A Guest Post by George Kaplan
Introduction
In many ways the US side of the Gulf of Mexico shows signs of a production basin at the end of life. Most of the sort historic of charts that would normally plotted – discoveries, drilling, active wells, active leases, leasing activity, natural gas production – show classic bell shapes, with current conditions on the tail; and yet oil production is still just about increasing, and the fall in remaining reserves has been reversed in recent years. Examples for some parameters are shown in the chart, and others in subsequent sections. (Note the units used for production, it was the only way to get everything on the same axis.)
I think the main reason for this is that there are really several different plays which have come and are now mostly gone or going. Without getting into the complicated geology, which I am incapable of anyway, the main divisions have been a move from shallow water (<1000ft) to deep, and now to ultra-deep (>5000ft) as newer generation drilling rigs and production facilities became available. These can be further divided: the initial shallow production was more natural gas and condensate than oil; and recently technology has moved from 10ksi, to 15ksi and soon to be 20ksi completions. Seismic technology improvements have also opened up other resources, most recently sub- (or pre-, I’ve never got the hang of the difference) salt, although the gains from that may not be as evident as initially expected. Exploration and production has further been disrupted by some big hurricane seasons, a couple of oil price collapses, the drilling hiatus after the BP Deep Horizon disaster, and some major equipment failures and delays. Reserve and production histories look like a series of overlapping bell curves, from four to maybe up to eight or ten. I’ve tried fitting these (see later posts) but I don’t know they have much predictive power, which is what seems to interest people the most.
I’ll concentrate on exploration, drilling and discoveries in this post, which are really just presenting BOEM (and some EIA and company) data in different ways, with a bit of conjecture as to what is happening, but nothing particularly startling or revelatory. Later (putative at the moment) posts would cover production, reserves and decline rates.
It also gives me a chance for a tirade against Trump, whom I consider a greater threat to the earth’s, and our, wellbeing than peak oil ever was, so if your sensibilities are going to be offended close your eyes after scrolling through about a dozen screens (or now if you like). This might be regular therapy for me especially if, god help us, he wins a second term – which, one good thing from it seems increasingly unlikely given how the virus (not him the other one) is revealing his shortcomings, despite what I see of the Democrat and democratic chaos in the USA. Nevertheless it’s a catharsis of some kind for me after seeing his odious visage, and that of his fawning and baying cult who has now pretty well given up any pretence of suppressing their various bigotries.
Oil and Gas Leasing Activity
Lease sales are at the tail end of a creaming curve and recently haven’t engendered much interest with only about one to one and a half percent of the acreage sold; generally there isn’t much competitive bidding and the lease prices are relatively low.
There are six more lease sales planned, each of about the same size: two this year, three next and the last in 2022. If normal leasing behaviour has been followed then there will have been industry input into deciding the order of leasing with the best tracts offered early, and those remaining are the dregs (in fact the GoM, more than anywhere, set this as the standard procedure).
There were suggestions from the White House that further eastern acreage would be opened up, but there’s plenty of evidence that those areas are not very prospective and there would have been, and were, objections from the Florida fishing and tourism industries (a key Trump state in 2016, and arguably more marginal now with demographic changes and an influx from Puerto Rico after hurricane Maria). I think there is a valid question as to whether Trump understands that there needs to be recoverable oil in place for it to be produced. He sees everything as conspiracies and politics and probably thinks only regulations and environmentalists have prevented more growth in oil from GoM – he also only gets ‘oil’ as a single economic idea, the nuances of natural gas, condensate, or differences between exploration and production have no place in his world.
New Discoveries and Developments
This chart shows the deep (>1000ft water depth) leases with the 2017 BOEM estimates for reserves. The background shows the proportion of total reserves in shallow, deep and ultra deep water, and how then resource base has been moving to deeper blocks.
The estimates for the fields under development (in blue) are from the trade magazines or company press releases so will be the very high end of equivalent oil totals; some don’t jibe with other reports, e.g. a very high reserve number being considered only as a tieback opportunity. There have been many examples of deep-water fields having downward reserve revisions soon after start-up (to be covered in later post).
The almost illegible writing in each year show the major projects based on that year’s discoveries. All the reserves are backdated against the year of original discovery in the lease – this carries the usual confusion in that there can be more than one field per lease, or fields extending over several leases, so actual field discovery does not match lease discovery.
The reserves shown for non-qualified fields are really just placeholders. They are for leases that are attached to existing fields in production and I just pro-rated based on total reserves and number of leases. In fact as these leases are the last to be developed their reserves are likely to be low, possibly zero. There are a dwindling number of other non-qualified leases (see first chart above) but their reserves are also likely low.
That said BOEM reserve numbers, although nominally 2P) have proved to be quite conservative in the past. They are far from scraping the bottom of the barrel for new developments, but what’s a bit odd is that most of the backlog of smaller, near field tie back and brownfield developments have been used up. I think this was a result of a fairly unusual confluence of technology, geology, the prior Deep Horizon drilling hiatus, low interest rates and oil price that stopped major developments but then hoovered up all the low cost, near field prospects.
What are being developed are major stand-alone projects, and what are being considered are also recent, putatively large discoveries like Whale, Ballymore and Dover. But two cautions about this: 1) many previously hyped discoveries subsequently turned out to be duds – Moccasin, Kaskida, Phobos, Shenandoah (not a dud, but not so good); as above at the same time as hinting at them as major, these new discoveries have all been mainly discussed as tie backs to maintain capacities in existing facilities. I saw one puff piece about Whale being the first of a new wave of developments – removed within hours.
It looks like developments now will be limited by the pace of discoveries, and could now slow to trickle given the oversupply in the market, the cost and risk of GoM activities and the already obvious geological limits.
Drilling Activity
The number of drill rigs, now virtually all deep water, and the number of boreholes with drilling activity (active drilling, inactive drilling and work overs) has been fairly constant since a big drop after the number of prospective shallow water sites disappeared, though there may be signs of a fall, mainly from inactive drilling boreholes recently. However this may be illusory as these are numbers that tend to get revised – additionally I’m not sure how this gets estimated: counting in whole months for such work, as BOEM does, seems far too granular.
There don’t appear to be any pure gas prospects in ultra-deep leases and the shallow gas fields are at end-of-life run down, so the number of active gas rigs has dropped to one or two.
There is little or no apparent correlation between oil and natural gas prices and drilling rig activity, if you squint and apply some putative time delays something could be conjured up but given the short data set you’d have to be rather desperate.
There have been a few horizontal wells – all in shallow water – and shallow water wells have mostly been vertical, more so in the years prior to those shown on the chart, but now almost all drilling in the Gulf is directional.
The drilling activity reported by BOEM is consistent with the steady number of rigs reported by BakerHughes.
I don’t know why the ratio of active to inactive wells drops so low for deep water drilling; it too could have something to do with the way the figures are reported.
Drilling Technology
The measured depth of wellbores (MD), which is basically the length of the drill string, has been gradually increasing as technology has improved. The water depth for the lease has increased more in step changes as new drilling rigs become available. The chart shows the years that particular types of rigs were manufactured and the approximate maximum depth GoM crews apparently pushed the limits in the80s and 90s. Technology progressed from barges through jack-ups to the seven generations of MODUs (semi-subs and drilling ships); I think the early ones of these could be grounded while drilling. Recently there has been a gradual move from deep to ultra deep, but that may be reversing in the last couple of years, although much of that drop off may be just delayed reporting.
Well measured-depth (MD) gradually increases with water depth. I found this a bit surprising, as I had thought that the GoM geology was a bit reversed from normal (i.e. with gas nearer to shore and something odd about the geothermal gradient); but I’m not surprised to be wrong and it would take a proper geologist to explain it (did somebody say SouLaGeo?).
Overall drilling rate seems to decline rapidly with water depth up to about 500ft and then stays pretty constant or slowly increases a bit. This is probably due to different drilling technologies used at different depths, with possible additional effects from the relative times for MIRU and RDMO compared to actual drilling (although I think I take the time from spud date to completion, so maybe not).
Active Wellbores and Leases
The number and length of wellbores drilled, if not the cost, has been dominated by shallow fields. For better clarity the deep and ultra-deep wellbore numbers are shown separately in the first chart above (but have all been lumped together as ‘deep’).
The big drop in activity in the late eighties almost certainly was a result of the preceding collapse in prices, I’m not sure if there’s much correlation in other years, which is not to way the current collapse won’t have a similar effect.
The number of active leases fell quickly from about 2000, many of those rescinded, especially in deep water, were blocks that had never produced rather than ones that had become exhausted.
The number of active completions, which is a balance between new wells and old ones being abandoned, has plateaued for all water depths over the past two years, though for shallow fields this was after a period of decline. It seems likely the numbers active will now decline, but may not necessarily impact production numbers.
Most wells end up as sidetracks and, interestingly (or not) the proportion of sidetracked wells in all water depths tends to level off at about 70 to 80%
Future GoM Posts
Future GoM posts (both viruses allowing – three if you include the human sort, and with unknown schedule):
Probable: Part II – Reserves
Probable: Part III – Production: Past and Present
Possible: Part IV – Company Activities
Tentative: Part V – Future Projections
Off Topic Finish: MAGA, a Rant
A lot of baggage has become attached to the phrase ‘make America great again’ since Trump starting using it as a moronic clarion call. In non-sentence order: firstly, among the vapid, pharmaceutically-addled reptile brains of his cultists ‘great’ is now taken to mean ‘greatest’, and not just any old greatest, but clearly and chest-thumpingly greatest; and not just at some things, but everything.
Secondly (or fourthly) ‘again’ implies it is not great at things now. In fact it is great at many things, not all of them necessarily good from all points of view, but those that they could be considered great at and, from normal ethical, moral or humanitarian standpoint, would be considered generally good are exactly the ones that the odious one feels threatened by, and that his toadies are allowing him to systematically destroy: lead positions in apolitical, cutting edge and often cross border science; generally humanitarian and incorruptible career professionals in government (both federal and state) – mainly the middle and upper middle positions, and less so the front of house DoT tellers, immigration officers and embassy staff, and certainly not the political appointees, whether the shifty chancers under most regimes or the moronic yes-men the fat boy favours now; a certain type of literature; some of the best of modern art; the more enlightened of their military (compared to the Neanderthal thugs his orangeness seems to worship); liberal professors in the arts – many of the best of whom are also pretty good authors of various sorts, etc. (I’m sure I’ve omitted many).
‘Make’ is also interesting, implying that it should just be a question of picking the right thought processes, mixing them together and – hey presto – we’re great. In fact America had a lot of externalities going for it: a huge resource base (coal, oil & gas, soil, land, water, benign climate, plenty of ideal sites for cities), which could be readily exploited with emerging technologies as the country grew; plenty of available and willing immigrants (there’s a theory that the majority came from pastoralist backgrounds, which tend to promote thrusting, pioneering entrepreneurship); a decline in rival states just at the right time (WW I and WW II, and before that the collapse of the French and Spanish empires, and a disinterested, kind of lap dog partnership from the British); pretty good politicians with real skill and integrity coming along at the right time; an inheritance of property rights and fairly open government through the enlightenments etc. (though obviously not for all).
It also, really by accident, led the way in universal education with the concomitant head start that gave them in having a skilled workforce as societies industrialised, with increased technological and cultural complexities. Accidentally because the prevailing believe was, incorrectly as it turned out, that all behaviour came from cultural learning, so all people are capable of all things. The reality, considered taboo in many quarters in America, but prevalent in Europe, is that heredity and psychological evolution have significant impacts on all behaviour and abilities. The lead America had has now fallen to a significant lag, at least as far as the ‘universal’ part is concerned, the decline started years before the repugnant slug’s first bankruptcy but he is certainly not going to make any effort to reverse things. I don’t hold with conspiracy theories but can believe that the elites came to feel threatened by purely merit based advancement and started intuitively to take whatever decisions would most thwart it. They did it tacitly; the golf cheat in chief is pretty open that he considers his base is stupid and needs to be kept that way (they probably are more ignorant on average, and seem to take some pride in this, but not lacking in native wit).
Much of those advantages have gone, although there is still a (decelerating) momentum carry things along from early growth spurts. It’s now kind of middle aged and staid – or at least more so now. There’s still plenty of some kinds of resources but they are not virtually free now, with plenty externalities. There is still a kind of economic empire, but it’s getting increasingly expensive to maintain; and with globalization and deregulation, it’s no longer ‘America[n]’, although the costs to maintain it are American taxpayer liabilities. And no one but the rabid core support can maintain with a straight face that exceptional politicians are coming along to sort things out. So the future will be a bigger challenge than the putative great times of the past.
Lastly ‘America’ implies the whole country, but really everything is aimed at red flyover states that, in many places and on average, only achieved ‘not quite completely awful’ in the past. Part of his delusion is to try and convince his base there of how great things were supposed to be. Trumpa the Gutt will ostentatiously dump them at the least hint of anything less than undying sycophancy as his promises are shown up as vapid, pandering nonsense.
The Cheeto doesn’t have any principles, he’ll just do and say whatever satisfies his narcissism the most, its just that he finds this easier with the more unpleasant side of human nature; and MAGA allows him to get away with barely acceptable bigotry.
Like his recent attempt at film criticism (concerning which, if he’d ever heard of them, he’d consider himself greater than Godard, Kael or Ebert, though he probably can understand no further than the Rotten Tomatoes audience score); I doubt Trump has seen Gone With the Wind, or really knows what it’s about, probably less so than most of the ignoramuses in his ‘base’. He could well believe it to be a frat boy comedy about bean eating contests (and, to be fair, many of those types of film were more deserving of an Oscar than the odd, turgid mix of racism, rom-com, psycho-drama and war apologetic of the actual winner). What he does know is that pushing the boundaries of racism and xenophobia as far as possible – and each time he is testing the limits a little further – while dressing it up in MAGA-speak, manages to get his (basically fear driven) cultist toadies a bit more fired up, and lets them come a bit further out of the bigots closets from which they’ve been wanting to escape for so long. Each time makes it so much more difficult to push them back in again. It’s not going to stop until something significantly more awful happens than just having to watch his slavering, gurning, hate and drivel-spewing orangeness in front of the baying hordes (all of whom seem to be vying with him for the ridiculous haircut Oscars).
The Fatman and COVID-19
I wrote the above a couple of weeks ago and the latest events mean we live in a different world; but the MAGA mind set hasn’t gone away and is likely to become more polarising as events unfold.
It’s hard to see much going right if the contagion really gets a hold in the US: an inept and ineffectual administration with no chance of forming any kind of popular, central leadership, and that has recently been alienating all it’s former allies; the nominal leaders being not only blind to science but actively against it; a divided country along class, race, age and geographical lines dominated by detached oligarchs and CEOs; an economy dependent on distant transport and commuting; a pretty awful health service controlled by for-profit-pharma and insurers rather than medical services; a huge number of people living day to day with needing two or three jobs to survive with no savings and no support; a high proportion of young but weakened people because of diabetes, obesity, addiction problems; large populations of incarcerated and homeless;, general libertarian outlook which is loath to accept any government controls; a business environment anathema to mortgage or rent holidays; a recent hollowing out of various federal departments like EPA and CDC; a kind of ingrained feeling that violence is often the best way to address problems; lot’s of guns if it comes to “me first”; etc. In flyover states especially the deniers will be out in force and quarantine measures will be very hard to impose. It will be a short step to unrest, riots, the National Guard, and, maybe, a bunch of people suddenly finding that socialism isn’t so bad anyway. The only positive is that it’s pretty warm and quickly getting hotter.
Until now Trump and his ever changing cadre of incompetent toadies have been pretty lucky in not having to face too many problems that can’t be dumped on future generations either by completely ignoring them (e.g. climate change and environmental damage) or just by loading up on debt (everything else).
Trump currently is just flailing around hoping something accidentally works, he is the very worst kind of buffoon. Really he just wants somebody to make it all go away (but his father is not around anymore). The virus has never read “The Art of the Deal” and doesn’t respond to threats of being sued by a billionaire, and he can’t declare bankruptcy and start again – so he’s out of ammo. In speeches he has to constantly remind himself to keep saying what a great job he’s done. There’s been a subtle shift so he’s talking more about “we” as if suddenly he has been listening to anyone who can make it all go away. His two or three policy mantras – the wall, cheap oil, and high stock markets – are biting him in the backside. He has no hint of humanitarianism in him so really has nothing to give in times of hardship.
To the extent he does anything it is whatever he thinks will appease his MAGA base, or his old pals on Wall Street, or that boosts his narcissism. The MAGA lot are virulently against any imposition of overt controls on personal freedom (despite being almost wholly susceptible to more subtle forms of media propaganda for political or other life choices), and keen on isolationism (a way for them to hide their racism and bigotry. The Wall Street boys know that Trump will primarily do anything to protect their assets, so this will just be another chance for the giant wealth transfer to continue, even as on average the country is further impoverished.
Trying to satisfy these forces is making him jump around at random like a desktop pendulum magnetic toy. He surely knows how far out of his depth he is, and that his normal repetitive, loud bluffing won’t work; every obvious blunder is going to be a body blow to his narcissism.
Hopefully he just goes into his twitter safe space and does not take any real action, he’s had plenty of practice, because another possibility is that the Republicans through action and others through inaction, allow this crisis to be the opportunity that allows him to become the Dictator he has always sought to be.
If he does fade away I don’t see too many of his toadies that can step up either. I haven’t seen that much of her but Pelosi looks like a natural leader with real ethical standards and natural authority (she’s a woman, so Trump hates her more than the usual loathing he has for any non-sycophant and it will be interesting to see how much influence she can finesse). Let’s hope the excellent career professionals in the US federal and state government departments, and some of the better-elected officials, can find ways to bypass the Trump appointees and get through this without too much damage and that this is the last major issue he faces. The probability and consequences of these crises are only going to increase, if he gets a second term, which looks almost impossible at the moment if the election proceeds, but there are worse possibilities, we should all be very afraid (except maybe Putin, MbS, Erdogan, Bolsonaro and the like).
The opinions expressed in this post are those of the author. They do not purport to reflect the opinions or views of PeakOilBarrel owners or other contributors, or those on any of the other sites that may choose to download and repeat this post, whether with or, as always, without permission (please feel free, but only if you take all of it).
Mr Kaplan , first let me acknowledge I am not an oilman ,so the first part of your post is ^ is above my pay scale ^ . I do not live in USA but do follow politics there because it effects the whole world . So all I can say is that the second part of your analysis on Mr Trump and the coming events is kudos . Thanks for your analysis . Of course your work on offshore is as they say ^Top of the Pops ^ .
George, great to have you back. Thanks for the informative no nonsense post.
Doug, it’s nice to see you still here, and carrying on the struggle. I normally look for your comments if I visit this site (plus a few others including Survivalist, who may also have disappeared, like a few old faithfuls on both sides of the aisle, and Jeff and Schinzy, below). We all need an occasional digital detox, an internet interregnum, a peak oil purge, some doom and gloom downtime, a shale oil … er … shabbatical (that’s enough meaningless alliterations, Ed.).
Thanks for the great post George. I hope you’re well. I’ve been running a handful as of late, and have had to resign myself to lurking. I will return to my usual shitposting self by mid-spring I’d imagine. Best comments on the net around here, if you can stand it. I was very pleased to see George back at POB with a piece; above my pay grade of course; I’ll be chewing on it for weeks.
Thanks George,
I always learn from your posts, good to hear from you again.
Nice and infomative, your posts are much appriciated and fun to (hope not only 3P but also tentative resource materialise)
https://www.click2houston.com/news/local/2020/03/19/report-texas-regulators-contemplating-a-reduction-in-oil-production-amid-coronavirus-crisis/
If this is correct it would be big news. I would think low oil prices might lead to a fall in the rate of new well completion.
There is a longer Wall street journal piece but its behind a paywall.
I wrote yesterday that my thought was that there would eventually be a summit resulting in a global version of the Texas Railroad Commission.
I still think so, because my next guess is that demand destruction will be able to swallow total US production whole, burp, spit on the ground, and not raise prices.
This is going to be bigger than the Texas RRC can handle.
Lloyd,
Agree in full.
D C,
North Dakota is considering similar actions. There was an article on it yesterday at s and p global; I read it through ASPO USA.
Synapsid,
Had not heard that, thanks for the heads up. It would be good for state agencies to attempt to limit production, they could take their cues from RRC and follow their lead, much like oligopoly pricing in the auto industry.
One of the suggested ideas to get oil prices back up is to sanction Russia if it continues to engage in a price war.
But given that the global economy is tanking, are sanctions much of a threat? If no one is buying or trading much, how much leverage is there in saying we won’t buy or trade with a country?
Boomer,
A $50/b import tax on C+C (or petroleum products in general perhaps) might give some relief to the oil industry as it would raise WTI to profitable levels. Potentially Canada and Mexico might be exempted from these tariffs.
Dennis
If the US placed such a tariff, other countries would follow with equally damaging tariffs.
The US sells a great deal of equipment to Russia and Saudi Arabia.
https://www.ustradenumbers.com/country/russia/
They could simply buy what they need from Europe, Japan and South Korea.
I do not think making another half a million Americans unemployed would help very much.
Wayne,
You may be right, generally I am an advocate of free trade, it usually is the best policy.
Anecdotal.
I drove on a major interstate today and both the light auto and semi truck traffic was heavy.
In the city the traffic was like Sunday. Light. In the burbs the traffic was also like Sunday. Lots of cars at the stores. Lots of cars in restaurant drive throughs.
Wal-Mart had over thirty semis parked in its delivery area, unloading.
The shale desperation begging the TRRC to make them stop drilling made me chuckle, but then I remembered all the good people in the field who will once again be laid off, like 2015-16.
We are hanging tight. One month of this won’t sink us. Nor will a few. A year, different story. Figure many will shut in before that. Maybe worldwide.
On the regulatory front, the state offices are all closed and no one is answering phones. The field personnel are still out there as of now, but thinking they may be sent home soon too.
Can shale wells be shut off and restarted later or do they risk damage that may need reaming out and in bad cases abandoning?
NAOM
Mike could answer better than me, but I think they can be shut down for a fairly long time with little problem.
Many older shale wells pump periodically.
We have reactivated conventional wells that were abandoned for decades. Those were economic until this most recent collapse
Shallow sand,
I remember differently, I thought Mike had said there is damage to the wells if they are shut in, this may only apply to tight oil wells in their first 36 to 48 months of operation, or I may not be remembering correctly.
The older tight oil wells (under 20 b/d of output) probably can be shut in as you say. You would know more than me, does that sound roughly correct?
It depends. Early in the well’s life, subject to liquid flow states, shut ins are not good because of proppant embedment and the possibility of induced frac closure. There is near wellbore skin damage to cope with; paraffin, scale, etc., and all of that threatens the wells ability to be brought back on line. As the well gets older they are less subject to harm from shut in. In the Permian, however, shut in periods might prove harmful with regard to ESP and gas lift systems for reasons I’ve described above.
They’ll sort this out. The TRRC is good at this stuff and it knows what it’s doing; it did it successfully, to the great benefit of worldwide price stability, for over 40 years. I still believe given the extreme decline rates of HZ LTO wells it is better to let Mother Nature do Her thing and focus instead on regulating the rate of shale oil development (slowing drilling) thru spacing requirements between wells and the density of wells per acre of land. That will be much easier, and safer to implement; this will reduce oversupply and associated gas waste much more cost effectively. We can always go back in between wells later. The TRRC can do that, as well, thru existing statutory laws, it does not need the permission or authority of the Federal government.
Depending on proration schedules there is little to no threat to leasehold issues. This will piss lenders and PE assholes off with drilling commitments and development covenants in their loans but they can all eat fish heads. I am hopeful that if this gains momentum the KSA and RU will take heed and come back to the table, quicker.
For me personally, this TRRC news is a big deal and I am hopeful.
https://www.oilystuffblog.com/single-post/2020/03/19/BREAKING-NEWS
Mike,
Thanks. You know this stuff better than most, makes sense that controlling completion rates through spacing rules and other regulations is the way to accomplish this. I would think that other State agencies would be able to regulate just as the RRC has done in the past as their has been precedent set by Texas. I am not a lawyer, so I may well be wrong on that.
Having trouble getting to Mr. Shellman’s post?
Here it is:
I have been working tirelessly the past four years, and relentlessly the past three weeks on social media, etc. for the Texas Railroad Commission to re-implement conservation laws in Texas and to stop the flaring of natural gas and the producing, and selling of Texas resource below extraction costs. Texas is the 3rd largest oil producing country on the planet, any effort to remove excess production from the market and/or to slow the rate of shale oil growth in America sends a strong message of cooperation to the rest of the world that we too want to raise and stabilize oil prices. That is good for the American oilfield worker and that is vitally important to America’s long term energy security. This is American strength.
This is huge and this will help bring the KSA and RU back to the negotiating table much, much faster. Watch.
God Bless Texas
Mike if you would like me to take this down, let me know.
I agree with your position (in your post above) 100%.
Link to Mike’s blog
https://www.oilystuffblog.com/
I would add, God bless Texans.
Thanks for the information guys, much appreciated.
NAOM
Mike,
“…but they can all eat fish heads.”
Thank you for this. It’s a new one to me.
(Life enrichment goes on.)
Unfortunately not all on the RRC are in agreement see
https://twitter.com/ChristianForTX/status/1241059333921738752
also look at the comments this Christian guy is going to keep the RRC from doing the right thing. It is a shame.
Also see
https://www.rrc.state.tx.us/about-us/commissioners/christian/news/032020a-rrc-chairman-wayne-christian-comments-on-oil-markets/
From the letter there is this (bold added by me):
None of this is temporary, as the U.S. Geologic Survey assessed a recent oil discovery in the West Texas to be 46 billion barrels of oil. RS Energy Group estimates this find could actually be as large as 230 billion barrels. This is the largest oil find in the history of the world.
The “recent discovery” is not recent at all, he is referring to the Permian basin assessment for “continuous oil resources” by the USGS, the mean TRR assessment is actually about 75 Gb and when economics are considered, the URR might be 60 Gb if oil prices eventually rise to $90/b by 2035 (in 2020$) and the mean USGS TRR estimate is correct, the range is roughly 40 Gb to 110 Gb (90% probability is is in this range for TRR by USGS estimates). Note also that real oilmen like Mr Shellman believe these estimates are ridiculous (I think perhaps the low end might be considered believable by Mike at high oil price levels, but I am guessing as he has only said they are not good estimates).
In any case, I am no expert, but based on comments by those more knowledgeable than me, the 230 Gb estimate seems patently absurd. Nearly 4 times higher (at minimum) than the most likely scenario (about 50 to 60 Gb of URR for the Permian basin, by my estimate.)
It is too bad they have a knucklehead as chairman of the RRC.
Dennis.
I wish people like this would quit using phrases like “energy dominance” when discussing shale.
I guess if one wants to be easily identified as a complete fool, one could continue to use such phrases.
The largest operator in our field and the largest operator in the adjoining field shut in combined around 1,000 wells this week and laid off about 80% of the workforce including all rig employees. That means wells that fail will be left shut in.
Stripper well operating break evens have a wide range, but I suspect $35-40 is average “all in” operating expense excluding income taxes and debt service.
Most operators are getting between $8-18 per barrel in the field from 3/20-3/22. Of course, most are on a monthly average, which will likely wind up being in the low $20s for March.
shallow sand,
Yes the energy dominance thing is silly. Not much can be done unless the US government decides to restrict imports of oil as it once did with exports, generally such policies back fire though.
I’m afraid I must ask a dumb question now, so as not to make it obvious later.
Will somebody take a few minutes and explain some of the techno speak in this thread?
I can’t make much sense of it.
Thanks.
As far as the rant at the end goes, it’s pretty much on the money.
Not me, there are a few sites with petroleum dictionaries you could try, but it’s not the work of a few minutes. I don’t know why I write this stuff – partly to get it straight in my head, partly to see how colourful and complicated I can make a chart while still keeping it almost legible, partly to fill up a lot of sleepless periods because of arthritic pain and muscle spasms; it’s certainly not as an educational service for the layman. There are probably hundreds of PhDs, extant and to be written, on why so much barely read gumpf is spewed out every day. When I do occasionally check the comments section here I take one look at your screeds with RANDOM capitalisation spooling off the page and don’t bother reading even the first sentence. I assume most people have a similar approach to anything I write, including this comment, so I’ll stop there.
Nothing anyone writes here will affect by even one day the day the trucks stop rolling and we all start starving.
But it still gets written. Not really cathartic, but there is a sense of thought organizing.
We’re all “blind men” trying to figure out the elephant under ground. some are better than others in describing what’s going on.
Me, I take a back seat to you all and try to educate myself and understand what you all are saying. I often come away as the grade school kid in a high school algebra class.
You’re much appreciated and respected.
I NEVER randomly capitalize anything, lol.
In other places I post, there are easy ways of underlining, italicizing, etc, that take one or two key strokes. In this forum, the only really fast way to emphasize a word is to cap it.
Two keystrokes.
But technical jargon is something else altogether. I could pepper my comments about the technical end of my own field so that hardly anybody here , excepting maybe a biologist or two, could make sense of them, but I learned long ago as a teacher, my secondary profession, that you can best get the message across to laymen, meaning anybody outside your professional field, using as little jargon and as much everyday language as possible.
It wouldn’t be hard at all to at least include the words indicated by acronyms in parentheses the first time they’re used, which would help a lot in deciphering the meanings of the same.
But you have my thanks and appreciation anyway for doing so much unpaid work, and I can still decipher some of it.
If you don’t like my comments, you can turn them off. THAT’S easily accomplished here, lol. Just click on the little box with the x in it beside my handle.
What do the initial rhs & lhs stand for? I assume that they are data sources.
They refer to the Y axis of a chart, Right Hand Scale and Left Hand Scale for all charts that have two vertical scales.
[Head slap]!! Of course. Thank you!!
Thanks for the informative post George, glad to see you back bud.
George,
Great to hear from you again, my friend, and another great post on the GOM! And looking forward to future posts.
I was referenced in your comments about well depth, gas v. oil, shallow water v. deep water, and geothermal gradients. I’ll comment on the shelf gas v. deepwater oil issue now.
The shelf has definitely been much more gas prone than deepwater. At it’s peak, the GOM was producing upwards of 13-15 bcf per day from the late 70s to the mid 90s. Now it’s producing only a few bcf/day largely because of the depletion of the shelf gas fields. There have been very few pure gas fields in deep water.
Why is this? It’s for one of two reasons – either the source rocks on the shelf are more gas prone (which is definitely the case offshore Texas shelf), or, the source rocks are more deeply buried on the shelf and are now in the gas zone, which is deeper than the oil zone. (Note that the thickest sediment packages in the northern gulf are about midway across the Louisiana shelf). Another reason for more shelf gas production is because of an abundance of shallow biogenic gas.
Picking up on shelf v. deep water well depth,, One of the reasons deepwater wells are typically deeper than shelf wells is because many of the deepwater fields are subsalt – the reservoirs are below an allochthonous salt canopy. The wells have to be deeper just to drill through the canopies to get to the reservoirs. These canopies also are present over much of the shelf, but virtually all shelf production is from above the canopies.
Regarding subsalt v. presalt – subsalt is in reference to reservoirs that are below salt that is out of place, v. presalt refers to reservoirs that are below in-situ salt. In the Gulf of Mexico deepwater, many of the reservoirs are below a salt layer that has been mobilized from a deeper salt layer. This mobilization process requires the in-place salt to forms diapirs or ridges in places, and then salt canopies develop from these diapirs or ridges. These salt canopies are “allochthonous” or “out-of-place”. The reservoirs are younger than the salt. To date, there have been no presalt wells in the Gulf of Mexico, although there is some exploration interest in testing the presalt. The best place for this would be in the east central GOM.
The prolife reservoirs offshore Brazil are presalt. This salt is in-place, or autochthonous, and therefore the reservoirs are older than the salt.
SouthLaGeo,
Economics may not be your thing, but do you expect the low oil price will slow down any further development in the GOM? It is not clear to me that future projects are economically viable at current oil price levels. You may have a better handle on this than many of us, with the possible exception of Mr. Kaplan.
Projects are at least getting deferred. I’m familiar with some development wells getting deferred, as well as some small facility projects. A few operators pulled their bids a day or two before last week’s GOM lease sale. There has been some talk about seeing if BOEM will grant an across-the-board one year lease extension to give operators one more year to drill exploration wells before their leases expire. As of last week, almost all operators have their staff working from home – it will probably be everyone this week.
Regarding those projects that have new facilities being fabricated in Korea – I’m sure there has been some delays, but, things may be getting back on track. Not sure though.
Historically, GOM projects that include the fabrication of new facilities have been somewhat immune to short term price cycles. Operators can’t keep starting and stopping these projects. Once the FID (Final Investment Decision) is made, it’s full speed ahead. This time may be different. Those projects that are within 2 years or so of first oil, where facility fabrication is well on track, are likely to proceed. Those include projects like Mad Dog 2 and Vito. Not so clear with other projects. This might make Chevron’s decision on Ballymore easier – tie it back to Blind Faith rather than build a new facility.
SouthLaGeo,
Thanks. So short term (next 24 months), this may have little effect on anticipated GOM output, after that it will depend on oil price over the next 24 months, if it remains under $50/bo (in 2020$) perhaps we see fewer new projects reach an FID and output might drop sharply in 24 months (in a low oil price scenario). Is that roughly a correct interpretation?
I think that’s right. Deferring development wells this year won’t have a much impact on this year’s production, but will impact production for the next couple of years. If the well eventually gets drilled, that production just gets delayed, assuming no EUR hits. I think it’s unlikely any projects get the green light for a while – maybe up to 2 years.
SouthLaGeo,
Thank you again. I appreciate you sharing your expertise here.
I appreciate Mr Kaplan’s work as well. Thanks for the excellent post.
The headline says it all. Oil just tanked to below $20. June is too far away. Will Russia come?
https://www.investing.com/news/commodities-news/breakingtexas-oil-regulator-had-great-talks-with-opec-invited-to-june-meet-2117128
I have just returned from holidays in the US.
News from Ron that he said I could share from an email.
Dennis it’s a long story. I checked into the hospital Friday noon in anticipation of a routine colonoscopy. I went into the operating room at about two and out at about 3. I was engulfed in horrible pain. The pain persisted and I was swelled up like a balloon. The doctor said he hit some kind of blockage and jut could not get around the corner in my colon. He told me he would do a CT scan next week. But I was still engulfed in horrible pain. He said it was just gas in my colon and he had to blow it up. He then told me to go home and walk a lot and the gas would go away.
I did buy the pain got no better. Bu 9 that night I could stand the pain no longer. I went back to the emergency room. They did a CT scan right then. They came back and told me I had a ruptured colon. I was having an emergency operation before midnight. I was in the ICU until Tuesday and was just discharged today, March 19th at about 6 PM. I now have a colostomy bag and will have to wear it for the rest of my life.
Of course, I had no internet access in the hospital.I could not call you because I did not have your phone number. Longtimber, whom I know personally from Pensacola, was the only number I had. So I called him and let him know what was happening. I explained my problem to him and thought he would post it on the blog. Instead, he just posted that I had a problem. I did not care that anyone knew what my problem was but apparently he thought I might. However, you may share this info with anyone you wish.
In a followup email he said:
Oh, the reason I had a ruptured colon was the doctor poked a hole it trying to make the corner in my colon.
Ron
He said he is doing ok, been out of the hospital for about 24 hours.
@Ron
Best of wishes, hope all goes well.
NAOM
Damn. And it is such a shame this was caused by the doctor.
300,000 deaths a year from the medical/pharmaceutical industry in the US. Who knows how much other damage short of death?
1 in 350 colonoscopies have serious complications and thousands die each year. That is more than 54,000 serious complications per year due to a single test type that detects about 3/4 of cancers present.
Can it be that hard to provide a link to these statistics?Well, here’s one I dug up on colonoscopies:
https://www.ncbi.nlm.nih.gov/pubmed/23373100
Unless you are remembering these numbers from the top of your head, you are likely referring to something in front of you, so the link is right there that you can copy & paste.
edited:
(of course I wrote the above before realizing it was in the context of Ron’s predicament, so we should just be happy that he pulled through. My mom had her last colonoscopy at ~82 years of age and the doctor told her that it was the last one she would ever need to get)
My best wishes, Ron. It never rains, but it pours.
Jonathan
Well, sometimes a little humor helps. I was talking to my son on the phone today. He asked, “But this is only temporary right, they will go in and fix it later?” I replied, no, this is permanent. I will never have another normal crap as long as I live. He replied, “Well, look on the bright side dad, just think of all that money you will save on toilet paper.”
In the spirit of humor-
Some people will do anything to get out of a Pandemic!
_______________________
Very sorry to hear what you had to/have to endure.
Best luck on healing up, and hunkering down.
Anesthesiologist a good friend of decades. He has talked of colostomies. There is some relative good news of a recent sort.
The nurses will teach you how to care for the opening. That used to be perpetually infected. No longer.
Ron,
Thank you for your transparency. Shit happens. As we get older, shit happens with greater frequency. I admire someone who tells it like it is regardless of what people might think. I appreciated your straight speak back in the oil drum days, and I still do. That’s a big reason I spend more time on this blog than on any other site.
Glad to have you back, take care.
I’m sorry to hear about – I hope you heal well.
Any idea why it can’t be repaired? I’m not sure I’d take that answer as the final word…
Fifty thumbs up!
Your son is lucky he was on the phone!! I don’t think he’s ever been hit up the side of the head with a colostomy bag!!
My son lost 18″ of his colon due to C-Diff and almost his life. We still have him and we are glad that he and you are still with us!!!
I pray your healing goes well.
Peter
Peter, it was a joke. Even though laughing caused me pain at the time, I laughed anyway. I desperately needed a little humor at the time.
Best whishes of quick recovery to Ron!
Ron,
Sorry to hear that story. But as usual you are keeping it real and strong. Hope you heal up well bud.
Ron, I’m sorry to hear about your hospitalization. My thoughts are with you. Remain strong.
You’re an inspiration Ron, and we all know we’re lucky to have you.
Thank you for the POB and best of luck in healing. You’re at the top of the Tough Old Bird list and that’s a genuine compliment.
Looks like frack spreads just took a dive.
https://twitter.com/PrimaryVision/status/1241157823817560071?s=20
Lightsout,
Not surprising. I think if oil prices remain under $30/b for the next 3 or 4 months we may see the frac spread count fall to less than 75, one thing that is unclear is how the frac spreads are split between oil and gas, there might be a few that remain in operation fraccing natural gas wells, but the frac spreads involved with tight oil focused production could drop close to zero at current oil price levels.
It is quite possible we will see tight oil output drop by 3000 to 4000 kb/d over the next 15 months if we see the tight oil completion rate drop to zero by May or June. As always we do not know future oil prices or future tight oil completion rates so this is speculative. At some point the economic crisis unfolding because of the covid 19 pandemic may be resolved (I am guessing by 2022). If that assumption is correct, demand for oil will eventually recover, oil prices will rise and eventually tight oil wells may begin to be completed again in the future perhaps a gradual increase starting in early 2022. Again speculation based on speculative assumptions. Crystal ball has never worked well.
My crystal ball can’t even tell me if I will survive to see prices recover.
Loved the rant – but you seemed to forget that everything which now exists depends upon the Third Central Bank of the United States – which produces a purely Fiat Currency.
FIAT : (1) a command or act of will that creates something without or as if without further effort
https://www.merriam-webster.com/dictionary/fiat
If tangible assets are used as currency vs. the now abstract assest – paper money created out of thin air – then Overshoot might be eliminated – and reality would be limited to what could actually be produced on time – and future demand would not be redeemed in present time.
“The probability and consequences of these crises are only going to increase, if he gets a second term, which looks almost impossible at the moment if the election proceeds, but there are worse possibilities, we should all be very afraid”.
Since we are already deeply into Overshoot – how should we proceed? Does it matter who is President?
CIRCUMSTANCE: The Age of Exuberance is over, population has already overshot carrying capacity, and prodigal Homo sapiens has drawn down the world’s savings deposits.
CONSEQUENCE: All forms of human organization and behavior that are based on the assumption of limitlessness must change to forms that accord with finite limits.
http://www.jayhanson.org/page15.htm
Tim E,
Perhaps leaders that choose advisers who recognize well established science would be a step in the right direction toward better policy.
“Perhaps leaders that choose advisers who recognize well established science would be a step in the right direction toward better policy”.
I agree – and M.King Hubbert was a leading member of Technocracy – or how the rich resources of this Planet would be appropriated/handled.
M. King Hubbert offered two different scenarios – one which was the status quo – the other afforded by an unimaginable limitless resource source – and that did not occur.
Technocracy is a necessary & and needed Government Organization when resources such as Oil are discovered and which can allow Overshoot – at least in Human Populations – to occur.
I fear it is too late.
Thank you for your kind and thoughtful reply.
“CONSEQUENCE: All forms of human organization and behavior that are based on the assumption of limitlessness must change to forms that accord with finite limits.”
Yep. Its a matter of timing and pathway. Choose well, or the path will be chosen for you.
“Choose well, or the path will be chosen for you”.
Choose well – lead your Sons and Daughters – and vote for the best & brightest.
A big thank you to Ron Patterson for allowing these discussions – and all the frequeny Contributors.
Thank you for the thoughts – contributions – and meanderings.
Hickory,choose well ,what ? Between a conman or a dementia man? . Surprising that in a population of 300 million this the choice . Of course if the dementia man fails,then the witch is there . Between a rock and a hard place .
P.S ; I am not a US citizen ,resident or anyway connected to the US ,but to a rational thinking individual the choice is disgusting .
try to choose everything well.
your thoughts, your friends, your food, what you spend money on, and what you tolerate from from your leaders.
etc.
Wrapping my mind around all this – I come back to my Pilgrimage to the Georgia Guidestones – whose tenets I can agree with:
From the Georgia Guidestones:
A message consisting of a set of ten guidelines or principles is engraved on the Georgia Guidestones in eight different languages, one language on each face of the four large upright stones. Moving clockwise around the structure from due north, these languages are: English, Spanish, Swahili, Hindi, Hebrew, Arabic, Chinese, and Russian.
Maintain humanity under 500,000,000 in perpetual balance with nature.
Guide reproduction wisely — improving fitness and diversity.
Unite humanity with a living new language.
Rule passion — faith — tradition — and all things with tempered reason.
Protect people and nations with fair laws and just courts.
Let all nations rule internally resolving external disputes in a world court.
Avoid petty laws and useless officials.
Balance personal rights with social duties.
Truth — beauty — love — seeking harmony with the infinite.
Be not a cancer on the earth — Leave room for nature — Leave room for nature.
Dying with the most toys….. well…. it is not sustainable. And oil is a finite and depleting resource.
Dennis produces some very beautiful charts and data – but when the oil is unavailable – what then?
Tim,
Better efficiency in use of energy, wind, solar, hydro, geothermal, and perhaps a bit of nuclear. Also better education should be a focus as it leads to lower total fertility ratios and human population decline eventually. It will not be easy, but nothing worth doing ever is.
Dennis – I agree with your comment – but I am not sure that the majority of Humanity can accept and come up to the level of the challenge to sustain and maintain “Industrial Civilization “Light” “.
At this point in time – numerous wheels are coming off of the Bus – and outside forces are coming into play which are leading to the end of Industrial Civilization and the ever increasing load of Humanity upon the Earth.
When the artificial lights go out – so does the sanitation system which most Urban Humans take for granted.
From The Plumber:
“The first epidemic of a waterborne disease probably was caused by an infected caveman relieving himself in waters upstream of his neighbors.
Perhaps the entire clan was decimated, or maybe the panicky survivors packed up their gourds and fled from the “evil spirits” inhabiting their camp to some other place.
As long as people lived in small groups, isolated from each other, such incidents were sporadic. But as civilization progressed, people began clustering into cities. They shared communal water, handled unwashed food, stepped in excrement from casual discharge or spread as manure, used urine for dyes, bleaches, and even as an antiseptic.
As cities became crowded, they also became the nesting places of waterborne, insect borne, and skin -to-skin infectious diseases that spurted out unchecked and seemingly at will. Typhus was most common, reported Thomas Sydenham, England’s first great physician, who lived in the 17th century and studied early history. Next came typhoid and relapsing fever, plague and other pestilential fever, smallpox and dysentery’s-the latter a generic class of disease that includes what’s known as dysentery, as well as cholera”.
https://theplumber.com/plagues-epidemics/
Those diseases, unknown in recent times – will return with a vengeance.
Ron,
I am very sorry to hear about this terrible medical injury.
I have read your fascinating site with its many interesting commentators for years. Thank you for all the work you’ve put into maintaining it.
I hope your recovery goes well, though it is dismaying that there is no surgical remedy for the damaged colon.
with warm wishes,
Brian
And is blaming Trump – who I am ambivalent about – the answer to which is neither a D or R reply.
From Dr. William Catton:
“In precisely Mills’s sense, the conversion of a marvelous carrying capacity surplus into a competition-aggravating and crash-inflicting deficit was a matter of fate. No compact group of leaders ever decided knowingly to take incautious advantage of enlargment of the scope of applicability of Liebig’s law, or subsequently to reduce that scope and leave a swollen load inadequately supported. No one decided deliberately to terminate the Age of Exuberance. No group of leaders conspired knowingly to turn us into detritovores. Using the ecological paradigm to think about human history, we can see instead that the end of exuberance was the summary result of all our separate and innocent decisions to have a baby, to trade a horse for a tractor, to avoid illness by getting vaccinated, to move from a farm to a city, to live in a heated home, to buy a family automobile and not depend on public transit, to specialize, exchange, and thereby prosper”.
http://www.jayhanson.org/page15.htm
RIP Jay Hanson.
Jay was a very interesting guy, but he greatly overestimated the importance of fossil fuels.
We don’t need fossil fuels, except for the short run. They were extremely useful in their time, and I have great respect for those who kill themselves to produce it, but…it’s time for something else.
As Dennis noted, there are superior substitutes, when you consider all of the costs and benefits. We need to move to them ASAP. This doesn’t require sophistication on the part of most users: the lights will continue to go on when people flick the switch. Good leadership is important, but fortunately FF interests (Republicans in the US) have only been partly successful in slowing down the transition away from FF. We have succeeded in developing wind and solar which is cheaper than FF; EVs which are as cheap or cheaper than comparable ICE vehicles; and plans for transitioning the grid away from FF. The only real question is whether we’ll do it as fast as we need to, to mitigate the worst of climate change.
Catton nailed it but so help me Sky Daddy, ninety percent of the people in this country couldn’t decipher what he is saying in this quote to save their soul. It’s university level English.
Here’s a plain language translation, for those who are minimally acquainted with evolutionary theory. :
Mother Nature doesn’t give a shit. She just continually stirs the pot, and whatever lives, and whatever dies, is of no consequence to her at all. She’s not sentient, she’s incapable of caring. She doesn’t keep score, except via the fossil record, and she doesn’t read it. She just creates it.
He probably does think that. But, what he said in the reference was different. He said something like this: “Humanity has become dependent on fossil fuels, and when they run out humanity will necessarily crash”.
Here’s a sample quote: “The human family, even if it were soon to stop growing, had committed itself to living beyond its means. Homo sapiens, as we saw in Chapter 9, was capable of transforming himself into new “quasi-species.” By the Industrial Revolution humans had turned themselves into “detritovores,” dependent on ravenous consumption of long-since accumulated organic remains, especially petroleum.” In other words, he’s talking about fossil fuels. (The whole thing is about fossil fuels and nuthin but – it reminds me of the song “Nothing but the bass”: no treble, it’s all about the bass, the bass, nothing but the bass…”)
Which is unrealistic. Humanity could crash, of course, and a transition away from FF could cause enormous trouble if mishandled. But, basically, Catton was wrong: humanity does not have to have fossil fuels: they can be replaced with substitutes that are as good or better: cheaper, cleaner, more equally distributed and far more abundant.
How did he get it so wrong? Basically, he was writing a long time ago, when biomass seemed to be the only renewable form of energy. We’re well past that idea, now.
Sorry Nick, but that is just a lot of baloney. Yes, humanity can live without fossil fuel but 7.8 million people cannot live without fossil fuel. Catton hit the nail squarly on the head. Less than half that number could not possibly live without fossil fuel.
The so-called Green Revolution has taken on the air of a mass movement.
A world powered entirely by renewable energy has become an ideology with a dogma all it’s own. They qualify for what Eric Hoffer wold call “True Believers”.
It is the true believer’s ability to “shut his eyes and stop his ears” to the facts that do not deserve to be either seen or heard which is the source of his unequaled fortitude and constancy. He cannot be frightened by danger nor disheartened by obstacle nor baffled by contradictions because he denies their existence.
Eric Hoffer: The True Believer.
Oh, my. We’ve had this discussion so many times. Each time I think we’re getting somewhere and then the discussion gets sidetracked to something else, and we don’t get that sense of finality, of agreeing on something. Well, we can try again.
Perhaps a good place to begin would be scalability. Do you agree that solar power, at 100,000 terawatts of continous 24×7 power (somewhere on the planet, of course, not 24×7 at any one spot) is more than enough to power civilization?
Enough? I have not done the math but that whole concept is absurd. The sun shining in South Africa will in no way power New York City in the middle of the night.
I would need to look at your model of this happening first. Then we could discuss it.
In 1920, world population was 1.8 billion and oil consumption was 450 million barrels.
Oil is mostly a luxury, we can go back to walking and reduce today’s healthcare costs. The world can transform to a better standard of living on 25 percent of today’s oil consumption.
Yep – there’s a lot of room for greater efficiency and conservation.
You know this just blows my mind. If we did it in 1920 then we can do the same thing in 2020. No we cannot! Since 1920 the world population has increased by four and one third times. In 1920 the vast majority of the world’s 1.8 billion people lived an agrarian lifestyle. Today the vast majority of the world’s population live and work in urban areas.
In 1920, one farmer produced enough food and fiber to feed and clothes one other family other than his own. Horsepower with real horses. But with the aid of fossil fuel today one farmer an feed at least 100 other families.
The world is today dramatically overpopulated. We are totally dependent on fossil fuel to produce the food, clothing, and all the other consumer products necessary for the survival of 7.8 billion people.
Every morning I take about a 10 minute shower at 2.5 gallons per minute and the water cost is about 1/4 of a cent per gallon(a luxury). If starting tomorrow the city raised the price of water to a $1 per gallons. I would learn to take a shower on less than 2 gallons over night.
Life goes on
I’m not arguing earth isn’t over populated with humans. It was also over populated in 1920.
Yes, New York City only gets sunlight for part of the day. The point is that I’m talking about averages, not peak power.
So…the average world generation of electricity is about 3 terawatts (an average of very roughly 400 watts per person, 24×7). You can compare that 3 TW to the 100,000 TW received by the planet as a whole in the form of sunshine.
If we assume 20% efficiency for PV, that means 20,000 TW available. Divide 3 TW into 20,000 TW, and we find that we’d need to cover .015% of the earth’s surface with PV.
Humans have already covered about 900,000 square km of the earth’s land surface with structures or paving of various sorts*. With 1 KW per square meter of insolation, those structures now receive 900 TW of sunlight. If all of that was covered by PV with an efficiency of 20%, and an average capacity factor of 15%, we’d get 27 TW of power. If we need 3 TW, then we’d need to cover about 11% of human structures with PV.
*http://www.curiousmeerkat.co.uk/questions/much-land-earth-inhabited/
Or, a country the size of the US could have one big PV farm about 80 miles x 80 miles, just to illustrate the scale needed.
Now, that’s just current electricity consumption: if we wanted to cover heating and transportation etc., we’d need about 2.5x as much electricity (assuming no improvements in efficiency and conservation).
So: do we agree that solar power can scale up to provide enough power for human civilization?
Nick, that is some pretty good math. But no, you haven’t proven a damn thing. New York probably averages, year around, about 6 hours of sunlight per day. (They don’t get a lot of sunshine in the winter.) You are going to need a pretty big battery bank. Where are your battery figures?
Yeah, I haven’t shown in this conversation that we can solve the problems you’ve raised, which are often called diurnal (daily) intermittency and seasonal intermittency. There are other problems, including weather-related intermittency and cost viability and probably other possible objections I’m not thinking of this second.
I’ll be delighted to discuss those.
But…in the name of actually making progress in this discussion, can we agree on this first point, that the total energy available from solar power is adequate for human purposes? In other words, that solar can scale up?
No Nick, solar power, alone, cannot possibly power the world. We cannot have half a conversation about replacing fossil fuels. Solar power must be able to power 24 hours a day in the dead of winter. You have not even made an attempt to tackle that problem. Simply to say that we could build enough solar panels to power everything is glaringly inadequate.
Ron, I’m sticking on this point because…well, this is how our conversations often go. I argue one point, and you move on to another. If we have a long discussion about fossil fuels, we suddenly move sideways to a discussion about loss of biodiversity, or soil, etc, and we don’t finish the conversation about fossil fuels. So, we never make progress.
Of course, we’d have to address intermittency in order to come to an overall conclusion that solar power could work. I’m not going to play games with you, and say that you’ve agreed that solar will work, when you haven’t.
I just want to finish one part of the discussion before we move on to intermittency.
So, if I stipulate that we’ve only had half the conversation (or less!), and that you’re not agreeing to the overall viability of solar power, can we agree on this one point: that solar can scale up?
Here’s a proposal: I’m going to assume you agree. If you don’t agree that solar can scale up, just say so, and give a reason, any reason, and we’ll discuss it. But, if you don’t say so, I’m going to assume you agree and the point is settled. Fair enough?
Okay, now, next question: daily intermittency. In the first step in this discussion, let’s examine the distribution of consumption over the day. In the US, power usage is higher during the day than during the night. I’d estimate that day time (roughly 9 to 5) power usage is twice as high as Night time (roughly 10 PM to 6 AM). Does that make sense?
Nick, I can very well understand why you wish to stick to solar panel production, deployment, and how much acreage they would cover. Those are the points you can cover with mathematics and so on.
But we both know that storage is achilleas heel of the renewal power problem. That problem has simply not been solved by scientific engineering yet. They may one day solve that problem. But not with the current demand and definitely not if all transportation ran on electrical power.
So you want to discuss the easy part, the part you can prove with mathematics. Well, I am not interested in talking about that. I want to discuss the difficult part, the part that is currently impossible. I want to hear how you think that part will be solved by scientists and when.
Until then, we have nothing to talk about.
Ron, I’m glad we agree. We agree that producing enough solar power isn’t hard to do. And, we agree that we also have to solve the storage problem. If you re-read the last paragraph of my last comment, you’ll see that I’m starting to answer the storage question, and I start by discussing intermittency.
The storage problem is all about solving intermittency: the fact that solar power is available only part of the time. Does that make sense?
I’d estimate that day time (roughly 9 to 5) power usage is twice as high as Night time (roughly 10 PM to 6 AM). Does that make sense?
No, that makes no sense whatsoever. Nighttime is not 10 PM till 6 AM. Nighttime is 6 PM till 6 AM (average). And the early evening hours, when the lights are turned on all over the nation, is at least as high as noon consumption. Also, the early morning and late afternoon sun will not produce a lot of electricity.And there are days, many days, when the skies are totally overcast for many days consecutively. Intermittent is not the word to describe that situation.
Also, just look at the traffic, anywhere in the world. A billion vehicles that you wish to convert to electrical vehicles. They will demand a charge throughout the day and night, mostly from your storage facility, that you haven’t even invented yet.
The storage problem is all about solving intermittency: the fact that solar power is available only part of the time.
Nick, that is dramatically underestimating the situation. Intermittency is something that happens occasionally. We are talking about something, that in the winter months, is present only about 25 to 30% of the time. Intermittency is not the word to describe that situation. You need a system that can be charged in with 6 hours of sunlight and then power every home, every industry, every business, and every vehicle on the road for a full 24 hours.
And as I said Nick, that system has not been invented yet.
Okay, deal with them apples.
The storage facility for pure solar energy is already invented, and partly build.
“only” the filling / discharging technic is more experimental.
Hydrogen, stored in huge caverns where today natural gas reserves are stored.
For creating electricity again you need hydrogen fuel cells, or with somewhat worse efficence reworked gas power plant (one experimenal gas plant runs on hydrogen here in Germany).
Oh, and big batteries for the day / night cycle – and reworked gas tankers transporting hydrogen around the world.
Chile can get the new Saudi Arabia, their Atacama high land desert is the best solar location on earth. They only need water and billions of $ – but I think the billions of $ can pump desalinated water from the coast.
Their current solar power plants are already under 3 cents / kwh – so there is a lot more possible there.
The storage facility for pure solar energy is already invented, and partly build.
Oh we are back to “the hydrogen economy.” We are, or will be, converting electricity to hydrogen, then converting the hydrogen back to electricity, and lose 80% of the original energy in the process. It is all explained here:
The Hydrogen Hoax
Yes, hope springs eternal but occasionally we just have to return to reality.
Ron, I don’t speak about cars where you have lot’s of additional compression losses and tranportation losses from transportation with trucks.
Best electrolysis methods have an efficiency of 80%, and modern gas plants get 60%. And you store at low pressure if you do it nation wide, like natural gas. You’ll get some losses with storing in caverns first, but this will taper out when saturation sets in.
It’s used for seasonal storage only, you build as much solar to cover 3 seasons, and store the surplus you always have with alternative energies since you have to overbuild. In Winter, you don’t get enough so you have to add from seasonal storage.
From the waste energy you can heat metropols in the winter with distance heating (implemented in Germany for some metropol areas, feed is from big coal and gas power plants).
It’s not perfect, but the best available non fossile since cheap fusion energy is so far away.
A strong nation wide mega volt power net is necessary to avoid storing as much as possible. So wind energy can be added from good places.
I think with a good balance 80-90% of the energy doesn’t need to be seasonal stored, only daily in batteries with much better efficiency. So a loss from round about 60% for seasonal storage is in sum not as bad as it looks first.
It’s all known technic that has to be scaled, not unknown stuff still to be developed. Power plants can be build for natural gas first and converted to hydrogen peak plants later.
Best electrolysis methods have an efficiency of 80%, and modern gas plants get 60%.
Eulenspiegel, We are talking about converting electricity to hydrogen via electrolysis, storing the hydrogen, then converting the hydrogen back into electricity. And you say you can recover 80% of the original electricity.
Eulenspiegel, what the hell are you smoking?
Seriously, the link I posted showed the step by step process from electricity, to hydrogen, then back to electricity again. The fact that the final electricity was to power an electric motor that powered an automobile, made no difference whatsoever. The math was there, explained in every detail. Now the least you should do is post the link that shows your statement to be correct. That is electricity to hydrogen then back to electricity with only a 20% loss. I just don’t think that is too much to ask.
If you really believe in your theory, you should have the links and math to back it up.
Intermittency is something that happens occasionally.
Well, “intermittency” is the word that the utility industry uses to refer to the fact that sunlight is only available part of the day; that winter reduces sunlight; and that clouds sometime block sunlight.
Can you stand the idea of using the standard word, or would you prefer a different word to refer to this kind of energy production variation?
Ron, I’m not smoking anything,
I said 80% for the electrolysis (to create H2), and 60% for converting back. That is, as you can think, multiplicative and results in a ball park number of 40% accounting for some more losses.
Plus the part for the pumps into the caverns – which is much less than the hydrogen handling for hydrogen cars. With hydrogen cars you get 80% loss. Filling 800 bar car tanks costs lot of pumping energy, as filling truck with cyro or high pressure hydrogen to drive it to the gas station.
No compressing, transporting and other steps involved.
And it’s for seasonal storage only – most will be used as produced or stored in much more efficient batteries or pumped hydro.
So if you only need to store 10% of the created energy in such storage, the overall effiency is not 40%, but 94%.
Example (sorry in German, perhaps a translater works):
https://www.zeit.de/2017/26/architektur-energieeffizienz-walter-schmid
It’s a Swizz zero enery house (no grid connection) with a seasonal hydrogen storage. Round about 10% of the yearly energy usage is stored there, most during surplus time in the summer. While discharging, the waste heat of the fuel cell is fully used for heating.
The nice thing: It works with today tech you can buy – no fusion energy and no yet to be invented super batteries. And in a not really good solar country.
When you build everything bigger (and cheaper with mass production), you can make a whole town independend. Scale effects can and will be used then.
How is this working out for Germany so far? Are they on the brink of 100% renewable power by now?
If not where are they?
How much time and money have they put into their current result?
If Germany is struggling, will it be harder or easier on a global scale? For poorer people and countries, countries with worse “location” then Germany?
Some times i think these global fantasies are based on the neighborhood where the creator of the fantasy lives.
+1
Germany is about 55% renewable electricity so far in 2020.
https://www.energy-charts.de/energy_pie.htm
The switch to electrified cars hasn’t really started yet, but oil consumption should be way down this year due to the (hopefully) one off pandemic. VW say it will release the first wave 30K of its new EV platform vehicles in August. They are presold.
Thanks to global warming ad better insulation, heating costs have fallen. Total carbon emissions have shrunk by about 35% since their peak in 1990. Per capita carbon emissions are about half what they are in the United States, partly thanks to high consumption taxes designed to reduce waste.
I think it’s fair to include nuclear in “low-carbon”, or “non-fossil fuel”. By that standard, Germany is 67% low carbon power.
That’s pretty good progress.
Germany is “struggling” because the last few federal governments didn’t want renewable energy.
You can get a lot of data here:
https://energy-charts.de/index.htm
Regarding fantasies, you’re free to get information what happens around the world.
IF you really want it.
Hi Ron,
I wish you strength and optimism to pull through. Continuing your website will be a sort of distraction from health problems. I hope the Corona virus does not complicate matters.
My latest post:
Impact of Corona Virus similar to some earlier peak oil scenarios
http://crudeoilpeak.info/impact-of-corona-virus-similar-to-some-earlier-peak-oil-scenarios
Q: “Recent travel and transport restrictions have given us the opportunity to relate peak oil predictions to the current state of the oil supply situation. These predictions were all based on higher oil prices which indeed materialized after the Iraq war. The problem we have since the 2008 oil price shock is that oil prices must be both affordable to consumers AND high enough for the oil industry to survive. The Corona virus is hitting an economy and financial system which have a precondition of accumulated debt incurred during the high oil price period and while the era of low cost oil has ended long ago”.
A: Good time for a nuclear war.
Hi Ron,
I’ve not been following this thread closely on a daily basis, and just now read the parts about your trouble.
Hang in there old buddy.
As I once heard my old Daddy tell Momma, now gone for quite some time, “We’re the old folks now.”
I enjoy needling you a little, sometimes, but only in fun. We we all know that you’re one damned intelligent and well informed man.
Ron,
best wishes and take care
Same from me Ron—-
We need your insight.
Not Even Higher Oil Prices Can Save U.S. Shale
While it might be understandable that drillers burned through cash during the 2014-2016 downturn, only six of the 34 companies surveyed by the institute reported positive cumulative cash flow between 2017 and 2019. That is a rather grim statistic for an industry that has hyped various mantras – low breakevens, technological innovation, big data and digitalization, downspacing and most recently, capital discipline – to justify why the next round of drilling might be different.
If 28 of 34 companies lost money in the years 2017 through 2019, what are they going to do today? WTI right now is at $22.30 a barrel.
Ron. Sorry to hear about your medical issues, glad to see you are able to keep posting.
If you look at page 106 of Pioneer Natural Resources 10K, you will find the company has a $5 billion net operating loss carryforward. This means that for income tax purposes, the company has racked up $5 billion in losses. I have determined these losses have been accumulated since 2015.
Also, on the same page you will find in 2019 the company had a net operating loss of over $900 million, and in 2018 had a net operating loss of over $800 million.
I think by begging OPEC and the TRRC, shale lost all credibility as a low or even medium cost oil producer.
I hate to say this, but we will gladly lose a few hundred thousand dollars this year if it means the shale oil lying is finally over.
$55-65 WTI. Moderation is what is needed. The USA needs to learn that lesson on the whole.
Moderation is what is needed. The USA needs to learn that lesson on the whole.
At last count, Congress Assembled contains two physicists, two chemists, two biologists, one geologist, 234 lawyers and an astronaut.
We have a President who doesn’t know what the word moderation means in almost all areas of his own life.
I read that most hotels could go BK if this doesn’t get better by summer. That means the Trump family would be toast, I assume they aren’t the best capitalized firm in the industry.
But hey, he got the low oil price he wanted. He would have been bragging all over the place if oil was this low without the pandemic part.
Say a prayer for the healthcare workers. The stress they are under is incredible. We have family in healthcare, as do most. I suspect they may pretty much be done with Trump, based upon what I am hearing.
…234 lawyers and an astronaut.
Not to worry, a second astronaut will soon join the group, Kelly of Arizona.
Keep Ron posting.
Its hard to swallow all the news, things are moving so fast.
But in case you haven’t digested the information coming out,
we are in a severe economic contraction that will qualify as a depression if it lasts long enough.
I don’t think anyone knows the length, but I will hazard a prediction on one ramification-
Peak Oil is upon us.
The rosy scenario of brisk economic recovery and oil output recovery to match rising demand, has a very poor prospect compared to just 2 months ago.
I hope to be wrong.
But the landscape of the world is going to be dramatically different on the back end of this.
Who will be credit worthy in a country that has added $5T to its balance sheet?
Just what is a dollar worth?
Who will be able to ride out this shutdown as a homeowner?
Our economic partners are going to be in even worse shambles than we.
My one hope is that we come up with a medication quickly, that can blunt the severity of the worse cases. This would allow the country to begin getting back to work. I think this is fairly likely. Timing is a big question mark. We will still have to go through the (very) painful process of developing herd immunity, since vaccine will come along too late.
Hickory you haven’t been paying attention. Didn’t you see the press conference this afternoon. Trumps on top of is.
He only has 10 more months to bankrupt America
I was trying to focus on relevant news. It is a challenge.
Hickory,
The rosy scenario of brisk economic recovery and oil output recovery to match rising demand, has a very poor prospect compared to just 2 months ago.
True, but what about 1-3 years from now?
With less than one in a million dying of the virus over a three month period, the virus will kill and wreck many more lives due to the human response to it causing an economic avalanche. Most of that will never be reported. It will be bundled into words like depression or recession or war.
Iron Mike- yes, that is the big question. Duration of this ‘event’
To me it looks like it will take long enough to cycle through the world
that a very large number of families are going to lose jobs and purchasing power.
So many people will earn nothing during these ‘slowdown’ periods, yet will still have bills to pay.
And government ability to fund large projects, such as infrastructure, will be very much diminished for a long time.
Many economic plans people had in December will not be realized in the next few years.
I would be pleased to find that I am wrong on all this.
Yea tough to call as usual.
Does anyone even know what the R0 of this virus is? It seems this is only the beginning looking at the info on wuflu.live
I think there is potential for a depression type scenario. And if the central banks want to throw QE infinity at it, then we will probably fall into a hyperinflation scenario.
Central banks need to be abolished. Disgusting organisations in my opinion.
“Central banks need to be abolished.”
I’m not so sure it would be a net gain, in the big scheme of things.
Luckily I don’t have to decide.
Well it’s their policies that has caused a lot of this mess. All they have done is inflate asset and equity markets.
Now they are talking about unlimited QE.
Absolute idiocy.
To me, it seems like the central banks are the kind thing people just love to hate-
hate if they do too much, hate if they do too little
Me, I find it easier to find fault with the those who control the rules, the taxes, the budgets and the regulations (or lack thereof)- that is the legislators.
Regardless, I wouldn’t want the job either of them have.
Agree, monetary policy has been covering up for the dysfunction of the law makers for to long. We are living in an era of low inflation because of the advancement of technology. Low inflation means lower interest rates and higher asset values.
As long as the dollar is preceived as safety and the world currency. This dysfunction can continue. The day that bubble pops, it will be the end of America as we all know it and the Fed won’t be able to print our way to prosperity. At that time all the cental bank haters will see the light and wish for the good old days.
We are living in an era of low inflation because financial assets are not included in inflation statistics. Central bank policy has been injecting unprecedented amounts of cash into financial assets, so that is where the inflation is. That is why
they are disgusting organizations. Their policy increases wealth inequality by favoring those who own financial assets over those who work for a living. The virus is giving them an excuse to crank the system up again, see https://wolfstreet.com/2020/03/23/what-are-all-the-feds-corporate-investor-bailout-programs-and-spvs/.
“because financial assets are not included in inflation”
Sounds like you should have been investing instead of consuming. Education is the first step.
Definition 1: The fundamental economic problem is to earn enough money to live the way you want.
Definition 2: The dual fundamental economic problem is to live the way you want without money. That way you don’t have to earn any.
I spend all my money investing in the dual fundamental problem. I don’t consume much at all.
I agree. Central banks are not only disgusting organizations, they are now obsolete. We can do much better.
After several years of dismissing bitcoin I realized I was making the mistake of not looking at the underlying technology: blockchain. Blockchain is revolutionary, you can decide the rules of money creation and destruction and program them into the blockchain. Impossible to cheat. The first cryptocurrency designed in the service of humanity rather than to attract speculators is called the june or Ğ̣. Its design is based on The Relative Theory of Money.
Google returned nothing on “june or Ğ̣ cryptocurrency” Do you have a link?
https://en.trm.creationmonetaire.info/. I think this was translated from the French using software, so the English is a bit stilted. I am less impressed with the theory than the result. Empirically when money is created this way it changes our relationship with money and exchanges. Exchanges are made much more in the spirit of mutual benefit.
Interesting speculative article on ZH.
What would a world look like with a negative oil price?
At this moment US three-month and six-month treasury bills have negative interest rates. Folks managed to ignore this sort of thing when I pointed it out in recent years with regard to Germany and Japan. As of right now, Germany’s 10-year instrument has a yield of -0.37%. Japan, the Netherlands, and Switzerland. All negative interest rates.
But of course this cannot happen because the sky is blue and things always work out logically with regard to money so you can go on ignoring it, or better yet pretend it’s not so.
With that as precedent, what would things look like if the price of oil went negative? My guess is the government would declare that the price is $15 per barrel, and so that would be the price. There, that wasn’t so hard, was it. Who in the oil industry would complain?
Watcher. We may be forced to shut down if the truck drivers can’t work or have no place to take the oil. Very little oil in the US goes directly from the lease stock tanks into pipelines.
Same issue will apply to hauling saltwater off leases.
Same issue applies to drilling, completing and equipping shale wells. Can’t social distance doing that IMO. There is COVID-19 in the Permian.
Oil production has been deemed an essential business, so right everyone can work.
SS, of course it’s an essential business. It is THE MOST essential business.
I have been curious about how food got to Wuhan. The Chinese sit at 80,000 cases and about 3,300 deaths. And they stopped it dead cold right there. They’ve got 1.3 billion people and a huge geographic area and they stopped it at 80,000 and maybe 25 miles. That city has 12 million people in it and every one of them eat food, and that food gets hauled in by diesel powered trucks just like in the US.
But those truck drivers somehow did not pick it up and spread it around the entirety of China. This is very impressive. There is much talk of autocratic, non freedom focused government measures there and how we cannot do that here. Well, that is our choice. They have stopped it. We have not.
Your truck drivers will have to move the oil. This is a requirement that will be in some way enforced. It doesn’t matter if that enforcement involves money or not. The oil has to move, just like food.
Another explanation is that China is lying.
Awful lot of reporters there hungry for reporter awards and superstardom who somehow are not finding the gazillion deaths.
It is possible to stop it. Look at Singapore’s numbers. Maybe they’re lying. Or S. Korea’s, but they could be lying, too. Germany’s death rate is 0.4%. Clearly lying.
“Germany’s death rate is 0.4%. Clearly lying.“
Watcher
Germany has 38 IC beds for every 100.000 inhabitants. Holland f.e. only 7/100.000
The U.S. ?
The ‘at least 60% of inhabitants immunity issue’ is called group immunity: the epidemic will die down. Before that happens we will have a vaccin, antibody treatment or medicine(s)
Make what you will of this.
https://www.cnn.com/2020/03/20/perspectives/saudi-arabia-oil-market/index.html
“Through various revenue model projections based on different oil price averages and export levels, the Saudi finance ministry and the Saudi Arabian Monetary Authority (SAMA) are designing financial government expenditure plans that can sustain oil prices falling as low as $30 per barrel on average for at least the next five years, with temporary dips as low as $15 per barrel, according to various government financial projections. Aramco CFO Khalid Al Dabbagh re-emphasised this point by saying “We [Aramco] are very comfortable we can meet our shareholders’ expectations at $30 a barrel or even lower.”
Talk is cheap. Both the Saudis and Russia as well as a bunch of other producers know that their finances are toast if oil prices stay as low as they are now. My prediction, there will be an agreement to cut oil production in the near future.
I think they wait until either Shale and a few other producers have really deep problems – or get regulated. I can think they can live with a regulated shale, only growing or shrinking only a few % every year.
Could be useful to have a number for global oil production with no drilling whatsoever. Companies throttling back capex would be operating on flow strictly from already existing wells.
That would be a useful measurement to have, globally. It also would provide a measurement of gross (not net) legacy decline.
Probably 7% annual decline would be my guess for World conventional C C (say everything except tight oil). So about 5 Mb/d for that and about 4 Mb/d for tight oil so overall about an 11% annual (9/84) decline in C C output with no new wells completed worldwide for the next 12 months.
I expect consumption will drop by 15 Mb/d, so there will be oversupply of 6 Mb/d unless OPEC cuts back and a lot of older wells are shut in.
Orange man bad! Seek help for your Trump derangement syndrome.
“Orange Jim Jones good!” –Tim
Out of curiosity, can you name ONE thing that Trump has handled well during this coronavirus outbreak?
His initial response was far too slow. He initially said that this virus would “just go away, like a miracle.” His current response is weak. He’s offered poor medical advice. He has consistently given incorrect information while addressing the nation. And now he wants to end lockdown after a few weeks, which is a surefire way to infect half the country and cause millions in fatalities.
So. Name a SINGLE thing you think the president has done well during this outbreak.
“So. Name a SINGLE thing you think the president has done well during this outbreak.”
https://www.youtube.com/watch?v=6xqp5EuStXE
He knew his wife tested NEGATIVE for the virus / Sarc
Well, it will just go away like a miracle. He was well briefed on that. The mechanism is the same as it has always been for viral disease. People get it, they recover, and they are immune for a substantial length of time.
Those people go out into the population and walk around and shake hands and say hello and essentially absorb virus transfer events that might have otherwise been virus infection events. As this number of immune people increases, the viable daily targets for the virus decreases.
We have been slow in getting Recovered patients turned loose. There is probably a legitimate reason for that but it’s a disease with a 2% kill rate and we have more deaths listed than Recovered. That’s not really possible as time passes. It will reverse. So the concept that it will just go away by itself is pretty much legitimate and the same concept that has always existed for disease.
“2% kill rate”
Globally, the fatality rate is currently 4.5%. Getting it below 2 requires intensive medical care. Without medical care, or if hospitals cannot keep up, the fatality rate goes much higher.
“We have more deaths listed than recovered.”
Entirely false. Why wouldn’t you Google things before saying them?
See https://cv19info.live/ for up to date info.
Finally, we all know that the president wasn’t talking about disease immunity over time. He meant that it would just go away and that it wouldn’t be a problem. He said this while his administration was still failing to take any significant steps to fight the disease.
And as far as immunity goes, that doesn’t work for a population until a significant chunk of the population has gotten the disease. In the US that means hundreds of millions of infections. That many infections would mean that the hospital system is overwhelmed, and you can kiss your 2% fatality rate goodbye. Italy is dealing with over run hospitals right now, and their fatality rate is over 10%. Granted, they have an old population, but the US will be facing a similar situation if the virus is allowed to spread in order to increase people’s immunity. We have a fairly old, very fat, population. We could easily see 8% fatality rates if our hospitals run out of resources.
The same effect would be felt in any country that fails to properly fight the disease. Countries with very low fatality rates fought the disease very hard early on, in order to conserve medical resources. South Korea is an example. If we fail to act decisively, we will see much greater fatality rates.
And as far as immunity goes, that doesn’t work for a population until a significant chunk of the population has gotten the disease.
Niko and Watcher,
Yes indeed. I heard an epidemiologist say that 60% or more of the population must have developed immunity for the disease to go away by itself. Most probably before that time there is a vaccin available. To be expected in sufficient amount somewhere next year.
If countries discontinue their emergency measures soon, then the daily number of infections will start to rise again.
How important is the economy ? Trump said: “We cannot let the cure be worse than the problem”.
The problem is ‘people dying’. In terms of percentage much higher than with seasonal flu.
Was talking about the USA’s death/recovered ratio since the item was about the president, and I’ve posted the relevant links in previous posts of my fave numbers source.
1094 dead 394 recovered.
Don’t rightly know how 60% can be the number. The population is mobile and some people die. And some people get born. Don’t think I know how to compute 60% as being correct. It would be nice to know if that’s a consensus, but of course if it’s derived from equations it won’t be a consensus. It will be purely fact.
There is some interesting merit in the concept of death rate being a function of hospital intervention. This is of course analogous to decline rates in oil fields with or without drilling. We always like to get a quote of decline without drilling, but they’re rare.
As an FYI in the US, 14% of total cases enter the hospital and need only supplemental oxygen. A couple of weeks later and they’re recovered but not recorded as such. 6% of total cases enter the hospital in need a ventilator. 40% of those die, but the 40% number comes from all of those on a ventilator historically.
80% don’t enter the hospital and generally speaking the enter the hospital if they’re going to need oxygen. 80% do not, most of that 80% never see a doctor, and are never tested. And a couple of weeks later they are recovered and not officially recorded as such.
Go to a hospital in New Orleans.
Tell them they are over-reacting.
Maybe read this Watcher
https://medium.com/@tomaspueyo/coronavirus-the-hammer-and-the-dance-be9337092b56
Nah, he says 75% of the US population get the virus and draws pictures based on that. Doesn’t have to be true.
Time passes. People recover. They had the virus once, and no longer. So at any point in time 75% may not have the virus. Might not ever get higher than maybe what, 2%? That’s possible. People are recovering all the time and become immune virus sponges.
That would be 6.6 million infected in a particular time frame. In other time frames, the Recovered relentlessly perform their virus sponge task as the oil field legacy decline equivalent. In fact, we may want to amplify the effect of Recovereds in that they know they are immune. They will go out and pick up virus off doorknobs somewhat aggressively. Only 6% of infected need an ICU. 396K. The ICU beds in the US are 92K, which I got several weeks ago. This guy is lowballing to make his case.
396K is more than the 92K that existed few weeks ago, true, but that 92K is more now, and there is no hard fast definition of ICU vs regular hospital floor. Ventilators can exist in both. The primary diff ICU vs regular hosp floor is time intensity monitoring, not equipment. That equipment can be in other rooms/floors.
The sky isn’t falling. This will be seen as a trivial event that we were very lucky to experience. It is a warm-up for the billions with a B that oil scarcity will kill.
Huge surge in reported Recovereds today. That, and Active Cases (not Total Cases), will tell the tale.
I wonder when hospitals will be told to treat elites only?
NAOM
PS @Lightsout Thanks for that link.
“Entirely false. Why wouldn’t you Google things before saying them? ”
Well Niko, that guy has preconceived notions that he is desperate to substantiate. Facts that don’t line up with it aren’t welcome, so he makes things up. The facts make his leader look like a fool with bad instincts. Difficult to swallow I guess.
Guys
Does anybody know the we’ll head price for Alaska crude?
I don’t think there is a wellhead price for oil in Alaska. You cannot buy oil before it passes through the pipeline. I believe all oil is sold FOB Port of Valdez.
Hi,
I am having a short discussion on another unrelated website and someone posted the comment below
Quote –
There is no shortage or even a projected shortage of crude oil in the world. The real problem in the Western World (particularly the United States) is over-supply which makes extracting domestic crude oil uneconomical.
– Quote
How should I counter this in a brief paragraph.
Any help would be greatly appreciated.
Ron – hope you are doing great.
Thanks
Richard
Richard,
The comment is correct today, there is a glut of oil currently due to overproduction by OPEC/Russia/US as well as a steep drop in consumption. The proof that this is correct is the price of Oil. At some point the health and economic crisis will end (date unknown) and World consumption of C+C will return to the level of 2018 or likely higher, the peak may be delayed by the current crisis to 2028 from my previous estimate of 2025, or it may be the peak was 2018, that is difficult to predict.
I can create scenarios based on a set of assumptions with a low, medium and high case to bracket the potential outcome, but any exercise is highly speculative with probably only a 50% probability that the low and high cases will bracket reality. I might do this at some point.
There is no shortage because we are now in a global recession/depression. Soon there may be plenty of oil, but no money to buy it with.
Hi and thanks,
Yes I understand what you are both saying and I should have stated my comment before his was about longer term trends (years) and was written a few weeks ago before the crazy moves started.
But I may not even reply. This is moving so fast what we say today is wrong tomorrow. But the overall trend is the same just different speeds.
Thanks again
You can definitely tell him the peak (so far) was November 2018 and the there is zero chance it will be topped in 2020.
Richard,
Longer term I expect there will be a shortage of oil, the current crisis will end in 1 to 3 years in my opinion.
North Dakota was down 42,253 barrels per day in December then down another 47,262 barrels per day in January.
Thanks, Ron. Going to be interesting where this chart ends up in the next few months.
Ron,
McKenzie country is the biggest producer in North Dakota
https://www.dmr.nd.gov/oilgas/stats/countymot.pdf
In Dec 2019 Mckenzie produced 17108736 bbd or 552 kbd. In Jan 2020 it was 16281073 or 525 kbd, down 27 kbd.
However, ND govt continues to show an uptrend to end 2022.
https://www.dmr.nd.gov/oilgas/stats/McKenzie.pdf
Tony,
That forecast was based on a WTI oil price of $55/bo or more and 22-23 operating rigs.
Currently there are about 17 active rigs in that McKenzie County, at current oil price, this number will fall to zero.
Scenario below is what I think things might look like if my price scenario (based on STEO through Dec 2021 and AEO 2020 reference scenario from Jan 2021 to Dec 2039) is roughly correct. Obviously speculation and 100% probability reality will be different.
I found this chart rather interesting. The “All North Dakota” includes the N.D. area of the Bakken plus the rest of North Dakota. The “DPR All Bakken” includes the Montana part of the Bakken but not the non-Bakken part of N.D. As you can see, it’s pretty much of a wash.
But as you can see, the EIA uses the actual data when they have it. but for the latest months they just make a wild ass guess. As for the Bakken, they are guessing things will be pretty level with only a very tiny slow decline. Obviously for January they got it wrong. And of course they got it just as wrong for February, March and April.
And I am guessing as well, but for January, with the North Dakota down over 47K barrels per day, all the USA will show a decline in January 2020.
Ron.
I think most producers are being paid $6-8 below WTI in the Bakken. This means March oil payments received in April will be around $22-24 per barrel.
In April, producers could be looking at prices in the teens or lower.
Bakken wells are expensive to operate. Salt issues, requiring fresh water treatments. Pulling an electric submersible pump costs at least $100K. Pulling a rod pumped well runs $25-100K.
I think about all wells drilled prior to 2018 are not economic to operate. As they fail, they will remain shut in.
This is also true in the other shale basins.
If oil stays here or goes lower for the remainder of 2020, it will be the worst bust since our first company started in the 1970s. We have never shut down a large number of wells, but we will if this continues for a few months. Something like 70-90% of conventional wells are operating at a loss.
I question if the US will be able to ever return to current levels, absent some major new discovery or secondary recovery breakthrough.
Shallow sand,
For wells not on water flood, wouldn’t they just come back on line after oil prices increase to $55/bo (in 2020$). Also for a well on water flood, couldn’t the injected water be stopped and the well be shut in, or pumped at a low rate that reduces potential well problems.
Dennis. Not as simple as that.
A lot depends on how corrosive the water is, with both water flood and non water flood production.
My only first hand knowledge is from the 1998 crash, involving a company that failed and was taken over by a PE firm that bought its debt from a bank at a deep discount and foreclosed.
A good friend of mine operated a rig that reactivated many shut in wells for the PE firm. The wells has been shut in for 6 months to two years. There had been no chemical treatment before shut in, which he said was a big mistake.
Every well needed almost all of the down hole equipment replaced. My friend said he has never seen so many semi loads of rods and tubing being hauled directly to the field.
From what little I know, the wells in the shale basins have very corrosive water. I think there will be down hole issues with most that are down for a very long period of time.
Mike could give a lot more information than me on this subject.
As to water flood, much more difficult to shut down. Also, big risk that production doesn’t return anywhere near to prior levels.
Of course, we haven’t even discussed CO2 floods, which produce a significant percentage of non-shale barrels in the US. Shutting those in is a nightmare (I hear, again no personal experience) and it would not surprise me if the ones shut in are abandoned. Again, I would appreciate comments on this. We used to have a lot more people who commented here with this knowledge, and I miss them.
When we have shut in wells, it has been usually low volume wells that freeze up in cold weather, under about 15 F. This is usually just for 2-3 months. We chemical before shut in, and none have very corrosive water. None are what I would call a true water flood, water is either hauled or a small amount is injected into the producing zone or a deeper zone. In 2016 we just left these wells down until April, when the price began to recover. We could have started them sooner, but got in no hurry with $25-30 well head (how we’d love that “high price now”.
Also, keep in mind what happens to surface equipment that is exposed to the elements 24/7 that is left idle for months or longer. Rust is never a good thing.
We shall see what happens this time around. A lot has been shut in already in conventional fields.
Citibank is predicting that WTI will not go much above $30 till 2021. Maybe US production drops will help balance the world market.
They are going to be shutting in the unconventionals if the refineries stop taking deliveries. What would that look like?
greenbub.
I have heard in certain areas of the Lower 48 that oil is not being hauled.
OTOH, I heard today from our crude oil purchases that they won’t have enough oil because some larger operators have shut in.
Heard gossip that the gauges today for the largest operator in our field were 15% of what they were two weeks ago. Just about everything they have along the main roads is standing still.
Shallow sand,
Thanks for the info. I was thinking more in terms of conventional output, you had mentioned water floods in the past. I am thinking in terms of a temporary shut down, waiting for oil prices to recover, rather than total abandonment. The wells would be chemically treated and pumps might be run a few hours per week to keep them in good mechanical shape (whatever schedule would be best to minimize overall costs for electricity, maintenance, and labor. For tight oil wells, and CO2 flood wells the strategy would be different no doubt. For older tight oil wells, they might be shut in, for newer wells they would just be run, the main strategy for tight oil would be to stop completing new wells, output drops to half current levels in a year to 18 months with that strategy so a drop from 8000 kbo/d to 4000 kbo/d in maybe 15 months for US tight oil. That would help balance the market, if shutting in of conventional and off shore also drops US non-tight oil by 33%, that’s another 1500 kb/d so US output would fall by 5500 kb/d. No doubt in the rest of non-OPEC we will also see reduced development due to low oil prices, so we might see a 20% drop in output, another roughly 6000 kb/d drop in output for a 11500 kb/d drop in output, if OPEC/Russia chip in when they come to their senses they could drop output another 3500 kb/d to get to the 15000 kb/d drop in output needed to balance the drop in consumption due to the ongoing economic crisis caused by the covid-19 pandemic.
Ron,
I have been saying for a long time that the most recent 4 months of the DPR is pretty useless.
I agree the DPR estimate for Jan 2020 to April 2020 is probably far from the mark.
Stimulus package erased all oil industry support.
Various green this and green that were thrown in as counterbalance and because of time pressures, the negotiators chose to delete it all rather than try to work out numbers.
Russia’s Self-Inflicted Oil Crisis
The Russian economy is likely to suffer the most devastating consequences of the oil price war – just as it bore the heaviest impact of low global oil prices five years ago. This time around, however, the injury is self-inflicted, as an angry Saudi Arabia not only decided to ramp up production but also moved to grab Russia’s oil market share around the world…
I was long US dollars for 2+ years against various other currencies. FED finally killed the being long US dollar trade with unlimited QE. Price of oil is going to react to the falling price of the currency oil is priced in period. Get ready for it because it’s going to be fast once it gets going. I could give you all what i think the target price is Based on technicals. But i won’t because not a damn you of you took it serious when i said $20 is coming.
No one took it seriously because you weren’t saying that in reference to the pandemic that caused most of the price plunge. Guessing right doesn’t mean crap if it’s for the wrong reasons.
HHH. I agree I didn’t think $20. I didn’t see COVID-19.
Brent is up artificially because of traders.
There are reports that deliveries have up to 10$ discount already, and tanks are filling fast. Something has to give, without shutins the commercial tanks will overflow soon.
Then a WTI/Brent spot price of 0$ is possible for a short time.
But I keep my bet. When there is a longer time of 20$ oil and sub, we’ll see 80$ oil. Because the damage to the oil infrastructure will be big, and no one will invest big $ into the oil industry next years while the price is low.
As you can read from Shallow, the damage is real – shutting in wells forever, which would have produced more barrels in a 50$ enviroment. And this will be world wide, shutting down all the tiny old field or low running sea fields (North Sea I’m looking at you) and whoops after the recovery in 2 years 3-4 mbpd are missing world wide.
It will be several years, at least 5 with world peace, to reach the 2019 production number again.
EDIT:
And for the crisis, here the IEA:
https://oilprice.com/Latest-Energy-News/World-News/IEA-Boss-Warns-Demand-Will-Plunge-By-20-Million-Barrels-Per-Day.html
That will fill up commercial tanks very fast. A few weeks and spot prices will be 0.
We are trying to get the state regulators to understand that this is similar to a wartime situation economically.
Thus far, they don’t seem to get it. They will when their orphan well count grows exponentially.
I can’t understand why the state oil and gas regulatory agencies are acting business as usual (except they aren’t going into the office – all working from home if ordered to or permitted to).
Russia’s foreign currency reserves appears to be $570B.
Balance of trade runs positive about $12B/yr. Oil is down about what, 1/2? So that becomes $6B/yr. Which adds to their currency reserves. Actually it’s probably not a decrease by 1/2. They sell $6B in weapons per year, too. It’s not all oil and gas. So probably adding 9B/yr to reserves.
They don’t seem to need to buy much from other countries. Given their technological superiority (who takes astronauts to the ISS again? Who is it that does that, and has for what, almost 10 yrs?) they likely have no need to buy tech from elsewhere.
Budget deficit is about $17B, which is less than 2% of GDP, in contrast to the US deficit which, with the new package, will clock in at about 7% GDP this year (GDP is going to decline, raw deficit will climb, sharply, which is why the president MUST get people back work or there will be no revenue).
That $17B would require 33 yrs to eat up the currency reserves. And that doesn’t even count their SWF. They appear to have about $240B in SWF total. The deficit would take another 15 or so years to eat through that.
And, of course, they have their own CB to monetize at will, like the Fed does. Of course, they have’t needed to, unlike the Fed.
It’s fashionable to swagger and think Russia is in horrible economic condition but the evidence just doesn’t say this. It’s mostly propaganda.
Russia’s real GDP per capita log scale.
https://fred.stlouisfed.org/series/NYGDPPCAPKDRUS#0
Google “Russia GDP”. The World Bank says that Russia’s GDP fell by about a third between 2013 and 2017. That is not good.
US Real GDP per capita
https://fred.stlouisfed.org/series/NYGDPPCAPKDUSA#0
In 2018 US real GDP per capita in 2010 US$ was 54579,
for Russia real GDP per capita in 2018 in 2010 US$ was 11729.
Russian debt is about $245B. about what 14% of GDP
US debt is going to be $21 T as soon as the stimulus is signed. That’s going to be about 120% of GDP after the Q1/2 hit.
You can borrow your way to GDP. The GDP equation has a G in it and that’s spending that in our case is substantially borrowed (recently loaned by the Fed). This can go on as long as other CBs (and the Fed) continue to act contrary to their own country’s best interests in order to avoid systemic issues. If they acted in their own country’s best interests, the Japanese Yen would have zero exchange value and the USD not much more than that. Were that to happen, import prices in dollar terms would explode. We do still net import oil.
Russia has no reason to care about all that. They have a trade surplus, food self sufficiency, oil and gas self sufficiency. And a debt of just 14% of GDP. This stuff is like celebrating corporate cash flow in a quarter where they borrowed a few billion.
Have another look at that GDP differential. And see what our debt paid for. Inefficiently, btw.
A Timeline for WTI
https://www.zerohedge.com/energy/wti-tumbles-21-handle-after-saudis-crush-hopes-russia-detente
A new OPEC post is up.