US Oil Production Finally Starting to Decline

There has been very little data to post about recently and as everyone should know by now, I post primarily about data. So if there is no data there is not much to post about. Also I have been very busy for the a week now and have checked in only a couple of times.

A few days ago a very racist post was posted on this blog. I completely overlooked it as I seldom scan the posts because I get an email for every post so I just read the posts in the emails. But when there is a guest post, as the one last week was, I get no emails, the guest poster gets them instead. Anyway I deleted the post and banned the poster. I also banned another poster because he accused me of deliberately letting the post stay up. That outraged me. It was the same thing as accusing me of such racism.

Petroleum Supply Monthly

The Monthly Energy Review and the Petroleum Supply Monthly have US production peaking, so far, in March and April. The Petroleum Supply Weekly has US production peaking in June. In the chart above I have averaged the Petroleum Supply Weekly into monthly data. All data is in thousand barrels per day,

Petroleum Supply Weekly

Here we have the weekly data from the Petroleum Supply Weekly. The last data point is July 24th. The huge jumps you see are basically just revisions. The huge jump you see for the week of May 22nd, was not really a jump. The EIA explained that their prior numbers were too low and the sudden increase that week was merely an adjustment.

Texas C+C

The EIA is finally getting its act together as to Texas C+C production. They have Texas peaking in March at 3,770,000 bpd and declining 106,000 bpd since then.

GOM

The EIA had the Gulf of Mexico spiking up in April but falling right back in May. The BSEE data, like Texas, is always delayed but only by about four months.

The EIA admits that they show different data but tries to explain it here:
EIA reports show different aspects of U.S. oil production statistics and trends

EIA Crude Oil ProductionEIA publishes several reports covering current crude oil and natural gas production conditions and how recent trends may affect the near-term outlook for the oil and gas industry. Each EIA product is distinct in its purpose, methodology, timeframe, and regional coverage. Some reports are considered estimates of actual production volumes, while others focus on future production.

One analyst suggest the EIA has been fudging the data all along:

EIA Capitulates Under Cover Of Darkness

Many investors know that when a company wants to mitigate media coverage of bad news, they typically release data on a Friday after the close.

Well last Friday, that is exactly what the EIA did, admitting the very thing I and Cornerstone Analytics have been arguing all year: EIA was and still is overstating U.S. production. The amount that they admitted to so far, as of Friday afternoon, was 254,000 barrels per day (b/d) or 1,778,000 barrels per week, 7,112,000 per month or 14,224,000 for June and July alone.

This is the most incredible cover up I have ever witnessed in my decade-long investment career and I have not seen one major media outlet even mention it so far. Instead China demand & Iran output are front and center as per prior posts in an attempt to divert attention (I call it moving the goal posts) away from the fact that both U.S. production and inventories were about to fall. The chart below speaks for itself on what is occurring:

EIA Capitulates

 

 

 

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501 Responses to US Oil Production Finally Starting to Decline

    • Rune is a modest man. He should have said BILLIONS. 😉

      • Rune Likvern says:

        Hi OFM and thanks!

        The headline is something oilprice.com produced on their own, my original headline;
        ”Are the Light Tight Oil (LTO) Companies trying to outsmart Mother Nature with their Financial Balance Sheets?”

        How my post originally and in full appears on my blog, link below
        http://fractionalflow.com/2015/08/03/are-the-light-tight-oil-lto-companies-trying-to-outsmart-mother-nature-with-their-financial-balance-sheets/

        And OFM you are right, it will become 10’s of billions and lots of people will become very familiar with the color….. red. 😉

        • shallow sand says:

          Rune, QEP, who has best acreage, can increase Bakken production 9% with just two rigs running, seems to do things right, still burned through $714.5 million cash in first half of 2015. That is with benefit of $15.88 per barrel re hedges.

          Do agree that QEP cannot make a go of it only further reinforces the theme of your most recent article.

          The numbers are there for all to see. WTI at $45 or below. This is getting very ugly!!

          • Rune Likvern says:

            Shallow,
            QEP (all Grail which at some point will become saturated with wells) has wells with very good first year flow totals. As these ages (like those of 2014 vintage) their total actual EUR converges towards the average for all their wells. The EUR band for the average well by vintage for their wells is also very narrow as I documented for some companies in my recent post.

            If QEPs average well follows the same pattern as others, that is midway point for EUR is reached after about 30 months of operation, the EUR for the average well will end up at around 400 kb (from actual data and apply some error bars to the figure).

            WTI (fixed) at $45/b and a $8M well requires a EUR about 450 – 500 kb for a Bakken well to nominally pay out (that is cash flows discounted at 0%) and thus no profit.
            There are not many wells that are that good.

            It is getting uglier!
            To me this is very serious and I believe few truly understand what this will set us up for further down the road.
            We are reliant on financially healthy oil companies as the oil companies are the experts to extract oil and bring it to the market.

            • The oil companies with a lot of exposure to light tight oil are relatively minor players. I’m not impressed by their managements’ ability to allow them to survive long term, if they go bankrupt their properties will be in better hands, and all personnel will still be available.

              In the medium term the oil price should bounce back and in a few years go above $100 per barrel, which should allow more wells to be drilled.

              • shallow sand says:

                Fernando, ExxonMobil, ConocoPhillips, EOG, Marathon Oil, Apache, Anadarko Petroleum, Occidental Petroleum, Shell, Chevron, BHP Billion, etc. All have varying degrees of exposure to US shale.

                I think you will find this is why there could be a ferocious oil price snap back. Many of these companies are abandoning world wide efforts to drill shale wells in US.

                Given these companies cannot all be completely incompetent, it would appear that many non-US projects they were pursuing need an even higher oil price then shale. International rig count outside Middle East has plummeted.

                Another thing, is there really any spare capacity left? When oil prices skyrocketed, dwindling spare capacity was a reason given. With KSA ramped up to 10.6, but how much higher can they go? No one else has any significant spare production capacity, at least based on my reading.

                Euan Means has a good chart on this in his link above.

                • shallow sand says:

                  Mearns, and below, not above. Comment editor not working for some reason.

                • Shallow, the large companies don’t have “a lot” of exposure. Do any of them have exposed more than 20 % of their SMOG PV to light tight oil? Any companies with more than 20 % exposure have shaky management as far as I’m concerned.

                  • shallow sand says:

                    I’d say COP, MRO and definitely EOG do.

                    I really think they feel shale has a better risk/return metric than most other conventional production.

                    For example, Marathon sold some pretty good Norway production to buy high priced shale production and acreage.

                  • If they have overexposure to shale then indeed they must feel they lack other alternatives.

                    They were unable to find enough prospects other than tight light oil in a $100 per barrel price environment. But the answer isn’t to play poker with shareholder funds. The answer is to simply acknowledge there’s a lack of acceptable prospects, strengthen finances, and look for a merger candidate.

                    The other answer is to take oil price insurance in the futures market.

                  • Nick G says:

                    The other answer is to take oil price insurance in the futures market.

                    That’s the key. As ShallowSand said, many companies got complacent, and saved a few pennies by not hedging properly.

            • John Keller says:

              Yet, these shale companies keep touting 600k, 800k, 1MM barrel EUR’s. When will regulators do something about that? It is clear from the financials of these companies that EUR’s are way overstated.

              • Regulators accept reserve estimates signed by professionals. If I were signing off on inflated reserve estimates I would use a false identity, because shareholders could come after me.

    • Jeffrey J. Brown says:

      WSJ: Oil-and-Gas Debt Deals Sting Investors
      Funds face paper losses on substantial investments this year in exploration-and-production companies
      http://www.wsj.com/articles/oil-and-gas-debt-deals-sting-investors-1438634208

      “Companies that did these deals, for the most part, had excessive leverage to begin with,” said Joshua Gale, an analyst at brokerage GMP Securities LLC. “So investors have done poorly” as prices have resumed falling.

      Since the selloff in oil, 19 stressed or distressed U.S. energy exploration-and-production companies have announced debt sales, though not all of those have closed, according to Mr. Gale. In the largest such offering, Energy XXI Ltd., which drills in high-cost oil fields, turned to bondholders including Franklin and Oaktree to make sure a $1.45 billion March debt offering succeeded, people familiar with the sale said. Funds that already owned Energy XXI bonds agreed to buy about half of the new debt before it was issued, one of the people added.

      The new bond puts Franklin and Oaktree among the company’s top-ranked creditors, but that doesn’t shield the investors from market losses. The new bonds have lost about 25% of their value since they were issued, while older bonds have lost about 50% of their value since the deal was priced and traded Monday at about 36 cents on the dollar, according to MarketAxess.

    • Han Neumann says:

      “US-Shale-How-Smoke-And-Mirrors-Could-Cost-Investors-Millions”

      Losses for those who don’t have the patience to wait.

      • Rune Likvern says:

        ”Losses for those who don’t have the patience to wait.”

        Han, would you care to elaborate a little further on what you mean?

        • Han Neumann says:

          Rune, I guess for a lot of investors the solution is waiting for the oilprices to recover. However maybe a lot are forced to close their position taking the loss. They could try to recover the losses and even win when oil production is clearly starting to decline. I’m losing now with some UWTI shares, but I don’t panic.

          • Rune Likvern says:

            Han, thanks for your reply.
            The key here is the level of the oil price.

            Simply stated there are two camps out there; one with those who believe the oil price will soon get higher.
            The other; the oil price will stay suppressed (as in low) for some time.
            FWIIW, I have flagged that I am in the second camp (bearish).

            Mine is from a broad understanding of the present global oil supply/demand balances, which, with no political interference, like from some countries agreeing to hold back supplies to close/narrow the present gap between supply and demand and thus provide support for a higher oil price, could last for some time. How long is any ones’ guesses.

            How things are in 2020 is in my opinion difficult to predict.
            Further the drag from total global debt loads will slow economic activity and thus affect demand for oil.

            Whatever happens in the near term, reality is that new supplies are costlier to develop and in general needs about $70/b for profitability.
            As long oil prices remain low, it weakens the oil companies’ balance sheets and their abilities for investments in new supplies. I think this is serious and poorly understood by most.

            A conventional oil reservoir has better resilience towards price swings due to its depletion profile.

            Shales (LTO) not so, as these now produce a big portion of their EUR in a low price environment, thus requiring a much, much higher price for the fast declining remaining EUR to make a profit.

            • Han Neumann says:

              Rune, also thanks for your reply. Exactly because of your mentioned caracteristics of LTO, I think that oil price recovery will happen rather sooner than later. Maybe even before end of this year. And for OPEC countries current oilprices are far too low for fiscal breakeven, so I wonder how long ‘they’ are going to keep their stubborn policy.
              Global debt loads could be a problem indeed. Oilprices could rebound considerably before falling below current levels.

              • Ronald Walter says:

                I want patience and I want it now!

                Patience is the euphemism for “I’m losing my shirt and am being skinned alive”.

                Whiting is under 20 USD today and CLR is in the doldrums at less than 32 USD.

                STO is 16.37. RIG is on sale for 12.40, looks like a brand new low. It’s nuclear winter for oil stocks.

              • Heinrich Leopold says:

                Han,

                The main reason for the low oil price is the high US dollar – and low current account deficit through high US oil production. As long as US production does not come down by at least two mb/d, the oil price will not move up. As high fixed costs producers the Saudis have to produce as much as they can – no matter how low the price goes. Saudi Arabia will very likely not bring up the oil price as this is too expensive for them. The natural swing producer is shale, because shale can reduce production at the lowest costs. You will get uwti much cheaper by next year.

                • Javier says:

                  Heinrich Leopold,

                  I disagree. The main reason for the low oil price is the mismatch between a weaker growing demand and a stronger growing production.

                  The high USD value is a byproduct of the worsening global economic conditions and its weakening demand growth on commodities and oil.

                  The oil price recovery requires a healthier oil demand growth. Cutting oil prices by half has not resulted in a surge in demand as it was predicted by many, and a lot of people are ignoring this important and worrying fact.

                  People are concentrating on the wrong side of the equation. A new global crisis, that is already past due according to post 60s statistics on recessions, will continue to depress prices for years, even as it destroys US shale production and reduces global oil production: i.e. peak oil.

                  The growing gap could turn ugly:

                  • Heinrich Leopold says:

                    Javier,

                    It is exactly the strong dollar, who restricts global demand through lower monetary liquidity.

                  • Javier says:

                    Heinrich Leopold,

                    Nope. A strong dollar is the result, not the cause of a reversal of the carry trade that is coming out of the developing world, the Eurozone and Japan, due to its poor performance as a result of a weakening global economy leaded by a weakening China.

                  • TechGuy says:

                    Javier wrote:
                    “People are concentrating on the wrong side of the equation. A new global crisis, that is already past due according to post 60s statistics on recessions, will continue to depress prices for years, even as it destroys US shale production and reduces global oil production: i.e. peak oil.”

                    Well Said. The Dollar strength is a symptom of global financial problems, not the cause.

                    I do think that the collapse in oil prices is likely to trigger oil shocks in the future (perhaps in 3 to 5 years). Long term projects are getting canceled, and the Shale debt bubble is to leave a bad mark in future energy investments well after the dust settles. At some point it, will result is real shortages do to a lack of sufficient investment to offset declines.

                    My best guess is that Energy companies, LTO and non-LTO need prices above $110 to support depletion offsets, and I doubt we will get there in the next two or three years. which will delay development for that same period. Since it takes 3 to 7 years to develop a new field, we are talking 6 to 10 years before new oil (non-shale) become available to offset declines. By then it will very tough or impossible to prevent an economic collapse.

                    I also doubt the global economy can sustain prices above $100 for any considerable period. The economy was able to afford higher prices by loading up on Debt. Already the sovereign debt bubble is beginning to crack in Asia and the EU. A US debt crisis may begin on the Shale debt bubble, coupled with corporate debt (used to fuel stock buybacks) and problems with Muni (aka Puerto Rico default) and student loans.

                    Lots and lots of really tough economic problems and a lack of will to tackle them with any real commitment or long term solutions. Maybe the collective Central banks can delay with another big round of QE, but QE can’t solve real problems.

                • Han Neumann says:

                  “As long as US production does not come down by at least two mb/d, the oil price will not move up. ”

                  Heinrich, Reading the comments from Rune and shallow sand among others, it probably won’t take many years before that is going to happen.

                  • Heinrich Leopold says:

                    Han,

                    Maybe there is a fast change. However, it will be faster for natgas. Ratio of UWTI/UGAZ is very favourable for UGAZ. It may be a wise thing switching to UGAZ instead of sticking with UWTI.

  1. Thomas says:

    Yeah EIA is right lol lol lol

  2. ezrydermike says:

    Nothing about coal exports.

    “The Clean Power Plan will reduce carbon pollution from power plants, the nation’s largest
    source, while maintaining energy reliability and affordability. Also on August 3, EPA issued
    final Carbon Pollution Standards for new, modified, and reconstructed power plants, and
    proposed a Federal Plan and model rule to assist states in implementing the Clean Power
    Plan.”

    http://www.epa.gov/airquality/cpp/fs-cpp-overview.pdf

    http://www2.epa.gov/cleanpowerplan/clean-power-plan-existing-power-plants

    • Fred Magyar says:

      And last week there was this news release from a left wing socialist greenie weenie organization that apparently thinks anthropogenic climate change is real enough to be a threat. That group better known as the DoD… released this:
      http://www.defense.gov/news/newsarticle.aspx?id=129366

      DoD Releases Report on Security Implications of Climate Change

      DoD News, Defense Media Activity
      WASHINGTON, July 29, 2015 – Global climate change will aggravate problems such as poverty, social tensions, environmental degradation, ineffectual leadership and weak political institutions that threaten stability in a number of countries, according to a report the Defense Department sent to Congress yesterday.

      Can’t wait for an update from the DoD on ‘Peak Oil’ and how that might aggravate those same conditions.

      • The DoD has a chief, who goes by the name President. When you get down to it they are a government bureaucracy. And they are quite skillful at laying out the BS. Overpopulation is a worse problem. But global warming is what the bureaucracy emphasizes because it pleases the top boss.

        • Fred Magyar says:

          So you think this one is BS as well?

          http://www.acq.osd.mil/dsb/reports/ADA477619.pdf

          I don’t think the president really has much to do with the content of any of these reports.

          Did you read what the German Bundeswehr said in their report on Peak Oil?
          Do you think that is BS as well?

          http://www.energybulletin.net/sites/default/files/Peak%20Oil_Study%20EN.pdf

          Do you think Angela Merckle has much influence over what the Bundeswehr says about German national security issues? Well in a similar vein I don’t buy your argument that the US President influences the DoDs report on national security issues and if they think Climate Change is important enough to be on their radar it’s probably because where there is smoke there is also fire.

          • I believe I was the first person to post links to the Defense white papers known as JOE Reports ( Joint Operating Reports) at the TOD.

            Anybody interested in where the Pentagon stands on climate as future issue is free to look them up.

            They are chock full of rock solid historical information and what is commonly accepted as hard science at just about any university.

            But just because I disagree with Fernando on SOME issues does not mean I disagree with him across the board.

            He is hard nosed enough to tell it like he sees it on illegal immigration- and I see it more or less exactly the same way he does. The more people you allow in illegally , the more will show up – and the growth in numbers will be exponential with a very steep curve even in the very near future.

            Some problems have to be dealt with by nipping them in the bud. Maybe I am a caveman or worse but I sincerely believe this is one of them. You just can’t ignore a crack in a leaky dam or a leaky roof without EXPECTING exponentially increasing troubles as a result.

            For what it is worth I base this opinion on having read a hell of a lot of history books over the last fifty years plus while most people spent their evenings watching tv.

            AND I DO fully recognize that my own refugee family arrived on these shores less than two centuries ago.

            Hypocrisy has nothing to do with the facts. We Scots,Irish and some Germans took the land I live on TODAY from the local so called ”Indians” who took it in a series of wars from other,earlier ”Indians”.

            My more distant ancestors took the land they occupied in Scotland and Ireland from people who got there sooner and I have good reason to believe that part of my family arrived here as the result of the English deliberately starving them out.

            Life is a Darwinian affair and will remain so for the foreseeable future.

            The people in Western Europe are already having quite a bit of trouble looking after their own. These troubles will grow worse as the climate worsens and non renewable resources continue to grow ever more expensive.

            A million desperate refugees mostly uneducated and unable to speak the language and used to doing whatever is necessary to get by in a failing country where the rule of law means NOTHING —–Well, a million such refugees are enough to wreck any small country and enough to bring on a political backlash a LOT worse than than any policy designed to keep them out.

            Now as far as the hard core left leaning liberals who will condemn me for these words are concerned, most likely by saying I am grossly exaggerating the problem–

            Well to them I can only say ” You need to be thinking about the nature of the exponential function and the potential number of refugees.”

            And thinking about the sort of politicians who will take over if the refugees are allowed to get thru in large numbers. They are not going to be the sort of politicians that modern decent people are proud of.

            • Han Neumann says:

              “The people in Western Europe are already having quite a bit of trouble looking after their own.”

              Mac, a Dutch politician said last week that refugees wouldn’t be much of a problem for Europe, because the population is decreasing. I agree with you that it is dangerous because of the mentioned risk of exponential increase.

              • Hi Han,

                For the most part the population is NOT YET decreasing and the governments in Western Europe are still looking at paying for getting the older generations safely thru old age on the economic backs of relatively few young people.

                My cave man side again emerges and I for one do not believe that millions of uneducated and uncivilized ( by European standards) people used to living by ENTIRELY different rules can be easily integrated into a modern western welfare state.

                Damned few of the many people I know of locally, personally, here in the states make a serious effort to better themselves once they get on welfare. They look at it as a sinecure position and do every thing they can to STAY on welfare. This not to say most of them do not hustle a little or a lot on the side, babysitting, cutting grass, doing a little carpentry or painting or dealing a little pot or fixing cars or whatever.

                But the idea that all such people are determined to rise to the top of the heap via study and hard work is a joke.

                So long as only a few get thru you will get a lot with real brains and ambition as a percentage of that few. ONCE they start getting thru by the tens of thousands you will unfortunately get the sort in large numbers that that jackass Trump is blathering about.

                Hardly anybody is right about everything.

                I have lots of Mexican neighbors these days – most of them the salt of the earth. But recently we are seeing the kind coming here -HERE- who have no work ethic other than to deal hard drugs and break into houses and that sort of behavior.

                This sort of person is NOT to be BLAMED for possessing the ethics and values of the society he grew up in. If I had been born to Catholic or Buddhist parents I would be a Catholic or Buddhist etc. If my Daddy had been a successful professional crook there is every reason to believe I would have followed in his footsteps.

                I do not believe any country is at present strong enough to risk taking in unscreened immigrants by the thousands and tens of thousands without risking a horrible political backlash at the minimum.

                I hope Trump flames out and crashes but the level of support he is getting now makes my point for me.

                Trump in office supported by people like him in control of congress means the end of any hope for any NEW environmental initiatives and the gutting of any already in place.

                The REAL conservative position is to take care of the one home we have.

                UNFORTUNATELY the large majority of people who think of themselves as conservatives are not well enough educated in the physical sciences to understand this fundamental fact.

                • Nick G says:

                  Mac,

                  This reverses the reality of the problem.

                  The hard reality is that illegal immigration has been tolerated in the US, (and legal immigration in Europe) because it provided cheap labor for business.

                  If anyone really cared about stopping immigration they would do something to improve education and opportunities in the immigrants’ countries of origin. That would start, for the US, with Mexico. Mexicans would be delighted to stay in Mexico if things weren’t so bad for them there.

                  The US has collaborated with the Mexican elite to keep the status quo – that could change…if the business community really wanted it to.

                  • I agree about the lack of opportunity in poor countries such as Mexico. But actually doing something about this lack of opportunity is a Herculean job and the American business community as you point out is not interested in fixing the problem. It is to the business community’s advantage to support the status quo.

                    The working classes of this country are desperate to do something about immigration but politically unorganized and thus powerless.

                    I know many such people personally, some of them kin to me. They hate immigrants guts with a passion because they contribute to the oversupply of cheap labor that keeps THEM poor.

                    The more fortunate middle classes are somewhat different. My old colleagues in education are mostly hard core liberals and yet perfectly happy to hire the CHEAPEST yard boys and baby sitters and house cleaners and nickel and dime construction workers they possibly can – nationality and citizenship be damned.

                    They can AFFORD to take the high and snooty moral ground because they work in fields that are just about totally insulated from competition from immigrants. The middle class business OWNERS are VERY happy to hire the cheapest labor they can get, no more questions asked than necessary to avoid going to jail.

                    Nurses are pretty well insulated from competition from immigrants but sometime back I read about a few hundred being allowed in from the Phillipines. The nurses I know personally ( some in the family ) are already retiring as early as possible because they are overworked and under paid. NOT a single one of them believes that the Phillipine nurses are being brought in except for ONE reason- to avoid paying higher wages and providing better working conditions.

                    A lot of computer programmers who used to think they were safe economy have seen THEIR jobs outsourced overseas as well. The most conservative of newly minted conservatives are liberals that have been recently mugged. The programmers were mugged by so called free trade.

                    My gut belief is that sooner rather than later the people who really matter at election time, the ”middle of the road more or less ” middle classes, are going to come to the conclusion that cheap labor is NOT a good thing.

                    I personally would rather pay a a couple more bucks for a shirt made by decently paid neighbors than one made in an overseas location- as well as supporting my neighbors on welfare and paying for an ever expanding police , courts, and prison system.

                    So far as I am concerned , pardon my language , only a fool who does not KNOW any poor working class people could possibly believe they can be successfully trained by the hundreds of thousands and the millions to do more sophisticated modern knowledge based work.

                    I have BEEN THERE and HELPED in the ATTEMPT to do that. Maybe one out of ten or twenty displaced manufacturing and service workers has the guts and potential to get the real training starting over with learning basic fxxking arithmetic and reading.

                    I used to make EXCELLENT money welding. Then I participated in shooting off my own welders toes by teaching a couple of hundred kids the fundamentals. Now welders are a dime a dozen compared to formerly.

                    The ONLY reason ANY trade or profession pays well is because there are few enough people capable of practicing it to keep wages and salaries high– UNLESS the people in it have a way of keeping outsiders permanently OUT.

                    I was able to get into some nuclear power plant work occasionally when the unions could not supply enough people. But as a general thing – not being able to get into the relevant unions – I was not even eligible to APPLY for most good welding jobs thru my working years.

                    The ONLY way the poor working people of this country will ever again enjoy reasonably well paid work is if by some means the competition for manufacturing and trades jobs is reduced sufficiently that the people doing the hiring must offer higher wages.

                    Moving the textile and furniture industries that used to provide modest but steady incomes to a million people in my area overseas is was one of the WORST mistakes possible. Half these people are now permanently on one sort or another of welfare and will STAY on it. A substantial portion of them have turned to less than legal ways of making ends meet.

                    I LIVE among these people, grew up among them, dress and talk like them , and mostly I live like them on a day to day basis.I am however MUCH better off than most of them since I own a good bit of property. I could dress and live more extravagantly if I so desired. I could drive a new car if I really wanted to.

                    They talk to me far more honestly than most people do to priests and lawyers. Some of this talk has taken place TODAY in the very room I am sitting in at this minute with a couple of folks who came to visit my Daddy.

                    I also know the other side. I lived for years in the city and hung around the university district taking grad classes and owned a business and made a lot of money at times. I was welcome at parties where everybody was living the American dream.

                  • Nick G says:

                    actually doing something about this lack of opportunity is a Herculean job

                    Not really. As you know, Mexicans are as hard working as anyone. My impression is that Mexican elites deliberately set things up to prevent entrepreneurship, good education, unionization, etc. It takes forever to get permits. There are effective monopolies everywhere. Why is Carlos Slim so rich??

                    The US actively supports this stuff. If the US pushed in the other direction against it, it would have enormous leverage. After all, if the US sneezes, Mexico catches a bad cold.

                    The ONLY reason ANY trade or profession pays well is because there are few enough people capable of practicing it to keep wages and salaries high

                    That helps, but the most important thing is collective action: unions. Which also need government support, or businesses will crush them.

                    Moving the textile and furniture industries that used to provide modest but steady incomes to a million people in my area overseas is was one of the WORST mistakes possible.

                    That’s not the primary problem. Automation is the primary problem. Automation would have eliminated 80% of those jobs by now, either way.

                • TechGuy says:

                  OFM
                  “I for one do not believe that millions of uneducated and uncivilized ( by European standards) people used to living by ENTIRELY different rules can be easily integrated into a modern western welfare state.”

                  Low skill immigrants cannot replace high skill workers (engineers, skilled laborers, etc). Its never been about the quantity of workers, but the skills of the workers needs to maintain complex systems. I am pretty sure the TPTB are only focusing in increasing the body count instead of matching skills sets. Of course political parties are gaming for the latino vote in the US. its probably not much different in the EU (with the difference of Middle East immigrants)

                  • For Nick ,

                    in response to your eight o four seven o four pm response

                    SO -You think dislodging the entrenched Mexican elite is a piece of cake job?

                    Maybe you are right.

                    But I am VERY strongly of the opinion that dislodging that elite and rearranging the Mexican economy is going to be a Herculean job.

                  • Nick G says:

                    Mac,

                    That would greatly over simplify this discussion.

                    What I’m trying to say is that the United States has collaborated with the Mexican status quo. Think maquiladoras. If the US were to stop pulling in the wrong direction, and start rolling in the right direction, they could make a very large difference.

                    But, we haven’t really tried…

                    Wouldn’t it be a good idea to at least give it a try??

            • Ilambiquated says:

              >The people in Western Europe are already having quite a bit of trouble looking after their own.

              Europe is a massive exporter of food, and I haven’t heard about people starving.

          • MarbleZeppelin says:

            Fernando has a point. If it wasn’t for population we would not have a problem. 🙂
            So population with technology causes global warming which causes climate change. Climate change affects the hydrologic cycle which in turn causes food production to be reduced, which solves some of the population problem.
            So if we can increase global warming fast enough, the population problem goes away. We can throw fossil fuel depletion into the mix just to give the population reduction an extra edge.

            The downside is that OFM stopped immigration and there is no one to work the farm fields when the tractors stop. Bad plan OFM.
            Wait a minute.
            Or maybe a good plan as it cuts population even faster due to less food. Good plan OFM.

            • The price of field labor – to the extent it is necessary- is a big problem for the farmers who have to pay for it while competing in the most competitive industry around.

              BUT if the cheap imported labor disappears then the price of it will go up substantially and some of the millions of people without jobs already – LOCAL people – will gladly take these jobs.

              This increase in labor costs on the farm will drive up the costs of fresh veggies and fruits a little – not much- at retail.

              The farmers will pass it thru and on to the wholesalers.

              When I was a kid I got paid pretty good money to pick apples – fifty cents a bushel due to labor shortages. I made very close to a hundred bucks some days- awesome money for that place and time.

              If I were still working I could pay two or even three bucks a bushel and a strong young man willing to HUSTLE all day could make over five hundred bucks. This would result in MY costs increasing maybe six or seven cents a POUND. Apples seldom sell AT RETAIL for less than a dollar a pound these days and usually closer to two bucks than one buck.

              The cost of field labor being an issue is simply farm industry propaganda. The ONLY part of hands on farm work these days that really supposedly depends on dirt cheap help is harvesting.

              You do NOT want incompetent help mixing chemicals that cost hundreds of bucks per pound or driving and maintaining tractors and combines that cost substantially more than Mercedes and Teslas.

              Except for hand harvested fruits and veggies the industry is and has been thoroughly mechanized for decades. Labor is NOT a big deal. That is totally industry propaganda bullshit. Get rid of the immigrant help ( no reflection intended on the immigrants who pick veggies and fruits , they are awesomely hard working decent people) and the price of tomatoes and apples goes up a nickel or a dime at the most.

              The price of chicken , beef and pork might go up a cent or two at the MOST.The operation of grain farms and feedlots is so highly mechanized that virtually NOTHING is done by hand anymore except repairs and maintenance work. The cost of a combine operator compared to the cost of a combine and the value of a hundred acres of corn or wheat is TRIVIAL. The operator will harvest into the thousands of dollars worth of crops per HOUR he works running a big modern machine.

              And a million or two million local people are back at work at wages they are willing to accept.

              This is NOT to say that occasionally farmers CANNOT find enough help mostly due to political considerations.

              Restaurants and farmers hire the cheapest help they can get for competitive reasons. If the cost of labor goes up they pass it along. Certainly some fast food outfits will fail if they have to pay a couple of bucks MORE per hour. But the INDUSTRY will survive. The industry will shrink some but the people in it will make more and have more to spend to support other industries so the net effect will be more or less a wash.

              No honest farmer will ever blame his failure on the cost of labor – so long as other farmers are paying the same labor costs as he is. If he fails it will be for OTHER reasons.

              Decades ago I saw figures to the effect that modern American farmers have more horsepower per man at their disposal than any other industry. I expect that this still holds. Big trucks have more horsepower than big tractors but farmers have tractors , combines,insecticide sprayers, lots of electric motors etc etc at their disposal- multiple machines per man.

              • wimbi says:

                Thanks, OFM, for putting a proper scale on cost of farm labor. I would add that, as usual, one really good helper is worth many not so good ones, and lots less bother.

                I just had to let go two ok but not great shop aides since their stress on me was more than I could take.

                The one I kept, now admits that he too, found them more in the way than real help. We are now both happier and more effective.

                When I was in business, I did what I could to bring in a few talented foreigners and they were indeed truly experts and a credit to all. And their offspring are now nationally recognized in this or that field. a great success!

                That was a real few, less than 10. When it comes to thousands and millions, then of course we get the normal distribution of everything human, heavily weighted toward poverty, ignorance, poor health and all the other reasons one might feel pushed to make a desperate move.

          • Those reports are related to fuel and energy supply, have nothing to do with “climate change” as such. The first link refers to energy supply security, concludes they use too much fuel and says the energy grid may become more unreliable (probably caused by voltage instabilities caused by wind).

        • Fred Magyar says:

          BTW, how does this jive with your Vencore link and the supposed resiliency of the Arctic Ice Sheet and its recent upward trend?

          https://goo.gl/8HyLhL

          Or do you think these guys are less professional than the good folks at Vencore?
          At least on this site you can actually download the data.

          Arctic sea ice maximum reaches lowest extent on record

          Arctic sea ice extent for February 25, 2015 was 14.54 million square kilometers (5.61 million square miles). The orange line shows the 1981 to 2010 median extent for that day. The black cross indicates the geographic North Pole. Sea Ice Index data. About the data —Credit: National Snow and Ice Data Center
          High-resolution image
          The National Snow and Ice Data Center (NSIDC) is part of the Cooperative Institute for Research in Environmental Sciences at the University of Colorado Boulder. NSIDC scientists provide Arctic Sea Ice News & Analysis content, with partial support from NASA.

          NSIDC has issued an update to Arctic Sea Ice News & Analysis describing winter sea ice conditions in the Arctic Ocean.

          Arctic sea ice appears to have reached its maximum extent for the year on February 25 at 14.54 million square kilometers (5.61 million square miles). This year’s maximum ice extent is the lowest in the satellite record.

          • That’s a five month old report. The report I linked was written in late July.

            You alarmists have a tendency to flagellate yourselves using cherry picked data. I think it’s some sort of masochistic tendency, to be honest. You would do better if you looked at the data, and relied less on the army of hysterical media and blog literature.

            Like I say, this is uncannily similar to the Iraq WMD bullshit storm used by Bush, the Pentagon, and the media prior to the 2003 invasion.

            • Fernando, the subject of that article was about the sea ice maximum! That is the very latest sea ice maximum. It was, of course, written at the time of the year when the sea ice maximum occurs. It states that this year’s sea ice maximum was the lowest on record. That record will be current until the next sea ice maximum occurs,… next year!

              That is current data. That is not cherry picking. Good god man, get a grip.

              • Yes Ron, nevertheless it was a cherry pick to pick the article. It proves nothing if the reader is educated in the subject (don’t forget I worked in real Arctic projects for several years and had to coordinate work done by ice experts). What counts is the over all trend, including the ice mass trend. The data in that particular link shows the trend was altered for a few weeks (the ice cover just happened to go very low at the max, which in the over all climate change is meaniingless). I like to look at the full data set. And the full data set does show a sea ice concentration, cover and volume recovery since 2012.

                http://neven1.typepad.com/blog/2015/08/piomas-august-2015.html

                • Fred Magyar says:

                  What counts is the over all trend, including the ice mass trend.

                  Yep, I agree 100% with that statement!

                  To be clear the overall trend has clearly been heading down at least since the 1980s, so I’m not quite sure how you figure this is cherry picked data on my part.

                  Of course you are still entitled to your opinion.

                  Cheers!

                  • It is cherry picked simply because you highlighted a single point in a longer trend.

                    My post, on the other hand, linked the Vencore site so it could be used by those who wish to have information from a USA government contractor who has less of a political agenda.

                    I also chose to quote the statement about the ice recovery from the 2012 low, which happens to be a 30 month trend (not a single point). The intent was to show that Vencore wasn’t just parroting the party line.

                    The ice recovery is important to those who try to project ice conditions for multiyear projects. For example, it could alter plans to explore for oil offshore Greenland, the Barents/Pechora, the Beaufort, etc.

                    We haven’t discussed the issue much, but the record sea ice extent around Antarctica is causing re supply problems for some bases. I understand the Australians may have to reduce activities because the ice is so thick they can’t access their base like they used to.

                  • Fernando, now you are just making excuses, trying to cover your mistake of calling the very last current data cherry picking.

                    Highlighting the fact that the very last sea ice maximum was the very lowest sea ice maximum in history is, by no stretch of the imagination, cherry picking.

                    The original reason you said it was cherry picking was the fact that the data was five months old. But when I pointed out that the very last sea ice maximum was five months ago and therefore this was current data, then you changed your reason. You found another reason to call it cherry picking.

                    Is it that hard to say: “Hey, I misspoke.”

                  • Sea ice cover plot by Danish institute. Shows the slight dip in February. The key is not to get misled by a statement focusing on a small segment, and instead look at the full data set.

                    http://ocean.dmi.dk/arctic/icecover.uk.php

      • Synapsid says:

        Hi Fred.

        Did you read the report a week or so ago describing sea-level change along the Atlantic coast of the US? The forebulge caused by the weight of the last ice sheet is still relaxing and the greatest rate of relaxation along the coast is centered at about the Chesapeake. Norfolk, Virginia, the throbbing heart of my old outfit the US Navy, is in that area. As the forebulge subsides the land sinks below sea level.

        Mother Nav is not a skeptic about sea-level rise, for good reason.

        • Fred Magyar says:

          No I didn’t see the report a week ago but I gather this is what you are talking about
          view-source:http://www.geodesy.noaa.gov/GRD/GPS/Projects/CB/SEALEVEL/sealevel.html


          A similar plot just for tide gauges along the east coast of North America.
          Tide gauges on the Chesapeake Bay are again emphasized using a different color.
          Note the similarity of all these plots.

          Figure provided by Bruce Douglas (NODC) and John Lilibridge (GL)

          The Table below shows the relative sea level rise in mm per year
          for long-term tide gauges in the Chesapeake Bay region. Trends
          for 1930-1990 and 1970-1990 are displayed. It is
          obvious at a glance that there is a great difference between the
          regional rate of sea level rise during the two periods.

           photo Sea Level Station_zps08cng91x.jpg

          The interval 1930-1990 is long enough at 60 years to establish
          that the middle Atlantic region has a systematically higher rate
          of sea level rise than the long term global average of nearly 2
          mm per year. The approximately 1.5 mm/yr extra rise for the
          region comes from a general sinking of the area into the ocean.
          Postglacial rebound, that is, readjustment (sinking in this area)
          of land elevations since the retreat of the glaciers at the end
          of the last ice age, is the cause. The overall global rise of
          sea level adds to the effect of land subsidence in the Chesapeake
          area to produce an unusually high rate of long-term local sea
          level rise relative to the global average.

          The period 1970-1990 tells a very different story. The sinking
          of the land from postglacial rebound is still going on, but the
          regional ocean circulation and density structure has produced a
          temporary fall of sea level in the zone that has entirely offset
          the effect of the subsidence due to postglacial rebound. Thus
          for now, the net change of sea level in the middle Atlantic area
          is zero. Of course this situation will not last. The nearby
          ocean will inevitably recover, and even overshoot, its long term
          rate of sea level rise in the area, producing at some time in the
          future (probably in the next few decades) a rate of rise that
          exceeds the long term average rate for the region.

          • Doug Leighton says:

            Isostatic rebound is rise of land mass that was depressed by the weight of ice during the last glacial period which should cause the apparent sea level to go down, not up. If you guys aren’t confused you’re certainly confusing me. True, sea levels from NY to Newfoundland did jump (approximately four inches in 2009 and 2010) — caused by ocean circulation changes.

            • Fred Magyar says:

              Isostatic rebound is rise of land mass that was depressed by the weight of ice during the last glacial period which should cause the apparent sea level to go down, not up.

              Yeah, that’s what I would have thought as well but you can argue with the guys who wrote that, not me 🙂

              The approximately 1.5 mm/yr extra rise for the
              region comes from a general sinking of the area into the ocean.

              Postglacial rebound, that is, readjustment (sinking in this area)
              of land elevations since the retreat of the glaciers at the end
              of the last ice age, is the cause.

              For reasons unbeknown to me, it seems the post glacial rebound in this particular region was causing the land to sink, not to rise during this time period…

              This might help clarify the issue…

              http://goo.gl/Nn5yJ0

              Earth also returns to its original shape very slowly. In fact, postglacial rebound continues today, albeit at an exponentially-decaying rate. The land beneath the former ice sheets, e.g. around Hudson Bay and central Scandinavia, is still rising by over a centimetre a year [3, 4], while those regions which had bulged upwards around the ice sheet are subsiding – regions such as the Baltic states and much of the eastern seaboard of North America

              • Fred Magyar says:

                Here’s a graphic that shows the rising and subsiding areas

              • Doug Leighton says:

                “Recently, the term post-glacial rebound is gradually being replaced by the term glacial isostatic adjustment. This is in recognition that the response of the Earth to glacial loading and unloading is not limited to the upward rebound movement, but also involves downward land movement…………..”

                Shit, and I’m a bloody geophysicist…. mind you it was 50 odd years ago we learned that stuff…. yeah, its a piss poor excuse. Thanks Fred.

        • MarbleZeppelin says:

          A discussion on the factors in sea level rise including the forebulge.
          http://www.eenews.net/stories/1059972339

          • Oskar Dilsilvo says:

            I was about to search for a magazine article I read, but it turns out the article posted at your link contains the information I sought:
            “When it comes to the East Coast, however, Greenland does have one particular twist in store. Its ice-loss legacy does not end with dumping fresh water. Afterward, geography kicks in. The island will rise, undergoing its own post-glacial rebound, just like Canada. (This could mitigate some melting.) But it will also lose something more ephemeral.

            It will lose its gravity.

            Currently, Greenland is home to so much ice that its huge mass pulls ocean water toward the island, its gravitational pull lifting local sea levels. Like a miniature moon, it creates a permanent tide. But melt enough ice and the ringing water will slough away, circulating back into the Atlantic.

            “It’s the most counterintuitive effect one could imagine,” said Harvard’s Mitrovica. “The sea level close to the ice sheet will dramatically drop … if it’s melted enough.”

            Even with the water it dumps into the ocean, this means that Greenland melt could lower sea levels in a halo some 1,200 miles around it. Newfoundland and Britain, for example, would see their sea levels quickly fall, he said. Few published models have accounted for these gravitational changes. Mitrovica published one himself, in 2010, looking at New York City. And by and large, Greenland’s gravity loss canceled out much of the rise that would have come from its meltwater.

            The community is only beginning to grapple with the importance of gravity to sea levels. These gravitational changes also mean each ice source carries its own geographic signal, its own fingerprint, as Mitrovica calls it. Future sea-level rise will be a mix of thermal inflation, glacial legacies and these fingerprints. Each coastline, each port will be different.

            “There’s no reason to believe that it should be even,” Mitrovica said.”

            The magazine article I read had the feature of maps/graphics depicting Greenland’s icecap gravitational pull and resulting ocean level bulge around it…as that bulge relaxes away, sea level will rise at various shores around the World far from Greenland.

            • If the planet were smooth with no high elevation masses of mountains and ice, and stationary, no moon , etc , as a theoretical or thinking experiment , then there should be a nice quiet sea that levels itself out perfectly like standing water in a small lake.

              So – if anybody in this forum knows, what are the maximum differences brought about in sea level from place to place on the globe by factors such as the Greenland ice sheet?

        • ezrydermike says:

          well at least the glacier melt is slowing down…oh wait….

          Observations show that glaciers around the world are in retreat and losing mass. Internationally coordinated for over a century, glacier monitoring activities provide an unprecedented dataset of glacier observations from ground, air and space. Glacier studies generally select specific parts of these datasets to obtain optimal assessments of the mass-balance data relating to the impact that glaciers exercise on global sea-level fluctuations or on regional runoff. In this study we provide an overview and analysis of the main observational datasets compiled by the World Glacier Monitoring Service (WGMS). The dataset on glacier front variations (~42 000 since 1600) delivers clear evidence that centennial glacier retreat is a global phenomenon. Intermittent readvance periods at regional and decadal scale are normally restricted to a subsample of glaciers and have not come close to achieving the maximum positions of the Little Ice Age (or Holocene). Glaciological and geodetic observations (~5200 since 1850) show that the rates of early 21st-century mass loss are without precedent on a global scale, at least for the time period observed and probably also for recorded history, as indicated also in reconstructions from written and illustrated documents. This strong imbalance implies that glaciers in many regions will very likely suffer further ice loss, even if climate remains stable.

          http://www.ingentaconnect.com/content/igsoc/jog/pre-prints/content-ings_jog_15j017

          • Javier says:

            Melting is what the glaciers are supposed to be doing since the world came out of the Little Ice Age, that marked the maximum expansion of glaciers during the entire 11,000 years of the Holocene.

            It is proposed that major glacier fluctuations occurred on a multicentennial scale with a changing pattern during the course of the Holocene. … After 3.6 cal. kyr BP less frequent recessions interrupted the trend to advanced glaciers peaking with the prominent ‘Little Ice Age’.
            Multicentury glacier fluctuations in the Swiss Alps during the Holocene

            Glaciers have been smaller than now for most of the Holocene, when CO2 concentrations were much lower.

            Results show that during the Holocene, the glacier was smaller than today for 6500 ± 2000 yr and larger than today for 4500 ± 2000 yr. This pattern is consistent with limited data from other techniques for glaciers in the Alps and Scandinavia…
            The Rhone Glacier was smaller than today for most of the Holocene

            And most interestingly, percentage of Swiss glaciers retreating and advancing for the last 100 years correlates well with AMO (Atlantic Multidecadal Oscillation).
            100‐year mass changes in the Swiss Alps linked to the Atlantic Multidecadal Oscillation
            Since the AMO is about to turn again, this theory predicts that our suffering shrinking glaciers should get a respite during the next decades.

            From Fig.3 in that paper:

    • ezrydermike says:

      Aug 3 (Reuters) – Alpha Natural Resources Inc, one of the largest U.S. coal companies, became the latest in the hard-hit industry to seek bankruptcy on Monday.

      The company became the second-largest publicly traded U.S. coal producer when it bought Massey Energy Co in a $7.1 billion deal in 2011, when its stock was trading at more than $50.

      http://www.reuters.com/article/2015/08/03/alpha-ntrl-resc-bankruptcy-idUSL3N10E4JP20150803

      • shallow sand says:

        Yes, US coal company stocks are probably the only sector in worse shape than US oil and gas.

        I guess we will have enough gas, etc? US coal production is tanking. Peak coal in US?

        EIA says US imports of coal will drop, but then rise in 2016.

        Will be a big issue in the 2016 election in WV, VA, KY, IN and PA?

        • Stuck in the Middle says:

          I read a few years ago that a whopping 14,000 coal mining jobs were considered at risk from the ‘war on coal’.

          Big hairy damn deal! Many of the same folks ideologically bleeding over that paltry number of jobs were champing at the bit to flush half to two thirds of the U.S. automobile industry (including parts suppliers) down the drain….many more jobs would have been lost…and many more auto industry U.S. jobs have been lost since the great outsourcing in autos and light trucks started decades ago. Same thing with cameras, televisions, and appliances…the numb-nuts bleating over the coal mining jobs cheered ‘Free Trade’ and the ‘Free Market’ for creating supposed corporate efficiencies from exploiting cheap labor and lax environmental regulations in various other countries around the World.

          So…they can shove their concern about coal miners sideways…those folks are far better off without the danger and chronic health issues from underground coal mining..and we and the environment would be far better off when we stop explosively removing mountaintops and filling in the valleys with the spoil…fly ash, sludge ponds, heavy metals…Holy Zeus, bring on the NG, with appropriately regulated fracking…and I’d rather see valleys filled with water for pumped storage then overburden blasted from mountaintops. And…bring on the solar PV and (especially offshore) wind…I would even entertain advanced fission plants as long as there is a 3 order of magnitude increase in safety against core melt downs, and we implemented a sane strategy to deal with the waste.

  3. Euan Mearns says:

    Ron, one of my recent posts that has generated a fair bit of interest.

    US Shale Oil: drilling productivity and decline rates

    “With these declines and current rig count and productivity levels, production in the Bakken will stabilise at around 870,000 bpd, down 330,000 bpd on current levels. Production in the Eagle Ford will stabilise at around 1,140,000 bpd, down 560,000 on current levels. The lower decline in the Permian means that production there will continue to rise. It is estimated that the net effect will be an LTO production decline of the order 830,000 bpd spread over several months.”

    This bound to be wrong, but the essence may be close to true.

    • shallow sand says:

      Euan. That you for the link.

    • Enno Peters says:

      Euan,

      You wrote about the Bakken production projection:
      “This is calculated by taking recent production of 1,200,000 bpd and applying a 5.2% decline per month and observing that this will take production down to 871,000 bpd after month 6.”

      I belief this method is flawed. The front-month decline rate declines itself rapidly as fewer fast-declining wells are being brought online than before. My projection tells me that even if 0 wells are brought online in the 7 months after May 2015, the December daily production is still higher than 871kbpd. This is based on applying well decline profiles to all individual wells, using separate profiles for >=2014 and <2014 wells. With about 100-120 wells being brought online on a monthly basis (consuming part of the fracklog) for the rest of the year, I project ND production will end around 1110 kbopd, plus or minus 40kbpod.

      • Euan Means says:

        Enno, I’m quite sure my analysis is flawed and there is a better way of doing this. In the articles I write I try to find a way of reaching “quick and dirty” answers that pick up on some fundamental points and get us into the right ball park.

        Some of the key observations are that less new wells = lower play decline rate. And that LTO production is not going to fall as far as many may expect or hope with current drilling and efficiencies. I think we are agreed on that. The devil then is in the detail.

        If you had some links to your splendid work….

        • Enno Peters says:

          Hi Euan, I agree with you. When the new ND data is out, end of next week, I’ll create a short-term projection in a post here.

  4. Dr. Don says:

    Told you Ron, the Gov now cooks most of the data they release to maintain their complete control of markets, perception, etc. The destruction in the oil patch will come back to bite us hard, but since the world is in a technocrat driven zero interest rate depression maybe we won’t need that much oil after all.

  5. AlexS says:

    Mixed Signals on U.S. Oil Output
    Government reports conflict on whether production is rising or falling, puzzling investors

    July 29, 2015
    http://www.wsj.com/articles/mixed-signals-on-u-s-oil-output-1438215062

    The most important question in the oil market is whether American production is falling as prices drop. Official oil data aren’t giving a straight answer.
    Investors, traders and executives who rely on federal data from the Energy Information Administration are tripping over conflicting images of U.S. production that have emerged from separate EIA reports in recent months.

    • Watcher says:

      If you’re pitching loan proposals, hard to see how reporting lower production helps you.

    • Relying on government data can lead to serious cases of data poisoning. Government agencies take the data, cook it unevenly, contaminate randomly, and package it. I see the possibility that they have a fairly well thought out process to drive prices down in an effort to lean on Iran and Russia.

      Given the fact that Iran has agreed to the deal the big countries wanted, and that Russia isn’t about to fold but Saudi Arabia and the other Arabs are gasping for air, I expect to see these energy agencies change their tune in a few weeks or months and improve their projections, which in recent months looked like anal extractions.

  6. shallow sand says:

    QEP Resources, which has the best Bakken wells IMO, reported earnings that beat estimates. They earned .09 per share, before impairments. Including impairments resulted in a GAAP loss of .43 per share.

    QEP did not add debt, because they had over one billion of cash on hand as of 1/1/15. Through 6/30/15 they burned through $714.5 million of that cash. They did achieve a production increase of 9% from the first quarter, and made no CAPEX adjustments for the year. Their oil guidance for full year increased 500K barrels, or about 1,400 bopd from prior quarter. No adjustment for forecast gas or NGLs was made, same forecast as prior quarter.

    About 2/3 of forecast 140K BOEPD is gas in 2015. QEP was almost strictly a gas producer prior to the shale oil boom. Oil is where production growth is in 2015 v 2014, with Williston and Permian being location.

    Long term debt is $2.2185 billion. Looks like they have good wells in both Permian and Williston basins. Believe they have over 400 locations yet to develop in Bakken, infill drilling on 400-600′ spacing and seeing strong results, 100 BOE in first 90 days. Well costs $7.3-$7.8 million in Bakken.

    Stock closed at $13.04, but after hours up to $13.98 on earnings beat. 52 week high $35.91.

    Closed Tulsa office, reduced workforce by 10%.

    This company is probably the strongest in the Bakken due to very superior well locations. Able to keep increasing production with just two rigs running. Q2 production, 52,400 BOEPD 89% liquids in Bakken, so have large presence. Much smaller in Permian at $11,400 BOEPD 81% liquids. Noteworthy that they realized $61.74 or an extra $15.88 per barrel on oil and $3.22 or an extra $.53 per mcf on gas due to hedges.

    Bottom line to me. QEP is a well run company with the best Bakken acreage. They had a substantial benefit from hedges, cut costs greatly and increased production in Bakken with just two rigs running off a very large base of production. However, they barely earned an operating profit and burned over $700 million in cash in six months, which is pretty hefty considering a market cap of $2.46 billion.

    QEP will be in trouble when hedges roll off and they will run out of cash or will need to borrow/cut CAPEX.

    Proof to me that $60s do not work. QEP could probably hold production flat and remain cash flow neutral at $75 per barrel in the field, with regard to Bakken and Permian, if gas remains in $3 range. For Bakken that is about $83 WTI.

    • Heinrich Leopold says:

      shallow sand,

      Why is the stock tanking? Just yesterday down 6% in one day. Is it the high proportion of unhedged NGL or is it the low hedge price for natural gas?

      • shallow sand says:

        I think when oil sank to $45, pretty much all oil stocks fell to varying degrees.

        The point, in part, of my above post, is that even the best acreage in the bakken will not work here or even at $60. QEP did raise Baskin production but burned through $714.5 million in 182 days to do so. That with hedges in place which gave them an effective oil price during the 182 days of over $61 at the well head.

        So if Goldman Sachs is correct, and oil stays at $50 or below WTI till 2020, it would appear all bakken activity would necessarily cease. QEP cannot burn over $1.4 billion a year, the next five years, the company’s market Cap is not even twice that.

        I have no clue why people still have not caught on. I could tell when I first looked at shale in 8/14 there would be a problem. I felt anything below $75 WTI would squeeze most. It just takes time.

        What is so difficult to understand about the problem with perpetual cash flow negativity?

        • Jeffrey J. Brown says:

          And don’t forget global production, especially high cost heavily depleted fields like the North Sea, where a lot of fields are still producing because the abandonment costs are so high, and companies are kicking the P&A costs down the road.

          Net Cash Flow math is actually quite similar to Net Oil Export math, to-wit, given an ongoing decline in gross cash flow from production sales, unless total costs (lease operating expenses plus G&A overhead) fall at the same rate as, or at a faster rate than, the rate of decline in gross cash flow, the resulting rate of decline in net cash flow will exceed the rate of decline in gross cash flow and the rate of decline in net cash flow will accelerate with time.

          As noted below, this has “Interesting” implications for the remaining cumulative net cash flow from developed producing properties. Of course, the gross cash flow from producing properties can decline when (not if) that production declines and/or if the price declines. This implies a tremendous mismatch between remaining cumulative net cash flow and debt levels.

        • Jeffrey J. Brown says:

          On the following Six Country Case History chart, the cash flow analogues to Net Export data would be as follows:

          Production = Gross Cash Flow From Production Sales
          ECI Ratio = Ratio of Gross Cash Flow to Total Costs
          Net Exports = Net Cash Flow (Gross Cash Flow Less Total Costs)
          CNE = Cumulative Net Cash Flow

          Link to chart:

          http://i1095.photobucket.com/albums/i475/westexas/Slide2_zps55d9efa7.jpg

          • Danlxyz says:

            Jeffery,
            Your graph goes to 2002. Do you have an updated one? What has happened in the last 13 years?

            • Jeffrey J. Brown says:

              They hit combined zero net exports in 2007, and as of 2011 they had combined net imports of 350,000 bpd. I haven’t updated the data base since then.

              These were the six major net oil exporters, excluding China, that hit or approached zero net exports from 1980 to 2010.

        • Mike says:

          Denial.

          You and I are clearly bias toward the profitability and sustainability of the LTO business. A lot of that is related to relying on oil and gas production to feed our families and a hand’s-on knowledge of oilfield economics 101. The LTO industry’s out of control spending spree resulted in 4 million barrels of increased oil production in the US that the world did not need. Oil prices at 45 dollars makes that message loud and clear. The rest of worldwide oil industry is now reeling from this, as is a good many world economies. It has me working harder than I have ever had to work, at 65, just to stay even. I am pissed off at the shale oil industry.

          I don’t know about you, Shallow, but I am also now very pissed off at the EIA. Apparently it can’t add even with its toes and fingers, and it grossly misrepresented production levels in the US and helped create, essentially, the illusion of a production “glut” that most certainly affected oil markets. Who will hold them accountable? Nobody. I can’t wait for the EIA to begin to ask me for monthly production data. I’ll say call the Texas Railroad Commission and while your at it, kiss my ass.

          Mike

          • Jeffrey J. Brown says:

            I used to invite my daughter and son-in law over for steaks. These days, I give them a choice of pinto beans and brown rice or black beans and brown rice (I’ve got some good beans and rice recipes if you want them).

            In any case Dr. Thomas Watson, Sr. (founder of IBM) reportedly observed that companies set themselves up for failure during boom times. Arguably, the best time to expand is during a recession. I would think that this would be a great time to put together an equity group (with little or no debt financing) to buy conventional producing properties with relatively low decline rates.

            • Mike says:

              Jeffery, your valuable perspective on global oil issues often cause me to forget that you too are a Texas boy with a very vested interest in oil production. The cost of pinto beans at the local HEB are sky high right now, always a leading indicator of oilfield related unemployment. That and Bud Light.

              All of the best production acquisitions I ever made were in these kinds of downturns, with good W. Texas bankers standing behind me. I am not seeing any noteworthy production sales yet as I think people are still hoping for a miracle. I think when the reality of a prolonged price turndown sets in there will be some steals out there, you are correct, sir.

              Mike

              • Jeffrey J. Brown says:

                Funny, as I was replenishing my stock of dried beans, I noticed that pinto beans were almost sold out at the local HEB here.

            • HVACman says:

              Rockman over on the “other” PO forum, is sitting on a rig-beam like a hungry vulture, lots of cash in-hand and no debt, waiting, just waiting for just such petro-carrion deals:)

          • shallow sand says:

            Mike, this is why I am in favor of EIA compiling runs from the crude oil purchasers. Not as many companies to collect data from. All should be automated already. They send the stuff to the paying companies like IHS and Drilling info, already. They could also easily report by gravity also, which would be very relevant info.

            Ok for EIA to forecast or do whatever else, but the oil runs would be data we should be able to rely on. Should be able to get pretty timely too. Besides, what goes into the pipeline is what is the relevant number anyway. I’m not aware of crude being stored in the field.

            I’m kind of resigned to low price for awhile, but also think that KSA cannot stand this for years, and demand will also grow by 1-1.5 million a year like it has, so overproduction will narrow.

            Do think that price could rocket over $100 again due to zero world wide spare capacity. It took 3 years plus for the US shale ramp up, probably take at least that long to grow US like that again, if even possible.

            Around here, when the price first ran up in 2005-2007, not a lot of drilling. Everyone happy to be making good money, not interested in going for broke. Just look at the data. Seems like that in other places also.

            If the shale folks have half a brain, they would be a little more cautious and thankful when prices do rise. Not go on a borrowing spree. Maybe if enough creditors get burned, they won’t be able to.

            • Mike says:

              Shallow, I don’t much care for the EIA but your idea would sure be beneficial to the folks who need to know everything about oil production. That would be fine with me.

              I think we are going to have to find a way to survive the next 18 months with < 60 dollar oil. Having said that, who knows? Nobody in the world is much liking these oil prices, I don't think. I guess a VLCC turned upside down and sideways in the mouth of the Hormuz would help some, uh?

              Shale folks got no brains, period.

              Mike

              • shallow sand says:

                Mike. My problem with EIA is they are estimating, come up with at least three different numbers for production, and yet those numbers are heavily traded on.

                Oil runs in the pipeline would be pretty accurate. In 18 years I remember 2 tank errors, one in our favor and one against us (both times truck driver wrote down wrong number). Of course both of those were caught by everyone pretty much immediately and corrected.

                As I am sure you do, we get statements about the 10th of the month and call if we find errors.

                The report crude purchasers would email to EIA would be very simple. Report total barrels purchased and then break down same in some reasonable API gravity increments. No need to report who they bought from, just by state.

                Its too easy!!

                On your ME comment, funny KSA at war, yet apparently there is no risk? In the 12 years prior, if someone over there let one fly out their behind the oil price would go up.

                Don’t feel as bad for our extended family as you might. We are heavy in oil, no doubt, but have other stuff going. One is grain farm, but rent that so more like owning RI given those prices are in the dumper. But overall income big time off where it was.

                We know many people who are mostly just in oil. A lot of guys who maybe own some production and do service work. With most don’t ever talk much specifics about oil stuff right now, seems like would be in bad taste.

                Do have a few real close friends in oil, we do talk. None of them have time to screw with the internet or looking at shale economics. I have educated them a little with the facts about cash flow and debt. Sure pisses them off a lot. So I don’t dwell on it too long.

                Hang in there. We figure OPEC will cut, in 2009 price doubled, 1999 more than doubled, both within months of a cut. What you think happens if they announce a 2-3 million cut tomorrow to price?

                But some more heads have to roll first, so 18 months will probably do it before a cut. Banks can do themselves a huge favor by saying drilling stops in October. Hate it for the guys and gals that need rigs running to work, though.

          • AlexS says:

            “The LTO industry’s out of control spending spree resulted in 4 million barrels of increased oil production in the US that the world did not need. ”

            I would say, of these 4-4.5mb/d only 1.5-2mb/d are really excessive. With US LTO production at 2.5 mb/d in 2015, the oil market would have been perfectly balanced.

            • Ves says:

              Alex,
              Don’t forget LTO’s little high maintenance cousin “Oil Sand” with over 2mb/d 🙂

  7. shallow sand says:

    Also noteworthy, the two largest upstream MLP’s, LINE and BBEP are trading at just 10% of their year ago stock prices. These two companies have combined production of over 250K BOEPD. Also have combined debt of $14 billion. Each borrowed heavily to buy existing conventional land based production, and paid high prices for much of same, hence the large debt.

    Look for declines in conventional US production due to stories such as these.

    • Doug Leighton says:

      shallow sand,

      Roughly how many of these LTO (public) companies are out there anyway? LINE and BBEP would appear to be basket cases.

      • shallow sand says:

        Actually LINE and BBEP are not shale companies. They are companies which bought considerable conventional production over the past 10 or so years. Between the two, they operate over 20,000 wells. Most of their production meets the stripper classification of less than 15 BOE per well.

        The business model requires them to pay distributions to unit holders (shareholders). The production they have is generally cash flow positive even now, but they paid very high prices for leases between 2005-2014, with mostly borrowed money. The debt service plus distributions are doing them in.

        An untold story is that from about 2005 on, many small privately held US operators of conventional production sold some or all of their production to entities such as these. The MLP’s, flush with investors’ cash, paid high prices for this production. The idea was that the MLP’s would hedge almost all production, making these shares or units a safe investment, providing income in the form of quarterly distributions. Yields of 7-10% are very attractive in this era of financial repression.

        The upstream MLP’s were first tested in 2008-2009. However, at that time, they were very well hedged. The downturn was short and they were able to maintain distributions during that period.

        Of course they, like the rest of us, got complacent. Did not stay completely hedged and tried to use cheaper hedges, like three way collars. Oil won’t go below $70 WTI surely?

        These companies are now slashing, or eliminating, distributions just to survive. As investors wanted to own for the distributions (income), they have dumped the shares completely. A year of sub $50 oil will pretty well put them into BK, IMO.

        Probably up to half a million barrels per day of US conventional liquids production is held by these entities. Because they are not shale, no one talks about them. But it all adds up. This production is the stable low decline variety, hate to see it suffer too.

        We are not in their position because we bought leases mostly pre-2005, before per flowing barrel sales shot up several fold. Thankfully we are too conservative, we tried to buy some but always out bid. Whew!!! We are hurting mightily at present levels. Throw major debt service on that, its lights out.

        With that many wells, decommissioning liabilities are staggering, even though land based. Hopefully, vultures will swoop in and at least keep the production flowing.

        There is a lot more than US shale getting hammered. Its just that shale gets all the press. Our county’s oil production is generally in great economic jeopardy. Canada too. No matter, surely our OPEC friends will fill the gap, just like last time US oil industry was decimated.

        • Doug Leighton says:

          Thanks shallow, was totally unaware of all that.

        • Heinrich Leopold says:

          shallow sand,

          LINE also down 18,8% in one day, becoming a penny stock soon. There must be a reason for this.

          • shallow sand says:

            Heinrich,

            LINE eliminated its distribution. That plus oil price tanking I assume.
            They have over $10 billion of debt.

            I think almost all of the Master Limited Partnerships have had to eliminate or cut their quarterly distribution (dividend). Cutting this craters the stock price.

            Note ConocoPhillips actually raised its dividend a penny and the CEO said they would defend the dividend at almost any cost. They borrowed the entire $1.8 billion to pay the dividend and likely will do so till they cannot. If they eliminated the dividend, stock maybe drops to 30s or 20s per share? Who knows for sure?

            I note the MLP’s generally did not have to cut 2008-2009. Although price has not yet hit 2008-2009 lows, this crash is worse already and the companies will not be saved by OPEC this time, at least not as soon as in 2008-2009.

            • Heinrich Leopold says:

              shallow sand,

              I think many companies still think, that oil prices will go up soon. However it will take time. Most companies are very skilled in finding oil and producing it, yet are awful in assessing prices.

              • shallow sand says:

                Heinrich, no one really is very good at it when it comes to oil forecasting.

                When KSA first started hinting they would not cut, there was talk from there of needing $80 Brent for two years to balance the market. Then they said $60.

                OPEC will cut at some point, just like in 1986, 1999 and 2009. Or maybe not, which mean US companies will trade like US coal companies soon.

        • DuaneX says:

          Shallow you look at these reports more than I do, but I would guess the Canadians have been hurt even worse. PennWest has similar debt to QEP, right about 2.2B. PWE did not add debt and actually paid it down, due to – how many times have you heard this these days? – selling “non-core assets.”

          Of course production dropped below 100,000 boepd (to 91K) because of those dispositions. Did not mention anything about staff reductions, but capex trimmed again. Still I’d think a flowing boe of conventional would be worth more than one of shale. So similar back of the envelope comparison but QEP was at $13? and PWE approaching $1?

          • shallow sand says:

            DuaneX. I am far from being a person to know why one company’s stock trades for much more than another.

            A case in point would be CLR v Whiting. CLR market cap nearly $12 billion. Long Term Debt will likely be at least $2 billion more than Whiting when they report tomorrow.. More BOEPD, 220K v 170 k, but doesn’t seem like enough to make market cap more than three times Whiting, which now stands around $3.8 billion.

            Of course, both are still priced for an oil rebound, IMO.

            • shallow sand says:

              One thing, share price is not what to look at. Add market cap to long term debt, that will give you a good idea of enterprise value.

              So with PWE and QEP, they are closer than you think. QEP enterprise value about $4.7 billion, PWE about $2.9 billion, but I get confused with exchange rates, so don’t hold me to that.

    • Longtimber says:

      15 B / 250,000 Barrels/day = $56,000 of debt for each flowing Barrel if I have them zeros correct. Per Day = $1.68 Million debt per flowing barrel per month. Holy API Batman.

      • Joe Clarkson says:

        Yes, 14B in debt for 250,000 barrels per day is $56,000 debt for each bbl/day. But one barrel per day is $18,250 per year in income for $50/bbl oil. If the oil will keep flowing for many years (which it should since these are strippers), and if O&M is minimal, that’s a good return on borrowed money. After three or four years the debt can be paid off and the money just keeps rolling in. It sounds like the LINE and BBEP investors aren’t very patient.

        • Rune Likvern says:

          Is $50/b market price or what the company nets (post OPEX, taxes etc.)?

          • shallow sand says:

            $50 is no where close to net today.

            Typical OPEX per barrel of oil runs $20-40 per barrel on MLP oil production. Throw on severance taxes, general and administrative, etc., and one see’s the serious problems for these highly leveraged companies.

            • shallow sand says:

              Decided to get some SEC numbers for BBEP. Second quarter 10Q not out yet, so what follows is from Q1 2015/10Q:

              OPEX per BOE $19.81. Severance taxes $2.40 per BOE.

              57% oil. 43% gas and NGLs.

              Average realized sales price per BOE was $32.52. $43.52 for oil, $16.54 for NGLs, $3.05 for gas, all BEFORE hedges.

              Gas OPEX per BOE is almost always less than oil OPEX per BOE. I estimate BBEP oil OPEX likely high $20s. Gas probably about $10 per BOE. Just my guesses.

              Problem, interest expense around $13-14 per BOE. So if there is no price recovery prior to hedges rolling off, they will be losing money on an operating basis big time.

              Likely all US upstream oil and gas master limited partnerships in a similar position to BBEP, which had traded around $20-25 and is now $2.50 range.

              • Joe Clarkson says:

                Surprised to see that OPEX is so high for these stripper wells, but given the numbers you found, the net/bbl oil before hedges and interest is only about $18. Without hedges or higher prices they have nothing much to distribute after making their interest payments.

                Back to the OPEX costs- I know that costs have gone up some in the last 15 years, but how in the heck did anyone make operating a stripper well profitable back when oil was $20/bbl?

                • shallow sand says:

                  OPEX has risen 3-4 fold since 1999. That is our experience. That is also true for many large public companies, including XOM.

                  OPEX is falling somewhat, but not enough. The same thing happened in grain farming.

                  An example in oil, the price of down hole chemicals. Down hole chemicals have tripled in price since 1999. The reason, the chemicals are many times oil based. Have they dropped in price sine the collapse? Not yet.

                  In grain farming, same thing with fertilizer. Inputs will come down, but slowly and not proportionate with grain prices.

                  Electricity rates rise every year. Labor cost in the oil field rose big time due to lack of experienced workers. I bet the largest cost savings in the OPEX area will be labor force reductions/reduction of salaries and benefits.

                  Finally, think about a stripper well that declines 2% per year. A 10 bbl well in 1999 is now making 7 bbl per day. So, even without all I mention above, OPEX per barrel goes up. Next consider a 6% annual decline from 1999. That 10 bbl well in 1999 now makes 3.7 barrels per day.

                  One of my arguments on shale is the OPEX on older wells rises significantly, even as produced water falls. A flush, flowing 500 barrel per day new well will have OPEX of $1-2. A seven year old well making 10-45 barrels per day will have OPEX of $15-20 with no down hole failures, $25-60 with 1-4 failures per year.

  8. Dr. Don says:

    The real tragedy is that most of the world’s great oil discoveries have been when all hope was lost. So if you are a independent with a plan to drill two deep water wildcats, at a cost of a couple hundred million, off the west coast of Africa and the first one is dry you pass on #2. Thus leaving a frontier play under explored and depriving the world of new sources of oil in 5 to 10 years. The impact of all of these games paper oil games will play out over the next 5 years and the result will be high oil prices.

  9. Ovi says:

    The International Energy statistics shows Mar US production 9,531 kb/d. This is lower than the March PSM and MER (162 kb/d) but higher than the weekly numbers, (142 kb/d). The March IES production was a new high. I think this caused the sharp revision to the weekly production number in May.

    How good/reliable is the IES data?

  10. Jimmy says:

    Hi Ron, I hope you’re well. Great post as usual. I really appreciate you posting the data sets from various reporting agencies and presenting the various quirks in their reporting procedures. My condolences regarding the attack on your site. The internet is a bit of a catch-all for misfits and f*ck-ups. I’m new to commenting on your website and must admit I was easily taken off topic. From now on I feel I’m going to stick to posting my comments only in so as they pertain to the topic of your post. Lately the comments seem to be quickly going off topic and into the realm of climate change and immigration. I feel this possibly contributes to the vitriol and acrimonious dialogue that attracts such posts as the ones in the recent attacks. I wish you and your blog well. There are clearly some who don’t. And I feel there are many who make subtle, and not so subtle, attempts to sabotage your site. All the best. Thanks for the data.

    • Thanks Jimmy. I really don’t mind off topic posts as long as they are somehow related to energy. And a few climate change posts are okay also as that does relate to the burning of fossil fuels.

      I do wish people would notify me more quickly when someone posts an offensive or racist post, especially if it is under a guest post, in which I get no email copy of the posts.

      • TechGuy says:

        “I do wish people would notify me more quickly when someone posts an offensive or racist post,”

        One recommendation is add some as a moderator with the ability to remove items, so you don’t have to do everything yourself.

        • I have one, Dennis. But he was on vacation and missed them also.

          • Hi Ron,

            I emailed Dennis but got no response and figured he was on vacation or sick or just very busy.

            Since you announced your intentions to take a few days off I did not email you directly since I thought it unnecessary to spoil your break.

            Sometimes the best part of a break is that it is a COMPLETE break , no emails no phone.

            Nobody who has known you over the years on the net could possibly believe you would tolerate such cartoons on your site. I knew they would come down as soon as you got back. There is no long term harm done.

            • Thanks Mac.

              When I am busy I just use the search function, control F, and search on my name to see if I need to reply to anything. When there are two or three hundred comments that is just too many for me to scan. That is how I missed them.

              It really pissed me off when Futilitist suggested that I saw them and deliberately left them up. That is saying that I approved of such trash. I do not. Anyway they are gone now and so is Futilitist. Kam also posted a racist comment on this post. I caught it after it was up only a few minutes. He and the reply are both gone now.

              I am sorry but shit like that really pisses me off. This site is not a place for people to spread their racist propaganda.

    • Jeffrey J. Brown says:

      In regard to migration, the iconic image from the US in the 1930’s, that says it all:

  11. Longtimber says:

    The Romance is over. Breaking up is hard to do.
    “One Wall Street firm admitted that falling in love with oil companies was a ‘bad call'”

    ** “Morgan Stanley is still “Overweight” the energy sector. But to account for just how differently things have panned out, the firm has reduced its exposure.” ** ooooK Ooch What’s that Again?

    Somewhere was the Line – “Shale “Oil” is where money goes to D I E ”
    It’s ain’t over till it’s over.
    http://www.businessinsider.com/morgan-stanley-energy-sector-positioning-2015-8

  12. MarbleZeppelin says:

    Apparently world food prices are zooming as it gets more difficult to produce food. I noticed that the article was basically about global warming/ climate change effects upon food production. It skipped completely that the world will be dealing with 2 billion more people by the 2040’s. One could assume that food shortages will slow the growth of population even further, possibly stopping growth before that time.

    “An unstoppable problem is making it increasingly difficult for the world to produce enough food.”
    http://www.businessinsider.com/climate-change-is-causing-food-shortages-2015-8

    • Caelan MacIntyre (Cae-Pack™, Item 1) says:

      The solution to all these interrelated problems is establishing a conglomerate of small, bio-diverse, ecological farms around the world

      “… and a localized food system that promotes consumption of local/regional produce…

      In fact, small farms are known to be two to 10 times as productive as large industrial farms and much more profitable, not just in the developing world, but also in the developed world, reports the Institute of Science in Society (ISIS).

      ‘Smaller diversified farms employee more people and use less land and water and produce more foods’, says Norberg-Hodge in her interview with Brand. She explains that localization also shortens the distance between consumers and producers, which helps the environment and also ensures that you do not eat produce that is pretty much dead traveling such insane distances.

      ‘Industrial agriculture and our globalized food system is a major contributor to greenhouse gas emissions, up to 50 percent if proper account is taken of emissions from land use change and deforestation, most of which are due to agriculture, and for food-related transport, processing, storage and consumption’, writes ISIS.”

      Green Acres

      • Caelan MacIntyre (Cae-Pack™, Item 2) says:

        Over the past decade

        “…a number of thinkers have tried to imagine how a post peak-oil, energy-descent future might manifest. While important details differ, the emerging consensus among many has been that–in the best case–the world will look less like the current globalized consumer leviathan and a more like what Jeff Vail has called the ‘hamlet economy’ in which people live and work in a non-hierarchical, ‘lattice-like’ rhizome network of largely self-reliant but still interdependent small settlements.” ~ Lakis Polycarpou

        • In Vail’s vision, these resilient settlements would make use of a “hybrid of horticulture, gathering and hunting” in the surrounding commons, to produce most of what they need close to home; in addition, each hamlet would develop one or more specialized products for trade with others, thus reinforcing communal connectivity and achieving a much higher standard of living than a completely isolated village or homestead could.

          Everyone “gathering and hunting” in the surrounding commons no less. Yes, this might work very well in a world with 200,000,000 people. It’s going to be holy hell getting down to that number however.

          • Javier says:

            Plus autarky is the recipe for extreme poverty.

          • Caelan MacIntyre says:

            At a conference a couple weeks ago

            “…an activist who does work in Africa recounted an encounter she had with the minister of agriculture of a certain African country. The minister spoke with excitement about the high-tech agricultural technologies he was bringing into the country in partnership with large agribusiness companies, so the activist brought up the topic of organic agriculture. The minister said, ‘Stop. You don’t understand. We cannot afford such luxuries here. In my country, people are starving.’

            This reflects a common conception about organic agriculture – that it sacrifices productivity in the interests of the environment and health. It stands to reason that if you forgo pesticides and chemical fertilizer, yields are going to suffer.

            This, in fact, is a myth. In Sacred Economics I cite research showing that when it is done properly, organic growing methods can deliver two to three times the yield of conventional methods. (Studies showing the opposite are poorly constructed. Of course if you take two fields and plant each with a monocrop, then the one without pesticides will do worse than the one with, but that isn’t really what organic farming is.) Conventional agriculture doesn’t seek to maximize yield per acre; it seeks to maximize yield per unit of labor. If we had 10% of the population engaged in agriculture rather than the current 1%, we could easily feed the country without petrochemicals or pesticides.”

            • Javier says:

              Don’t get me wrong, Caelan,

              I am totally in favor of organic farming. I am not trying to pooh-pooh organic farming since I consider it the farming of the future. I am officially certified as an organic farmer in my country after passing the required studies. I spent this growing season cultivating 2 acres organically for vegetables.

              But it is very important that we understand the challenges and difficulties of organic farming. Organic farming does require a lot more knowledge and a much better management than traditional farming. Dealing with weeds and pests is a lot more challenging and often results in a lot more work and less yield. I had serious problems with the potato beetle (Leptinotarsa decemlineata) and with the purple nutsedge weed (Cyperus rotundus), and the crucifer flea beetle (Phyllotreta cruciferae) left my chards full of little holes, although they could still be eaten, clearly not sold.

              The best study on organic farming yields was published in Nature in 2012. It is a very rigorous meta-analysis, so you cannot oppose to it any simple study, you would need another meta-analysis saying the opposite, and as far as I know it doesn’t exist.

              Comparing the yields of organic and conventional agriculture Seufert et al., Nature 485, 229–232 (10 May 2012).

              The conclusions are absolutely congruent with most studies, as they should be in a meta-analysis:

              yield differences are highly contextual, depending on system and site characteristics, and range from 5% lower organic yields (rain-fed legumes and perennials on weak-acidic to weak-alkaline soils), 13% lower yields (when best organic practices are used), to 34% lower yields (when the conventional and organic systems are most comparable).

              The average organic-to-conventional yield ratio from our meta-analysis is 0.75 (with a 95% confidence interval of 0.71 to 0.79); that is, overall, organic yields are 25% lower than conventional

              It stands to reason that perennials and legumes on good soils have the least difference and that best organic practices are required to reduce the important difference between traditional and organic. Sadly we know by experience that best practices are not as widespread as we would like in any trade, not only farming.

              An additional problem that is not discussed in the paper is the concept of shadow land. The land required to obtain the inputs for farming. The lead author of the work, Jon Foley, had this to say about organic shadow land requirements:

              – The original study in Nature did not consider the *land* requirement for growing organic and conventional crops.  Only the yield differences on the two different kinds of farming systems.
              – Farms also have a “shadow” amount of land use, which is associated with the inputs they use — whether it’s the land used to generate nutrient inputs, biocidies, energy, etc.  Just think of the footprint of land needed to make the stuff you use on the farm.
              – As you already figured out, the organic systems probably have a fairly large amount of “shadow” land, particularly if they use manure from other fields as an input on their own fields.  That is extremely hard to quantify right now, as we often do not know (at larger scales, especially) where the organic nutrients are coming from.  Further, the organic nutrients might be a mix of cover crops (legumes), compost (from on farm wastes — but this is a mostly closed material cycle), and manure from another field or farm.
              – You can imagine that, for manure based systems, that the amount of shadow land is quite large indeed.  Perhaps even larger than the organic farm field itself.  But for other organic nitrogen sources, it could be far smaller.
              – Compared to industrial nitrogen, organic nitrogen sources are probably much more land intensive — although of course they are less energy intensive, probably better for the environment in other ways, etc.
              So it is fair to say that organic systems use more land than their conventional counterparts:  some of this has been quantified (the *direct* land use difference, which is roughly 20-30%, but varies by crop) and some of this has not (the *indirect* land use effects, counting where the nutrients ultimately came from).
              We have been thinking about this, and hope to address this in a future paper.
              How land-inefficient is organic agriculture?

              The conclusion is inescapable. We cannot feed the world with organic farming unless we boost the productivity or population gets reduced. This is not what I expected when I started in organic farming, but it is the reality. Maybe that African minister of agriculture knew what he was talking about.

              • Javier says:

                A very interesting TED talk from Jon Foley, director of the Institute on the Environment at the University of Minnesota and author of the Nature paper on organic farming yields about the agricultural problem that the world faces.

                I think it is really worth 10 minutes of your time to know about the future challenges of agriculture, its impact on the world and the proposed solutions:

                Jonathan Foley: The other inconvenient truth

                Thousands of times more serious and urgent than climate change in my opinion.

                • MarbleZeppelin says:

                  I agree, the TED talker is a very dangerous man. He points out the severity of the problems agriculture is causing to the ecosystem. He points out that it uses huge amounts of fresh water and huge external inputs. Then he talks about increasing it so it will support more growth and bigger population.
                  What then, more agriculture with more climate change and more population?
                  He is not offering a solution, he is offering a bigger problem in the future.

                  • Javier says:

                    He is pointing to the biggest challenge that mankind faces in the next decades. A much bigger problem that climate change. Population is going to shoot up to 9 billion in about 2-3 decades, while food production increase is decelerating. Unless we get our act together we are facing the biggest catastrophe in the history of mankind.

                    The population increase is already baked in the cake. If we take the wrong decisions we will regret it if we survive the consequences. Some insensitive people think this is only a problem for poor overpopulated countries. Hunger is likely to affect all the poor in the world and nobody is safe from becoming poor.

                  • He is not offering a solution, he is offering a bigger problem in the future.

                    There is no solution. There are only bigger problems. There will be no solution to those bigger problems either.

                  • Fred Magyar says:

                    Javier says:
                    Population is going to shoot up to 9 billion in about 2-3 decades, while food production increase is decelerating.

                    While I disagree with many of Javier’s views regarding climate change I’m not going to pick on him this time.

                    However this idea that population is going to continue to increase to more than 9 billion is a view held by an apparent majority of humanity. I personally do not subscribe to this notion!

                    If ‘Peak Oil’ is actually happening now, and I do think it is, then there is no way in hell that we can continue to produce food for the 7 billion plus already here, let alone for an extra 2 billion or more. There will be a contraction of the existing population by means either fair or foul in the next few decades it can’t be any other way!

                    Humans are in deep ecological overshoot.
                    We are experiencing a massive biological extinction event. Humans may think they are special but nothing that I have ever seen gives me any reason to believe that we can continue to increase our population without hitting the wall of physical resource limits and waste sinks of our global ecosystems.

                    To convince me that I’m wrong I need extraordinary evidence and data. If anyone has such, please provide it. I’d love to be proven wrong!

                  • Javier says:

                    Fred,

                    Nobody has a crystal ball that works. 9 billion population is a simple projection of growth rate dynamics. There is nothing to believe or disbelieve in that.

                    For that to not happen you need a pretty drastic change. Take into account that the WWII with 60 million casualties (3% of the population) and quite a few countries badly damaged, didn’t produce even a tiny notch in the population dynamics statistics.

                    So to not reach 9 billion you need to invoke a 10-50 times bigger event than WWII. Will something so big happen within the next 30 years? Maybe, or maybe not. Doesn’t look like a conservative prediction.

              • Javier is dead on and NATURE the publication is dead on. I was unaware of this particular research since I do not have regular access to NATURE (Effing spell check insists on removing my cap N) but it is entirely consistent with what I know generally about organic farming.

                We will eventually manage to control pests and diseases via a combination of organic techniques and high tech while using very few pesticides but this is a big tough undertaking and progress is slow.

                The shadow land problem is basically insoluble given current realities. The inputs in the form of manures mulches and other organic fertilizers must mostly come from off the premises.

                A farm is not an ecosystem – it exports nutrients. They MUST be replaced. At some future point we may have a low enough population distributed in such a way that our own organic wastes can be recycled efficiently. if so, this time is at least a half a century down the road.

                The high tech will involve substantial advances in genetic engineering of crops and pests.

                One fairly well known example that will be very widely used in the future is the sterilization of factory farm raised male pest insects and the release of them to breed with wild females. This technique has been shown to reduce pest populations as much as ninety percent.

                Incidentally very few farmers use pesticides indiscriminately. They are VERY expensive and the state of the art for now is referred to as integrated pest management- meaning using as many non chemical techniques as can be brought to bear and spraying as little as possible.

                Forty years ago most orchardists sprayed on a schedule. We no longer use a schedule but keep a very close eye on the trees and spray as little as possible consistent with making a marketable crop.

                • farmboy says:

                  OFM Once the consumer again starts paying enough for fruit with some blemishes, and wormies, then raising fruit will not require near the amount of chemicals. And once they are willing to get away from their screens, and pick their own fruit, and relinquish there right to sue the farmer. Now that could just put the fun back into farming.

                  • Hi Farmboy,

                    I agree but that time is still some time off. A couple of years ago we couldn’t get enough for blemished apples to pay the freight bill to the cannery and juice house.

                    But when it comes to picking their own, most people live in places where this is literally impossible. Apples won’t grow in Florida and oranges won’t grow in Virginia and neither will grow in asphalt or the shade of a skyscraper.

              • Caelan MacIntyre says:

                Hey guys, ‘organic’ farming and even farming in general is really a catch-all phrase that doesn’t nearly get into the varied practices and approaches and, for example, such things as no-till; hugulkulture; composting; biodiversity/crop-diversity/native species; so-called weeds-as-not-weeds-at-all (you eat the things; they grow like ‘weeds’ and in hard conditions, etc.); nutrient fixing plants; soil regeneration; closed systems; food forest/vertical gardens/gardening; swales such as for crops and holistic practices with regard to water/irrigation/control and natural contour; livestock and their holistic integrations, such as with regard to nutrient-cycling and pest management, and on and on.

                Javier, we spoke briefly previously about the potato beetle hereon. Maybe you caught it.
                Reality, and vis-a-vis farming, is not all black and white or cut and dried. There’s a shipload of options and then some. But, yes, relatively-more people will likely have to do farming. That seems a given.

                I think it’s safe to say that no two people, unless maybe part of the industrial farming framework, do farming the same, and maybe shouldn’t, given for example, differences in locales, and some, who we might do better to learn more from, use their heads more.

                • Javier says:

                  relatively-more people will likely have to do farming. That seems a given.

                  Yes, I figured that out myself some time ago. In my country only 2% of the population is dedicated to farming or cattle raising, and their average age is around 50. My estimate is that in 2-3 decades it could go up to double digits. The number is already growing albeit slowly due to high chronic unemployment.

                  It is a problem because as OFM says it is very hard to make a living out of a small non-mechanized farm. But the farm will feed you and your family and in a no so distant future that could be the difference between life and death. There are very few people alive from the time when we had our last widespread hunger, after the civil war, but some of us know that the people that had farms fared a lot better.

                  The beetle is a re-run as it was present last year, although much reduced. Larvae dig into the ground at fall to come back at spring, so crop rotation is the main weapon. It is amazingly prolific as a female can lay >800 eggs so it can get easily out of proportion. Birds won’t eat them because they get solanine, a poisonous alkaloid, from the potato. And they are very resistant to the organic insecticides like neem oil.

                  Organic farming needs to get into equilibrium with nature. To me its main advantage is that it is very low energy intensive, at least from fossil fuels. Human energy requires a lot. I see in the future that once we have globalization affected by oil availability or price, we are going to have a hell of a problem feeding people so we better start now producing as much food locally as possible without depending much on fossil fuel inputs (including fertilizers, pesticides and herbicides).

                  • Ronald Walter says:

                    The intent, the goal, is to not depend upon petrochemicals of any kind to raise my small crop of potatoes and all the other vegetables that are available in copious amounts. Not a difficult goal to achieve, don’t use petrochemicals. If you don’t use them, you won’t need them.

                    Potato growers use hundreds of thousands of dollars of petrochemicals to use on potato crops in the 1600 acre range, ten quarters. Your fries from fast food giants are fried with petrochemicals from the getgo.

                    I have a great crop of high quality potatoes this year in spite of the potato bugs. They ate and ate and ate and ate, they never stop, never will. What you do is to use mechanical means to effectively remove them so they don’t eat. They’re not there anymore. Eventually they will eat themselves out of house and home. The land has topnotch fertility and a yield is guaranteed, a loss from poor weather and parasite infestation needs to be expected.

                    There is control without petrochemicals, but the work is more intense. I figure if I have to use chemicals on the potato plants, they are being corrupted, might as well use the simplest of means to get the job done.

                    Mother Nature is more kind, she just is a bitch from hell sometimes.

                    Organic farmers do use chemicals, they are not purists.

                    If you want to truly be an organic farmer, you will not use any oil byproducts whatsoever. If you use one gallon of gas for production, you are not an organic farmer. Maybe too puritanical, but it does make sense.

                    No such thing as organic farming.

                    Natural yields produce high quality results, no use of any insecticides or herbicides.

                    The very best apples I eat are from the tree 160 feet from my door.

                  • Caelan MacIntyre says:
                  • Generally speaking I disagree with Javier but in predicting the return of small scale farming I do agree with him.

                    He is right about one thing for sure. Anybody who is short of work and willing to farm on a small scale can make at least a few dollars- very few per hour most likely but the benefits of living on a small working farm while holding an off farm job can be substantial.

                    Eating your own tomatoes that wholesale for fifty cents is CONSIDERABLY more economical than buying tomatoes at retail for three or four times that price.

                    There are lots of ways to stretch an off farm income by living on a small farm. It is VERY hard to sell enough produce or eggs or meat or whatever to make a go of it at a very small scale, you can always sell SOME of any of these things at above wholesale prices.

                    You can make excellent money on small quantities of fresh produce or other output but selling enough to make a living is almost impossible because it takes an impossible amount of time to find customers and deliver to them. There will generally always be a FEW customers who are very close by and easy to sell to.

            • If organic farming yields more profits then it will be adopted by agribusiness corporations.

              This reminds me of the bs about solar plus batteries being lower cost in Germany (saw a german solar industry promoter make that claim in a local TV show here in Spain).

              • Caelan MacIntyre says:

                More profits for who? Everyone? Equally? Fundamentally, profit depends on a healthy planet and society. That’s why I’ve writ before that greed is hitting a glass ceiling.

                It seems that if the economy wants to be taken seriously by Mother Nature, then it needs to be truly economic. If most everyone loses their jobs, who’s going to pay for the fruits of agribiz?

                Greed explained: J. Paul Getty, Aristotle and the Maximum Power Principle

      • ”In fact, small farms are known to be two to 10 times as productive as large industrial farms and much more profitable”

        This sort of claim is basically pure bullshit except in certain relatively rare instances. Certainly an acre of strawberries is ten times or even twenty times more valuable than an acre of wheat or corn. I know some guys who used to grow a little pot – a few hundred square feet – and net tens of thousands of dollars. Some of them got away with it. Some went to jail. They have all quit now due to the helicopters paying frequent visits to this neighborhood.

        When it comes to producing any major crop the facts are entirely different. It is generally impossible to make a go of producing any major crop on a very small farm–unless you can bypass the wholesale market and sell direct. That is not farming as such but rather sharp marketing. Damned few people have this opportunity. The big boys can undersell you on a regular basis. You might get a lot higher yield per acre but you will wind up working for two dollars an hour.

        It IS possible to work the hell out of an acre or two of very high value crops and earn a bare living- a VERY modest living, IF the two acres are in the RIGHT spot- right climate, right nearby market, very little or no competition , you might even make a fairly decent part time income. I know a couple of people who are able to pull this trick off since they own land in exactly the right spot- near well to do neighborhoods where they can sell at super high prices to people who care less about the price they pay so long as they get the personal touch marketing of produce picked THIS MORNING and delivered this afternoon. This sort of operation generally involves double or triple cropping and a huge investment of time in relation to the yields obtained.

        But any sort of across the board claim of this nature is still pure bullshit. There are no high intensity orchards that produce two to ten times the amount of apples per acre I used to produce. There are no one horse farmers growing twice the corn or wheat per acre that commercial farmers produce – not in the same geographical area and in the same markets. Nobody grows three or four times as many tomatoes per acre as local commercial growers.

        Awesomely high yields are possible if you work the land INTENSIVELY enough by hand but in general terms there are NO PROFITS associated with such operations in the modern world.

        Anybody who wants to know how such yields can be obtained on small holdings should read Farmers of Forty Centuries.

        If you are REALLY interested in knowing the truth you will take time to read this book.

        Folks whose eyes glaze over are not ever really going to KNOW the truth about anything. They have to take SOMEBODY’s opinion at face value since they cannot be troubled to invest a few hours- or few hundred hours- to investigate for themselves.

        There is nothing much new about all this so called new era agriculture.

        Ninety nine percent of whatever new tech becomes commercially feasible will continue to come from the long established conventional agricultural research infrastructure – meaning mostly government institutions such as the land grant universities, the life sciences departments of all universities, and commercial research and development undertaken by agriculturally oriented businesses.

        I most emphatically do not defend such companies as Monsanto etc. We would be much better off collectively if patent laws involving genetic manipulation etc were rewritten to prevent such companies from establishing monopolistic market shares.

        Now if we switch the time frame from the present to the somewhat distant future, then there are plenty of good reasons to think that small scale , high labor intensity farming will make a comeback.

        • Caelan MacIntyre says:

          “…more knowledge would be key to any effort to boost organic farming or its yields. Conventional farming requires knowledge of how to manage what farmers know as inputs—synthetic fertilizer, chemical pesticides and the like—as well as fields laid out precisely via global-positioning systems. Organic farmers, on the other hand, must learn to manage an entire ecosystem geared to producing food—controlling pests through biological means, using the waste from animals to fertilize fields and even growing one crop amidst another. ‘Organic farming is a very knowledge-intensive farming system’, Seufert notes. An organic farmer ‘needs to create a fertile soil that provides sufficient nutrients at the right time when the crops need them. The same is true for pest management.’.” ~ Scientific American

          “when I studied organic biological agriculture, part of the studies looked at differences between conventional produce and those produced with living soils. Because plants are, in simplistic terms, when it comes to water, basically ‘pumps’ (pumping water up from below), when they have water-soluble fertiliser they suck it up, grow rapidly and ‘look’ great, but the differences in nutrition are quite striking… Plants that are instead fed a balanced diet through symbiotic exchanges between the plant’s roots and the micro-organisms that surround them, end up getting much more than just NPK, but also trace elements the plants (and we!) need for health. This makes the natural defences of plants much stronger, eliminating a great deal of ‘pest’ problems, and when we eat these healthy ‘broad spectrum’ nutrient bombs, we also receive the gift of strong immune systems.” ~ Craig Mackintosh

          ‘Yield’ also seems relative to what the produce inevitably contains and does not, as well as what it requires and destroys in the process and how sustainable it is in the long run.

          See also Rodale’s 30-year organic versus conventional Farming Systems Trial

    • They quote the ipcc, which makes its projections using the flawed RCP8.5. Then they quote a self appointed university professor who also goes back to quote the same ipcc bs. They close with a list of unsupported propaganda statements.

      I have food production graphs I’ll try to show below if they are small enough.

      There’s no sign that food production is in trouble:

      http://reliefweb.int/report/world/fao-statistical-yearbook-2013-world-food-and-agriculture

      We do have signs that overpopulation is causing environmental problems and civil conflicts.

      http://www.trincoll.edu/~thyde2/rwanda_history.htm

      • Here’s one I think may fit

        • Javier says:

          Food production has benefited enormously from longer growing seasons and increased CO2 since 1850 when the global warming started. Let’s not forget that global warming is more pronounced at higher latitudes, specially in the Northern Hemisphere, as the Southern Hemisphere shows little warming.

          Whether this is positive or negative is a different question, as increased food production has given us increased population and thus increased resource consumption, running earlier against the limits to growth.

          • I think its positive. The last thing we need right now is for global warming to REALLY hurt food production. Thus far the figures show it seems to help. The studies seem to show, in a fuzzy fashion, that an additional 0.8 degrees C is positive for the world economy.

            Overpopulation needs to be considered separately as a major problem. It’s much worse than global warming.

          • ezrydermike says:

            “Food production has benefited enormously from longer growing seasons and increased CO2 since 1850 when the global warming started.”

            Bullshit

            • Javier says:

              Show me the real data that relates global warming with decreasing world food production.

              Otherwise the bullshit is on you.

              Correlation indicates that what I say, that global warming benefits food production is certainly possible, while what you say, that global warming is damaging for food production is impossible.

              • TechGuy says:

                Javier wrote:
                “Show me the real data that relates global warming with decreasing world food production.”

                I am reasonably sure that food production growth is attributed to increased demand (rising population), increase farm land, and the application of the green revolution worldwide. A single farmer using a tractor with agra-chem, can out produce a 500 subsistent farmers (ie farmers not using modern equipment and agra-chems).

                I doubt warmer climate has much of an impact since it also leads to droughts, too much rain, etc that likely nullify temperature changes. Just about every year I read articles that crops are wiped out in some regions from too little or too much rain.

                We also have use a lot more ground water (ie aquifiers globally are dropping by alarming rates)

                Need graph lines for Agra-chem (ie fertializer/herbacide/pesticide) use and increase use of fuel and farm machinery that increased farm productivity, and increase ground water use for crops.

                Of course when fuel and NatGas gets expensive again, and the acquifers deplete… Its going to impact food prices and, or production.

                • Javier says:

                  Or alternatively climate warming has the effect that we know it has.

                  Increased temperature lengthens the growing season and after all that is what farmers use greenhouses and tunnels for, to increase productivity in temperate areas.

                  And increased CO2 increases productivity as is so well known that there is an industry dedicated to increase CO2 concentration in greenhouses to boost productivity. Many C3 plants appear to have an optimal CO2 concentration between 1000-1200 ppms. Go figure.

                  • TechGuy says:

                    Javier wrote:
                    “Increased temperature lengthens the growing season and after all that is what farmers use greenhouses and tunnels for, to increase productivity in temperate areas.”

                    I doubt the changes have been enough to make a significant improvement. We are talk perhaps a 2 to 3 weeks of a longer growing season. And Warmer climate also increases droughts and floods.

                    The big increases in productivity are from the green revolution, modern irrigation techniques and farm machinery. Any analysis on productivity gains it likely to flawed since it would be extremely difficult, if not impossible to exclude technology improvements in the data. Its like mixing two glasses of water together, and trying to separate which water was in glass A and the other in glass B after they been mixed.

                    Fern Wrote:
                    “Interesting fact: the available studies show the world economy has been helped by the temperature increase we have experienced in the last 150 years.”

                    Raising an eyebrow on this too. Warmer climates make it more difficult to operate factories and engage in manual labor, prior to environmental systems (A/C & Fans). Until the 20th century, the majority of factories were located in cooler regions.

                  • Javier says:

                    Techguy:
                    And Warmer climate also increases droughts and floods.

                    Is this an article of faith, a model prediction or a statistical reality? After 150 years of warming we should know if that is true, shouldn’t we?

                  • TechGuy says:

                    Javier wrote:
                    “Is this an article of faith, a model prediction or a statistical reality? After 150 years of warming we should know if that is true, shouldn’t we?”

                    1. No, because how do you quantify droughts and modern irrigation techniques? Farmers tap ground water, and damed rivers to overcome drought conditions. Again a problem of separating Tech improvements versus climate changes. In the US, they farm in the desert (Nevada, Arizona, California, etc). These regions were made productive by Tech, not climate change. if any Warmer temps in these desert regions should have decreased production.

                    2. What about excess rain and smaller droughts that impact crops but are not of any economic consequence, and thus not tracked?

                    3. Still can not isolate green rev. and other farming productivity increases. That is Like separating water mixed in from two glasses.

                  • Javier says:

                    1. No, because how do you quantify droughts

                    With the Palmer Drought Severity Index obviously.

                    If climate warming increases droughts, it should show up in this index that is measured since 1965. But it doesn’t. Ergo climate warming does not increase droughts. It is another myth. Something that can be modeled and predicted, yet it hasn’t happened for the last 50 years of climate warming. Why should we think it has to happen in the next 50 years?

                    Yet despite the data, you and many others believe that climate warming increases droughts. You and many others have turned climate warming into a religion in which faith substitutes the data.

                    I could go to your bible, the IPCC report and show you that it says that we don’t know that climate warming increases droughts, but why should I care? Go on believing that climate warming will increase droughts and floods. Perhaps 50 more years of data is all it takes to convince you, or perhaps you cannot be convinced by the data ever, like witnesses of Jeovah

                • Tech guy:

                  “I doubt warmer climate has much of an impact since it also leads to droughts, too much rain, etc that likely nullify temperature changes. Just about every year I read articles that crops are wiped out in some regions from too little or too much rain.”

                  Yes, but you can’t show that over the planet’s surface the climate has worsened.

                  Interesting fact: the available studies show the world economy has been helped by the temperature increase we have experienced in the last 150 years.

              • ezrydermike says:

                no, I did saying anything about damage.

                You made the claim and now you say…

                “Correlation indicates that what I say, that global warming benefits food production is certainly possible”

                Correlation is not correlation.

                Increased temperature means a longer growing season..? What?

                This is just Heartland mis-direction crap.

                Show me a peer reviewed study that supports your claims. You are the one who made them.

                • Javier says:

                  Will you accept IPCC WGII AR4 as peer reviewed?

                  Recent results from Free Air Carbon Enrichment (FACE) studies of carbon dioxide fertilisation confirm conclusions from the TAR that crop yields at 550 ppm CO2 concentration increase by an average of 17%.

                  In temperate regions, moderate to medium local increases in temperature (1 to 3ºC), along with associated CO2 increase and rainfall changes can have small beneficial impacts on crops, including wheat, maize, and rice. Cotton has a similar response.

                  Globally, an increased agricultural production potential should increase overall food availability in the short to medium-term (2020-2050).

                  AR4 SOD Chapter 05

                  IPCC believes that global warming up to 3°C will reduce food prices, as this figure shows:

                  • ezrydermike says:

                    well, isn’t this strange….

                    CONFIDENTIAL: Do Not Cite – Do Not Quote IPCC WGII AR4 – Draft for Government and Expert Review

                    so this hasn’t been reviewed and you are using it a peer reviewed?

                  • Javier says:

                    Oops, I clicked the wrong reply and responded below.

                • Aaron 985 says:

                  You’re right, I’m not sure temperature data relates to the length of the growing season. There are likely far more data in the records over past millennia on growing seasons rather than temperatures, which we have only been able to keep records for during the past century or so. Plus temperature records are easily manipulated to advance political or economic agendas since the thermometers can simply be placed in environments warmer or colder than the surroundings.

                  That said, if the climate change studied by the government scientists is real and does actually lead to longer growing seasons, we need to do what we can to embrace the change because whenever growing seasons have shortened in human history, the result has lead to a catastrophic breakdown of society. See, for example, the destruction of the Akkadian kingdom and Old Egyptian Kingdom during the two-century Middle East drought, the New World mini-ice age around 2200 B.C., the Dark Ages, and the 1300-1850 A.D. Little Ice Age.

                  • On the other hand, the overall theoretical trend is for more rain. I believe it’s easier to widen drainage ditches and build catchment ponds than to go without water. Global warming is supposed to be enhanced by the higher humidity, which in turn leads to more rainfall as well as more snowfall in higher latitudes.

                • Javier says:

                  well, isn’t this strange….

                  I don’t know if you know how the IPCC works. The draft is the work of the scientists. The wording is a lot clearer. It is hosted at the IPCC website.

                  You can also read the final version where the executive summary is the work of the politicians.

                  Obviously it says the same:
                  -Recent re-analyses of FACE studies indicate that, at 550 ppm atmospheric CO2 concentrations, yields increase under unstressed conditions by 10-25% for C3 crops, and by 0-10% for C4 crops
                  -the purchasing power for food is reinforced in the period to 2050 by declining real prices
                  -In mid- to high-latitude regions, moderate warming benefits crop and pasture yields. These results, on the whole, project the potential for global food production to increase with increases in local average temperature over a range of 1 to 3ºC
                  https://www.ipcc.ch/publications_and_data/ar4/wg2/en/ch5s5-es.html

            • We are on average getting more food production in the Northern hemisphere due to warming and rising CO2. We are planting earlier and harvesting later in the USA for sure, historically speaking. We are growing some crops farther north than previously.

              But while a little warming has been helpful in this one respect it is likely it is also playing hell in other respects such as increased flooding and drought – with increasing fire problems etc.

              A whole lot of warming is most likely going to reduce crop yields rather than increase them.

              One glass of wine is known to be good for you. A bottle is known to be bad. Warming is extremely likely to play out in a similar fashion in terms of farming.

              • Javier says:

                Well, of course OFM, a whole lot of warming would certainly be detrimental, but there is no evidence that we are ever going to get a whole lot of warming. Warming rates are nothing to be alarmed about, and farming is one of the most adaptable human activities. Farming has been successfully adapting to warming since the early 1700s when the answer to Little Ice Age crop failures and harsh climate agricultural conditions triggered the second agricultural revolution with the Flemish four crop rotation system and the Chinese-invented Dutch swing plough as its basis.
                Wikipedia: British Agricultural Revolution
                Since then farmers have been changing and diversifying crops and practices to take advantage of global warming benefits and avoid its problems.

                I sincerely don’t know why people want to be scared by food shortages due to climate change, when all the evidence points in the opposite direction. I suppose it has the same basis as the success of zombies TV series. Well they can enjoy it, but they shouldn’t go around screaming.

                • “I sincerely don’t know why people want to be scared by food shortages due to climate change, when all the evidence points in the opposite direction.”

                  A lot of people myself included think that climate change is going to progress to the point that food production will be reduced substantially.

                  I do not however think this is going to be a big problem in the short term. A decade or two or three down the road is an altogether different question.

                  We can only go so far north. There is very little good soil beyond a certain point going north.

                  If we lose our current bread basket mid western states and the southeast gets to hot or dry we are going to have problems even in the USA.

                  The southwest is a cooked goose , long term, unless somebody figures out a way to desalinate water very cheaply indeed.

                  • Javier says:

                    A lot of people myself included think that climate change is going to progress to the point that food production will be reduced substantially.

                    Everyone is entitled to their beliefs, but what we really have is 0.8° C warming in the last 100 years and very little if any in the last two decades.

                    You and I know that we cannot keep current growth of fossil fuel consumption for more than a few decades at most.

                    Once we get into an energy descent the population problem is going to explode into an alimentary crisis as the world hasn’t seen in centuries or ever. It ought to be accompanied by all sort of geopolitical problems.

                    In a century or at most two, perhaps earlier, the current warming phase of the millennial climate cycle will come to an end and the cooling phase will start. We humans are not very good at detecting cycles that are longer than our lifespan even if they are clearly in the records. Once the cooling progresses enough it will turn into a serious problem, but then neither you nor I will be alive, neither our children maybe.

                    What I say is more probable than what you say because what I say is not an hypothesis but projecting the past into the future. Is a conservative prediction based on natural climate cycles continuing doing what they have done for thousands of years. I know a lot of people and scientists think that this time is different and that we have abolished natural climate variability. Well that is an unproven hypothesis. I bet conservatively on nature having the last word. So far it seems that climate cycles have not been abolished based on evidence.

                  • “A lot of people myself included think that climate change is going to progress to the point that food production will be reduced substantially.”

                    Mac, that’s probably because you are being victimized by a flood of misinformation built upon a “business as usual” case which projects unbelievable amounts of fossil fuels being burned, is jacked up with a very large amount of methane, and leads to high temps. On top of that you read and hear about non existent phenomena and impacts, topped off with lies such as “97% of scientists agree with the crap I just told you”.

                    Studies show that thus far warming is a positive, and will remain a positive as temperature increases 0.8 degrees C above today’s. Beyond that the impact of sea level rise begins to hurt. Sea level rise is the most important issue, the rest is pretty much poppycock.

              • ezrydermike says:

                OFM, maybe you’ll look at this stuff.
                I believe Javier is a professional merchant of doubt and perhaps a Heartland troll.

                This is the IPCC 5th Assessment Report

                https://www.ipcc.ch/report/ar5/

                This is the summary policy report

                https://www.ipcc.ch/pdf/assessment-report/ar5/syr/AR5_SYR_FINAL_SPM.pdf

                This is the section on Food Security and Food Production Systems

                https://www.ipcc.ch/pdf/assessment-report/ar5/wg2/WGIIAR5-Chap7_FINAL.pdf

                As far as increased CO2 being beneficial to crops, I was hoping to see more cited research like this..

                http://californiaagriculture.ucanr.org/landingpage.cfm?article=ca.v063n02p67&fulltext=yes

                This issue is far from settled and I think clearly there is more than enough for me to again call bullshit to this claim…”Food production has benefited enormously from longer growing seasons and increased CO2 since 1850 when the global warming started.”

                • Javier says:

                  I believe Javier is a professional merchant of doubt and perhaps a Heartland troll.

                  You seem to have a lot of beliefs not based on evidence. This belief of yours is certainly wrong.

                  I have showed you that the IPCC, based on ample bibliography, believes that the fertilization effect of CO2 is real and that moderate warming is beneficial on crops and pastures from mid to high latitudes. It is written in their reports. It is supported by scientific literature.

                  Your bible contradicts your beliefs. Your reaction is to attack me for pointing it out to you. You are clearly not subject to reason. I see no point in talking to you.

                  Please stop calling bullshit to what science has clearly demonstrated and experience has showed, that past warming and future moderate warming and CO2 increases up to 550 ppm at least, are beneficial to agriculture. You look like a denier of science.

                  • Don Wharton says:

                    Javier is very much a troll doing the best he can to spread misinformation and doubt.

                  • Don Wharton says:

                    Followup from IPCC report chapter 7.

                    The first two sentences of the IPCC report on Food Security and Food Production Systems:

                    The effects of climate change on crop and terrestrial food production are evident in several regions of the world (high confidence).
                    Negative impacts of climate trends have been more common than positive ones. {Figures 7-2, 7-7}

                    From the last paragraph of the first page:
                    For the major crops (wheat, rice, and maize) in tropical and temperate regions, climate change without adaptation will negatively impact production for local temperature increases of 2°C or more above late-20th-century levels, although individual locations may benefit (medium confidence).

                  • Without adaptation. In other words, the ipcc writes things get worse if there’s absolutely nothing done. The “without adaptation” is the key language which renders the whole comment inapplicable.

                  • Don Wharton says:

                    Replying to Fernando.

                    There will be no adaptation for California if the droughts continue as they are now. Current production is still occurring with frantic well drilling and that is clearly unsustainable. And frankly if you look at the existing projection in the IPCC report the entirety of the American West will be in trouble. It is not clear that our American midwest will be in the clear either. What happens if what is now the breadbasket of our nation becomes a scrub desert. That possibility is not precluded under current projections. There is no evidence that adaptation is possible or reasonable without the science to show how that would be accomplished.

    • Javier says:

      Apparently world food prices are zooming as it gets more difficult to produce food.

      Silly me. I thought that food prices were dependent on oil prices and now it turns out that as everything else in the world they depend on evil climate warming.

      I guess that this graph on the food price index must be really wrong, then. I must not doubt anything that is said about the effects of global warming. Perhaps someone can show me the relation between food prices and global warming, not that any fact is necessary to maintain faith. Perhaps food prices are falling because global warming has stopped. Oops, heresy!

      • Ves says:

        Javier, is that chart tracking real food or substitute for food 🙂

        Beef Tenderloin is $52 per Kg, way more than when the oil, gas and potash were double in prices from last year. And if you are, let’s say economical, you can get 4 fillet mignon cuts out of that 1 kg. On the other hand, if we track the cost of “Crap Big Mac Burgers” they indeed went down from $1.59 to $0.99 per burger.

        • Javier says:

          You have all the info about the food price index in the FAO link above.

          It is possible that FAO did not check your supermarket when elaborating the index.

          • Ves says:

            It is not about supermarkets but what are you actually counting. These days many “things” are counted as OIL (just ask EIA) but hey don’t let these minor things stops you from modeling your multicolour charts all with “shoulders” and “candles”.

            • Javier says:

              So you can disregard data because you know better.

              • Ves says:

                Data? What are you going to do with that “data”? If you live moment by moment you don’t need “data”. LOL

        • Painting with the broad brush:

          Beef is very expensive NOW due to producers having to sell out their breeding stock in recent years due to drought – lack of feed- and then low prices due to distressed sales forcing out producers who DID have feed – producers in areas not suffering drought.

          The resultant lack of breeding stock has resulted in less beef coming to market- and of course many beef producing areas are still drought stricken.

          I expect the price of oil to shoot up in an analogous fashion in a couple of years because so many producers have cut back so far on investment in future production.

          A price close to fifty bucks even for filet mignon a kilo indicates a boutique market or a high cost of living city to me. Prices in stores near here are not so high. Even a crappy so called big mac costs right at ten bucks in some cities.

          Hell I pay five bucks for a cup of coffee here in the boonies occasionally- at the bookstore. The high price keeps the loud riffraff out so I gladly pay it occasionally to enjoy a quiet atmosphere checking out new books.

          • Ves says:

            Mac,
            No boutique around here. It is Costco meat at Costco price, although i will admit it is more expensive than comparable Costco’s in US due to economies of scale. But anyway it is what it is and it is not only beef that we are talking about but lots of other staples.
            Posting charts that food staples dropped 30% due to oil in the last year I would expect to see on cable channels like CNBC or something like that, whose audience dwindled to just gym goers. Even they put it on “mute” while on treadmill – just watching, not listening. Who believes in that crap anymore?

            • Hi Ves,

              I agree that food prices are trending up overall. Anybody who believes differently is looking at cherry picked short term data.

              On the other hand food prices are still very low in historical terms in comparison to the incomes of people who have good jobs.

              You have not said where you live but you obviously live in a place that prices are higher than average, at least for premium meats.

              The prices of the cheapest staples in my area have roughly doubled in the last five years. I used to get bananas on a regular basis for thirty cents on sale. Sixty cents now. Dried beans have gone from fifty or sixty cents to over a dollar. Potatoes five years ago half what they are now on average.ETC.

              Even the cheapest ground beef is in the four and five dollar class now, half that a little while back.

              Local growers are getting twice what we got a decade ago for fruit at wholesale but rising expenses get most of the difference.

              Paying for food and energy will in my estimation soon be impossible for poor countries forced to import but with little or nothing to export.

              And the rest of the world is neither prosperous nor generous enough to support such countries on charity long term.

              This is NOT going to end well, on a world wide basis but countries such as the USA and Canada are well situated in terms of food supplies for the foreseeable future barring the climate going totally haywire.

              We have ample domestic resources that can be diverted from pleasure flying and beer fetching to run farms and process and distribute food.

  13. Caelan MacIntyre (Cae-Pack™, Item 3) says:

    Unfortunately, I (and thee) are too poor to afford a Tesla.

    “But that doesn’t mean we won’t continue to be forced to ‘help’ Elon Musk build these mobile – just barely (and briefly) monuments to crony capitalism.

    This is a company that bleeds money like a machine-gunned hemophiliac, yet doesn’t die because fresh transfusions are always available. Just last week it was announced the company lost another $100 million and change while delivering fewer than 10,000 cars. Tesla has yet to earn – properly speaking – a single honest dollar. The money it takes in (a very different thing) is obtained chiefly via carbon tax credits ($130 million from the state of California alone; that is to say, from the pockets of the taxpayers of the state of California) and everyone knows all about the $7,500 per car subsidy Uncle dangles in front of prospects to lure them into buying one of these flashy, yet functionally useless, electric Edsels. There are in addition state-level subsidies (in 23 states) ranging from $1,000 to $5,000 per ‘sale’.

    Do you know what a ‘carbon tax credit’ is? It’s a tax, first of all – only one paid to an entity (I won’t call it a company, as companies are businesses and Tesla is neither) like Tesla rather than to the government…

    The finished car… took a lot of noxious emissions to build the thing. Do American haters of internal combustion ever stop to wonder why Tesla is building its ‘Gigafactory’ in… China?

    Where there is no EPA?

    Do you know what goes into making a Tesla’s lithium-ion electric battery pack? Caustic, highly reactive solvents and cobalt oxide…

    And how do you get cobalt? By mining other materials such as nickel and copper. Then, using various noxious processes to separate out the cobalt, such as ‘froth flotation’, ‘roasting’ and ‘leaching’ with sulfuric acid…

    This form of Gaia-rape is ok, though, because it does not occur within sight of Al Gore’s house. Most of the cobalt needed to make Tesla and other electric batteries is located in places like China, Afghanistan and Africa. Those parts of the earth are ok to fist and finger.

    Battery production… is an aspect of EVs that is routinely overlooked – deliberately. Because the picture isn’t pretty. In addition to the environmental nastiness of the materials, it takes a great deal of un-green energy to transform those materials into the finished product (a battery). Nearly twice the energy that goes into making a conventional (internal combustion engined) car, as it turns out.”

    We hope you’ve enjoyed your Cae-Pack™ as much as we’ve enjoyed packing it!

    • Javier says:

      I was defending in the previous post the unfairness of taxing the poor majority to make EVs more affordable to the rich minority.

      But it appears that if you sell it like saving the planet, even if it is false, the uneducated poor will not protest.

    • Doug Leighton says:

      “Most alarming, EVs that depend on coal for their electricity are actually 17 percent to 27 percent worse than diesel or gas engines. That is especially bad for the United States, because we derive close to 45 percent of our electricity from coal. In states like Texas, Pennsylvania, and Ohio, that number is much closer to 100 percent. That’s right folks; for residents of some of the most populous states, buying an EV is not only toxic, it’s warming the planet more than its gas-powered counterparts.”

      http://www.digitaltrends.com/cars/hold-smugness-tesla-might-just-worse-environment-know/

      • TechGuy says:

        DougL Wrote:
        ” That is especially bad for the United States, because we derive close to 45 percent of our electricity from coal.”

        Not to worry! /sarc That will start to change at the end of this year. the US is decommissioning 95 coal plants this year (2015) ~20 GW. Virutally all US coal plants are on the chopping block by 2024, unless the regulations are reversed. It really depends on who wins the election in 2016.

        That said, the US de-industrializing, as power plant closures are well exceeding replacement plants. In addition to US coal plant shutdowns, the US is also shutting down nuclear plants (about 2 per year, but nuke plants closures will accelerate soon as the plants become too old and costly to operate) . The cost of electricity will likely start soaring after 2016. Higher electricity costs will drive more industrial business overseas to Asia that has no to little regulations on Coal. CO2 regulations also effect other industries in the US, such as steel and cement, which will force them to move overseas. US regulation do not control global CO2 emissions. it just shifts the country of origin.

        • Maybe we’ll see a boom in natural gas fed combined cycle turbines. Gas prices could reach $10-15 per mmbtu in 10 years.

          • TechGuy says:

            Fern wrote:
            “Maybe we’ll see a boom in natural gas fed combined cycle turbines. Gas prices could reach $10-15 per mmbtu in 10 years.”

            At the moment, I don’t see a large number of power companies switching to Gas fired turbines. From the articles I read, power companies are aware that prices for NatGas are likely to soar and don’t want to spend $$$ on systems that may not be profitable. A new plant need more than 10 years to payback. A few coal plant operators are converting coal to natgas with gas inserts since it cheap to convert them. but as soon as the natgas prices go up they will become uneconomical. These converted plants are not very efficient. It appears that the majority of coal plants being shutdown are simply not going to get replaced. They are either hoping for a regulation reversal after 2016 (elections) or will simple shutdown operations and retire.

            I very much doubt it will take 10 year before we see Natgas prices in the $10 to $15 range. Shale NatGas has the same financing problems as Shale Oil (drill at a loss). Shale Gas needs $10 to $18 just to break even, but for the past 5 years, investors handed over money like it was free. If I recall correctly Shale Gas drilling has dropped off the map. So I don’t see how Natgas prices can be keep low for much longer (perhaps a year or two?)

            http://marketrealist.com/2015/04/us-crude-oil-natural-gas-rig-counts/

            • Don Wharton says:

              Techguy, I think you are not grasping the situation with nat gas. At about 72 bcfd that is the energy equivalent of 12 billion barrels of oil a day. The energy of 6000 bcf of gas is more than equal to a barrel of oil. For much of last year the price was close to $4 and there was a ferocious increase in production. My expectation is that a return to $4 will result in a substantial increase in supply.

              • nNgass says:

                “…. energy equivalent of 12 billion barrels of oil a day.”???
                This planet uses “only” about 90 MILLION barrels a day. So, more than 100 earths could be fed with that amount per day.

              • TechGuy says:

                Don Wrote:
                “For much of last year the price was close to $4 and there was a ferocious increase in production. My expectation is that a return to $4 will result in a substantial increase in supply.”

                Your not considering how much energy companies have been drilling for cash flow from Wall Street. When drillers go broke, and investors get burned, who is going to finance Shale gas drilling at $5, $6, and probably beyond $12? Investors are going to require much higher returns for the rises and they are going to watch these companies like hawks. Shale drillers will be forced to turn a profit and that means selling natgas in the $12 to $18 range.

                As Jeffrey Brown states, US natgas production depletions at about 24% per year. Every four years NatGas drillers need to replace 96% of production. As the the US is forced to consume more natGas as Coal is forced out, its going to have a dramatic increase in costs. In my opinion it crazy to burn NatGas baseload electric Generation. NatGas is very import for domestic heating. When the shortage happen, not only will poor people be in the dark, they also be freezing too.

                • Don Wharton says:

                  The Marcellus and Utica formations are extremely productive. They are the major sources of new nat gas. Many providers are now getting far less than $2 for their gas because of now limited take away capacity. If they could get $3.50 in a future where Henry Hub is at $4 they will be extremely cash flow positive and the share holders will be very happy. The latest EIA Drilling Productivity report asserted that the average drilling rig in the Marcellus added over 8,000,000 cf/d presumably for each months worth of drilling. 8,000*$3.50*30days in a month would yield an average of $840,000 for a month. My recollection is that average well cost there is running around $6 million. Obviously there is a very significant decline rate and all the other expenses to be recovered. However, that is very good money and my impression that that all operators would be delighted with the earnings at that level.

                  For much of the rest of the nat gas market the primary issue for a given well is the oil produced. The nat gas is secondary.

            • What’s the typical EUR (BCF) for a Marcellus or Utica well?

              • coffeeguyzz says:

                Fernando

                That’s a great question with no simple answer due, amongst other factors, to the many variables involved.

                The Marcellus has been divided into NEPA (northeast PA) and SWPA (Southwest PA) by many due to the differences in the formation. NEPA has dryer gas, SWPA has both wet and super rich (>1,350 mmbtu) areas. The Utica has only about 1,000 wells producing so far – mostly in Ohio – and it is wet/super rich.
                Another factor in EUR determination is length of laterals. Operators are only starting to exceed 6,000’/7,000′ this past year. According to Range’s earnings report from last week, their EURs run about 2.5 Bcf per 1,000′ lateral in the SWPA area, and slightly higher in the northeast. (There are two recent Range SWPA wells that have produced bout 1.8 Bcf each first 90 days).

                The ‘dry’ Utica is probably anyone’s guess now as only a handful of wells have been drilled. The distance covers 400 miles from Tyler county WV to Tioga county, PA.
                Range’s Sportsman, in SWPA has produced 1.6 Bcf in 4 months but is declining rapidly. (11,700′ deep).
                Rice’s Bigfoot 9H, in Ohio (9,500′ deep), has produced over 5 Bcf first year on restricted choke.

                Big time crap shoot/unknowns all over the place.

              • For the sake of argument: a well can recover 8 bcf, or 8 million mcf. I think it’s feasible to say that gas will sell for $5 in the future, or $40 million gross income per well. Looks like that acreage is definitely worth locking up. And this explains why they are trying to get LNG plants built to export gas to Europe.

                • Don Wharton says:

                  There are a good number of Marcellus wells that are expected to yield that much over their lifetime. However, I think a more normal level might be about 4 bcf. That is the rough amount projected by David Hughes in his Drilling Deeper report on the Marcellus last year for Lycoming and Greene Counties. Those are less productive than the most prolific Susquehanna and Bradford Counties. Obviously the less prolific counties have fewer wells so the median EUR is likely to be near that 4 bcf figure now. However, as the sweet spots get drilled out we can expect the EUR values to substantially decline as drillers move to less productive areas. My guess is that 2.5 bcf might be typical in 10 years. Hughes reported 2.84 bcf EUR for the “other 19” counties in his Marcellus report. Of Course, that is just my guesstimate.

      • Texas has over the years actually used more gas than coal to generate electricity.

        BUT – paradoxically – Texas in recent years has been burning MORE coal as a percentage of generation -BECAUSE Texas has an extremely productive wind industry that is going to continue to grow.

        When the wind is blowing the utilities shut down gas fired generation because it is easily ramped up and down in comparison to coal fired. The use of LESS gas due to MORE wind has thus resulted in the PERCENTAGE use of coal increasing a few points.

        But Texas still generates substantially less than half of the states electricity from coal as of two years ago.

        Nuance is every thing . Context is everything—If you want to understand complex reality.

        The folks who knock the wind industry seldom stop to think that the less gas is burnt to generate electricity the CHEAPER gas will be for all other purposes- such as heating their houses or manufacturing nitrates to grow corn so they can eat steak.

        WIND as it increases production will also have the effect of making gas cheaper to generate electricity as well- at least for the next few decades. Wind and solar might eventually drive coal out almost altogether if enough gas is available to back up renewables to that extent.

        My guess is that Fernando is right and that eventually pumped storage facilities will be built right and left as fossil fuel supplies deplete. He constantly says they will not work but he also says that ninety seven percent of all scientists will recognize peak oil as a fact a few years down the road lol.

        • Synapsid says:

          OFM,

          Just as a little icing on the cake: last time I looked the coal Texas burns is lignite, the best coal to burn for maximum production of CO2 per unit of energy.

          • Brown oily mud is what they call it themselves. It is burnt at mine mouth generating plants – no transportation costs.

            “(According to the Electric Reliability Council of Texas, the independent system operator for the state, coal generated 36 percent of electricity in 2014.)”

            The more wind they get – and they will be getting plenty more wind power- the less coal they will burn.

        • TechGuy says:

          OFM Wrote:
          “My guess is that Fernando is right and that eventually pumped storage facilities will be built right and left as fossil fuel supplies deplete. He constantly says they will not work but he also says that ninety seven percent of all scientists will recognize peak oil as a fact a few years down the road lol.”

          Lack of water and undeveloped land appropriate for pumped storage systems is the problem. Second, there is going to the lack of capital since the US and the rest of the world is drowning in debt. We are starting to see the cracks in the Debt dam (Greece, Puerto Rico, Italy, Spain, China, Japan, so on), are all springing leaks.

          • When the time comes that we have to build pumped storage or do without a steady supply of electricity -and such a time may well come- then we will find the land needed by kicking the local people off of it and condemning it and building such transmission lines as are necessary to wind and solar farms.

            Going broke as a nation is a generally a gradual process and lots of governments have found it possible to for instance build up a HUGE war machine during times when money was extremely scarce. Nazi Germany is the premier example.

            I do not doubt , personally, that if it is necessary to condemn developed land and draft workers as necessary just like drafting soldiers , that pumped storage will be built if doing without dependable electricity is the alternative.

            The nearby Shenandoah National Park and the nearby Blue Ridge Parkway were established by kicking people off their land. The nearby interstate – ditto.

            When the large majority of people want something , Leviathan gets it for them if it can be had. Condemning land at a time of a declared emergency is a piece of cake.

            Given the choice of building new coal capacity or living on rationed electricity the average greenie will go for pumped hydro or coal or both.

        • I never wrote pumped power doesn’t work. It’s used here in Spain. The combination of hydro with pumped power with solar and wind seems to work ok. The practical limit is the hydro and pumped plus gas turbine ability to back up non dispatchable wind and solar.

          • My apologies, I intended to say you constantly insist that wind and solar don’t work – in general terms your argument being that they are TOO EXPENSIVE.

            You have pointed out often that wind and solar backed up by pumped hydro or enough ordinary hydro can work – if you are willing to pay the cost of building it.

            MY argument is that eventually – and within the foreseeable future- wind and solar generation will be substantially cheaper than generation using imported gas and coal – maybe not everywhere but certainly in countries with good wind and solar resources and little or no locally produced coal and gas.

            Nobody is going to repossess a wind or solar farm once installed within national borders. But businessmen from outside those borders can refuse to deliver coal and gas except for hard cash. Sky Daddy alone knows what the prices of coal and gas may be ten or twenty years down the road. A war might make it impossible to get a delivery for a year or two at a time.

            My belief is that the risk of running short of readily available and affordable coal and gas is sufficiently high that we should ramp up renewables as fast as practicable. If we wait until the last minute it may be impossible to make the transition. Even with the renewables pedal to the metal it will take decades to get mostly over to renewables and mostly away from coal and gas.

            • Sure, but what’s as fast as practicable? Does this include doubling electricity prices and raising unemployment and the national debt?

              Also, many of you seem to believe costs will drop. A quickie analysis shows it’s more sensible to wait a few years before going nutty with solar panels and paying high subsidies for an incomplete technology.

              A more sensible approach is to take measures to increase efficiency.

              For example encourage more high occupancy expressway lanes, more street lanes limited for use by buses, give buses the ability to turn lights green so they move much faster, build light rail and encourage apartment construction by taxing land area used for a dwelling at a higher level. You know, those practices which common sense tell you work in any circumstance.

              • Fernando I agree with you one hundred percent that conservation and efficiency are the low hanging fruits in any serious discussion of energy.

                But controlling the behavior of naked tailless monkeys is harder than herding cats and as a purely practical matter we can only do what we can get done in the face of habit, business as usual obstructionism , and the stubborn habits of millions and billions of naked tailless monkeys.

                At one time I spent many a long evening actually studying communism and the way the old USSR practiced it in terms of international affairs. Read the source books. Read what was published by both the right and the left.

                The commies made a practice of doing whatever they could to further their own interest – meaning spreading communism. If that meant corrupting a labor union they did it – although doing it did not necessarily mean they would take over a country. If they could install a puppet government they did so. If they could bleed a free country at extremely little expense to themselves they did so. Everybody else will disagree on this no doubt but you and I will agree.

                Now building out renewables NOW at substantial expense is hurting some people in the short to medium term – no question. But having renewables ready to shoulder the load is the difference between a successful transition and a collapsing economy.

                Would the free market perfect the renewables technologies , given time? There is no doubt in my mind that the market , given sufficient time , would replace depleting coal and gas with non depleting wind and sun.

                But forcing the technology along FASTER with subsidies and mandates means that renewables will be ready MUCH sooner.

                A decade or two sooner imo. That decade or two may well be the difference between a tough but manageable peaceable transition and troubles ranging from large scale rioting and uncontrollable(except maybe with machine guns ) illegal mass migrations right on up to a flat out WWIII.

                Hey we piss away billions of dollars promoting other things that are not so useful- such as air travel.

                I just cannot bring myself to believe that gas is going to stay cheap in a connected world.

                Now we disagree on the amount of risk we are running when it comes to climate.

                Maybe you are right and the low scenarios are right and maybe we won’t even get as much warming as the low modeling scenarios indicate.

                And MAYBE the models are extremely conservative in that there might be far far worse positive feedbacks that will come into play than so far anticipated.

                Nobody is good at predicting the behavior of non linear partially chaotic complex systems. NOBODY at all.

                I have spent substantial amounts of time studying these things and my opinion for what it is worth is that while you are probably a damned good petroleum engineer I would never want you in charge of planning any climate policy. You are going into the game with the preconceived firm belief that there will be no dangerous forced warming.

                There is simply NO way you can be sure you are right.

                Ditto Javier.

                Just because a scenario has never come to pass is no indication it never will- especially if knowledgeable people think it might due to changing values of critical input variables..

                So – if you are an engineer and tell me a certain giant machine might start running hot because something is changing – Well , I ought to listen to you.

                We are changing fundamental values and variables pertaining to the climate. People who devote their careers to the study of climate are telling us they believe the climate is going to run increasingly hot as a result.

                Just because it has NOT yet happened to a DANGEROUS extent is no proof at all it WILL NOT a few years down the road.

                The engine on my stationary pump runs a little hotter on a hot day. If the radiator gets partially clogged it will run a little hotter still but nevertheless still be ok.

                But at some point- at some point- it builds up enough pressure to start blowing some water out of the radiator and at that point -If I keep running it-I have REAL TROUBLES.

                WE SIMPLY DO NOT KNOW how far we can push things in terms of the climate before we start getting some positive feedbacks that will result in accelerated forced warming.

                The people such as Javier who tell us we have had only a degree or so of warming in a century do NOT know how much MORE warming we are at risk of over the next century.

                Once the cooling system of an engine passes a certain operational tipping point it is all over for that engine unless it is promptly shut down.

                There is no kill switch for either the climate or the economy.

                My belief is that whatever progress is made in scaling up renewables NOW will be priceless later on.

                A military man might devote his career to getting a defensive line built at enormous expense. BUT in the event of an invasion- a well designed defensive line is absolutely priceless.

                We KNOW we are going to run short of affordable oil within the next couple of decades at the longest. Even the most optimistic scenarios estimate peak production of gas within the next few decades.

                Coal is plentiful – assuming we are forced to burn it. But cleaning it up is awesomely expensive and CO2 capture and sequestration is probably so expensive as to be out of reach.

                But I do not normally even think of climate as the bigger problem except in the abstract. Depletion of oil and gas are apt to result in troubles enough to break the back of industrial civilization.

                WHY should we be SURE given tricky bookkeepers and depletion and a growing population that there will never be a sudden economy killing oil and or gas crisis ?

                • Javier says:

                  OFM:

                  The people such as Javier who tell us we have had only a degree or so of warming in a century do NOT know how much MORE warming we are at risk of over the next century.

                  EVERYBODY will tell you that we have had only a degree or so of warming in a century BECAUSE that is what we have had.

                  NOBODY knows HOW MUCH more warming we are going to get over the next century. Heck, nobody knew how much more warming we were going to have these past two decades, two decades ago.

                  That is called REALITY. A strange concept nowadays.

                  Do you want to discuss the precautionary principle? Interglacials last half a 23 ky precessional cycle, and we are already at that point. The Little Ice Age was the coolest period in the entire Holocene. Perhaps it was a warning sign of things to come. Perhaps those greenhouse gases are all that stand between us and a return to Ice Age conditions. This is not a wild idea, it is well reflected in the scientific literature. Many scientists believe that current CO2 levels are incompatible with a Glacial Inception. Let’s hope they are right.

                  The dangers of such an event are many, many times the dangers of global warming. Problem is we need to keep those CO2 levels high for thousands of years.

      • “(According to the Electric Reliability Council of Texas, the independent system operator for the state, coal generated 36 percent of electricity in 2014.)”

        This from Marketwatch.

        Apparently the digital trends piece Doug linked to was written by a Tesla hater or a very careless writer.

    • Bob Nickson says:

      David Stockman wrote:

      “Do American haters of internal combustion ever stop to wonder why Tesla is building its ‘Gigafactory’ in… China?”

      Not so. The GigaFactory is under construction near Reno Nevada.

      Dough Leighton quoted:

      “Most alarming, EVs that depend on coal for their electricity are actually 17 percent to 27 percent worse than diesel or gas engines.”

      This is disputed. As reported be Eric Jaffe here: http://www.citylab.com/weather/2015/07/4-key-problems-with-measuring-ev-pollution-vs-gas-cars/398093/ David Reichmuth of the Union of Concerned Scientists has a different take on the matter:

      “[O]verall the UCS reports suggest there’s really nowhere in the country where EVs don’t stack up favorably to conventional cars when it comes to lifecycle pollution. The 2014 report finds that an EV charged in every grid area in the U.S. produces less global warming emissions than the average, 28-mpg gasoline car. And it shows that 60 percent of the country lives where EVs produce less global warming emissions than the best-performing gas car, a 50-mpg Prius.”

      At any rate, this argument is an indictment of coal sourced power, not EV’s.

      • islandboy says:

        ‘Do American haters of internal combustion ever stop to wonder why Tesla is building its ‘Gigafactory’ in… China?”

        Not so. The GigaFactory is under construction near Reno Nevada.’

        Which begs the question, if this person was willing to publish such a blatant, barefaced lie, what else has he written that cannot stand up to scrutiny? For heaven’s sake, it doesn’t take a minute to find out that Tesla’s Gigafactory is currently under construction in the the vicinity of Sparks/Reno, Nevada! There are even videos taken by drones as in, Tesla’s Gigafactory: Drone’s Eye View of the Massive Battery Factory. That video is only a minute long and at 36 seconds in, contains this little titbit “The factory will be powered by renewables”, making rubbish of Stockman’s assertion that “In addition to the environmental nastiness of the materials, it takes a great deal of un-green energy to transform those materials into the finished product (a battery).” He obviously did zero fact checking before spouting his vitriol.

        Tell me one lie and it makes me doubt everything you say!

        As a side note, in a previous thread I made a statement about 52 states in the USA. I do not consider that a lie as much as it seems I am not the first person who has made that mistake and for some reason this figure of 52 is out there. A quick internet search sorted it all out in my mind and I should have known better. My late father, who taught high school geography before becoming a school administrator, would heave been deeply disturbed by my carelessness! Bear in mind that I am not an American and would have difficulty finding many of the states on a map if the names were omitted!

        • Synapsid says:

          Hi islandboy.

          There was no thought that you were lying about the 52 states, just the question of where the number came from.

          Is that number really out there? All we need is for something else to give The Donald ideas.

          • islandboy says:

            I did a internet search using Google for “52 states in the US” and based on the results. it seems that it is a fairly common misconception. Without even clicking on any of the results, the excerpt from the first result reads“Many people recall the United States including 51 or 52 states, not 50. The interesting point is that the memories are fairly consistent, and include Puerto Rico as a state. One teacher suggested this is a common misunderstanding.”

          • ezrydermike says:

            don’t forget Pennsatucky and East West Virginia

      • Ronald Walter says:

        Build power plants at the Athabasca region and build pipelines for electricity.

        Makes much more sense. All that tar can generate electricity and won’t have to be transported long distances. Won’t be as invasive. It will short the oil supply and increase the supply of electricity. Price of oil increases, electricity prices decrease with new generating capacity for electricity.

        Build automated power plants using robots, have robots operating the power plants. Driverless vehicles and machines mining the tar to haul to the generating facility.

        All robotic, totally automated power plants, the future is here.

    • Bob Nickson says:

      Aside from tail pipe emissions from an EV directly, we can fuel our transportation with tar sands, or photons.

      The PV array in the photo below, assuming 300W panels, would produce about 60kWh/day. Interestingly, that would power the average U.S. home, and two EV’s for the average U.S. daily vehicle mileage.

      • Doodlebugger says:

        Have been wondering. How will solar panels fare in roof destroying hail? We’ve had three in the past two years, (golfball-baseball sized).

        • Bob Nickson says:

          Hail starts at the 29 second mark.

          https://youtu.be/M6v2lDa8Hos?t=29

          • MarbleZeppelin says:

            Those are really tough panels. However, if the neighbors start driving their pick-ups on my roof I will get really upset even if there is no damage. 🙂
            So are the naysayers now looking for new reasons to naysay or are they just going to keep spewing out the same old same old hoping to catch the unwary?

      • Please refer to page 4, paragraph starting with “Unfortunately…”

        https://web.stanford.edu/group/sjir/pdf/Solar_11.2.pdf

        This is a Stanford report which includes a brief overview of the environmental damage caused by solar panel manufacturing.

        I have a daughter who worked in China and had to return with internal organ problems caused by contamination.

        • Doug Leighton says:

          Yes, it pisses me off to constantly hear EVs/Solar will solve humanities’ problems with zero recognition of the fact EVERYTHING has a cost. Even relatively benign hydro-power has consequences some of which are awful. Sorry to hear about your Daughter.

          • Doug Leighton says:

            And, if you want to see Hell on earth visit the Baotou rare earth mines in Inner Mongolia; a vast area of former pastureland turned into a wasteland of toxic sludge. God only knows how many people are poisoned there every year, allowing us to have our fancy e-toys.

          • Fred Magyar says:

            Yes, it pisses me off to constantly hear EVs/Solar will solve humanities’ problems with zero recognition of the fact EVERYTHING has a cost.

            You are 100% correct, they won’t and anyone with half a brain should be able to understand that! However the costs associated with trying to maintain the BAU oil based paradigm are turning out to be quite high as well. So we do need to look at alternatives. We obviously can’t keep going as we have.

            BTW, Hydro as they have been doing it in Brazil,certainly has huge negative environmental costs. That’s something that pisses me off just as much as the negative impacts of manufacturing solar panels in China.

            I guess we could be here all day talking about the negative impacts of refineries, coal mining or working the tar sands in Canada.

            At the end of the day the issues that we really need to address are population growth, how we change the system which promotes consumption of goods for status, and the economic system which depends on infinite growth to service debt. Until we address those issues everything else is pretty much moot!

        • MarbleZeppelin says:

          What waste of time reading that essay by diplomats about Chinese manufacturing problems. The problem is internal to China and their views, not the solar PV industry. These compounds can be handled safely. China is just willing to sacrifice workers and the environment. You can say that about the whole industrial system in China, their government and their society.

          I worked in chemistry for decades, research and analytical, handling unknown untested compounds. Still here, no problems. I also worked in chemical production for a few years. We had lots of safety protocols, safety equipment and up to date equipment. The federal government also monitored the chemicals used and made sure the dangerous ones were properly contained in the manufacturing process.
          Chemistry is dangerous. So is roofing, driving, swimming, eating, and living in general. Proper actions, proper training and equipment lead to a low probability of harmful events.
          But first one has to care or be made to care about people and the environment. China has a lot of growing up to do, it’s an ancient culture of medieval despotism put into a modern industrial culture.

          • China’s government and economy are into a communist~>fascist + capitalist regime. Communism has failed, the elite realizes this failure, but they want to maintain the dictatorship and the communist party oligarchy. This makes the government unresponsive to the needs of people removed from the halls of power. It’s an emerging monster, a model which includes an Orwellian dictatorship with extreme abuse, dividing the population into a caste structure, and ensuring its survival with extreme but very sophisticated repression.

            I’m seeing the Cuban dictatorship trying to move in the same direction. And the USA elites seem to be ok with the Castro family plan to install itself as a hereditary fascist autarchy.

            What many forget to factor into their equations is the externality that solar and wind are buttressed by lower costs derived from the use of slave labor and extreme environmental degradation in China. The same will apply to those Cuban cigars and the nice trips you will enjoy to screw around with Cuban prostitutes…they will be the result of extreme exploitation and human right abuses. But that’s fine, isn’t it, because the dictatorship will wave red flags and quote Marx.

            • MarbleZeppelin says:

              “It’s an emerging monster, a model which includes an Orwellian dictatorship with extreme abuse, dividing the population into a caste structure, and ensuring its survival with extreme but very sophisticated repression. ”

              Yes, the problem is political.

  14. Watcher says:

    Itttttttttttttttttttttttt’s monthly car sales time!

    Nissan Leaf July 1174 sold
    July 2014 — (drum roll) 3019 that’s down 61% year to year

    It’s a revolution!

    (gasoline prices are down about 19% over that period)

    Ford sold 220,000 vehicles last month. 66,000 of ’em F150s.

    • Greenbub says:

      Well, the new F-150 does get pretty good mileage.

    • Ronald Walter says:

      It only takes one time to have zero charge, no power, be stranded on a highway somewhere and you need a tow, then the ev craze comes to a screeching halt. You have a thirty thousand dollar golf cart.

      Trade it off for something that can go 400 miles with 18 gallons of gas and will time after time day after day, not a thing to worry about.

      The wind turbine fiasco will produce the same results, the economy will crash with no ff powering it all. The party will be over, the fat lady will be belting one out like never before. Prepare for a world with ultra rich and impoverished huddled masses because that is what will probably happen with a grid powered by renewables that destroy the planet even faster than fossil fuels could possibly do. It won’t be a picknick on June 21st.

      Didn’t Ford lease a few electric pickup trucks and then recall them much to the chagrin of the lease holders?

      Must have been something in the technology that Ford wanted to keep for themselves.

      • All you guys knocking electrics would have been knocking Model T’s and tractors in favor of horses.

        Collapse may be inevitable but there is in my opinion at least plenty of reason to believe that plug in cars will be cost competitive without subsidies within a very few years. I have historically been a right wing hard core guy when it comes to free markets but in recent times I have grown wiser. Now that I am aware of impending critical resource shortages I believe in goosing the market along using some incentives to get new tech up to scale faster.

        HEY GUYS —HOW LONG do YOU think it will take before it takes oil to go up enough to put gasoline back above four bucks again? My own guess , barring the economy staying on life support , is less than three years. Five years no matter what imo.

        Some of you yak right along about shark fins and Seneca cliffs when talking about oil. GET A GRIP. Electric cars are not going to save civilization in the long run but they ARE going to delay the day we have to give up personal automobiles by a decade or two or three- maybe even longer.

        Lets not forget that a VOLT with a supposedly worn out battery that will take it only on a twenty mile trip will still suffice for most daily use purposes for tens of millions of drivers- without their having to spend a dime for gasoline.

        And the ENGINE under the hood – well, it will still be just about NEW in most cases. A well cared for VOLT will probably last four hundred thousand miles in a lot of cases without any major repairs. A TESLA with a new battery should last just about forever if properly maintained.

        The big rechargeable battery industry is barely out of diapers. Musk’s gigafactory is the FIRST REAL FULL SCALE battery factory – big enough to be state of the art and take full advantage of economies of scale – and it will be obsolete in many respects before it even gets into full production.

        Some idiot was posting a couple of days back about the price of oil going to zero within a few years. If he wants I am ready to bet fifty to one , five hundred to one against.

        • All you guys knocking electrics would have been knocking Model T’s and tractors in favor of horses.

          Mac, very, very bad analogy and not true at all. Cars and tractors were a many fold improvement in efficiency over the horse. Electric vehicles are not an increase in efficiency or price to operate over gasoline powered vehicles. If they were then they would have replaced gasoline powered vehicles many years ago.

          When electric vehicles become cheaper to operate than gasoline powered vehicles then they will replace them and not one day before.

          • Hi Ron,

            I failed to point out that I am talking about the future rather than today.

            No doubt you believe in oil becoming rather scarce and expensive within the foreseeable future given that you host this fine blog. 😉

            There is good reason in my opinion at least to believe that the price of gasoline will double and the price of batteries will fall by half within a decade.

            Of course opinions are what make horse races.

            I would agree with you if I thought oil would stay cheap and batteries would stay dear.

            • From todays online WIRED

              ”The 2016 Volt sees its battery range jump from 38 miles to 53. Beyond that, the gasoline engine generator kicks in to keep juice flowing to the motor. Yes, that’s only a little more than half what you’d see in a car like the battery-electric Chevy Spark or Nissan Leaf. But it should be plenty for most motorists. General Motors says current Volt owners make 80 percent of their trips without ever firing up the engine, and the increased range will push that figure to 90 percent.
              The 2016 Volt sees its battery range jump from 38 miles to 53. Beyond that, the gasoline engine generator kicks in to keep juice flowing to the motor. Yes, that’s only a little more than half what you’d see in a car like the battery-electric Chevy Spark or Nissan Leaf. But it should be plenty for most motorists. General Motors says current Volt owners make 80 percent of their trips without ever firing up the engine, and the increased range will push that figure to 90 percent.”

              My conservative mid brain tells me to never buy another GUVMINT MOTORS vehicle but my neocortex is telling me that some GM managers bit the bullet and took the big chance and did what was necessary to save the company in the face of peak oil.

              The Volt will sell like ice water in hell when the next oil crisis hits.

              There WILL BE an oil crisis. It would not surprise me much if it arrives within three to five years.

              Anybody that believes in peak oil and collapse has to believe in an oil crisis.

              The only real question is whether collapse will be sudden or drawn out. I personally favor the drawn out bet , at least for rich powerful countries such as the USA.

              In the cases of countries such as Egypt I do not believe that they will be able to pay for essential imports in the face of still rising populations and I do not believe more prosperous countries are going to be willing or even ABLE to support them on charity over a long enough period for them to adapt.

              Collapse in such countries is apt to be rather abrupt in some cases. It all depends on what you call collapse. If twenty percent of the population starving in one year is not considered collapse then most very poor countries probably will not collapse. They will survive if collapse is defined this way and the populations will gradually fall back to sustainable levels.

              • R2D2 says:

                “My conservative mid brain tells me to never buy another GUVMINT MOTORS”

                Yet, Donald Trump leads your political party to “make America Great Again”. You know, back when GM sold over 60% of all vehicles and Americans had good paying jobs with benefits.

                “You can lead a middle age American male to reasonable, but” you can’t stop them from shooting themselves in the foot (with a gun).

                ????????

                • ChiefEngineer says:

                  Hypocrisy is the claim or pretense of holding beliefs, feelings, standards, qualities, opinions, behaviors, virtues, motivations, or other characteristics that one does not actually hold. Hypocrisy is not simply failing to practice those virtues that one preaches.

                  http://news.yahoo.com/jon-stewart-bids-fox-news-adieu-on–the-daily-show-134533895.html

                • R2D2,

                  I ain’t no stinking republican.

                  I AM a real conservative – which I readily admit makes me one of an extremely rare breed these days.

                  The republican party is conservative mostly only in name only when it comes to what I consider true , informed conservatism.

                  I suppose I ought to point out that I am a devotee of the Humpty Dumpty school of linguistics as well.

                  (When I use words, they MEAN WHAT I SAY THEY MEAN) 😉

                  I am frequently accused of being a whale loving tree hugging socialist commie liberal by republicans but so far none of them have had the balls to show up when I challenge them to a duel. LOL.

                  • R2D2 says:

                    Mac,

                    What is it about General Motors that a(real) conservative mid brain tells it to not to buy one of there vehicles? Since you used the name “GUVMINT MOTORS”. Is this an area that a real conservative have in common with todays Republican Conservative ?

                    Does it bother you that the Republican party has stolen your view of a conservative ? Maybe the Republicans have changed the definition of conservative and you really aren’t one anymore. Oh my God, maybe you have become a progressive liberal. LOL. Republicans are also good at changing history.

                    One more question for you. How does a real conservative feel about gay marriage and abortion ? Because I know how the Republican conservative party candidates feel about it. Just trying to understand this.

                    Mostly here in California, the rich Republicans could careless about those subjects. What they care about here are tax cuts and they all drive BMW & Mercedes in Newport Beach with the country largest dealership.

                  • For R2D2 this reply should be down thread.

                    A proper answer would take a very long time to compose but to make it as short as possible I define a real conservative as a person who one knows enough to know what is best for society as a whole and two is willing to advocate for what he believes. This definition leans heavily on the engineering definition of the word meaning something along the lines of ” well constructed with ample safety margins built in”.

                    Now this is hard to comprehend for people who think in smaller boxes. But speaking as a technically educated , scientifically literate REAL conservative I understand that we have only one home- this third watery rock orbiting our rather inconsequential sun in a backwater of our galaxy.

                    NOTHING can be more important that taking GOOD care of this home since our lives and the lives of any children and grandchildren depend on it. Most REPUBLICANS are too ignorant or too stupid to understand this undeniable ( to a truly well educated person ) fact.

                    Now the very NATURE of the mid brain is to be conservative – we are born programmed to be conservative in that we are quicker to avoid change and risk than to embrace it- except when the hormones are raging and we are young men.

                    I along with most capable thinkers DO believe in the free market being allowed to work to the extent it can- which is generally adequate. The government stepped in and cut deals with particular constituencies such as big labor ( and I once held memberships in TWO big labor unions but could never wangle the ones I really wanted ) . If GM had been allowed to PROPERLY go bankrupt it would have imo been much better for the country. We would NOT have run short of cars and the people working there would have been shortly rehired by other manufacturers.

                    Past mismanagement and overreaching greed on the part of the UAW should have been dealt with the way I would be dealt with- the government would never have bailed out my sorry ass because I lacked the clout.

                    But the market does not alway work fast enough. I advocate subsidies for renewables technologies because I fear we will come up too short too late someday in terms of fossil fuel supplies etc and that at that time the market will not have either the TIME nor the CAPITAL to manage a fast transition to renewables.

                    This is actually in the last analysis a very conservative position to take , just as it is a conservative position to advocate having a very strong military establishment. The dangers of it being misused are substantial, but trivial – in my estimation- compared to the risk we would be running if we were to do away with it.

                    If you believe in peak resources and human over shoot then the conservative thing to do is to advocate for policies that will help prevent a hard crash – or at least delay and soften it to the extent possible.. An economic transition to renewables is necessarily going to take a good long time -if we come up short there will be no hope of a successful transition in a world mired in poverty and war. Best to get on with the transition NOW – to the extent we can.

                    Now by my definition a true conservative believes in keeping the government as small as possible and leaving as much as possible to the markets and to the people.

                    Government should concern itself mostly with issues and problems that cannot be dealt with safely by other means.

                    Telling people who they can or cannot sleep with is not consistent with small government. Personally the sight of two guys making out makes me want to puke but hey – so long as they do it in private it really is none of my business.

                    For what it is worth the sight of two women making out does not bother me at all. I had some gay friends (and a Jewish wife too) in times past but none at this time due to moving back to the boonies where openly gay guys are very scarce on the ground. The ones I suspected of being gay back in my younger days all moved away.

                    A rational person does not blame a person for being born with a black or yellow skin. Mother Nature put gay people here. Everybody should just get used to this fact and DEAL with it.

                    Yes it bothers me that real conservatism is lost in the partisan war of politics. Yes , the republicans have redefined the word.

                    And in case you did not notice I included a couple of lol’s and smiley faces to indicate that my comments are often somewhat tongue in cheek.

                    Did you READ the paragraph about my being accused of being a tree hugging whale loving commie liberal?

                    Do you have any sense of humor? You ought to detect some mild self directed sarcasm in such a statement.

                    Damned if I wouldn’t give a couple of front teeth for a month off but fate dictates I sit here all day looking after Daddy for now.

                    Being a Baptist by upbringing I will never subject him to the indignity of a nursing home even though I do not believe in sky daddy.

                    Ron out of the kindness of his heart allows me to ramble away here which really helps pass the time. When you get old the world has a way of forgetting you exist.

          • Longtimber says:

            A single 320w PV Module will generate ~ 1.4 kWh DAILY Annual Average in our climate – 30 degrees latitude with lots of clouds. That will drive an EV 3-4 miles. 2-3 miles/kWh is Typical for most EV’s now. Many that drive electric have or plan to install PV Arrays. With the current trend in the cost of PV kWh’s, Battery “consumption” costs could exceed the cost of fuel.

            • So six thousand watts in your less than ideal location will provide you with up to sixty miles per day.

              At an average long term cost of four bucks a gallon, which seems EXTREMELY conservative to me , that would be equal to about eight bucks a day’s worth of gasoline for the next twenty years which seems to be the minimum estimated life of good panels.

              Say two grand a year times twenty years is forty thousand dollars worth of gasoline.

              Personally I expect gasoline to cost two or three times four bucks within twenty years.Depletion never sleeps you know.

              There is no way of knowing how long the batteries will last in newer electric vehicles but the motors ought to last indefinitely and as for the stinking transmission – an electric car ” don’t need no stinking transmission” to paraphrase the movie.

              Some manufacturers are already warranting their batteries longer than their IC engines.

              • TechGuy says:

                OFM wrote:
                “So six thousand watts in your less than ideal location will provide you with up to sixty miles per day.”

                No way. A leaf gets consumes about 0.34 kwh per mile (on a test track – no hills, no stops, etc). You need a minimum of 20 kwh to go 60 miles on a “ideal track”, much more in real world driving conditions. In addition there are conversion losses from the PV panels output, from conductor losses, voltage conversion loss as well as charging losses. I doubt the 0.34 kwh per mile includes AC, heat, defroster, or even headlights. My guess is that a 6 kwh per day system gives him about 5 to 10 miles in daily driving distance.

                Also a problem with the EV/PV pair, is most people work in the day. To pair up an EV with a home PV system, people would need to work night shifts so their cars can charge at home during the day.

                No way will utility buy power from home systems at market rates. At best Residential PV power will be bought at wholesale price (it same cost as a natGas/Coal/Nuke plant, but EV drivers be force to pay retail prices at charging stations at their office. Its will be net financial loss for consumers. Utilities make money off of distribution not generation and charge a premium to wholesale generation prices since it cost them $$$ to maintain equipment and power lines.

                Well all this is academic. EV sales have collapsed, and I suspect EV cars will eventually disappear from the market in a few years do to lack of buyers.

                • My mental arithmetic is or was optimistic in this case. But in a good location you can get twenty kilowatt hours or more from six thousand watts worth of panels on a good day.

                  If electric cars disappear we will eventually be going back to horses.

                  • islandboy says:

                    OFM, your mental arithmetic seems fine to me. Using Longtimber’s figure for solar resource, 6 kW would yield a average of 26.25 kWh per day, good for between 50 and 75 miles of driving.

                    It was TechGuy that had the brain fart. You said “So six thousand watts in your less than ideal location will provide you with up to sixty miles per day. “ TechGuy then said “My guess is that a 6 kwh per day system gives him about 5 to 10 miles in daily driving distance. “ You didn’t make the claim that 6 kWh would go more than 5 to 10 miles. Nobody did.

            • techsan says:

              We regularly get 4+ miles per KWH in both our Nissan Leaf and Chevy Volt.

              PV is not expensive — what is expensive is burning money in the form of gasoline, gone forever. Sort of like Al Capone lighting his cigar with a $100 bill.

              The cost of a few years’ gasoline will buy PV to power an electric car the same number of miles per year for the rest of your life.

        • nNgass says:

          “Some idiot was posting a couple of days back about the price of oil going to zero….” Those are the people of the Hill Group posting there types of comments as for example shortonoil,a member of the group:
          Sun, 26th Oct 2014 8:10 am
          “And analysts believe the price could fall to as low as $60 a barrel.”We hate to inform these analysts but the price of oil is falling toward $0.00/barrel. That will occur sometime in the 2030-2035 time frame. This is happening because the world’s petroleum supply is depleting, and we are now using the last 25% of the total reserve that is worth extracting. The price of petroleum can not exceed the value of the energy it supplies. The energy it supplies is declining as the energy to produce it is increasing.

          I thought that, if a commodity is depleting but vital for the survival of people, then the price is going up. The pharma industry would love $0.00 oil for making drugs.

          • islandboy says:

            This is happening because the world’s petroleum supply is depleting, and we are now using the last 25% of the total reserve that is worth extracting. The price of petroleum can not exceed the value of the energy it supplies. The energy it supplies is declining as the energy to produce it is increasing.”

            Whoa! That’s a lot of fuddling going on there! As long as there is a surplus of petroleum above and beyond the amount used to extract it that surplus will have some value. If the value of the energy supplied by petroleum is defined by what that energy is used to do, then it is the value of what it is used to do that will set the limits on the price.

            Now, if Tony Seba is right and solar PV and autonomous (self driving) electric vehicles make fossil fuels obsolete then he who shall not be called by name may well be right and oil prices could end up going to zero, especially if commercial aircraft and transcontinental shipping can be electrified. 😉 (Except that transportation and in some cases electricity generation are not the only valuable uses for petroleum)

          • Caelan MacIntyre says:

            “I thought that, if a commodity is depleting but vital for the survival of people, then the price is going up.” ~ nNgass

            Unsure about that… What if you needed any particular commodity to ‘survive’ (sort of), but it was buried so far underground that the energy required to get at it was beyond what you had available, was more than you could expend? It might as well be $0, no?

            “It’s $0. Go get it… What’s the problem?”

            There’s a demand for it and there’s a supply, but it’s not accessible. So there’s no supply, and therefore no demand. LOL

            $0.00

            “A bargain!”

            This seems like what Hill et al. are talking about.

        • I would never have knocked a model T. I can’t afford to buy an electric vehicle, they are simply a stupid buy at this point in time. I keep vehicles in Texas and in Eastern Spain. The climate and distances make an EV a vehicle for rich folk with three car garages.

          • Nick G says:

            Or, for poor folk who just need to get to work.

            The Leaf is the cheapest thing on the US roads to buy AND own, even WITHOUT the tax credit. And the capital costs can amortized with a lease – there’s no excuse.

            • islandboy says:

              “The Leaf is the cheapest thing on the US roads to buy AND own,”

              Especially with the ones coming off lease. Apparently it’s a buyer’s market for used Volts and Leafs now. I watched a video over at EVTV recently where they had a lengthly discussion on the state of the EV market, with the longer range Volts and Leafs due out for the 2016 model year. They pointed out how it was better to just lease these cars new and then get all the improvements on the latest model when the lease ends by taking out a lease on the newest models. That saves the lessor the headache of having to worry about the residual value of the cars.

              Really interesting discussions if you can spare the time. These guys can go on and on with some of the “episodes” being two hours long!

              I think the episode containing the discussion on the EV market was:

              “Tesla Drive Unit – 16000 rpm and Counting”

              There was another interesting episode surrounding a Ford Transit Connect EV that EVTV owns and uses a a shop van. They had parked the van and left it on a charger while they sorted out some paper work issues and when they tried to drive it again it would not power up and would not charge the main battery. The company that did the vehicle for Ford went bankrupt, the battery supplier (Johnson Controls/Saft) got stuck with an inventory of unsold Ford Transit Connect EV batteries resulting in them not wanting to have anything to do with the vehicle. The “episode” chronicles the nightmare of owning a discontinued EV for which parts, service and even service data are unavailable. It has a happy ending as they were able to basically hack the van and got it working again. See:

              “Waking a Dead Ford Transit Connect Electric”

              They rambled on about the “right to repair” and issues of manufacturers being cagey with “trade secrets” and locking out anybody but special shops from being able to work on vehicles.

              • scrub puller says:

                Yair . . . .
                I believe the “right and ability to do repairs” is an issue needing urgent attention by the industry.

                Witness the bullshit in the mundane old earthmoving industry (monopolised by Caterpillar). The little guy with a single Cat machine is at the mercy of the dealer because the information to repair the machine is proprietary and only available under a yearly licence and then often not in full.

                Not so long ago you could buy a repair manual and sort things out yourself. This problem is universal and not just a criticism of Cat.

                I am long out of the game but my beef is the industry has allowed this to happen. Had some of the big mining conglomerates said to Cat. Komatsu et al they needed the information and life time upgrades supplied as part of the deal it may have sharpened up the thinking.

                Of course it didn’t happen because the yearly licence fee becomes insignificant when applied to a spread of big rigs . . . a major issue though for a bloke I know who had a problem plagued just out of warranty little dozer.

                Cheers.

    • Bob Nickson says:

      It is an exciting time for EV enthusiasts. My own anticipation is of increased ranges and lower prices within the next several years, and it is affecting my purchasing decision.

      I doubt I’m the only one who is waiting to pull the trigger on a Leaf purchase until after the 2016 model range specs are announced.

      I’m also probably not the only one who will then use that info to decide whether to hold out until the Tesla Model III is revealed.

  15. ChiefEngineer says:

    A (PEAK) at the future:

    2016 Chevrolet Volt EPA-rated at 53 miles all-electric range

    For the first 53 miles, the Gen 2 Volt can drive gas and tailpipe-emissions free using a full charge of electricity stored in its new 18.4-kWh lithium-ion battery, rated at a combined 106 MPGe, or gasoline equivalent

    nearly a 40% improvement over the first-generation

    Data shows that drivers of the first-generation Volt achieved, and often exceeded, the published EPA-estimated mileage.

    http://www.greencarcongress.com/2015/08/20150804-volt.html

    • MarbleZeppelin says:

      How far do they go on electric when the temperature is below 20 F?

      • Or hill climbing in an expressway at 120 kmph in 35 degrees C with the AC running? Use Alicante to Albacete as an example.

        • techsan says:

          We drive our Leaf and Volt up big hills in Austin in the summer (102 F = 39 C today) with the A/C on the whole time, high enough for comfort; no problems.

          When my father did the same thing in a Suburban a few years ago, the cooling system blew up a radiator hose.

          • Caelan MacIntyre says:

            How long have you had the cars and the batteries?

            But that’s nowhere near the only issue anyway.

            • Techsan says:

              We have had the Leaf for 4 years and the Volt for 3+ years.
              Great cars. NO MAINTENANCE. Miniscule operating cost. I like that. Powered by PV.

      • manybytes says:

        At those temperatures the Volt will start up on gasoline. But it will automatically switch to battery whenever the temperature allows. Unless you live somewhere where it is very cold for long periods of time, you will still drive on battery quite a bit. I average, in Colorado around 70-80 percent of the time on battery.
        But even when the Volt is on gasoline, it gets around 40 mpg. All of these concerns about it not being the perfect solution ignore that fact that the Volt still greatly reduces gasoline consumption, takes advantage of solar and wind, and is more fun to drive than any of the all chemical burners out there. Check out the customer satisfaction numbers on it.
        As to mountains and heat affecting it…it is really a great car in both. I drive all over the Rockies and wouldn’t now use anything else.

        • MarbleZeppelin says:

          Temperatures here get as low as minus twenty and last couple of years a lot of mornings started her below zero during the winter. I just have to get an idea of how much PV to add to compensate for the electric load.

          Seems a big variable but since I mostly drive under 30 miles round trip it wouldn’t be a big problem for me. 40 mpg is pretty good and electric would cover most of my driving.
          Winter in a Chevy Volt
          https://www.cars.com/articles/2011/04/a-winter-in-the-chevy-volt/

          • manybytes says:

            I notice your link is from 2011, mine has a slightly bigger battery. I have a 2013 and never charge up to less than 35 miles. This morning with temps in the 90’s, I hit 47 miles. This is very normal for this time of year. Actual miles vary with use of a/c and whether I feel like rocket man that day. Which is usually.

            I have 33.7K miles and have used 303 gallons of gasoline or right at 111 mpg. My electric costs are right at 4 cents per mile. So I can drive around at 4 cents or with gasoline right now, at around 7.5 cents per mile. I haven’t calculated an integrated cost lately.

            I have changed the oil once and am about 50 percent of the way to another one. Zero other problems. I have a 40 mile commute this fits perfectly into, but I also drive it on a regular 120 mile commute on the weekend. So I get about a third of that or a little better on battery.

        • Fred Magyar says:

          Don’t mind Fernando, he doesn’t like change but the world is changing whether he likes or not and whether he wants it too or not. I have friends in Florida who drive Volts and they love them. One of my friends who does is a mechanic and he has a shop that works on classic American muscle cars, Ferraris, Lambos, and the like, even his customers are beginning to look at Teslas. Pure ICEs will be a niche market sooner than Fernando imagines, unless of course as OFM is fond of saying, BAU dies of a heart attack before EVs really take off. And then all bets are off, so it won’t matter… and even the communists will all starve to death and the cockroaches and small rodents will rule the earth again… GRIN!

  16. Dean says:

    Azerbaijani oil export decreased by 56.32% in July (1.448 million tons) compared to June 2015 (2.264 million tons)
    http://www.news.az/articles/100071

    • AlexS says:

      Monthly fluctuations in Azeri export volumes are due to temporary factors. But there is a clear trend of declining oil production from 2011, as the Azeri-Chirag-Guneshli (ACG) project has already achieved its peak production and is declining.

      Azerbaijan annual oil production (kb/d)

      • Alex, I don’t know if I told you, but I suggested to SOCAR the main line to Ceyhan be designed for 630,000 BOPD. A few years later I heard the AIOC had designed it for 1 mmbopd. I thought such an approach was risky and was contrary to Azerbaijan’s interest, but you know how it goes….

    • AlexS says:

      Azerbaijan monthly oil production and exports, January –June 2015 (kb/d)

  17. yoananda says:

    Isn’t it a bit soon to claim US production have peaked ?
    peaked for how long ? 6 months ? is it worth claiming ?
    Petroleum Supply Weekly could have been said peaking in june.
    We already have false similar peaking signal in the last years (that are not displayed on this graphs).

    • Let’s say it hit the peak for the 2015 calendar year? Whether it can exceed that peak will depend on price expectations.

      If oil companies take this price environment to be a long lasting phase they’ll budget much lower CAPEX for 2016 and subsequent years. This will reduce the number of people and budgets to do the geoscience and engineering, permitting and logistics needed to invest in the field.

      Such a work flow gap could in turn slow down response time when prices do increase. At that point we see a race between declining production and investors reacting to the higher price environment to fill the demand gap.

      If the demand drives prices beyond say $120 per barrel we may see other energy sources come in to compete to fill the gap. This depends on evolving technology. For example, if they were to develop a better battery then the electric vehicle would be more than a gizmo which survives based on subsidies.

      Those who think we have a peak coming soon seem to believe renewables are more competitive. Those who think peak oil will happen in the 2020 to 2040 time frame seem to think renewables just won’t cut it for the time being.

      • Fernando, peak oil will occur when the maximum amount of oil can be extracted at a price that consumers can afford to pay. The competitiveness of renewables will have no effect on the timing of the peak whatsoever.

        Well, that is my opinion anyway. I am sure others, especially those who believe renewables will save the world, have a different opinion.

        • yoananda says:

          I agree, but nobody really know that price, and we don’t even know if it’s the good criteria.
          Maybe there is no maximum price for affordability, and it’s another thing that will trigger peak oil :
          * it could be triggered by another source of energy
          * spiraling deflation in economy
          * an ecologic catastrophy
          * anything else ?

          • Doug Leighton says:

            “Maybe there is no maximum price for affordability” Maybe not for you but many may disagree.

            • nNgass says:

              “Maybe there is no maximum price for affordability” Naturally, people will have to give up personal cars and use other means of transports. However, industry will have to pay whatever the price is to sustain live on the planet, not 7+ Billion, of course. Think of the pharma industry, for example. In a certain medication, there is only a few milligrams of oil so, even if oil costs $1000/b, the price for a pill is affordable.
              See some comments downstream discussing the price and other issues under “if you have to have it”

              • I must confess I have no idea at all what a PURELY synthetic oil might cost- one manufactured from CO2 and water using renewable energy for example. A thousand bucks a barrel would probably be more enough to manufacture such oil though.

                Given that the output of such a synthetics plant would be straight diesel due to the design that would be only about twenty five bucks a gallon. Add in ten more for taxes and distribution costs etc- diesel would still be under forty dollars a gallon.

                My maternal grandfather used to leave before daylight and get back home after dark in the summer- using a wagon to haul produce to the nearest town and bring back a few things such as nails and coffee. He could haul only about a ton.

                When we got our first ” medium ” truck back in the fifties we could haul EIGHT tons to town and be back home in less than two hours- and most of that two hours involved getting eight tons UNLOADED.

                That took about six gallons of gasoline. A new diesel truck would use less than FOUR gallons of diesel.

                Super expensive oil would no doubt crash the economy but eventually the economy would adapt to oil even at a thousand bucks a barrel. It would still be better than horses and mules by a factor of ten.

                You feed horses EVERY DAY. You feed a truck only on days you use it. We could eventually live just fine with trucks driving ten or twenty percent of the miles they do today hauling throw away junk and hauling things that can be economically produced locally- such as beer- hundreds of miles from far away breweries.One truck load of potatoes is equal to ten truck loads of potato chips in terms of food.

                SOME oil will sell at ANY imaginable price.

                MY basic furniture is solid thick oak and chestnut locally hand made fifty years to seventy five years ago. It has never been in a cardboard box. If it is kept dry it will last hundreds of years barring fire.

                (Any ONE of half a dozen pieces elaborately carved chestnut would sell for enough to buy a houseful of Chinese throwaway particle board furniture – BIG GRIN as FM says. )

                If the cost of transporting furniture goes thru the roof we can go back to using beds and tables and chests that last for generations. One delivery once every two hundred years one table.

                The future is not throwaway although we seem to be doing all we can to throw it away.

                • Greenbub says:

                  This may seem like a strange request, but could you post a picture of the chestnut furniture?

                  • I cannot get this damned MAC to work when it comes to pictures. My pc croaked. Will be getting another pc soon.

                    Unfortunately the ONE person I know who is proficient on Macs is too sick for me to bother him about talking me thru computer issues.

                    If you want some pics post a phone number for a smart phone and I will send you a couple.

                    I joined the official mac forum hoping for some help with it but apparently every last soul in it wears panties.They are afraid somebody is going to show up mug them if they ever actually speak to a stranger -even on the phone.

                    There is a LOT to be said for standardization. I am going to get rid of this computer and stick to pc’s hereafter.

                    I can get twenty people on the phone to help me with a pc problem as easy as dialing their number.

                  • Greenbub says:

                    Not that important, thanks though.

                • Nick G says:

                  Mac,

                  According to a highly reputable chemical engineer, Robert Rapier, with current technology and electricity prices, purely synthetic fuel could be produced for about $10 per gallon.

                  If you were to use electricity in a Chevy volt for 90% of your miles traveled, and a $10 per gallon synthetic fuel for the other 10%, the cost per mile would be about six cents.

        • If plug in hybrids and pure electrics achieve high market penetrations in the near future they could reduce the consumption of oil to a degree sufficient to change the peak date by a year or two maybe.

          I do not expect them to become so popular so soon however.

          ONCE peak oil is clear to everybody I think plug ins and pure electrics will sell very well indeed- assuming the general public can still afford new cars. That is a big assumption.

        • I don’t agree, Ron. I see biofuels nibbling into the market at this point.

          Let’s say oil prices don’t recover fast enough to allow oil to regain this year’s peak, in that case we should see oil prices rebound, and what will keep the oil from zooming through the stratosphere would be renewables. At $150 per barrel you won’t find much sugar cane going into sugar.

          On the other hand, if prices do react and we bring production back up, then the peak could simply be delayed a few years. In this case we could see a price increase and as the prices go to $150 per barrel we should see both a surge in biofuels as well as electric vehicles. Thus it wouldn’t be necessarily all caused by reduced demand and inability to pay. It would be a price dip experienced by oil producers who run into substitution. Thus biofuels and electric vehicles should have an impact. Anyway, that’s the way I see it.

          One reason why I debate with the EV fanatics is my perception that electrics don’t cut it. I sure wish they did, they would avoid the enormous hassle we will have when prices do reach $150 per barrel.

          • Nick G says:

            What the heck do you mean by “don’t cut it “?

            The Opel Ampera can cut fuel consumption by 90%, and it has no range or temperature problems.

      • A two to four million barrel increase in production has been enough to reduce prices by half.

        If the world economy picks up at just one percent for two or three years the price of oil could easily be back up to around a hundred bucks. Depletion never sleeps and the producers have cut back so sharply on capital spending that they may not be able to increase production much if at all for several years. Everything I read here about production indicates that just about any kind of new production takes two or three years at least and usually twice as long to go from initial decision to actually pumping oil.

        The only real exception seems to be American tight oil but zero interest liars loans are not permanent features of the lending industry. How fast tight oil can come back is a big question mark but I am guessing that the lenders are thru with tight oil until the price stays above eighty plus or thereabouts for a substantial period of time.

    • Yoananda, to my knowledge no one on this list is claiming US production has peaked. Prices crashed. Most people expected US production to start to decline much sooner than it did. However production did slow down but did not start to decline. Due to the recent price crash US production has finally started to decline. I wrote:

      The Monthly Energy Review and the Petroleum Supply Monthly have US production peaking, so far, in March and April.

      The words “so far” means… well it means “so far”. Please try read my posts a little closer. Then you might be able to give a better reply.

      • yoananda says:

        Ron, I read carefully, but didn’t understand quite well :
        what’s the point of speaking of “peak so far” within a few weeks timeframe ?
        that happens all the time … it is no information at all, don’t you think ? why even mention it …

        • Javier says:

          yoananda, you are formally correct. One cannot really demonstrate a peak oil until at least a couple of years have passed.

          However we are living in very special circumstances. Shale companies are having a very tough time and the number of rigs has fallen drastically, yet some people are claiming that efficiency gains will compensate and shale production will maintain quite well. Thus many of us are really interested in closely following reductions in production that a year ago would have meant nothing.

          Bear with us, please 🙂

        • Really, I don’t think it is all that hard to understand. We are talking about production change due to the current price crash. “Peak so far” means oil production has reached a peak and is now declining due to the current price of oil. I consider it extremely unlikely that production will increase above that peak again until the price of oil increases. I just assumed everyone would understand that. Apparently not however.

          The current 50% drop in oil prices has been the dominate theme ever since the drop started last year. Almost every post has been dominated by that theme.

          • Watcher says:

            Not too long ago we were more concerned about a geologic peak. When oil was north of $100 for a few years, the geologic peak was the focus.

            This would be a good thing to know.

            That would be the mother of all shark fins, when printed money no longer affects output and geology and only geology decides what flows.

            • Jeffrey J. Brown says:

              Of course, some of us ’round these parts suspect that the peak of actual global crude oil production (45 and lower API gravity) is in the rear view mirror.

              From 2005 to 2014:
              Global dry gas production increased by 24% (BP)
              Global Natural Gas Liquids (NGL) production increased by 26% (EIA)
              Global Crude + Condensate (C+C) production increased by only 5% (EIA)

              Since condensate, like NGL, is a byproduct of gas production, I suspect that actual global crude oil production (45 and lower API gravity crude oil) probably peaked in 2005, while global natural gas production and associated liquids, condensate & NGL, have (so far) continued to increase.

            • The peak, the final peak, will be the geological peak. It will also be the demand peak. The peak will be the peak. There is no need to call it either the geological peak or the demand peak. It will simply be the peak. End of story.

              • Watcher says:

                Yup, that sounds right. If you HAVE to have it, you will go get it, regardless of price. The peak will be formed of that necessity.

                Of course demand will exceed consumption then.

                And Jeffrey, you will never be told. It won’t ever be in the mirror or in the windshield. No one has any incentive to tell their lenders there is going to be less and less. Things will get redefined in some way or another.

                • SAWDUST says:

                  If you have to HAVE it. Which you do. And you go get it regardless of price you end up with less oil sooner than you would have if you hadn’t of went an got it regardless of price.

                  Fact is if the US can replace its Shale production with somebody else’s oil they don’t need to go get it regardless of price.

                  Also if you help say a country like China who consumes lots of oil into a economic collapse by allowing dollar to strengthen massively forcing capital flight on a massive scale(dollar carry trade unwind) you could potentially free up a lot of oil for use elsewhere.

                  • Watcher says:

                    If you have to have it and don’t get it, from wherever, you die and don’t do any more analysis.

                  • SAWDUST says:

                    Watcher,

                    Your catching on. Be it slowly. Yes you take away someone else’s supply any which way you can. In order to preserve your own. If you can do it through monetary means great it means you can kill them and save money by doing it just by taking their oil supply without force. At some point force will be necessary. Then the wars you hint about become reality.

            • Political Economist says:

              According to David Hughes, the geological peak will not be too far away, around 2020

              Hughes said he would update his shale oil estimate in September

          • yoananda says:

            I understand “peak so far”.
            I don’t understand the interest of talking about it since we don’t know if it’s a slow, a peak with hard decline, a temporary bump, if it will be sufficient to make price go up, if it will trigger many bankruptcy or not, etc…
            “peak so far” tells nothing about the future. Or maybe I missed something important ?

            So the title of the article should be “US Oil Production Finally Starting to Decline … until it raise again” since nobody have no clue when price will rise again.

            My point is : is there any relationship with “peak oil” and peak shale US of the month ? (just ignore the sarcasm)

            • Yo Yoananda,

              In terms of the really big picture the exact date of peak oil is not very important. A year or two either way is not apt to make much difference in the history books.

              BUT HERE in this forum peak oil is ranges from a hobby to an obsession depending on the member.

              In terms of the larger world it would hardly matter if you ( presuming you are a potential mother) decide to have your first child this year or next year. But to your friends and acquaintances this year sooner or later would be A BIG DEAL.

              Since I have been following this discussion for ten years or longer now I want to be ” in the know” when the peak occurs. To a person less interested the precise date of the peak doesn’t matter much.

              In terms of history the peak will be a VERY important date if it can be determined with a reasonable degree of accuracy- a date comparable to the date the first steam engine was put to work in a mine or driving a train or the date the Model T went into production – the Model T being the first really cheap and affordable car ever.

            • MarbleZeppelin says:

              If you were on a life support machine and someone kept telling you the power might go out soon, you might be afraid. Peak oil is like that, society is on life support from oil and it’s kin. We have positioned ourselves to be critically dependent upon oil. We don’t have to be, but we are.
              That is what stirs the conversation, the fear and the potential for dramatic deadly change.
              It’s the adult version of the monster under the bed. Climate change is the monster in the closet.

  18. This comment is off topic today but refers back to yesterday’s discussion of sewage and farming.

    READ IT AT THE PERIL OF HAVING YOUR EYES GLAZE OVER LOL.

    It has been some time since I looked into this question and I was surprised to see that fifty percent of sludge is now applied to farmland. I would have guessed substantially less.

    In the past sludge was dumped at sea in huge quantities but the environmentalists put a stop to that and then the bau guys ,the environmentalists, the public health authorities and various governments NECESSARILY got together to find a way to get rid of it. The farmers who accept it are a very small minority and the industry from production to final marketing keeps it as quiet as possible.

    Now there is a HUGE difference between farm and feed lot produced manures and human sewage. The only significant pollutants in farm sourced manures are the antibiotics fed to livestock and when applied to the land and exposed to natural forces these break down pretty quick- and they are not typically absorbed by field crops in any case. So the antibiotics are a problem only in that they create an opportunity for the various microbes they target to evolve resistance faster.

    Some people may want to think of nitrates and phosphates as pollutants- and they are, in the form of runoff. But these same nitrates and phosphates are essential to high yields and modern high yield farming industrial style will not work without using them liberally. SO- we either mine and manufacture them or get them from manures ( to the extent we can) or we can produce only a a minor fraction of todays yields per acre.

    SEWAGE on the other hand contains everything that goes down a toilet, everything that goes down a storm drain, and everything that goes into a drain out of any shopping center or manufacturing plant. These contaminants include not only antibiotics and all sorts of medicines but heavy metals and an endless string of chemical pollutants all of which are potentially dangerous.

    AND- a sewage treatment plant IS DESIGNED to clean up the WATER- meaning that the better job it does cleaning the water, the MORE concentrated the pollutants are in the SLUDGE. Very little if any effort and money have been expended so far on cleaning up the SLUDGE.

    So- what might be in sludge is a real question mark. Incidentally biosolids is the first adopted euphemism created by the powers that be to mislead the public in this respect.

    Over a long period of time the possibility of seriously contaminating farm land with heavy metals etc is a real risk unless a way is found to economically remove these metals etc from sludge.

    Now ONE of the many problems associated with fermented ethanol is that it must be DISTILLED and this takes substantial energy. LIKEWISE, manures and sewage are mostly water. Drying and packaging and shipping the end product takes a hell of a lot of energy and money. And while the bulk of the dried product is generally good for the soil, the product is nevertheless LOW in the percentage content of the essential nutrients compared to commercially manufactured fertilizers. So unless the land where it is to be used is near the source and the sludge is dirt cheap then manufactured fertilizers are actually substantially cheaper. I can get fifty pounds of fourteen ten ten for twelve bucks at retail locally. Bulk is MUCH cheaper.

    It takes a LOT of bags of BLACK COW to equal one bag of fourteen ten ten. And Black Cow is seven bucks a bag locally. It takes a lot of hauling and a lot of work distributing compared to the manufactured product as well. Composted humanure would necessarily cost a lot more than composted cow manure.

    This high volume low nutrient density problem is the KEY reason we hear a lot about manure lagoons on giant farms and feedlots. In my part of the country hogs are raised by the thousands on industrially sized farms. We have almost no beef feedlots because feedlots are more profitable when located close to the sources of grain fed to the thousands of cattle held in such lots. Grain is grown here but not in adequate quantities to make beef feedlots truly competitive.

    The hog farms and the feed lots – and to some extent poultry producers as well – generate FAR more manure than can be easily utilized NEARBY due to the high costs of shipping it. You just can’t haul it very far due to the high cost of trucking and pipelines are totally out of the question. So it goes into lagoons. Occasionally the lagoons fail with catastrophic consequences on the local scale. Dead fish etc.

    In really deep farm country where houses are very few and very far apart and the fields are huge- I am talking midwestern grain country – the local people are willing to use sludge because it can be cheaper than ordinary fertilizers.Getting it there from far away cities costs an arm and a leg on the other hand and so it must sell for very little or be given away for it to be used in the real boonies..

    In some other places as well sludge is accepted but only because the people of those localities are generally UNAWARE it is being used to on a large scale locally to grow the food THEY eat.

    In my part of the world – near the NC piedmont- local people raise holy hell about the stink and the potential health problems associated with putting sludge on the land. Some local governments are totally opposed and doing everything they can to stop the application of sludge but state and federal laws and regs generally stop them from outlawing sludge altogether.

    As energy and mineral resources grow scarcer and more expensive more sludge will be used. But the public is not going to like it. Using it more widely will require some first class pr finesse. And using it will cost substantially more in most cases than manufactured fertilizers cost for the easily foreseeable future.

    I am not claiming that our current industrial farming model is sustainable over the long term – far from it. I am merely pointing out that it is what it is and we will be retaining it for some time yet. Half a century or longer imo.

    Scarce and expensive minerals and energy can and will be diverted to agriculture as necessary when the fecal matter starts hitting the fan in quantity.

    • Fred Magyar says:

      Hey OFM,

      AND- a sewage treatment plant IS DESIGNED to clean up the WATER- meaning that the better job it does cleaning the water, the MORE concentrated the pollutants are in the SLUDGE. Very little if any effort and money have been expended so far on cleaning up the SLUDGE.

      Well, here in Brazil there have been a number of studies done using phytoremediation to remove heavy metals from sewage and sludge. They have been very successful in treating contaminated water, with water hyacinths (Eichhornia crassipes) which is otherwise considered a nusiance plant.

      This abstract is from a paper in the Brazilian Journal of Chemical Engineering and is authored by a group of Pakistani scientists.

      http://www.scielo.br/pdf/bjce/v31n4/06.pdf

      PHYTOREMEDIATION POTENTIAL OF AQUATIC
      HERBS FROM STEEL FOUNDRY EFFLUENT

      Abstract – Discharge of industrial effluents in aquatic environments is a serious threat to life due to toxic heavy metals. Plants can be used as cheap phytoremedients in comparison to conventional technologies. The present study was conducted to check the phytoremediation capability of two free-floating plants, i.e., Pistia stratiotes and Eichhornia crassipes, for the removal of heavy metals from steel effluent by using Atomic Absorption Spectrophotometry. P. stratiotes was able to remove some of the heavy metals, showing the highest affinity for Pb and Cu with 70.7% and 66.5% efficiency, respectively, while E. crassipes proved to be the best phytoremediant for polluted water as its efficiency was greatest progressively for Cd, Cu, As, Al and Pb, i.e., 82.8%, 78.6%, 74%, 73% and 73%, respectively. In conclusion, aquatic plants can be a better candidate for phytoextraction from industrial effluents due to cost effectiveness.

      Brazilian saying: “He who does not have a dog, hunts with a cat!” BIG GRIN!

      • Great results!! Hats off to the Pakistani guys.

        But I am wondering about the number of hectares of ground that would need to be devoted to this clean up technique to clean the sludge of a good sized city – and how such a the system would work in cold weather.

        I doubt it would work at all during the winter months anyplace north of Florida in the USA.

        I have read about a few small water treatment plants using wetlands and wetlands plants for cleaning up water on a trial basis but to the best of my knowledge this technology has not yet been widely deployed anywhere. It seems to work well but it also seems to be too new for most cities to consider it.

        There is a LOT to be said for downsizing and going local. Small towns could find the space for such a treatment system. Unfortunately we are stuck with the large populations we have these days and for at least three or four decades to come barring miracles or disasters on the demographic front.

        • Fred Magyar says:

          I doubt it would work at all during the winter months anyplace north of Florida in the USA.

          Well,

          Here’s a case study of full scale application of phytoremediation in Newfoundland, Canada. Is that cold enough for you? 🙂

          http://www.sciencedirect.com/science/article/pii/S1878029610001751

          • Will read it soon. If the area is big enough sludge can be deposited or stockpiled during cold weather and the plants can giterdone during the warm season.

            SO- cold weather is not an insoluble problem if you have adequate space for your wetland and to stockpile sludge during cold weather.

            Eventually it may prove necessary to build some pipelines to carry diluted sludge away from big cities to places with space enough to treat it cheaply this way. Or maybe it can be hauled on trains instead.

            In any case detoxified sludge is actually worth substantial money – if it is within shipping distance of a farming area where it can be made use of without too much backlash. Shipping costs are a real killer when it comes to low nutrient density and high bulk and volume.

            But as times change , and energy and mined minerals become more expensive, and pollution problems more troublesome, the calculus will shift so that paying the shipping may be the best solution all around.

            We are already looking at the best phosphate mining sites playing out within the next few decades.

          • MarbleZeppelin says:

            Plant remediation of abandoned mine effluents has worked very well in Pennsylvania. I recall a project done almost two decades ago. The water was cleaned by forming pools and using aquatic plants. No industrial system needed.

      • Fred Magyar says:

        Hey ezrydermike,

        That’s great and it sounds like a pretty good system for removal of typical pollutants but I have two questions.
        Do they have a problem with heavy metals in the effluent in Arcata, CA?
        And if so, how are they removing that from the water?

  19. Doug Leighton says:
    • They only need to print an eco friendly battery and they will be in business.

      • Fred Magyar says:

        Um that thing has a 700 hp ICE engine, they said it was powered by gas, though I’m not quite sure if that was CNG or LNG… the ECO 3D printed parts are more about the modular construction of the chassis and the connectors that hold the carbon fiber rods together. So it won’t need a printed battery.

        On the other hand if someone could mate this technology with Elon Musk’s Tesla drive train and battery pack that might be one very quick little sports car.

        Oh, but in case you are wondering, there are 3D printed batteries already in the works..
        http://www.technologyreview.com/demo/521956/printing-batteries/
        Printing Batteries
        New inks and tools allow 3-D printing of lithium-ion technology.

        • Yes, but we need a battery that really works. This carbon fiber vehicle is more of a gimmick. Of course it’s light, it’s carbon fiber. I guess they can put an aluminum cage around the driver. And if it costs the same as a carbon fiber tennis racket it should sell.

          • Fred Magyar says:

            What exactly do you mean by WORKS?

            http://goo.gl/ueNbkE

            Your entry level EV Smart car gets about 68 miles per charge and your top of the line Tesla gets about 265 miles per charge.
            So clearly we already have battery technology that WORKS?

  20. Huckleberry Finn says:

    EIA numbers are a bunch of bullshit.
    Look at actual numbers reported by one Canadian Company which is predominantly producing Shale oil.
    http://longrun.mwnewsroom.com/press-releases/long-run-exploration-ltd-announces-2015-second-quarter-results-tsx-lre-201507301019357001

    Total Liquids are down 10% between Match 31st and June 30th!

  21. HR says:

    Shallow sands, Fernando and the other guys in the business

    I’m here to commiserate and feel your pain. I’m not a LTO guy (so don’t go hating on me) but I am a producer. I operate in the U.S. And Mexico.

    As far as I can tell YTD, I’m operating around break even but I have no debt. Yeah baby, I paid cash for my whole enchilada and all I got was this crap price. And breaking even doesn’t replace my gear when it breaks down or wears out, so I’m not a happy camper.
    I am very interested in how in the hell these LTO guys can continue with this whole extend and pretend deal they’ve got going. I smell a giant political turd in this thing and that’s never good for business. Wall Street and Washington have a massive love affair going and anything they touch usually turns to shit so my antennae are screaming.
    Furthermore, one of the other guys above is banging on about the dollar correlation with oil and I think he’s right. Which also doesn’t bode well for the future as we’ve already seen that Washington and Wall Street will do whatever they want with the dollar to get themselves out of whatever trouble they’ve gotten themselves into and the peasants can be damned.
    I’ve had friends tell me that Marin Katusa is a good research guy and that I should join up to get my hands on his work. Any one know about him? He use to be at Doug Casey’s outfit. All of you guys that are analyzing the quarterly results of the E&P guys are to be commended but the wall steet guys are the best crooks in the world and you’re only going to be able to skim and figure out what they want you to see..at the best. You need the inside scoop and sorry but I’m not that guy. We need a rat on the inside.
    Cheers gentlemen/HR

    • shallow sand says:

      HR. I sure hope the SEC quarterly and annual stuff is accurate. I don’t know much about oil analysts, they seem to say some pretty odd stuff on business MSM sometimes. Don’t know of those you mention.

      How do you own stuff in Mexico? That may sound dumb, but keep in mind I’m far from the border.

      • AlexS says:

        shallow sand,

        most of investment banks’ oil analysts are actually quite positive about the shale industry. Likewise, they were positive about internet companies or Enron in early 2000s.
        They helped to create all those bubbles

      • HR says:

        Shallow sands

        How do you own stuff in Mexico?
        Very carefully.

        Mexico is a whole different ball of wax from the U.S. Both countries are corrupt as hell but in different ways. The governments and the people in them are the problem and not the solution to anything. If you want to know more I’ll be happy to talk with you but I neither like nor trust computers or the Internet. They are only good to read the news and you can’t believe most of that either.
        Cheers HR

    • HR, I’m not in the oil business. My main research interest is the methods and reasons governments use to lie.

    • Mike says:

      HR, if you are not in the LTO business, I don’t hate you. I am an operator also swimming against the shale oil bullshit current, same as you.

      In the field and thru mid level engineer friends I have with LTO companies I get little bits and pieces of insight into what I refer to as LTO “creative” reserve accounting, for instance EUR “modeling” that I just posted about over on Rune Likvern’s, Fractional Flow site. That is as far as I am going to get, I can tell you. The really funky reserve stuff starts at the very top and is between the LTO jefes and Wall Street. We’re not going to dig a rat out from up there.

      Thanks much to Shallow’s work we know these guys are losing their skirts right now. The more relevant issue to me is survival rate and we should be focused on equity, or what’s left of it, and things like this R/P tool that Rune is discussing. What the “real” reserve basis is that these shale guys actually have is going to dictate whether they swim, or drown. Nobody buying this shale stuff in fire sales is going to be buying it for cash flow (there ain’t any), it will be for remaining PDP reserves. The PUD reserves, the “drillable locations” dooky, will only have value if there is sufficient PDP to re-finance with.

      Mike

      • HR says:

        Ola amigo
        I’m getting my ass handed to me these days. In full survival mode. I’ll freely admit that I didn’t see this one coming which also mightily pisses me off because after they stole everybody’s money in 2008 I swore they’d never sneak up on me again. When the Feds started printing money, I said ok fine you guys can give me more of your crap dollars for my oil and I expanded as fast as I could. Why should I want a lot of dollars in their shaky banks anyway? And then they snuck up on me and hit me in the back of the head with a steel pipe. Again.
        Anyway, I don’t have the option of using creative accounting methods to operate or to sell my soul to the Blackstone guys for cash. But I’ll tell you what, I will live to fight another day and I’m gonna clean these guys clock somehow.
        And again I’ll reiterate to all you guys, as Mike said, you’re only going to be able to glean from the quarterlies what they’ll allow you to know. Last time I checked the guys at the SEC where only known for their porn habits on the job and schilling for a job at Goldman. To a degree you’re kind of wasting your time. It’s interesting but the real information that you seek can only come from someone on the inside. Good luck with that.
        I did speak with a guy today from MBI in the Bakken. But the scuttlebutt wasn’t that useful. Said it was slow, plenty of drilled wells.

      • Rune Likvern says:

        MORE ON R/P METRIC

        “Continental’s 2015 Bakken drilling program is focused on core leasehold in Williams, McKenzie, Mountrail and Dunn counties, targeting an average estimated ultimate recovery (EUR) of approximately 800,000 Boe per well.”

        From the Continental’s press release of Q2 15 earnings/results.
        The wells in Bakken on average produce with a GOR (Gas to Oil Rario) of 1:5 [BOE:BOE].

        This results in an estimated 670 kb oil (LTO) for the average well.
        Looking at the actual data from NDIC for the average well total year by year operated by Continental shows the following flows (data as per May 15 with time series from Jan 08 to May 15).

        Year 1: 76 kb
        Year 2: 36 kb
        Year 3: 26 kb
        Year 4: 21 kb

        The development in the R/P ratio using Continental’s number of 670 kb for EUR (oil only) based on annual production from the average well from NDIC data).
        R/P after year 1: 7.8
        R/P after year 2: 15.5
        R/P after year 3: 20.5
        R/P after year 4: 24.3

        The R/P number after Year 4 expresses a theoretical rectangular profile for the years 5 – 28+ of 21 kb/a or about 58b/d.

        Note with time (as the well ages) the rapid growth in the R/P number using data from Continental for their average well.

  22. shallow sand says:

    Oasis Petroleum reported second quarter numbers.

    They achieved cash flow neutrality in the second quarter. Big success for a Bakken producer, no others have accomplished this feat, at least so far as I am aware.

    In Q1 BOEPD was 50,446 CAPEX $271,105,000

    Q2 BOEPD was 50,261. CAPED $170,408,000. 88% oil. 12%/gas and NGL’s.

    Production guidance for third quarter is 48,000-50,000 BOEPD.
    CAPEX for remainder of year will be about $228,500,000.

    So production is gently falling in 2015.

    So how the heck did Oasis achieve cash flow neutrality in the second quarter, with slightly declining production?

    Oasis is very well hedged. So much so that realized oil price with hedges was $78.01 per barrel in Q2. So if we figure $8 per barrel basis differential, Oasis needed $86 WTI per barrel to achieve cash flow neutrality with production that declined on an annualized basis of 1.5%.

    So looks to me that by my definition of break even (cash flow neutral with flat production) Oasis Petroleum, which operates solely in the Bakken, needs right at $90 WTI to “break even.”

    I’d like someone to refute this post. Please! I have seen pretty much everyone put ND Bakken break even in a range from $40-70 WTI.

    This to me is the best evidence yet that to hold production flat and remain cash flow neutral, $90 WTI is required in the Bakken. It was likely higher last year, but Oasis did achieve reduced expenses in first half of 2015, as did almost all other producers.

    Maybe it is how break even is defined?? Is that how they get the lower numbers? I got $90+ with Whiting, $90 with Oasis and $83 with QEP. Oasis is best to use, in my view, as they are only Bakken.

    CLR is tomorrow.

    • aeberman says:

      Shallow Sand,

      Regarding Oasis’ Q2 earnings:

      Many will say that current quarter capex is mostly a growth expense and not a maintenance expense (or at least a hybrid) and break-even, therefore, cannot be determined from 10-Q data alone. I partly agree so you have to look at the history of capex/cash from operations.

      The only way to do it right is to calculate the EURs and run the economics using costs to determine break-even prices at a range of EURs and an average EUR by area and operator. It’s more work, obviously.

      • shallow sand says:

        AE Berman. How is Oasis second, third and fourth quarter CAPEX going to be a growth expense when second quarter production is lower than first and guidance for third quarter is lower yet? I do not see fourth guided, so I assume at best things stay flat.

        Also, I understand your point about break even over the life of the well. However, we can easily attain much lower break even if we allow 30+ years for the well to pay out and ignore present value issues and debt service issues.

        My view on conventional low decline production is it must pay out in 5 years or less to be worth the many risks incurred. Shale high decline should probably be given no more than 3. I am sure many may disagree.

        I agree my approach is simplistic. It is usually a good idea to keep it that way. Rather than just work up a bunch of EUR calculations, I think more important is how much $ is going in and out of the bank account. Payout in year 8 won’t help if you run out of cash in year 2.

        I do foresee break even being greatly reduced in the near future. When a shale company goes liquidation BK, the acquiring company paying with cash will have a much lower break even. No debt, pay cents on the dollar of what the wells cost.
        Have seen some early distressed shale oil sales in EFS for around $40K BOE, putting $0 value on the un drilled acreage. Put that value on most US shale companies and long term debt is more than asset value.

        I agree that break even is not defined, so maybe I am using the wrong definition. Ultimately, a company has to be cash flow positive at some point, especially one with a depleting asset. It appears to me that, for one quarter at least, OAS did not burn cash, had slightly declining production, with a realized oil price of $78.01 per barrel. Maybe costs will come down more?

        I readily admit I am not a petroleum engineer, nor do I have any public company experience. I just see a lot of claims made with no definition of break even and no calculations to back up the break even claim.

        So I made up my own simple break even definitions for company wide and for individual wells. For individual wells I started doing my own simple calculations, using 5 years as a guide. I just plug in an oil price, a gas price, take production from the data the good people here have shared, deduct severance taxes, LOE (OPEX), G & A, and interest. I also run different NRI assumptions, as I find from the public auctions and comments here, NRI can be anywhere from 65-87.5%. Funny how the shales don’t disclose their companywide NRI when it is crucial to the finances.

        Anyway, at current prices, even using the current contango strip, almost all wells are in deficit after 5 years. So I guess in my individual well break even calculations, I do use 5 year EUR, based on what I hope is some pretty good data from the people here.

        As you likely know, PV10 is a common metric used to value reserves. It, or maybe now PV9, is also used by the banks and the OCC with regard to lending. I have done estimates of PV10 after the price crash. CLR had a very revealing statement about this in its 2014 10K. So did Newfield.

        Bottom line, PDP PV10 will be far less than long term debt for almost all shale companies. Funny this is not mentioned, nor that under OCC guidelines banks could not hold all shale company debt. When these calculations start to include the likes of COP, there is a real problem at hand.

        To summarize, I think each of the following is a relevant metric:

        A. Price needed for a company to be cash flow neutral with flat production.
        B. Economics at 5 years from first production for an individual or group of wells.
        C. Long term debt to PV10, and in particular PDP PV10 on a companywide basis.

        I do read all of your columns and agree with most of your observations and opinions. Thank you for the work you do.

        • shallow sand says:

          One final note. It is very worthwhile to examine lease operating statements for shale oil wells, in particular those 3+ year old. How will billions in debt principal be repaid in 2020-2030 on the backs of 10,000+’ vertical well bores producing 15-40 gross barrels of oil per day with lifting cost of $15-60 per barrel?

          • Tuscaloosan says:

            Hey shallow sands,

            Denbury (DNR) reported today. They specialize in CO2 EOR.

            How do they compare in this parade of woe?

            Great perspective in your analysis – Thanks!

            • shallow sand says:

              Production decreased 2% from 2014 Q2 and 1% from Q1 2015.

              Lease operating expenses averaged $19.70 per BOE, which was a 7% decrease from Q1 and 17% decrease from Q2 2014.

              Denbury reduced employee headcount through an involuntary workforce reduction, approximately 10% of workforce.

              Hedges help big time, $19.38 per barrel boost to average oil price realized in Q2.

              They have $3,509,237,000 of debt principal against total BOE production in Q2 of 73,726 per day.

              Huge reserve write downs and say more are on the way in Q3, but that applies to all oil companies.

              Denbury stock trading at $3.53 per share, market cap of $1.331 billion. 52 week high over $17. Market valuing flowing BOE at $65,600. Have not seen sales that high. Putting $40K per BOE on Denbury renders it insolvent. Also, very likely debt to PV10 (all cateogories) ratio will be over 100% at year end, but they are not alone.

              Very tough times for all in the upstream industry. When I post this stuff, I do not mean to be critical of (most) of the companies. I am just showing how dire things are.

              • shallow sand says:

                Speaking of tough times, as I eat lunch I see CHK reported earnings today, stock is off about 10%. Skimming release notes pretty drastic fall in production from Q2 to Q4, slashing rigs down to one or two in pretty much all basins.

                Also, strange that stocks fell over 4 million for the week, yet price dropped. Refineries at highest utilization since 2005.

                • Watcher says:

                  It’s not odd if you don’t worship at the altar of supply and demand for price determination.

                • coffeeguyzz says:

                  Shallow

                  Super quick scan of Chesapeake’s report, may be some errors …

                  $4.15 billion quarterly loss, primarily asset impairment.
                  Operational loss $126 million
                  Average net realized price for gas for quarter … $1.01 mmbtu (WTF?)
                  703,000boepd production.
                  These guys seem to be using the ol’ Webvan business model, lose a little on each transaction but make it up on volume.

                  Mebbe Rockman can make ’em an offer …

                  • AlexS says:

                    CHK is down 12%, to $7.04.
                    – 76.5% from last year’s peak of $29.92 on June 30, 2014

                  • Heinrich Leopold says:

                    coffeeguyzz,

                    CHK gets just 1.9 USD per barrel (in 2014 21 USD per barrel) for NGL. It is just a question of how long the management can sustain the current strategy (produce natgas at any cost). Q3 results will be much worse. Yesterday total US production was lower by 0,9 bcf/d from Monday despite the start of the REX pipeline. So far the flood of new production has not arrived yet.

                • Ovi says:

                  It was the 54 kb/d increase in production in the lower 48 states that freaked the market, along with last week’s drill increase. Again is this the EIA correcting last week’s production drop of 151 kb/d to a more realistic number or are they just adding more confusion

        • Enno says:

          Shallow, I agree that your metrics are very useful. It is much better to be roughly right, than to be precisely wrong.

    • Rune Likvern says:

      Shallow,
      I did some estimates based on Oasis Q2 15 press release.
      These came out with about $23/boe [total interest, G&A, Transport, LOE].
      Interest costs at above $8/boe.

      1 boe nat gas is about 6 MMBtu (varies with conversion used), resulting in costs about $4/MMBtu and HH is now sub $3/MMBtu.

      Am I missing something?

      • shallow sand says:

        Rune,

        I include CAPEX expended for the quarter completely, because they did not increase production despite it. My method is what were the total costs, including CAPEX, to hold production flat.

        I am sure my methods are not perfect. However, if you and your bank were looking at projects or making a loan for one, they would find them useful.

        The problem with shale EPS is that DD&A is taken over a long period on a GAAP basis, or at least too long for as fast as the initial decline occurs. If one half of production comes in year one, maybe taking 1/2 of DD&A in year one would make more sense than 10-15%?

        I am very open to other methods, if I can understand them of course, LOL. I think my simple approaches are useful, but they are not perfect.

      • shallow sand says:

        No, except 88% of product sold is oil. They only realized $1.63 per mcf in Q2. Ouch.

    • Shallow, your analysis is pretty sound on an approximate basis. There are a few subtle items which may change the “break even” price.

      For example, let’s say they used some debt to drill wells in a costlier environment, this means some of their cash flow is devoted to pay for “extra CAPEX” they won’t pay in today’s lower cost environment.

      On the other hand, they will be operating a growing well population, and OPEx is in part a function of well count.

      If I were looking at the overall play I’d compare the well quality for Oasis versus the overall basin average. Is that information available? I seem to recall some graphs showing well quality for different companies.

      • shallow sand says:

        I agree with what you posted, Fernando.

        My methods are not perfect. Costs are coming down and debt on high costs, past mistakes can skew the results. But for the specific company, the past is still there. A BK/distressed sale to a cash paying buyer will reduce beak even more than anything else. Dad Joiner’s sale to HL Hunt in the East Texas field in the 1930s being a huge example.

    • Rune Likvern says:

      I think shallow does a great job on crunching company numbers and is kind to share his findings.

      I got lots of stuff on shales and one of the metrics I look at is specific debt for PDP + PDNP (SEC 10-K reported), expressed as $/b (of oil).

      For some companies this is about $20/b (nominal, not discounted). One way to look upon this is that each remaining barrel of PDP + PDNP (in the ground) shall retire $20 of debt (this does not include other liabilities).

      In addition, it shall cover its costs (inclusive taxes and royalties) of being extracted and likely in advance, pay for the manufacturing of new wells. As wells age their specific OPEX normally increases.

      Adding all up each barrel has to carry about $50/b (that is before any profits are made!) at the wellhead. Adding profits and the time value of money (NPV) the figure moves above $70/b.
      This is about the same figure one gets running project economics and discounting the cash flows for the average well.

      If PDP+PDNP turns out to be lower (due to lower EURs) the, “ break even” both nominal (undiscounted) and discounted moves higher.

      • Mike says:

        Rune, I am surprised your R/P tool is not getting any more attention, here, than it is. People seem to have their little niche regarding shale oil analysis and that’s it. They can’t see the forest for the trees.

        There is little question in my mind that LTO EUR’s across the board are over exaggerated, significantly, as then are reported PDP reserves and everything on down the line. We have identified that these shale oil companies are not making any money, their 10K’s suck and are going to suck more…I’d like to start to think about who is going to survive this chaos. This IP hubbub is getting to be a joke.

        Don’t give up.

        By the way, the single largest LTO player in the EF? < 100 wells in frac inventory and going down to < 6 rigs. That's a fact.

        Mike

        • shallow sand says:

          I’m paying attention to Rune’s R/P analysis.

          At some point, a business or an individual should not be able to borrow more if debt is greater than equity.

          I wonder what PDP PV10 would be if, not only the price is lowered to $44 WTI, but EUR is accurate, more like 400K instead of 800 K.

          PV should be the way the assets of an upstream company are valued, especially for collateral purposes.

          I sometimes wonder if many think this current oil situation is just some big trader game, and that the price will be back to $80+ within a year? Seems dangerous for a lender to assume this, and I am hearing the OCC is cracking down, so there will be no pass, like in March.

          • Mike says:

            Good, Shallow. I know you are. Realized production in the Bakken does not appear to be tracking EUR’s. That’s important.

            I can say this to you, Shallow, and you will understand; the world simply does not need high cost, very high decline LTO production at the moment. It will, but not yet. The price of oil reflects that. No sooner than we reached a short plateau in the high 50 range, creeping over 60 dollars a barrel a few weeks ago, the LTO industry started it’s ramping up BS, adding rigs, frac’ing more wells in inventory, all that. Oil prices went right back down again.

            There is huge oversupply of oil on the world market. The perceived notion that oversupply is not going to go away is all speculators need to drive the price back down again and keep it there.

            The shale industry can’t seem to get that. Please google the utter nonsense that Pioneer just made public regarding their plans to keep going, wide open, just like the price was still 90 dollars a barrel.

            Mike

            • shallow sand says:

              Mike. I also wonder what operating expenses are plugged in for years 5+ when the engineers are calculating shale PV.

              As I have stated here, it looks like the ND Bakken wells LOE or OPEX will run $17-$50 per bbl once production has dropped below 50 bopd gross.

              The is not much PV generated by a well making maybe 10,000 barrels net to the working interest owners 5+ years from now, with $20-50 per barrel LOE and with a futures price that is below $70 out to 2023, especially in Bakken where the discount runs $8+.

              I also starting to wonder about things with some of these guys. When I compare three companies, and the one with easily the lowest EURs of the three in the Bakken as set forth here, was by far the strongest, something is off.

              I realize we are seeing big IP in SCOOP. But the wells are very costly, and are mostly gas, which was sold for around $2.13 last quarter.

              coffee, if you are out there, maybe you can lay out SCOOP economics for me. Clearly it is better than Bakken, EFS, Marcellus and Utica based on CLR Q2.

          • Jeffrey J. Brown says:

            WSJ: Oil’s $4.4 Trillion Hole
            Deflation spreads through the global oil industry

            http://www.wsj.com/articles/oils-4-4-trillion-hole-1438875099

            It rankles when you lose $20. But hey, at least it isn’t $4.4 trillion.

            That is roughly how much revenue the world’s oil producers will forego over the next three years, based on the current outlook for prices and demand, relative to what was expected just a year ago. With Brent crude having tumbled back below $50 a barrel, the industry has entered a vicious, and spreading, bout of deflation.

            A year ago, futures indicated an average Brent crude-oil price in 2016 through 2018 of about $101 a barrel. Today, that is just under $60. Estimates of future demand have also been marked down slightly.

            The implied hit to oil producers’ revenue is about $4.4 trillion spread across those three years. It is a crude metric that, for example, doesn’t take account of different grades of oil commanding different prices. But it does indicate the scale of the hit taken relative to expectations held only recently. Some 42% of implied revenue has disappeared. At an average of about $1.5 trillion a year, it is equivalent to more than double the gross domestic product of Saudi Arabia.

            It is also roughly three times the forecast capital expenditure of the global exploration and production sector, according to a recent survey of 474 oil companies by Cowen.

            This is why life is so tough for the likes of Chevron right now. It is trying to meet massive project and shareholder obligations—built up during years of triple-digit oil—with less cash flow. The same goes for exploration and production companies that built up debts in the shale boom.

            My comment:

            An important point to keep in mind is that when we ask for the price of oil, we get the price of actual crude oil (45 and lower API gravity crude oil), but when we ask for the volume of oil, we get some combination of crude + condensate + natural gas liquids (NGL) + biofuels.   What the EIA defines as crude oil is actually crude + condensate (C+C). Condensate, like NGL, is a byproduct of natural gas production.  

            Note that annual Brent crude oil prices doubled from $55 in 2005 to an average of $110 for 2011 to 2013, remaining at $99 in 2014.  

            From 2005 to 2014, global natural gas and global NGL production rose by 24% and 26% respectively, but global C+C production rose by only 5% (EIA & BP data, annual averages).  The only plausible interpretation of the data is that actual global crude oil production probably peaked in 2005, while global natural gas production and associated liquids, condensate & NGL, have so far continued to increase.

            If it took trillions of dollars in upstream capex to keep actual global crude oil production (45 API gravity and lower crude oil) approximately flat (to probably down) from 2005 to 2014, what happens to global crude oil production going forward with a collapse in global upstream capex? And as I have occasionally opined, what about net oil exports?

            • Karen Fremerman says:

              Jeffery and all– Sorry I am still so new to the finer points of all this. I understand the important difference between C & C and the other stuff NGL, butane, ethane, etc. i.e. one we can put in our car/truck/train/ship the other stuff we can’t. My question is: can the other stuff (that makes the total liquids chart look so high) be used as a substitute to run (not in cars) but other important things like electric utilities that we now use C & C as fuel? Thanks!

              • Jeffrey J. Brown says:

                The biggest problem with condensate (over 45 API gravity) is that we get little, if any, distillate yield (diesel, jet fuel, etc., note the precipitous decline in distillate yield and cat feed just going from 39 API gravity crude to 42 API gravity crude on the following chart).

                But that’s not the real issue.

                I don’t think that anyone has argued that partial substitution, in response to higher oil prices, would not be a factor. Substitution has been and will be a factor, but the CC’s (Crazed Cornucopians) are arguing that there is no sign of any kind of peak in sight.

                My argument is that this assertion of no peak in sight is manifestly false in regard to actual global crude oil production (45 and lower API gravity crude oil).

                • Karen Fremerman says:

                  I think I get that. I am so new to this that when I saw the ‘cat feed’ category I was thinking that that is a joke that it is trash/unusable stuff. When I googled ‘cat feed’ terminology for oil I got ‘Central Area Transmission system’ at first I got ‘What should I feed my cat?’
                  So if I am hearing you correctly, the stuff after 45 is pretty unusable not that there won’t be pockets of usability (probably near the places of refinement, not shipped around the globe). Correct?

                  • ezrydermike says:

                    perhaps FCC or fluid catalytic cracker feedstock. Is this is correct, it is a very valuable portion.

                  • Jeffrey J. Brown says:

                    Condensate over 45 is basically natural gasoline, so it is easily refined into gasoline and it’s valuable as a petrochemical feedstock.

                    Cat feed consists of longer chain hydrocarbons that are run through catalytic cracking units to break them down into shorter chain hydrocarbons:

                    http://www.britannica.com/technology/petroleum-refining

                    But as noted above, this is not the real issue. IMO, the real issue is that despite a doubling in annual Brent crude oil prices from 2005 to 2011-2013, the volume of actual global crude oil production (45 and lower API gravity crude) has almost certainly been flat to down since 2005.

  23. Anon says:

    People should keep in mind that oil doesn’t behave like most other things. Its supply and demand are both extremely sticky, such that playing at the margins can shift the market price by several times. 2 million bpd over? Can’t give it away. 2 million bpd under? Arbitrary price/bidding war.

    The important aspect of that is that short-term oil price has nothing to do with overall health of oil reserves beyond impairing future E&P because it loses money. If the economy is sufficiently poor to reduce demand against flat oil production, you can have low oil prices at Peak, or even slightly on the downslope.

    The problem arises when you can’t restart good economic growth because energy prices get painful quickly as supply keeps falling.

  24. wiseindian says:

    Delete

  25. Venezuela update: Over the last week there has been an odd increase in looting. This is a you tube showing the looting of a Chinese owned store in San Felix (eastern Venezuela).

    http://youtu.be/I91EUQNLTi4

    Here’s Miguel Octavio’s take on what’s going on

    http://devilexcrement.com/2015/08/04/a-not-so-subtle-change-in-venezuela/

    M.O. Writes the devil’s excrement blog, is an expert in the Venezuelan economy.

    • Fred Magyar says:

      I’ve said it before and I’ll say it again this is what peak oil is going to look like in a lot of places. It means economic hardship if not outright economic collapse and it won’t matter who is in a political leadership position. Neither right wing nor left, communist or capitalist. None of the players from the old paradigms have any real solutions so until new economic paradigms take hold through a process of emergence I believe we will see more and more economic chaos all over the world. Oh, yeah before I forget, 7 billion plus humans on this planet is too many. What happens next is anybody’s guess but whatever it is, turbulent times will probably be the new norm!
      Good luck to all!

      • Ronald Walter says:

        Didn’t Dr. Paul Erhlich predict hundreds of millions would starve during the 1970s?

        http://www.creators.com/opinion/walter-williams/environmentalists-wild-predictions.html

        At the first Earth Day celebration, in 1969, environmentalist Nigel Calder warned, “The threat of a new ice age must now stand alongside nuclear war as a likely source of wholesale death and misery for mankind.” C.C. Wallen of the World Meteorological Organization said, “The cooling since 1940 has been large enough and consistent enough that it will not soon be reversed.” In 1968, Professor Paul Ehrlich, Vice President Gore’s hero and mentor, predicted there would be a major food shortage in the U.S. and “in the 1970s … hundreds of millions of people are going to starve to death.” Ehrlich forecasted that 65 million Americans would die of starvation between 1980 and 1989, and by 1999 the U.S. population would have declined to 22.6 million. Ehrlich’s predictions about England were gloomier: “If I were a gambler, I would take even money that England will not exist in the year 2000.”

        http://www.creators.com/opinion/walter-williams/environmentalists-wild-predictions.html

        Making predictions can make a fool out of anybody.

        Global warming brings on global cooling in the far reaches of outer Mongolia.

  26. Jeffrey J. Brown says:

    Item posted on Peakoil.com:

    Washington Times: US poised to become leading exporter of natural gas

    http://www.washingtontimes.com/news/2015/aug/3/us-poised-to-become-leading-exporter-of-natural-ga/

    My comment on Washington Times website:

    The EIA and BP showed average US dry natural gas production of 71 BCF/day in 2014.  BP showed consumption of 74 BCF/day in 2014.  Although year over year changes in gas storage can affect consumption numbers, the US remains a net importer of natural gas.  However, the December, 2015 production rate was 75 BCF/day. 

    And recently CIti Research estimated the gross underlying decline rate from existing US natural gas production is about 24%/year, which implies that  the US needs about 18 BCF/day of new gas production per year, just to maintain current production (gross decline rate is the rate of decline with no new wells).  

    As an example of why this is a reasonable estimate, the observed net rate of decline in Louisiana’s marketed gas production from 2012 to 2014 was 20%/year (EIA data).  This was the net decline, after new wells were added. 

    In any case the estimated volumetric rate of decline of 18 BCF/day per year from existing wells in December, 2015 would exceed the natural gas production rate from every country in the world, except for the US and Russia, and in order to maintain current production we would have to replace 100% of current US gas production in about four years.

     

    • HVACman says:

      Funny how writers can use a single word to suggest something is eminent when it is actually impossible. For example, picture the following fantastical sports headline:

      “US track long-jump team poised to jump across Grand Canyon”.

      The team may all be” poised” at the edge of the canyon, ready to jump, but physics says they’ll not actually make it to the other side if they do leap.

      Skateboarders have a derisive phrase for those who are “poised” to do some wild trick, usually taking a photo of themselves in a static pose ready to pull it off, but they aren’t good enough to actually do it. They’re called “posers”. The US and the world are full of natural gas and oil posers and the media is falling for their photos.

  27. Longtimber says:

    “realization that production continues to surge has cratered WTI crude which is now trading with a $44 handle!! This is the lowest in 5 months. Energy credit risk is back near 1000bps once again – near its record wides vs the broad HY index.”

    What is 1000bps ??
    http://www.zerohedge.com/news/2015-08-05/wti-plunges-44-handle-near-5-month-lows

    • Watcher says:

      basis points. 1/100th of a %.

      That’s the price of swaps vs whatever their baseline is — in this case the broad High Yield index.

      It will translate to a pure yield difference. Meaning if high yield bonds across all industries provide a bond buyer 5% interest/year, the energy sector of high yield bonds is having to pay 1000 basis points higher than that — or 15% — to attract money.

      shallow sands, heads up on that for your interest expense number crunching.

  28. shallow sand says:

    There is a very good, short article on Reuters, with a title to the effect of “companies fear worse than 1986”. Could someone link that here? I found particularly relevant that IOC’s need $82 to cover costs and pay dividends.

  29. Watcher says:

    For September’s upcoming collateral revaluation based on 1st of month price:

    1 Sept 2014 $92.92
    1 Oct 2014 $90.74
    1 Nov 2014 $80.53
    1 Dec 2014 $68.98
    1 Jan 2015 $53.45
    1 Feb 2015 $47.79
    1 Mar 2015 $49.84
    1 Apr 2015 $50.12
    1 May 2015 $59.10
    1 Jun 2015 $60.24
    1 July 2015 $56.94
    1 Aug 2015 $46.70

    Avg $63.11

    The April to April time frame . . . from April to August 2014 avg was about $102, then the numbers above kick in.

    This averages to about $83 that determined reserves collateral valuation in April. Down likely about 18% from the previous evaluation.

    $83 to $63, given no huge move in this month, is a collateral decline of 24%. It’s not getting better.

    Sort of like mortgage backed securities, yes?

    • Doug Leighton says:

      Watcher, what is “reserve collateral valuation” in VERY simple terms. Sorry if this is a dumb question.

      • clueless says:

        I believe that Watcher is referring to the amount of loan collateral that a bank will calculate that an oil and gas production company has available based upon a valuation of its oil and gas reserves [e.g., proven reserves + proven undeveloped reserves]. The bank will loan a % of that value. The figure is generally arrived at by using the SEC valuation method. That method uses a net present value arrived at by discounting anticipated future net cash flows form those reserves using a 10% discount rate. The price used to determine the price to be received for that future production is computed by using a rolling 12 month average of the past 12 month’s prices from the first day of each of the preceding 12 months. Shortened as “SEC PV10”

        • Doug Leighton says:

          Thanks, I think I’ve got it. It’s a PV calculation based on future gross revenues estimated using a rolling average rather than using prevailing energy prices. In my very limited experience, bankers would apply lowest conceivable price and not an average including higher historical numbers: of course I’m not a fan of bankers. Anyway, thanks.

          • shallow sand says:

            Doug, the prices Watcher is referring to are actually the ones required by the SEC when companies report reserves on an annual basis in 10K forms. The relevant dates for 2015 will be the first day of each month in 2015. So far, per Watcher’s post, the average of 1/1 – 8/1 is $53.02. To give you an idea of how much SEC valuations will be written down, the WTI price in 2014 was $94.99. As I have stated, CLR disclosed in their 2014 10K that using 2/15 oil and gas prices resulted in a write down of company PV10 by 61%, or from $22.7 billion to $9 billion.

            You will notice as all shale companies report earnings, there are two numbers. One is a tremendous loss, which takes into account the extent reserves had to be written down in Q2. The other excludes that amount. For example, Chesapeake Energy Corporation (CHK) just reported a loss of ($6.27) per share for the second quarter of 2015. That number takes into account the SEC reserve write down Watcher refers to. Excluding the reserve write down and other “special items” CHK reported a second quarter loss of ($0.11) per share.

            Banks develop their own prices, which they refer to as “price decks”. Those can be different for each bank, and usually are somewhat, although they are typically pretty close to the futures prices. The banks will then look at the differential to WTI that a customer actually receives, and do their own reserve valuation analysis of the customer to determine borrowing base.

            The public shale companies mostly saw the reserve valuation crash coming, and sold a ton of bonds or issued more stock to investors early this year. That mostly cleared the bank lines of credit. Investors bought, thinking the price dip would be short lived. Now that things are getting even worse, those investors are underwater on those investments.

            The unanswered question is to what extent the banks are limited by other debt the corporations have outstanding. For example, Whiting Petroleum off loaded all of its bank debt to investors. They have nothing drawn on the bank borrowing base, yet they owe $5.2 billion in long term debt.

            So, as a banker, how much do you loan on a $200,000 home to a person who has $200,000 of unsecured credit card debt? You will have a first lien on the home, but do you really want to lend much if there will not be sufficient cash flow to pay the monthly mortgage payments?

            Banks do not want to foreclose. Oil and gas properties are not easy to operate, and typically rather than foreclose, banks will sell bad loans to private equity firms at a discount. The private equity firms, known as “vulture capitalists,” foreclose and attempt to operate the properties. Eventually, the private equity firms will sell the properties, once market conditions have improved.

            I have no way of knowing how much banks will loan, but rest assured, $90+ oil prices from last fall will not be in their calculations in making borrowing base redeterminations.

            Finally, keep in mind, many shale companies’ PV calculations include significant proved, but undeveloped, reserves. Banks are required to discount those reserves further, its seem like I have read 40% to 70% is a standard range. I know in our case, no value was put on PUD reserves, but our plan was not to be on a drilling treadmill either.

            • Doug Leighton says:

              Shallow,

              Excellent explanation, thanks. Watcher tends to confuse me with his abbreviated comments: OK if you’ve got a basic understanding of economics, which I don’t. Thanks again.

  30. canabuck says:

    Ebola outbreak in Africa.
    12+ months after the start.
    It is interesting to see how the initial exponential rise, gave way to containment.

    • Javier says:

      This is really a success story. Finally developed countries got their act together on ebola, and now with the vaccine the disease should be contained and eliminated in a few more months. Hopefully a new vaccine can be developed quickly for every outbreak of a new strain that happens from now on.

      People and the media got really crazy about this one. It clearly shows that our alarmism was once more unjustified.

    • islandboy says:

      What I wanna know is, since the disease is not 100% fatal and actually far from it, what is it about the survivors that allowed then to survive? I am intrigued by the following question:

      Can Vitamin C Cure Ebola?

      • robert wilson says:

        Dr. Appel once spoke to my retired doctors group at the time of the panic. He said that it was unlikely that ebola would be epidemic in a country with good supportive medical care and modern sanitation. https://www.google.com/?gws_rd=ssl#q=james+appel+md+ebola

        I once tested Pauling’s technique to prevent the common cold. It failed

        • islandboy says:

          Hey Doc, You should try and spare a few minutes to read the page I linked to. A lot of work has been done since Pauling published his book, some of it after he died in 1994. The people who wrote the article are very much alive and kicking and continue to do research on the way nutrients affect our health. I think you’ll really like how it starts:

          “If there were a drug that worked on Ebola you should use it. There isn’t. There is only vitamin C. But you must be extremely careful what you believe, because, as it ever was, the Internet is full of dangerous loonies.”

  31. MarbleZeppelin says:

    Radar mapping studies over two decades reveal the inner nature of the Greenland Ice Sheet. From the animation it appears as if more than half the current ice sheet formed during the Holocene. Very little “old” ice from before the last glaciation is evident, so most of the ice from the previous glaciation melted away. If that happens naturally this time, then the odds are with the extra CO2, Greenland might be actually green in the future.

    http://www.nasa.gov/content/goddard/nasa-data-peers-into-greenlands-ice-sheet

  32. shallow sand says:

    Continental Resources highlights:

    Raised production from 206,829 BOEPD in Q1 to 226,547 BOEPD in Q2. Production exit Forecast for 2015 210,000 BOEPD.

    Lowered cost of Bakken wells from $9.6 million at year end to $7.7 million in Q2.

    Lowered SCOOP well cost from $12.2 million at year end to $9.8 million in Q2.

    Oil gas ratio went from 70% oil 30% gas at year end to 66% oil 34% gas in Q2.

    ND Bakken up to 127,872 BOEPD from 120,957 in Q1.

    SCOOp up to 62,546 BOEPD from 49,882 in Q1

    Cut OPEX to $4.39 from $5.05 per BOE in Q1.

    LT debt up to $6,988,046.000 6/30/15 from $5,926,800,000 12/31/14.

    Spent 1,963,303,000 in CAPEX in first six months. Will only spend $586,698,000 in second half of 2015 re CAPEX. Therefore, production will fall.

    Cash burn for Q2 $290,277,000

    Cash burn for first half $1,046,000,000.

    They spent quite a bit less in CAPEX in Q2 than Q1. Really boosted production despite that, have to wonder how much lag is in that?

    Really benefited from Q2 improved pricing v. Q1 as no oil hedges in place.

    Drop in oil price in Q3 really going to hurt.

    Looks like they are going to continue to drill more in SCOOP than Bakken, so gas will become greater part of production.

    Had $60 oil stayed, cash flow neutral in second half might have been a possibility with greatly reduced CAPEX spending in second half. Will be tougher now.

    Got to admit, these guys cut the heck out of costs. Still think they are fighting a losing battle, but I’d say their break even (as I define it, cash flow neutral with flat production) is closer to $70 in the field, so around $78 given price differentials. That is just and eyeball guess. Don’t have time to crunch more numbers now.

    They are doing a better job than most, but $7 billion of long term debt cannot be ignored.

    • Watcher says:

      Did they fire people. Did their suppliers? Where did the cost cut come from?

      Ain’t no such thing as timely efficiency. Nobody endures lower margin than they could have even in good times.

      I’m gonna offer up . . . they didn’t do jack. They drilled fewer wells and so spent less, didn’t complete some so each looks cheaper.

      And the increase in oil output is fudged up somewhere. Be nice to see if they paid NoDak taxes on each of those barrels. Oooh, or how about a negotiated deferred royalty to the owner.

      Always a good idea to look for earnings management.

      • Ves says:

        “Where did the cost cut come from?”

        There are annual meetings at the end of the year where all the service people from the boonies congregate to the glass towers of oil companies HQ where top brass like to showcase their fancy charts, modeling and etc. Well, at the reception lobby there is food & beverage corner and one dedicated employee on payroll has a task to cut cucumbers in slices and replenish them in the jug of water from 9-noon. In the afternoon the task is little bit modified and they switch from cucumbers to lemons. Lemons are cut in wedges and replenished in the water jug. True story, no kidding 🙂

        Well, last December at the last meetings there was no cucumber person working in the lobby. Here are your efficiency improvements 🙂

    • Rune Likvern says:

      More based on data from Continental’s press/earnings release for Q2 15.

      Total OPEX (LOE, Taxes, Marketing, Transport, G&A, Interest expenses; Totals around $14/boe
      1 boe is about 6 Mcf => $2.30/Mcf in OPEX, average (realized) sales price nat gas $2.31 (Q2 15).

      Around 150 kb/d in oil production (assume this remains for 2H 2015), and a total of 27.6 Mb (oil) for 2H 2015.

      Estimated total CAPEX for 2H 2015 $590M (see shallows number). Pays for about a total of 75 wells (2H 2015) from spud to flow.
      Nat gas adds little and is therefore ignored.

      Stays cash flow neutral in H2 2015 if $21 – 22/b is netted back (at the wellhead).
      Cash flow neutral in H2 15 with about $35/b at the wellhead.
      The price estimated for cash flow neutral, should NOT be confused with the price required to make some profit from the investment in the well.

      It is [BIG] portions of the profits that is/will be used to retire debts as these mature, pay dividends etc.

    • coffeeguyzz says:

      Andy

      While my views are contrary to many on this site – for various reasons – that article nails it on so many levels, IMHO, that discerning observers may read and remember its content in the coming months.
      We, all of us, are living in rapidly changing times.

    • Jimmy says:

      KSA has just over 659 billion in foreign currency reserves. They won’t be going broke for some time. I think US oil will buckle first.

      https://www.imf.org/external/np/sta/ir/IRProcessWeb/data/sau/eng/cursau.htm

      • Watcher says:

        One more time.

        KSA didn’t do anything.

        From “the Saudis are forcing the price down” which was the original mantra about, oh, 10-11 months ago, the wackos have migrated the phrasing to :

        “The Saudis didn’t do what they have always done before when the price fell, they didn’t cut.’

        See the difference?

        Want more? Sashay on up to Ron’s Opec Charts top of this page. Sept 2014 to now. KSA upticks 500K bpd. UAE upticked too. You know who else did? Iraq. 1 MILLION BPD. Why isn’t it Iraq, or the US, that is driving the price down?

        Now sashay over to mazamascience.com/oilexport and call up the Chinese consumption curve. The upticks upticked because there was a customer for it. The world’s consumption rose, and look at China and India, leading they march.

        Oh and notice the world consumption line is above the production line? For years?

    • Watcher says:

      It’s people who don’t understand the numbers and need to file copy by deadline. And there are plenty of wackos to provide them quotes.

      KSA just borrowed $4B. They sold bonds. You know who bought them? Banks.

      Banks in Saudi Arabia.

      Stop thinking money is going to matter as societal descent proceeds. It’s not. No one is going to let obliteration occur because of numbers on a screen when they can change those numbers by decree.

    • AlexS says:

      Saudi Reserves Drop for Fifth Straight Month to $664.4 Billion

      August 6, 2015
      http://www.bloomberg.com/news/articles/2015-08-06/saudi-reserves-drop-for-fifth-straight-month-to-664-4-billion

      Saudi Arabia’s net foreign assets fell 1.2 percent in June as the government of the biggest Arab economy continued to spend down reserves for the fifth month in a row.
      Net foreign assets fell to $664.4 billion, bringing their decline since an all-time high in August last year to $72.6 billion, the Riyadh-based Saudi Arabian Monetary Agency said in its monthly report.
      Saudi Arabia’s reserves have shrunk for nine out of the last 10 months as the oil-price rout, war in Yemen and a boost in domestic spending pressure state finances. The International Monetary Fund forecast that the kingdom will post a budget deficit this year equal to 20 percent of its GDP.
      “We should expect some sort of fiscal adjustment at some point, and that’s going to be a tricky thing to do for the government given that it has such high expenditure pressure, especially on the security side,” …
      Economists at Jeddah-based National Commercial Bank forecast in a July research note that Saudi Arabia’s net foreign assets will fall to $655.5 billion this year and drop $22.1 billion more in 2016.
      The government plans to sell as much as 20 billion riyals ($5.3 billion) of debt on Monday as part of a wider plan to raise 90 to 100 billion riyals before year-end to help cover the deficit, two people familiar with the matter said.
      If that happens, government debt would increase to about 7 percent of economic output from less than two percent last year, the lowest ratio in the world, Jean-Michel Saliba, a London-based economist at Bank of America Merrill Lynch, wrote in a research note.
      ———————————————–
      With very low government debt and still very significant international reserves, KSA will not face serious financial problems over the next several years.

  33. AlexS says:

    Interestingly, the supermajors are cutting their capex elsewhere, but drilling activity in the U.S. shale plays remains intact. Here is an article from BTUanalytics:

    Deep Pockets Keep Activity Consistent for Majors

    July 24, 2015
    https://btuanalytics.com/deep-pockets-keep-activity-consistent-for-majors/

    While US Independents have been under constant pressure to slow drilling down due to capital constraints caused by weak natural gas, natural gas liquids, and crude oil prices, the majors have continued to drill horizontal wells at the same pace as when oil prices were $100 per barrel. In the first 6 months of 2013, the majors consisting of ExxonMobil, Chevron, Shell, BP, and ConocoPhillips drilled a combined 693 horizontal wells, and in the first 6 months of 2014, those operators drilled 632 horizontals wells in the US. Through the first 6 months of 2015, the group has combined for 668 horizontal wells, nearly 5% more than in the same period of 2014 when crude oil prices averaged $101 per barrel compared to $53 per barrel in 2015.
    ………………………………………….

    • coffeeguyzz says:

      Alex
      XTO is drilling balls to the wall in the Bakken. Pretty high IPs to boot.
      Wonder what those guys know?

    • shallow sand says:

      AlexS. I have noticed that and I sure do not understand why.

      Oil rigs dropped to under 200 in the 2008-2009 crash. They seem stuck in the 650 range now, even though prices are pretty low, have been so for longer, and it doesn’t appear that the wells make much sense economically. Even if you can eke out a meager profit, why would you? We might be able to hit an economic well right now, but we sure wouldn’t want to waste the flush off that at $40 oil.

      I am pretty confused by many things happening, I must admit. Just like the article above from an Australian newspaper that KSA will be BK in 2-3 years as shale costs keep going down. Seeing the cost reductions CLR reported caught me off guard. Pretty darn big.

      I looked at a SCOOP high density drilling unit on the auction that CLR operates. I had the well costs and lease operating statements right in front of me. I saw no way that was a good deal, even with much higher prices. I laid it out a few posts ago. Mike looked it over and I think he agreed with me.

      It sure looks like CLR is focusing more on SCOOP. It is much more gas and NGLs. So I cannot see how that is working better than Bakken, when Marcellus and Utica guys are getting creamed and have much more prolific wells at much lower costs than SCOOP.

      What seems really knuckleheaded are the statements from Scott S. At Pioneer and John Hess from Hess. Sheffield says Permian will in near future produce 6-7 million barrels of oil per day. Why on earth would he talk the price down like that? Why the heck would he want that, can he turn a profit in the Permian on $10 oil? Hess does the same thing when he claims costs will fall even more again than they already have, and its full steam ahead with more production for his company.

      Almost makes you think these guys are part of some US government conspiracy to drive down the crude oil price. I mean really. You have 98% of oil producers in this country praying for a production drop, so the price can recover from the brink. Then you have these shale nuts like Mr. Lance at COP talking smack at the Gulf producers, drilling more and more shale wells, while his company borrows $1.8 billion dollars to pay two quarters of dividends, plus another $700 million in two quarters to pay bills. I a shareholder of COP, thankfully small and thankfully still have PSX. Please, Mr. Lance, stop the madness!!

      Something is really messed up. Why are CLR and Hess supposedly getting such huge cost reductions in the Bakken while Whiting is not? Is Whiting not in the media club? Admit I’ve never seen Whiting CEO on business MSM like I have Lance, Hamm and Hess.

      I really do not go for conspiracies. However, did talk to a guy with a big privately held independent. They have subscriptions to every private service which reports onshore lower 48 production and sales. He claims December, 2014 was the peak and that production has fallen every month since. He cannot understand what the heck EIA is doing. Who knows?

      • Watcher says:

        Zillions of credible explanations.

        1) You’re only going to get government (or more likely Fed) action if you completely destroy the whole thing, and that happens at $30 a lot easier than at $50. $50 takes too long. There’s no shock requiring the emergency FOMC meeting. You WANT the emergency FOMC meeting.

        2) Yes, how odd there are reports of efficiency by some but not by others. In fact, Whiting was ballyhooed here as the uber shale guys, but son of a gun if they aren’t getting mega cost cuts and others are. I have zero doubt those costs cuts have been other money motion that have been reinterpreted and pointed at the money spigot to keep it open. BTW big cost cuts in other industries often happen via deferred this and that. Talk someone into taking payment spread out at 10% interest and you can declare a cost cut this quarter.

        3) If I had a long history in Oklahoma and govt favors owed me far and wide, that’s where I would be drilling money losing wells, too.

        (WTI $44.87 in Asia this moment)

        • Heinrich Leopold says:

          Watcher,

          North Dakota prices are already below thirty dollar per barrel. North Dakota sour is even at 15 dollar per barrel. see http://www.fhr.com/refining/bulletins.aspx?AspxAutoDetectCookieSupport=1.
          The best thing the FED can do is not to raise interest rates. However they want to rock the boat, driving shale against the wall. They go as far as they can go and react just after the event.

        • shallow sand says:

          Watcher. Dont have time to write up info, but might want to compare CLR Q2 with EOG Q2.

          EOG burned about as much cash as Q1 but production down. CLR burned much less cash in Q2 and production up.

          Only thing I can think of is either EOG built a big frack log and/or SCOOP is better for CLR than any of EOG acreage in Bakken, EFS and Permian.

          What little of SCOOP I have reviewed did not impress me. But I have admittedly seen little SCOOP data.

          Boy we still talk about nothing much but IP in the news releases. LOL.

      • John S says:

        Shallow,

        Have you ever looked at Parsley Energy? It is a midland independent run by Scott S. son.

        • shallow sand says:

          JohnS. No I haven’t. Will take a look when get time. Think they are a pretty new company.

      • shallow sand says:

        Correction. Sheffield said 5-6 million per day from Permian. Sorry about that error and sorry about the rant.

        • AlexS says:

          Did he mean 5-6 million boe per day?
          I’ve seen forecasts for 3-3.5 mb/d peak oil production in the Permian, but 5-6 mb/d looks too bold

          Permian oil and gas production (kboe/d)
          Source: EIA DPR

          • shallow sand says:

            Read the link AndyH provided above. The quote is in the link, which is in an Austrailian media source.

      • Anon says:

        These guys are mostly committing self-interested fraud. There is no broader economic logic among them, that’s why it makes no sense.

    • AlexS says:

      ExxonMobil continues Midland basin leasehold expansion

      08/06/2015
      http://www.ogj.com/articles/2015/08/exxonmobil-continues-midland-basin-leasehold-expansion.html

      ExxonMobil Corp. has executed two agreements to obtain horizontal development rights in 48,000 acres in the core of the Midland basin. Neither the seller or sellers nor the purchase price was disclosed.
      The two agreements include an acquisition and farm-in adjoining ExxonMobil’s US shale-focused subsidiary XTO Energy Inc.’s existing acreage position in Martin and Midland counties, Tex., providing rights to all intervals within the basin. XTO will operate the acreage.
      “We are continuing to grow our position in a prolific area of the Permian basin,” commented Randy Cleveland, president of XTO . “The recent emergence of strong Lower Spraberry results combined with the established Wolfcamp intervals demonstrates the significant potential of the stacked pays in the Midland Basin core.”
      ExxonMobil has executed five agreements in the Midland since January 2014, providing the company with 135,000 operated net acres. Two of those deals have come by way of asset swaps with Linn Energy LLC .
      “We are encouraged by the horizontal well productivity and cost reductions we have achieved to date,” Cleveland said. “We expect to drive continued improvements in productivity and cost as we develop our substantial inventory of wells across the multiple stacked pays.”
      XTO is currently operating 11 horizontal and four vertical rigs across its Permian leasehold of more than 1.5 million net acres, with net production of more than 115,000 boe/d.

  34. Caelan MacIntyre says:

    Permaculture is a system of

    “…agricultural and social design principles centered around simulating or directly utilizing the patterns and features observed in natural ecosystems… The word permaculture originally referred to ‘permanent agriculture’, but was expanded to stand also for ‘permanent culture’, as it was seen that social aspects were integral to a truly sustainable system as inspired by Masanobu Fukuoka’s natural farming philosophy.

    It has many branches that include but are not limited to ecological design, ecological engineering, environmental design, construction and integrated water resources management that develops sustainable architecture, regenerative and self-maintained habitat and agricultural systems modeled from natural ecosystems.

    Mollison has said: ‘Permaculture is a philosophy of working with, rather than against nature; of protracted and thoughtful observation rather than protracted and thoughtless labor; and of looking at plants and animals in all their functions, rather than treating any area as a single product system.’.

    The three core tenets of permaculture are:

    Care for the earth: Provision for all life systems to continue and multiply. This is the first principle, because without a healthy earth, humans cannot flourish.
    Care for the people: Provision for people to access those resources necessary for their existence.
    Return of surplus: Reinvesting surpluses back into the system to provide for the first two ethics. This includes returning waste back into the system to recycle into usefulness. The third ethic is sometimes referred to as Fair Share to reflect that each of us should take no more than what we need before we reinvest the surplus.

    Permaculture design emphasizes patterns of landscape, function, and species assemblies. It determines where these elements should be placed so they can provide maximum benefit to the local environment. The central concept of permaculture is maximizing useful connections between components and synergy of the final design. The focus of permaculture, therefore, is not on each separate element, but rather on the relationships created among elements by the way they are placed together; the whole becoming greater than the sum of its parts. Permaculture design therefore seeks to minimize waste, human labor, and energy input by building systems with maximal benefits between design elements to achieve a high level of synergy.

    Permaculture designs evolve over time by taking into account these relationships and elements and can become extremely complex systems that produce a high density of food and materials with minimal input.

    The design principles which are the conceptual foundation of permaculture were derived from the science of systems ecology and study of pre-industrial examples of sustainable land use. Permaculture draws from several disciplines including organic farming, agroforestry, integrated farming, sustainable development, and applied ecology. Permaculture has been applied most commonly to the design of housing and landscaping, integrating techniques such as agroforestry, natural building, and rainwater harvesting within the context of permaculture design principles and theory.

    Twelve Permaculture design principles articulated by David Holmgren in his Permaculture: Principles and Pathways Beyond Sustainability:

    Observe and interact: By taking time to engage with nature we can design solutions that suit our particular situation.
    Catch and store energy: By developing systems that collect resources at peak abundance, we can use them in times of need.
    Obtain a yield: Ensure that you are getting truly useful rewards as part of the work that you are doing.
    Apply self-regulation and accept feedback: We need to discourage inappropriate activity to ensure that systems can continue to function well.
    Use and value renewable resources and services: Make the best use of nature’s abundance to reduce our consumptive behavior and dependence on non-renewable resources.
    Produce no waste: By valuing and making use of all the resources that are available to us, nothing goes to waste.
    Design from patterns to details: By stepping back, we can observe patterns in nature and society. These can form the backbone of our designs, with the details filled in as we go.
    Integrate rather than segregate: By putting the right things in the right place, relationships develop between those things and they work together to support each other.
    Use small and slow solutions: Small and slow systems are easier to maintain than big ones, making better use of local resources and producing more sustainable outcomes.
    Use and value diversity: Diversity reduces vulnerability to a variety of threats and takes advantage of the unique nature of the environment in which it resides.
    Use edges and value the marginal: The interface between things is where the most interesting events take place. These are often the most valuable, diverse and productive elements in the system.
    Creatively use and respond to change: We can have a positive impact on inevitable change by carefully observing, and then intervening at the right time.” ~ Wikipedia

    • Greenbub says:

      Permaculture is pretentious, self-aggrandizing bullshit. Small farmers have already operated this way for centuries.

      • Caelan MacIntyre says:

        With regard to some small farmers operating ‘this way’ for centuries, if not longer, it’s possible (which seems to give permaculture, or aspects thereof, a funny kind of stamp of approval.) (When I have an idea, it might be looked up online and, very often, it or something similar has been thought of.)

      • Caelan MacIntyre says:

        One other point:
        If the human species is jerking around with their planet and their own prospects for survival, then I can understand how some ‘smarten-up’ responses to that, like permaculture, can seem like ‘self aggrandizing bullshit’ (SAB) to some, such as those who like to take cheap shots at the wrong targets. It’s all relative.

        I’d concern myself with the real SAB, like a system that seems to operate as though it’s beyond or above the ecosystem as opposed to a subset of it.

    • Javier says:

      Permaculture has not contributed anything to agriculture. Every agricultural element in permaculture has been borrowed from others, mainly natural farming, agroecology, keyline design, food forest gardens and biointensive agriculture.

      Moreover, after 37 years permaculture has failed to make a significant impact in agriculture. The permaculture movement is a popular fashion between urbanites and seems to be living out of educational fees, including the expensive Permaculture Design Certificate Course, a 72 hour course with a fee of $ 1,295. Permaculture has been criticized for failing to produce Permaculture practitioners producing instead Permaculture educators that make their income from courses, talks, seminars and workshops.

      An interesting reading is Robert Scott’s A Critical Review of Permaculture in the United States

      Permaculture has the same problem as Biodynamic agriculture in thinking that the farm is a closed ecosystem capable of self-sustaining. They don’t even understand the basic physic principle of mass conservation. If you produce food you need to bring in nutrients. Due to losses, you need to bring in more nutrients than the food that you produce.

      Fukuoka used to say that nature has the perfect knowledge while we are very ignorant. Permaculturists are very presumptuous in thinking they can design a natural environment. We are much better off increasing the biodiversity in our farms and trying to produce as much as possible in a sustainable way as traditional organic farming promotes.

      I have nothing but respect for conventional farmers that are feeding the world today. My only problem is that I don’t think what they are doing is sustainable in terms of soil fertility and peak oil. We need alternatives that build soil fertility, and are resilient to peak oil, to transition to a sustainable food production system.

      • Karen Fremerman says:

        A farm can be close to self sustaining and close the loop by using Humanure and compost cropping. Once you have built your soil with imports to a good level with micronutrients then you can grow all your own food to feed yourself for a year. When you compost your waste you return those nutrients back into soil that you took out for harvest. Also you compost crop (grow your own compost material) to add organic material back into your soil, then you have pretty much closed your loop (obviously rain will have run off and leaching of soil off your land also nutrients can get imported — a deer can take a dump on your land). John Jeavons has been analyzing and experimenting for 30 years with how much land it takes to grow all the calories a person needs in a year, sustainably. He has come pretty close to closing the loop.
        http://growbiointensive.org/

        One Circle

        How to Grow a Complete Diet in Less Than 1000 Square Feet

        Dave Duhon & Cindy Gebhard
        1984, 200 pp.

        Using the techniques described in How To Grow More Vegetables…, this book will help you explore your nutritional needs and then design and produce a complete vegetarian diet in as little as 700 square feet. Loaded with charts, annotated bibliographies, step-by-step instructions, and even cut-out slide rules for the calculations. You’re invited to participate in this bold, new cutting-edge of Biointensive development and research. You will need to read How To Grow More Vegeables… first.

        • Javier says:

          John Jeavons has been analyzing and experimenting for 30 years with how much land it takes to grow all the calories a person needs in a year, sustainably.

          Jeavons and family have been living for 30 years from selling books and courses, not from what they grow. He claims such amazing yields, that either he is the only one that can get the biointensive method to work or he is exaggerating his results by a wide margin.

          Dr. Michael Bemford of Kentucky State University conducted a study on energy use by farming approach, comparing biointensive (Jeavon’s method) to market gardening and small mechanized farm. The results weren’t very encouraging for Biointensive farming. Its yields were unimpressive and its labor efficiency appalling.

          Farm Scale Study: Summary of 2010 Results

          This together with other people reporting that their yields are nowhere near what Jeavons writes, plus Jeavons making a living from selling books makes me suspicious. Besides double digging appears very drastic and labor intensive for today’s trend of maintaining soil structure.

          Why don’t you try The market gardener by Jean-Martin Fortier? At least this guy makes a living out of farming and has a very profitable small farm business.

          • Caelan MacIntyre says:

            I don’t like to view ‘farming’ in ‘profitable’ terms unless by profit we mean food, health and life for all and ethically– stuff like that.
            The moment farming– or just about anything else– is leveraged in the context of this current crony-capitalist plutarchy (CCP) uneconomy, is the moment it is no longer farming as I view it, but rather more of playing within the CCP game, where, for example, people starve in the face of surpluses, in the face of drawdown & despoilment, and in the face of ultimate failure, like ecocide.

            (And therein lies both a strength– care of people/planet ethics– as well as a potential problem with permaculture, if it attempts to work from a profit/business/money sense within a CCP system that is fundamentally unworkable. Permaculture and farming, etc., need to decouple from this kind of thing, and fast.)

            • Javier says:

              Farming profitably has nothing to do with capitalism. Since the start of agriculture the question is whether people can make a living out of farming or not. And making a living has always mean producing as much as possible sustainably because the goal is not to feed oneself but to exchange the surplus to get the many things needed to actually make a living instead of just surviving.

              • Karen Fremerman says:

                Javier– I am not quite sure what you mean by ‘make a living’. I guess it I am not sure what you think life will be like when we are sustainably making a living as opposed to ‘just surviving’.

                • Javier says:

                  Easy. You make a living if you can at least cover your expenses for:
                  – Food
                  – Clothing
                  – Basic healthcare
                  – Transportation
                  – Basic education
                  – Tools for maintenance
                  You survive if you just get the food and have to get along without the rest.

                  • Karen Fremerman says:

                    So you foresee a future where most all are able to sustainably have jobs outside of growing our own food? Sustainably meaning for hundreds of years?

                  • Javier says:

                    I don’t have that much capacity of foreseeing. I foresee that there’s going to be an inversion in the 20th century trend of reducing people working in the primary sector towards increasing it at the expense of the tertiary sector.

                    So yes, a lot more people will have to work producing food to substitute part of the energy from fossil fuels that will not be available or affordable. That’s what I think.

        • “How to Grow a Complete Diet in Less Than 1000 Square Feet”

          On about the same level of practicality as building a spaceship capable of supplying all the food for the space travelers. Not NECESSARILY IMPOSSIBLE- but as a practical matter, it has never happened and likely never will.

          Lab experiments and extrapolations therefrom are good – such experiments can tell you, roughly, where ultimate limits lie.

          But we seldom if ever approach ULTIMATE limits in practical terms in the day to day affairs of live and civilization. Various factors or variables present this happening.

          The simplest example, and the most ridiculous I can think of is the idea that the population of the Earth could rise to the point each human has standing room only. Planet wide people , wall to wall.

          As Javier points out in other comments the people who push alternative agriculture the hardest and the most successfully make a living out of selling books and classes and certifications- rather than pursuing what they preach.

          The people who believe them are confined to the subset of people who want to rather than those who have tried their methods side by side with conventional methods- which are constantly evolving.

          Somebody else brags about not using synthetics as if natural poisons are safer.

          I challenge them to inject a cc of rattlesnake venom and tell me if it is a benign substance an hour later- if they are still able.

          Nobody I know who is well informed in respect to the BIG picture thinks industrial agriculture is permanently sustainable after the current fashion.

          The people pursuing the various alternative methods accepted as GOSPEL here are NOT practitioners of these methods in more than a minute number of cases.

          When they are actually practitioners of what they preach I have so far found them ( ones I have had a chance to look at ) operating on the start up principle – burning cash and work in anticipation of future success.

          It’s easy to grow a couple of thousand dollars worth of produce by alternative methods while spending FOUR thousand in cash and labor.

          I know how. Been there and done that but only on a very small scale with the old folks. My great grand parents and grandparents did without chemical and petroleum inputs previous to 1930 or so. MIGHT HAVE to do it again but do not expect to live so long. They ate quite well but they put in MANY MANY hours just feeding themselves.

      • farmboy says:

        Javier says “They don’t even understand the basic physic principle of mass conservation. If you produce food you need to bring in nutrients. Due to losses, you need to bring in more nutrients than the food that you produce”

        One thing that you’re not taking into account is the tremendous supply of minerals that are locked up in almost all soils. I understand that though its quite expensive, you can have a soil test done for the total amount of macro and micro nutrients in your soil. A normal soil test only tells you the amount of soluble nutrients in your sample, these soluble nutrients are ready for plant uptake but they are also ready to be leeched out or volatize. What most conventional agronomist fail to take into account is the power of healthy biology in the soil to release these nutrients and make them available to the plants as needed.

        Gabe Brown is a great example of a large scale grain and livestock operation that has been incorporating these principles,in Bismark North Dakota for 20 years or so he has not been using any outside fertility except for the seeds to plant his covercrops and grain crops. On grain he is generally yielding at or above the county average and at the same time his operation is feeding way more livestock then it did 20 years ago. https://www.youtube.com/watch?v=9yPjoh9YJMk

        • Javier says:

          Gabe Brown is a great example of a large scale grain and livestock operation that has been incorporating these principles,in Bismark North Dakota for 20 years or so he has not been using any outside fertility except for the seeds to plant his covercrops and grain crops.

          No tillage or reduced tillage and cover crops are recommended practices in organic farming as a way to improve organic matter in the soil, but if you want good yields, you still need a source of fertility, whether it be manure, compost, etc.

          Regarding Gabe Brown he seems to still be using some synthetic fertilizer and quite a lot of herbicide. No tillage is difficult to practice without herbicides:

          Brown’s Ranch: Farming in Nature’s Image to Regenerate Land, Productivity, and Quality of Life

          By employing high levels of diversity and “regenerating landscapes and balancing biodiversity,“ the Brown’s have reduced the use of synthetic fertilizer by over 90% and the use of herbicides by over 75%, and continue to work on reducing herbicide use.

          • farmboy says:

            Javier Straight from the horse’s mouth ” We have now eliminated the use of synthetic fertilizers, fungicides, and pesticides”. http://brownsranch.us/

            And chemical herbicides are down to once every 3 years compared to most farms in that area i would guess, would be more like twice per year.

      • Caelan MacIntyre says:

        Javier, permaculture is not agriculture and ‘everybody’ knows that permaculture gets its inspiration from many different people, places and times. Wikipedia’s permaculture entry lists some of them.

        The power of permaculture seems to me to be in part that it consolidates many, often separate, things into one concept. (That’s almost exactly what I’m trying to do from a geosociopolitical angle with Permaea.) Permaculture isn’t perfect, but AFAIK it seems like the best thing going so far in terms of transitioning this pickle out of our sorry asses we’ve worked our way onto. (Or is that the other way around?)

        Anyway, if you have a better concept, by all means. If you can improve permaculture, by all means, since adaptation, self-criticism and evolution appear to be part of it.

        Speaking of ass-backwards, personally, I have a hard time with the term, ‘farming’ as applied to, say, industry. Industrial, or so-called conventional agriculture hardly seems like what we might imagine farming is or should be. Why, it almost flirts with its very antithesis and to do just about everything wrong, rather like the so-called economy, which both BC and myself call the ‘uneconomy’. And for good reasons.

        • Javier says:

          Then if Permaculture is so good, why is not getting anywhere in terms of convincing the people that actually makes a living from farming in the world?

          To me that is because Permaculture actually introduces more work and doesn’t increase the production or even reduces it.

          You can compare it to the system of rice intensification (SRI), or more generally the system of crop intensification (SCI), that is extending like wildfire in the third world, because with very little additional work increases production significantly.

          Biodynamics has 90 years and a few thousands practitioners. SCI has barely 10 years and is practiced by over a million farmers. That is the difference between the things that work and the things that don’t.

          • Caelan MacIntyre says:

            Again, Javier, permaculture is not agriculture or farming or whatever have you.

            Comparing it with SRI or SCI seems kind of like comparing some parts of a system to the whole system, if we assume that SRI and SCI can be integrated within the concept of permaculture.

            According to Wikipedia, SRI is labor-intensive.

            There are probably various reasons why permaculture has not been taken up by as many as some might hope, but, just off the cuff, it is an ethically-based system in the midst of a relatively-corrupt status-quo.

  35. Daniel says:

    Where is all the oil?

    Gentlemen, as usual, probably a very naive question from my side, but does anybody have any actual data showing world crude inventories filling up? I see an oversupply of 3.0 – 3,5 MM BBL/Day quoted, but without any backup documentation. It seems like ±20% of worldwide supply (doemstic production & imports) is ending up in the US at this stage without any huge change in stock-piles. Looking forward to your input/links to good data, etc.

    Thanks

    Dan

  36. shallow sand says:

    I have a couple automobile questions.

    Tesla had disappointing results. I assume the fact they burn cash like US shale drillers at $40 is still not very relevant to the long term view?

    I read an article that hackers were able to shut down a Tesla model S while it was traveling at a low speed. The same article made reference to this problem with Jeep Cherokees. So with both EV and non, if I am driving a later model vehicle, hackers could try to kill me and my passengers by messing with my vehicle while in operation?

    With all of the hacking issues, should I be ok with self driving automobiles, semi trucks, etc?

    • MarbleZeppelin says:

      Cybersecurity Research were the ones who did it, so Tesla is on top of the problem. These were not hackers but are a group funded by industry to preempt and solve cyber security problems.
      I am sure that autonomous vehicles will provide sci-fi writers with a lot of potential material for their books and screen plays.
      Early cars had safety problems also. Horses are extremely dangerous and can suddenly take off on their own. The new electrics are fairly safe, hacking problems can be minimized and they have a huge advantage over ICE vehicles. They don’t have to produce more climate change and pollution. The biggest danger of all can be eliminated through the implementation of electrics.
      Autonomous cars also have the potential to dramatically reduce road accidents. So as the companies stay on top of cyber problems, the amount of deaths and injuries due to road travel could fall dramatically.
      Why not have the car fully self controlled while driving, allowing no external input while in motion?

      • muppet says:

        I’d be more terrified of nutjobs using drones to drop bombs or attack you some other fashion. Where people like to invade movie theaters today, tomorrows crazy gun freaks will be able to kill you from their video game consoles. Much easier than hacking your Chevy.

          • Fred Magyar says:

            I’m in Sao Paulo right now where if everyone tried to get into their cars and drive it would create the most massive traffic jam ever seen on the face of this planet.

            However most work I might want to do can be achieved via video conferencing, phone and email. I can reach out to people anywhere on the planet in a blink of an eye!

            Unless I have to transport physical goods in person there is very little reason to get in a vehicle and drive on a road. Most people can probably do a large portion of their jobs on line and we really need to stop driving to work, it’s just plain dumb and employers who can’t figure out ways to have their employees do work from their home offices or cellphones need to be put out of business!

            That’s my early morning rant from Sao Paulo 🙂

        • Caelan MacIntyre says:

          “I’d be more terrified of nutjobs using drones to drop bombs or attack you some other fashion.” ~ muppet

          Sounds like the US military industrial complex.

  37. Frugal says:

    Canadian Natural posts $405-million net loss on higher tax rate, lower revenue

    … total revenue the second quarter was $3.42 billion, down from $5.37 billion a year earlier.

  38. Ronald Walter says:

    A visit to New York City back in 1973 during the Labor Day Weekend was a wake up call for me. Gasoline was 75.9 cents per gallon, the most I ever paid for gas in my entire life.

    I was taken aback. I sold my Volvo and vowed to stop driving cars for good. 42 years later, I drive a good vehicle and need it worse than ever before. I turned into a hypocrite.

    WLL is under 18 today and it will probably fall under 15, imo.

    MRO, Marathon is under 19 today and is looking like it will go lower.

    The time to speak up has passed, now is the time for senseless bickering. har

  39. Toolpush says:

    Interesting times in the Nat gas market. Storage is up only 32 bcf. In fact in the producing area, they actually had a draw down of 6bcf, and the price dropped? So supply is dropping, storage is down to the 5 year year average, and nobody is concerned.
    The EIA weekly gas report due, in a few hours, may shed some light on the matter, though I am still waiting to see normalization of the Marcellus gas price with Henry Hub to get a goo feel on how things are going to work out.

    http://ir.eia.gov/ngs/ngs.html

    Summary
    Working gas in storage was 2,912 Bcf as of Friday, July 31, 2015, according to EIA estimates. This represents a net increase of 32 Bcf from the previous week. Stocks were 535 Bcf higher than last year at this time and 64 Bcf above the 5-year average of 2,848 Bcf. In the East Region, stocks were 69 Bcf below the 5-year average following net injections of 36 Bcf. Stocks in the Producing Region were 114 Bcf above the 5-year average of 978 Bcf after a net withdrawal of 6 Bcf. Stocks in the West Region were 19 Bcf above the 5-year average after a net addition of 2 Bcf. At 2,912 Bcf, total working gas is within the 5-year historical range.

    • Heinrich Leopold says:

      toolpush,

      The striking trend is that oil and natgas go countercyclical. Natgas – albeit current inventories are still high – shows a dramatic fall in inventories. This has changed with shale. This is one of the lowest inventory build I know during the summer and there is a good chance we get an inventory draw over the next weeks. Natgas has been more or less a co-product of oil production, soon it will turn around and natgas could become the main product. Coud be a lifeline for shale producers.

      • Toolpush says:

        Heinrich,

        If this drop in expected storage numbers is purely due to a drop in associated gas, then some people have a shock coming to them from a oil production point of view, and the oil numbers we are reading must be a little fluffed.
        Interesting times ahead and the fog of war gets lifted.

        Edit: I also see the Nat gas is on the rise now, which is what I would have expected with such a storage number. I was a little quick of the mark.

        • Heinrich Leopold says:

          toolpush,

          My explanation is that many traders can simply not believe that natgas goes up when oil is down. So it will take some time until natgas goes up. However the internal trend is very strong, which I can see from the ratio of UGAZ/UWTI.

  40. Rune Likvern says:

    IMO

    Worth the read and the article touch many of those factors affecting oil prices and why it may take a while for the market to rebalance.

    ”As shale has dramatically reduced time-to-build (the time between when producers commit capital and when they get production) from several years to several months, oil prices now need to remain lower for longer to keep capital sidelined and allow the rebalancing process to occur uninterrupted. This spring’s rally in prices did prove to be self-defeating. Not only did all the capital markets reopen as oil prices rose, but producers began to redeploy rigs and remained under hedged, which is a reflection that the industry simply had not faced enough pain to create real financial stress that would create change.

    http://www.zerohedge.com/news/2015-08-06/crude-carnage-continues-goldman-warns-storage-running-out

  41. Longtimber says:

    LDS = Liquidity Death Spiral Looks like the TBTF’s are going to own some holes & drill stock.

    ” Banks are going to reassess their energy loans this October, a twice-a-year ritual. These loans are backed by oil and gas reserves. When prices plunge, the value of the collateral plunges in parallel. Banks, under increasing pressure from regulators to get a handle on this, are going to slash these credit lines. And even more liquidity will drain out of the sector.”

    “This coincides with the expiration of the hedges that have protected so far a portion of these companies’ revenues, but won’t do so going forward.” “Liquidity death spiral,” is what S&P Capital IQ called this phenomenon.”

    http://wolfstreet.com/2015/08/04/oil-gas-re-bloodies-private-equity-investments-smart-money/

    Just who’s on the wrong side of the Hedges anyway?

  42. The Wet One says:

    Ron,

    I think I will rue the day that you introduced me to this site: http://www.desdemonadespair.net/

    Granted, the place has an obvious bias, but jeez louise, the drumbeat of bad news is almost impossible to overcome. Is it the odd sort of lie whereby a false image is created by selective reporting, or are things really as bad as Desdemona (assuming such a person exists) paints them? Hard to know.

    For my part, I keep trying to assume it isn’t as bad as the site makes it out to be, but I find it hard to keep up that pretense, and stay hopeful, in the face of what appears to be, without more, honest reporting of what’s going on in the world. It could all be lies, but I’ve yet to see the countervailing evidence or arguments.

    Things are simply going to go where they go, and I’m damned (thanks to you Ron) to watch them. You’ve put me to the test of knowledge. I’m not sure I appreciate it yet. 🙁

    • Wet One, it is every bit as bad as this site makes it out to be. In fact you could read every one of the posts on this site and it would still be much worse than that. That is because no site can report all the things that are happening to this earth and the creatures that live here.

      Is it the odd sort of lie whereby a false image is created by selective reporting, or are things really as bad as Desdemona (assuming such a person exists) paints them? Hard to know.

      Such a person never existed. She is a fictional character.

      Desdemona

      Desdemona is a character in William Shakespeare’s play Othello (c. 1601–1604). Shakespeare’s Desdemona is a Venetian beauty who enrages and disappoints her father, a Venetian senator, when she elopes with Othello, a man several years her senior.

      However your reply has convinced me to post the link more often. Perhaps if more people followed the site they would get a better idea of what is really happening to our planet.

      Desdemona Despair Read it and weep. I know I did.

  43. learner2 says:

    OAS and CLR up huge today. Most stocks staged a dramatic turnaround. What does the market see in them?

    • shallow sand says:

      Possibly a leak that the big money center banks and Gulf OPEC are going to quit shorting the crude market soon? Just a guess.

  44. MarbleZeppelin says:

    World glaciers melting even faster.

    Journal of Glaciology, Vol. 61, No. 228, 2015 doi: 10.3189/2015JoG15J017
    Historically unprecedented global glacier decline in the
    early 21st century:
    “The globally observed mass loss rates of the early 21st
    century that are revealed via the glaciological and geodetic
    methods are unmatched in the time period of observational
    records, or even of recorded history. The observed rate from
    the glaciological mass balances is significantly more negative
    than the average for the second half of the 20th century
    (–0.54mw.e. a–1 vs –0.33mw.e. a–1). The value derived
    from the geodetic method is four, three and two times larger
    than the averages of the periods 1851–1900, 1901–50 and
    1951–2000, respectively. At a regional level, the picture is
    more variable but clearly shows the excessive mass loss
    observed in the two most recent decades from 1991 to
    2010. The increased mass loss over the past few decades is
    driven mainly by summer balances which are dominated in
    most regions by ablation processes. Winter balances seem
    to be of secondary importance and show no common trend.
    As a consequence of both the extended period of mass loss
    and the delayed dynamic reaction, glaciers in many regions
    are in strong imbalance with current climatic conditions
    and, hence, destined to further substantial ice loss.”

    http://docserver.ingentaconnect.com/deliver/fasttrack/igsoc/00221430/j15j017_1438265005624.pdf?expires=1438896472&id=guest&checksum=FA9D0B02261E96BB78B6201C261494BC

    • Walt Seh says:

      I am a Canadian who hikes a lot in the Canadian Rockies.

      Early pictures from the area vs. today do indeed show a lot of glacial recession, at least for some glaciers, such as Bow Glacier, which is the source of the Bow River. The hiking book “Classic Hikes in the Canadian Rockies” shows a picture of this glacier around 1900. If you go there today, the same glacier is much, much smaller. BUT there is this big rub about it. Those peer-reviewed journal types in your link who think science is determined by consensus rather than experimentation and hypothesis testing unthinkingly look at this and feel empowered to make unwarranted conclusions. The fact of the matter is that there was something called the Little Ice Age (LIA) which caused global temperatures to reach a nadir in the early 1800s. This time period was one of the coldest since the last great big Ice Age, and because of the intensity of the cooling the world saw during this time, we still have yet to fully emerge from it. THAT, mon ami, is why the Bow Glacier – and all its sisters – have been receding: we are still emerging from the LIA. This is why also, according to the Archeological Survey of Canada, the current tree line in the western part of the country is 100 km SOUTH of the tree line observed during the time before the onset of the LIA. This can all be rationalized by noting that before the global cooling of the LIA came the warmth of the Medieval Warm Period (MWP), which itself was preceded by the similar Roman Warm Period (RWP).

      Incidentally, our emergence from the Little Ice Age seems to have stopped over the past dozen or so years – the unaltered global temperature datasets highlight zero global temperature increase since 1998, which now even the IPCC has been forced to admit, as did Phil Jones, who, when at Hadley, was one of the world’s foremost global warming investigators until ClimateGate forced him to resign.

      Even more evidence keeps on appearing. Kegwins’ study in Nature on marine radioistopes shows that we are, today, still BELOW the 3,000 year average. Furthermore if you Google “Dr. Tim Ball+picea glauca” you will find a paper about a white spruce stump located in Canada near the shores of the Arctic Ocean. Remarkably, this stump has been dated to about 5,000 years in age, and is in a site absolutely NOWHERE even close to today’s treeline. One would think this kind of observation would be huge, groundbreaking news within the scientific community, but nope. The official climate scientists funded by taxpayer grants have been completely silent about this research. To me, that is incredibly odd, as I would like to think if they were truthful about striving for intellectual honesty through their peer-reviewed work, they would make a point of at least addressing all the holes that keep getting poked into their theory of global warming.

      • Fred Magyar says:

        Those peer-reviewed journal types in your link who think science is determined by consensus rather than experimentation and hypothesis testing unthinkingly look at this and feel empowered to make unwarranted conclusions.

        If you really believe that scientists do not go out in the field, make observations, collect data, do analysis and actually perform experiments, then you have never met a real scientist and you don’t have the beginning of a clue as to how science is done!

        And BTW, 5000 years is NOT incredibly old!
        You really need to get a bit of perspective as to what really old actually is! Sart here:

        https://goo.gl/ttrozE

      • Fred Magyar says:

        To me, that is incredibly odd, as I would like to think if they were truthful about striving for intellectual honesty through their peer-reviewed work, they would make a point of at least addressing all the holes that keep getting poked into their theory of global warming.

        First, there are no holes, second, it’s actually called CLIMATE CHANGE!

        https://goo.gl/wqpesq

      • MarbleZeppelin says:

        Walt
        I hear you and will try to clear up a few things. First we need to get the language straight. We have been in a continuous Ice Age for over 2.6 million years. During that time there have been periodic glaciations and melting. The last glaciation ended over 10,000 years ago as we entered the Holocene.
        The so called Little Ice Age was primarily a northern hemisphere phenomenon initiated by major volcanic occurrences and continued by a shift in the thermohaline. flow. It was not an Ice Age, merely a cooling, mostly local to the northern hemisphere. No massive glaciation happened during the Little Ice Age. Not much happened in the Southern hemisphere.
        The probable reason for a maximum tree line limit being north of the current one is that we have been on a slow cooling cycle for a long time, headed toward the next glaciation. At least until now, when the heating caused by major human induced environmental change has overcome the relatively small forcing of planetary orbital variations. So we could be passing the peak temperature in the historical past, since the earth appears to have been in a general cooling mode (aside from the Little Ice Age).
        If there has been any slowdown in the recent heating of the earth (earth being both atmosphere and ocean), which is not actually indicated, but if there has been it will be due to the major changes in cloud reflectivity that we have induced by pumping huge amounts of SOx into the atmosphere.

        My question about the stump was why only one? Trees move northward as forest, not as a lone tree. Where is the forest of stumps? Maybe it is errata.

        • Maybe a bird ate the seed, flew over the area and relieved itself? This allowed a lonely tree to grow where it wasn’t supposed to. Or maybe there were other trees and the Inuit used the wood.

      • Fred Magyar says:

        Yeah I googled Tim Ball!
        Surprise, surprise! The guy is a wacko, a crank and a liar to boot! Jeez what else could one expect from a climate change denier, eh?

        Ball has also claimed, in an article written for the Calgary Herald, to be the first person to receive a PhD in climatology in Canada, and that he had been a professor for 28 years,[27] claims he also made in a letter to the then-prime minister of Canada, Paul Martin.[28] However, on April 23, 2006, Dan Johnson, a professor of environmental science at the University of Lethbridge, wrote a letter to the Herald in which he stated that at the time Ball received his PhD in 1983, “Canada already had PhDs in climatology,” and that Ball had only been a professor for eight years, rather than 28 as he had claimed.[29] In the letter, Johnson also wrote that Ball “did not show any evidence of research regarding climate and atmosphere.

      • Don Wharton says:

        Another unfortunate troll alert!
        the unaltered global temperature datasets highlight zero global temperature increase since 1998

        The crackpot right-wing anti-science crowd loves to make use of the 1998 warm peak that occurred because of the extreme El Nino of that time. They then pretend that the extreme increases in the 10 year moving average of world temperature is something that should be ignored. They also want to ignore the all time record new high in world temperature of 2014 and the subsequent new high that has already been achieved for the first half of 2015.

        Kegwins’ study in Nature on marine radioistopes shows that we are, today, still BELOW the 3,000 year average.

        I could not find any such article. My guess is this is slanderous misrepresentation of anything said by Kegwin. The consensus of climate science is that we are above anything in the last 100,000 years. A NASA article with the long term paleoclimate record and a graph of the last 1,500 years can be found here:
        http://earthobservatory.nasa.gov/Features/GlobalWarming/page3.php

        This article ends with: “When global warming has happened at various times in the past two million years, it has taken the planet about 5,000 years to warm 5 degrees. The predicted rate of warming for the next century is at least 20 times faster. This rate of change is extremely unusual.”

        Ron, can we start banning those that repeat crackpot denialist propaganda?

        • Javier says:

          Don Wharton you are so ignorant on climate change that I understand you want banished anybody that can show it. It is typical of ignorant people to attack and insult those that don’t share their views, rather than have a civilized discussion to see who has the better evidence.

          The consensus of climate science is that we are above anything in the last 100,000 years.

          The consensus of climate science is that the warmer and wetter period during the Holocene is the Holocene Thermal Maximum (HTM) that took place 10-6 Kya. It is believed that at high latitudes the temperature during HTM was up to 5° C higher than 20th century average. And no, Greenland did not melt.

          The Holocene cooling that has taken place between 6,000 years ago and the 19th century introduces a paradox for current popular climate change theories:

          Marine and terrestrial proxy records suggest global cooling during the Late Holocene, following the peak warming of the Holocene Thermal Maximum (∼10 to 6 ka) until the rapid warming induced by increasing anthropogenic greenhouses gases. However, the physical mechanism responsible for this global cooling has remained elusive. Here, we show that climate models simulate a robust global annual mean warming in the Holocene, mainly in response to rising CO2 and the retreat of ice sheets. This model-data inconsistency demands a critical reexamination of both proxy data and models.

          Why, oh why did climate cool amid ice sheets retreat and rising CO2?

          The Holocene temperature conundrum Liu et al. PNAS 2014.

          • Don Wharton says:

            Javier, Thank you so much for attempting to show that I am “so ignorant on climate change that I understand you want banished anybody that can show it.”

            You have no ability to show falsehoods because there are some people around here who actually understand the data. The discussion was on global surface temperature over the last 100,000 years. The citing of the extreme high latitude values in the one model that represents the most extreme high temperatures within this period is precisely the sort of extreme and reprehensible bias that is typical of the denialist camp.

            We know that you seem to have no compunction about voicing falsehoods. I have yet to see your defense of your prior outrageous claim that the global energy imbalance is only 0.6 watts per square meter.

            The Marcott et. al. model in the PNAS article you cite suggests a high temperature of about Holocene Thermal Maximum of about 0.5 degree C above baseline. It was the only model reviewed to suggest this level of warming. The entire thrust of the article was to question whether this was valid at all. There were seasonal biases in the markers used to project those temperatures and the modeling of all forcing agents project a flat to rising warming over this period. Thus we need to question the degree to which there even is this thermal maximum.

            Javier, if you made any real attempt to understand what is happening you would find that even this most extreme model of the possible warming during the Holocene is now exceeded:

            http://www.techtimes.com/articles/27277/20150119/its-official-2014-is-hottest-year-on-record-global-warming-is-no-hoax.htm
            The year’s (2014) average temperature, 58.24 degrees Fahrenheit (14.58 C) was 1.24 degrees F (0.69 C) above the 20th century average, NOAA scientists said.

            Obviously the 0.69 degree above baseline now is greater than the 0.5 degree above that MAY have existed in the earlier Holocene.

            Oh and your emphasis on the fertilizer effect is similarly an attempt to misdirect all attention away from the ozone effect that is usually highly correlated with CO2, and the droughts, floods and extreme heat events that kill crops.

            And from your perspective I am the one that is ignorant!!!

            Javier, let me emphasize that this is not a conversation. This is setting the record straight in the comment record so that if and when Ron decides to put an end to preposterous, crackpot propaganda he will not need to put effort into explaining why he is doing that.

        • ezrydermike says:

          “If you smell something, say something”

          You really need to get with the program Don.

          Some people say, including blog trolls, Heartland true believers and disreputed scientists not in the climate science field, that increased carbon dioxide is good for us. It make things grow faster and longer!

          It’s keeping us from diving into another ice age!

          Melting glaciers on Greenland is bad? No! All that newly opened land can be planted with crops that can be used as pig food!

          We can turn Greenland into a Tyson / Smithfield paradise! Since it is hotter and there is more CO2, the pig food crops will grow like weeds!

          This is great news, since the US is just too full of bullshit and there is no room for pig shit.

          Rising sea levels bad? No! That just means ports can handle bigger ships chock full of Greenland pork!

          Why, since there won’t be any Artic sea ice in the way, we can import on both coasts!

          And if a little ice age should creep in, no worries mate, that will just keep the pork fresh!

          Ban the AGW deniers? Oh no, you need to ask yourself….Why do you hate bacon?

    • ezrydermike says:

      “One of the best examples is glacier data. Measurements of glaciers began in earnest in the 19th century, and the collected work is truly that of legions of researchers. Some have even pored over historical records and geological data to extend our knowledge back before they themselves were born, and that’s a lot of work in itself. Now imagine taking all that data, from over a century of diligent efforts, on tens of thousands of glaciers around the world, and putting it all into a useable form so guys like me can work our statistical magic. Just thinking about how much work that all is, makes my head spin.

      But that’s what the hard workers have been doing. The pinnacle of their achievement is the collected data holdings of the World Glacier Monitoring Service, headed by Michael Zemp in Switzerland. The thoroughness, the care, the diligence of their efforts are truly impressive.

      Zemp and a host of others have just published a new paper reporting analysis of all that data. The results reveal just how different the last few decades have been, not just compared to the preceding hundred years or so, but probably compared to all of recorded history.

      The data fall into three broad categories. Glaciological data result from measurements taken of individual glaciers at individual locations (often, a large number of individual locations), primarily based on “stake and pit” measurements in which researchers put a stake in the glacier to use as a marker to measure over time how much the glacier grows or shrinks. Geodetic data estimates glacier volume changes (and by deduction, mass changes) from repeated mapping from the ground, the air, and space. Front variation data records the changes of the front of the glacier, which can be extended to remote areas by remote sensing, and even back in time by the study of clearly dated historical documents. Some front variation data extend as far back as the little ice age, i.e. the 16th century.”

      https://tamino.wordpress.com/2015/08/05/vanighing-ice/#more-7622

  45. Greenbub says:

    Non-expert idea: The majors are still investing in and starting fracking projects because they know there will be an oil shortage soon and fracking is a faster way to bring new oil to market (as opposed to offshore).

  46. islandboy says:

    Saw this over at solarserver.com:

    Saudi Arabia to build a 50 MW PV plant in the city of Saudi Aflaj

    “According to media reports, King Abdulaziz City for Science and Technology (KACST) on July 30th, 2015 signed two memorandums of understanding with Saudi Electricity Company (SEC) and Saudi Company for Development and Technology Investment (TAQNIA).

    The partners announced to establish a solar photovoltaic (PV) power plant with a capacity of 50 MW in the city of Saudi Aflaj, which will be the first utility-scale PV plant in the Kingdom of Saudi Arabia. “

    I wonder how much of this they can install before they go broke or can’t get any money to borrow or run out of oil and gas?

    • Probably the last place on Earth to run out of money will be Saudi Arabia- with the possible exception of the USA lol.

      Uncle Sam is already broke but everybody is so scared of him nobody will point out the obvious. The printed dollar rules- for a while yet.

  47. islandboy says:

    News from Germany courtesy of PV Magazine:

    Germany: Record PV and wind grid feed-in for July

    ‘According to Fraunhofer ISE’s data, the amount of PV and wind generated electricity fed into the grid hit a record high in July in Germany. The PV power generated also matched up to nuclear. Another first…..[snip]

    Bruno Burger from the Fraunhofer ISE furthermore highlights another record in this hit month of July. According to the website Energy Transition: The German Energiewende, PV installations for the first time in July 2015 managed to surpass the electricity produced by nuclear sources in Germany. PV power added up to 5.183TWh whilst nuclear power churned out 5.181TWh. Nuclear juggernauts and solar naysayers might reckon the gap small, but it is a victory for solar power nevertheless.

    “Naturally it is a result of the high irradiation, plus the shut down of Grafenrheinfeld nuclear plant as well as the annual revisions at Grundremmingen-C, Isar II und Philippsburg-2,” Burger explained.’

  48. islandboy says:

    Also from PV Magazine, Elon Musk and company are at it again:

    Silevo, SolarCity hold topping off ceremony at Buffalo Gigafactory

    “SolarCity’s continued efforts to cast solar power as far and as wide across the U.S. as possible took another giant step forward yesterday as the company celebrated a topping off ceremony at its forthcoming 1 GW Gigafactory in Buffalo, New York state.

    The ceremony at Riverbend was attended by New York governor Andrew Cuomo, who spoke of how SolarCity’s endeavor – the project will create nearly 3,000 jobs in Western New York and a total of around 5,000 in the state – had helped transform the local economy, as well as the region’s outlook on future industry and energy sources….[snip]

    The next stage of the construction process will focus on the interior fit-out, including the installation of all tooling and machinery. The fab is expected to begin commercial operation in the first quarter of 2016 and will be the largest facility of its kind in the western hemisphere.”

    These guys do not play around, adding 1 GW of PV module manufacturing capacity with just one plant in about 18 months! Right now they are very loose cannons in some peoples view and are set to upset quite a few apple carts.

    • MarbleZeppelin says:

      It’s about time. Buffalo used to be a big industrial center. With all that snow and lake effect, it is ironic that PV is going to be manufactured there.

      • HVACman says:

        Solar insolation isn’t a big factor at a PV factory. One of biggest cost factors for PV production is electricity if they are making their own semi-conductor cells. They have huge electric ovens to run to melt and refine the crystals and the ovens run 24/7. I bet Buffalo has access to a lot of inexpensive hydroelectric power from Niagara that they can use to deal out low industrial electric rates to big customers. PV manufacturers may make solar power panels, but they couldn’t afford to stay in business if they actually had to rely upon their own panels to run their factories. They really depend on cheap, cheap power to remain competitive. One reason so many are made in China, where they have cheap hydro and coal-power.

  49. Ronald Walter says:

    Dinosaur hunting in Mongolia circa 1920’s:

    https://m.youtube.com/watch?v=HHrSKhIx2EM

    Interesting video, only six minutes or so. Worth watching.

    BNSF week 30 has a decrease of about 1500 petroleum cars compared to week 30 of 2014.

    9863 petroleum cars hauled in 2015 week 30, 11,314 hauled in 2014, week 30.

    http://www.bnsf.com/about-bnsf/financial-information/weekly-carload-reports/

    1500 x 650 = 975,000 fewer barrels in one week.

    The totals should show a decrease of about four million barrels short of the 35 million for the Bakken in May 2015.

    My guess is the total production for all of North Dakota will be somewhere near 31 million barrels for July of 2015. Just a wild ass guess, nothing more, based on BNSF’s weekly reports.

    • Enno says:

      Pipeline capacity has, and continues to grow in ND. Operators prefer pipelines over rail, due to much lower costs. With growth having stalled in ND, it would only be logical to see a continuously declining usage of rail. Therefore, the BNSF reports are interesting, but don’t tell the whole story, and might lead to erroneous conclusions. Low prices in July might have caused operators to start choking wells again, but it would highly surprise me if the output of ND would already drop below 1.1 mbopd so quickly.

      • Ronald Walter says:

        A hundred petroleum cars pulled by a locomotive is hauling 65 thousand barrels to the refinery and it is getting there fast.

        http://www.upi.com/Business_News/Energy-Resources/2014/07/21/Delta-sources-Bakken-crude-for-Pa-refinery/5281405951764/

        The news release is from 2014. The agreement is for five years, 65 thousand bpd.

        I read that increased rail use to haul oil is due to the glut, too much oil on hand. You have to operate, there’s oil flowing, it will sell like ice cream in 100 degree heat.

        Just don’t want to sell as much at 30 unless you have a darn good well and they’re there. Oil is the Mother’s Milk of civilization, we are but infants needing mother’s milk all of the time, without it, you die. I digress.

        If you were selling oil when it was at a hunert dollars, then end up selling it for 30 right at the pump, you might want to cutback some.

        I see a decrease coming for the June report when it is reported. Haven’t seen anything yet, they must be afraid to show the numbers. 😂

  50. Jeffrey J. Brown says:

    A new option for urban commuting, a couple of WSJ articles:

    No Longer for Punks, Skateboards Cater to Yuppie Commuters
    Ever Heard of a Boosted Board? Contraptions Aimed at Professionals Who Don’t Want to Drive to Work

    http://www.wsj.com/articles/no-longer-for-punks-skateboards-cater-to-yuppie-commuters-1401847791

    Electric Skateboards: A Totally Rad Ride
    Self-propelled and easy to master, the latest electric skateboards are a radical way to kick up your ride. Here, we review: the Boosted Single, Evolve Carbon All Terrain and Yuneec E-Go.

    http://www.wsj.com/articles/electric-skateboards-a-totally-rad-ride-1438887877

    • Greenbub says:

      Nice read.

    • Enno Peters says:

      Thanks for sharing, I found it very insightful.

      I think another important factor behind the large fall of oil in dollar terms has been the strengthening of the dollar over the last year. In many other currencies the oil price collapse has been less severe, though still significant. The US could well be starting to suffer from the Dutch Disease, making oil production less economical than elsewhere.

      • Ves says:

        I don’t know Enno about that article. It’s just superficial analysis in few areas. Look at this:

        “That shale oil producers have this operational flexibility to modulate production in response to changing prices does not make them the highest cost or marginal producer over the full cycle. It means rather that they act as an additional level of oil storage capacity. By not producing oil today they are effectively storing oil underground for tomorrow. With Saudi Arabia no longer compensating for temporary imbalances in the market, changes in oil inventories have now become the balancing mechanism. ”

        You cannot just call rig and frac crew on standby like Dominos for pizza 🙂 What about debt and interest that is ticking all the time? Do they call banks and say “Hey oil is at below $65 so we will skip the next payments”
        How about paying the access to the lease and road to the landowners? You have to pay for use of lease and access road regardless if you drill or not. Who absorbs these costs? Price changes are very fast and physical adjustment of the business takes way longer to economically follow the price.

        • Enno Peters says:

          Ves, most wells still pay for all operational costs. According to Baker Hughes, the US rig count dropped by more than 50% in the 5 months from last December (1882 > 889). I call that rather flexible 🙂 I do agree that ramping up again is likely to be on much slower pace, as access to cash (and other resources) will be much more constrained in the future.

          • Ves says:

            Well, yes going downhill is always more flexible than going uphill 🙂 So I am not surprised about that rig drop. But skilled staff is not sitting around so the oil companies can play trading game with the rigs depending how oil price is moving as that article is insinuating. I personally know rig staff that is now back to farming, others are doing other staff, moving away. They won’t be coming back after this debacle.

  51. Stephen says:

    Anadarko, Continental, Hess, and others are reporting rising production. I think that production has been more resilient than any of us expected.

    • Enno Peters says:

      Continental Resources is predicting less production in Q3 and Q4. In ND, they also have been completing >50% more wells than were spudded from Jan to May this year (about 103 oil wells started vs 65 spudded). So far I don’t see any surprises in new well performance, and changes in this “fracklog” can explain the resilience in oil production so far.

  52. Watcher says:

    $43.xx

  53. AlexS says:

    There was a discussion about CO2 EOR project in Saudi Arabia. Here is a new information:

    Saudi Aramco launches carbon capture pilot project

    08/06/2015
    http://www.ogj.com/articles/2015/08/saudi-aramco-launches-carbon-capture-pilot-project.html

    Saudi Aramco reported the launch of a carbon capture and storage pilot project in an attempt to enhance oil recovery while reducing carbon dioxide emissions. Aramco hopes the project, which it is calling the largest of its kind in the Middle East, will demonstrate enhanced oil recovery beyond the more common method of water flooding.
    The pilot project, which will be led by the company’s EXPEC-Advanced Research Center, entails the capture of 40 MMscfd of carbon dioxide at Hawiyah gas recovery plant to be piped 85 km to Uthmaniyah field where it will be injected into flooded oil reservoirs under high pressure for EOR.
    The pilot project is the latest in the company’s efforts to inject 800,000 tons/year of CO2 into flooded oil reservoirs. A monitoring system is in place to measure how much CO2 remains sequestered underground.
    Over the next 3-5 years, the project will be studied by field engineers and researchers, and lessons learned from this project will be used at facilities and fields around the kingdom, Aramco said.

  54. Impatient Voter says:

    No sustainability, environmental, or any other such discussion topics at the first Republican ‘debates’ (circuses). Seventeen candidates, and nothing intelligent said about any topic of any importance to me.

  55. Kellyb says:

    Shallowsand,

    Interesting your comments about OAS. Before seeing your post I had done my own calculations on OAS exactly the same way you did. I’ve done that calculation for a good 10+ companies so far and that capex for shale players to keep production constant absolutely kills them. Most of them I’ve found are in the same general neighborhood as OAS. The lowest cost shale oil producer I’ve found is AXAS, but they’re very small. They can get by at ~$60. Most are up in the 70-80 range. A few are over $100 (PVA, GDP).

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