330/toxic-oceans-created-the-greatest-explosion-in-biodiversity-earth-has-ever-seen

            • For me it all boils down to one simple question, where did the information in our DNA come from?

              It evolved. You need to say that real slow so it sinks in..
              It eee–voollllved!

              Origin and Evolution of DNA and DNA Replication Machineries

              Sure, that is possible but the more logical conclusion is that it came from conscious activity.

              An where did that conscious activity come from?

              Enough already. I had already said that I refused to argue with a creationist anymore. And so-called “intelligent design” is just another form of creationism.

              I will discuss this no further. Bye now.

              • MudGod says:

                Ron, I clearly stated that life evolves. It is the origin of life that is in question. And that simple little theory that you linked to, who’s to say that that process wasn’t designed. It is an answer that I will probably be searching for until the day I die. But if you found it than good for you.

                • Boomer II says:

                  And that simple little theory that you linked to, who’s to say that that process wasn’t designed.

                  But who designed the designer?

                  I am intrigued by the theories of the origin of the universe, and we can push our knowledge back to the beginnings of the universe, but I’m not sure we’ll ever figure out what came before the beginning? Was there no beginning? If so, what does that mean?

                  Even if one believes in God, where did God come from? If he had no beginning, what does that mean?

                  Also, given the number of stars in the knowable universe and the long history of the universe, humans are such a tiny part of it and we, as a species, probably won’t be around forever. The end of homo sapiens is likely part of the natural progress of things. In the greater scheme of the universe, I don’t think we matter much. At any rate, in terms of time and distance, human scale is of no consequence.

                  • Synapsid says:

                    Boomer II,

                    “…what came before the beginning?”

                    Steven Hawking once said that to ask that is like asking what is located one mile north of the North Pole. “It’s a meaningless question.”

                    He has a point, I guess.

                  • MudGod says:

                    So some evolutionists went to God and said, God, we don’t need you anymore. We can take some dirt and go to the lab and create life. God says, that’s fine, now get your own dirt.

              • Brian Rose says:

                Most people simply aren’t aware of the fact that it took 3.3 billion years of evolution on the microbial level before the first multi-cellular “macro” organism appeared.

                86% of life’s evolutionary history was just microbes.

                All the cellular complexity inside of us happened at an infinitesimally slow pace. 3.3 billion years of evolution, and all we had to show for it was still just… microbes.

                Only after that foundation was built over 3.3 billion years did the very first multi-cellular “macro” organism appear.

                It doesn’t help that our brains are incapable of genuinely comprehending “3.3 billion years”. It is literally 100% impossible for anyone to truly grasp how long 100,000 years or 1 million years is, much less 3.3 BILLION.

                We can “understand” 100,000 years as a concept; however, we cannot truly comprehend the unfolding of such an insanely LONG time frame.

                Once you get to 3.3 billion years… Well, no wonder people find life’s complexity impossible. They simply have no grasp of how infinitely long that timeline is.

                I cannot truly grasp it either, but I understand the idea of 3.3 billion years well enough to ask “what took life so damn long to evolve the first Sponge?!” instead of some peoples ignorant question “How could something as complex as a human evolve after ‘only’ 3.8 billion years?”

                3.8 billion years. And all we got was humans!

                Look at a side-by-side picture of E. coli and a human and it SEEMS amazing, but only because the eternity of time between them is not fully comprehended.

                3.3 billion years and all you get is Sponges. That is terribly, terribly inefficient considering how ungodly long that time frame is. But, that’s the nature of random mutation and natural selection.

                Some people think evolution is just too darn incredible to be true. I’d say it happens so damn slowly that it is better seen as underwhelming.

                • Nick G says:

                  Very nicely put.

                • MudGod says:

                  When compared to infinity, a few billion years isn’t that long at all.
                  Quantum equation predicts universe has no beginning
                  http://phys.org/news/2015-02-big-quantum-equation-universe.html

                  • Caelan MacIntyre says:

                    A few billions years or so in the context of infinity is maybe sort of like pressing the fast forward or backward button or even clicking on the next song. Maybe our universe is just the ‘next song’… of an infinite album of songs.

                    I Look Like I’m From Space

                    Of course, we’re all from space and so we all look like that… Right? ^u^

                  • Brian Rose says:

                    MudGod,

                    I am 100% on the same page. I’m only hoping to express the reality that 3.3 billion years might as well be eternity.

                    We are incapable of comprehending infinite time; we are equally incapable of comprehending the scale of 3.3 billion years of time.

                    In terms of physics 3.3 billion years is s momentary flash compared to “infinite”. In terms of experiential understanding 3.3 billion years is just as nebulous as infinity.

                    Physics gives us the defined number, but relating the magnitude of that number is impossible. Even an accurate conception of its length is a diminishment of its true reality.

                    3.3 billion years! It doesn’t even make sense once you really dig into what even 100 million years of time is.

                    We cannot even comprehend a single lifetime. From when we’re conceived to our first cogent memory 3 years later. Every job, every shift, every date, every purchase, every mundane moment. THEN we sleep for 33% of it, so 33% of a 77 year life literally doesn’t exist in terms of experiencing time.

                    One lifetime seems “short” because our brain prunes memories. Our hard drive space doesn’t change, but the accumulation of experience doesn’t relent.

                    It is a biological limitation that every year goes by “faster and faster” as we age. This has nothing to do with time itself. It is 100% a reflection of our brain pruning old memories as new data comes in. The result is a feeling of “time passing more quickly” as moment to moment experiences are refined to the most important (neurologically, not literally) and everything else is deleted (i.e. forgotten).

                    This is why comprehending 3.3 billion years is, literally, neuro-anatomically impossible.

                    It is neuro-anatomically impossible for us to comprehend the length of our own lived and experienced lifetime. It is well established science that each year feels shorter because we have a finite hard-drive and over a lifetime we experience far more than can be stored.

                    It is no different than having a 1 TB hard-drive and trying to store every years great movies on it – give it 20 or 30 years and you’re going to be forced to delete previously “important” movies to save new “important” movies.

                    1500 movies come out every year. You save 3. You forget 97% of movies, but at over time even that 3% retained that are “important” must be trimmed. You forget how much you loved Young Frankenstein. There;s no conscience moment that it happened, but it did.

                    Comprehending the entirety of even a single lifetime is, unequivocally, biologically, impossible. That is a life we technically live, but its totality is only comprehended through experience, which is limited by neurology.

                    Comprehending 100,000 years when we’re verifiably incapable of comprehending our own lifetime?

                    We need not venture to a timeline of 3.3 billion years when we know we are not equipped to comprehend our own lifetime.

                    This isn’t philosophy; this is well documented science.

                  • Doug Leighton says:

                    Hi Brian,

                    Excellent comment though, being picky, I have one small reservation. Comprehend has two meanings: Grasp mentally and understand. We cannot mentally grasp large numbers however they are certainly something we understand. Every day I do calculations involving 10 to various powers and comprehend (understand) the result. Obviously you do so yourself.

                • Caelan MacIntyre (Tribe Of Pangaea- First Member) says:

                  “Apparently Earth is 4.54 billion years old. That seems awfully recent in a universe that’s only apparently 13.77 billion years old, don’t you think? Why should our planet be, eerily perhaps, as old as almost exactly a third (4.54 x 3= 13.62 billion) of the age of the entire universe?…
                  Given the question about life on other planets, maybe it is indeed very early in the process and we may be among the first.” ~ Tribe Of Pangaea- First Member

                  “…we are probably one of the first planets with intelligent life. [with maybe intelligence being kind of so-called or relative or something] First you had the big bang, then you had lots of cosmic evolution. Then lots of stars had to form, burn, and then go super-nova in order to form the heavier elements. So it probably took a good 7 to 8 billion years until there were enough heavier elements to even make life possible. Our planet then formed and life started. It took some 4.5billion years to evolve us. Any other intelligent life out there (which is probably extremely rare) probably hasn’t been around much longer than us. And even if they are out there, it is no surprise they haven’t mastered long-distance space travel given the near impossible physics of it.” ~ speculawyer

                  Ronald Walter; happy belated moon landing.

                  In a Nick G/Jacque Fresco world, perhaps Mars would be well-colonized by now (with Tesla rovers ‘n’ stuff) and in the process of being terraformed.

                  • “…we are probably one of the first planets with intelligent life. First …..

                    Well many hundreds of billions of planets formed out of heavier elements at pretty close to the same time ours did… so….

                  • Caelan MacIntyre says:

                    Sure, although that might make things relatively sparse even at a few hundred billion and what with those extinction events that almost wiped things out here.
                    And then there’s that myth of progress thing.
                    And those inherent drags on the what-is-possible.

                  • Brian Rose says:

                    Yes!

                    Cosmologically speaking, several solar lifetimes were needed to produce enough heavy elements for rocky planetary systems to exist.

                    That being said, the universes earliest stars were massive and short-lived.

                    We may be among the first intelligent life in our galaxy; no need to go universal since we have 200 billion stars in the Milky Way alone.

                    Also, we may not. As Ron pointed out, billions of other solar systems in our galaxy are of the same age and atomic complexity.

                    Even more importantly, billions of star systems in our galaxy are billions of years older, but still composed of the same enriched remains of several generations of older stars.

                    Case in point, the Earth homolog announced by NASA yesterday, Kepler 452-b, is 1.5 billion years older than Earth, yet is revolving around a star equivalent to the Sun in its composition.

                  • Doug Leighton says:

                    Brian,

                    The Milky Way is 13.2 billion years years old. It has been forming stars (and their planets) all that time. So, rocky planets with life potential have been in our galaxy for a long long time. Human existence is trivial (time wise) so another planet with “intelligent” life would as likely be more “evolved” as less evolved. Unless some galactic god of goddess decided otherwise.

                • Synapsid says:

                  Brian Rose,

                  About the 2 billion years when life remained prokaryote (bacteria and archaea: single-celled, without a nucleus):

                  Look into Nick Lane’s new book The Vital Question. He makes a strong argument that what made more complex organisms possible comes down to a large increase in energy available per gene, as a result of that endosymbiotic engulfing, by an archaeal cell, of a bacterium. The engulfed bacterium set up shop within the archaeon and became a specialized generator of cellular energy, passing most of its genes to the archaeon and retaining primarily what it needed in its new role–leaving it smaller. Smaller meant that the cell could host a large number of these mitochondria, as they now were, and the energy production could allow much larger, and more complex, cells than prokaryote energy production could support. Thus the eukaryote scale of organism became possible, sponges and all.

                  He makes a good argument that this endosymbiotic event only happened once.

                  • Brian Rose says:

                    Synapsid,

                    The endosymbiosis of mitochondria is frankly the single most important event in evolutionary history.

                    Evolution of a nucleus? A landmark moment we use to segregate entire domains of life.

                    Evolution of chromosomes? Incredibly important.

                    Endosymbiosis of mitochondria? Likely the biggest event in evolutionary history.

                    There is not a single eukaryote that doesn’t have mitochondria. Well, more accurately, even the very few eukaryotes that don’t have mitochondria have the ribosomal remains of having had mitochondria, but having lost them.

                    Makes you wonder. Is it the nucleus that defines a eukaryote or the mitochondria?

                    Separating DNA into its own compartment allows for far greater and more precise translation of DNA into RNA. Without that adaptability and precision you cannot produce the differentiated variety of cells needed for macroorganisms.

                    However, that segregation and precision have costs. Energetic costs. Without a powerhouse that evolutionary strategy cannot be maintained.

                    Endocytosis of mitochondria by eukaryotic cells is much like how coral works, but much more intimate.

                    Hands down the biggest “How likely is this?” part of evolutionary history. Yet without it we would not have… us. Or any macro-organism for that matter.

                    In each of the cells in my body there are hundreds of mitochondria. Alien cells, dividing independently inside my own cells, all containing their own DNA.

                    We’re eukaryotes… with hundreds of prokaryotes living independent lives INSIDE every single one of our cells. It’s intriguing to say the least.

                • JW says:

                  For 3.3 billion years single cell organisms evolved more and more complexity. But there are a limit to how advanced a single cell can be. You will approach that limit asymptotically. 1 billion years, or 10, not much difference. The limitation lays in the single cell concept.

                  The breakthrough come with multi cellular organisms. And that super-important step can happen first when sufficiently advanced cells are formed (eukaryotic cells) and then we must wait a long time for a series of random events will create a multi cellular structure. I guess a few billion years is what it takes.

                  And for what it is worth; 10 000 years is what I can wrap my head around. I call it a myriard, the “seconds on my evolutionary clock”. 100 000 years is ten times of that.

                  • MudGod says:

                    Wow, we have some really intelligent life on this blog. Thanks for your time and contributions to this discussion. Now I have a Masters in Environmental Science and believe strongly in evolution so why would I even consider Intelligent Design as a valid scientific theory. Well it’s because I have a daughter who sees spirits. And not only her but some of her cousins and one of her teachers also sees these same spirits. So in my search for answers I come across this book called The Scalpel and the Soul written by a neurosurgeon Dr Allan J. Hamilton. A book I recommend for anybody who is terminal or has a love one that is. So now I ponder the origin of life, something even Darwin didn’t have an answer for. Now I am no cellular biologist or physicist so I don’t quite understand everything in this discussion but in regards to the age of the universe, if energy can neither be created nor destroyed, how could there have been a beginning or an end. And if consciousness is energy well then…

                  • Boomer II says:

                    So now I ponder the origin of life, something even Darwin didn’t have an answer for. Now I am no cellular biologist or physicist so I don’t quite understand everything in this discussion but in regards to the age of the universe, if energy can neither be created nor destroyed, how could there have been a beginning or an end.

                    I am more interested in theoretical physics than religion, but I still realize there are concepts we as humans don’t understand and may never understand.

                    I have pondered the idea that our reality is just someone else’s dream. Or that there are multiple universes not necessarily all operating on the same physical principles. And so on.

                    Currently I find that theoretical physics more awe-inspiring and thought-provoking than any religion or spirituality I have come across, and I anticipate that will continue to be the case. However, part of that awe involves realizing there are unanswered questions.

                  • coffeeguyzz says:

                    Mudgod

                    Spirituality has been described as an individual’s recognition of the existence of a non-physical reality. (Religion being a social/cultural expression of same).
                    Faith may more precisely be viewed NOT as believing in something you do not know to be true … rather it is trusting in something you do not yet understand.

                    Those with intimate experiences with things of a spiritual nature would understand.

                  • MudGod, surely you must realize that any theory that posits a supernatural being must, by definition, be a religious theory, not a scientific theory.

                  • coffeeguyzz says:

                    Mr. Patterson

                    Before he went insane, was institutionalized, and was electronically lobotomized via electroshock therapy, Robert Pirsig was able to employ his staggering intellectual prowess to identify just how Reason obtained its self-appointed position at the apex of human qualities. He used the scientific method throughout to arrive at his conclusions.
                    His work was presented in the classic “Zen and the Art of Motorcycle Maintenance”.

                  • Brian Rose says:

                    JW,

                    Very well said.

                    Look at a diagram of a eukaryote with all of its organelles, cytoskeleton, innumerable transport system… I mean even the “simple” process of mitosis is an incredibly elaborate and awe inspiring dance.

                    By the time we got to single celled Eukaryotes 98% of the evolutionary work was done.

                    If Eukaryotes are like the Taj Mahal, then Prokaryotes are a mud-brick hut. But even Prokaryotes, simple as they seem, did a lot of the fine tuning that allowed for Eukaryotes to come about.

                    We share 55% of our DNA with E coli. If we had the DNA of our actual common ancestor with E coli we’d find that it is much higher than 55% since E coli has been evolving just as long as we have.

                    But, at a bear minimum, we can say that 55% of what we are is left over from billions of years ago. More accurately, the genetic foundation that underpins our cellular activity and structure was so well refined by the time our Prokaryotic ancestor came about that no amount of selection could refine it further. The concrete was poured and dried; 55% of the work was done, and we weren’t even a single celled Eukaryote yet.

                    In that 3.3 billion years of microbial evolution a LOT happened. If we saw what the first “life” was I’m positive it would saddle the line and only qualify as proto-life. Like a duck-billed platypus it’s not quite a mammal; it’s a proto-mammal.

                    Going from whatever that proto-life was, through the RNA World (if that is indeed how things unfolded, which I think likely), to the first DNA organism (call it a proto-prokaryote), to eukaryotes.

                    3.3 billion years is an eternity, but you are correct, we should not downplay the fact that those microbial years did 98% of the work. Then, macro-organisms did a few finishing touches.

                  • His work was presented in the classic “Zen and the Art of Motorcycle Maintenance”.

                    I read that book back in the late 70s. I don’t remember a lot about it however. I do remember that I loved it.

                  • coffeeguyzz says:

                    Mr. Patterson

                    A very brief passage from ZMM that may address a great deal of the underlying tensions displayed on this blog, the hydrocarbon field, and much of today’s societies in general …

                    “The Buddha, the Godhead, resides quite as comfortably in the circuits of a digital computer or the gears of a cycle transmission as he does at the top of a mountain or in the petals of a flower. To think otherwise is to demean the Buddha – which is to demean oneself”.

                    Fascinating insight.

          • stevek says:

            Ron,

            It depends on what you mean by climate change.

            Every reputable scientist believes in co2 causing global warming. But there is a great deal of debate as to the sensitivity of temperature to the amount of co2.

            If sensitivity is on lower end then increasing co2 will not do much harm, it may even do some good. If on higher end there will be problems.

            Very reputable scientists disagree about what the sensitivity is.

            The ipcc models have predicted higher sensitivity but actual observation does not match the models. It could be we just need to get more observations or models are incorrect.

            Time will tell.

            • Brian Rose says:

              The IPCC models didn’t accurately predict how much energy the oceans would absorb, and that did make them too sensitive.

              It is a bit nerve wracking that the loss of sea ice, permafrost, ice sheets, and glaciers has happened FASTER than models predicted.

              This means sea level rise will likely be more rapid and severe than predicted.

              There is less surface warming than predicted, so you’d think there’d be less ice loss than predicted… But the opposite happened.

              So surface warming predictions were too sensitive, but sea level rise predictions were not sensitive enough. If anything that is a far worse outcome.

              I wish the model were correct – we’d have more warming with less disaster. Instead what is unfolding is less warming with more disaster.

              In my eyes potential sea level rise is the least manageable and most costly long-term impact of climate change.

              • Don Wharton says:

                Brian, I hope you are right about sea level rise being the most costly. My fear is that the impact on agriculture will be the most costly. The natural result of big declines in agricultural productivity will have waves of population decline with the associated social dysfunction and wars that logically must occur with anything that dramatic.

                • Everybody says sea level. The other stuff is mostly hype. And they project using RCp8.5. Other than sea level and having an AC unit fall on your head you should be fine.

              • old farmer mac says:

                Acidification of the seas might be a bigger problem than rising sea levels.

                My own seat of the pants guess is that by the time rising sea levels result in truly major disruptions the population of naked apes will be falling off substantially for reasons both fair and foul.

                So the loss of land area might not be as critical as it appears at first glance.

                Sky Daddy alone knows what the consequences of ocean acidification might be.

                • Brian Rose says:

                  OFM,

                  I’m torn on ocean acidification.

                  We’re already seeing impacts on shell formation, which throws the entire ecosystem into chaos. Entire levels of the energy pyramid food chain are removed, and everything above that pyramid level dies as well.

                  It’s a scary future with strong evidence that it’s already beginning.

                  On the other hand, I feel that this has probably happened before, many times over, and that after massive die offs a subsect of each population will be left that has a phenotype than CAN handle shell formation in more acidic conditions.

                  It’s a lot like a deadly disease passing through a population, wiping out 90% of people, and the 10% left survived due to immunity.

                  Digging a bit deeper, and more theoretically, I’ve long thought that epigenetics is a stronger piece of evolution than Molecular Biologists yet realize.

                  Histones, and the mythylation of DNA to “lock it away” are the means by which developmental genes are turned off as we mature. For instance, 95% of Asians are lactose intolerant. As infants 100% of Asians CAN digest lactose – a primary ingredient in mother’s milk. Some time after weening the lactase gene is turned off. They have the gene, but it is “locked away”.

                  In college we were taught over and over again that 50% of human DNA is “junk DNA”. Why? Because it doesn’t sequence for a gene. That felt wrong. Evolution doesn’t waste energy and resources like that. “Junk DNA may not code for genes, but it does something.

                  Our genome goes through the effort to shut off lactose digestion so that it can save a miniscule amount of energy and amino acids not “printing” lactase. Before 15,000 years ago virtually ALL humans were lactose intolerant (after infancy).

                  Selection was clearly strong enough where the energy and resources saved by shutting off lactase production was meaningful. Yet, my textbooks and Professors were telling us that 50% of DNA is “junk”. Yeah, right!

                  Recently, Molecular Biologists figured out that SOME of the “junk” DNA is for higher level regulation. It doesn’t code for genes, but for where and when genes are used.

                  I very strongly feel that the rest of the “junk DNA” is for higher level regulation, longer-term regulation. In concert with epigenetics I believe we have within us a huge store of DNA that can be re-accessed over multiple generations as environmental conditions change.

                  Just like the rapid spread of “lactose tolerance” after our ancestors domesticated milk producing livestock. Just like the development of Type II Diabetes through epigenetic changes we don’t yet understand.

                  Epigenetics started with discovering how developmental genes are turned off as we grow. Then, it was found that some epigenetic changes are passed on to children as permanent strucutural change – the proliferation of “lactose tolerance” (not turning off lactase production).

                  Just last year it was discovered that common lifestyle differences – like eating habits, sunlight exposure, ambient temperature – cause epigenetic changes frequently, AND those changes are passed on to offspring.

                  BAM! The first proof that our ability to cope with varying environments doesn’t require the dangerously slow process of mutation and selection. Over time we will discover that a combination of long-term multi-generation epigenetics, and the remaining “junk DNA” it may be locking down (making it look useless), can combine to yield an exquisite new view on evolution over smaller time periods – say, 1,000 – 100,000 years.

                  So whats that got to do with shell formation and ocean acidification? It seems likely to me that the DNA inside organisms has much more adaptability built into it than we currently know.

                  Eco systems experience changes both radical and slow, but constant. Conditions like salinity, temperature, pollutant concentration, acidity, etc. have fluctuated wildly over time, and organisms likely have epigenetic and “junk DNA” means of adapting to those changes.

                  That “junk DNA” is like an investment – generation after generation wastes energy and resources preserving it. The ones that don’t will proliferate temporarily, but are wiped out when the inevitable happens. The result is that we’re left here scratching our heads asking “If evolution is so frugal, then why does every organism have all this ‘junk DNA’?”

                  • Fred Magyar says:

                    Great post Brian!

                    Some food for thought:
                    http://goo.gl/N84DxK
                    Toxic oceans created the greatest explosion in biodiversity Earth has ever seen

                    And some great music about the same topic.
                    https://goo.gl/j1N7gR

                    Cheers!

                    Note to Fernando: This stuff is for beginners don’t bother reading any of it.

                • Acidification is a concern. But it seems to be manageable. Those acidification projections you see use RCP8.5 or its EPA cousin, the 8.6.

            • Caelan MacIntyre says:

              “Time will tell.” ~ stevek

              Many scientists are also saying that we do not have the luxury of time and that steps required to severely curtail C02 emissions need to be taken immediately.

              Which seems to mean flushing a lot of vested interests in this crony-capitalist plutarchy fraud for a life down the tubes.

              I’m in.

              Also, we might do well (which many already do) to take the comments of some drive-by’s with regard to some issues concerning climate with as much dubiousness and detachment as their own brief appearances and sudden disappearances seem to warrant.

        • Ed says:

          I support your right to put your views about climate change on this blog Javier when the topic comes up, just as my comments are tolerated on AGW denial sites like Energy Matters.

          • Joe Clarkson says:

            I am surprised that anyone gets a comment published on Energy Matters that differs from Euan or Roger’s take on climate change. I was banned after one comment about the effect of temperature on the carbon cycle.

            Their bans are apparently irrevocable. An attempted comment on a novel means of pumped hydro using underground aquifers (related to the topic of the post) was never published.

            I occasionally read their posts, but the comment section is mostly just the choir singing “hallelujah” back to Euan and Roger. I have given up reading the comments.

            • old farmer mac says:

              They tolerate me and I comment there often using a different handle but the same arguments I use here.

              Occasionally they come up with some really good stuff such as their very recent summary of the state of the nuclear industry and the near term possibilities of new nuclear tech being deployed.

          • Dennis Coyne says:

            Hi Ed,

            Ron has put a lot of work into this blog.

            I support his right to censor as he sees fit.

            So far I think he has done an outstanding job, with a very tolerant attitude towards views that are different from his own views.

            That is what makes this blog interesting.

            • Futilitist says:

              Hi Dennis.

              Are you the system administrator of this site?

              For example:

              DC says:
              12/15/2013 at 1:07 pm
              Nice that the comment reply function works now.
              We can only go to 6 levels deep.
              DC

              dcoyne78 says:
              12/18/2013 at 2:14 pm
              I have changed this to 8 levels deep. We will see how ell it works.
              DC

              And:

              Dennis Coyne says:
              03/31/2015 at 9:51 am

              Hi all,

              The edit function will be disabled for and hour or so.

              Test it is working again, sorry if I messed anybody up.

    • Dave Hillemann (Texan) says:

      Does it really matter? Global warming is the latest controversial social issue that people will spend hours and hours debating without accomplishing anything. Facts and data don’t really matter in these sorts of debates, since everybody already formed an unwavering opinion on the matter at some point in the past. No amount of arguing will change anybody’s opinion.

      Global warming has replaced evolution as one of the debatable social issues in this country, in my opinion. Surveys still show that at least a quarter of all Americans believe in creationism, but these people don’t really express their beliefs in public much these days, probably because of the public ridicule they’d be likely to face. That’s something not present with the global warming debate – whether you accept it or not, your views one way or the other aren’t yet likely to cause you public ridicule or shame.

      • Don Wharton says:

        Oh please! Most of the people here will alter their views based on evidence. Those who respect science will very much appreciate new insights on what is happening. We just need to filter out the dogmatists for whom evidence really does not matter.

        • Dave Hillemann (Texan) says:

          You would probably be interested in the recent Pew Research report, “Americans, Politics and Science Issues.” Climate change and energy policy are the two most politicized issues they studied. When something gets so politically charged, they note that a person’s opinion on the matter basically becomes rigid and no longer changeable.

          http://www.pewinternet.org/2015/07/01/americans-politics-and-science-issues/

          • old farmer mac says:

            DH Texan is dead on about people believing what they want to believe once an issue becomes a cultural litmus test.

            There is an essentially ZERO chance of changing the mind of a person who lacks a basic scientific education when it comes to climate change.

            ..I just had a long conversation with a close relative yesterday-a very intelligent man with a kind heart and tons of EVERY DAY COMMON SENSE – who is utterly convinced that forced climate change is a scam on the grand scale.

            He is incidentally a multi millionaire grade school dropout who ran a successful business of his own for forty years starting out as a farm laborer.

            Now this mans problem is not that he is not capable of thinking or incapable of critical thinking but rather that he IS THINKING using the data available to him, the data which he possesses from watching right wing satellite tv three hours every night. PLUS the algorithms he has formulated for himself after observing society for seventy years.

            EVERY GODDAMNED EASILY IDENTIFIED group of people in this country and in this world represents a special interest of one sort or another , with every group pushing to get what it wants from government. Almost any fool, even one with a degree from an Ivy League, recognizes this as a fact.

            When you get right down to the nitty gritty, this IS a Darwinian world and every man in it is out to look out after himself and his own ” in ” group..The LAWYERS and the CPA’ s and the doctors and the bankers and the engineers and the owners of Walmart and the teachers and the cops and the guys who fill potholes on the government payroll and the preachers and priests and engineers are first and fucking always foremost interested in their own problems.

            Of course there are exceptions. My own physician quit big city medicine making three hundred grand to open an office to ” do it right” making one fifty out in the boonies.

            He is as fine a man as I have ever met but if he did not get paid he would close his office in a flash. Told me so himself while readily admitting that he can afford to retire and continue to live VERY well indeed except maybe not getting a new six figure car every year,which he has never done anyway. He would still be able to fly to New Zealand twice a year and stay a month in a spiffy back country resort fly fishing.

            So now ………… given that lying and dissembling and advocacy for gain are just about universal (every major novelist , playwright, poet has recognized this truth for TWO thousand plus of years ) and that my relative understands this basic truth …. grade school drop out or no… WHY should he believe climate scientists are any more honest and ethical than anybody else?????

            His THINKING is fine. The problem arises because he is simply grossly ignorant of the actual workings of the physical sciences. Computers say garbage in garbage out. In this case even without the garbage (in the end paid for by the Koch brothers and friends ) coming in and accepted as factual, he would still be extremely suspicious and very strongly inclined to disbelieve in climate science—- because he immediately identifies just about every public figure who accepts the concept of forced climate change as a deadly social enemy. From HIS point of view, Al Gore and Hillary are determined to tax the shit out of him to support the many irresponsible people he knows personally at HIS expense. AL and Hillary are in his mind determined to prevent him from developing his large farm into a subdivision so he can fly fish in New Zealand for a month twice a year along with Dr X.

            From his point of view homosexual sex and marriage are as big an abomination as adults having sex with kids -and I daresay virtually one hundred percent of the people who comment here are opposed to adults sleeping with minors- or at least ones younger than maybe sixteen or so.

            Now others who are not so disinterested and so alien like in their thinking as I am in the abstract may think that because adults are adults and kids aren’t that makes the difference . ( I actually agree in this particular case since this agreement is consistent with MY culture).

            In the abstract, sex with kids is only wrong because we have DECIDED it is wrong. In other cultures at other places and times it has been and is perfectly acceptable.

            It is perfectly acceptable in MY culture to kill your wife’s lover if you think you can get away with it. No REAL man , in keeping with evolutionary principles , is interested in working his ass off for decades supporting another mans kids as opposed to his own. Any biologist who denies this fact is a fool and doesn’t understand the abc’s of his profession.

            (Being a more mellow sort personally when I had such a problem with a couple of women I told them to make sure the door didn’t hit them in the ass on their way out. I would have been told the same by my Big Apple Jewish artist second wife or any of the women I have lived with.Was told the same once. )

            So now – there is a point to this rant.

            When you kick climate ”denialist” people out of a forum such as this one , you just reinforce their belief that climate scientists are collectively scamming us. You just convince the people kicked out that we are part of the scam- THEREBY also convincing them that PEAK OIL is a scam as well.

            We all know that we need lawyers but plenty of us in this forum believe that lawyers are basically money grubbing parasites taken all around. I happen to agree with that pov. Other countries get along fine with VERY few lawyers compared to the USA.

            But in the end there does come a time when the climate argument takes over a forum if the host allows it to do so and Ron may eventually HAVE to ban a lot of people for this reason.

            It might work to have a forum divided into two sections whereby anybody who wants to can post various thoughts in the second section so as to keep the primary one ON TOPIC. I don’t know if the software Ron uses is sophisticated enough to allow this option.

            A forum such as this one may be kept running by the host for several reasons. One really good reason is to educate the public. For that reason it is good to have the widest possible audience.

            Some people who are ” denialists” are open minded when it comes to understanding that things come out of holes in the ground MUST eventually come up in short supply. If they are not made to leave because they are insulted they will learn something here.

            Such problems as this one have no truly satisfactory solutions.

            I do occasionally point out to such individuals that modern medical treatments are in large part available because the government spends megabucks on medical research- virtually every dime of which winds up in the pockets of doctors and other people in the health care industry. I do occasionally point out to them that they can drink the water in the town downstream of us ONLY because the government forces all us upstream folk to use septic systems rather than crapping and peeing in outhouses.

            • Boomer II says:

              But in the end there does come a time when the climate argument takes over a forum if the host allows it to do so and Ron may eventually HAVE to ban a lot of people for this reason.

              The problem here with discussing climate science is that we get quite a few people who drop in to comment about that and nothing else. They appear to do Google searches and then whenever they see something about GW, they decide they must defend “freedom” and comment on the subject.

              Therefore, I think the less on the topic the better to avoid all the people who have nothing to discuss about oil and fossil fuels.

              There are multiple other places where climate science can be discussed. I don’t think this forum really needs to tackle the subject as well.

          • Boomer II says:

            By contrast, only 43% of Republicans and leaning Republicans expressed support for prioritizing alternative energy production over traditional energy development.

            This will likely change as the economics change.

            Right now you’ve got Tea Party types supporting solar in some areas.

            There are libertarian Silicon Valley types who are promoting alternative energy technologies.

            As this forum as pointed out, the fracking industry is in financial trouble.

            And as others have pointed out, the fossil fuel industries may need government help to keep going because supplies are declining and the cost of production is going up.

            I think we could let the GW issue fade into the background and just watch the economics take over.

        • JW says:

          DON. The man is RIGHT.
          If someone do not want to believe in evolution or climate change, he will not. And for those who believe religion has a unique ability to do this other ideas does not have, that person is wrong.

          When I was (yes, was) a young earth creationist, I frequently debated evolution/creationism on a forum only accessible to computer nerds from universities in Sweden. I think I was the only creationist on those forums.

          The guy I debated most with is an anti-socialist free market liberal atheist that is very smart. His opinions on me as a creationist was pretty much the same as Ron displays here.
          It turned out when climate change came to be debated, he was a CC denialist! His free market beliefs disabled him from accepting science on these matters.

          I am no longer a creationist, he is still a CC denialist.

          • Don Wharton says:

            JW

            Obviously there are many examples of people who are trapped in their various thought cages of dogma. My point is that the community here is mostly science oriented. The majority here understand the role of evidence and are willing to alter their understandings based on that evidence. Ron is not vetting the people who come here in regards to their respect for science. So there will be a minority here that try to dump their dogma into the discussion. My preference is that such dogma should be treated as the embarrassing stupidity that it is. The fact that dogmatists will change their opinion very slowly does not mean that they will not or cannot change. As you point out you have changed from a dogmatic view that you held in the past. We need to be respectful of the people as they go through the needed changes so that they can understand what is real. That does not mean that Ron should let them spew their dogma unimpeded. Moderating or banning them as needed to keep the noise level within reason is something that must be done. This is how a community of whatever sort nourishes wisdom over time. I love what Ron is doing here to achieve that.

            • JW says:

              There is nothing I disagree with in what you wrote. I also believe we need to respect people we disagree with. To hate people like racists and CC denialists is the wrong way to go. In my brightest moment, I consider such people my unenlightened brothers.

              But web forums are a complicated beast. They tend to bring out the worst of people. There are people in the real world I would literally take a bullet for, but when we discuss politics on social forums, I sometimes must restrain myself from shooting them myself. Text based forums like these are a real bad forum for the human psychology to interact with.

              Given that, I don’t know if web forums are the right way to “turn” people. I think video forums such as Youtube is much more powerful. You can’t be unpersonal with your face. I think Ron is right to filter out the denialist bovine fecal matter. But he should keep some for educational and recreational purposes 🙂

              • Boomer II says:

                Given that, I don’t know if web forums are the right way to “turn” people.

                And for that reason, I wish those who pop in here only to post about their political disagreements with global warming would not bother.

                I don’t think they even read what is here. They just post mostly canned comments that no one here pays much attention to.

                This forum is primarily about peak oil. So people here assume changes are coming no matter what happens to the climate because available energy resources will be changing. There is disagreement about how soon and how severe the changes will be, but I think all the regular posters anticipate some sort of major changes ahead.

      • Dave, I used to believe the IPCC line hook line and sinker. What got me into researching the issue was the information I got from a colleague. This gentleman was working next to my office and decided he wanted to switch into renewables (our company was a large energy multinational with a small interest in biofuels and other funky oil replacement sources).

        This guy was really smart, had a bunch of degrees, and got into it really hard to be able to get a reassignment to the renewables side. But after six months he told me he was getting cold feet. He explained he could see renewables moving forward in a big way with subsidies or with a carbon tax.

        But when I replied a carbon tax sure looked very likely due to global warming he laughed and explained he had found the global warming story had holes.

        Anyway, I filed that and started looking into it very slowly. What perked me up was the disconnect between the climate model forward runs and real data. Then I saw the AR5 draft and noticed what I thought was poor quality work flows. I never did believe global warming was bogus, but I switched from taking it all without question to being very critical of the IPCC and associated propaganda.

        • Boomer II says:

          Renewables are moving forward for economic reasons.

          The global warming discussions are interesting, but it will be unlikely that all the necessary countries will get their acts together to do anything about global warming collectively.

          We really don’t need to discuss the IPCC here because the economics of oil and fossil fuels in general are sufficient to keep the peak oil conversions going.

          Some people seem to think that if they can discount global warming, they can stop lifestyle changes. As we can see, the fracking economics don’t look good and global warming or not, that industry has to deal with the realities of resources and costs.

          In the meantime, you have entrepreneurs who see money in the future of EVs and renewables and they will likely be influential in future policy setting.

        • Javier says:

          Same story here Fernando,

          Less than a year ago I was uncritically believing in catastrophic global warming and all the media reported associated phenomena. Being from a different field I was trusting that climatologists were doing their science right. Then I started to research the issue in depth to get to the real science behind AGW for my blog. I even wrote “The climate crisis is the most serious of all, but it also has the slowest progression.” http://www.rankia.com/blog/game-over/2533998-contexto written on November 9th 2014.

          I went to read the papers and look at the evidence to be able to give my readers an in depth analysis free of any gratuitous alarmism. What I found left me white faced. More often than not the critics were right. The conclusions went way farther than the evidence allowed and there were a lot of holes. The theory was a lot less firm that generally represented and it was not possible to discount the null hypothesis. Important factors were being dismissed without much basis and a lot of faith was placed on models without any predictive capability.

          Article after article I became more and more skeptic. I guess it is a common story and many skeptics were previous believers. I doubt the opposite is true and I don’t think many skeptics are convinced by the available evidence to become believers.

          In my case I converted 7 months ago from believing in CAGW to being very skeptical about it after researching it in depth. Now I am embarrassed that I believed for so long without question. From believer to skeptic in 7 months, a path of enlightenment and discovery.

      • ilambiquated says:

        Global warming is an civil engineering problem, not a “social”. It is stupid to build like they do in South Florida because it is all going to sink. Republicans preventing people from fixing tyenproblem are themselves an engineering problem.

        • Boomer II says:

          We should let the insurance companies take the risk and jack up the premiums in areas where people will likely lose their properties to natural disasters.

          When rates went up in some places after Sandy, the property owners complained that it wasn’t fair. So the minute the marketplace interferes with BAU, people are happy to have the government help.

          • Boomer II says:

            Popular Flood Insurance Law Is Target of Both Political Parties – The New York Times: The insurance rate increases hit many of the 5.5 million coastal home and business owners covered under the National Flood Insurance Program, and came as the Federal Emergency Management Agency, which runs the program, was updating flood maps and placing thousands of homes inside flood zones for the first time. Last summer and fall, homeowners near coasts, rivers and wetlands saw their insurance rates soar and their property values plummet.

            The homeowners’ frustration erupted into a grass-roots lobbying campaign to roll back the Biggert-Waters act, and lawmakers in Washington quickly got the message.

    • The accepted global energy imbalance is around 0.6 watts per meter squared. As Javier explained in the past, the ocean is the main energy absorber. Therefore the total ocean energy content hits a record every day of the year.

      Total energy content is reflected in water temperature. But the energy does get transferred down from the surface. This means the ocean surface has periods of fairly steady temperature followed by spurts, which are mostly associated with the El Niño-Southern Oscillation (ENSO).

      As it turns out, there was a weak El Niño event in 2014. The 2014 record shows a water mass moving under the surface from the western tropical pacific to the eastern tropical pacific. This large water mass (known as a Kelvin wave) hit the surface off South America, and the net result was an anomalously warm flow along the equator back towards the East.

      This year we are seeing a repeat, but it’s shaping up as a super event. If you check the temperature anomaly maps that water is shown as a red/orange bullet or finger in the Pacific Ocean.

      So, a lot of the high temperature we have seen in 2014 and 2015 is a result of this phenomenon.

      However, it’s important to understand that a large pool of anomalously warm temperature doesn’t surge out of nowhere. The ocean seems to work like a partial energy absorber plus a capacitor. Most of the energy is absorbed, and it doesn’t impact surface temperatures. But a fraction gets captured in this capacitor and surges back. In the last 50 years we have seen three super capacitor discharges, the 1983, 1998, and 2014-15 ENSOs.

      The interesting fact is that a super ENSO can be followed by a strong reversal, but the temperature doesn’t drop to the previous level. This means there is some warming taking place. But the warming effect isn’t nearly as strong as projected by the climate models popularized by the IPCC. Those models run hot, have been missing temperature trends for over a decade. I think they can’t model the way energy is absorbed by the ocean, and have too much cloud positive feedback.

      With regards to censoring comments. Individuals who request censorship are probably frustrated by their inability to deal with differences of opinion.

      • Jef says:

        It is not a matter of simply stating ones “opinion”. You are stating a false analysis of the facts.

        This is essentially a “conspiracy theory”. You and Javier are saying, in no uncertain terms, that hundreds of independent institutions around the world, with 10s of thousands of scientist and grad-students, using billions of dollars of state of the art technology throughout the biosphere and space, have all been conspiring to fool the population of the planet.

        Deniers are probably just frustrated by their inability to deal with the truth.

      • Fred Magyar says:

        Fernando,

        Your comment was fine, clear and perfectly rational up until the point, where for some reason you felt you absolutely had to write this paragraph:

        The interesting fact is that a super ENSO can be followed by a strong reversal, but the temperature doesn’t drop to the previous level. This means there is some warming taking place. But the warming effect isn’t nearly as strong as projected by the climate models popularized by the IPCC. Those models run hot, have been missing temperature trends for over a decade. I think they can’t model the way energy is absorbed by the ocean, and have too much cloud positive feedback.

        This is exactly what I characterize as an irrelevant politicization of this topic. If you could just leave out the constant harping on the IPCC models and instead say something more to the point like “the warming effect isn’t nearly as strong as projected by the climate models “ and then provide a link or two to an actual graph and possibly a link with a coherent refutation of the data and the subsequent analysis of it, I would be much more willing to listen to what you have to say.

        While I’m on this subject, let me request, if possible, that you also please leave out references to greenie weenie watermelons and communists as well! They have no place in any scientific discussion and would not be allowed at any scientific conference that I’m aware of.

        Basically what I’m saying is that if we all raise the bar and the level of discourse to be on par with that which would be the norm at any scientific conference, then we could all participate in a much more civil and scientific discussion and we could still have dissenting opinions, which we would require be backed up with real data!

        I’m hoping we can all rise to the challenge of dropping the political and personal attacks from our discussions

        Warmest regards,
        Fred Magyar

        • Fred, I posted those links in the past. Hell, I posted the RSS data and commentary about the disconnect between the RSS data and the climate models in the last 48 hours.

          http://www.remss.com/research/climate

          To be honest, I don’t put up links because I don’t think they are looked at. I don’t get any comments in response when I do.

          • Fred Magyar says:

            Fernando, I assume that you agree with the information in the link you provide above that there is anthropogenic global warming though not as pronounced as some projected scenarios would suggest. To be honest a time series from 1980 to 2010 is not a very long period of time when it comes to discussing the climate.

            Why not look at the bigger picture and a longer time period?
            Now you may have reason to disagree with the assertions of the American Institute of Physics’ time line and their milestones in the history of Climate Science.

            Starting in the 1800s to the present.

            Timeline (Milestones)
            Here are gathered in chronological sequence the most important events in the history of climate change science. (For a narrative see the Introduction: summary history.) This list of milestones includes major influences external to the science itself. Following it is a list of other external influences.

            1800-1870
            Level of carbon dioxide gas (CO2) in the atmosphere, as later measured in ancient ice, is about 290 ppm (parts per million).

            Mean global temperature (1850-1870) is about 13.6°C.

            First Industrial Revolution. Coal, railroads, and land clearing speed up greenhouse gas emission, while better agriculture and sanitation speed up population growth.

            You can go to my link and read about the other points on their timeline…

            Up to the present:

            2013

            An apparent pause or “hiatus” in global warming of the atmosphere since 1998 is discussed and explained; the atmosphere is still warming, and the oceans have continued to get rapidly warmer. =>Modern temp’s

            Mean global temperature is 14.6°C, the warmest in thousands of years.

            Level of CO2 in the atmosphere reaches 397 ppm, the highest in millions of years.

        • Synapsid says:

          Fred,

          Once again, very well put and thank you.

          And in regard to that post above recommending consulting a chimp or Fred M:
          well, I want you to know that I’d consult you before consulting a chimp–every time.

          (supposed to be a yellow face up there)

      • Don Wharton says:

        The accepted global energy imbalance is around 0.6 watts per meter squared.

        The above statement is almost certainly crap that Fernando found from some denialist site. The fact that some of his comments are scientifically informed is almost beside the point. Assertions that are this grossly outside the scientific consensus should not be routinely voiced on a forum where a reality based discussion is desired. The following is the consensus included in the last IPCC report Technical Summary in the section TS.3 Drivers of Climate Change:

        “Based on concentration changes, the RF of all WMGHGs in 2011 is 2.83 [2.54 to 3.12] W m–2 (very high confidence). This is an increase since AR4 of 0.20 [0.18 to 0.22] W m–2, with nearly all of the increase due to the increase in the abundance of CO2 since 2005.”

        Fernando: With regards to censoring comments. Individuals who request censorship are probably frustrated by their inability to deal with differences of opinion.

        This is a generic ad hominem attack on those who want some measure of scientific validity in the data posted here. I have very excellent tools to deal with differences of opinion. I nurture discussion groups with that in mind. It is a major source of my personal growth to deliberately expose myself to those who do differ. However, I want people who make some good faith effort to understand what is real. People who deliberately distort evidence to support a preconceived notion destroy the value of discussion forums for everyone else. It is Ron’s job to decide what is real in your case.

        • Don, let me show you how to obtain the global energy imbalance in watts per meter squared:

          1. Look up the ocean energy uptake curves form 0 to 2000 meters.

          2. Obtain the trend in joules per year.

          3. Divide by the earth’s surface area, make sure you use m2.

          4. Convert joules per year per m2 to joules per second per m2.

          This will yield a value, to which we must add other miscellaneous items. If you don’t want to get into the details you can read this:

          “We used other measurements to estimate the energy going into the deeper ocean, into the continents, and into melting of ice worldwide in the period 2005-2010. We found a total Earth energy imbalance of +0.58±0.15 W/m2 divided as shown in Fig. 1.”

          http://www.giss.nasa.gov/research/briefs/hansen_16/

          I was really happy when my estimate came in at 0.57, because it was within other estimates. The link above is to a web page by James Hansen. 😐

          Interestingly, one item I found many researchers leave in the air is the heat coming out of the earth’s core, around 0.1 watts per m2. That remains unchanged, but it does alter the way one looks at the overall heat transfer. It also means an ocean temperature and energy reanalysis such as Balmaseda et al’s fails to model the ocean properly. Most of those ocean energy reanalysis products have problems in this area.

          • Don Wharton says:

            Fernado, please work on your reading skills. The figure you cited reflects just the energy going into the earth and the oceans. Thus this is an amount that does not warm the atmosphere. It is also an amount that will be reduced as the ocean and land warms to equilibrium. The article correctly confirms the nearly 3 watt per M2 from global warming gasses that I shared. There is an extensive discussion of negative forcing from aerosols which reduces the net forcing. It is not well understood and there is a wide statistical distribution of possible aerosol effects. Quoting IPCC, “Improved understanding of aerosol–cloud interactions has led to a reduction in the magnitude of many global aerosol–cloud forcings estimates. The total ERF due to aerosols (ERFari+aci, excluding the effect of absorbing aerosol on snow and ice) is assessed to be –0.9 [–1.9 to –0.1] W m–2 (medium confidence).”

            Obviously there is significant variability in aerosols from natural sources such as volcanoes which can alter impacts very significantly over given years. The IPCC is extremely cautious about its estimates of overall human cause warming effects. There is a extremely slight possibility under their analysis that the net impact from all global warming gases and and anthropogenic aerosols may be as low as 0.6 watt per M2. However, you certainly cannot use that very slim possibility as any “consensus.” It is extremely unlikely. Moreover, most modern countries have cleaned up their SO2 emissions. China realizes that they need to do the same since their citizens are suffering major declines in longevity from the pollution. Thus the negative forcing, whatever it might be, will hopefully be reduced. There are those that advocate releasing aerosols in the upper atmosphere where they would not harm human lungs on the surface. I think the cost of that is radically infeasible.

            • Don:

              Let me try to help you:

              “We found a total Earth energy imbalance of +0.58±0.15 W/m2 divided as shown in Fig. 1.”

              Hansen et al

              “The accepted global energy imbalance is around 0.6 watts per meter squared. As Javier explained in the past, the ocean is the main energy absorber.”

              Fernando

              When I write “global” I mean the same as Hansen’s “Earth”. I prefer to round off to one significant figure, he used two. I hope this helps to calm you down.

              • Don Wharton says:

                Fernando, the problem with global warming is not because the earth under our feet warms up. Do you really not get that your number is almost irrelevant to the discussion? You are picking out a number that is actually very positive in that it is reducing the energy going into the atmosphere. You seem to not understand what you are reading. The ocean warming is a problem for coral reefs. That is a problem but it is not THE problem. The forcing extent is likely triple what you are trying to suggest and it is only that low because of the aerosols.

                • Don, I understand what I’m reading. Try reading what I wrote all over again.

                  • Don Wharton says:

                    You are forgetting that this thread started with a gross misrepresentation on your part:
                    The accepted global energy imbalance is around 0.6 watts per meter squared.

                    Global means global as in the entirely of our globe including our atmosphere. When I challenged you, you pointed to a figure in a study that talks about the energy flow going just into the subsurface of the globe. Now either you did not understand the article that you read or you intended to misrepresent what it means to the people reading here. The global energy imbalance must include the energy going into the atmosphere of our globe.

  2. Toolpush says:

    https://www.dmr.nd.gov/oilgas/daily/2015/dr072215.pdf

    They had a busy day completing wells yesterday. Nearly 30 on the list. It must have been a choke point in the reporting system?

    • I know, I have made an entry in the post above. Even with the wells listed we are still way below average. There have been a total of 62 for the 22 days so far of July. (Assuming there were no wells plugged.) That is an average of 2.8 per day or 87 for the month if the trend continues.

      • Toolpush says:

        Ron,

        “Today, July 22, there were 18 “Producing Wells Completed””

        I think that should read 28 wells completed?

        • You are correct. I have made the correction. Thanks for the heads up. I should not be in such a rush to make corrections, I just wind up making things worse.

        • coffeeguyzz says:

          Push

          A bit off topic, but related to the Utica well flowing 59MMcf we discussed a few months back …
          EQT just announced a new Utica IP well flowing 72.9MMcf 24hr IP.
          The current flowing casing pressure is over 9,500 psi and is flowing on restricted choke at 26MMcf/d.
          The lateral was only 3,221′ long.
          For folks more familiar with oil numbers, the IP has the energy equivalent of more than 12,000 boe and is now flowing (for many months, if it mimics similar wells) at a rate of over 4,000 boe/d.
          The Utica is proving to be a massive, massive source of hydrocarbons.

          • shallow sand says:

            coffee. I read about this well. I also understand there were extra ordinary costs associated with it. Is that correct? Any links or cost info for this well is appreciated.

            • coffeeguyzz says:

              Shallow

              The report quoted the just completed conference call where the cost was about $12/$13 million, I think. Big, big bucks.
              Couple of things about that, though …
              There was a well I read about a few months back, possibly this one, that a slightly smaller rig was drilling, encountered some huge gas pressure problems, put a ‘heavy mud finger’ in the hole, and tiptoed away. A much bigger rig was brought in to complete the job. At 9 1/2 thousand pounds pressure, I wouldn’t be surprised if it was this same well.
              Dunno as I’ve not had much time to spend on this fluff, but this particular Utica well was definitely a wildcat type as it was EQT’s very first Utica.
              The county was Greene in SW Pennsylvania which is evolving into a real ‘Mecca’ for gas as the biggest Marcellus wells are also coming from this area (Range’s 43 MMcf IP is in adjacent Washington county).

              • shallow sand says:

                coffee. EQT earnings 1 cent per share. Note how much worse their price differentials will be in Q3 compared to Q2 will be, I assume to hedges dropping off. So, therefore, they will likely post a Q3 loss.

                Not the best time to be drilling expensive, record setting wells.

                Some companies have been selling gas for less than a buck, prices not seen since the mid 1970s

                • coffeeguyzz says:

                  Shallow
                  They just about all are losing their asses financially. It cannot continue this way much longer.

                  • Toolpush says:

                    Coffee,

                    Now that sounds like a big well. 9500psi, is also a heap of pressure. I hope they have taken out options on rigs with 15k BOPs? They are going to need them!

                    The stories I read about the Marcellus / Utica, either say the area peaks next year, or the area is held back by capacity constraints. I suppose we will not have find out soon enough? It most likely will be sorted out by the financials. Survival of the fittest.

  3. Ronald Walter says:

    If well completions are half of what they were while it is summer, this coming winter will probably have zero.

    IOW, bust.

  4. Toolpush says:

    Low oil prices must be beginning to bite in the Middle East. UAE to stop subsidizing fuel!

    http://www.downstreamtoday.com/news/article.aspx?a_id=48499

    U.A.E. Removes Fuel Subsidy as Oil Drop Hurts Arab Economies

    Bloomberg) — The United Arab Emirates, the third-biggest OPEC producer, will link gasoline and diesel prices to global oil markets starting next month, becoming the first country in the oil-rich Persian Gulf to remove transport fuel subsidies.

    Fuel prices will be deregulated as of Aug. 1, the Ministry of Energy said in a statement on Wednesday. Diesel prices will also be linked to global markets, and are initially expected to decline, it said. Prices for both fuels will be announced on the 28th day of each month, the ministry said.

    Gasoline is now subsidized in the U.A.E., the second- biggest Arab economy and home to about 6 percent of the world’s oil reserves. Unleaded gasoline 98 octane in the U.A.E. sells for 1.83 dirhams (50 cents) a liter, according to prices on the ministry’s website. The U.S. price of premium unleaded gasoline is $3.18 a gallon, or 84 cents a liter, according to AAA, the biggest U.S. auto group. That compares with 16 cents in Saudi Arabia, the largest OPEC producer.

    • Nick G says:

      This is a big deal. These domestic price caps and subsidies are the primary driver of Jeffrey’s ELM. China and India have mostly eliminated them. They make no sense, as the value of the subsidy mostly goes to middle and upper income consumers.

      Of course, when prices are low is the ideal time to do this, because it limits the public outcry. Later, when world oil prices go up, the rulers can point to the markets and blame them.

      • Jeffrey J. Brown says:

        To be a little more precise, given an inevitable ongoing decline in production in a net oil exporting country, unless they cut their domestic liquids consumption at the same rate as, or at a faster rate than, the rate of decline in production, the resulting rate of decline in net exports will exceed the production decline rate and the net export decline rate will accelerate with time.

        For example, during their respective production and net export declines both Indonesia, which subsidized liquids consumption, and the UK, which heavily taxed liquids consumption, both showed accelerating rates of decline in net exports.

        In regard to the (2005) top 33 net oil exporters, they showed no increase in liquids consumption from 2008 to 2009 (with consumption flat at 18 MMBPD), as annual Brent crude oil prices fell from $97 to $62, but their consumption increased again as oil prices rose, rising to 20 MMBPD in 2013.

        • Nick G says:

          given an inevitable ongoing decline in production in a net oil exporting country

          Some oil exporters have declining production. Some don’t, such as KSA, Iraq, and arguably Iran.

          If KSA were to price fuel at market rates, domestic consumption would drop sharply. They have PR campaigns to convince people not to slop fuel all over the ground when filling up. People waste it because it’s so cheap.

          • Jeffrey J. Brown says:

            Some oil exporters have declining production. Some don’t, such as KSA, Iraq, and arguably Iran.

            Are you arguing that production declines are not inevitable?

            I remain amazed at the level of denial in regard to basic math concepts inherent in what I call “Net Export Math.”

            Given an inevitable ongoing decline in production in a net oil exporting country, unless they cut their domestic liquids consumption at the same rate as, or at a faster rate than, the rate of decline in production, it’s a mathematical certainty that the resulting rate of decline in net exports will exceed the production decline rate and that the net export decline rate will accelerate with time.

          • Jeffrey J. Brown says:

            And as I frequently point, a case history of rising production, the Six Country Case History, with production up by 2% from 1995 to 1999, as they shipped 54% of their post-1995 CNE (Cumulative Net Exports):

          • Jeffrey J. Brown says:

            Peak Oilers confront Net Export Math:

      • Jeffrey J. Brown says:

        Some normalized liquids consumption data versus annual oil prices (same trends continued in 2013 and apparently in 2014). (2005) Top 33 consumption was up to 136% of the 2002 value in 2013.

        • Dennis Coyne says:

          Liquids consumption is mostly correlated with GDP. Below is a chart with normalized GDP for China, India, US and Germany with 2002 levels set at 100%.

          The increase in China and India’s liquids consumption is a function of their more rapid growth relative to most OECD countries.

          • Jeffrey J. Brown says:

            In other words, you are asserting that China & India were (so far) able to outbid developed countries like the US for access to a post-2005 declining supply of Global Net Exports of oil (GNE*), resulting in the supply of GNE available to importers other than China & India falling from 41 MMBPD in 2005 to 34 MMBPD in 2013 (a pattern which apparently continued in 2014)?

            *Combined net exports from (2005) top 33 net exporters (EIA data, total petroleum liquids + other liquids)

            • Dennis Coyne says:

              Hi Jeffrey,

              No I am saying that oil consumption at the World level correlates quite well with World GDP. I have then asserted that because China’s GDP has grown by 270% from 2002 to 2012, that a growth in liquids consumption by 194% is not all that surprising, likewise India’s 210% growth in GDP and resulting 151% growth in liquids consumption.

              The amazing thing is that the US economy grew by about 19% from 2002 to 2012 (1.7% per year) while decreasing petroleum use by 6%.

              I took a look at Brazil, India, and China(BIC) and their GDP/barrel of C+C and from 2005 to 2014 this increased by 30%, for the World minus the BIC countries the increase in GDP per barrel of C+C only increased by 17%. If these rates of growth continue then the GDP/b for the BIC countries will catch up with the World-BIC by 2051.

              • Dennis, is that petroleum use by the U.S. = to the crude oil and condensate used by the U.S.? Or is it products used?

                • Dennis Coyne says:

                  Hi Fernando,

                  For the World, Brazil, China, and India it is BP consumption in tonnes of oil equivalent converted to barrels at 7.33 b/tonne. For the US, the liquids data is from Jeffrey Brown’s chart, he says BP data, but I don’t know if he used the “barrels” data or the “Mtoe” data (which I believe more closely reflects the energy content of the liquids consumed).

                  • What do we have on refinery gain for the USA? I’m guessing it must have gone up. You see, in the last decade we saw many refineries install heavy oil handling kits. These break up the heavy oil and add hydrogen. So I’m guessing refinery gains increased.

                    Shouldn’t that be corrected for biofuels as well?

              • Nick G says:

                The amazing thing is that the US economy grew by about 19% from 2002 to 2012 (1.7% per year) while decreasing petroleum use by 6%.

                The amazing thing is that we’re not moving faster to transition away from oil. We focus on oil shocks, which hurt the economies of oil importers because of FUD (which reduces capital expenditures), and because of the sudden increase in the transfer of income and wealth from importers to exporters.

                Fuel taxes and increased CAFE requirements would give regulatory certainty to producers and consumers, reduce uncertainty and increase investments (which stimulate the economy), and reduce the transfer of income & wealth to oil exporters.

                EVs are better and cheaper – they address the majority of oil consumption.

                Freight trucking can go rail, and to NG. I/C consumption can electrify and move to NG.

                Oil is obsolete, and the alternatives are cheaper and better. Here’s a nice oil publication article about that:

                “The Tesla Model-S is one of the most beautiful and interesting automobiles to ever get made. It might also be one of the most dangerous. That’s because it’s managed to do something that no other electric vehicle has ever achieved: become an object of desire. Previous generations of electric cars, from the Nissan Leaf to GM’s famous (and infamous) EV-1, have tended to be high on cost and low on drivability. But the Model-S managed to bridge that divide, and as the reviewers at Car and Driver said in their review of the car, “it dispels conventional thinking about EVs – it’s a glimpse of the future.”
                That future is at the core of The Powerhouse, a new book by Quartz journalist Steve LeVine that documents the race to build a better battery. It’s a race LeVine thinks could create a global battery market worth as much as $100 billion a year by 2030, and a global electric vehicle market that’s multiples of that. Given that most of those vehicles wouldn’t need much in the way of liquid fuels, that would have an obvious impact on the demand curve for oil – and the price upstream companies get for it. Creative disruption has already wracked most major industries, and it’s wrecked more than a few of them in the process. If it’s going to visit itself upon the fossil fuel industry, it’s almost certain to take the form of an electric vehicle. As LeVine’s book makes clear, that could happen a lot sooner than some people might want to think.”

                http://www.albertaoilmagazine.com/2015/07/is-teslas-model-s-the-beginning-of-the-end-for-oil/

                • wimbi says:

                  Battery market a hundred B/yr? Gawd, that’s about what we pay for beer!

                  My point? All this bullshit about EV and solar and so on costing too much. Meaning– more than–what?

                  Lawns? Joy rides to Paris? Absurd restaurant meals? Beer? Gasoline? Bananas? F 35 fighter planes?

                  I like bananas and beer. Do I need ’em? Thank god, no.

                  Do I need to quit dumping carbon into my grandkids’ lives? I think yes.

                  My choice.

                  • May I suggest you develop a political party platform like this?

                    “1. We will force all homeowners to replace their lawns with white pebble beds

                    2. We will make it difficult for Anericans to fly to Europe

                    3.Beer and bananas will be banned

                    4. The F35 fighter program will be cancelled

                    5. Eating absurd restaurant meals will be prohibited”

                    I’m sure you’ll get lots of votes.

                  • Boomer II says:

                    When the water gets scarce, the while pebble lawns will be a reasonable option. Homeowners won’t have to be forced to do it. The price of water will make the decision for them.

                    When fuel costs go up enough, flying to Europe won’t be an option for most people.

                    The F35 is being heavily criticized by some military writers. There are definitely pro military types trying to kill it.

                    And so on.

                    Politicians aren’t necessarily going to deliver the bad news, but some of that stuff is going to happen anyway.

                  • Dunno. I read the new airplane designs will save 40 % fuel. If fuel prices go up 50 % that’s inconsequential. Even doubling fuel prices will allow people to keep flying.

                  • PO Lurker says:

                    In some places people will gladly accept decorative gravel xeriscaping or they wont’ have any damn clean water to drink and cook with and bathe after a fashion; so get over it.

                    Jesus, Zeus and the Flying Spaghetti monster Fernando, do not even try to defend that abomination against the taxpayer and the warfighter known as the F-35. You obviously know nothing about that program and that machine. The only entities who will win from that rat hole disguised as a fifth generation air combat system will be LM, its subs, and any politicians who benefit from campaign contributions. I weep when I think about the opportunity costs of the resources we are pouring into that disaster. Stick to talking about oil drilling.

                  • Boomer II says:

                    Jesus, Zeus and the Flying Spaghetti monster Fernando, do not even try to defend that abomination against the taxpayer and the warfighter known as the F-35.

                    Yeah, I could post multiple articles outlining the problems with the plane, but I won’t. Suffice it to say that there are a number of knowledgeable military strategists who think the project should be killed.

                    Stick to talking about oil drilling.

                    Yeah, there’s non-oil stuff that Fernando tosses out that doesn’t take into account a lot of information outside his biases. There are enough smart people in this forum that if he says anything questionable, it’s going to be researched and likely disputed. I shake my head at some of his comments.

              • Nick G says:

                More thoughts about change:

                Ask yourself why we’re not all driving with some form of electric vehicle, even though they’re cheaper and better? The answer:

                Change isn’t easy. The legacy industries will lose out (both the employees and the investors), so they’ll put out propaganda, like that the Volt is an Obamamobile, and that the Prius is for pansies. Even within companies that move towards EVs, there’s tough resistance – have you looked at how bad the Volt commercials are? They practically apologize for the Volt being electric. Not to mention dealers, who hate losing all the ICE maintenance revenue – ask yourself, why did Tesla bypass dealers??

                Finally, it just takes time. Time for vendors to provide a good lineup of choices; time for people to get used to new things; time for economies of scale to kick in. Time for people to admit that the old thing had lots of external costs that we just put up with, because we thought we had to (pollution, oil wars, etc.).

                Change isn’t easy. But, it will come.

                • Around here they aren’t cheaper nor better. The better option is a diesel powered 5 speed manual.

                  You see, I live by the coast, to get to Valencia I need to use a road that climbs about 800 meters, and then runs through a valley where temperatures usually range around 30 to 35 degrees C in the summer, but in winter they drop below zero.

                  The car advice magazines and the local mechanic both give me the same information: the electric cars don’t have the range to do the two hour drive to Valencia.

                  And if I can’t get to Valencia then I can’t get to Madrid, or to just about anywhere I want to go.

                  • Dennis Coyne says:

                    Hi Fernando,

                    You have said the public transportation is good in Alicante, it was pretty good back in 1982, probably better now.

                    If you don’t do any local driving, the 5 speed diesel is your best option. If you do many trips less than 50 miles round trip, then a Chevy Volt might save some money, but it would depend on the relative price of electricity and diesel fuel and the ratio of long trips to short trips. If most of your miles are for trips of 100 miles or more, your solution is best for now. At some point high diesel prices may make the Volt or something like it a better option.

                  • Nick G says:

                    Fernando,

                    Have you compared your vehicle side-by-side with an Opel Ampera? That’s the European version of the Volt.

                  • Ves says:

                    Fern,
                    The most economical and efficient solution for the masses is a train. Driving diesel Opel Corsa or Volt is the same concept about how we move around. In order to adjust in new reality of LESS affordability solutions has to be based on different concepts. That is not even new concept but different. Whoever drove on TGV (France) or ICE (Germany) knows very well that trains are very comfortable and efficient way of transportation. I mean you have private chauffeur, you have AC cabins, more comfortable seats then on airplane, more legroom, internet, and because it is more efficient they can spare extra change on actual food rather than pretzels that you get on plane.

                  • Boomer II says:

                    For workaholics who want to have more to work, public transportation provides that opportunity. If you commute on the road is an hour each way, you could be working (or relaxing) an extra two hours a day rather than paying attention to traffic.

                  • Nick G says:

                    I use electric trains primarily. They’re great.

                    But, they take a long time to plan and build. In the meantime, EVs will work far better than ICEs.

                  • Denis, nobody would buy a Chevy volt around here. As you say, the short distance is better handled by tram or taxi (I hate the bus). There’s very little medium distance. Besides, as I mentioned the summer heat wastes batteries. I checked with taxi drivers who own hybrids, everybody with batteries is scared of the August heat.

              • TechGuy says:

                DC Wrote:
                “The amazing thing is that the US economy grew by about 19% from 2002 to 2012 (1.7% per year) while decreasing petroleum use by 6%.”

                That’s about near or below the rate of inflation in the US. There really isn’t any growth in the US since 1999. US labor force participate rate peaked in 1999 and has steadily declined. US also has have abnormally low interest rates and credit was very easily from 2002 to 2008, which impacted the US economy.

                • AlexS says:

                  1.7% per year is real (inflation-adjusted) growth

                • TechGuy says:

                  AlexS Wrote:
                  “1.7% per year is real (inflation-adjusted) growth”

                  The US gov’t very much under reports inflation. in the late 1980s (1986 or 1987 I think), the US changed the inflation calculation, to exclude food, energy, healthcare, education, housing, etc. Hedonic estimates and the cost of imported goods (ie falling costs of imported consumer electronics) has masked real inflation rates. Wages have also stagnated, which also masks inflation estimates used. Using the old inflation calc. method, US inflation is running north of 4% to 5% for much of the past 15 years.

                  US goods are also sold in smaller amounts, as manufacturers reduce packing sizes (but the prices remain the same) – ie 5 pound bags of sugar, now sold as 4 pound bags, etc.

                  • AlexS says:

                    For real GDP growth calculation they use GDP deflator, not CPI.

                  • Dennis Coyne says:

                    Hi AlexS,

                    Correct again.

                    On CPI, the Shadowstats numbers are bogus.

                    I used the shadow stats numbers rather than CPI ti see what “real” (based on shadow stats CPI) oil prices would look like. I think the CPI chart seems more reasonable YMMV.

                  • Nick G says:

                    in the late 1980s (1986 or 1987 I think), the US changed the inflation calculation, to exclude food, energy, healthcare, education, housing, etc.

                    That’s not correct. All of those things are included. You’re thinking of the “core CPI”, which is an alternative measure which excluded food and energy because both are pretty volatile, as we’ve seen lately. But no one considers the core CPI as the primary measure of inflation.

                    US goods are also sold in smaller amounts

                    Geez, they’re not stupid – they adjust for that.

    • Watcher says:

      Fuel prices will be deregulated as of Aug. 1, the Ministry of Energy said in a statement on Wednesday. Diesel prices will also be linked to global markets, and are initially expected to decline, it said. Prices for both fuels will be announced on the 28th day of each month, the ministry said.

      If price goes up, the subsidy will resume. No reason why it should not. Why should owners of the oil be inconvenienced by price defined outside the country?

      • Nick G says:

        Why should citizens waste fuel on consumption of very marginal value, when they can make lots of money exporting it?

        Improper pricing causes misallocation of resources.

        • Ves says:

          yeah Nick, that is all nice & dandy but that is the drop in a ocean. How many U.A.E-an consumers we have? Is there are million?
          Improper pricing do causes misallocation of resources but how about improper interest rates? How about improper lending? How about lobbies that influence how staff is moved, consumed.

          The whole world oil industry can go bankrupt, except few pockets in ME, in a span of couple years of “low” prices and at the same time general population is also going towards bankruptcy despite these “low” prices. Current financial system does not work with diminishing resources. It creates bubbles, and misallocation of capital and few winners and many losers.

    • Fuel prices are subsidized with credit. If direct subsidies to drivers are eliminated, other subsidies — loans to drillers — as well as indirect subsidies — loans to drillers’ customers — are expanded:

      Sadly for the industry, central bank monetary easing (subsidy) shifts purchasing power from customers toward drillers. The result of this subsidy is extraction in excess of consumption (‘glut’) as customers cannot borrow enough to retire the drillers’ loans. At some point the drillers go out of business as they cannot retire their loans w/ sales (loans from their customers) and they cannot borrow, themselves.

      http://www.zerohedge.com/news/2015-07-22/far-worse-1986-oil-downturn-has-no-parallel-recorded-history-morgan-stanley-says

      Petroleum offers a discount to human labor which amounts to a subsidy. Petroleum fuel is mis-priced by summing extraction rents and adding (hopefully) a profit margin. Rents are subsidized w/ low-cost leases, tax credits, accelerated depreciation, depletion allowances, favorable regulation, zero-cost transport infrastructure, etc. If the oil industry was forced to function in a proper price environment there would be no oil.

      A gallon of gas priced to its human-labor equivalent would cost $1,000. At that price nobody would waste it any more than people waste gold or diamonds.

      Without access to credit there would also be no oil.

      • clueless says:

        Steve RE: Rents are subsidized with
        1. low-cost leases – Where? The cost of leases have skyrocketed over the past few years. Companies such as Chesapeake are almost bankrupt with high-cost leases.
        2. Tax credits – What?
        3. Accelerated depreciation – Every industry in the US gets this and it just lets you recover the cost of equipment quicker. For a driller, equipment is a minor expense with a well.
        4. Depletion allowances – Large producers are limited virtually totally to cost depletion. That is, they can amortize the cost that they paid for the lease as they take the oil out of the ground.
        5. Favorable regulation – The only favorable regulation that I know of is that they are still allowed to drill for oil.
        6. Zero-cost transport infrastructure – Why, e.g., are Burlington Northern and Kinder Morgan raking in billions of dollars for transporting oil? Does not look like zero cost to me.

        • shallow sand says:

          Oil producers do qualify for the domestic production credit. However, oil was singled out to receive a lower credit than every other domestic industry in the United States.

          The largest credit would be Intangible Drilling Cost expensing election for shale, which I assume accounts for a large part of deferred income taxes?

          • clueless says:

            SS – With all due respect, deducting IDC is NOT a “tax credit.”
            With respect to the “domestic production credit,” I confess to be ignorant on this terminology and defer to the currently practicing CPA’s on this site. However, I thought that it was a domestic “manufacturing” credit, that could be used by, for example, refiners, etc. – but, not by the driller/producers. But, I would await someone who knows for sure to reply. I was aware of some questions. For example, as a petroleum marketer, if you added a chemical to diesel fuel to keep it from gelling up in below zero temperature, were you “manufacturing” a new product, and therefore, could get some credit? But, producers of oil? I did not think so.

            • shallow sand says:

              clueless. You are correct and I am in error re IDC. Those are expensing elections, not tax credits. Don’t know why I typed that above. Definitely wrong.

              I think on the domestic production credit, it was not originally intended to apply to producers, but that ultimately it does. I also stand to be corrected, though.

      • Do you live on planet Earth? Sol 3, Sirius Sector?

      • Rune Likvern says:

        ”Fuel prices are subsidized with credit.”

        Steve, I think I understand what you mean with the statement above.
        I wonder if the word “subsidize” describes it properly?
        (It is about the perception of a subsidy.)

        • Ell says:

          @Rune – what word would be better? ‘enabled’ ‘supported’?

          • Rune Likvern says:

            To me, supported (enable will also do and there are likely other terms as well).

            • Futilitist says:

              Hi Rune.

              What is wrong with the word subsidize?

              subsidize

              transitive verb sub·si·dize \ˈsəb-sə-ˌdīz, -zə-\

              —to help someone or something pay for the costs of (something)

              • Rune Likvern says:

                [suhb-si-dee]
                noun, plural subsidies.
                1. a direct pecuniary aid furnished by a government to a private industrial undertaking, a charity organization, or the like.
                2. a sum paid, often in accordance with a treaty, by one government to another to secure some service in return.
                3. a grant or contribution of money.
                4. money formerly granted by the English Parliament to the crown for special needs.

                People use credit to buy something (they get something in exchange for the credit).

      • Nick G says:

        A gallon of gas priced to its human-labor equivalent would cost $1,000. At that price nobody would waste it any more than people waste gold or diamonds.

        At that price we’d use other forms of energy. Renewable electricity costs 1/4 as much per kilometer, in the US. A gallon of gas will move the average US vehicle about 40 km. That would require about 6 kWhs, which cost roughly $.70 in the US.

        So, no one would pay $1,000, when they could pay $.70.

        • At that price we’d use other forms of energy.

          We would all the other forms of energy that would be available. And it is extremely likely that not nearly as much would be available a was formally available as liquid petroleum.

          • Nick G says:

            What makes you think that? The US would only have to expand it’s grid power by 25% to power all of the light vehicles (cars, pickups, suv’s, etc) in the US.

            And wind and solar are a beautiful match with EVs, because EVs can schedule when to charge, and buffer renewable intermittency.

            Utilities are very, very excited at the prospect of a big EV expansion. Electricity demand has been stagnant for several years, and this could get it going again at the traditional 2% per year growth rate. Do that for 20 years, and you’re done.

          • wimbi says:

            And not nearly as much is actually needed or even desirable, since so much of what we do right now does nothing for our happiness and a lot to ruin our planet.

            When I got around to it, for example, I found it easy to cut my kW-hr usage to 2o% of average, and after that, it was no problem to get all I needed and more from a PV array that cost not a lot relatively to many things my neighbors bought without much concern.

            One of my most beneficial moves was the TV from living room to storage room behind the superannuated brooms.

  5. Han Neumann says:

    “Texas crude only appears to have had a very good gain in May. ”

    I don’t see that in the graph. It shows two declines after Jan-15. Same for condensate.

  6. shallow sand says:

    Guess we are getting my wish from the other day about a price run down to WTI 40s. If that’s what we are getting, maybe in the long run its a good thing.

    Might clean out a bunch of zombies and dumb money. Might also be of assistance to big time cuts of the borrowing base.

    Always hate it for the company personnel, though. Hard working people getting axed due to shale CEO chutzpah.

    Also hate it hurting the low decline marginal stuff in the US. Most of it will survive but hard to give it the needed TLC at these levels.

    I guess I’m not as panicked as I was post Thanksgiving, 2014. We have went since January with an average price only $3.50 north of here without much trouble.

    Now when she drops to WTI low 40s or lower, will get a little more antsy, although that was pretty much January and March levels.

    No debt helps. I guess if we cannot make it I figure neither will many, many more.

    • Enno says:

      Good luck Shallow.

      When prices are working out for you again, you may want to consider hedging your production 1-2 years out? It will hurt a bit during the good times, but help during the bad ones, just like any insurance.

      • shallow sand says:

        Yes, should have done that Enno. Lulled into complacency like many others.

        We did when we owed, just didn’t see sub $50 WTI, or really sub $70.

        • Enno says:

          My advice is just to stay away from the fancy hedges, e.g. the three-way collars, which quite many producers have been using. That is no good hedge at all, and will hurt most when times are especially dire. It’s like having a fire insurance, that pays out in the case of fire, except when your whole house burns down.

    • Ronald Walter says:

      Shallow Sand, I bought an oil company stock (not an American oil company) that had no debt and x million shares. After the purchase they diluted the stock by issuing more shares and were loaned 25 million dollars.

      The company has working interest in wells in Colorado, GOM, Wyoming and North Dakota.

      Needless to say, it is now in FUBAR range. Oil companies are doing the limbo to see how low they can go with the share price of their company stock.

      Craft beer sells for six dollars per pint, works out to 48 dollars per gallon.

      It is a matter of what liquid commodity deserves the investment, oil or beer.

      I know for a fact that investing in beer is a far better investment than any oil stock out there.

      Consumers will complain about 3 or 4 dollar per gallon gas while quaffing 64 ounces of Sierra Nevada Pale Ale and not complaining about the 24 dollars spent to drink four pints of beer.

      They’ll bark and growl for hours on end when they pay 80 dollars for 20 gallons of gas, you’ll never hear the end of it. My heart bleeds for them, not because they are 80 dollars poorer and another 500 miles down the road, but because of their vast ignorance.

      • HVACman says:

        re: Sierra Nevada Pale Ale $4 pints. I do a lot of work at Chico State and frequent SN’s nearby brewery and brew-pub whenever at Chico. It is a masterpiece of both brewing and energy technology. The owner (SN is a privately-owned corp.) is an energy efficiency fanatic and installed one of the few sound and economic applications of fuel cell technology – industrial cogeneration. Instead of feeding natural gas to their boilers, they feed most of it through an NG-to-hydrogen steam reformer, then feed the hydrogen through a bank of stationary fuel cells to generate the bulk of the brewery’s electricity. All the waste heat both from the steam reformer and the fuel cells go to various brewing processes. A lot of other plants do the same thing, but use gas or steam turbines for the power generation. The fuel cells eliminate almost all of the moving parts and simplify power management.

        Oh, and the owner was one of the first purchasers of a Nissan Leaf. He installed chargers under the facility’s PV-shaded parking lot 4 years ago that are free to those indulging at the pub or touring the brewery. So people with EV’s can funnel all their energy money into that $4 pint. Great wood-fired pizza, too. What’s not to like with that?

  7. OscarThreeKilo says:

    “That is still way below the number required to keep production flat.”

    “If well completions are half of what they were while it is summer, this coming winter will probably have zero.”

    One of the interesting conditions to be worked around in 20 below zero conditions is how to deal with the fresh water required for the first 2500′ of drilling. You either keep the water moving, or heat it or both. This added expense during the cold period may be enough in itself to inhibit wintertime drilling given the low prices at the wellhead.

    That said, keeping up production is the Red Queen scenario that we have been discussing and waiting to see prove out in real life.

    China demand must have dropped off a few months ago, and we are seeing the adjustment in their “Planned Economy” as their stock markets fall to more realistic levels, with presumably lower levels to be seen. I suppose that this is where we see the air come out of the credit bubble as well. This will have worldwide implications that are not pleasant to contemplate.

    O3K,

    Out

    • Toolpush says:

      O3K,

      A simple work around, would be to pre-drill the top hole during warmer times, with light weight rigs, leaving the deeper sections for the heavy weigh rigs, which no doubt are using invert muds, and have weatherproofed cement rooms/units?
      But I take your point, with so few wells being drilled, and money being so tight, economies will come from all directions.

      • What’s a cement room in an onshore drilling spread? I can’t believe they are building such a thing, that’s extreme luxury, no wonder their wells have been costing so much. Do they also have a tv room they can use during the after meal nap time?

        • Toolpush says:

          Fernando,

          I have made no secret, I work offshore, so you need to cut me a little slack on the terminology for onshore rigs. That is why I put”room/unit” But I just can’t see anybody standing on the back of a cement pump truck in -40 degs, attempting to pump water through steel pipe. Surely the operators have some sort of weather protect, what ever they call it? Surely the companyman and toolpusher is going to insist some sort of protection?

          • Dennis Coyne says:

            Hi Toolpush,

            I am not in the industry, but when I ski in -18 C weather, I just where warm clothing, those oil hands are no doubt much tougher than me, they probably don’t put on gloves til its -30C. 🙂

          • Dunno for sure. The worst I saw was -10 degrees C with high wind. But if it got too bad we shut down. I’m not sure about cementers. In those days I only went to run the cement bond log. I guess they suffered through it.

  8. Frugal says:

    Oilsands production forecast cut by 280000 bpd due to low oil prices

    WCS now trades at more than a $15 US per barrel discount to WTI, up from only $7.50 in June,” the report notes, adding the June tightness was partly caused by forest fires that removed more than 200,000 bpd of oilsands from the market. Before the forest fires, the differential was in the $10-12.50 per barrel range.

    Not sure how forest fires can increase the spread between tar sands and WTI?

    • Kam says:

      Forest fires decreased the spread form 10-12 usd/b to 7,5 usd.

    • If production goes down the refineries taking the heavy crude will bid up the price. Many of those refineries were kitted up to swallow heavy crude. They usually add vacuum distillation, an extra coker unit (this unit destroys the heavy molecules and passes them on to units where hydrogen is added to make synthetic liquids). Refineries able to run this junk crude have an advantage, but they also have to pay back several billion $ invested to get them in shape. So they bid the heavy oil up.

      There’s an interesting fact many people forget, and this probably includes the Obama administration as well as congressional staffers: refineries with these heavy oil kits are located in the USA gulf coast and in the U.S. Midwest, close to the Canadian border. If the USA blocks Canadian oil from the gulf coast market the refineries will buy the identical Venezuelan heavy from the Orinoco Tar Belt.

      What the XL pipeline protesters do is block oil from a friendly democracy which enhances the price received by the Venezuelan regime, a declared enemy of the USA and a serial human rights abuser.

      • HVACman says:

        re: XL – Great point about benefiting Venezuela if the protesters actually achieved reduced Canadian heavy oil imports to the US by one barrel. As Rockman frequently points out at PO.com, there are so many alternative paths already in-place for the oil to cross the border that the XL line is essentially a moot point.

        • I think the line does reduce transport cost. If Canadian heavy crude blend costs $2 more to ship to Houston then the Venezuelan dictatorship sees close to a $2 price increase in their heavy crude blend sale price. They are blended to look very similar.

    • aws. says:

      A few paragraphs from Frugal’s link I found particularly interesting…

      The report adds that the price of condensate, a light petroleum product blended with bitumen to allow it to flow in a pipeline, has remained strong and will likely remain a significant cost for producers even if the differentials bounce back as expected.

      “As a result, realized bitumen pricing has been hit particularly hard, down about 50 per cent since early June. We expect condensate pricing in Western Canada to remain relatively strong, with continued growth in oilsands production outstripping growth in domestic condensate supplies,” said the report.

      Birn said IHS estimates the break-even WTI oil price in the first quarter would have had to be at least $95 US per barrel for a new mining project and $70 US for a new in situ project. It was actually $48.57 in the first three months, improving to $57.85 in the second quarter.

  9. MarbleZeppelin says:

    Article from Rapier on US “oil ” production and it’s actual energy content. Contains a comparative graph of US, Saudi and Russian oil production over time. He talks about the energy content of crude oil vs. NGL. I wonder if there is much real difference since not all the components of crude oil are used to produce energy.

    http://www.theenergycollective.com/robertrapier/2251596/us-really-world-s-top-oil-producer

    • There is a significant difference. Ethane, the major fraction, is a chemical feedstock. Propane is a feedstock and a small amount is used for fuel. Butane is a feedstock and also a fuel. I don’t consider pentane plus to be a real NGL.

      I don’t know what is the source for the “typical” mole composition he lists. But I do know what a well designed production system and associated natural gas processing plant do: they produce an NGL stream with as little pentane as possible. The pentane plus is recycled back to be blended with the condensate and crude oil, simply because it improves the blend price.

      The NGL stream buyer will take the product to a plant where these components are separated, and then fed to different clients via pipeline. The pentane plus does get sent to a refinery, thats the natural gasoline feed.

      The NGL (ethane-propane-butane) have less heating value, cause lower co2 emissions per barrel, and sell for a lower price. Companies keep tabs on these volumes, but some government agencies and BP chose to report a single figure, which tends to confuse the issue. The answer is simply: no, NGL isn’t oil. It’s not even close.

      • MarbleZeppelin says:

        Of course the lower molecular weight fuels are less dense and being sold by volume appear to be less energetic upon combustion. However, on a mass basis propane and butane have more heat energy than gasoline.

        Refineries in the United States produced an average of about 12 gallons of diesel fuel and 19 gallons of gasoline from one barrel (42 gallons) of crude oil in 2013. So one barrel of crude is only 73 percent fuel giving crude oil 100,809 BTU per gallon as fuel.
        I assume those numbers from the EIA contain the fraction of naptha converted to fuel also.
        Propane has about 92,500 BTU per gallon and Butane has 130,000 BTU per gallon.

        • AlexS says:

          “Refineries in the United States produced an average of about 12 gallons of diesel fuel and 19 gallons of gasoline from one barrel (42 gallons) of crude oil in 2013. So one barrel of crude is only 73 percent fuel”

          What about jet fuel, fuel oil, nafta and many other products?

          • MarbleZeppelin says:

            Nafta is not a product, it is the North American Free Trade Agreement.

            Since some naptha is converted to gasoline that should be included in the gasoline. Naptha is mainly used in chemical synthesis, so that portion is not fuel. Other products such as asphalt, lubricants, and chemicals are not fuel. Refineries can produce different amounts of given fuels depending upon chemical upgrading and conversions. EIA says 73 percent. California says about 80 percent liquid fuels.
            Coke is not a liquid fuel but is a saleable energy product.
            http://energyalmanac.ca.gov/gasoline/whats_in_barrel_oil.html
            It’s a complex process but since we use mainly diesel and gasoline those are the important products.
            So at pick your poison, 73 percent or 80 percent conversion to liquid fuel products. Depends on source and refinery. LTO should produce more gasoline and low molecular weight fuels (like NGL) and tar sands will produce synthetic gasoline or diesel from converted bitumen (like asphalt).
            Chemically we can take small or large molecules and convert them to usable liquid fuels, however conversions take extra materials, energy and equipment.

            • Dennis Coyne says:

              Don’t you think you should at least include all the liquid fuel?
              For example gasoline, diesel, jet fuel, aviation gasoline, kerosene, and residual fuel oil are all liquid fuels that should be included in your total.

              • MarbleZeppelin says:

                Did you even look at the information in the link? It appears not.

                • Dennis Coyne says:

                  Hi MZ,

                  No I did not. But when I add up the liquid petroleum I get about 88%. If we leave out the residual fuel oil, it is 85%.

            • AlexS says:

              If you only include liquid motor fuels, here is U.S. Refinery Yield in % (as of April):
              Finished Motor Gasoline 44,5
              Distillate Fuel Oil 29,6
              Kerosene-Type Jet Fuel 9,6
              Aviation Gasoline 0,1
              Total motor fuels 83,8

              Now, what percentage of NGLs is used for production of motor fuels?

              • Dennis Coyne says:

                Hi AlexS,

                Diesel fuel is essentially the same as home heating oil (No 2 oil in the US) which is used to produce hot water or steam for home heating systems (though it is processed to reduce the sulfur content at present, this was not always the case). Residual fuel oil (no 5 and no 6 oils in the US) is also used to produce steam in ships, power plants, and for industrial heat processes, so we might consider including all liquid petroleum fuels that are liquids at standard temperature and pressure.

                • AlexS says:

                  I agree, Dennis.
                  But, MarbleZeppelin apparently was talking only about motor fuels.
                  Diesel is a major part of Distillate Fuel
                  http://www.eia.gov/dnav/pet/pet_pnp_pct_dc_nus_pct_m.htm

                  • MarbleZeppelin says:

                    No I was talking about liquid fuels. It is important to realize that most liquids can be used directly or converted to motor fuels.
                    Some naptha is converted to gasoline so is included in the gasoline number. Some bitumen is converted to either gasoline or diesel. Butane is used directly in gasoline. Propane either heats or is used in motors. Ethane goes to polymerization. Pentane and above go into motor fuels. Fuel oils, depending on grade are used for ICE’s (land and marine), boilers, heating pots, and home heating systems.

                    If you look at the mass of liquid fuels instead of the volumes (varies with density and temperature) the BTU numbers come out very different.

                  • MarbleZeppelin says:

                    What is gasoline?

                    Gasoline is a refined product of petroleum consisting of a mixture of hydrocarbons, additives, and
                    blending agents. The composition of gasolines varies widely, depending on the crude oils used, the
                    refinery processes available, the overall balance of product demand, and the product specifications.
                    The typical composition of gasoline hydrocarbons (% volume) is as follows: 4-8% alkanes; 2-5%
                    alkenes; 25-40% isoalkanes; 3-7% cycloalkanes; l-4% cycloalkenes; and 20-50% total aromatics
                    (0.5-2.5% benzene) (IARC 1989). Additives and blending agents are added to the hydrocarbon
                    mixture to improve the performance and stability of gasoline (IARC 1989; Lane 1980). These
                    compounds include anti-knock agents, anti-oxidants, metal deactivators, lead scavengers, anti-rust
                    agents, anti-icing agents, upper-cylinder lubricants, detergents, and dyes (IARC 1989; Lane 1980). At
                    the end of the production process, finished gasoline typically contains more than 150 separate
                    compounds although as many as 1,000 compounds have been identified in some blends (Domask
                    1984; Mehlman 1990)

                    http://www.atsdr.cdc.gov/toxprofiles/tp72-c3.pdf
                    See table 3-3 for major components of gasoline

                  • Dennis Coyne says:

                    Hi Marblezepplin,

                    The best measure would be to use Joules, but we don’t do that. If given the choice between mass or volume to report Total petroleum liquids, I think mass will be closer than volume at present levels of output, mass will under report by a small amount, volume will over report (in terms of energy) by a larger amount.

        • Dennis Coyne says:

          Hi Marble zepplin,

          Note that using the same logic we would eliminate the ethane from the NGL stream and only report the percentage of all NGL that is butane and propane which would reduce the barrels produced by 33% (for 2014), if we also eliminate pentanes (which are essentially the same chemically as condensate) then about 51% of NGL is butane(18%) and propane(33%), the average for this total would be about 107,000 BTU/gal. This is higher than the average NGL barrel because ethane has lower energy per gallon. but we will use this value anyway as it overestimates energy content of the NGL that is used as fuel. So taking 51% of the 107,000 BTU/gal we have about 55,000 BTU per gallon for NGL used as fuel, about 55% of your underestimate of the crude that is used as fuel.

          If we had used all motor fuel (83.8% from AlexS) we would have 115,700 BTU per Gallon and the NGL(55,000 BTU/gal) would only be 45% of the energy content of crude.

          • MarbleZeppelin says:

            I can see some sense to your logic of removing things like ethane from the accounting. Ethane is not an energy source as far as I know, it is used in polymerization of long chain organic compounds for structural purposes.
            The major point of peak oil and global warming is the oxidation of organic compounds to produce heat for both heating purposes and transportation. The oxidation produces CO2 as a major by-product and thus changes the composition of the atmosphere. The use of petroleum components to drive major societal needs leaves open the possibility of major societal upheavals as the resource depletes.

            To get an accurate comparison of energies derived from various fuels, one needs to compare masses. To compare volumes is to allow density differences and temperatures to enter the comparison as variables.

            In the long run, society is interested only in how much work it can get out of a given energy source/system combination. So initial energy involved in obtaining, processing and delivering the fuel is compounded by efficiencies of the system it is used in. Eventually it will be compounded by how much energy society needs to use to defer or correct the effects of using certain types of energy, but most people just put that one off and it generally does not enter into the assessment of a fuel or other energy source.

            • Ethane is not an energy source as far as I know, it is used in polymerization of long chain organic compounds for structural purposes.

              Are you joking? Ethane burns just like methane. When I was in Saudi we often burned ethane in the power plant. It required less ethane than methane for the same power out because ethane has a higher BTU content per cubic meter than methane.

              • MarbleZeppelin says:

                Of course I am not joking Ron. Of course it burns, are you serious or just in a bad mood?
                If ethane mostly used as a fuel then I stand corrected. You should get on Wikipedia and correct their statements.

                “Prior to the 1960s, ethane and larger molecules were typically not separated from the methane component of natural gas, but simply burnt along with the methane as a fuel. Today, however, ethane is an important petrochemical feedstock, and it is separated from the other components of natural gas in most well-developed gas fields. ”
                “The chief use of ethane is in the chemical industry in the production of ethene (ethylene) by steam cracking”

                I haven’t found anything about it’s use as a fuel except for burning boil-off during liquid ethane marine shipping.
                As far as I know it’s mostly used to produce plastics, antifreeze, detergents and as a refrigerant.
                Why would someone go to the trouble and expense of separating ethane from methane to burn it when you could just burn it as a mixture? Natural gas only has about a 1 to 6% ethane content, not abundant enough to use as a general fuel unless the ethane is stranded.

              • Ron: Saudi Arabia seems to be an exception, they lack (ed?) the chemical plants to use it. Given Saudi Arabia’s problems finding gas they may be burning ethane at this point, but that’s a bit oddball.

                If ethane were that freely available to burn it would be used to make synthetic fuels. It’s much easier to crack.

                • This was in the early 80s, at Ghazlan power plant they would burn ethane for about half a day or so every month. I have no idea why or why they would even separate it from the methane. But that is just what the operators told me.

                  They would also, on occasions, burn naphtha. The plant could burn anything that came out of the ground, gas or liquid. But gas, or methane, was their primary fuel.

                  • I read a report about it many years ago: they were limited in the ethane they could put in the natural gas stream, so they deethanized and used it as trash gas. But later they built the Yanbu complex.

                    I heard they had a similar problem in the Emirates around 1985 (they also had huge gas flares).

            • AlexS says:

              MarbleZeppelin,
              Your phrase that started this discussion: “…He talks about the energy content of crude oil vs. NGL. I wonder if there is much real difference since not all the components of crude oil are used to produce energy.”
              More than 85% of crude oil is used to produce energy, and less that half of NGLs is used to produce energy

              NGL Consumption by Sector
              Source: http://www.brookings.edu/~/media/Research/Files/Reports/2013/04/01-natural-gas-ebinger-avasarala/Natural-Gas-Briefing-1-pdf.pdf?la=en

              • MarbleZeppelin says:

                Hi AS,
                And then I went on to say “I wonder if there is much real difference since not all the components of crude oil are used to produce energy” So I talked about components. He talked about NGL.
                So what is your point?

        • The statistics are kept using volume units.

    • shallow sand says:

      Ronald. I hadn’t seen that chart before. Wow. Most percentage growth since prior to 1935 in 2012-2014.

      Thank you for posting it.

    • Rune Likvern says:

      About 13 bbls/d per well.
      One of the things I sense has dropped from the radar for most is what a sustained low oil price does to stripper wells. Stripper wells is a considerable portion of US production.

      • shallow sand says:

        Rune. I had read a Wood Mac article earlier this year which claimed a very small percentage of US production was under water on an operating basis at $40-50 WTI.

        As I have noted prior, I wonder what all expenses Wood Mac included. Wonder if that included the down hole failures? How about replacement of surface equipment? G & A surely not in that. Taxes? Employee benefits? Last I checked every bill has to be paid for the producer to stay in business.

        And then, of course, if there is no CAPEX, looking at a big decline in production rates, in particular with shale making up an increasingly large amount of production.

        I believe the best approach would be to try to determine the all inclusive cost to keep production at a constant rate, which would include new well CAPEX sufficient to do so.

        I bet the number in the US is over $75 WTI. I am very anxious to see second quarter 10Q for US based companies. It appears in the second quarter production began to level off, and I am hoping there are several cases wherein production remained flat, or nearly so, from quarter 1 to quarter 2. We can then look at cash flow, and from that back into the price each company needed to be cash flow neutral, or to earn a certain percentage of return.

        Several come out next week I believe.

        • Rune Likvern says:

          On an operating basis, I presume it is meant OPEX (inclusive taxes, royalties etc.)
          One of the things I like to see (the dry, boring, but important stuff) is what these amounts to in the estimates presented.

          What would be interesting would be to see estimates on how wells (production) faired versus various price bands.

          ”Last I checked every bill has to be paid for the producer to stay in business.”
          Yes, but there is a thing called…CREDIT! 😉

          I have looked at the financial statements for several of the big international oil companies, applying different methods to estimate equity changes from 2014 to 2015 if present oil price remains.

          The financial statements are IMO key to understand the state of the oil companies which again gives some idea about their financial capabilities for future CAPEX and thus developments to production.

          The results so far stunned me, I need to do QA to it, but the different methods results in about the same picture. From the financial statements it appears as several oil companies bet that the oil price would not remain below about $70/b (it is their leverage that suggests this).
          Yes, the next few weeks with Q2 15 results will be interesting….in the Chinese sense.

          • shallow sand says:

            Rune. The $70 figure was widely considered to be a safe bet.

            Take a look at public oil company 3 way collars concerning their hedging programs. $70 was the bottom part of the three way collar on many. Almost no one thought we would drop below there.

            So the $80-$100 collar is now at $58 WTI.

            • Rune Likvern says:

              ”The $70 figure was widely considered to be a safe bet.”
              Groupthink!

              If you are not able to form an independent opinion, peer pressure takes over. Look at how many of the majors responded to the shale story and the hits they are taking to their balance sheets now and more companies will go out of business.

              For several years (based on global credit expansion [affects demand and supplies]) I (and a tiny minority that does not count) have been in the camp that the oil price would temporarily come significantly down and also stated so in the public, but refused to put a number on it in public (private investors [looking at Permian, others], different story, and they heeded the advice which kept them out of harms way).
              Growth in total credit adds to aggregate demand and thus price. Credit also allows to grow the supplies.
              I watched with disbelief how oil companies leveraged up in recent years…they could of course know/expect something I did not.

              The oil price formation is IMO far more complex than simple supply/demand balances would suggest and things happens with some time lags. Physical changes slow, changes in virtual systems (the financial system)…fast!

            • Rune Likvern says:

              Shallow (and others taking an interest)

              A useful metric to evaluate an oil company is the Reserves to Production ratio (R/P), normally found in the 10-K statements.
              For some shale companies (will not name any) they have listed a R/P of 19-20 (meaning that the theoretical production level of the previous year may be sustained for 19 – 20 years with the reserves at the same year’s end).

              This number in the shales may give away something about what goes into the reserves estimates, PDP + PUD.
              Something tells me the PUD portion is quite high.
              Given time this could be done for a few companies.

              It is this assets and equity thing.

              Edit: Did some quick estimates for a few companies for PDP (Proved Developed Producing) and R/P ranges in the area 4-5. I have observed this for some time.

              The method is straight forward using expected EUR by vintage (or other) multiplying with the number of wells of each vintage. Then subtract what has been extracted, the resulting number is an estimate of remaining developed reserves.
              Divide this number by annualized extraction.

            • Rune Likvern says:

              Here follows more (it is for one shale oil company and these are back of the envelope estimates, but should illustrate the headwinds facing this company and others as well).

              The company’s debt (10-K/Q) was pro rationed according to where production originated (not exact and likely in the low end).
              $3.6B to Bakken, annual equity production of about 40 Mb (in Bakken) which at $50/b (WTI) nets back about $20/b or about $800M/a (operating cash flow).

              A R/P of 4-5 (PDP) will (if oil prices remain at $50/b) net a total of $3.2 – $4.0B.
              It becomes a close call to retire all debt (there are other liabilities that needs to be adjusted for) with PDP.

              All values are nominal, not adjusted for the time value of money.

              Then get this, the company continues to drill wells which now are on a trajectory that suggests these will not reach payout, in other words, they will likely result in a loss at $50/b.

  10. Toolpush says:

    I wonder if these increased oil imports are the stocks that built up during the price fall, and were sold forward in the contango market?

    Analysis of U.S. EIA Data: U.S. crude stocks rose 2.5 million barrels last week – EIA

    New York – July 22, 2015

    Crude oil imports surge, driving inventories higher
    Refinery utilization remains strong; crude runs set another record high
    Gasoline stocks see unexpected draw

    – See more at: http://www.noodls.com/viewNoodl/29173706/platts/commentary-on-us-eia-oil-stocks-data—-by-platts-oil-futu#sthash.vvJMXarp.dpuf

  11. Don Wharton says:

    David Hughes has a Shale Gas Reality Check document:
    http://www.postcarbon.org/wp-content/uploads/2015/07/Hughes_Shale-Gas-Reality-Check_Summer-2015.pdf

    I have not read it yet but I expect that it will be of value to a number of us here.

  12. Jeffrey J. Brown says:

    WSJ: Falling Crude Prices Upend Canada’s Oil Sands Projects
    (Usually available by doing Google Search)
    Royal Dutch Shell, Exxon Mobil and Imperial Oil rely on deeply buried oil sands deposits to increase cash flows

    http://www.wsj.com/articles/falling-crude-prices-upend-canadas-oil-sands-projects-1437609134

    Of the roughly two million barrels a day that Canada currently produces from its oil sands, about half is mined from the surface using giant excavators and the world’s tallest dump trucks. The rest is too deep to mine and must be recovered by newer technology such as injecting steam underground to leach out oil deposits. That accounts for about 80% of Canada’s reserves—the world’s third-largest source of untapped crude.

    The global downturn in oil prices is shining a harsh light on the high cost of extracting Canada’s oil sands, which are the biggest single source of U.S. crude imports. Some of the world’s biggest oil companies, including Royal Dutch Shell PLC and Exxon Mobil Corp. ’s Canadian unit, Imperial Oil Ltd. , are counting on those deeply buried oil sands deposits to increase cash flows and shore up their global production levels. Chronic cost overruns amid the pressure of lower oil prices are calling into question how much of those reserves can be recovered profitably. . . 


    In industry circles, it is known SAGD, or steam assisted gravity drainage and has no relation to hydraulic fracturing, which uses a single well and high-pressure injections of unheated water to release oil from shale formations. But this method is turning out to be more technologically complex and unpredictable than billed when first deployed commercially in the early 2000s. The key unforeseen challenge with the technology has been the lack in uniformity in reservoirs of heavy crude, or bitumen, in ancient river beds that now lie buried under the boreal forests in Canada’s western Alberta province.

    Operators are having to drill more wells, pump more steam underground and lay more pipe above ground to meet targets, thanks to varying thickness, impermeable rock formations and high water-saturation levels. The result is a lot of trial and error as kinks are worked out. . . .

    Many of their projects were greenlighted when prices were higher, or believed to be heading higher. But what was tolerable a year ago at $100 a barrel has become less profitable—or unworkable—in today’s world of $50 a barrel crude. The break-even point for a brand-new SAGD project, including a 9% average return on investment, requires crude prices of at least $65 a barrel, which is among the highest extraction cost in the oil industry, according to the Bank of Nova Scotia. . . .

    Even some of the richest deposits have proved more difficult to develop than envisioned, requiring more steam per barrel to separate hockey puck-hard heavy oil embedded in sand. Suncor’s biggest SAGD project, known as Firebag, uses 40% more steam per barrel than it was initially designed for, despite a decade of operation, according to a recent report by Calgary investment bank Peters & Co. “We believe that most companies in the oil sands are drilling significantly more wells than initially planned to keep production rates stable,” a recent Peters report said.

    • shallow sand says:

      Jeffrey, given much of world wide growth prior to this year’s OPEC ramp up, is from North American tar sands and shale oil, how many world wide barrels do you suppose are underwater at $49 WTI?

      I suspicion enough that leaving them in the ground would cause severe shortages. Funny how commodities work that way. I have read that almost all gold extraction is currently underwater.

      • Jeffrey J. Brown says:

        As I have periodically opined, despite trillions of dollars in global upstream capex since 2005, it’s quite likely that actual global crude oil production (45 and lower API gravity crude) has been flat to down since 2005, even as annual Brent crude oil prices averaged $110 for 2011 to 2013 inclusive (and averaged $99 in 2014).

        So, what happens to actual global crude oil production given declining global upstream capex expenditures?

        IMO, this is an ideal time to buy low decline rate and reasonably low operating cost US conventional crude oil production, especially where there is some developmental potential.

        • shallow sand says:

          Or just hold onto what you have and weather the storm.

          Why do the shale CEO’s act as if they are competing with OPEC, when the only price stability they have, and the only reason for their existence, is the price stability maintained by OPEC prior to Thanksgiving, 2014?

          Ironic the shale drillers may have overspent themselves into bankruptcy and ruined the price stability they require.

          A conventional producer with no debt and low decline can weather the storm. We are about to see shale oil’s ability to do the same.

          Many are now below $10 per share. Some below $1.

          Seems like we would be seeing more distressed sales by now.

          • old farmer mac says:

            ”Seems like we would be seeing more distressed sales by now.”

            It seems that way to me too but after watching the wheels of business and industry turn for half a century plus I have finally come to accept that nearly everything takes at least twice as long to happen as I think it ought to.

            As the lawyers say the wheels of justice grind exceeding slow, but they also grind exceeding fine.

            My guess is that the bankruptcies and consolidations will come in a rush before this year is out. But it might be next year.

          • Ves says:

            “Why do the shale CEO’s act as if they are competing with OPEC, when the only price stability they have, and the only reason for their existence, is the price stability maintained by OPEC prior to Thanksgiving, 2014?”

            Shallow,
            Shale or Oil Sands are not competing with OPEC. What they are competing are with other industries for capital. Their selling pitch was ROI during that period of “high” oil prices of $100.

            Look this sentence in above article that Jeffrey put:
            “The break-even point for a brand-new SAGD project, including a 9% average return on investment, requires crude prices of at least $65 a barrel,”

            9%!!!! That info right there is their selling pitch to the grandma and granpas , pension funds, gullible investors and others…. I am not familiar with any other new venture that can promise 9% in this 0% environment. So it was their “promise” that was relatively short lived.

            • Robert Spoley says:

              The prices you are quoting are a myth. NRI leases in Oklahoma are about 81.25%. State severance tax is 7.2 %. O&M is at least 3-4% so the price per bbl. to the WI is about 1/3d the posted price, not the futures price. Thus $45 oil = $30/bbl to the WI and $30 posted price oil = $20/bbl to the WI. There are no horizontal resource producers anywhere that can service debt at anywhere near those prices. It’s over and probably won’t come back for a long time. Go figure.

              • Watcher says:

                Oooh! An Oklahoma guy. Tell us about SCOOP and CLR’s lies.

              • clueless says:

                Robert – “so the price per bbl. to the WI is about 1/3d the posted price, not the futures price. ”
                Your examples show 2/3’s to the WI. Is the “1/3d” a typo?

            • clueless says:

              Ves states- “I am not familiar with any other new venture that can promise 9% in this 0% environment.”
              First, I assume that “promise” is the same as the “pitch” you refer to. Second, with respect to a “new venture” [your words], venture capitalists will not touch anything that does not have a “pitch” [promise] showing 25% or more, even in this 0% environment. For example, The “Shark Tank” guys/gals [CNBC] or “The Profit” [CNBC] are not looking for 9% on their money.

              • Ves says:

                clueless,
                For crying out loud could you at least make a difference between entertainment type of shows with their comical and Trump(eskian) type of ventures with oil business that at least employed 100’s of thousand of REAL people that actually drilled some holes and moved some trucks and produced at least something so the rest of us could piss around and call it GDP. Common man 🙂

        • Jeffrey J. Brown says:

          Several years ago, I had a slide prepared which showed fossil fuels as a continuum on the horizontal axis, from natural gas, to NGL, to condensate, to light/sweet crude (average API gravity of about 38), to heavy/sour crude, to bitumen to various grades of coal.

          I then showed a qualitative “U” shaped curve (with capital & energy expenditures on the vertical axis) that illustrated the point that we could obtain Liquid Transportation Fuels (LTF) from any fossil fuel source, but light/sweet crude produced the maximum yield of the full spectrum (gasoline & distillates) LTF for the least expenditures of capital & energy, with capital & energy expenditures (necessary to obtain full spectrum LTF) rising as we move away from light/sweet crude toward the two endpoints, gas and coal. Therefore, it made sense that the first fossil fuel source to peak would be light/sweet crude (average API gravity of 38).

          As I have periodically noted, global gas production rose by 24% from 2005 to 2014 and global NGL production rose by 26%, while global C+C production rose by only 5% (EIA + BP data).

        • Wake says:

          what are such assets with low decline rates and little debt?

        • Longtimber says:

          I take it such companies are few outside of Texas. Somewhere it was noted that the largest new US field in the last few decades was Jay Florida(??). Now Florida has zippo crude. Perhaps lot O NG on the shelf, that is off limits till we have a shortage that brings lots of Economic pain.

    • I don’t know what the bank of Nova Scotia uses, but I wouldn’t get into a SAGD project unless I expected $90 per barrel WTI environment and had my investment cost nailed down very hard.

      By the way, Firebag is known to have monster wells, with very high oil production rates. I’ve seen individual well simulations for well pairs completed with large tubulars using the Firebag concept and they do use a huge amount of steam. But they also produce a huge amount of oil.

      • Jeffrey J. Brown says:

        A related article in the WSJ this morning:

        How a Chinese Company Slipped on Canada’s Oil Sands
        State-controlled Cnooc bought Canada’s Nexen to expand globally but now faces poor production, oil spill

        http://www.wsj.com/articles/how-china-slipped-on-canadas-oil-sands-1437616832

        Cnooc knew it was eyeing a troubled asset in Nexen. Long Lake’s development, initially budgeted at $3.4 billion Canadian dollars ($2.6 billion at today’s exchange rates), had cost C$6.1 billion by 2007. Soaring costs put pressure on Nexen’s profit margins. A new management team couldn’t stabilize it, and the board fired its CEO in 2012.

        And Nexen presented known technical hurdles. Its oil-sands reserves at Long Lake are hard to tap because of high water saturation levels and uneven deposits interspersed with shale that make it difficult to penetrate, say people familiar with the projects. Nexen’s global assets also concentrated in harsh climates like Canada’s subarctic, the volatile North Sea and Yemen’s deserts. . . .

        The Long Lake project had made some engineering missteps. Nexen drilled wells close to the site’s base plant to save time and money, say people familiar with the project, but found the wells saturated with water and far-removed from the richest deposits of crude, requiring more steam than planned.

        Nexen also had skipped a traditional step, an on-site pilot project for processing oil to work out kinks—instead developing a large-scale commercial operation, these people say. As construction costs ballooned, Nexen cut out redundancies designed into the project, saving money but exposing it to extended closures when equipment failed.

        • Water is a killer. Venezuela’s extra heavy oil reserves are being murdered by pdvsa production practices which bring water into the high graded reservoir sectors. It’s the biggest reservoir mismanagement case I’ve ever seen.

  13. shallow sand says:

    I made a post near the end of the last of Ron’s posts about ConocoPhillips potential reserve write downs

    One thing that I did not take into account is much higher worldwide natural gas prices, than in North America. Will help out COP considerably.

    Another thing which really is hurting US shale oil is persistently low price for natural gas and NGLs.

    Most companies report production and expenses in BOE terms. Depending on product mix, those for shale oil companies are now likely ranging from $30-42 per BOE.

    EUR is generally stated in BOE terms. That even occurs when more than 50% of the production is gas, at times.

  14. shallow sand says:

    See comparisons to 1986 beginning.

    Interesting to note US refinery utilization rates at that time were in the 75-80% range, now in 95% range.

    Also true that US refining capacity has not risen much since 1985, so maybe not a worthwhile statistic.

    • MarbleZeppelin says:

      US refineries import crude to produce exportable petroleum products. They have higher profits by keeping the refinery running in the higher utilization range. US refinery output is not directly related to internal use due to export of finished product.

  15. Doug Leighton says:

    OIL RIGS LEFT IDLING TURN CARIBBEAN INTO EXPENSIVE PARKING LOT

    http://www.worldoil.com/news/2015/7/23/oil-rigs-left-idling-turn-caribbean-into-expensive-parking-lot

    “The dilemma underscores how an offshore industry that geared up for an oil boom is grappling with a bust. Rig owners are putting equipment aside at unprecedented numbers as customers including ConocoPhillips pull back from higher-cost deepwater exploration. That’s helped make Transocean Ltd. and Ensco Plc two of the three worst performers in the Standard & Poor’s 500 Index over the past year.”

  16. Watcher says:

    Oil sub $49.

    Suncor $25.45.

    We have to live in a world where we buy things with money, but one more time sportsfans, when oil’s price drops don’t sprint for the microphones to pontificate about how supply is a glut or China must be in freefall.

    And before others sprint to the microphone to announce supply and demand is eventually compelling and defines price, lets avoid argument by noting that “eventually” is unspecified. Price for some period of time doesn’t have to derive from supply and demand.

    Once you get there, other things become more clear.

    Efficiency. Yankee ingenuity. If you don’t fire people, then where is the evidence of it? Automation eliminates people and the oil guys fervently tell us that the tasks don’t lend themselves to automation. Okay, then reduced price for services had to get someone fired — or you have to admit you let yourself be gouged by limo chauffered proppant maker guys who come to work to shovel sand onto railcars for 5 yrs.

    Someone has to lose money if your services prices fall. Who got fired? Did proppant shoveling get automated?

    Predatory Pricing. Bask in the glow of those words for a while when you want to believe price will rise again just as soon as _______ (fill in the blank with the explanation du jour for lower demand) fix their economy. It will open your eyes about the free market. It will also change your perspective on hedging.

    • Watcher says:

      Notice I’m not editing here. This is important to no one.

      So, money loses its meaning. The oil is there. What does this mean for doom?

      It means you feed your citizens. It is the top priority above all things and no one else’s citizens matter at all.

      We sit here after 4.2 trillion dollars were printed . . . 20-25% of GDP . . . and pretend normalcy. Oil flowed out of NoDak at $110/barrel, and it won’t flow at $45 and similar things will be so from EagleFord and the US of A will be asking for 3.5 mbpd more from other folks.

      Why should we get it? Because we’ll pay more? Other people can’t bid, too? India and China want that oil. Why should the US get it instead of them? Because we’ll pay more? Suppose they outbid us? Well, that scenario restarts shale at $150.

      But suppose . . . suppose those other folks get the oil from the producers without outbidding. Suppose they are preferred as customers? Suppose they get the oil at $45 despite the US bidding $95.

      How can this be? Because . . . it can. Think on that for a bit.

    • Anonymous says:

      Watcher,

      The explanation is fairly simple.

      U.S. shale producers are margin producers, kept afloat in the past 5 years by the combination of easy money from the Fed and Wall Street and a sustained period of high prices. They have and continue to overproduce even in a low environment because the money keeps flowing. Couple this with many European countries being at or near recession (or depression in the case of Greece) thanks to the political and economic clusterfuck that is the Fourth Rei – er I mean the New Zollverein – uh I mean the Eurozone. Combine this with a SLIGHTLY slowing Chinese economy and a strong dollar and of course you have low prices. There’s no conspiracy here. Just countries looking out for their own economic self-interest. The “free market” has and will always be a myth, particularly on the global scale.

      • Watcher says:

        Nah. Easy money would not have flowed oil out of NoDak at $45.

        It was all price. Well not literally all. 98 or so %. 10 million well at 9% vs 10 million at 7% is only 200K.

        • Watcher says:

          Oh and btw, predatory pricing IS looking out for your economic best interests.

          • Nick G says:

            predatory pricing IS looking out for your economic best interests.

            Which is a very strong argument for transitioning away from being dependent on imported oil.

  17. Robert Spoley says:

    I read about half of the comments on the “peak oil – global warming” thing. My own particular viewpoint is that there are about 7.3 billion folks on this planet all trying to live as long and as well as they can. This includes a variety of groups they are associated with. Thus, cooperation is born for similar positions. Not surprising. However, as we all want more and better, it takes more energy to do this. Currently carbon emissions are perceived to be the arch bad guts. May, maybe not and maybe in part. The debate goes on. In reality the villain in this discussion is the increased amount of heat generated by that number or people all wanting to improve their lot in life. Almost all “work” ( in the sense of physics) done on this planet is done by increasing the temperature of something, usually water and converting volume “a” to volume “b” which is much bigger than the former. This is commonly revealed in a turbine-generator set. When the steam cools and reverts to water, a very large amount of heat is liberated and everything gets warmer. Thus “heat islands” are born called cities. Really!? How are we going to curtail this process? 1) get us back to 2 billion people in the next 100 years; and 2) figure out how to get “work” done without expanding water to steam then back to water without dumping huge amounts of heat into/onto the planet. Somebody pleeeeease accomplish something and stop the B. S.

    • Fuser says:

      Sometimes there are no palatable answers to questions such as yours.

    • BC says:

      Robert, you define our predicament quite well.

    • MarbleZeppelin says:

      First of all the amount of heat generated by human activity is quite small compared to he heat gained through the added greenhouse effect of additional CO2, NO2 and methane.

      Secondly, we all should be accomplishing things. I have dramatically reduced my energy footprint and fossil fuel use. I encourage my neighbors to do the same.
      Anyone who designs a more efficient pump or car or way of obtaining energy, as examples, is doing something. Anyone who finds way to eliminate waste and effort is doing something.
      The heat island effect is no worse than rock or desert surfaces which exist all over. It is primarily from sunlight and the differences in albedo between manmade surfaces and vegetation, not human energy use. Insulation and use of passive or active solar heating can reduce the human energy footprint in cities. Better design of buildings can also reduce their energy footprint. People have been doing that for years.
      We have at our fingertips huge advances such as plates of materials made from sand that produce energy with no emissions or heat effect. These advances and some thoughtfulness on use have made changes in how we can run civilization. Just keep in mind that the rollout has started and if we all encourage the change it will happen faster.

  18. Rune Likvern says:

    Hope?

    http://www.nbcnews.com/science/space/nasas-kepler-space-telescope-discovers-new-planet-n397141

    ”NASA on Thursday announced the discovery of Kepler-452b, the most Earth-like planet ever found. Located 1,400 light-years from our planet, NASA called it “Earth 2.0,” because it’s the first small, rocky planet discovered in the habitable zone of a G star similar to our sun.”
    Wonder if there is oil there? Lots of it! 😉

    • Fred Magyar says:

      Wonder if there is oil there? Lots of it! 🙂

      Hopefully if there is intelligent life there they are smart enough not to burn through it in a couple of hundred years building an unsustainable industrial civilization that crashes when they run out.

      Has anyone mentioned if they have oceans?

      Since they have a star that is similar to our sun maybe we can export solar panels to them 🙂

      • Has anyone mentioned if they have oceans?

        No, and they will never know. The most powerful telescope will never be able to see the planet. Even the star is nothing but a point of light. The planet can only be detected because it passes between us and its star and the magnitude of the star dips ever so slightly.

        • Fred Magyar says:

          No, and they will never know. The most powerful telescope will never be able to see the planet. Even the star is nothing but a point of light.

          Perhaps one of our resident astrophysicists will chime in and say if that is truly the case or not… Though I think that even if we could never actually see the surface of these distant planets, I believe we have high resolution imaging spectrographs that can read the signature of water vapor and gases in the atmospheres of these planets and therefore tell us if there is water there.

          • What you would get is a spectrograph of the star, dimmed by a fraction of much less than one percent as the planet eclipse it. But I guess they could detect changes as the planet passed. That would give them a clue as to the atmosphere of the planet.

            • Fred Magyar says:

              Well, from the article linked to by Rune above:

              The next step is to use the James Webb Telescope to do a spectroscopic analysis of the Earth-like planet to gain a better understanding of its atmosphere.

              And from a link on the JWST:
              http://goo.gl/Usi2dn

              One of the JWST’s most notable abilities is that it will be able to detect planets around nearby stars by measuring infrared radiation, and it will even be able to measure the atmospheres of exoplanets by studying the starlight that passes through. By doing this it will be able to determine if an exoplanet has liquid water on its surface.

              So I guess we will eventually get to know if this particular exoplanet has liquid water on its surface or not.

        • MarbleZeppelin says:

          Angular resolution is dependent upon the diameter of the telescope mirror.
          It’s just a matter of putting up bigger telescopes in space. Certainly a lot easier than going there although the data will be hundreds of years old or more.
          Larger telescopes not only have much greater resolving ability but they have the light gathering ability to provide enough light for spectrographic studies.
          Not going to happen soon though. Too much money will be wasted sending people to Mars! (Why?)

          http://www.space.com/26520-alien-life-search-space-telescopes.html

          http://apod.nasa.gov/apod/ap100106.html

          I personally don’t see the point , we have a fine planet and sun right here. But I guess it is a nice hobby. Better to study this planet and the sun.

      • BC says:

        Now, if we had the Starship Enterprise with Cap’n Kirk and Mr. Spock in charge, we could direct Scotty to fire up the dilithium crystal-based matter-antimatter engines to peg warp 9 to get to Kepler-252b in about ~155 years, which is about the extent of the period of the peak Oil Age epoch we as human apes have enjoyed to date.

        We’re only now experimenting with costly, uneconomic EVs for rich Silly-Con Valleyites and Wall Streeters, so as a human ape species we’re running out of time and net energy per capita to develop warp engines.

        Beam me up, Scotty!!!

        • MarbleZeppelin says:

          Oh come on, most space exploration will be done by robots and computer. Kirk, Spock and Scotty will be avatars.

        • Watcher says:

          Anyone checked the expiration date on these guys’ research grant?

          • MarbleZeppelin says:

            Good till 20 years after peak oil or until Miami goes under water.

      • Rune Likvern says:

        Fred,
        Great idea about the solar panels. And if they do not have water I start to sense the formation of a great business.
        We export solar panels and water and receives all their (for them useless) oil in return. 😉

  19. AlexS says:

    OPEC Production Surges in 2015
    Source: Morgan Stanley Research, Bloomberg
    http://www.bloomberg.com/news/articles/2015-07-23/oil-warning-crash-could-be-worst-in-more-than-45-years

    • OPEC was reported to have produced 31.4 mmbopd in June. That plot shows a discrepancy. I think we discussed the fact that Venezuela and Iraq were looking unreliable.

      • AlexS says:

        You are right, Fernando, the absolute numbers in the chart look too high and are above estimates from the IEA and OPEC.
        But, according to the IEA, OPEC crude production has indeed increased by more than 1.5 mb/d, from 30.1mb/d in February to 31.7 mb/d in June
        https://www.iea.org/oilmarketreport/omrpublic/

  20. clueless says:

    Human nature in the US.
    With most people, “seeing is believing.” So, when they [including supposedly sophisticated investors on Wall Street] read and hear about the devastation in the oil patch, they do not believe it. First, they WANT to believe that if gasoline is more than $.50/gal, the oil industry is ripping them off and making obscene profits. They have felt this way since 1972 [Arab oil embargo]. So, they gravitate to the stories that say that despite the rig count being down by over 50%, US production is up. That “proves” to them that they have been ripped off. So, the oil price will only recover when it is obvious to almost everyone that US production is declining, and declining at a fairly rapid pace. At that point, a story will be written that essentially refers back to the middle of 2014 and illustrates that at that time, virtually everyone expected that in 2 years [2016], US production would be UP by 1.5 million bls./day, but it will in fact be DOWN .5 million bls/day. To borrow a phrase, at that point “Houston, we have a problem” will be recognized. [Reference to a problematic space trip to the moon for those of you under age 60.]

    • Watcher says:

      So, they gravitate to the stories that say that despite the rig count being down by over 50%, US production is up. That “proves” to them that they have been ripped off.

      Nah, this proves to them yankee ingenuity has stepped forward and will destroy KSA. They’re gonna be in that mode for a while.

      • shallow sand says:

        The Fed Ex CEO on CNBC said shale tech will continue to drive down shale costs.

        • Ves says:

          Fed Ex CEO? The “Mail Man”? I wouldn’t be surprised that they bring Floyd Maywather to convince us about decreasing shale costs 🙂

  21. PDVSA President Eulogio del Pino has tendered his resignation, but it was rejected. Mr del Pino is upset because his orders to pay a backlog of unpaid bills are being ignored by the company treasurer. The unpaid bills are owed to private contractors who do services for pdvsa, and are increasingly unable to work because they lack the cash flow to pay their subcontractors, suppliers and employees.

    I suspect we may see Venezuela lose as much as 25000 BOPD per month until the end of the year, unless these bills do get paid. The amount owed is $1 billion.

  22. Ronald Walter says:

    Of Big Bang Theory interest: A Belgian priest by the name of Georges Lemaitre conceptualized the idea.

    “A Belgian priest named Georges Lemaître first suggested the big bang theory in the 1920s when he theorized that the universe began from a single primordial atom. The idea subsequently received major boosts by Edwin Hubble’s observations that galaxies are speeding away from us in all directions, and from the discovery of cosmic microwave radiation by Arno Penzias and Robert Wilson.”

    http://science.nationalgeographic.com/science/space/universe/origins-universe-article/

    The monk Gregoire Mendel studied peas, conceptualized independent assortment and segregation of genes, via experimentation, of course, because nothing else really works; methodical, measured, quantitative, and qualitative observations conducted by men of the cloth. I’ll be doggoned. Will wonders ever cease?

    Religious folks can be scientists too, dagnammit.

    Kind of ironic, God deniers follow the theory of a Belgian priest.

    That’s the way it goes moving west.

    You can thank your lucky stars. Har

    • Fred Magyar says:

      Kind of ironic, God deniers follow the theory of a Belgian priest.

      There have been more than a few atheist Jesuit priest scientists who have pretended to believe in God so they could do their work…

      • Exactly! God deniers were once burned at the stake.

        There was a time when the church ruled the world. It was called The Dark Ages.

      • Ronald Walter says:

        Leave it to a Jesuit priest to commit a fraud from the word go, the incorrigble heretics that they are and probably always have been. lol

        Where were they when witches were being burned at the stake? The cowardly fools were hiding in their ivory towers, ensconced in hypocrisy. Couldn’t lift a finger to offer any aid to a condemned woman who weighed less than a duck., they were fearstruck cowards. When Joan of Arc was burned at the stake, her executioners retrieved her charred remains and were horrified when they discovered her heart was still beating.

        Giordano Bruno was a Roman Catholic, excommunicated. Became a Calvinist, the clergy would not tolerate his insolence and was excommunicated. Even the Lutherans excommunicated his sorry ass. Then the inquisition finally cornered his worthless hide and Mr. Bruno was burned at the stake. He would not recant, the heretic held firm to his heresy, one being Christ was merely a skillful magician; one Protestant leader said he did not have a trace of religion.

        Liberties Philosophica, the freedom to think was one of Giordano’s crazy ideas.

        At least he had the good sense to challenge and question authority, i.e. not a coward.

        http://www.newadvent.org/cathen/03016a.htm

        “I do not feel obliged to believe that the same God who has endowed us with sense, reason, and intellect has intended us to forgo their use. – Galileo, convicted of a thought crime, another heretic, but had enough brains to recant, otherwise, he was doomed.

        The heresy:

        “The proposition that the sun is in the center of the world and immovable from its place is absurd, philosophically false, and formally heretical; because it is expressly contrary to Holy Scriptures.

        The proposition that the earth is not the center of the world, nor immovable, but that it moves, and also with a diurnal action, is also absurd, philosophically false, and, theologically considered, at least erroneous in faith.”

        http://deoxy.org/galileoc.htm

        Say a prayer for Giordano for old times sake.

        These days, it is the oil industry that is being burned at the stake, crucified.

        That’s the way it goes, welcome to the real world.

        • Javier says:

          Anybody that disagrees with the majority’s beliefs gets burned at the stake. At least these days it is a metaphorical burning. We can call that progress.

  23. thrig says:

    And on the gas tax front, it looks like those taxes are not going up. Meanwhile, why not try to have a little fire sale from the Strategic Petroleum Reserve to try to cover the costs of the insolvent Highway Trust Fund?

    http://www.alaskapublic.org/2015/07/22/murkowski-balks-at-proposed-funding-source-for-highway-bill/

    They expect $89 bucks a barrel, too.

  24. SAWDUST says:

    Something a lot of people aren’t counting on is the pending FED rate hike being extremely bullish for oil and oil price. The build up to the rate hike is very bearish for oil price. But the actual rate hike itself will be very bullish.

    Here is why. US equity or stock markets will have a correction lower. Sending dollar lower as carry trade unwinds. Yen and Euro strength against the dollar. This will force a correction in oil price to the upside.

    If we get the rate hike in September expect oil price to be in mid 60’s to 70 by year end.

    • Rune Likvern says:

      Saw,
      This is interesting. Currency movements also affects demand and an unwind of the carry trade [$9T ?] (caused by a Fed rate hike) may divert more local currencies towards servicing dollar denominated debt, which may affect the (global) demand side.

      I see so many parts in the “machine” that forms the oil price, and one of the things I keep a watchful eye on is developments in (global) demand [and factors affecting it], the supply side appears well understood for the next 1-2 years.

    • Ves says:

      Saw,
      As far I can see here from the peanut gallery is that Fed just talking (for how long about rate raise) and never actually raising it is position as good as it gets. That is their optimum position where you can’t make any move without making things worse. Not only stock market but bond market and real estate is going into reversal with the rate increase. As well countries that own foreign debt, nominated in $US, will require to pay more money in higher priced dollars for their own currency. So that only means debt deflation and defaults. Economy is basically cornered. With knowing that, if rate increase does happen, it is practically impossible to see how price of oil will behave. But i would be skeptical in betting bullish scenario for oil.

      • SAWDUST says:

        If they do a rate hike it will likely be a one and done situation. Which is bearish USD. If they do a rate hike equites will correct which is bearish USD. If they don’t do a rate hike thats also bearish USD. A strong dollar will be tolerated for only so long. FED will eventually act to weaken it.

        No matter how you look at it this current USD strength will come to an end. Which will support oil price.

        • SAWDUST says:

          In the long run debt deflation can’t be avoided. The bubble all the CB’s created after 2008 will eventually deflate. Eventually we will have a global depression that should have happened in 2008.

          Reality is as long as we have sufficient oil supply they can re-inflate asset bubbles after debt deflation has occurred. But when insufficient oil arrives asset bubbles will continue to deflate no matter how much money they throw at it. And pretty much everything is in an asset bubble. The price of just about everything doesn’t reflect reality in the real world. Price only reflect CB’s willingness to print an hold interest rates low.

          If CB’s just left the markets all together we would find out what the true price of everything really is. I’d imagine the average $200,000 home is only worth about $50,000 and stock valuations for the Dow and s@p500 would be below the 2009 lows right now. Oil would reflect the cost it takes to produce it an demand for it which demand would be far less than it is today. The average car would probably cost under $10,000 but it’s all a relative thing cause everybody’s income would be much less.

          • Rune Likvern says:

            ”……but it’s all a relative thing cause everybody’s income would be much less.”

            My present reading of the tea leaves; this is where we are headed.
            It becomes an affordability issue.

            It is all about the relative movements, an oil price of say $30/b, may be too high (for many) if one cannot afford it.
            Demand is what one can pay for!

            • Watcher says:

              Which is why God gave us subsidies.

              • Nick G says:

                It’s why god gave us bankruptcy courts to clear out excess debt.

                • Ves says:

                  True. but somehow God forgot to give us means to clear government debt 🙂

                  • Doug Leighton says:

                    I thought God forgives, so presumably He forgives debt. ‘Course my god doesn’t forgive, it’s a lightening bolt to the heart. Sigh.

                  • Nick G says:

                    Many governments have been clearing debts, for many years. See the book: “This Time is Different – eight hundred years of financial folly”.

                  • Ves says:

                    Nick,
                    Can you name one country that has significant government debt write off after the WWII? Just one. And by the way term “clearing debt” with a new debt “a la Greece” does not count.

                  • AlexS says:

                    “Can you name one country that has significant government debt write off after the WWII? Just one”
                    1/ Germany after WWII
                    2/ Poland in 1991
                    “debt forgiveness has an established historical precedent in Europe. Poland, for example, had accrued external debts of about 57% of GDP by the time the Communist system had collapsed, with the majority of that debt (around $33 billion) being owed to Western governments.

                    Poland’s largest creditor at the time was Germany, which reluctantly agreed in 1991 (under pressure from the United States) to go along with the “Paris Club” of creditor nations and forgive half of Poland’s debt to the West (though this was less than the 80% write-off Poland had originally been seeking).

                    An even more dramatic example is provided by Germany itself. Historically, Germany has been described as the biggest “debt transgressor” of the 20th Century, with restructurings in 1924, 1929, 1932 and 1953. Total debt forgiveness for Germany between 1947 and 1953 amounted to somewhere in the region of 280% of GDP, according to economic historian Albrecht Ritschl of the London School of Economics. ”

                    http://www.debatingeurope.eu/2015/03/18/parallels-greece-today-german-debt-relief-1953/#.VbKycP0w9LM

                    http://www.nytimes.com/1991/03/16/business/poland-is-granted-large-cut-in-debt.html

                  • Ves says:

                    Alex,
                    Germany debt was restructured as consequence of destruction in WWII. Yes it happened in 1947-53 so technically after WWII but it was dealing with debt from before WWII. I would not count that. And anyway it was clearly political decision. Poland, as well. Political decision. Do you have any recent ones? Ireland? Spain? Argentina? How about Puerto Rico?

              • SAWDUST says:

                Subsidies, so everyone can pay a higher price for this an that.

                I’d love to see a chart of the growth in subsidies, food, healthcare, everything that gets subsidized for say the last 50-60 years.

                It’s been said that what can’t be sustained wont be sustained. They have been able to sustain subsidies for a very long time. It will be interesting to see how much longer it can continue.

                We get to the point where subsides disappear, thats when riots break out and tanks are deployed in the streets.

                Everything is subsides by the issuing of more debt which can’t be sustained unless there is issuing of more debt. Which eventually can’t be serviced at any interest rate. Japan is very close to the moment of brown on the fan blades. Wonder what happens when the country with the 3rd largest economy in the world becomes a failed state.

            • Futilitist says:

              “My present reading of the tea leaves; this is where we are headed. It becomes an affordability issue.”
              ~Rune Likvern

              I am glad you are finally coming to that realization, Rune. That is what I have been saying all along. It is obvious enough without reading tea leaves. Oil affordability is dropping. This trend cannot be reversed.

    • Javier says:

      I think they will find an excuse not to do the rate hike. It is just too risky.

    • Javier says:

      the pending FED rate hike being extremely bullish for oil and oil price. …
      Here is why. US equity or stock markets will have a correction lower. Sending dollar lower as carry trade unwinds. Yen and Euro strength against the dollar. This will force a correction in oil price to the upside.

      Economic theory predicts the opposite. A higher interest rate is bullish for the dollar as the carry trade moves towards higher interests. Investors will sell euros and yens to buy dollars. If the US market corrects this will send even more money from stocks into bonds and USD. As oil is priced in USD, any raise in the currency will be bearish for oil prices.

      As I said I think the Fed might find reasons not to hike rates. It could tip the balance and send the global economy into recession again.

  25. shallow sand says:

    Comparisons being made to 1986 crash

    EIA has daily close data going back to late 1985

    Thought a review of 1986-2015 might be of interest.

    1/3/86. $26.00

    2/3/86. $17.42.

    3/3/86. $11.98

    3/31/86. $10.25.

    5/2/86. $14.23

    5/19/86. $17.13

    6/6/86. $12.73

    7/23/86. $10.83

    From there, price climbed to 1/12/87 $19.00. 1987 range was $15.57-$21.82

    1988 was weak. $12.58 – $18.50

    1989. $17.11 to $22.20

    1990. $15.43 to $39.34 (Gulf War) Most of year above $20.

    1991-1997. Mostly range of $18-23. Low of $14.09. High of $26.40.

    1998 $10.86-17.93

    1999 $11.65-26.74

    2000-2003. Mostly range of $25-32. Low $17.74. High $36.24

    2004. Low of $33.71. High of $56.37.

    Did not close below $40 again until 12/18/08. Lowest close $30.28 12/23/08

    By 4/28/09 last close below $50.

    5/20/09. Crosses $60

    6/8/09. Crosses $70

    10/22/09 Crosses $80

    2010 $68.03-$91.48

    1/1/2011-10/31/2014. $77.34-113.39

    10/31/14. Last close above $80

    11/26/14. Last close above $70

    12/11/14. Last close above $60, till 5/29/14

    1/15/15. Closes below $50

    1/1/15-7/23/15 range $43.93-61.36.

    If low price persists, will be lowest nominal since 2004.

    However, if mimics 1986, should be to $81 by end of 2015, price range in 2016 would be $67-93. 2017 would be weaker, $54-79. This assumes 2015 of $43.93 holds.

    The 26.00 to 10.25 crash correlates to a crash from $111.43 to $43.93.

    I am in no way arguing a price forecast at all. Would just say if price stays below $60 through 2016, I will consider this crash worse than 1986 crash.

    Keep in mind the type of reserves 1986-1987 compared to today. No expensive shale, tar sands, ultra deep or Artic.

    Not trying to offend anyone who lived through 1986 crash and welcome comment from those that did.

    Did a lot of stuff quick here, so as always, feel free to poke holes.

    Setting up to be one heck of a correlation to 1986? Likewise, if this is more like 1998, look at the snap back in 1999.

    And before anyone tries to complain that $43.93 is so much higher than 1986, keep my personal stuff in mind:

    I bought my first car in 1985 for $6,000. V-8 engine, one year old, 1984 model 11,000 miles on it, one owner.

    Tuition in 1986 was $2600.00 for the year at State U where cost is now over $20,000.00
    My apartment rent that year was $150.00 per month.

    • Rune Likvern says:

      Shallow,
      FWIIW, my understanding is that this is different from 1986 and the major difference is total global debt levels.
      I was through the 1986 crash and things were dire.

      • shallow sand says:

        Rune. Very good point. Will look up global debt levels and compare 1986 to 2015 if I can find those statistics.

        Looked at CPI historical chart. Surprising that number went from 109.5 in 1986 to 238.63 currently. Apparently things such as higher education, health care, housing, energy and food are not included?

        Hard time believing cost of living has only a little more than doubled since 1986.

        OTOH I worked a summer job and made $6 and hour. Minimum was $3.35. Minimum now $7.25 and pretty much all student summer work is limited to that.

        US public debt went from $2 trillion in 1986 to $18 trillion in 2015.

        • Rune Likvern says:

          Shallow,
          The linked report “Debt and (not much) deleveraging” from McKinsey (Feb 2015) below is IMO worth the time. There are others as well like the Geneva 17th report from last fall and the annual reports from Banks for International Settlements (BIS, Basel in Switzerland) the central bank of the central banks (FED is member and so is BOE, BoJ, China, Brazil and others).

          The common theme is “TOO MUCH (global) DEBT!”

          From 2007 to 2014 global debt (credit) grew with about $57 Trillion. That buys a lot of oil …..on credit.

          I know the theme is dry and boring, but IMO will have more consequences than most are aware of.
          http://www.mckinsey.com/insights/economic_studies/debt_and_not_much_deleveraging

          The whole thing started to change in the 80’s as the world turned to credit/debt for economic growth. Pay back will be a bitch!

          • Dennis Coyne says:

            Hi Rune,

            One positive thing in the Executive summary is that the compound annual growth rate in debt fell from 7.3% in the 2000-2007 period to 5.3% in the 2007 to 2014 period (Exhibit E1).

            It would be better if this were lower (under 3%) so that Dept to GDP levels would fall, but at least it is moving in the right direction.

            • Rune Likvern says:

              Dennis,
              Total debt levels are the important thing. The lower relative growth happens from a higher base.

              The slowdown may reflect that consumers/companies/sovereigns are entering debt saturation, that is they do not have much room left on their balance sheets to take on and service more debt.
              If their assets decline for whatever reason (thus their equity while debt/liabilities remains) they are getting closer to going under water (under water = insolvent).
              Ref the housing crisis and what has happened to some companies recently.

              Sine the 70’s/80’s GDP growth has very much been about growth in credit/debt.
              The productivity of debt (its effect on GDP) has been in decline for several years due to the drag from growth in total debt levels.
              Lowerincg credit/debt growth lowers GDP growth or sends it negative.

              This can go on until it cannot. Nothing grows for eternity.
              Deleveraging is about to set in which is deflationary.

              • Futilitist says:

                Hello Rune.

                I completely agree with your perspective on the historical and current debt situation.

                “This can go on until it cannot. Nothing grows for eternity. Deleveraging is about to set in which is deflationary.”

                The end of world economic growth is setting in. The deflationary deleveraging of which you speak will bring about ever lower oil prices, as my model predicts. The situation is quite dire. World stock markets are weakening, etc. The crisis could begin any day now. Ultimately, the coming destructive, deflationary spiral will lead to the rapid, total collapse of industrial civilization. Do you agree? If not, please explain why not.

              • Dennis Coyne says:

                Hi Rune,

                What is an acceptable level for total debt? Is it based on assets or income. The total assets of the World are quite large, usually income is a big part of the picture.

                Do we have an estimate of the total wealth level of the World? For long lived assets,like a well built home debt can usually be at 75% of the assets appraised worth if income is at 33% of the debt load (roughly).

                Maybe the problem is too little debt rather than too much.

                • Rune Likvern says:

                  The total debt load (measured as debt to GDP or other metric) is widely debated.
                  These things do not happen in a vacuum and the interest rate is one important parameter to keep an eye on. Low interest rates allows for balance sheet expansion as it lowers costs for debt service.
                  The other thing is what the income may sustain to service.
                  With regard to assets, this is not a fixed value. Ref the debate on other threads on POB with regard to how the oil price affects the oil companies’ balance sheets, assets, equity, Net Asset Value (NAV) etc.

                  Micheal Hudson has said something like “a house is worth what the bank is willing to lend against it”.
                  House prices are also subject to market forces, access to credit, bid/ask dynamics.
                  A house may at one point in time have a market value of say $300,000. Some time later and given that no one puts a bid on it, the market value is close to nothing. It is still a house.
                  To me as I read the numbers from Bank for International Settlements (BIS), the problem is TOO MUCH DEBT. Euro area (private sector) is in a delveraging mode for this reason, same for Japan.
                  BIS has covered this in their annual reports, the Genevea 17th report as well and I also linked to a McKinsey report.

                  Credit/debt is borrowing from the future and pulls demand forward in time. (Increases aggregate demand). This affects supply and demand and price formation/discovery.

                  Difficult to be more specific than this, easier if we look at some concrete examples.

  26. ezrydermike says:

    Great Debate: Climate Change, Surviving the Future
    Saturday, February 2, 2013

    Join an exciting panel of scientists and leaders affiliated with NASA, NOAA, The Earth Institute, E3G, and The Global Institute of Sustainability for what is sure to be a lively conversation on the future of the nation and the world in our changing climate. The Origins Project at ASU is proud to host esteemed scientists and intellectuals Prof. Jim Hansen, Prof. Susan Solomon, Prof. Wallace Broecker, Mr. John Ashton CBE, and Prof. Sander Van Der Leeuw as they discuss these controversial issues in the field of climate change. Origins Project director Lawrence Krauss will moderate the evening.

    https://origins.asu.edu/events/great-debate-climate-change-surviving-future

  27. ezrydermike says:

    a slightly different perspective…

    Richard Wolff: Why Oil & Gas Prices are dropping 12/2014

    https://www.youtube.com/watch?v=LCW7lWZ5CiE

    • Watcher says:

      Shallow understanding.

      • R2D2 says:

        Watcher, I would argue your comment is shallow, simple, lazy and wrong.

        • Watcher says:

          Well, you were wearing a nice sweater, I’ll give you that.

          • Futilitist says:

            Hey Watcher.

            What was wrong with Wolff’s analysis? It seemed pretty spot on to me.

            Frankly, I have no idea what your position actually is. I have never been able to figure it out. You can’t ever seem to state a position clearly without vague winks, inscrutable nods, and a bunch of cryptic bullshit about the supposed power of central banks to extend and pretend forever. In your mind it is hilarious that no one seems to be able to grasp the current situation as well as you. I can tell that you are entertaining yourself, but personally speaking, I can’t really make heads or tales of any of your comments.

            What the hell is your point?

            • Watcher says:

              You should not try. You’ll be happier.

              • Futilitist says:

                Ha ha. Perfect. You are good!

                I have no idea what that means.

                I was just asking for a little clarification, oh inscrutable one.

                “You should not try. You’ll be happier.”

                Do you mean that you think things will turn out worse than I think they will?

                Or are you suggesting I shouldn’t worry my little head about trying to understand what the hell you are talking about?

                Or something else?

                Help me out a little, here.

                Oh, and what, exactly, was wrong with Wolff’s analysis?

  28. Heinrich Leopold says:

    Ron,

    Although the May numbers from RRC are indicating some resilence in oil and gas production, big moves are coming for July. AAR rail car transport for petroleum came just out yesterday and the yoy decline of – 20% is steadily building up (-7% and -13% the previous weeks). Daily natural gas production for Texas is a little bit over 20 bcf/d in July versus 22 bcf/d in May. Total US July gas production at 71 bcf/d is just 4% higher than last year – the lowest growth in years – and 5 % below its peak in December 2014.

  29. Enno Peters says:

    For anybody interested in the accounting of oil companies, or in the upcoming impairments in their books, I strongly recommend the very thorough treatment of these topics in the following article:

    An E&P Impairment Corollary: Does The Relative Absence Of Impairments For Successful Efforts Companies Matter?

    The same author has a number of other excellent articles as well.

    • Enno Peters says:

      For example, his following recent article has a nice overview of E&P companies, their accounting method, debt level, and value of their properties:

      Upcoming E&P Earnings: Impairment Tsunami Warning

      “It is widely believed that banks went easy on company reserve value estimates at their most recent redetermination dates in April since the price declines were so recent. However, with more history of lower prices, with added pressures from the Federal Reserve and from the Office of the Comptroller of the Currency to “clean things up” ahead of YE ’15, lowered borrowing bases are likely to be the norm and, as a result, many companies will be forced into paydown situations and/or term loans if they cannot access the capital markets. The list of companies already lined up at restructuring’s door is rapidly growing, and is likely to grow even more unless prices improve quickly and dramatically.”

      • AlexS says:

        Thanks for the link, Enno, Good article

      • shallow sand says:

        Enno. Thanks for the link! Stuff I have been harping on ad nauseam here.

        Will be interesting to see what the banks do if prices do not rebound in next couple months.

        Again, just for purposes of illustration, take any of the companies in the chart provided by the author, divide the SEC PV10 by 2. That is likely the amount of PDP. Then divide by 2 again. That is likely the PDP at present oil and natural gas prices.

        They are just about all underwater if you do that and really should not be allowed to borrow any more money to drill.

        I assume that it what OPEC is waiting on. I question if that is how things will play out.

    • Rune Likvern says:

      Enno, thanks a lot!
      For those interested the excellent articles Enno linked to are worth the time.

  30. gwalke says:

    Ron and all;

    On the daily reports article, if you have a look at John Kemp’s twitter it turns out the person at the DMR who keys in the completion data was on holiday (!), explaining the long gap and then 37 wells in one day.

  31. old farmer mac says:

    Back to the future for a minute.

    It seems that there are still enough drilled but not Fracked wells in ND and maybe a couple more places to hold tight oil production just about flat for a while yet. What is the latest estimate or at least scientific wild ass guess as to how long it will take to work thru the Frack backlog?

    And on average about how many days pass between the time a drill rig in conventional oil fields is moved in to drill and the first steady production from the new conventional dry land well ?
    How long in the water ?

    Do some analysts think that maybe the Chinese and maybe a few other people are putting oil into long term storage ?

    If I happened to be a Chinese official with responsibility for the dollar holdings of that country I would be storing oil ( to the limits of storage capacity ) in expectation that higher prices later on will mean oil in storage would be a very profitable investment compared to zero interest paper- although of course EXISTING older bonds ARE paying interest at various rates well above zero.

    • Dennis Coyne says:

      Hi Old Farmer Mac,

      First let’s assume 65 new wells are drilled each month in the ND Bakken/Three Forks.
      Second we will assume that Lynn Helms estimate of 925 wells waiting on completion is correct and that most of these have to be completed in the next 12 months. 900/12=75 wells per month, and 65+75 is 140 wells. My Wag is 75 to 140 new wells per month, if we assume the oil companies can obtain the financing necessary. My guess the financing will be an issue unless oil prices rise so 50 to 75 new wells per month may be a better estimate. Rune Likvern or Shallow sands would probably have better estimates as they follow the finances much better than I do.

      • old farmer mac says:

        Thanks Dennis,

        Your reply seems to indicate that ND Bakken /Three Forks production may hold about steady for the next year or so- assuming the sixty five new wells are drilled monthly..

        Some other stuff I am reading indicates production should start falling off there sooner.If the price goes up noticeably then people with leases to protect and money to drill may of course drill more than sixty five wells a month.

  32. ezrydermike says:

    what’s going on with SA?

    Over the past year, Saudi Arabia – once among the richest nations on the planet – has wound up having to sell some $4 billion in bonds. It has been necessary in order to maintain levels of spending on public works and continue financing the war against Yemen. The Saudi government has also had to draw on its reserves of foreign currency. Falad al-Mubarak, who heads the Saudi Arabian Monetary Agency (the nation’s equivalent of the U.S. Federal Reserve), predicts “an increase in borrowing” in the face of a projected $130 billion deficit.

    http://www.ringoffireradio.com/2015/07/saudi-arabia-having-to-borrow-billions-to-support-its-infrastructure-could-be-bankrupt-by-end-of-the-decade/

    • Jeffrey J. Brown says:

      And depletion marches on.

      Using BP consumption numbers and EIA production numbers for 2014 and EIA data for other years (EIA consumption data not yet available for 2014), Saudi net exports fell from 9.5 MMBPD in 2005 to 8.4 MMBPD in 2014 (total petroleum liquids + other liquids).

      At the 2005 to 2014 rate of decline in the Saudi ECI Ratio (ratio of production to consumption), they would approach zero net exports some time around the year 2033, 18 years hence, and I estimate that Saudi Arabia may have already shipped close to half of their post-2005 CNE (Cumulative Net Exports).

      • marmico says:

        What is the average KSA net exports from 2004-2014? It would include your 2005 cherry-picked outlier. Do the same for Russia.

        • AlexS says:

          Saudi Arabia crude oil exports (mb/d)
          Source: JODI
          KSA is not importing crude oil, but is exporting and importing refined products.

          • AlexS says:

            Saudi liquids exports

            JODI data from IEA OMR July 2015

            • shallow sand says:

              AlexS, Again, thanks!!

              Looks like KSA did not start the oversupply issue but they are going to end it, or at least try, even to their financial detriment.

              I would note that oil prices rebounded in 1986 due to KSA and other OPEC members setting $18 as a price target. However, other members overproduced, which sent prices back down in 1988.

              Underestimation by OPEC of the Asian financial crisis in 1997 led to the 1998-1999 collapse. In March, 1999 OPEC agreed to a 2.104 million barrel per day cut. As I show above, a strong price rebound occurred.

              The low prices could last quite some time without OPEC action. That likely will not come until next year at the earliest.

              Will banks loan US producers unlimited funds to keep drilling and violate Office of Comptroller of the Currency lending standards? Will those few US producers who are not already in too deep continue to borrow and destroy their companies?

              Since US became an importer of oil, there has never been a major price move that did not involve OPEC members.

              Arab Oil embargo

              Iranian revolution and Iran-Iraq war.

              KSA 1986 price war. Recovery only due to OPEC trying to set a target price.

              1999. OPEC production cut raised price from $10-12 to $26

              2009. OPEC cut raised price from $30s to $80s.

              2014. OPEC did not cut, here we are.

              If I am wrong, it will mean US producers pull off the largest cost savings measures in the history of the industry.

              • AlexS says:

                Shale companies started the oversupply.
                Their financial problems, cancellation and postponement of conventional projects, and rising demand will end it

            • Jeffrey J. Brown says:

              Gross exports do not fully take into account domestic consumption. I would also note that 2009 was down because of voluntary reductions in production & exports, in response to the substantial year over year decline in annual Brent prices.

              In any case, as noted above (using BP consumption for 2014 and EIA data elsewhere), Saudi net exports fell from 9.5 MMBPD in 2005 to 8.4 MMBPD in 2014 (total petroleum liquids + other liquids) and have remained below the 2005 rate for nine straight years–as annual Brent crude oil prices doubled from $55 in 2005 to an average of $110 for 2011 to 2013 (remaining at $99 for 2014).

              As I have previously noted, the foregoing is in marked contrast to the 2002 to 2005 time period, when Saudi net exports increased from 7.1 MMBPD in 2002 to 9.5 MMBPD in 2005–as annual Brent crude oil prices approximately doubled, from $25 in 2002 to $55 in 2005.

              And by definition, it’s not whether Saudi Arabia has depleted their remaining supply of post-2005 CNE (Cumulative Net Exports), it’s only a question of by how much.

              As I have periodically noted, in terms of production, everything was swell for the Six Country Case History*, as their production increased from 1995 to 1999 (although net exports fell because of rising consumption), but in only four years they had already shipped 54% of their post-1995 CNE.

              *Major net exporters, excluding China, that hit or approached zero net exports from 1980 to 2010

              • Jeffrey J. Brown says:

                I’ve used the following example to illustrate the differences between gross and net exports:

                Production Land (P) has 2.0 MMBPD of production, but no refining capacity.  Refinery Land (R) has 2.0 MMBPD of refining capacity, but no production.

                Ignoring refinery gains and other minor issues, P has consumption of 1.0 MMBPD, and R has consumption of 1.0 MMBPD. 

                P’s gross exports to R are 2.0 MMBPD. R’s gross imports from P are 2.0 MMBPD. 

                R refines 2.0 MMBPD, consumes 1.0 MMBPD, and exports 1.0 MMBPD of refined product to P. 

                P’s net exports are production (2.0) less consumption (1.0) = +1.0 MMBPD. 

                R’s net exports (actually net imports) are production (zero) less consumption (1.0) = -1.0 MMBPD.

                Alternatively, you get the same answer if you define net exports as gross exports less gross imports.

            • AlexS says:

              Saudi Arabia oil product imports (kb/d)
              Source: JODI

            • AlexS says:

              Saudi Arabia net exports of crude oil and refined products (mb/d)
              Source: JODI

            • AlexS says:

              Saudi Arabia net exports of crude oil and refined products, annual averages (mb/d)
              Source: JODI

              • Jeffrey J. Brown says:

                For an apples to apples comparison, what does the JODI data base show for total petroleum liquids production and total liquids consumption for Saudi Arabia?

                Here are the latest EIA data (BP shows consumption of 3.2 MMBPD in 2014):

                Saudi Total Petroleum Liquids + other liquids Production (2002 to 2014):

                http://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=5&pid=55&aid=1&cid=SA,&syid=2002&eyid=2014&unit=TBPD

                Saudi Total Liquids Consumption (2002 to 2013):

                http://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=5&pid=5&aid=2&cid=SA,&syid=2002&eyid=2014&unit=TBPD

                For 2005:

                Production less consumption = Net Exports

                11.5 – 2.0 = 9.5 MMBPD

                For 2014:

                11.6 – 3.2* = 8.4 MMBPD

                *BP

                Assuming consumption of at least 3.4 MMPBD (remember all of the air activity in Yemen), Saudi would have to produce around 13 MMPBD of total petroleum liquids in 2015, in order to match the 2005 net export rate.

                • AlexS says:

                  JODI shows only crude oil production. NGL production is not available. But they have relatively reliable data for exports, which is used by the IEA.

                  BP and EIA data for consumption and production diverge significantly. EIA C+C+NGLs production numbers for SA are higher than BP’s data, which also include NGLs.
                  By contrast, EIA data for total liquids consumption in SA are lower than BP’s data.
                  Thus calculations based on EIA’s production data and BP’s consumption data are not correct.
                  Besides, I have doubts about accuracy of EIA’s international oil statistics. We now know how they were “modelling” production numbers for Texas (just by adding 50kb/d to TRRC numbers). I can only imagine how they are modelling the numbers for other countries.

                  Saudi Arabia petroleum production and consumption data from various sources (kb/d)

                  • Jeffrey J. Brown says:

                    “Thus calculations based on EIA’s production data and BP’s consumption data are not correct.”

                    I only used BP consumption data for 2014. In any case, from 2005 to 2013 inclusive, BP showed average Saudi consumption of 2.5 MMBPD, while the EIA showed 2.4 MMBPD, and both data sets show Saudi consumption increasing from 2.0 MMBPD in 2005 to 3.0 MMBPD in 2013.

              • Jeffrey J. Brown says:

                Saudi Oil Minister (January, 2015): “”The math will tell you that our exports are gradually declining.”

                http://www.reuters.com/article/2015/01/27/saudi-oil-aramco-idUSL6N0V60Z320150127

                Jan 27 (Reuters) – Saudi Aramco will renegotiate some contracts and postpone some projects due to falling oil prices, the head of Saudi Arabia’s state oil company said on Tuesday, stressing the top crude exporter will not single handedly balance the global oil market. . . .

                Saudi Aramco Chief Executive Khalid al-Falih, speaking at a conference in Riyadh, did not specify which projects or contracts would be affected by low prices. . . .

                Falih said the imbalance in the oil market had nothing to do with Saudi Arabia, and a fair price is what would ultimately balance supply and demand, a sign Riyadh is sticking to its strategy of allowing the market to stabilise itself.

                “Saudi Arabia has a policy, the policy is set by the government through the Ministry of Petroleum, and they have said that Saudi Arabia will not single handedly balance the market,” he said.

                “The math will tell you that our exports are gradually declining. So the reason for the imbalance in the market absolutely has nothing to do with Saudi Arabia.”

              • AlexS says:

                more readable table

            • AlexS says:

              Jeffrey,

              In general, I think that deducting consumption from production numbers is not the best way to calculate “real” net exports. There are too many balancing items, change in inventories, other liquids, etc.
              The table below compares supply/demand balance and “real” net exports for Saudi Arabia, based on the EIA statistics (in kb/d). Not only supply minus consumption and net exports numbers are different, but their dynamics are opposite

              • Jeffrey J. Brown says:

                The EIA data are not reliable for production less consumption but they are more reliable for gross exports and imports by type of petroleum, which is even harder to accurately track?

                I’m not arguing that the data sets are not noisy. I have pointed out that the EIA revised upward Saudi Arabia’s 2005 total petroleum liquids production number by 0.4 MMBPD about eight years after the initial estimate was published.

                Given the inherent uncertainties in the data, I think that we need to keep it as simple as possible, i.e., production less consumption, and as noted above, the Saudi Oil Minister observed, as of January, 2015 anyway, that Saudi oil exports were gradually declining.

                And the EIA has traditionally defined net exports of oil as production less consumption.

                I’m sorry, but given the uncertainties in the data, I think it’s flat out ridiculous to use anything other than production less consumption to estimate net exports.

              • marmico says:

                Thanks AlexS. The KSA ELM is a nothingburger.

  33. ezrydermike says:

    A new EPA report, Climate Change in the United States: Benefits of Global Action, estimates the physical and monetary benefits to the U.S. of reducing global greenhouse gas emissions. This report summarizes results from the Climate Change Impacts and Risks Analysis (CIRA) project, a peer-reviewed study comparing impacts in a future with significant global action on climate change to a future in which current greenhouse gas emissions continue to rise.
    The report shows that global action on climate change will significantly benefit Americans by saving lives and avoiding costly damages across the U.S. economy.

    http://www2.epa.gov/cira

  34. MarbleZeppelin says:

    New York State energy. Found this and since many of you here are interested in energy I am posting it. Interesting how Manhattan still has three gas fired power generators. Includes a nice scalable map with generator stations marked.

    http://www.eia.gov/state/?sid=NY#tabs-1

  35. MarbleZeppelin says:

    Why Power Density Matters
    http://www.theenergycollective.com/robertwilson190/257481/why-power-density-matters

    I present this not as an article to be given credence but as an article that if the errors and misrepresentations were holes it would make Swiss cheese look solid. I know a few here will jump on it as god given truth but for the rest, road kill is served. Have at it.
    It is however an excellent tool to be used to prove that the city of the future is non-viable ( but that too would be misrepresenting reality).

    • Robert Wilson says:

      Not to be confused with the Robert Wilson from California that occasionally posts here and on other oily sites.

    • Robert Wilson makes a good point. I don’t like the use of corn ethanol to estimate the energy delivery for all biofuels. I guess what he points out means we ought to start building nuclear power plants and leave the fossil fuels for unstable countries?

    • Nick G says:

      His main point seems to be that it would be very hard to power big cities with renewable energy produced within their boundaries.

      I don’t know why anybody would think that was a serious problem. It’s not like Manhattan runs on oil, gas or coal from mines or wells within the city boundaries.

      • MarbleZeppelin says:

        I agree Nick. Cities supply very little of any of their basic needs within their own boundaries and achieving over half of their power from within their boundaries would be a huge change plus a relief to the out of city areas that must supply their needs.

        One big area that is neglected is the sides of buildings. They could be used to collect heat or electricity instead of just being glass walls that leak heat and over-heat in the summer.
        I noticed also that he seems to purposely low ball renewables when calculating.

        The big question is, are cities worth investing in and continuing? Can they be re-designed not only to be more self-sufficient but to be better habitat for those living there?

        • Nick G says:

          And, the answer is of course.

          Heck, all new construction buildings can be made to leak less heat and coolth, use less power, and produce more of their own power, Passive-House style. Most can get to zero net energy.

          And, of course, electric vehicles (and heat pumps, etc) use about 1/3 as many joules to do the identical work.

          • old farmer mac says:

            I believe that cities are here to stay and that cities are probably always going to be more energy efficient per capita than rural environments. Transporting food and raw materials to and from cities does not appear to consume nearly as much energy as would be needed to support the same number of people enjoying the same lifestyle if they were all spread out thru the country side.

            Cities enable specialization on the grand scale and while specialization reduces resilience it sure as shooting enables us to enjoy all sorts of things ranging from laptops to hospitals staffed with medical specialists and specialized equipment.

            It would probably be impossible to build even the simplest sort of motorized farm machinery in a rural environment. The relative handful of people in a village would never be able to master all the different necessary skills or to afford the necessary capital equipment.

            • Boomer II says:

              I believe that cities are here to stay and that cities are probably always going to be more energy efficient per capita than rural environments.

              Also, if you want to reduce the amount of living space people have, you might want to create densely populated areas, even if they are surrounded by open space.

              The idea of suburbs, where everyone has they own little yard, might make sense if all those yards are turned into effective food growing spaces. But people might also use a sort of co-housing plan where everyone lives in tiny houses and apartments, but the community works the land around the housing for maximum benefit for all.

        • old farmer mac says:

          The land devoted to wind farms is not of much use at all from a commercial pov except when it can be farmed- and there is no real reason other than bureaucratic bullshit why a farmer cannot continue to farm around wind turbines. It would of course behoove him to stay away from them during thunderstorms and wind storms. Solar farms are not going to take up any significant about of land in comparison to the land area of the country – at least not within the next fifty to hundred years.

          Worrying about the land area foot print of wind and solar farms is nitpicking.

          Now when it comes to corn based ethanol or similar shenanigans it is another story altogether. If we once really commit ourselves to that path we are up doo doo creek without a paddle. Joe Sixpack will never give up his truck or car until every acre possible is under the plow. That equals an environmental disaster.

        • old farmer mac says:

          The land devoted to wind farms is not of much use at all from a commercial pov except when it can be farmed- and there is no real reason other than bureaucratic bullshit why a farmer cannot continue to farm around wind turbines. It would of course behoove him to stay away from them during thunderstorms and wind storms. Solar farms are not going to take up any significant about of land in comparison to the land area of the country – at least not within the next fifty to hundred years.

          Worrying about the land area foot print of wind and solar farms is nitpicking.

          Now when it comes to corn based ethanol or similar shenanigans it is another story altogether. If we once really commit ourselves to that path we are up doo doo creek without a paddle. Joe Sixpack will never give up his truck or car until every acre possible is under the plow. That path is the preacher mans broad smooth highway straight down hill to environmental hell.If we ever once really get started down it in a very serious way, there will be no turning back.

          • MarbleZeppelin says:

            And in areas that can have wind towers but no farming, a certain percentage of that land can be covered with solar PV. Shadowing problems will be minor and could be computer controlled to level out any pulsing. Or the panels can be just put to the south side of the wind towers in the northern latitudes. If it’s on a mountain top, add a pumped storage facility to fill in for sunless, windless periods.

      • It’s not “within their boundaries”. It’s within the planet’s boundaries. If you want do prove him wrong you can estimate the area covered by a wind farm and estimate what’s required to satisfy a country’s need. Try Jamaica it will need 1 gigawatt. At 30 % factor it needs 3.3 gigawatts.

    • Paul Helvik says:

      Most North Dakotans detest these unsightly and noisy migratory bird killing machines that are a big blight on the landscape. Drive on hwy 66 south and east of Langdon and the only thing you see are hundreds of these things. Worse of all, the generated electricity isn’t even for the state. Mostly it goes to satisfy Minnesota’s renewable energy mandate they passed because they are a tax and spend democrat state and the democrats really like the socialistic ideals of renewable energy. I say if they want to cripple there economy by paying massive taxes to fund the renewable energy stuff they want, it should stay within there own state and not pollute neighboring states. But the problem is some of the politicians in North Dakota like those in the eastern part of the state around Fargo and old UND hippies in Grand Forks are from Minnesota and caught the big gov’t socialists bug from when they lived there so they gleefully allow in the wind turbine builders. Using the propaganda to say it brings economic prosperity and help the environment. Personally Id rather look at an oil rig and enjoy all the new oil wells in the state. They serve an actual purpose and are perfect examples of hard working American craftsmanship and free enterprise small gov’t ideals that we believe in out in this part of the country.

      • Rph says:

        I say if they want to cripple there economy by paying massive taxes to fund the renewable energy stuff they want, it should stay within there own state and not pollute neighboring states.

        Already being done in massive numbers. Actually, did you even click on the link Patrick R posted? It’s about a wind farm being built in an area of southwest Minnesota not even close to the border with the Dakotas. There are already thousands of windmills in that part of the state, you can’t help but see some if you travel through, even if you only stick to I-90. Best place to look is obviously around the Buffalo Ridge.

      • old farmer mac says:

        Bullshit arguments.

        I take it you are FINE with ND exporting WHEAT and OIL but not ELECTRICITY?

        Have you ever stopped to think that ND is only exporting oil because it got to be so expensive that drilling in ND got to be profitable – at least in the short term with zero interest loans that will never be repaid for the most part ?

        The market for oil depends as much on subsidies as wind power. Who do you think paid for all the highways we drive on ? Exon? Chevron ? Your local tight oil driller?

        • Paul Helvik says:

          Wind and solar are the preferred energy sources for the tax and spend liberals. That means as a free market Republican I must be opposed. I strongly believe the liberals are out to morally and fiscally bankrupt this country in order to bring about the european style of socialism they say they love so much.

          • Boomer II says:

            There are folks here who think a number of oil companies, some of them operating in North Dakota, will go bankrupt and then the government may need to bail out the industry or the banks that lent to those companies.

            Now, you won’t be supporting any government bail out money that goes to North Dakota, will you?

      • Boomer II says:

        Most North Dakotans detest these unsightly and noisy migratory bird killing machines that are a big blight on the landscape.

        I would think that all the flared gas and the traffic noises and dust might also be a problem for them.

        Wind power allows those land owners to make some money. Oil money is okay for land owners, but wind turbine money is not?

        • Paul Helvik says:

          the difference between wind money and oil money is that the wind money is extracted from me through taxes to prop up the wind companies because they wouldnt be able to survive any other way. Then the tax money goes to the land owners. It’s redistribution of wealth.

          • Boomer II says:

            Here’s a list of subsidies the fossil fuel industry gets. Your tax dollars go to those, too. I think a lot of people would be in favor of eliminating all subsidies and tax breaks for all energy-related industries.

            USA FFSR progress report to G20 2014 Final.pdf

          • Citizen realist says:

            you are an ideologue.

            Where the hell do you think we will get energy after your heavily subsidized fossil fuels are gravely depleted?

            I got news for you, bub: Galt’s Gulch is as much fiction as heaven and hell and Valhalla and Hades.

            Live in the real World please.

  36. shallow sand says:

    Just skimmed Q2 from Encana and Cabot Oil and Gas.

    Encana had tremendous cash burn, $1.5 billion, and Q2 CAPEX was higher than Q1. They had to take an over $2 billion write down in Q2 compared to an almost $2 billion in Q1. The Q2 CAPEX expected by analysts was only $560 million, compared to $743 million actual, did not realize anticipated cost reductions. Stock price below $8. They are still planning on drilling a bunch of wells in Permian in Q3.

    Cabot is primarily gas producer in Marcellus, but has acreage in EFS. They are down to three rigs in Marcellus. One rig in EFS. Looks like EFS production for them will decline 15%, only looking at completing 5 wells in Q3, in response to question, CEO would not say price where they add rigs to EFS. Called market conditions draconian. Looks like they burned about $220 million in Q2. They are not hedged in 2016 and said all product prices are too low to add hedges. Marcellus production will drop also.

    EnCana= reckless. Cabot Oil being smart.

    After reading about CAPEX, have a question for experienced people in industry. How much lag time is there in lowering costs with service providers? Maybe the shale companies do not actually realize CAPEX reductions on their financials until a couple quarters pass?

    Next week will be very interesting.

    • Heinrich Leopold says:

      shallow sand,

      Cabot had yesterday a breakdown and also EOG, the former stalwart looks now quite vulnerable. This coincidences with my theory that production will fall as soon as companies cannot sell futures at a reasonable price. It will be now interesting to see what the FED will do. Is it ready to sacrify the shale industry? Higher interest rates mean a higher dollar and a tanking oil price. However it is becoming increasingly clear that a lower oil price will destroy the shale industry and thus oil production. The consequence will be a higher US current account deficit and thus a lower dollar and higher inflation in the long term. So increasing interest rates will mean a lower dollar and higher inflation in the long term (after oil production comes down). However does the FED see it the same way? At least we have to prepare for some volatility.

      • shallow sand says:

        Heinrich. I doubt the Fed is that US oil focused.

        To be fair about EnCana, they did pay down $1.3 billion of debt principal since 12/31/14. However, that was accomplished through selling $1 billion of assets and raising $1 billion of stock, it appears.

        I note even ExxonMobil broke under $80. So investors are dumping the entire sector.

        I think it is becoming clear that oil will not have a significant rebound without OPEC action. That will only happen when US production falls significantly. Or a major military or political event happens in the Middle East. That is the history, at least.

        The US natural gas side has tried to BK itself by drilling a bunch of high volume wells in the NE, and selling product for .50 to 1.50. I think Cabot realizes more is not better.

        I think that EnCana is drilling vertical wells to hold acreage is incredibly telling about the current profitability of Permian horizontal drilling. If you recall, around ten years ago, or so, drilling co-mingled vertical Sprayberry Wolfcamp wells was a big thing. Oil was $40-60 per barrel. Wells cost about $1 million.

        I suspicion there has not been any great technology breakthrough in the Permian re horizontal drilling. I think they are just drilling in the same zones as always. They get more oil and gas per well, but wells also cost several times more and likely have a steeper decline.

        From what I can tell, the “source rock” in the Permian was not economic at $100.

        However, this is all just internet reading from me. Welcome comments from those who are in the Permian basin.

        I guess have to wonder, Chevron and Oxy have huge blocks of HBP acreage. Almost 3 million between them. They were drilling unconventional in 2014, but not on the scale one would expect if the area is wildly profitable.

        • Heinrich Leopold says:

          SHALLOW SAND,

          In my view, the FED looks very closely to the oil price and the shale industry as the reduction of the US current account deficit through lower oil imports has been the major monetary event of the last decade. As this reversed US dollar weakness, it gave a new perspective for monetary policy. However the dollar strength also reversed oil price strength, which threatens the shale industry and ultimately reduces oil production and dollar strength. It is like killing the goose (shale industry) laying golden eggs (dollar strength).

  37. Ronald Walter says:

    http://www.bnsf.com/about-bnsf/financial-information/weekly-carload-reports/

    Week 28, petroleum cars at 8935. Week 28 of 2014 had 12208 petroleum cars., a decrease of about 27 percent.

    http://www.parl.ns.ca/lobster/history.htm

    History of Lobster Fishing and Processing
    The Very Beginning / The Start of the Industry / The 20th Century

    Shipbuilding was the largest industry in northern Nova Scotia during the 1800s, employing thousands of people from Pugwash to Pictou. When this industry began to fail at the turn of the century the people of the shore communities looked towards the lobster fishery to make their living.

    The lobster fishery has changed considerably over the years. It has been the livelihood of the north shore people for the last century. It has suffered through bad times and flourished in good times. For over thirty years hundreds of lobster canneries dotted the coastline of the Northumberland Strait where thousands of fishermen would bring their catches to be processed. These small plants would employ fishermen and cannery workers, both local men and women and those from away. It was a wide-spread and profitable business, but unfortunately short-lived.

    With increased technology and new and efficient ways of storing, transporting and marketing lobster, the old canneries were replaced with fewer, larger ones and the lobster fishery was changed forever.

    The Very Beginning

    Even before the Europeans arrived on the shores to settle in the “ New World”, the Mic Mac (Mi’kmaq) and Maleseet Indians of Atlantic Canada had been fishing the seas for lobster for hundreds of years. Long ago, lobsters were so plentiful that they often were found on the beach at low tide, and would wash up on shore in large storms. The tasty crustacean was known as “Wolum Keeh” to the Mic Macs, and was a source of food, fertilizer, and ornamental material. Hilton McCully wrote in his 1995 book, Pictou Island, “in the harbour of Cibou (Sydney, Cape Breton) in 1597, one haul of a little dragnet brought up 140 lobsters.” It is quite amazing to think that in just 400 years the lobster population has declined so greatly that if you were to throw a net out now you would be lucky to get any at all!

    http://www.parl.ns.ca/lobster/history.htm

    http://www.thelobsterzone.com/lobster-logic

    The largest lobster ever caught was found in deep seas off the coast of New England. It weighed 115 pounds and measured more than five feet long. Before European settlers arrived in America, lobsters as large as today’s livestock were pulled from the New England and Canadian seacoast by Native Indians.
    There is irrefutable evidence today that in Maine, during the early period before resource exploitation, oysters routinely measured 18 inches long.

    http://www.thelobsterzone.com/lobster-logic

  38. The Baker Hughes Rig Count is out. Big jump in oil rigs, up 21. Gas rigs down 2. Texas rigs up 8.

    Baker  Hughes photo Baker Hughes.gif_zpsvnc6mmpf.png

    • shallow sand says:

      Continuing to dig the hole deeper as opposed to trying to survive.

      Unless Encana is an outlier, shale oil at $48 is toast. They actually did about the same as Q1.

    • AlexS says:

      Oil rigs +21,
      of which: “others” (conventional) +9
      “second-tiers” (Niobrara, Cana-Woodford, Granite Wash) +6
      Permian +3
      Eagle Ford +2
      Williston +1

      From this year’s lows (as of June 26th):
      Total oil rigs +31 (+5%)
      “others” (conventional) +13 (9%)
      Permian +14 (6%)
      Granite Wash +8 (80%) (!!!)
      Niobrara + 4 (19%)
      Bakken and Eagle Ford still very close to this year’s lows.

      • AlexS says:

        I do not know who is drilling in Granite Wash, but they are redeploying rigs from gas to oil. Gas rigs are down from 5 to 0 in the past few weeks

        The overall number of gas rigs is down 12 units from 228 on June 26th to 216 now. This is the lowest number in history of Baker Hughes gas rig count (started in 1987).

        The number of vertical rigs is up 8 units this week and 32 units since early June (from 99 to 131). Horizontal rigs up 12 units this week, but still at the same level as in mid-June.

      • shallow sand says:

        AlexS. Reading more about EnCana, I now know why there has been an increase in vertical oil wells.

        EnCana disclosed they will spend $200 million this year on vertical wells solely to hold acreage in the Permian Basin that would otherwise expire.

        EnCana missed guidance in the Permian, which leads to questions as to whether Permian horizontal big fracks are any more economic than EFS and/or Bakken, on the whole.

        I have thought for awhile that maybe it is being hyped because, due to multiple formations and areas, it is much more difficult for those on the outside to figure out it won’t work either.

        Seems to me much of the horizontal Permian wells are in formation that have been produced vertically for decades. The Cline shale needs $150 to be economic. The Delaware basin wells look to have declines that make the EFS blush.

        So, Toolpush, it is not us little guys adding vertical rigs, LOL!!!

        • Toolpush says:

          Shallow,

          Not sure when you posted this, as I have been away for a few days. Great to see you have found the solution to the increasing vertical rig count. It also answers your question about all the acreage not HBP, and what the shale player, plan on doing about it. The only question left, do they have enough money finish their plan?

  39. SatansBestFriend says:

    http://www.dailymail.co.uk/sciencetech/article-3173595/Have-got-dark-matter-wrong-New-theory-says-mysterious-substance-acts-like-particle-discovered-1930s.html

    Dark Matter may be a previously discovered particle…the pion.

    Given that these are Japanese scientists claiming this….It must be part of an American lefty political conspiracy to help Hillary Clinton win the election! /sarc

  40. Watcher says:

    Russian oil exports.

    I spent some time looking at the Chinese import configuration along the east coast from the perspective of targetting and concluded they put some thought into it. Quite spread out, though most in the north. A balance always will exist between convenience/distance/cost and military vulnerability.

    For Russia, the export ports are along the Baltic and Black Sea. Primorsk and Novorossiisk as poster children. Different military configuration there. Makes no sense to bomb your own fuel supply.

    And in this overall context, here is how you attack enemies. Pretty clever.

    http://www.reuters.com/article/2014/12/09/russia-oil-exports-idUSL6N0TS1XV20141209

    Refine the oil and flood Europe with high quality diesel. This smashes the European refineries. Delightful little bit of economic retaliation.

    • That would cost $300 to $400 billion USD. It would also require about 25 years. As they build such huge infrastructure there would be refining overcapacity, driving refining margins down.

      But le me ask you, why such obsession about war with Russia? Are you a neocon?

      • Ronald Walter says:

        For your edification:

        http://www.chaostan.com/praxeology.html

        “Investment analysis is not the study of charts, graphs and equations, it’s the study of people. The economy is not a machine, it’s an ecology; it’s not physics, it’s biology.

        Investments are not things, they are forms of human action. To study changes in interest rates, stocks, bonds, gold, oil and so on is to study the decisions of individuals, millions of them.

        Even something as simple as my bank CD is, at bottom, nothing more than a promise by certain individuals that they will fulfill their contractual obligations and give me back my money at the stated time.

        Will they? How do I know?

        I don’t. We are talking about human behavior, and it’s a mighty fuzzy subject. There are no guarantees. Humans change their minds.”

        Richard Maybury, Early Warning Report

        http://www.chaostan.com/praxeology.html

        • old farmer mac says:

          Hi Ronald,

          I always said back when I referred to you as our resident court jester that you are a highly intelligent individual. Your ” serious ” comments prove it over and over again.

          But I miss the high quality comic stuff you used to post often.Some of it was hilarious as well as being right on the money.

          • Mr. Helpful says:

            Hello old farmer mac.

            I have noticed over the years that you don’t know how to type quotation marks. In the example above, ” serious ” just looks weird. It is graphically distracting. I think you might have a habit of adding spaces after the first quotation mark and before the second one. (Or maybe that is just how Dvorak makes quotes? I can’t seem to reproduce the way your quotes look. If I add extra spaces, I get: ” serious “!). On my keyboard, if you don’t put the errant spaces in, it looks like this: “serious”. I think it would make you seem more “serious” and it would definitely save precious keystrokes, thus increasing typing speed. 🙂

            If you are doing the quotation thing on purpose, for some odd or colorful reason, you can just disregard this comment. 😉

            • old farmer mac says:

              Hi Helpful,

              The problem is that I taught myself to type using the Dvorak keyboard and can now type at over sixty words per minute but I developed some bad habits along the way and have some eyesight issues.

              The extra spaces are typos and the quote marks being turned the wrong way are just a bad habit.

              I was never able to master the qwerty keyboard at all but I took up typing in my old age without a teacher.It took me about six weeks an hour or two a day to master touch typing using Dvorak.

              If I were getting paid I would edit line by line.

              Anybody who does not already know how to touch type and wants to learn can do himself a major favor by using Dvorak.

              Unless I need to hit a number or symbol on the top row I usually type hundreds of words in a row without moving my palms on the palm rests at all.I use a very cheap ergonomic keyboard, a Microsoft 4000.. Carpal tunnel is a non issue using Dvorak.

              The best Dvorak typists in side by side competition out type the best qwerty typists by truly substantial margins. If there was ever a technology that persists simply because it is familiar to every body as opposed to a better one that few people know about it is the qwerty keyboard.

              Incidentally all the so called evidence that purports to show that qwerty is as good or better SIMPLY DOES NOT EXIST. I have searched far and wide for it. You can find tons of REFERENCES to it but not the evidence itself.

              I got into this argument to the extent of getting banned at another site for continually posting that the evidence does not exist while the membership there kept posting REFERENCES to it. I can post references to whales swallowing men whole and spitting them up alive days later.

              • coffeeguyzz says:

                OFM

                Good stuff, as always.
                I still catch flak when I point out that the much-hyped EIA report that downgraded the Monterey shale’s potential simply does not exist. Heated responses contain umpteen links that REFER to a soon- to – be – released report … but not the report itself.
                One has never been published.

          • Ronald Walter says:

            Don’t worry, I have one for comic relief, can’t right now, no time.

            It is also all true and all fiction at the same time.

            When I find time, I will post the story, it’s hilarious.

        • That would cost $300 to $400 billion USD. It would also require about 25 years. As they build such huge infrastructure there would be refining overcapacity, driving refining margins down.

    • Watcher says:

      Exports from Russia have been curbed by infrastructure constraints but its oil pipeline monopoly Transneft is now boosting diesel export capacity on the Sever (North) project, which feeds into the Baltic port of Primorsk, by using pipelines initially designated for crude oil.

      Transneft hopes to increase annual diesel exports from the port to 18 million tonnes by early 2017 from an expected 11 million tonnes in 2014.

      Effective tactics. The EU will probably be forced to subsidize those businesses rather than find themselves dependent on Russia for something else.

      Then there is this:

      http://oilprice.com/Energy/Crude-Oil/Saudis-Expand-Price-War-Downstream.html

      https://gulfbusiness.com/2015/07/record-saudi-oil-inventory-seen-tied-new-refinery-global-glut/

      When your raw material cost is almost zero, you can defeat competing refineries who have to pay shipping costs for that raw material. Your margins are going to be superior. You can undercut them in price and wipe them out.

      • AlexS says:

        Here I posted a chart showing Russian oil and refined products exports.
        http://peakoilbarrel.com/texas-rrc-oil-gas-production/comment-page-1/#comment-528522

        In particular, refined product exports increased from 62.6 mn tons in 2000 to 165.3 mn tons in 2014 (+164%).
        Using the 7.3 barrel/ton conversion rate: 1.25 mb/d in 2000 and 3.31 mb/d in 2014. In January-May 2015, Russian companies exported 77.1mn tons of refined products (3.73mb/d).
        Diesel exports rose from 35,4mn tons (0.71mb/d) in 2011 to 47.4mn tons (0.95mb/d) in 2014 and reached 23.6mn tons (1.14mb/d) in January-May 2015. (Source: Russian customs statistics)

        Output of “ultra-low-sulphur diesel (ULSD) neared 0.5mb/d in 2013, double the 2012 rate, according to consultancy Energy Aspects. Further growth in ULSD production is expected, with 1.1m barrels a day by 2016, just under two-thirds of Russian diesel production. While some is sold for domestic use to satisfy demand for Russia’s rising numbers of cars, most ULSD is earmarked for export.” (“Flood of Russian diesel inflicts pain on European refiners”. Financial Times, June 16, 2014. http://www.ft.com/cms/s/0/17424454-f173-11e3-9fb0-00144feabdc0.html)

        • AlexS says:

          The Saudis will primarily compete for the Asian markets, although a small part of their refined product exports can be directed to the Mediterranean markets

          • Watcher says:

            You might want to find the thing I did on Chinese port by Chinese port. The upcoming Japanese war will have those as obvious targets. They didn’t make it easy.

            When you’re europe no point bombing your own fuel supply by going after Primorsk, but Japan/China different kettle of fish.

      • The cost isn’t zero. Russian refineries suck big time.

        • AlexS says:

          Fernando,

          US$300bn is a cost of building 30-40 new medium-sized refineries ($7-10 billion) or 20-25 large refineries ($12-15 billion). Recent examples: $13.6bn 400,000-bpd SATORP Jubail heavy oil refinery in Saudi Arabia; planned 615,000 bpd Al-Zour refinery in Kuwait with an estimated cost of $14.5 billion; planned $6-billion 140,000-bpd Karbala refinery in Iraq; 200,000-bpd STAR refinery in Turkey – $5.5 billion, etc.

          Russia has around 30 large and medium-sized refineries, a number of small and mini-refineries, and doesn’t need new primary distillation capacity. The cost of upgrading existing refineries varies from several hundred million dollars to install secondary units to $1.5-2 billion for a complex modernization of a large refinery. Thus, in any case, the overall investments needed to upgrade Russian refineries do not exceed $100 billion. Russian vertically integrated oil companies have been increasing downstream capex since 2000, and in the past 4 years their investments in refinery upgrades have averaged around $10 billion p.a. Since 2000, refinery output in Russia has grown by over 45 percent, reaching 294 million tons in 2014, of which 165 million tons were exported. Several big refineries have already been largely modernized. This enabled to significantly increase yield of light products and improve their quality, which currently meets Euro 4 and Euro 5 standards.

          Until now, investments in refineries have not been slowed despite low oil prices and sanctions. According to the Energy Ministry, 19 new units are expected to be commissioned at Russian refineries in 2015 compared with 8 in 2014. However, in the medium-term, several refinery modernization projects will likely be postponed. Simple refineries which were not yet upgraded and small teapot refineries are having problems and operate at low capacity, although they are still nominally profitable.

          • Alex, as I mentioned, Russian refineries built during the soviet era really sucked. They ought to invest to fix the ones they haven’t upgraded. But that doesn’t give them the capacity to process 10 million BOPD. Plus they have to build a huge amount of product pipelines. And they really can’t count on producing 10 mmbopd for a long time.

            The Russian federation probably benefits more from capturing NGLs to a fuller extent and building a much more capable petrochemicals industry. Tell Putin to name me minister and I’ll fix it up. But I want a dacha close to Gorky 10. I’ll take Barvikha 1B.

  41. Futilitist says:

    This post is in the wrong place. It should appear at the end of my other comment to Nick G on the Maximum Power Principle.

    Apparently the Maximum Power Principle is considered to be spam on this website.

    “Neither capital nor labor nor technology — nor wishful thinking — can “create” energy (the first law of thermodynamics). Instead, available energy must be spent to transform existing “stocks” of energy (e.g., oil), or to divert an existing energy “flow” (e.g., wind) into more available energy. The engines that actually do the work in our society (so-called “heat engines”, such as diesel engines) waste 50 percent of the energy contained in their fuel (the second law).

    A “stock” of energy (e.g., oil) is not sustainable because stocks are ultimately depleted. Thus, sustainable energy systems must be based on “flows” such as solar radiation, oceanic tides, or geothermal heat.

    H.T. Odum’s solar “eMergy” (eMbodied energy) measures all of the energy (adjusted for quality) that went into the production of a product. Odum’s calculations show that the only forms of alternative energy that can survive the exhaustion of fossil fuel are burning biomass (wood, animal dung, or peat), hydroelectric, geothermal in volcanic areas, and some wind electrical generation. Nuclear power could be viable if one could overcome the shortage of fuel. No other alternatives (e.g., solar voltaic) produce a large enough net energy to be sustainable. In short, there is no way out.

    The fact that our society can not survive with alternative energy should come as no surprise, because only an idiot would believe that windmills and solar panels can run bulldozers, elevators, steel mills, glass factories, electric heat, air conditioning, aircraft, automobiles, etc., AND still have enough energy left over to support a corrupt political system, armies, etc.

    We like to believe we are in charge of our own destinies. But in truth, the MPP has condemned us to a fight to the death over dwindling resources.”
    ~Jay Hanson

    “If someone points out to you that your pet theory of the universe is in disagreement with Maxwell’s equations — then so much the worse for Maxwell’s equations. If it is found to be contradicted by observation — well, these experimentalists do bungle things sometimes. But if your theory is found to be against the second law of thermodynamics I can give you no hope; there is nothing for it but to collapse in deepest humiliation.”
    — Sir Arthur Eddington

    The shit is about to hit the fan, Nick. EV’s will not save us. Humans are not smarter than yeast.

    I would love to put the link up. But the system won’t let me. It is from the die-off dot com site, page 193

    • MarbleZeppelin says:

      Nope, Futil, EV’s and PV and wind power will not save us. We are all going to die, no matter what. But they will save lots of other species and help keep us from running amok and destroying the last of the last. Or at least give them a chance.
      Yes we will all die, so what? Big deal, it happens to all of us, it happens to all species.
      We are designed to move forward, to press the advantage, to explore and think of new things then do them. Anything else is not human. Go with it, the big picture is not ours to deal with, not yet anyway.

    • Don Wharton says:

      I’m sorry but humanity is very mush smarter than yeast. We will not die off as a species. Just as we should disrespect the denialist claims we should not respect the worst of the alarmist claims. EVs can help. Renewable energy is projected to be cheaper than any other source in a few decades. The German passive house standard is 90% more energy efficient than standard construction. It is a shining example of what can be done for little or no incremental investment. Let’s celebrate our ability to be smart and spread the vision of what that means.

      • Futilitist says:

        “I’m sorry but humanity is very mush smarter than yeast.”

        It is just a relative thing. Both yeast and humans are only as smart as they need to be able to collect and disperse enough available energy to maintain their niche against competition from other species. Being smarter just makes us better at generating entropy. On our finite planet, the problem of resource constraints doesn’t have a “solution”, no matter how smart we are. We humans are the victims of our own success.

        “We will not die off as a species.”

        Ever? You’re kidding, right? That is ridiculous.

        “Just as we should disrespect the denialist claims we should not respect the worst of the alarmist claims.”

        Unfortunately, humans have a very strong optimism bias.

        What objective criteria is to be used to differentiate alarmist claims from real possibilities? Isn’t alarmism really just in the eye of the beholder? Chicken Little was obviously wrong, but the boy who cried wolf turned out to be right. How can we ever tell in advance?

        Why do we have so many aphorisms about avoiding rocking the boat and making waves? Why do we kill the messenger? They say, “Don’t be the bearer of bad news” and “Go along to get along”. Don’t these expressions just serve to reinforce our optimism bias, leading to potentially dangerous Groupthink? Why do they call it “blind optimism”?

        “Let’s celebrate our ability to be smart and spread the vision of what that means.”

        That is what I am doing.

        • Nick G says:

          Unfortunately, humans have a very strong optimism bias.

          Actually, the research shows that humans have a very strong bias towards false alarms. When you’re prey (as humans were for most of their evolutionary history), it’s a survival trait.

          That’s why newspapers go by the saying: “If it bleeds, it leads.”. It’s why fear-mongering and red-baiting work so well for politicians.

          • Futilitist says:

            Hi Nick.

            “Actually, the research shows that humans have a very strong bias towards false alarms. When you’re prey, it’s a survival trait.”

            Last time I checked, I wasn’t prey. (And I typed that before you edited your post. It doesn’t matter in terms of the larger point. It was just a little joke to kick things off.)

            1. Your example explains why evolution favors animals that make snap decisions. It shows why our brains are not really evolved for rational thought.

            2. So what? I was talking about the presence of a specific cognitive bias. The proposed presence of another one doesn’t negate my point at all. You are just changing the subject.

            3. I was talking about a specific cognitive bias that leads to overly optimistic predictions about future outcomes. Wikipedia has a long list of cognitive biases, but a bias toward false alarms is not one of them.

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

            Optimism Bias —– The tendency to be over-optimistic, overestimating favorable and pleasing outcomes (see also wishful thinking, valence effect, positive outcome bias).

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

            The valence effect of prediction is the tendency for people to simply overestimate the likelihood of good things happening rather than bad things. Valence refers to the positive or negative emotional charge some entity possesses.

            This finding has been corroborated by dozens of studies. In one straightforward experiment, all other things being equal, participants assigned a higher probability to picking a card that had a smiling face on its reverse side than one which had a frowning face.

            In addition, some have reported a valence effect in attribution when we over predict the likelihood of positive events happening to ourselves relative to others. (See self-serving bias.)

            The outcome of valence effects may be called wishful thinking.

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

            Wishful thinking is the formation of beliefs and making decisions according to what might be pleasing to imagine instead of by appealing to evidence, rationality, or reality. It is a product of resolving conflicts between belief and desire. Studies have consistently shown that holding all else equal, subjects will predict positive outcomes to be more likely than negative outcomes (valence effect).

            the fantasy cycle … a pattern that recurs in personal lives, in politics, in history – and in storytelling. When we embark on a course of action which is unconsciously driven by wishful thinking, all may seem to go well for a time, in what may be called the “dream stage”. But because this make-believe can never be reconciled with reality, it leads to a “frustration stage” as things start to go wrong, prompting a more determined effort to keep the fantasy in being. As reality presses in, it leads to a “nightmare stage” as everything goes wrong, culminating in an “explosion into reality”, when the fantasy finally falls apart.”
            ~Christopher Booker

            And…

            4. If humans have such a strong false alarm bias, as you say, why don’t more people here share my outlook?

            • MarbleZeppelin says:

              Isn’t good and bad a personal evaluation? What is good for one could be bad for another. Possibly the human brain filters out information that would lead to seemingly bad conclusions since it is driven by an ego that does not like being in error.
              An example would be seeing only the positive aspects of someone we love and reducing or ignoring their negative aspects.
              In fact humans seem to change realistic assessments to fit a more positive outcome, hence the term cognitive dissonance.
              A person who paid to see a movie and seemed disgruntled with it immediately afterward, may have a positive outlook about it the next day.
              Basically, the human race is self-delusional, which can build a resilient mental structure but also may get one in trouble since it doesn’t fit reality.
              Humans may not be able to fully grasp reality. Some may think they do, which in itself is a lack of grasp of reality.
              So we do what we can with limited information, poor assessment of the situation and fill in the gaps with our own fantasy. Worked so far.
              Humans are also subject to an extreme lack of information. We do not know most of what goes on. For a given endeavor or action, even rational decisions are based upon limited experience, social memes and internal desires.

    • Nick G says:

      Odum’s calculations show that…No other alternatives (e.g., solar voltaic) produce a large enough net energy to be sustainable.

      That’s not realistic. Have you ever actually looked at his calculations?? How old are they?

      Odum’s calculations show that the only forms of alternative energy that can survive the exhaustion of fossil fuel are burning biomass (wood, animal dung, or peat), hydroelectric, geothermal in volcanic areas, and some wind electrical generation. Nuclear power could be viable if one could overcome the shortage of fuel.

      So, he agrees that wind and nuclear can work. So, why are you saying that Odum thinks we’re doomed?

      • Futilitist says:

        “That’s not realistic.”

        Really. Why not?

        “Have you ever actually looked at his calculations?? How old are they?”

        I learned most of this stuff in BIO 104 in 1980.

        “So, he agrees that wind and nuclear can work. So, why are you saying that Odum thinks we’re doomed?”

        1. I didn’t say that Odem thought we were doomed. Jay Hanson said that Odem’s calculations show we are doomed.

        2. In a multiphasic systemic collapse, it will be very difficult for humanity to maintain maximum power.

        3. What do you mean, “he agrees that wind and nuclear can work.”?
        Can work to maintain industrial civilization? Can work to prevent die-off? I think you need to read that part again. Jay Hanson said “some wind electrical generation” and “Nuclear power could be viable if one could overcome the shortage of fuel” and “No other alternatives (e.g., solar voltaic) produce a large enough net energy to be sustainable”. Your interpretation, “he agrees that wind and nuclear can work” shows a clear optimism bias.

        • Nick G says:

          Really. Why not?

          Because PV has a good net energy return.

          I learned most of this stuff in BIO 104 in 1980.

          So, this stuff is 35 years old? Seriously?? in 1980 PV cost more than $30 per peak Watt, now it costs around $.50. Odum is seriously out of date.

          Jay Hanson said that Odem’s calculations show we are doomed.

          And Jay Hanson isn’t a reliable authority. He demonstrates very little practical knowledge of wind and solar energy, or related technical questions.

  42. Doug Leighton says:

    Something new to deny.

    WATCH WILDFIRE SMOKE FROM ALASKA AND CANADA ENVELOP THE ARCTIC

    http://www.smithsonianmag.com/smart-news/see-wildfire-smoke-alaska-and-canada-circle-arctic-180956003/?no-ist

    “….For the Arctic, that’s not good, “For the present event, all of these physical processes would likely influence the radiation balance over the Arctic region, which is experiencing climate change at a faster rate than any other region of the globe.”

  43. Robert Wilson says:

    An essay by nonagenerian Walter Youngquist. To the best of my knowledge the 2nd edition of GeoDestinies was never formally published. http://www.npg.org/library/forum-series/a-geomoment-of-affluence-between-two-austere-eras.html

  44. Andy H. says:

    I think it is time now to get bullish on oil stocks. DMLP, COSWF and SU.
    Long reserves and good enough balance sheets to weather the storm. DMLP debt free.
    Demand is rising nicely, Supply will fall. Dont think China demand will drop too much even though they are in bust mode. Seems like we saw capitulation last week. Chesapeake convert prefs in the 50’s. Good buy with puts as hedge I think.
    Contrarian thoughts?

    • Longtimber says:

      If you have the conviction, Simpler and safer to use Futures rather than to bet on specific horses?

    • Watcher says:

      What is different this moment than 3-4 mos ago?

      • Longtimber says:

        The Donald will go get all our Oil. It belongs to US.

      • AndyH says:

        I think we are on the verge of bigger production declines in the US. Rail shipments a good tell.
        Globally–we are underinvesting now to meet the decline rate . Look at the deepwater and fracking cancellations!
        Demand is picking up.
        Market has given up on oil stocks. Older canadian oil sands co’s have low 40’s breakeven and long reserves. 50-75 yrs. Option w/o expiration.

    • Heinrich Leopold says:

      Andy H.

      In my view it is better to wait at least another year for buying oil stocks. US oil production has to come down by at least 2 mill b/d. And there is the FED who wants to rock the boat and raise interest rates which would be another shock for oil and oil has good chances to go to the thirties by year end. There is much more supply coming to the markets over the next two years e.g. the Kashgan project. However I am very bullish on natgas.

      • How much oil is Kashagan supposed to produce?

        • AlexS says:

          “Output is expected to resume in the second half of 2016… . In the first few months, output of 90,000 bpd is expected, before rising to 90,000 bpd and then 180,000 bpd, a level at which it will be kept for six months… . By the end of 2017 Kashagan will achieve a maximum production level of the first phase. This is 370,000 bpd”
          http://www.rigzone.com/news/oil_gas/a/139023/Kazakhstans_Kashagan_Aiming_for_370000_Bpd_by_End2017

          No big addition in 2015-16

        • Heinrich Leopold says:

          Fernando,

          According to the Total website the first phase will yield 300 000 b/d. However it is not specified how much further phases will yield. After the nightmare of the first startup, the company is clearly cautious. However the expectations are much higher. In the end the project is a 48 bnUSD project and must yield higher returns.

          • Yeah well. In 1992 or 1993 (i cant remember the date) I talked a senior Vice President into not participating in the Caspian 3D seismic shoot consortium. I showed him the math whereby the project was bound to yield negative returns, and he believed me. Over the years I’ve been criticized or praised about my work, so I follow its hassles from long distance. As far as I can tell Kashagan is a blood bath for participants. They compounded the initial degree of difficulty with terrible conceptual and project design. It has to rank as the biggest blunder the industry ever made.

            • AlexS says:

              It is the most costly and the most long-delayed upstream project in history

              • Toolpush says:

                Yep,

                The only thing that keeps it going, is the sunk cost. If they just spend a few billion more, and the oil will be flowing.
                I think they have been saying that for about 10 years now. They will be correct one day!

            • Heinrch Leopold says:

              Fernando,
              Assuming that 1 b/d installed capacity costs USD 40 k, 48bn already spent means the production should yield around 1 mill b/d some day. I have still a contact there and they hope they can achieve it. However there is also Iran and Iraq as well as Kurdistan…., which will bring additional capacity to the markets over the next two years. However, the main reason for a low oil price will be a high dollar. At least two mill b/d have to come out from the US market until oil can go higher. It will be a long struggle for shale.

  45. MarbleZeppelin says:

    Hazard Advisory.
    If you are trekking around the Northwest Territories be advised things are melting fast and this lake is about to go.

    http://www.nwtgeoscience.ca/news/hazard-advisory-valley-west-husky-lake-gwichin-settlement-area

  46. Greenbub says:

    So if Iran produces more, so does Iraq, Saudis keep spigot wide open, Russia produces the same, US produces the same (due to efficiency improvements?)… when will there be any less oil?

    • Jeffrey J. Brown says:

      . . . when will there be any less oil?

      Today, remaining recoverable reserves fell, and they will fall tomorrow, and the day after that. At relatively high production rates, the rate of depletion of remaining recoverable reserves tends to accelerate with time. And that’s without getting into CNE (Cumulative Net Exports) depletion.

      • Greenbub says:

        “remaining recoverable reserves fell”

        Wasn’t this true since day one of the oil business?

    • Watcher says:

      So if Iran produces more, so does Iraq, Saudis keep spigot wide open, Russia produces the same, US produces the same (due to efficiency improvements?)… when will there be any less oil?

      I’m sure you meant govt subsidy when you typed efficiency improvements, but it’s a powerful overall question, and not in the context of “less oil”, but what you really meant . . . less oil flow.

      The answer would be “soon”. We can postulate a monetary measurement of effort/physics and presume that particular measurement to overwhelm the power of central bankers (though there is no proof of that yet), but from a physics perspective one does have to presume that EROEI is going to become the dominant measurement and trump printed money.

      The field pressures will fall. Yes, producing govts (American mostly, the other major producers export and thus have lots of slack to cut back) will intervene perhaps with martial law to maintain flow (and thus food to cities), but one would think physics will overwhelm them too.

      I would think the most probable event sequence would not reach the point of outright physics imbalance. The reality of insufficient domestic flow for feeding cities will appear long before the physics fail and then someone else’s oil will simply have to be diverted to Houston. There is no choice in that.

      But we’re getting a significant lesson right now. If you don’t care about economics, if economics has been rendered inconsequential by govt decree, you can get Bakken oil out to feed US cities if you print the money req’d to make it flow.

      THIS is the lesson of these months. If you HAVE to HAVE it, and you DO . . . HAVE TO HAVE IT . . . you can get it if you indemnify all lenders. When you do, the normalcy narrative will be destroyed. The reaction of other oil producers to this destruction is unpredictable.

      Simply that.

      • Futilitist says:

        Hey Watcher.

        I understood your post and I think I basically agree with you. We are about to experience some very startling events, very soon.

        “The answer would be “soon”. We can postulate a monetary measurement of effort/physics and presume that particular measurement to overwhelm the power of central bankers (though there is no proof of that yet), but from a physics perspective one does have to presume that EROEI is going to become the dominant measurement and trump printed money.

        The field pressures will fall. Yes, producing govts (American mostly, the other major producers export and thus have lots of slack to cut back) will intervene perhaps with martial law to maintain flow (and thus food to cities), but one would think physics will overwhelm them too.”

        Yes.

        “I would think the most probable event sequence would not reach the point of outright physics imbalance.”

        No. Ultimately, the event sequence must eventually reach the point of outright physics imbalance. Once the collapse process begins, it will accelerate rapidly.

      • Greenbub says:

        The definition of “soon”?

        • Jimmy says:

          For less total global oil production (flow) AKA peak oil: 2016.
          For available net exports (the oil flow available for importers to purchase); it has been flat/slightly down since 2005 so less oil in that sense is in our history not our future.
          When the excrement will make physical contact with the electric powered oscillating air current distribution device depends where you are in the world. Yemen, Syria, Tunisia, Egypt etc…, it already did. Greece and the rest of Europe, shortly. USA, I give it until 2018 until everybody goes Zombie Apocalypse. By 2023 it’s back to the dark ages; unregulated mass migration and state failure. Last one out please turn off the lights.

        • Kam says:

          2015-2016. Can’t you see it? It’s already happening. The price of oil is much below what is needed to sustain production level. We’re already past peak coal, because opex in coal extraction is much bigger than capex. In oil, capex is bigger than opex, so we have to wait 2-4 years more, than with coal.

    • Next week there will be less oil production capacity. After that, there will be even less….don’t forget the existing fields are losing about 3 million BOPD every year. That’s 60 thousand barrels per day per week.

      • Greenbub says:

        Nobody outside this blog got the memo.

      • Greenbub, I’m not sure who got the message. I do know your comment was somewhat simple minded, in the sense that it ignored the barrels being produced in countries with a relentless decline rate, or countries which were doing ok until the price dipped. I use Ecuador as “gauge”: this month’s production is averaging 538 kbopd, that’s down 16 kbopd (in three months) from the 554 April 2015 peak. And that happens to be over 10 % per year decline rate.

  47. Futilitist says:

    Here is another version of the Futilitist Oil Price Forecast Model. In this version, I move in closer to show how the 50 week moving average oil price was disrupted as the Etp model curve intersected the Etp maximum price curve. Strange angular “coincidences” in the oil price movement appear quite distinctly in the crossover zone. These angular price moves seem to alternate jaggedly between paralleling one curve or the other. I think this noisy price pattern is a signal that corresponds to the oil price undergoing the transition from freely rising exponentially, to being permanently constrained by the physics limit of the maximum oil price curve. (Or, it could be just another weird coincidence, as hypothesized by Dennis Coyne).

    • Futilitist says:

      So, the Etp model is derived from the second law of thermodynamics. Check.
      And the Etp model is 96.5% accurate from 1960-2013. Check.
      And the Etp model still seems to be tracking the oil price accurately since 2013. Check.
      And now I have presented possible empirical evidence that seems to confirm the model. Check.

      (Crickets chirping)

      If true, the Etp model is like the holy grail of depletion forecasting. And no one here has been able to put together a truly cogent argument to rebut it. We had just begun a rousing discussion about it on the last page and it suddenly went dead silent for no apparent reason. This graph has been up for 2 days without a single comment.

      I am a real person and I am extremely curious to know all that I can about peak oil. That is why I came to a peak oil website to discuss the most up to date knowledge on the subject. But this entire site seems to have a strong collective bias against knowing anything definitive. Why?

      • Greenbub says:

        I am not smart enough to understand your graph. If I were smart enough, I would rudely dismiss it.

  48. Jeffrey J. Brown says:

    Long NYT article on China and their global ambitions, with loans and strings attached:

    http://www.nytimes.com/2015/07/26/business/international/chinas-global-ambitions-with-loans-and-strings-attached.html

  49. Futilitist says:

    Okay, one more.

    In this graph we can see the 100 week moving average oil price in relation to the Etp model curves. When seen at this resolution, smoothing out the noise of the seemingly random oil price curve, it becomes painfully obvious that the price of oil is, in the end, determined by the laws of physics. Although the concept is counterintuitive to some, this graph clearly illustrates how such a thing is not only possible, but must, in fact, be true.

    So much for that whole free will thing. And that whole human techno-triumphalism thing.

    This is a graph of the end of the oil age, and the end of world economic growth, and the onset of collapse.

    But it might as well be a graph of yeast in a vat. (With a 100 hour moving average grape juice price!)

    • Futilitist says:

      This doesn’t seem the least bit interesting to anyone?

      Oh well, I guess it is true.

      You can lead the yeast to grape juice, but you cannot make them think! 😉

      • Berkeley says:

        I’m interested, in fact, I’m saving up money to buy an F-350 in 2020 when gasoline is almost free!

      • Caelan MacIntyre says:

        It’s a cool graph, Futilitist.
        What does it mean at the end of the red line a little after 2020? $0? Outright economic collapse?

        • Futilitist says:

          Hey Caelan.

          Oil will reach what is called the “zero state” around 2021. That means the EROEI of oil will be 1:1. Further use of oil by civilization will subtract rather than add to GDP.

          The red curve is the physics limit on the price of oil, i.e. the maximum price. The oil price will generally not exceed that limit from here on. That is the best case scenario. Market forces, war, etc. could raise the price over the line, but only for a short time, followed by a hellish reversion to the mean. Bear in mind that the oil price could end up being considerably lower than the red curve, depending on the economy (we are already in the early stages of what Dennis Meadows refers to as a multiphasic collapse).

          It is not a collapse chart. Just an oil price chart. But I think the economy will collapse long before 2021.

          PS—-

          Did you notice I made the 100 week moving average oil price purple, like grape juice? I thought that was a nice touch.

          We really are the same as yeast in a vat. Are humans smarter than yeast? Sure, but it doesn’t matter. We may be more intelligent, but no amount of intelligence can overcome the laws of physics. I think my graph is kind of profound.

          • Caelan MacIntyre says:

            The grape line is fine, although on my screen, it looks a little more like Kool Aid than, say, a rich concord grape color. Even a raw apple juice line would be fine, too. You could add yeast to either and get a nice cider. I’d like to do that soon.

            See also lacto-fermentation for preserving veggies. (I am in the middle of watching it.)

            “This is the scariest chart I’ve ever seen. It shows civilization is likely to crash within the next 20 years. I thought oil depletion curve would be symmetric… but this chart reveals it’s more likely to be a cliff… when you factor in Energy Returned on Energy Invested (EROEI).” ~ Energyskeptic

            “As oil becomes tight and expensive so will the cost of primary production rise, including coal and natural gas. Production per hectare will decline due to reduced inputs and more marginal land will not be farmed reducing the hectares farmed.

            Energy production limit of economic viability is about an EROEI of 7:1. In other words an energy return of 7 times the energy invested is needed to be economically viable but only just. Subsistence farming has an EROEI of 2:1

            When you crunch the numbers it is actually not very hard to project the actual time of events on a macro level…

            Unless another serious economic down turn reduces oil consumption there will be global oil shortages in the second half of this decade, which will cause oil prices to rise and rising oil prices will cause another serious economic downturn, screwed either way.

            Enjoy the ride while it lasts but do start cycling cause that will be the only option too soon. ~ Dan Hannan

            “Charles A. S. Hall used to guess we needed an EROEI of 5:1 to keep civilization going, but he now thinks 12:1 or 13:1 to maintain our way of life. I guess we’re about to find out… Dennis Meadows, Robert Hirsch, and many others see an oil crunch coming 2015 to 2022.” ~ energyskeptic

            What are you doing for Collapse by the way? Have you bought all your gifts already? I’m so excited! (rubs hands quickly together)

            “The first time I read the article a couple months ago about a concentrating solar factory (skipping the electrical transmission part of solar), I thought it was laughable. Then I drove past the gigantic cement plant on the way out of Tucson, and it sunk in that most industrial processes mostly require heat, not electricity and it clicked – storing electricity is both hard and expensive. Storing heat is doable, but still not ideal. Storing concrete is dirt simple…
            Plenty of people work only when the work is available now (contractors, etc.). If you want to talk about economic substitution for oil, I think one of the necessary substitutions is going to be in the temporal aspect of industrial processes. When it’s cloudy, most of the employees at the cement plant get unpaid vacation, when it’s sunny, overtime pay. Working 24/7 without regard to the environment is a very new development in most human endeavours. Food production still largely follows the seasons…” ~ desertrat/Steve

          • Huckleberry Finn says:

            This is another line of doomer porn.
            EROEI of 7:1?
            Are you guys idiots?
            That would suggest 13 million barrels of oil a day used in extraction of oil.
            Seriously?
            You also need to consider the energy source used. If the energy ultimately used is electricity, with in the future, the bulk derived from solar even 2:1 does not matter.

            • Caelan MacIntyre says:

              The site also mentions Jeffrey Brown’s ELM, too– quite the porn collection…

              Get the kids out of the room for a sec…

              “In my interview, I also asked Jeffrey to share his thoughts on the situation globally. Here’s his response.

              ‘Global production peaked in 2005, and we’re now into the third year of decline. And the critical point, to keep in mind, is our model and case histories show that the decline rate accelerates, year by year. Using the Lower 48 in the United States as an example, you can see the annual declines going 2%, 3%, 5%, 7%, 10%, 15%, 20, on and on. So it’s an accelerating decline rate.” ~ energyskeptic

              Anyway, what exactly do you mean/are you talking about? Even better, let’s say we’re in the part-time juvenile ‘prison’ called ‘high school’– and/or ‘idiots’, if you must– and you’re a show-and-tell item here to set us straight.

  50. old farmer mac says:

    http://www.washingtonexaminer.com/energy-storage-finds-a-new-icy-solution/article/2568523

    The storage of electrical energy to be used for cooling in the form of ice is now well established commercial technology. I don’t see any real reason why this basic concept cannot also be extended to the storage of electrical energy by building heat sinks from stone or concrete – the same concrete used in the floors for instance of most commercial buildings and many houses these days.

    Putting electricity into storage in the form of warm to hot concrete would work like a charm and cost “peanuts” in new construction.And there are tens of millions of older buildings that have ample unutilized space that could be used to construct a heat sink that would last without maintenance for the life of the building.

    The ”renewables storage” issue is not really that big a deal at all. Barring Old Man Business As Usual having a heart attack sooner, battery systems such as Musk’s Power Wall will sell for half what they do today ten years down the road.

    As Brian Rose points out

    xxxx

    “Is 2015 just like 2005? Are we legitimately much closer in the development of EVs and renewables now than then?

    We clearly are, but are we even yet in a phase where we can truly say we’ve spent a single year trying to transition? Not really.

    We’re getting close, and a strong global agreement could push us into a true transition.

    The most fascinating and mind consuming topic is really “how close are we to starting a thorough transition?” Given a stable global economy, and the progress in relative costs of batteries, EVs, PV, and wind, we’re close to a turning point.

    But the second the economy goes sour due to an oil crisis will any of it have mattered? A genuine peak event would halt even the strongest transition in its tracks.”

    We DO have a remaining window of opportunity and we CAN with some substantial amount of luck and a great deal of determination and hard work turn the corner on fossil fuels – at least for a substantial portion of humanity for a fairly long time.

    Oil and gas are not going to run out overnight. We will still have a quite a bit of both for at least half a century to come and we ALREADY know how to use it FAR more efficiently than we do now.

    Pray for Pearl Harbor wakeup events to the ” God of Your Choice”.

    • The best low temperature storage medium is water. But that’s only useful for heating and cooling. Putting electricity to use heating rocks isn’t very practical, because the heat capacity of rocks is much lower than water heat capacity. Note I’m stating ELECTRICITY storage.

      The lack of a cost effective energy storage system is what kills renewables. The only sound option is pumped water storage. I don’t see much use in all these gadgets and concepts as long as pumped storage can be put in place.

    • HVACman says:

      OFM – here is a link to a really creative innovation in the concrete block business that can take full advantage of the CMU’s mass for thermal purposes – internally-insulated block. It combines internal block insulation with the block core grout to put the bulk of the assembly’s thermal mass inside the insulation, which gives it optimal effectiveness for moderating internal temperature swings.

      This is a real home run in my book. Thermal mass combined with and externally-insulated wall can cut peak HVAC loads dramatically and load-shift cooling loads to the much-cooler night-time hours. Since this looks to be a very inexpensive concept to execute and with no architectural impact or compromises (compared to most CMU insulation techniques) this could be a game changer and swing small-medium-sized building construction back around from light framed construction to more heavy mass-type.

      http://www.concreteproductsgroup.com/index.php/products/spec-thermal/item/hi-r-h

  51. ELM is starting to hit hard in Latin America

    This is a very good article, originally published in the Havana Times. It probably deserves a post of its own and if I had time I would do it. But I am going to be out of pocket until about Monday, August 3rd. Dennis will have a post, likely on Tuesday, July 28. I will be checking in every night but won’t have a lot of time to post.

    On Latin America and the Coming Energy Crisis

     photo ElM Latin America_zpsoyqkxscx.jpg

    This is a dangerous and plainly unsustainable addiction. If we continue to “metabolize” this fuel at the pace we’ve set over recent years, our wells will be unable to quench our growing thirst in less than five years. Oil abstinence has an ugly face. If you don’t believe me, ask Greece, Syria and Yemen…

    Despite having been well endowed by nature, the region’s energy panorama does not look too promising. If developments don’t change course (only a miracle could bring this about), economic and political crises will undo the precarious harmony the continent achieved in the past decade.

    We need to look at the problem in the face and stop fantasizing about magical solutions. Neither the struggle against corruption or drug trafficking, nor renewable resources, nor fracking, nor progressive governments, will be able to avoid the unavoidable.

    But it’s not all bad news. The high-voltage reggaeton music and consumerist culture that comes with it will meet the same end as gasoline, and, tomorrow or the day after, the survivors will once again be able to build a world that “dances and sings” at a more human pace.

    • The continent didn’t achieve “precarious harmony”. The writer is living in harmony with the upper atmosphere. Needs to get his feet on the ground.

      • Caelan MacIntyre says:

        The last of the Amazonian tribes might begin to experience more company; a reverse exodus.

        “…the survivors will once again be able to build a world that ‘dances and sings’ at a more human pace.” ~ Ron Patterson, quoting Havana Times article

        Ahh, someone who gets it, or some of it at least. How refreshing amid all this techno-babble.

  52. old farmer mac says:

    http://www.washingtonexaminer.com/energy-storage-finds-a-new-icy-solution/article/2568523

    The storage of electrical energy to be used for cooling in the form of ice is now well established commercial technology. This basic concept can also be extended to the storage of electrical energy by building heat sinks from stone or concrete – the same concrete used in the floors for instance of most commercial buildings and many houses these days.

    Putting electricity into storage in the form of cold OR hot concrete would work like a charm and cost “peanuts” in new construction.And there are tens of millions of older buildings that have ample unutilized space that could be used to construct a heat or sink that would last without maintenance for the life of the building.The same space could be used for an ice storage system but ice systems will require maintanence.

    The ”renewables storage” issue is not really that big a deal at all. Barring Old Man Business As Usual having a heart attack sooner, battery systems such as Musk’s Power Wall will sell for half what they do today ten years down the road. Between just about eliminating the need for fossil fuels to heat and cool new construction and the use of batteries there is PLENTY of room for adding HUGE amounts of renewable power to the grid.

    I have not heard of any engineer claiming that the grid cannot be UPGRADED to handle almost any amount of renewable power assuming somebody will pay for it. When the depletion and climate fecal matter starts hitting the fan in an OBVIOUS fashion we will pay for the necessary upgrades.

    A new car twenty years from today will get two or three times todays typical miles per gallon, EVEN AS the high price of driving forces people by the tens of millions off the roads and onto mass transit and bike paths.

    As Brian Rose points out

    xxxx

    “Is 2015 just like 2005? Are we legitimately much closer in the development of EVs and renewables now than then?

    We clearly are, but are we even yet in a phase where we can truly say we’ve spent a single year trying to transition? Not really.

    We’re getting close, and a strong global agreement could push us into a true transition.

    The most fascinating and mind consuming topic is really “how close are we to starting a thorough transition?” Given a stable global economy, and the progress in relative costs of batteries, EVs, PV, and wind, we’re close to a turning point.

    But the second the economy goes sour due to an oil crisis will any of it have mattered? A genuine peak event would halt even the strongest transition in its tracks.”

    We DO have a remaining window of opportunity and we CAN with some substantial amount of luck and a great deal of determination and hard work turn the corner on fossil fuels – at least for a substantial portion of humanity for a fairly long time.

    Oil and gas are not going to run out overnight. We will still have a quite a bit of both for at least half a century to come and we ALREADY know how to use it FAR more efficiently than we do now.

    Pray for Pearl Harbor wakeup events to the ” God(s) of Your Choice”.

    And don’t get caught in Egypt.

  53. Watcher says:

    ZH:

    http://www.zerohedge.com/news/2015-07-26/energy-companies-face-come-jesus-point-bankruptcies-loom#comments

    Re: lenders —
    A: I don’t know if you’ll get the same slack in October as in April, absent a turnaround in the market price for oil. It’s going to be that ‘come-to-Jesus’ point in time where it’s about how much longer can they let it play.

    . . .

    They know what pressure they’re facing from a regulatory perspective. At the same time, if they push too far in that direction, toward complying with the regulatory side and getting out, then they’re going to hurt themselves in terms of what their own recovery is going to be. All of the banks have these loans under very close scrutiny right now. They’d all get out tomorrow if they could. That’s the sense they’re giving off to the marketplace, because the numbers are just not supporting what they need to have from a regulatory perspective.

    Regulatory perspective aka bailout fodder. Gov’t loosening of the lending regulations and you can print some oil. The alternative is let Russia win.

  54. ‘You can put a 25-storey building in there’: RT peeks inside mysterious Siberian craters (VIDEO)

    The origin of giant sinkhole craters in Siberia has prompted dozens of wild theories, from meteorites to UFOs. An RT documentary has traveled to the region to try and lift the veil behind the mystery.
    Looking inside the mystery holes in the Russian Yamal peninsula is an experience of a lifetime, according to RT documentary correspondent Vitaly Buzuev. The largest of the craters, discovered a year ago, is 60 meters deep.

  55. MarbleZeppelin says:

    Improvements in the Permian? Or just a mirage?

    http://www.oaoa.com/business/article_1ebb9eb0-334e-11e5-982c-5b1ebfae1eb8.html

    Of course that is how the market works. Competition between various producers and their own ability to push production has lowered prices. Same models are seen at the local merchant level. That is why a Burger-King will be near a MacDonald’s or a Rite-Aid drugstore will suddenly appear across the street from the local pharmacy. Walmart’s took up the selling of food and are often near other large supermarkets. Flood the market and undercut, prices fall, see who ends up the winner.
    In the case of oil, the consumer is the winner for right now. Future production will be reduced and the EV/hybrid market will take a big hit. Low pollution energy will not appear as advantageous . Why go renewable when prices of fossil fuel are low?
    Well, the smarter ones know that answer.

    By the way, A&P food just entered bankruptcy and is in the process of closing stores and looking for buyers.
    http://www.usatoday.com/story/money/2015/07/20/p-grocery-chain-files-bankruptcy-again/30404517/

  56. SAWDUST says:

    I’d be curious to know how much of the money that’s been pouring out of Europe and Japan over last 2-3 years due to monetary policy ended up in HY bonds of the US oil variety, searching for yield. Borrowed, levered money at that.

    It’s going to get ugly when the tide turns and USD is no longer appreciating against the Euro and the Yen.

  57. Captain Realist says:

    Article about the risk of nuclear fission power.

    http://allthingsnuclear.org/new-renewed-and-subsequent-nuclear-reactor-risks/

    I interpret that is the hypothetical risk level of 1 accident in 100,000 reactor-years could be realized, that perhaps some 500-odd modern nuclear fission reactors could power the current electrical demand of needs of the United states with a risk of a significant accident in say every 200 years or so. Increasing the electrical production two-fold (to account for replacing most FF-derived uses) would call for ~ 1,000 reactors and a rough accident rate of one every 100 years. This of course assumes no further drown in per-capita electricity demand (not counting the hypothetical increase to replace FFs, I already accounted for that) and no further increase in population. To be fair and balanced, I did not speculate on further increases in efficiency, nor in increases in solar and wind electricty production, nor in demand destruction caused by higher electricity process (DD meaning reduction in use not counting efficiency gains…doing less with less).

    I will shoot from the lip and speculate that electricity prices, in real dollars, baselined to right now, July 25, 2015, would have to increase by at least 20-fold by 2050 in order to maintain some semblance of what we consider modern society.

    Of course this will drive a lot of changes…our variable resources and sinks, increasing population, and the delcine in EROIE will result in less energy per capita.

    It is inevitable, and this is the very best outcome imaginable…all other scenarios are considerably worse.

    To be clear, I don’t mean that building 1000 nukes is inevitable, I mean the prediction about less energy for everyone is inevitable…assuming population demographics do not change…with or without more nukes, energy prices will increase by the factor I imagined…one could imagine a massive build-out of solar and wind with massive storage buffer and transmission infrastructure…that will cost every bit and much (bit won’t suffer the types of accidents that nukes will suffer, even with greatly decreased accident rates.)

    Too bad the Georgia Guidestones weren’t built when the U.S. was founded and then their message scrupulously followed…

    Happy Sunday!

    • Boomer II says:

      Of course this will drive a lot of changes…our variable resources and sinks, increasing population, and the delcine in EROIE will result in less energy per capita.

      That’s why I think the political conspiracy talk about global warming data is misguided. Whatever the conspiracy theory proponents fear is going to happen, is going to happen. Therefore, it’s going to be more productive to find ways to prepare for and deal with the changes than to continue criticizing those who talk about the upcoming changes.

    • old farmer mac says:

      “I will shoot from the lip and speculate that electricity prices, in real dollars, baselined to right now, July 25, 2015, would have to increase by at least 20-fold by 2050 in order to maintain some semblance of what we consider modern society.”

      My own guess is that while electricity prices will necessarily have to rise SUBSTANTIALLY twenty fold is WAY on the high side.

      Unless Old Man Business As Usual has a heart attack sooner there will be an awesome and to many people unbelievable amount of progress in storing and generating electricity economically.Furthermore there will be equally astonishing improvements in the efficiency of use of electricity.

      Pessimists tend to forget the power of the Mighty Mighty Market and the (sort of )Invincible Invisible Hand when time allows. Real costs are going to be coming down across the board in all the technologies needed to go renewable , ranging from the manufacture and installation of residential scale solar systems to batteries to long distance HVDC transmission lines.

      The machinery used in manufacturing plants and the appliances used in homes are going to use half or less as much electricity in thirty years as they use these days. The manufacturing plant and the home will be redesigned to make this possible- if necessary.

      When I first worked on a car it took half a day to take a fender off and put it back on on a typical American car. The last time I took one off a modern car some years ago it took half an hour.

      I will also hazard a guess that throwaway tools, furniture, appliances, automobiles , etc will be largely done away with by one means or another unless the manufacturer can prove his throwaway design is actually more energy efficient in the end.

      Seventy five years ago nobody in this backwoods believed the government would ever be able to outlaw an outhouse but I know of only one or two still in use within many many miles. These are the last remaining ones are grandfathered in and neither is regularly used anymore except for a week or two a year when the houses are occupied as hunting cabins. Older mechanics thirty or forty years ago didn’t believe the government would be able to outlaw carburetors and make it stick.

      You can’t buy single pane windows anymore – unless you have them made to order. Double pane is the minimum available at the big box building supply stores. I expect triple pane to be the rule within ten more years.

      • MarbleZeppelin says:

        I look deeply into my crystal ball. (satire)
        In 2050 a black hole will pass by the solar system, severely disturbing the earth’s orbit. The eccentricity and modes will make the Milankovich cycle look like a perfect circle. Finally the fringe will be right, massive temperature and irradiance changes due to orbital cycles crash civilization and kill most of the life on earth as it swings rapidly back and forth between snowball earth and hot liquid planet.
        Internal solar processes will have been disturbed, destabilizing the EM output and finally making the fringe believers in the sun cycles power to disrupt climate correct. But with the other large changes and no one around to care, it doesn’t matter anymore. How disappointing.

        Yes it all goes to hell in 2050, but it only gets worse as Mars, thrown of it’s orbit, will collide with the earth in 2250 wiping out all life in a giant red blur. With civilization gone and unable to rebuild, there is no escape. Life is trapped but it will finally get to Mars.
        Somewhere out in space is our heritage, radio waves from the 1950’s carrying Marvin Rainwater’s voice singing “So you think you’ve got troubles”.
        https://www.youtube.com/watch?v=TAVvacwJZjU
        and “I Don’t Care About Tomorrow”
        https://www.youtube.com/watch?v=DdzItpfxESM

        • Caelan MacIntyre says:

          And in the future (maybe quite soon), music will start sounding more and more acoustic and home-composed…

          Hey, anyone want to square-dance with me and Marvin?

  58. Jeffrey J. Brown says:

    WSJ: Sudden Drop in Crude-Oil Prices Roils U.S. Energy Firms’ Rebound
    More job cuts, asset sales are expected; layoffs extend to engineers and scientists

    http://www.wsj.com/articles/sudden-drop-in-crude-oil-prices-roils-u-s-energy-firms-rebound-1437903002
    (For access, you can do a Google Search for title)

  59. old farmer mac says:

    http://www.heraldscotland.com/business/13463812.EU_set_to_pledge_billions_in_support_of__top_priority__North_Sea_supergrid/

    This is a war time footing scaled project sure enough but it is moving about like a glacier.

    Who has an opinion as to whether it will get built? And IF it gets built,when ?

  60. Longtimber says:

    Citi’s Junk bond heat map? Secondary Oil & Gas Producers?
    “here is a heat map showing the YTD change in junk bond prices (relative box size indicates total outstanding debt amount) when seen in terms of either the 31 subsectors.”
    http://www.zerohedge.com/news/2015-07-25/junk-bond-heatmap-has-not-been-red-long-time

  61. SAWDUST says:

    Just from a purely technical standpoint. Oil futures are in a descending wedge. Looks like a secondary low is being made here and a possible new weekly trendline. Next couple of days are critical and will tell the tell.

    If it breaks out of the or above the falling trendline and we get test and hold of what looks to be a new weekly trendline. It would be time to go long oil futures. Even if it falls out the bottom here somewhat it’s still going to be in a descending wedge. Bottom trendline of wedge would need to be redrawn but it’s still a Bullish reversal pattern.

    USD/CAD also put in a bearish shooting star Friday. While this pair doesn’t track oil 100% more often than not a high in this pair signals a low in oil futures or a low in this pair signals a high in oil futures. And of USD/CAD starts trending lower from here you can be certain oil is in an up trend.

    • shallow sand says:

      Short term movements are tough for me to gauge.

      Long term a signficant up trend is a long way off without an OPEC cut or major war/political situation in the Middle East.

      US producer bankruptcies will take 2-4 years to clear. At sub $50 there will be a few more this year, but most will occur 2016-2017.

      That US producers, already debt laden, are not hunkering down, but are still at 600+ active oil rigs, still shows they have no clue. I guess most of them didn’t intend on repaying debt anyway. Internet chat is that CLR will burn through $2.5 billion before the year is out.

      Might as well knock price below $40, get this over with quicker.

      • SAWDUST says:

        Fundamentally your right about all that. I think the rebound that the charts are indicating will be a currency move (dollar weakness) instead of a fundamental shift in the outlook. And it may be short lived or it may turn into a trend. Time will tell.

        • shallow sand says:

          The borrowing base cuts will likely not occur, unless the overage can be off loaded, but new money will also be absent, unless to prevent a default. Banks absolutely will not want to foreclose and take possession.

          Any debt that can’t be taken off the bank’s shoulders through a public debt issuance or equity raise will be put on interest only status. The banks, having first liens, will seek to offload what cannot be spun publicly to private equity. Private equity will either collect interest, or, will take the assets. Keep in mind the wells can still turn a profit at $30-40 per barrel, or the majority of them can, for a couple or three years. By then, price will recover at least some.

          The problem, of course, is that private equity will get burned also, as they will find out they paid way too much per barrel for what will soon be stripper well, or slightly more productive, leases long term. They should know they need $125+ oil prices plus much higher gas prices, to make a go of it. The world economy has trouble at that level, so those prices will last about as long as they did in 2008.

          When oil was at these levels in 2004, oil leases were selling for less than half what they are now. I think about anyone who doesn’t pay 2004 prices will get whacked, unless they buy high quality stuff and have some staying power.

          KKR has already tried their hand at shale, got burned.

          Maybe there will not be many takers for shale debt. Who knows.

          This is going to be a bad one. We have stock pile to get through this and we are somewhat worried. Once price took this second dip, our outlook has changed on duration. However, we have adjusted to making no money. Getting ready to start losing some on an operating basis, will try to limit.

          I may be wrong, just the feeling I have. Hope I am. If I’m not, the indebted shale guys might want to get ready to “reap what they have sown.”.

          Think about how many shale oil wells have been completed since Thanksgiving and how many more will be, over 90% of which will be economic losers. This drop wasn’t taken seriously. I think reality is FINALLY setting in as MSM is starting to beat the drum on shale oil wells.

  62. Homo Fosilfuelus says:

    Life is precious…

    An illustrated list of every animal which has gone extinct in the last 100 years…I imagine this list is not all-inclusive by any stretch of the imagination.

    http://www.pixable.com/article/heres-every-single-animal-that-became-extinct-in-the-last-100-years-photos-67674?utm_medium=partner&utm_source=facebook&utm_campaign=pixsesocial&ts_pid=2&ts_pid=2

  63. Ronald Walter says:

    Maybe it is a bad analaogy, even though it may be, it just might apply, not too farfetched.

    If there is one industry that has some remote resemblance to the oil industry, its current maelstrom, its turbulent chaotic, fluid state, a state of confusion, the demand, it is alcohol during Prohibition. The illegal trade of wines, spirits, ales and beers, sale and distribution of sent Seagram’s to set up shop in Weyburn, Saskatchewan. The demand wouldn’t go away, people went to a doctor to be prescribed alcohol.

    Al Capone was particularly adept at making money flow and realizing a profit since he was the very first US businessman to reach 100 million dollars in income in one year’s time.

    He also opened soup lines and helped old ladies along with a proficiency in the skills and use of a baseball bat, probably a not a wise choice of action by Al. He also had delivery vans delivering twenty thousand gallons of beer each day to thirsty patrons in and around Chicago who were always demanding more. He knew how to handle the business of sales and distribution of highly desirable goods. He wasn’t about to give up any market share, not going to happen, not in the cards.

    If I may draw the analogy, looks plausible.

    There is an interesting tale in the story of Al Capone and his brothers. Al was in a scuffle with a rival gang member on the streets of New York, the fight produced a knife and Scarface’s name was born. His brother, Vincenzo, hunted down the offender and threw him through a plate glass window. Vincenzo left town on a freight and found his way to Homer, Nebraska where he stayed to live and work. Vincenzo assumed an alias by the name of Richard J.Hart, became a federal agent busting moonshiners and Native Americans distilling corn into Everclear, the distilled spirit of choice at 190 proof. Al Capone’s brother, Vincenzo Capone, became an enforcer of Prohibition laws. Gained the well-deserved name of ‘Two-Gun’ Hart. It is all true.

    Find out more of what happened after Vincenzo left the streets of New York City:

    http://www.historynet.com/two-gun-hart-the-prohibition-cowboy.htm

    About the only difference is oil will run out long before alcohol. I can live without oil, no beer will cause riots and mayhem. In heaven there is no beer. That’s why we drink it here.

    Anything else just won’t be good enough.

    Edit

  64. shallow sand says:

    AlexS. I assume oil here or lower puts the hurt on Russia, regardless of currency matters?

  65. old farmer mac says:

    http://www.ibtimes.com/clinton-announces-energy-plan-wants-install-half-billion-solar-panels-end-first-term-2025133

    I would LIKE to trust her but I have better sense going all the way back to Cattlegate.

    • Fred Magyar says:

      Who knows, maybe she’s figured out that there aren’t too many other options from the old oil based paradigm that make as much economic sense as PV. Not that I’d trust any politician one way or the other. My experience has been that politicians hardly ever lead, they usually follow breaking trends and perhaps she has seen the writing on the wall…

      • Boomer II says:

        I haven’t yet read the article, but it makes sense.

        Money talks in politics and it has been inevitable to that Silicon Valley billionaires would start pushing in the directions that they favor. Since I like any efforts to move away from fossil fuels, I am going to support Silicon Valley money more than Koch money.

    • She needs to be less sold out to the Israel lobby to get my support. Right now I see her as the democrats’ version of Bush. Well connected by family and willing to push buttons to get to the top, at which point she’ll make an enormous mess.

      • old farmer mac says:

        Hi Fred, Fernando

        I agree with both of you.

        The repuglithans are apt to run somebody even deeper in the pocket of big business and just as unethical as well- but my money says the republican candidate will have been far more circumspect over the decades when it comes to shady deals, flat out lies and taking BIG bribes for speeches.

        Unfortunately we are sort of stuck accepting the lesser of two evils most elections these days and I doubt the repugs will run a candidate even willing to pay lip service to the energy crisis.

        I will probably vote a third party this time or write in somebody.

        The current day republican party does not give a damn about truly conservative values. If it did, we would be looking after the environment better. NOTHING is more conservative in principle than looking after our collective home – the only one we will ever have.

        • Jimmy says:

          The Democrat-Republican paradigm has always been a stage set for idiots to argue upon about how they should best be enslaved. Even more so now that they both work for the same corporate masters on Wall Street. The current American political system gives you no options if you wish to vote against the interests of Goldman Sachs. The Dems took a turn to the right under Bill Clinton and in response the Repubs moved even further to the right, effectively rendering them insane.

  66. Venezuela update: Sold Jamaican debt it held at half of face value for $1.5 billion. Purchaser was Jamaica, which issued bonds to buy back its own debt to Venezuela. This debt originates from an oil sales program Venezuela uses to buy votes from about 22 Western Hemisphere nations. The loans made by Venezuela are used to block votes supporting the use of the interamerican charter on human rights clauses to sanction Venezuela.

    The black market bolivar hit 687 to the dollar. ATM machines are running short in Caracas. There’s a toothpaste shortage. Typical communist mess.

  67. Ronald Walter says:

    90 000 000 x 365.25 = 32,872,500,000 barrels of oil for consumption, burning gasoline and diesel fuel for 7.3 billion people to share and get along for one full year. Doesnt seem to be enough, sounds crazy. Humans go hog wild over the stuff, it’s nuts.

    Synthetic motor oil for your engine, use synthetic oil, it saves money and oil.

    3.7 trillion barrels URR, 1.3 gone, 2.4 remaining, you can see that there is about 65 to 70 years to be weaned from oil consumption simply because there won’t be much left to go around.

    If there isn’t any available, the cost will be zero. When there is some available, the price will be negotiable, the price will be what anyone will be willing to pay. One cow for 20 barrels of oil.

    Four fat hogs for 25 barrels of oil. One old gray mare isn’t going to be worth much, glue.

    One wheelbarrow full of printed currency to fuel your cookstove, you can keep the wheelbarrow, you’ll need it.

    You can buy one cookstove for 10 barrels of oil.

    The old German woman on the farm had a cow and a calf on her farm. WWII was over, the Russians were in Germany. The Russian colonel paid a visit to her farm, the old German grandmother begged the colonel to just take the cow, not the calf too.

    “I don’t give a shit,” said the colonel. A cruel decision, all is fair in love and war.

    Sometimes, price isn’t necessary.

    “Stop qoting your laws, we have swords.” – General Pompey

  68. old farmer mac says:

    The whole world need not go to hell in a hand basket although it very well might.

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

    Wind and solar power are getting cheaper by the month and there must be PLENTY of places in the world that can and will be condemned and converted to pumped storage when the shit hits the fan.

    My attorney is a good buddy and we often discuss politics. He has two young daughters, both professional women educated at snooty private universities. They are as green as the new spring grass when it comes to EVERYBODY ELSE living in small houses or apartments and taking mass transit BUT when they experience their first gasoline crisis or blackout they will morph into republicans in a flash in his estimation. I agree.

    They are NOT going to give up their accustomed lifestyles for any reason so long as there is a chance of maintaining it.

    • Nick G says:

      They are NOT going to give up their accustomed lifestyles for any reason so long as there is a chance of maintaining it.

      Why should they? If oil prices zoom up, why shouldn’t they just buy an EV, or an EREV like a Volt??

      If natural gas gets short for home heating, why not just buy one or more nice mini-split air-based heat pumps? Put in insulation? These things are cheap and effective.

      Think it through: what’s the scenario that would require lifestyle sacrifice, and why wouldn’t cheap and effective substitutes work just fine?

      • old farmer mac says:

        The scenario that would require a changing lifestyle is easily envisioned – the continuation of business as usual while depending on the market to bring about a robust move to renewables in its own sweet time.

        UNLESS we FORCE the growth of renewables we are at high risk of waking up one day within the easily foreseeable future without adequate supplies of gas and oil and maybe even coal. Very serious shortages can develop in a matter of days in the event of war and maybe in as little as a year or two due to depletion.

        IF shortages come to pass quickly it will be impossible at that time to quickly change our ways. These two young women will vote their personal comfort and come out damned fast for renewed coal fired and nuclear generation – neither of which is in the best long term interest of anybody except maybe the owners of the coal mines and nuclear industries.

        It won’t be just their personal choice of automobile or address at stake. Their incomes and professions depend on the business as usual economy. If the economy turns sharply downward due to an energy crisis they are at risk of losing their jobs.

        • Nick G says:

          the continuation of business as usual while depending on the market

          That’s not really the scenario I’m thinking of. I’m thinking of a scenario like this: several years of under investment in oil production slams into rising consumption, which forces oil prices to $200. Or…war in the ME closes the Straits of Hormuz, and prices go to $300.

          What do individuals do? Well, why in the world would they move into a tiny apartment? Why not just buy a Volt?

          What would a society do? Why not mandate temporary car-pooling, and an emergency ramp up of EV’s?

          And, what would Republicans offer that was better? Invading somebody or other, in the hope of scaring up some oil? Sadly, I suppose someone might believe them.

          But, the point is: sacrifices aren’t necessary. We have better and cheaper alternatives, right now.

          If w have an emergency then we need to go WWII style, using far less gas, **temporarily**. That’s not that hard, given that the average car only carries 1.2 people. If highways were mandatory HOV for *all* lanes, that would cut fuel consumption dramatically.

          • old farmer mac says:

            Nick you are driving the GOOD SHIP IDEALISM onto the dreaded ROCKS of REALITY. Not many people are in a position to just go out and buy a VOLT.

            The market can and does work so long as things don’t change too fast. Resource depletion is apt to jump our collective ass like a leopard coming out of the grass- there will not be a leisurely window of opportunity to change our ways.

            • Nick G says:

              Mac,

              Have you looked at the prices people are paying? The average new car is above $31k these days. The Volt is only a little above that.

              When you add in the much lower operating costs you get an overall cost which is well below the average new car, even without the tax credit.

              Don’t forget, you can lease the car, so your lower operating costs more than pay for the slightly higher lease cost.

              And, of course, the Leaf is insanely cheap. It’s all you need to get to work.

              Make sense?

              • Caelan MacIntyre says:

                All roads named Nick G seem to lead to the large-scale centralized crony-capitalist plutarchy, so yes, makes sense.
                Just hop in a Dolt or Leaf-Blower and take one of those roads that lead, full throttle, to the concrete wall of nowhere.

                Details aside, it is this very dystem that is, arguably, causing collapse, whether it pays your vested-interest-bills or not, so going to jobs to feed this monster via taxation and slavery, etc., is precisely what is going to render this planet uninhabitable or very uncomfortable.
                Or can’t you see that? Or don’t you care? You must let go, Nick, and look long and hard at ethics and what really matter. Beyond your office cubicle. The industry-and-government just don’t cut that mustard.
                Never mind being stranded in a Priapus at the hands of unpredictable fast fractal collapses.
                We are better off turning our priorities to true priorities– the fundamentals– as opposed to mechanized chariots on ribbons of asphalt to our appointments with dehumanization, death, disease and destruction.
                Want to talk leafs? Then let’s talk the actual green growing ones. Remember those?

                Hugs,
                ~ Your Cae <3

  69. MarbleZeppelin says:

    The first ever malaria vaccine was just approved. With up to 500 million cases per year and 1 million deaths (mostly children), the new vaccine will stop about 30 percent of those cases and deaths if completely rolled out. The add-on effect is that with 30 percent less cases, there are a lot less vectors and that should reduce the number of cases even further.

    The March 2015 issue of Scientific American has a Supplemental on the Microbiome. The huge number of bacteria living within us seem to hold the key to health and prevention or cure of several major chronic diseases as well as some cancers.
    Also in that issue is an essay called Forging Doubt. It discusses the remarkably consistent and disturbingly effective planting of doubt in the mind of the public by industries that produce harmful products. The writer calls it psuedoskepticism and includes the fossil fuel industries. Directly named as a front group is ClimateDepot.com, partly financed by Chevron and Exxon. Manufactured doubt it the business of these front groups.

    • Fred Magyar says:

      The first ever malaria vaccine was just approved. With up to 500 million cases per year and 1 million deaths (mostly children), the new vaccine will stop about 30 percent of those cases and deaths if completely rolled out. The add-on effect is that with 30 percent less cases, there are a lot less vectors and that should reduce the number of cases even further.

      So this great advance in medical science will have the unintended consequence of adding to the already unsustainable human population growth…

      • MarbleZeppelin says:

        Fred, I think the intention is to save lives that are already in existence. I do not pretend to know what will happen to those children saved, 15 or 20 years from now. Whether they have no children, two children or less or more is unknown. So the best answer I can give, not knowing future circumstances is a maybe to your population increase.

        As far as your attitude and logic, I say you and a few billion others are about as hypocritical as they can be and about as sociopathically selfish. If you, your loved ones, your kids or relatives did not have any vaccines and did not have children then fine, I respect your stance against helping people since they might cause some future problems. In reality the average fat-assed American or European has had a plethora of vaccines and enjoyed huge medical help through the years. They cause more problems in the world than twenty Africans and a dozen or more Indians or Asians. So maybe we should just look at who is causing most of the problems of resource use and pollution in the world before we spout off about letting children die for some possible future effect.
        If I am truly wrong about this, well I will apologize, later. If you can convince me.
        But we can’t have it both ways. Save ourselves through medicine then look down from our high thrones and say those” lowly poor masses” should suffer and die so we enjoy our high end life-styles. So we are either going to be the new Nazis of the world or figure out other ways to slow and reduce population growth, if you think it is actually up to us. I think most people have decided that question already.

        • Doug Leighton says:

          You’re out of line to interpret Fred’s comment as a stance against helping people since they might cause some future problems.

          • MarbleZeppelin says:

            Really? Look at the …, that left interpretation open to the reader.

        • Fred Magyar says:

          Marble, you don’t know me and you have completely misinterpreted my comment. Right now I’m down in Brazil and know first hand how terrible diseases such as malaria can be. I can walk down the street where I am and see the shiny steel and glass towers of the global multinationals across the street from the extreme poverty of the shanty towns. I most certainly am not against the poor or the downtrodden and I find ways to help whenever I can. How I do that is none of your damn business.

          That having been said may I suggest you read the transcript or watch the video of the late Dr. Al Bartlett’s lecture on Arithmetic, Population and Energy.
          If you do you may notice he makes a similar comment to mine. I doubt anyone would ever have accused him of things you just said about me.

          Though I understand your reaction and don’t hold it against you!

          http://old.globalpublicmedia.com/transcripts/645

          …Now, if this current modest 1.3% per year could continue, the world population would grow to a density of one person per square meter on the dry land surface of the earth in just 780 years, and the mass of people would equal the mass of the earth in just 2400 years. Well, we can smile at those, we know they couldn’t happen. This one make for a cute cartoon; the caption says, “Excuse me sir, but I am prepared to make you a rather attractive offer for your square.”

          There’s a very profound lesson in that cartoon. The lesson is that zero population growth is going to happen. Now, we can debate whether we like zero population growth or don’t like it, it’s going to happen. Whether we debate it or not, whether we like it or not, it’s absolutely certain. People could never live at that density on the dry land surface of the earth. Therefore, today’s high birth rates will drop; today’s low death rates will rise till they have exactly the same numerical value. That will certainly be in a time short compared to 780 years. So maybe you’re wondering then, what options are available if we wanted to address the problem.

          In the left hand column, I’ve listed some of those things that we should encourage if we want to raise the rate of growth of population and in so doing, make the problem worse. Just look at the list. Everything in the list is as sacred as motherhood. There’s immigration, medicine, public health, sanitation. These are all devoted to the humane goals of lowering the death rate and that’s very important to me, if it’s my death they’re lowering. But then I’ve got to realise that anything that just lowers the death rate makes the population problem worse.

          There’s peace, law and order; scientific agriculture has lowered the death rate due to famine—that just makes the population problem worse. It’s widely reported that the 55 mph speed limit saved thousands of lives—that just makes the population problem worse. Clean air makes it worse.

          Now, in this column are some of the things we should encourage if we want to lower the rate of growth of population and in so doing, help solve the population problem. Well, there’s abstention, contraception, abortion, small families, stop immigration, disease, war, murder, famine, accidents. Now, smoking clearly raises the death rate; well, that helps solve the problem.

          Remember our conclusion from the cartoon of one person per square meter; we concluded that zero population growth is going to happen. Let’s state that conclusion in other terms and say it’s obvious nature is going to choose from the right hand list and we don’t have to do anything—except be prepared to live with whatever nature chooses from that right hand list. Or we can exercise the one option that’s open to us, and that option is to choose first from the right hand list. We gotta find something here we can go out and campaign for. Anyone here for promoting disease? (audience laughter)

          We now have the capability of incredible war; would you like more murder, more famine, more accidents? Well, here we can see the human dilemma—everything we regard as good makes the population problem worse, everything we regard as bad helps solve the problem. There is a dilemma if ever there was one.

          The one remaining question is education: does it go in the left hand column or the right hand column? I’d have to say thus far in this country it’s been in the left hand column—it’s done very little to reduce ignorance of the problem.

          • Nick G says:

            I doubt anyone would ever have accused him of things you just said about me.

            Sadly, Bartlett has been quoted with some very xenophobic ideas.

            And….he’s wrong. Just wrong. Fertility rates have fallen below the replacement rate in most of the world. Population is not the impossible problem he describes.

            And his comment about education? Also competely wrong. Women have reduced their fertility mostly due to education, and having choices besides being baby factories.

            The odd thing – I think you know that, as I seem to remember you agreeing with this kind of discussion about Brazilian women. So, I think you’re not really thinking through what Bartlett is saying.

            • Fred Magyar says:

              And….he’s wrong. Just wrong. Fertility rates have fallen below the replacement rate in most of the world. Population is not the impossible problem he describes.

              Unfortunately global population is still growing. Global births out number global deaths and the net difference is about 50,ooo,000 people added to the planet every year.

              • MarbleZeppelin says:

                Yes and that will continue reducing with time. Even your car doesn’t stop instantly, let alone a whole world of people.

                • MarbleZeppelin says:

                  BTW, Ron White’s wife had probably the best method to pleasurably but markedly reduce the birth rate. Might even cause extinction on it’s own.

            • Caelan MacIntyre says:

              “Women have reduced their fertility mostly due to education, and having choices besides being baby factories.” Nick G

              Why, there’s a logical fallacy or two right there, folks, along with what seems to be some kind of disrespect for women who choose to have and raise their own children to boot.

              Kudos, Nick G…

              Yes, now women can ‘choose’ to wage-slave for the crony-capitalist plutarchy (CCP) in their ‘factories’ and assorted mind-numbing spiritual dead-zones; ‘choose’ to acquire a questionable ‘education’ (often tied to the CCP and their funny-monied/vested interests– those very ‘factories’ again– and often ending up with no field-of-study-related work and up to their follicles in student debt (debt-bondage) — thus back at the ‘factories’); ‘choose’ to ‘vote’ (for what Presipimp will be governpimping– and helping the factory-owners pimp– them some more next); ‘choose’ to outsource the raising of any ‘corporatocracy-tatooed’ children they might dare to have to more ‘factories’; ‘choose’ to slave along with their partners outside of their homes to pay the money-grabs (AKA, ‘bills’) because the increasing cost of living has now made it less affordable for only one to work/stay at home (Family? Community? What’s that? Oh wait, you mean, like, a Walmart-Monsanto Family of Big-Box-Parking-Lot-Tract Suburbarrhea© Companies Community Team-player Family™?); and so on.

              Ain’t ‘choice’ grand?

              • old farmer mac says:

                DAMMIT Caelan,

                Did your Mom raise you exclusively on vinegar and green persimmons? LOL

                Things are not as bad as you paint them. If it weren’t for the opportunity to live as wage slaves the women of the world would be living as farm laborers or worse . I have had a personal taste of that and assure you that modern wage slavery is generally easier and pays better.

                And even if things are as bad as you think, it doesn’t matter a hoot in the cosmic scheme.

                Our little rock ball of a planet circles one little inconsequential star in the isolated backwaters of just one more galaxy out of so many galaxies there probably is not even any way to get an accurate estimate of how many galaxies exist.

          • MarbleZeppelin says:

            Fred, you might be a great guy. I don’t know, so don’t take it too personally. I do go over the top on this because I have seen the worst side of mankind exhibited in the control or elimination of population. If it makes you feel better I will remove you from the two billion or so who are the real problem here, if you think it’s true.
            However you did imply that preventing malarial victims and deaths was a bad thing, since apparently their deaths reduce population. I say just the opposite, but we will get to that. So here goes.

            First of all, thanks for the link to the whole lecture series of Dr. Al Bartlett. I had seen his “not smarter than yeast lecture a while ago” but never watched the whole thing. He is a really scary man.
            Never the less, nothing he said has convinced me that taking a medieval, sociopathic stance allowing or encouraging war, disease, starvation etc. is the way to reduce population. Neither ethically, morally or actually. All those things run rampant in the past and have not worked. People only demean themselves or show a negative nature when they think that way.

            I am not impressed by simplistic mathematics which do not relate to reality. Scientists love taking simple models and extrapolating them. Too bad they generally end so far from reality that scientists then are ignored. The actual models would be very complex and involve both negative and positive factors as well as the realization that many of those factors are not independent and the models can never be complete, realistic or even worse, show correct action.

            Fact: The population is not growing exponentially.
            Fact: Energy use is not growing exponentially
            Fact: Coal use in the US is not growing at all.
            Fact: There is no natural growth of population in many developed countries, quite the opposite in a number of cases.
            Fact: Population growth will reach zero, it already has in places (Here Dr. B and I agree)
            Fact: Energy is not a problem that can’t be solved.
            Fact: BAU is eroding and cannot be used to extrapolate into the future
            Fact: Education, especially of women, reduces the birth rate
            Fact: Raising the standard of living generally decreases the birth rate
            Fact: The countries with the ability, the money and the power are often doing pitifully little to correct most of the major problems.

            I have a lot more but not into writing a book right now.

            I postulate to you and others, making a population healthier, especially saving young children, increasing their standard of living and education will reduce the birth rate.
            I also say that a species that is stressed by high death rates among the young always increases it’s birth rate to the limits of possibility, even if it is not the best solution.

            There is not only no need to murder people (deliberately withholding medical advances or other advances is a form of murder) to get the world population to reduce. There is a need for people to rise up to the problems we face, take responsibility for their actions and look to better ways to live, not worse ones. To step back and say if I do some good in the world it’s bad is just lazy, dangerous and irresponsible thinking. Instead think about the problem. I whole heartedly agree with Dr. B’s attitude that we all should think for ourselves. There are always other solutions.

            To end this, I just want to say we really need look closely at ourselves. We are part of nature. Maybe a unique part of nature, maybe the most wonderful thing that has happened ever or the most horrible thing. If we keep choosing our wonderful side, eventually we become wonderful and wonderful results happen. If we step back and say, well we’re screwed. so let’s take some bad options to try and get less screwed; I think it will only make things worse and will only make us horrible. If you aim at a destination you might just get there, or die trying. From my point of view it is better to die trying than to succumb to our lesser nature.

            • old farmer mac says:

              Everybody has a piece of the truth. Everybody is generally eventually proven wrong at least in part about some things because as Yogi sez, predicting is hard – ‘ specially the future.

              I accepted the pronunciations of people such as Bartlett and the guy Erlich who wrote The Population Bomb as definitive back in the dark ages as an undergraduate- even as most of the professors across campus on the ag quad ( Tech has four buildings in the old agriculture college known as the ag quad ) poo poohed their doomerish announcements.

              (Those were heady days in ag colleges- the atmosphere was comparable to that prevailing in the space program. The Green Revolution was hitting the upper faster gears , hammer down and an open road ahead. We were going to conquer nature and no doubt about it. )

              Even then I realized that both doomer and cornucopian arguments depended on the assumptions made and that not all the assumptions would NECESSARILY hold.

              The number that have failed to hold -so far- over the last few decades- is truly astonishing- but this does not mean that in the end they WILL continue to fail to hold.

              Bartlett is probably right about the eventual fate of most of the people in the world. He may be right about all of us being the victims of hard violent crash that will mean the end of life as we know it. BUT there is a significant chance that some of us will pull thru- for a century or maybe for a thousand years – or three thousand.

              NICK is right about the premises and assumptions underpinning Bartlett and the Maximum Power Principle not holding under some circumstances.

              Over the years I have found it necessary to change my opinions and beliefs about many things , some cultural, some physically and scientifically oriented.

              I understood Fred’s comment in the sense he intended it and I understand why MZ reacted to it as he did.

              Hard dry black letters on a screen or page lack the nuance of face to face communication. They would have understood each other IMMEDIATLEY with a little body language thrown in and agreed instantly that they both have valid points to make.

            • Fred Magyar says:

              Fred, you might be a great guy. I don’t know, so don’t take it too personally.

              Don’t worry I didn’t, as a matter of fact I specifically said I understood your reaction and wasn’t holding it against you.

              However you did imply that preventing malarial victims and deaths was a bad thing, since apparently their deaths reduce population.

              No, I never said that was a bad thing in and of itself. I understand that for the children and their parents it is obviously a good thing. I’m human and a dad myself. I know what that feels like.

              I did say it had the unintended consequence of adding people to the current population who otherwise wouldn’t have survived. Now that is where this becomes a dilemma.

              I personally do think that the planet is already full, humanity is in deep ecological overshoot and that the vast majority of children born today are going to live very difficult lives in a world filled with strife.

              Come down to Brazil and I’ll take you for a tour of what these children are in for and Brazil is a paradise compared to places like say Bangladesh.

              • MarbleZeppelin says:

                That’s OK Fred, I know about starvation and deprivation. Seen plenty of horrors in my life.
                Yes Brazil has it’s malaria problems. The US used to have malaria but I draining swamps and treating the waters and other areas has stopped it. Almost all cases of malaria in the US are brought in from other countries.
                We have our own unchecked plagues in the US but that is another story.

                I don’t see the future as you do. At one time I thought it might end that way but further thought and research led me further along the path.

                I wouldn’t mind going to Brazil, had a Brazilian friend for years until he finally moved back. I just don’t see the point anymore in taking long trips unless there is a very good reason to do so. Tourism is not my bag, exploration and high adventure was but those days are gone. I will pass on the malaria, already had a similar disease.

                Are they using mepron to treat the malaria or is it too expensive?

                • Fred Magyar says:

                  Tourism is not my bag,

                  LOL! I’m definitely not in Brazil as a tourist!

                  BTW Brazil has some really excellent programs for developing farmaceutical solutions that bypass the the big global drug manufactures. They were one of the first countries in the world to give the big drug manufactures the middle finger salute and develop cheap alternatives to expensive AIDS medication.

                  With regards malaria a few years back they came out with this cocktail which has been quite effective.

                  http://usatoday30.usatoday.com/news/health/2008-04-17-2511732830_x.htm
                  RIO DE JANEIRO, Brazil — Brazil announced a new malaria treatment Thursday that scientists say offers a potentially cheap and effective way to attack a disease that largely afflicts the world’s poor.
                  The treatment, developed by the Brazilian government in conjunction with the Drugs for Neglected Diseases Initiative, combines existing malaria drugs artesunate and mefloquine into a single, fixed-dose tablet and reduces the cost of treatment.

                  Health care for all Brazilians is written into the constitution and is considered a human right.
                  Foe example anyone can walk into any drug store and get free medication for conditions such as hypertension or diabetes. Locally manufactured generic drugs are available to substitute for almost any name brand products and the store farmacists tend to be very savvy and knowledgeable about the pertinent biochemistry of interactions with other medications, side effects, dosages, etc… etc…

                  I have only the highest respect for Brazilian medical professionals and their biomedical scientists!

  70. SAWDUST says:

    Foundation for a strong dollar is starting to come unwound a bit this morning. Durable Goods missed for 5th straight month. Core CapEx was also down over 6% YoY

    Euro and Yen are up fairly big on the dollar which is a big deal at this juncture. Both look to be making a trend change.

    This turn should support oil prices but not necessarily the HY bonds backing oil companies.

    We could get higher prices from here and oil companies could still struggle if money decides to leave HY bonds on a currency move.

  71. Ronald Walter says:

    A year ago Comstock Resources was at $25.68 per share. Today, it is at 1.39 per share.

    A drop of 94 percent.

    Did a nice swandive.

    http://www.marketwatch.com/investing/stock/crk

    • shallow sand says:

      EXCO reported earnings this morning.

      Jeffrey J. Brown should be interested to note that their natural gas production fell 7% from the second quarter of 2014. They have production in Marcellus, Haynesville and Bossier shales.

      Eagle Ford shale production, however, was up 3% from the second quarter, 2014.

      On an operating basis, the company lost 5 cents a share. However, they took an impairment, which resulted in a GAAP loss of $1.67 per share, or right about at three times the present price per share of their equity, which is 56 cents per share.

      I cannot find their 10Q online yet. If I see anything further of interest, I will post. However, I think the above pretty much speaks for itself without further clarification.

  72. old farmer mac says:

    Those of us who insist that renewables are never going to be cheap enough to shoulder the business as usual load carried by fossil fuels will have to eat their words someday -IF Old Man Business As Usual manages to stumble along for another decade or two.

    http://www.renewableenergyworld.com/articles/2015/07/how-solar-energy-zones-and-easy-permitting-helped-create-3-cent-solar.html

    Now this particular project is located where the sun shines hot and bright almost every day and it no doubt is receiving some substantial subsidies. But even without any subsidies it would probably have come in under five cents.

    We have thousands of square miles of land suitable for building large solar farms and within another decade or so the price of HVDC transmission equipment will have come down substantially.

    • That particular project is a lie or distorted presentation of reality. I would start looking carefully at the websites you use as references, or try to study a bit more about the actual costs from a reliable source.

      Let me show you First Solar’s own website, look at the claim they make:

      http://www.firstsolar.com/en/solutions/utility-scale-generation

      The chart distorts natural gas costs, but I think it’s safe to assume the cost range they claim is either reasonable or optimistic. This tells me the sales price is rigged. Remember this deal is for first solar to sell electricity to a Berkshire Hathaway owned company. First Solar is getting the 30 % investment tax credit, but there’s another honey pot in this deal. I don’t have the time to identify the honey pot, but I’m assuming this involves a later commitment to have Berkshire Hathaway to buy the project at above market value, provide cheap financing, or both. There’s also another issue involved: what the utility is paying isn’t the price the consumer will see if the regulations allow pricing in the honey pots. Therefore the real deal becomes the overall cost of energy to the retail consumer.

      Let me show the utility’s charge schedule (note the peak hours charges per kWh)

      https://www.nvenergy.com/brochures_arch/rate_schedules/np_res_rate.pdf

      Lately I’ve noticed this solar power issue has taken on all the aspects of a religious crusade, including the irrational aspects, the lies, the distortions, and and the proliferation of statements by politicians who feel they have to get aboard the bandwagon.

      • Fred Magyar says:

        That particular project is a lie.

        Why should we believe you? Citation needed!

        • A. Yeats says:

          Mr. Magyar – you are flogging a dead horse. You make many intelligent and well informed comments and I’d like to continue to read them rather than an inane argument with Mr. Leanme. I stopped paying attention to his self aggrandizing drivel several weeks ago and would recommend it as a healthy life style choice for all here. He has classic narcissus complex, and you will never convince him of anything that differs from his preset opinion. I’m surprised he manages to drag himself away from the mirror for long enough to write as much tripe as he seems to manage.

      • old farmer mac says:

        MAYBE somebody can come up with the actual amount of money spent to build this solar farm. Then we can easily compute the cost of each kilowatt hour it produces annually.

        I agree with Fernando that lots of money may be siphoned off into the pockets of politically savvy and well connected middle men and this is paid out of the consumers pocket.

        But eventually the lower cost of any new technology enables it to displace older more expensive technologies. Sooner or later the utilities themselves are going to find it cheaper to build their own wind and solar farms that it is to buy coal and gas for their conventional thermal generation.Things that come out of holes in the ground DO DEPLETE.

        The point of subsidizing new tech is to get it to market on the grand scale sooner.

        Maybe I am irrational but I believe natural gas is going to get to be VERY expensive within a decade and that coal is going to go up substantially as well over the next couple of decades.

      • Don Wharton says:

        Fernando,

        I am afraid that you are the one who is once again grossly distorting reality to support your religious crusade. Yes we know that there are “honeypots” via government support. These are not “lies.” They are rational actions to prevent a future disaster for humanity. Moreover, just look at the price curves for solar and wind. The implication is that with these supports we will be getting our least cost energy from renewable energy. Our children will be vastly better served with the lower cost energy and more robust ecosystem that they will have because in our investments in rational action.

    • Nick G says:

      The article says that they expect to generate 307GWhrs per year, with 100MW of capacity. That’s a capacity factor of 35%! I knew Nevada had few clouds and lots of sun, but who knew it was this good? Maybe they’re taking advantage of reflection off the desert floor…

      Wow! No wonder they can achieve less than 4 cents per kWh. That suggests enormous potential for exports.

      • Fred Magyar says:

        Maybe they’re taking advantage of reflection off the desert floor…

        Probably just using tracking technology. There’s a comment in there from a Hungarian by the name of Zoltan Kiss Ph.D. who sounds a lot like Fernando and doubts the numbers cited are true. Two commenters provide information showing that the numbers are indeed within the range of possibility.

        Zoltan Kiss, Ph.D.
        Author
        Please explain to me how can a 100MW solar power station generate 300,000MWh/year. That implies 100% efficiency and
        3000 hours of peak sunlight equivqlent per year. To the best of my knowledge, there is no 100% and no such place with so much sun.?
        LikeReplyShare2 replies0

        4 days ago
        Susan Kraemer
        Here is the filing with Nevada regulators with those figures:
        http://pucweb1.state.nv.us/PDF/AxImages/DOCKETS_2015_THRU_PRESENT/2015-7/3615.pdf

        It seems reasonable to me, for example 100 MW running X 8 hours of sun avg daily X 365 days = 292,000 MWh – they are both in the range.
        LikeReplyShare1

        4 days ago
        DoggyDog World
        I think my RE World at my earlier comment. Some parts of the “tri-state area” (Nevada, Arizona, California) in the SW US desert do receive 3000 peak sun hours per year for panels with two-axis tracking. Panels without tracking get the equivalent of about 2400 hours.

        NREL publishes coarse maps (companies use more detailed maps to find the best spots):
        http://www.nrel.go;v/gis/solar.html

        NREL publishes coarse maps (companies use more detailed maps to find the best spots):
        http://www.nrel.go;v/gis/solar.html

    • This is another example of the ongoing distortions. I own a house in Florida, and I looked at the proposed amendment. What it does is create conditions for individuals and corporations who install solar panels on home roofs to freeload or serve as parasites on other customers (or on tax payers if the freeloading is remedied via use of the general tax pool).

      The key in this case is to understand the amendment, if it passes, would allow the solar panel generators to use grid electricity when there’s no sun, and the utilities have to provide the spinning reserve to be able to stabilize the grid. The cost of the extra reserve and the fuel it consumes is chargeable to the regular customers.

      The best way to handle this is to have the solar panel owners put up their panels, but they have to have a switch to drop them off the grid if their demand causes low voltage in the system. In other words, they get surplus juice if it’s available, but they can’t be imposing rules to become giant social parasites.

      • Fred Magyar says:

        What it does is create conditions for individuals and corporations who install solar panels on home roofs to freeload or serve as parasites on other customers (or on tax payers if the freeloading is remedied via use of the general tax pool).

        That’s a lie! No, it’s pure bullshit! BTW the real parasites are the utility companies, who’s monopolies are threatened by the idea of distributed generation, which they correctly see, as a customer gateway for getting completely off the grid.

        BTW, I’m a Florida resident as well and I resent having another nuclear power plant shoved down my throat along with the increased utility bills to finance it!
        Solar is a much better option in Florida than nuclear if for no other reason than the fact that it doesn’t depend on water resources in environmentally sensitive areas! I could list at least a hundred other reasons as well.

        • Doug Leighton says:

          Fred, off topic but any chance of an update on the Brazil drought situation? You know, an Our Man in Rio (or wherever you are) kind of thing. This seems like an important issue that seems to have disappeared from the (our) normal news sources.

          • Fred Magyar says:

            Probably not many eyeballs on this thread anymore but I am in Sao Paulo and the situation is quite critical. I will provide updates as I can. I have started a video blog, not really ready for prime time yet, but every journey starts with a first step, as they say… Editing raw footage takes a huge amount of time! I have a steep learning curve ahead of me.

            Here’s a link to my first post. https://goo.gl/4zFxKO

      • old farmer mac says:

        People who simply use very little electricty are subsidized by the ones who use a lot. The cost of the grid is spread out over all the customers on it. Most of the customers out in rural areas such as the place I live would not have grid service if it were not subsidized by either the government or urban customers or both.

        Having plenty of solar and wind power on the system lowers the price of fossil fuels and thus saves the utility substantial amounts of money. It also reduces to some extent the amount of new capacity the utility must construct.

        I have not been able to find good figures on the amount that it saves the USA collectively on coal and gas but we now generate well over four percent of our juice with wind and solar power.Some sources say that six percent is closer since small solar is not tabulated.

        When you lower the sale of a commodity such as coal and gas you depress the price of it as well- FOR EVERY BODY. The people who buy food from farmers such as yours truly buy it cheaper when I can buy nitrate based fertilizers made from natural gas cheaper. These nitrates are one of our biggest expendable or consumable expenses.

        Steel is a little cheaper and thus every thing made out of steel is cheaper. ETC ETC.

        AND this is after all a peak oil forum. Most of us, including you, believe that gas and oil are going to get to be rather scarce and expensive someday in the not too distant future.

        And while I personally agree with you that the dangers of climate change may be overstated politically as in using the whichever eight point five scenario, they may also be understated.

        What I DO KNOW without a shadow of a doubt is that burning coal by the millions of tons is doing irreparable harm DIRECTLY to the part of the country where I live.Streams are being buried in valleys filled with the tops of mountains. Burning the coal is indirectly via causing health problems all over the southeast in particular and the country in general. Ask any medical professional involved in public health work.

        Duke is currently spending megabucks trying to clean up coal ash pits that are not just threatening to ruin local rivers – one of them just recently killed nearly everything alive for many miles in a local river.I used to fish in that river back when I the drive there and back was fun instead of work.

        Any body who actually looks into the situation with an open mind will in my estimation most likely conclude that the utility is concerned about its own bottom line long term rather than the customer. FPL wants total control of the industry and will go to just about any underhanded method to maintain that control.

        The average consumer will never pay enough attention to get past the ten or twenty second sound bite ads. If FPL managers were HONEST they would run the ads under their own name instead of using misleadingly named front organizations like commies.You know more about commies than anybody else in this forum – with me in second place most likely, given that I am an armchair historian with a strong interest in such matters. (Nobody else seems to give a hoot about commies anymore except the two of us. )

        If there was such a thing as a free market I would agree with you- but in most cases the so called free market is an abstraction that does not actually exist. Every body who is paying net taxes is subsidizing somebody who does not these days.

        FPL is a government sanctioned monopoly that wants to have things IT’S way. The people of Florida are entitled to a choice in the matter.

        Personally I believe that FPL should not be allowed to run an anti solar ad without clearly acknowledging responsibility for the ad.

        • Boomer II says:

          The thing about solar is that it doesn’t fall neatly into right/left political categories. There are conservatives making money in solar or lowering their utility costs with solar. Telling them they should give up something that is financially beneficial to them is likely to result in a push back.

          It’s kind of like legalization of marijuana. It used to be something only liberal hippies wanted. But now there are enough Republicans who want to have access to marijuana for either medical or recreational uses, and there are enough state governments looking for new tax revenue, that legalization is likely to spread across the country.

  73. shallow sand says:

    Just read that Goodrich Petroleum sold 2,850 BOE per day and acreage in EFS for $41,000 per barrel flowing, putting no value on the acreage. (Article on Rigzone).

    Folks, that was 40% of their production.

    I realize all EFS is not the same. However, may be a good barometer for what EFS production with acreage is worth?

    You put that amount per flowing BOE into most any shale company’s second quarter numbers and it will be about equal to, or less than, the company’s long term debt.

    • shallow sand says:

      To add, per Q1 2015 10Q, Goodrich had $600 million of long term debt. They are not using all the proceeds to pay down debt, they are going to keep drilling with part of it.

      Total BOE was about 8,500 per day at end of Q1. Rig zone article said amount sold was 40%, so must have lost another 1,000 through decline.

      So company will be down to 4,250 of high decline BOE with over 500K against it, or close to $120K per flowing BOE, when market is in low 40K per BOE. Looks like long term debt holders are underwater to the tune of over $350 million.

    • The value depends on the well age. Barrels flowing today isn’t a good measure unless you have the projected profile. Say the decline rate is projected at 15 %, the economic limit is 400 boepd, then the reserves are 6 million barrels. At 30 % decline they are 3 million barrels.

      So, if the sale price is $117 million, in the first case the buyer paid $19.50 per BOE, in the second case they paid $39 per BOE. The decline rate is hyperbolic, and gas oil ratio is supposed to increase over time. Then we have to use a reasonable discount factor.

      Is this less than the outstanding loan value? It depends on future oil and gas prices. I guess there’s a general sense that prices won’t stay low, if nothing else because the Saudis can’t take the low price environment for much longer.

  74. ezrydermike says:

    so low oil prices are hurting the producers but the refining side seems to be doing well or is this just the CA market?

    http://www.latimes.com/business/la-fi-gas-profits-20150722-story.html#page=1

    • Indeed, a reasonable well engineered wind and solar mega project has to incorporate the used of hydro and pumped hydro. That’s what was done in Spain to allow such a high renewables penetration (plus it helps to have the base load include nuclear power plants).

      If the Europeans were really serious about doing real world engineering to introduce renewables they would be talking to the Norwegians to make huge investments in the power generation kit, as well as the installation of a very large set of power transmission lines all the way to Belgium, Denmark, and Poland. From there, the system can sort itself out over time.

      The lack of any serious discussions and engineering studies to carry out this project is what tells me the EU effort is guided by mentally retarded politicians.

  75. ezrydermike says:

    Now here’s an interesting piece from of all people, Margaret Atwood.

    https://medium.com/matter/it-s-not-climate-change-it-s-everything-change-8fd9aa671804

    • MarbleZeppelin says:

      Thanks, that was interesting, worth the time to read it and see the photos.

    • Caelan MacIntyre says:

      Second MZ’s contention with a wish that more famous people get on board with this kind of stuff.

  76. AlexS says:

    UBS Exposes The “Scary Reality” Of High Yield Energy
    http://www.zerohedge.com/news/2015-07-27/ubs-exposes-scary-reality-high-yield-energy

    worth reading

  77. AlexS says:

    WoodMac optimistic about tight oil wells productivity gains:

    ————————–
    Could the shale slowdown lift well productivity?

    24 July 2015
    http://www.woodmac.com/public/views/shale-slowdown

    We illustrate how the current downturn could be setting a foundation for future tight oil metrics to outperform.
    Today’s tight oil wells are better producers than those drilled only a few years ago. Expected ultimate recoveries (EURs) have grown by over 10% each year with the application of better drilling technology, more robust basin modelling and experienced asset teams.
    Despite this, the 55% drop in onshore US oil rig count from 2014 levels presents an opportunity to study how a less aggressive pace of activity coupled with sharper operator focus could improve future EURs even more.
    The slowdown has some marked similarities to the Gulf of Mexico (GoM) lull following the Macondo well incident in 2010 when a federal moratorium on GoM drilling activity was enacted. Operating practice and company psychology changed when players stopped running on a ‘leasing treadmill’ and increased their focus on basin science. This is evident in the discovery data.
    Average post-Macondo discovery size grew by 30% – even as the discovery count fell by roughly half – demonstrating how producers were able to capitalise on slower paced projects and leverage the additional time they were afforded to vet prospects and design wells . Although the US tight oil slowdown is market-driven rather than regulatory based, we believe that post-slowdown improvements will be replicated within the onshore US asset class.
    Our expectation that the tight oil ‘pencil sharpening’ exercise will improve future EURs has been built by studying the latest onshore well data and comparing it to pre-slowdown activity. Using our North America Well Analysis Tool, we analysed data for the Bakken Fort Berthold and Eagle Ford sub-plays and the gain in EUR for newer onshore wells in each sub-play before and after the 2014 oil price fall is noticeable.
    In the Eagle Ford example, initial production rates for newer wells (drilled after July 2014) fell but the EUR has increased due to better reservoir management. Across both sub-plays, EURs increased by roughly 25% pre and post slowdown.
    We believe that the tight oil slowdown could result in a more positive long-term outcome for tight oil plays assets, particularly a few years in the future. In that timeframe, a step change in EURs – alongside a steadily improving price environment – could allow tight oil metrics to yet again surprise on the upside.

    • AlexS says:

      My comment: IP rate is a real number. EUR is an estimated and “modelled” number

      • Yes indeed. Wood Mac has lots of young smart analysts (I used to be interviewed by them once a year, so I got to know them a little bit). But they tend to crunch numbers on automatic pilot. And the key is to understand that a high grade yields lower total production.

        The lower supplier costs really help. One item they don’t mention is the motivation geoscientists, engineers, and supervisors, have to improve work quality (because they are no longer football stars, now they feel like summer time free agents sitting on a bubble). The key in these situations is to emphasize teamwork. In times like this it’s so much dog eat dog we see a tendency for people to become a bit too selfish and insecure.

    • shallow sand says:

      AlexS. Two good articles.

      I have wondered if, after the forced sales and bankruptcies, those who end up with the assets will develop and operate what is left in a more conservative and well thought out manner.

      • AlexS says:

        shallow sand,

        We can only guess.
        I think that we will not see massive bankruptcies, but asset sales and M&A activity in the shale sector will accelerate.
        There will be no dramatic drop in tight oil production even if WTI stays at $50 for 3 or 4 quarters. But 1 mb/d annual growth is the thing of the past, even if oil price return to >$80 levels.

      • Shallow, if they don’t they are kinda stupid. My experience is the opposite, they tend to become a bit insecure and won’t risk much. I remember when, in the 1990’s, they had us running economics using $15 per barrel for 30 years, escalated for inflation and nothing else. I told management that, if they really believed such a low price, they should sell every property we had to companies running much more aggressive forecasts.

    • Heinrch Leopold says:

      AlexS,

      What speaks against higher productivity gains, is that a similar correction in 2008/9 showed large productivity gains, which quickly evaporated when drilling started again. I am still trying to figure out why, yet it is important if there is a structural change or if it is just cyclical. The recent dramatic massacre of shale companies going down by up to 20 % per day even for the big and strong companies, also indicates that shareholders do not agree with advertised productivity gains.

      • It’s simple, we try to maximize shareholder value. If we think prices are high the best option is to develop what we have to maximize pv10. That value is maximized as long as we do invest in all projects with positive risked pv10. It’s like….automatic, dude.

      • AlexS says:

        Heinrch Leopold,

        I’m not sure, if 2008-09 is a good example, as that was the early stage of the shale boom in the Bakken and very early stage in the Eagle Ford.

        Today’s productivity gains are due both to structural and cyclical factors.
        Structural: continuing improvements in technology (though there were no revolutionary breakthrough in technology in the past 12 months).
        Cyclical: oil producers concentrated their activity on the sweet spots.
        Productivity gains in the Permian are also related to the shift from vertical to horizontal drilling

  78. AlexS says:

    Also from Woodmac:

    ———————————————————

    Pre-FID project deferrals: 20 billion boe and counting

    24th July 2015
    http://blogs.woodmac.com/pre-fid-project-deferrals-20-billion-boe-and-counting/

    By year-end we may be able to count the number of major upstream projects that reached a Final Investment Decision (FID) during 2015 on one hand. The dramatic fall in oil prices in 2014 and subsequent dismantling of 2015 company budgets has, by mid-year, already resulted in over 45 major project FID deferrals.
    As a result, we estimate 20 billion boe of reserves has been pushed back from a diverse range of onshore, shallow-water and deepwater projects. Together, this creates a US$200 billion hole in the industry’s investment pipeline.

    Deferred project reserves by resource theme (bn boe):
    • Deep/Ultradeep 10.6 bn boe
    • Oil sands 5.6 bn boe
    • Shallow-water 2.6 bn boe
    • Onshore 1.1 bn boe

    Why these projects, and why now?
    Projects that are technically challenging, have significant upfront costs and/or low returns have proved vulnerable – over 50% of the 20 billion boe is located in deepwater projects, and nearly 30% in the Canadian oil sands.
    From a corporate perspective, there are two main drivers for deferring projects:
    • Releasing capital in response to the fall in oil prices
    • Giving more time to develop enhanced designs, cost optimisation and other measures to improve overall economics. In essence, rebuilding projects for a lower price environment.
    Trying to breakeven
    Inflationary pressures have pushed many projects into economically marginal territory and operators are now reworking costs and development solutions to achieve their hurdle rates. But it won’t be easy. We estimate that half of the new greenfield developments still produce sub-15% development IRRs, which is below most companies’ economic hurdle rate.
    For most operators, hoping a 10% reduction in capex is sufficient to reach FID won’t be enough, as only a handful have an NPV10 breakeven below US$50/bbl. Given where we are in the corporate capex cycle, only those assets with the most robust economics can expect to make the grade.
    We estimate the majority of these projects are now targeting start-up between 2019 and 2023. However, if the major IOCs continue to focus on cutting future capital commitments – to the detriment of future production growth – then these dates will be pushed back further.
    For some, aggressive re-phasing of capital spend and savings from cost deflation will enable them to have another run at FID over the next six to 12 months. But in a world of greater financial discipline and lower oil prices, others will require more radical changes to make them attractive investments.

    • AlexS says:

      Similar estimate a month ago by Ernst & Young:

      ———————————————————–

      Low oil price hits $200bn in mega-projects

      LONDON, June 17, 2015
      http://www.tradearabia.com/news/IND_284432.html

      Deepwater oil projects and complex gas facilities worth around $200 billion have been cancelled or put on hold worldwide in recent months due to the sharp drop in oil prices over the past year, consultancy Ernst and Young said.
      Further project cuts and delays are likely as the industry braces for an extended period of lower oil prices as a result of a supply glut.
      “The mind set in the industry at the moment is that prices are unlikely to be bouncing up materially in the near term,” the consultancy’s Andy Brogan said in a presentation. “There is an expectation that volatility is with us for a reasonable period of time to come and companies need to cope with that.”
      The delays in multi-billion dollar projects that can take up to 10 years to develop, and needed to support rising global demand for energy, could create a shortage in the future.
      International companies have responded rapidly to the near halving of oil prices since last June, slashing tens of billions of dollars in capital spending in order to boost their balance sheets and maintain dividend payouts to investors.
      The main 24 mega projects that have been put on ice or scrapped are spread across the globe, according to EY.
      For oil, many of the projects are complex, deepwater fields in the Gulf of Mexico, the North Sea, West Africa and Southeast Asia with budgets of up to $20 billion.
      Among the most expensive are liquefied natural gas facilities such as the Arrow liquefied natural gas (LNG) project in Australia, operated by Royal Dutch Shell’s and PetroChina and BG Group’s Prince Rupert LNG project in Canada.
      Though often just as expensive, most oil mega-projects benefit from the advantage of returning value within 3 to 4 years from first investment, compared with up to 12 years for LNG projects, Brogan said.

  79. old farmer mac says:

    ALMOST a month less below freezing days in Aspen compared to earlier.

    http://www.latimes.com/nation/la-na-sej-mountain-climate-change-20150728-story.html#page=1

  80. shallow sand says:

    Mike. You seem to have departed us for the time being, which I can understand.

    However, since you are in the area, any idea on how good/not so good the EFS production of Goodrich is that just sold for $41,000 flowing BOE? Primarily in LaSalle, lesser extent in Frio.

    If that is anywhere near the value, shale stocks that have not hit under $5 are still way over priced. I plug that number in for shale guys and about all have long term debt higher than production value at $41K per barrel.

    I know production is worth differing amounts for many reasons, and per BOE valuations are not the best. Fernando points that out above.

    However, have bought enough leases over the years to know that is a valuation metric. Also know that when prices were in this ball park in 2004, production in our area sold for $15-30K per barrel. It topped out at around $150K per barrel in early 2014.

    Been kind of quiet around here last couple days.

    • Mike says:

      Shallow, I’m busy surviving and got kind of fed up with all the modeling, predicting and never ending speculating. Most of the people doing that crap have never even seen a drilling rig before. Predicting the future of the oil business has become like a game on X-Box. Besides, you have a good handle on it; you don’t need me.

      Goodrich was based in the shallower, up-dip oil window of the EF where shale thickness and thermal maturity was suspect. You know, lower GOR, lower oil gravity, lower EUR’s. Not primo shale country, not by a long shot:

      http://eaglefordshale.com/companies/goodrich-petroleum/

      They were damn lucky to get what they got for it. I think right now all that PUD stuff is not worth doodly squat without the money to drill it. And who’s got that?

      I’ve bought lots of production but always on discounted reserve estimates, or on smaller acquistions even a simple net income extrapolated over time basis. But not per BOE. The “dollars per BOE” metric came after the dumb ass shale industry quoted sales of production in the “dollars per net acre” metric. That threw mineral owners looking for lease bonuses into a tizzy, let me tell ya.’ They heard Petrohawk sold to BHP for 75,000 dollars per net mineral acre and they thought that is what they should get for lease bonus! Not kidding. So then the metric for production sales became per BOE. The idiots.

      I like how the shale industry is bragging about how it can “ramp” back up again when prices go up, so it can then shoot itself in another appendage and drive oil prices down again:

      http://phillipsenergy.com/2015/07/15/a-look-at-eagle-ford-shale-well-drilling-vs-well-completion/

      Its a helluva business model, uh?

      In my roughneck opinion all future oil development is going to be severely financially restrained. We can’t keep making this stuff up (money). We may even get to a point where production is financially constrained. Hang on to every barrel you’ve got, bro’. Someday the marginal stripper production with low OPEX is going be worth big bucks.

      Mike

  81. AlexS says:

    Good article by Art Berman:

    Has The E&P Industry Lost Touch With Reality?
    Posted on Mon, 27 July 2015
    http://oilprice.com/Energy/Oil-Prices/Has-The-EP-Industry-Lost-Touch-With-Reality.html

    • Berman seems to forget companies tend to mob rigs based on price expectations, and that once contracts are signed they tend to have difficulties putting everything in reverse. As far as I can see they probably saw a steady price environment at $60, took price insurance via the futures market and got rock bottom prices from drilling and other Contractors. Then they high graded locations and moved to drill where they have existing facilities and or need to hold acreage. Overall the article sounds like a “my, ain’t I so smart in hindsight” self promoting piece.

      • marmico says:

        Overall the article sounds like a “my, ain’t I so smart in hindsight” self promoting piece.

        Just like his foresight self promoting February 19, 2015 pièce de résistance.

  82. shallow sand says:

    AlexS. I agree with Berman.

    When you have a company that is $600 million in debt, sells 40% of its production for $118 million, and rather than using the money to pay down debt, plans on using most of it to drill more wells, I’d say that is a sign of losing touch with reality.

    I think we now see why Whiting could not sell itself. Put a value of $40-50K per flowing BOE on Whiting values the share price at $4-7 per share.

    • Ves says:

      Hey, but you can get drilling rigs and frac chemicals for 60% off now. Here right there is their improved efficiency 🙂 As far as not making a profit, well, it’s not their money anyway. 🙂

  83. Doug Leighton says:

    GLOBAL OIL DEMAND TO INCREASE NEXT YEAR AT FASTEST PACE SINCE 2010

    http://www.sciencedaily.com/videos/cadece0c6c07f7d082934ac36620b7a2.htm

    “Global oil demand will rise at the fastest pace in five years in 2015, according to the International Energy Agency. The IEA said that world oil consumption will increase next year by 1.4 million barrels a day to a record 94.1 million. Most of the increase in oil supply will be from nations outside of the Organization of Petroleum Exporting Countries. Oil supply from non-OPEC countries will rise by 1.2 million barrels a day next year as North American production rises. The demand for oil will be driven in large part by China, which the agency said will see demand increase by more than 4% to about 10.8 million a day.”

    • Doug Leighton says:

      On the other hand.

      OIL PRICES SENT CLOSE TO SIX-MONTH LOWS BY CHINA ROUT

      https://ca.finance.yahoo.com/news/oil-prices-fall-close-four-month-lows-china-030714946–finance.html

      “Oil prices fell to their lowest point in nearly six months on Tuesday as a meltdown in Chinese equities deepened doubts about the outlook for crude demand in the world’s top commodities consumer.”

      • Jeffrey J. Brown says:

        Kevin O’Leary was on CNBC this morning making the case for taking a long term bullish view on China. He said that a slow down in the rate of growth in the Chinese economy is not negative growth.

        Some of the CNBC folks questioned him about the accuracy of Chinese GDP numbers, and he agreed that there are definite concerns about the accuracy of Chinese GDP data, but he noted that many American companies that report Chinese sales are showing 5% plus year over year increases in sales in China.

        Of course, there are other factors, such as the catastrophic levels of pollution in some areas, especially Beijing.

  84. Ron: off topic: the August 2015 Scientific American has an article, “in search of alien Jupitwrs” with a pretty decent description of the techniques they are using to take large exoplanet photographs. The Jupiter plus size located far from its star seems to be a done deal, they expect to have the results in short order. The smaller planets will require the Magellan giant telescope. I think to have a good chance to confirm water vapor in an earth size planet will require a super giant set of mirrors located in space . But I think the goal is achievable. And it sure beats sending a few people to Mars.

  85. Dennis Coyne says:

    Hi All,

    A new post is up.

    http://peakoilbarrel.com/world-natural-gas-shock-model/

    Hope you like it.

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