US Oil Production by State

The EIA’s Petroleum Supply Monthly is just out with production numbers, through August, for each state and offshore territories. The EIA’s Monthly Energy Review is also out. This publication has US production data through September but not for individual states.

US Total C+C

The Petroleum Supply Monthly June 15 production numbers were revised down considerably this month. And you can see they had a drop of 169,000 bpd in September. I think there will likely be an even larger drop in October. At any rate US production is finally starting to drop significantly.

Gulf of Mexico

The Gulf of Mexico is the one place that is bucking the trend. The GOM was up 146,000 bpd in July and up another 63,000 bpd in August for a total of 209,000 bpd for the two months.
Texas

Texas was down for the fifth straight month.

North Dakota

North Dakota has been moving sideways but is now below their September 2014 level.

Alaska

Alaska is slightly above their August 2014 level but their average annual production will drop by between 25 and 50 thousand bpd this year.

Oklahoma

Oklahoma has dropped 59,000 bpd since March.

New Mexico

New Mexico which holds part of the Permian recovered slightly in August.

Montana

Montana which, holds part of the Bakken, has been in a downward trend since March.

Wyoming

Wyoming had been bucking the trend but now looks like it has succumbed to low oil prices also.

The Baker Hughes Rig Count

Baker Hughes

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325 Responses to US Oil Production by State

  1. Longtimber says:

    Cold winter in Alaska? Meanwhile on the other side of the pond, Mr Yergin thinks Frackers may invade the Old World.
    “Europe has shale gas potential, but political obstacles prevent its development, he said. IHS research indicates that by the mid- 2030s Germany could be getting 35 of its natural gas from domestic shale gas produced from non-sensitive areas, equivalent to current import levels from Norway or Russia.”

    YERGIN: ENERGY HAS ENTERED ‘NEW ERA OF SHALE’ WITH BIG BENEFITS FOR PETROCHEMICALS

    http://www.ogfj.com/articles/2015/10/yergin-energy-has-entered-new-era-of-shale-with-big-benefits-for-petrochemicals.html

    • MarbleZeppelin says:

      I found this one from the University of Cambridge: https://www.cam.ac.uk/research/news/new-design-points-a-path-to-the-ultimate-battery

      Another couple of steps toward very high density batteries. Graphene seems to be the new wonder material lately. Even if the practical limits are only 5X -6X current lithium ion battery charge density, that would make EV’s lighter and have ranges of 500 to 1000 miles per charge. That should be adequate for almost everyone. Maybe we will see work vans and pickup trucks being battery powered.

      • Jonathan Madden says:

        There appears to be a pile of work yet to do on this one. It’s a Lithium-Oxygen battery that at present needs pure Oxygen, not air, to work. Which also means that it generates Oxygen gas during recharging.
        These high energy-density batteries, even if having 90%+ charge/discharge efficiency, will generate heat through their internal resistance. Fast charging, say at 250kW, will significantly heat up a low thermal capacity (specific heat) material such as Lithium/Graphene if as little as 5% of charging energy is dissipated into the battery as heat. The less the weight of the battery vs. its electrical energy, the hotter it will tend to get.

        • MarbleZeppelin says:

          If we have some hydrogen technology developing, there will be plenty of oxygen available, if they can’t find a way to make the battery run on air.
          An internal cooling system could be integrated into the battery and could also be used to heat the battery during cold weather.
          I see the battery switching industry as an alternative to owning a battery. Although with the charge densities involved it probably would not be necessary to fast charge very often.

          • Jonathan Madden says:

            MZ,
            I have to say that my scepticism index rises a notch when I hear ‘battery switching’. One has to assume quite a degree of cross-industry standardisation as non ff cars are introduced, to avoid clogging the re-energising system up with a myriad of types of charging plugs, liquid/compressed H2 transfer valves for ‘fool’ celled cars, etc. Adding a range of exchangeable battery shapes and sizes into the mix stretches my imagination a tad. But you do have a good point.

            • Nick G says:

              The obvious place for battery-swapping is commercial fleets: much smaller number of vehicles, standardized/short routes, much higher vehicle utilization and fuel consumption to pay back the investment.

            • MarbleZeppelin says:

              Not sure how it will all work yet, but I think you are making it too complicated. Think about a truck stop. Cars go one place, trucks another. It’s not a one size fits all system.
              Anyway, an electric car with a 400 to 600 mile range would fill all my needs without ever switching the battery out until it fails.

              • Jonathan Madden says:

                I misunderstood. End of Life exchange would be no problem; but more so after each discharge, as per Aluminium/air batteries. Thanks.

              • wimbi says:

                I have always liked the trailer battery. Any one fits any car. Only thing standard needed is the battery hitch.

                Of course, people can’t back up a trailer. But a trailer can back itself up just fine, no driver brain required.

                Trailer could even rush out and snap itself on, while making endearing little puppy yelps.

                The battery company owns the trailer, and so the battery can be updated any time.

                Fast, easy, allows any range. Needs lotsa swap stations? Sure, just like today needs lotsa gas stations.

                • MarbleZeppelin says:

                  Wimbi, apparently Tesla can exchange batteries in 90 seconds on the S model.

                  • wimbi says:

                    Right, I saw Elon do it on that video. But then- they have all the standardization problems, and all the rest of that long weary list of swap woes already trotted out here.

                    Once again I see a perfectly sensible process drowned in specious quibbles from the unthinking.

                    Anyhow, even at this primitive first evolutionary stage, my EV is just fine for our purpose, and my wife is slowly convincing her women’s groups that it is not a mere toy, but instead is a “real car”.

                    And mighty cheap to operate.

                • Jonathan Madden says:

                  Talking of trailers, Wimbi, I have a speculative, and slightly absurd, design on my virtual drawing board which I name the Heat Recovery Trailer.

                  The idea is to have a trailer with an insulated tank of, say, 500 litres capacity, containing Sodium Acetate Trihydrate. This is the stuff hand warmers contain, the plastic pouches containing a viscous liquid that gives off heat when crystallisation is initiated by application of a small shock. It’s cheap, and you’d only need one fill of the stuff. Resetting, and melting the NaAc, is done by heating it up again.

                  Anyway, put a heat exchanger in the trailer and then couple it to your ff car’s cooling system before you set off. A couple of hours or so driving later, and the NaAc solution is up to 100C+. On arrival back home you couple it into your central heating primary circuit and Bob’s your Uncle – heating until the next day at little marginal cost. The NaAc of course not only has high thermal capacity by virtue of being water-based, but also emits considerable heat of crystallisation at about 50C, the temp you want for your radiators.

                  A downside is having to make the central heating primary liquid the same as the car’s coolant, and avoiding leaks during coupling/uncoupling. An average car engine would probably produce some 15-20kWh of heat in two hours’ driving and there would be some loss of efficiency for the car itself.

                  • MarbleZeppelin says:

                    How much would that trailer weigh?

                  • Jonathan Madden says:

                    MZ,
                    About 1,000kg, all in, for 500L liquid capacity. Density of NaAc.3H2O is 1.45. One could make it smaller – 200L would probably suffice for most purposes. Specific heat is 2.3; so assuming a useful temp range of 100C to 40C gives 60×2.3x200k=27MJ. I am actually not sure that the value of 2.3 for specific heat includes the latent heat of crystallisation – the total heat content may be considerably higher than 27MJ for my example. It’s quite a useful amount of stored energy.

                  • wimbi says:

                    Bygod, a man after my own heart! this could be the thing for my hot mamma- the sack of heat I toss into the Leaf for wife’s short trips to town so she does not have to use the battery.

                    I have a wood stove in the shop that puts out way more heat than I need as I do my pyrolyzer experiments.

                    But the awful truth is that she says her warm coat is more than enough and she does not desire to be in a car with any hot mommas.

                    Curses! Foiled again.

                  • Jonathan Madden says:

                    The one advantage the inefficiency of an ff car has over electric, Wimbi – thinner socks in winter.
                    At risk of sending people to sleep, I feel obliged to correct the drivel in my thermal arithmetic above. It should read something like this:
                    For 200L capacity. The measurement of total calorific capacity of NaAc solution is well described in:
                    http://vnuf.cz/papers/11_25_Vicha.pdf
                    and comes out as 188kJ/kg, during cooling from 52C to 25C. This includes both cooling of the liquid phase and also crystallisation of the super-saturated cooled liquid.
                    200L would therefore give ((1.45*200*188) + (200*48*1.45*4.2))kJ = 113MJ for total heat emitted in cooling from 100C to 25C. I suspect the second term is a little too high, so somewhere in the 100MJ region seems reasonable. It’s a surprising amount of heat.

            • notanoilman says:

              Amazingly enough, we have managed to standardise the fuel nozzle system for filling fossil fuel vehicles at petrol/gas stations!!!

              NAOM

    • Carpetbagger says:

      The researches say it may take up to 10 years for their battery technology to be ramped up to mass production. A lot can happen in 10 years…

      • MarbleZeppelin says:

        Yes, the battery could have been practical for five years by then. The money to be made from ultra-dense batteries is phenomenal. Money means research support. It will become a race.

        • Old Farmer Mac says:

          I have been a big fan of tech news since the dark ages when you got it almost exclusively from magazines such as Popular Science or Popular Mechanics etc.

          After all this time, I feel qualified to rate myself as an EXPERT OBSERVER of tech news. LOL.

          For every hundred articles you read about some new tech that is going to change the world, ONE of them will make it to the market, and out of ten that make it to market, maybe one of them will turn out to be something really important.

          The odds are in both a figurative and literal sense a thousand to one against any ONE of the hoped for next thousand NEW technologies working out commercially within a decade.

          This does NOT mean there won’t be hot new technologies, with a few of them being game changers.

          You can’t predict the winners.

          • MarbleZeppelin says:

            Old Farmer, I worked in R&D for decades, in an area that allowed me to interact with most of the research projects, as well as the pilot plant and production end. From what I saw your estimate is way off as far as success of research projects, probably by two orders of magnitude.
            Timing to product output is much faster, once a business starts research it may have products ready in just a couple of years. Slower and the competition gets there first.
            Much of new technology is not even evident to the public. How much does the public now about block copolymerization or graft copolymers and smart polymers? Yet they use them every day.

            • wimbi says:

              During my R&D phase of life, I thought up lots of patents, some of which went on to fame and glory in the military, leaving but a pittance to my little company which, after the prototype, was left to shiver in the dark.

              But some of the most promising, while undeniably proven to perform, were never picked up by anybody, for the usual reasons.

              “Not the kinda thing we do”
              “We are making money now, no need to change our product.”
              ” Cute, but really don’t understand it. Could be some sort of trick.”
              “Only a liberal would suggest that thing.”
              “Military version works, sure, but costs way too much.”

              I am sure there are people right now raking thru the piles of dead patents for the many that could have flown if let loose. Some of my best ones have been in that pile for many decades.

          • Doug Leighton says:

            Hi Mac,

            LOL I expect you’re right. Apparently there are about one million patents issued worldwide per year and it seems very unlikely that more than one percent yield useful (or profitable) products; someone probably tracks this kink of stuff. Of course even one percent of a million compounded over a few decades comes to a lot of new stuff — like anti-cancer drugs.

            • MarbleZeppelin says:

              I looked it up and it appears as if 97 to 98% of patents never make it to market. Of course many of those may be of the better mousetrap, can opener and widget type. Sometimes several patented items or compounds are put together to make another product, so I do not know if the components are counted in that list.
              I know that a serious business will not put up with that kind of wasted time and money in R&D. Most poor or unworkable ideas in the business arena are weeded out before the patent process occurs and they already know the market and have a marketing and sales team ready to promote the product.

              • Boomer II says:

                Lots of people patent ideas that will never get past the patent stage. People file patents for new ponytail holders, for new lunch bags, and so on.

                So don’t gauge technology progress by the number of patents filed.

                The number of patents filed, and the number of technology advances tried, but failed aren’t really the same thing.

                • Old Farmer Mac says:

                  Bottom line my thinking is that the large majority of new technology brought to market consists of marginal improvements to existing products or services.

                  Game changers are rare. And a technology that in and of itself is a genuine breakthrough may not be very important.

                  The famous “better mouse trap ” would not really matter very much if it were LITERALLY a better mouse trap. Mice are not that important, not in the modern world, and there are other methods of controlling them.

                  Now if that lithium air battery works out, THAT would be a game changer sure enough. But then we would be hearing about all sorts of incremental improvements to the new battery for the next couple of decades after that- and each and every one of them would be breathlessly described as a breakthrough in short articles in the msm.

                  • MarbleZeppelin says:

                    At this point Farmer, it appears as if you have wandered far beyond your information and are just talking. I mean that in as kind a way as possible, I do really think you generally have great posts and very well thought out ideas.
                    However, this is wandering into semantics and width of definition of terms. So cohesive discussion is very limited by language at this point.

                    How about a given type of solar PV gaining 10 percent efficiency. Is that a major advance? A large amount of research effort and probably some ground breaking knowledge would go into that. Plus it gives the end user a free year of power for every ten years of use. Is that major or minor? Is that a better mousetrap (catching 10 percent more mice)? Or do we have to use completely different materials or combinations of materials involving broad band capture and increases above 50% in capability?
                    I don’t know how to accurately define some of the terms used here.

                    Not long ago I read a post from a rather well known blogger on physics. I generally think he is very good at studying and disseminating information, and only occasionally wanders beyond his expertise and information.
                    However he did wander far on this subject and was very wrong. He took the tact that no new major discoveries in science had been made lately.
                    Even the best sometimes wander past their knowledge and abilities.

          • Nick G says:

            Mac,

            I think you just need to clarify what you’re saying: there’s a big difference between something being viable, and it’s being the winner in a competitive contest.

            Dozens of battery chemistries and many dozens of technical variations are being explored, but only a few will win out eventually.

            VHS vs Beta…

            • old Farmer Mac says:

              I was mostly just trying to point out that the media constantly hypes the crap out of every little bit of technical news and that the odds of any one such piece of research leading to a breakthrough new technology are very slim.

              No doubt adding ten percent to the performance of solar cells involves a great deal of cutting edge work by physicists, materials engineers, manufacturing engineers, etc, and from THEIR pov, they justifiably see that ten percent as HUGE.

              But to somebody like me, a person outside the industry, that ten percent is just another incremental improvement.

      • Aws. says:

        How long would it have taken Shell to bring Arctic oil into production if they hadn’t come up dry this summer… they were talking late 2020 for production. A super dense battery in ten years would be a whole lot sooner than Arctic oil.

        • hightrekker23 says:

          Aside from the numerous obstacles to overcome, it needs to scale.
          A big order.
          We really need to get beyond 1990’s Japaneses technology.
          Lets hope this pans out.

          • Longtimber says:

            1990’s Battery Tech? 1906 Edison patent. ( For Stationary app ) http://ironedison.com/iron-edison-usa-series-nickel-iron-nife-battery
            10,000+ cycles. Photons abundant/PV Power affordable. efficiency not paramount. Battery for your great great grandchildren.

            • hightrekker23 says:

              Come now, the lithium ion battery invented by the Japanese in the early 1990’s, is still the highpoint for anything that scales.

              It has been quite a while.

              • Longtimber says:

                Stationary is different than Traction/EV’s. But as pointed out, scaling is critical, Exide shut down the last NiFe Facility in the US in the 70’s. A clear threat to the multi-billion disposable battery business. We need MASS PRODUCED cell’s that don’t cannibalize themselves each cycle . My Grandfather’s 70’s Oil Crisis boat ” The Freedom” had redundant 32V NiFe banks. I have learned to deploy several decades old NiFe Railroad switching banks. Some customers LOVE alkaline banks. IMO, It’s stupid that such resilient solutions are replaced with Neurotoxin loaded disposable crap like Lead Acid in stationary applications. Most Lead Acid cells have less than a 6 month calendar life at temperatures > 33C. That being said, Lithium cell tech has the advantage of the most reactive metal will likely mass produced in such Giga quantities that it will win for all solid battery applications. It is happening.

                • Longtimber says:

                  Latest Generation LG ( Leaf-BMW) Pak Stack on the Bench for Bottom Balancing. Each pancake is twin cell ~.5 kWh each. ( 66Ah @ 7.4v ). 3kWh fits in a long briefcase. Application is 48V NEVs/Golf Carts. Cell cost in Low Quantity is around $300 / kWh. More economical than Lead Acid. Lots of Know How to do this right on a smaller EV scale.

                  • hightrekker23 says:

                    Big, bulky, and not that efficient.
                    That is why almost everyone went with lithium ion—-

            • old Farmer Mac says:

              IF nickel iron battery production were to be scaled up sufficiently to justify building new state of the art manufacturing facilities and take advantage of economies of scale, HOW MUCH would nickel iron batteries cost?

              Any rough estimates appreciated. There is certainly no shortage of iron or other materials needed, everything except the nickel itself would be pretty cheap. Nickel is not that expensive per kilo, but if a new battery industry started consuming it by the ton, it might GET expensive.

              I totally agree about the efficiency not being that big a deal, before too long there is apt to be plenty of pv juice in need of a “home ” available during the sunny hours to charge up such batteries. I have read about some that are over fifty years old that are still in great condition.

              • MarbleZeppelin says:

                The Edison type cell has an estimated 25 year life and can handle 80 percent discharge levels without harm. It is about four times more effective than a lead acid cell. Right now they cost about $800 per kwh. That should fall to about half if large scale production occurs.
                If you use 6 kwh per day average, it would cost about $3000 per storage day. If you are looking for just overnight storage, then it would be a much lower cost. so potentially one could get away with about $1000 worth of batteries (if the price falls by 50%). I would overbuild it by 50%, but that is just me.

  2. Dean says:

    My corrected data for Texas (published a week ago) together with the latest EIA for Texas.

    • AlexS says:

      Thanks Dean

      Below is the chart with the EIA newly released data for Texas vs. TRRC vs. Drillinginfo.
      Drillinginfo statistics for June and July are apparently incomplete. Previous DI numbers are close to the EIA. The EIA’s numbers are little changed vs. previous month

      • Amatoori says:

        Thx Alex,

        Quit significant difference. Whats your opinion, is it the EIA number lagging and estimated and State data more accurate and up to date? There is 600.000 difference / 17%. Someone is very wrong.

        • AlexS says:

          As we have discussed many times, Texas Railroad Commision numbers are incomplete and are gradually revised thereafter. Even 18-month old TRRC numbers are too low.

      • Dean says:

        Thanks for the info.
        Dean

  3. shallow sand says:

    Ron. Thanks for the post!

    Some interesting things, to me anyway.

    After reading several company earnings releases and conference calls, it appears that all want to develop US shale over anything else they own. Unless foreign companies pick up the slack, it appears US majors’ lack of foreign investment might result in some steep declines.

    Second interesting tidbit. Read a Seeking Alpha article about ConocoPhillips today that indicated they lost $3 for every BOE they produced company wide on a GAAP basis, with the US lower 48 incurring the highest BOE losses at $9. These figures were for the third quarter, 2015.

    Finally, read that Whiting is in process of selling its water disposal infrastructure. I touched on this earlier. I was unaware this is a common industry practice. To me, selling these assets at this time is a sign of desperation. IMO this permanently devalues the producing assets with an unnecesaary expense burden. If anyone has some data on how much of this infrastructure has been sold off by the shale companies, let me know. Likewise, as I am not familiar with this practice, and especially if you think I am off base, please chime in. I can’t imagine us ever wanting to do such a thing. I note both clueless and John S posted this is quite common.

    To me, selling these assets is like selling off the plumbing, wiring, furnace and air conditioner in your house and having to rent them forever.

    • gwalke says:

      Beyond the infrastructure sale, Whiting’s 3Q2015 results seemed like a real disaster to me, though many analysts thought it was a good quarter.

      The three things that stood out to me were:

      They announced 38% production increase – so they told investors that in response to prices falling 60%, they produced more oil (?!);

      They announced that they have increased the sand per frack job, and intend to increase it further – telling investors that they are risking the long-term recovery factors of their wells for short-term production rate gains;

      They announced they will update their EUR curves on the basis of the IP of these new “enhanced completions”, and even used 24hr IP to discuss how amazing their 7 million lb of sand fracks are – essentially telling investors that they are juicing their IP in order to hoodwink them about well profitability.

      • Greenbub says:

        gwalke, I would also like to see an explanation for your three things.

        • shallow sand says:

          For a historical perspective, as of 9/30/15, Whiting Petroleum produced 165K BOEPD average (80% oil), and had $5.25 billion of long term debt. D,D & A runs over $20 per BOE.

          As of 12/31/2005, Whiting Petroleum produced 41K BOEPD (76% oil), and had long term debt of $875 million. D,D &A ran $8 per BOE.

          So, during at time when WTI was north of $80 per barrel, Whiting increased production fourfold and long term debt six fold. They have not added debt in 2015, CAPEX is being funded by asset sales and an equity raise in early 2015.

          Whiting has the best acreage in the Bakken, except for maybe EOG and QEP. Production at year end will fall to 147K BOEPD due to decreased CAPEX. They hope to hold there by spending over $1 billion less in CAPEX.

          Not a bad company other than an ill timed purchase, IMO. Just need higher oil prices like all US producers.

          • gwalke says:

            Nothing really wrong with the geology they own, but oversanding wells to make IP look good to Wall Street is very likely going to damage long-term recovery.

  4. R Walter says:

    Peak Words will never happen. har

    We are in a new age of wind, so!ar, batteries, nuclear, hydro, what have you. The best news available, at the moment.

    The oil age is history, coal is ancient history. Just the way things are, might as well give up and give in.

    Oil? What oil? We don’t need no steeeenking oil. Coal? What coal? We don’t need no stinkin’ coal!

    Until you need some, then everything changes. ☺

    Another short history lesson:

    https://www.lloyds.com/lloyds/about-us/history/corporate-history/the-lutine-bell

    The Lutine Bell, weighing 106 pounds and measuring 18 inches in diameter, is synonymous with the name of Lloyd’s. Traditionally it has been rung to herald important announcements – one stroke for bad news and two for good.

    The bell was carried on board the French frigate La Lutine (the sprite) which surrendered to the British at Toulon in 1793. Six years later as HMS Lutine and carrying a cargo of gold and silver bullion, she sank off the Dutch coast. The cargo, valued then at around £1 million, was insured by Lloyd’s underwriters who paid the claim in full.

    There were numerous salvage attempts and in 1859 the wreck yielded its most important treasure – the ship’s bell. It was hung in Lloyd’s Underwriting Room at the Royal Exchange and was rung when news of overdue ships arrived.

    Whenever a vessel became overdue, underwriters would ask a specialist broker to reinsure some of their liability based on the possibility of the ship becoming a total loss. When reliable information became available the ringing of the bell ensured that everyone with an interest in the risk became aware of the news simultaneously. The bell has hung in four successive Underwriting Rooms. In the Royal Exchange 1890s-1928, Leadenhall Street 1928-1958, Lime Street 1958-1986; and in the present Lloyd’s building since 1986.

    The bell is no longer rung as the result of a vessel becoming “overdue”. Today, the ringing of the Lutine bell is generally limited to ceremonial occasions, although in rare instances exceptions are made.

    https://www.lloyds.com/lloyds/about-us/history/corporate-history/the-lutine-bell

    Dr. Pavlov would be stumped.

    Let us make one special exception!

    Ring it once for oil, once for coal, makes it two times and that’s good news! Bad news is good news!

    You better believe it. It’s true!

    Coal and oil are the bread and butter. Solar jelly and wind peanut butter are OK, but they’re not as good without the bread. Might replace the butter, but not quite, nice try, not even close.

    The charts and graphs tell the real story.

    Once the oil age is over, it’s over. When the HMS Oil sinks, the life boats won’t be there.

    Coal will hang in there, rise to the occasion, the knight in shining armor arriving just in time to save the day. Back to the good old days when life was a dream, a rowboat moving gently down the stream.

    Back to sails, just to make it all happen all over again.

    Sorry for the maritime digression. Water might replace oil for the long haul. Oceans of water, not a problem.

    Oil is. Coal, not so much. Solar does all of the work, the sun better be there tomorrow or there will be trouble in River City.

    Gettin’ a little windy, I’ll stop. One last thing: Posole. It is killer.

    • sunnnv says:

      Hah! had to look up “posole” to see I already knew it as “pozole”.

      And until I read the wiki article, I didn’t get the “killer” reference either.
      https://en.wikipedia.org/wiki/Pozole#Ritual_significance

      hmmm, “tastes like pork…”
      Well, that’s one way to deal with overpopulation.

    • Glenn Stehle says:

      “Bad news is good news!”

      And good news is bad news.

      Prometheus stold fire from Zeus while the god was resting with Ganymedes, and wisdom in arts from Hephaestus and Athena.

      http://www.maicar.com/GML/Prometheus1.html

      • Glenn Stehle says:

        Prometheus then gave fire, along with wisdom in arts, to humanity so that men could exercise those crafts.

        Zeus, however, having been robbed, was not happy.

        “Prometheus, you are glad that you have outwitted me and stolen fire … but I will give men as the price for fire an evil thing in which they may all be glad of heart while they embrace their own destruction,” Zeus told Prometheus.

        Fearing the consequences of his own cleverness, Prometheus told his brother Epimetheus never to take a gift from Zeus, but Epimetheus, a man with no foresight, accepted Zeus’ gift (Pandora), and he only later understood what had happened. For until that time men lived free from ills, toil and sicknesses, but Pandora opened a jar containing all kinds of evils, and these flew out, afflicting mankind ever since. Only Hope remained there.

        Prometheus among men came to be called “benefactor,” a curious title considering that humans rapidly made a habit of employing Prometheus’s gifts to cook and burn one another in many ways.

        • “only hope remained there”.

          As J.M. Greer recently pointed out, hope was not left as a blessing, but as the final curse.

          http://thearchdruidreport.blogspot.com/2013/05/the-shape-of-time.html

          QUOTE: Hope is not a virtue in such a world. Whether or not Hesiod invented the story of Pandora’s box, he’s the source from which every later version derives, but there’s a detail you’ll find in modern versions of the tale that is not in his account. The usual version these days is that when all the plagues and curses in the box flew out to afflict humanity, Hope remained behind as a kind of consolation prize. In Hesiod, it’s not a consolation prize, it’s the nastiest of the curses that Zeus put in the box, the enticing delusion that things will get better when they won’t. Early Greek poets liked to use fixed adjective-noun pairs—the rosy-fingered dawn, the wine-dark sea, and so on; when the word “hope” appears in ancient Greek poetry, the adjective normally assigned to it was “blind.”

          That’s the world in which Hesiod lived. The point that too many of his modern interpreters don’t grasp is that his attitude, and the practical implications of that attitude which filled the verses of Works and Days—distrust the new, rely on traditional wisdom, aim for modest goals, keep a year’s supply of grain on hand so you don’t starve—were better suited to his world than, for example, our faith in the limitless potential of the future would have been. In an impoverished tribal society scrabbling for survival amid the ruins of a far more complex culture and the long-term impacts of ecological collapse, accepting the reality of decline and the likelihood of further trouble to come was a better strategy than any of the alternatives; in the language of evolutionary ecology, it was adaptive. It’s unlikely to be an accident that visions of time like Hesiod’s are very common in the hard times that follow the collapse of major civilizations.

          • wimbi says:

            Goddam it Greer, you commit the sin warned against by Maimonides , equating impossible with unlikely.

            Hope is quite logically based on the intrinsic unpredictability of the future.

            You can perfectly well be cautious and plan carefully for worst case, but not forget possibility of less worst case.

            The real sin is to quit when you still could – tho highly unlikely- win.

            tons of examples in history.

          • Nick G says:

            distrust the new, rely on traditional wisdom, aim for modest goals

            That’s agricultural-poverty thinking. That’s the kind of thinking that we see in the Middle East, that imprisons women in the home and forces them to avoid education and have children.

            Any empire in an agricultural era was bound to collapse in poverty, because their actual underlying annual growth rate was about .001%: empires had to be organized theft to grow.

            • Caelan MacIntyre says:

              “…empires had to be organized theft to grow.” ~ Nick G

              It’s basically the same thing now, only orders of magnitude worse.

              “A low-energy policy allows for a wide choice of lifestyles and cultures. If, on the other hand, a society opts for high energy consumption, its social relations must be dictated by technocracy and will be equally degrading whether labeled capitalist or socialist.” ~ Ivan Illich

          • Fred Magyar says:

            Just because it is obvious that there is no hope for the continuation of BAU, it does not follow, that there is no hope for anything else either.

    • Glenn Stehle says:

      “Bad news is good news!” And good news is bad news.

      I see where China is facing a “collapse of the workforce and a demographic crisis.” So maybe mankind’s continued prosperity depends not only on producing vast quantities of coal, natural gas and oil, but of babies too?

      The coercive anti-natalist policies begun by Mao Zedong in the early 1970s – and pushed further by ideologues in thrall to the Club of Rome’s Malthusian doomsday theories, the “Limits of Growth” – have had powerful and perverse effects. They freed workers from family duties and created a “demographic dividend” of sorts that until recently flattered China’s growth rate. Now the process is kicking violently into reverse.

      The workforce began to decline in absolute terms in 2012 and has since been shrinking by 3m people a year.

      The International Monetary Fund says the reserve army of labour peaked five years ago and is going into “precipitous decline”, threatening a labour shortage of 140m by the early 2030s.

      This is happening just as life expectancy soars to 75.2 – with a target of 77 in 2020 – causing a drastic deterioration in the ratio of workers to pensioners, and unlike the demographic decline in Japan it will start to bite before the country is rich. The ratio was 6.6 in 2000. It is expected to be 2.37 in 2030 and 1.25 in 2060.

      The Chinese Academy of Social Sciences says the fertility rate has collapsed to 1.4 and is nearing the danger line of 1.3, the so-called “low fertility trap” where it becomes culturally self-perpetuating. This has already happened in Japan, Korea and Taiwan, and in some of China’s richest cities.

      http://www.telegraph.co.uk/finance/economics/11964280/It-is-already-too-late-to-scrap-Chinas-one-child-policy.html

      • Glenn Stehle says:

        But not to worry. China, just like River City, has a man with a plan. And he, just like Harold Hill, promises to keep the music playing:

        The plan is to lift China up the technology ladder towards “high-end” industries, moving to a “lean, clean and green” economy driven by consumer growth and services.

        But first China must break the stranglehold of the state-owned industrial behemoths, the patronage machine of the regional party bosses and a bottomless pit of wasted credit. A cull of these beasts was announced with much fanfare at the 3rd Plenum two years ago….

        It was never, in fact, executed.

        • Old Farmer Mac says:

          “The best laid schemes o’ Mice an’ Men. Gang aft agley,. An’ lea’e us nought but grief an’ pain,”

          Damned engineers and economists ought to be REQUIRED to read some poetry and history every morning before being allowed to have breakfast. LOL

          • R Walter says:

            Mice are smart. They don’t fall for traps anymore, but they love peanut butter. They do manage to eat the peanut butter without springing the trap.

            These days I don’t set the trap the first time around, I push some peanut butter onto the trap and they come along to enjoy the feast. Once they have eaten the peanut butter from the trap that is not set, they’re extremely vulnerable. The next time I set the trap to spring, then they’re completely fooled. They fall for it every time.

            My plans are superior to those of mice.

            • wimbi says:

              Or, you take a tin box, make a teeter totter top lid, smear some pbutter on the lid, put it in the mouse runway. Mouse has to check out the smell, teeters the lid, in for it.

              Next morning, take your box of mice out to the barn, call the cat(s), dump the mice, and watch an exciting miniature roman circus for a few seconds, mice playing the christians.

              Strap your pants legs.

          • HVACman says:

            OFM – I’m an engineer and I read your posts every morning. Sometimes you to wax poetic and you’ve been around long enough that many of your experiences are now considered ancient history. Does that count? Can I eat breakfast now?

            • old Farmer Mac says:

              Hi HVAC Guy,

              I DID put an LOL at the end of that comment. 😉

              A yellow smiley shows up better, I will use them exclusively from here on out.

              Seriously engineers and economists really should read some history and poetry, on a regular basis.

              Otherwise they might forget that (eventually) idiots are going inevitably wind up in control of whatever they create, and that there really is such a law as the law of unintended consequences, which is in my humble layman’s opinion potentially even MORE important than the basic laws of chemistry and physics etc.

              The laws of physics enable you to make EXCELLENT predictions about what you build.

              Unfortunately predicting the behavior of naked apes is not quite so straight forward.

            • old Farmer Mac says:

              Hi HVAC man,

              I did put an “LOL” at the end of that remark. Probably should have used a smiley, it would have shown up better. 😉

              Nobody should take ME very seriously, unless the topic has to do with agriculture.

              Otherwise, just assume I am only trying to draw out other forum members to see what they think about the various topics I bring up.

              I do deliberately try to provoke serious thought and get good conversations going.

              Perhaps I am taking credit where none is due, but I think by way of example the current discussion of grid vulnerability due to terrorism can be traced back to my remarks and questions concerning super solar flares a week or so ago and the possibility of the grid going down. I pointed out then that there is NO backup supply of large transformers etc.

      • KIC 8462852 says:

        We have not yet reached Peak Stupidity.

        The author of this article extolling the virtues of China’s recent abolition of the one-child policy is Peak Stupidity’s current spokesperson:

        http://news.nationalgeographic.com/2015/10/151030-china-one-child-policy-mei-fong/

        Ratio of working people to retired old people my ass.

        So the answer to this impending ‘labor shortage’ and ‘old folks support
        workers shortage’ is to produce even m ore people at a faster rate and thus drive the population ever higher?

        A sustainability Ponzi Scheme.

        China, put on your collective (~1.3 Billion) thinking caps and do better than this…learn to adapt to a falling population which will level off over a century or so, plus maybe a couple or three decades, at a more sustainable level. Gods, I thought these Commies were into long-term planning…looks like they caught a bad case of western short-term thinking flu.

        The End of Mor is coming… Nature bats last.

        Peace be with you,

        The Emissary.

        • Boomer II says:

          Yes, I had the same thought. Why do you need more young people to support old people? Why can’t you structure the economy so the burden and the resources don’t need to come from family members? Get more productive jobs to do more with less, and don’t require that the elderly only be supported by their own kids.

          • Nick G says:

            The simplest answer to better health and longer lives, which cause an excess of retirees:

            Postpone retirement age!!

            Let’s see: would I rather work 5 years longer, or die 5 years sooner…such a hard decision…

            • R Walter says:

              If you delay retirement for 20 years and retire at age 85, you will be working a job that a twenty year-old person in the workforce should be working, but will have to wait until they are forty to begin to make a living. You will be forcing a young person to live with no job most of their productive years. It is pure greed to continue to work until you are 85 and not retire at 65. 😀

              Would you want an 85 year-old fireman riding the fire truck to a five alarm fire or a forty year-old fireman drinking coffee while fighting the fire?

              It is greed that dominates delaying retirement, not living longer. har

              • Nick G says:

                I dunno. I look around, and somehow it looks like there’s plenty of things that need doing. More than enough to keep everyone busy, no matter what their age…

                • wimbi says:

                  Right, there’s an overwhelming load of things needing doing to get us off ff’s and drag the carbon back out of the air. Trouble is, of course, that the wherewithall to do it is instead blown on mindlessly searching for more carbon to put into the air.

                  Or, wasted on utter frivolity that just gives us a belly ache.

                  Wrong attitude, wimbi, dammit. Emphasize the fun and the benefits of the new life, everybody already knows about the current collective suicide pact and is rightly weary of hearing more about it.

    • Glenn Stehle says:

      R. Walter said:

      Posole. It is killer.

      But it’s mighty tasty.

      There’s a pozoleria a couple of blocks from my house.

      But one more time, it looks like maybe good is bad.

  5. Petro says:

    Thank you for the post/update, Ron!

    Be well,

    Petro

  6. sunnnv says:

    A few days old…

    Chinese Company Pays More Than $1B For Texas Oil Fields

    http://www.manufacturing.net/news/2015/10/chinese-company-pays-more-than-1b-for-texas-oil-fields
    or behind WSJ paywall
    http://www.wsj.com/articles/chinese-property-developer-snaps-up-texas-oil-fields-1445773022

    “A Chinese investment company is buying $1.3 billion in West Texas oil assets.

    Yantai Xinchao Industry Co. of Shanghai, The Wall Street Journal reports, will purchase fellow investment company Ningbo Dingliang Huitong Equity Investment Center. According to a regulatory filing, the deal includes the acquisition of oil properties in Howard and Borden counties from Tall City Exploration and Plymouth Petroleum.

    Those companies are owned by Boston-based private equity firms ArcLight Capital Partners and Denham Capital Management, respectively. …”

    Looks like Howard and Borden counties are up in the Permian area,
    so maybe a combination of conventional and light tight oil ?

    Tall City Exploration just sold some other land to Aubrey McClendon’s new company.
    http://www.mrt.com/top_stories/article_b246df70-7501-11e4-aa2a-0ff3b94e955c.html

    Though I wouldn’t believe every word in the Midland Reporter-Telegram,
    the following article quotes a guy saying “Historically, a frac job required a million tons of sand; now it’s 8 (million) or 12 million tons of sand,”
    Clearly confusing tons and pounds.

    http://www.mrt.com/business/oil/top_stories/article_00ce17fe-7e88-11e5-8ec1-0ffe920904bc.html

    • Glenn Stehle says:

      McClendon paid over $30,000 per acre for his acquisition in Reagan County, over $300,000 per producing bopd.

      How could one possibly justify that sort of land cost, other than on speculation that the price of oil will rebound soon?

      It seems the low oil prices have not cooled the speculative fever.

      • R Walter says:

        After Spindletop gushed its oil at 75,000 bpd, land around Beaumont sold for one millon dollars per acre. In Pennsylvania at Titusville, land sold for one million dollars per acre. After the boom became bust, it was at 25 cents per acre.

        30 grand today is small potatoes.

        “Though not a California well, the Spindletop gusher, which blew out on January 10, 1901 near Beaumont in East Texas, had a great impact on the California oil industry. Spindletop was not the first nor the biggest gusher – the Adams Canyon, Shamrock and Blue Goose gushers of California were earlier and the Lakeview gusher was bigger. However, Spindletop was certainly one of the great gushers of all time, and, most important, it heralded the birth of the Texas oil industry.”

        http://www.sjvgeology.org/history/gushers_world.html#spindletop

  7. VK says:

    Down the slippery slope of descent and ruin. For 80% of Americans life has been getting harder and harder.

    http://www.paulcraigroberts.org/2015/10/29/us-on-road-to-third-world-paul-craig-roberts/

    The evidence is everywhere. In September the US Bureau of the Census released its report on US household income by quintile. Every quintile, as well as the top 5%, has experienced a decline in real household income since their peaks. The bottom quintile (lower 20 percent) has had a 17.1% decline in real income from the 1999 peak (from $14,092 to $11,676). The 4th quintile has had a 10.8% fall in real income since 2000 (from $34,863 to $31,087). The middle quintile has had a 6.9% decline in real income since 2000 (from $58,058 to $54,041). The 2nd quintile has had a 2.8% fall in real income since 2007 (from $90,331 to $87,834). The top quintile has had a decline in real income since 2006 of 1.7% (from $197,466 to $194,053). The top 5% has experienced a 4.8% reduction in real income since 2006 (from $349,215 to $332,347). Only the top One Percent or less (mainly the 0.1%) has experienced growth in income and wealth.

    The Census Bureau uses official measures of inflation to arrive at real income. These measures are understated. If more accurate measures of inflation are used (such as those available from shadowstats.com), the declines in real household income are larger and have been declining for a longer period. Some measures show real median annual household income below levels of the late 1960s and early 1970s.

    • MarbleZeppelin says:

      And if one considers the declining quality of many of the products purchased, inflation would look sky high.

      • MarbleZeppelin says:

        Just for fun I weighed a couple of my old cotton tee shirts and two new ones. The change from old to new was minus 38%. Since the surface area is the approximately the same, the major change is in thickness.
        However, the feel of the tee-shirts is much different also, so I am not sure what other physical changes are occurring between old and new.
        What I am sure about is that the old T-shirts last at least 15 years (some are beyond 20) and the new ones are shot after one or two years. That is an amazing decline in product longevity. Cost is less, but the longevity is far less.
        The new underwear briefs (Fruit of the Loom) is showing even worse longevity problems.
        Has anyone come across a study of product quality change over time?

        • old Farmer Mac says:

          The quality of popular brands of work clothing has declined by half in my opinion over the last few years.

    • Glenn Stehle says:

      So one is left wondering what is causing the downward mobility of most Americans. Is it caused by increasingly less abundant natural resources, making it more costly to exploit those that remain? Or is it caused by one group of humans which is more aggressively exploiting another group?

      Most Americans seem to believe it’s the latter. The Economist reports that:

      The country faces a crisis of mutual resentment… Sharply-delineated voter blocs are alarmingly willing to believe that rival groups are up to no good or taking more than their fair share.
      http://www.economist.com/news/united-states/21591180-americas-political-divisions-have-deeper-social-consequences-why-americans-are-so-angry

      So Americans are mad as hell. And as they descend into an orgy of victimization, even rich white straight protestant men can be heard bellowing for victim status.

      Where will it all lead, and especially if the politicians are no longer able to bring the bacon home?

      I’m reading Christopher Simpson’s the Science of Coercion where he notes that Harold Lawswell, one of the seminal “scientific engineers of consent” in the United States, claimed that “successful social and political management often depends on proper coordination of propaganda with coercion, violent or non-violent; economic inducement (including bribery); diplomatic negotiation; and other techniques.”

      So beginning around the turn of the century, the scientific engineers of consent unleashed a Weltanschauungskrieg (“worldview war”) on an unsuspecting public, Simpson argues, in which they sought “a shift in which modern consumer culture displaced existing social forms.”

      “We have thought in terms of fighting dictatorships-by-force,” Donald Slesinger noted of the new strategy and tactics, “through the establishment of dictatorship-by-manipulation.”

      As Simpson goes on to explain, for the scientific engineers of consent

      the simple sale of products and services is not enough. Their commercial success in a mass market depends to an important degree on their ability to substitute their values and worldview for those previously held by their audience, typically through seduction and deflection of rival worldviews. Automobile marketers, for example, do not simply tout their products for their usefulness as transportation; they seek to convince their customers to define their personal goals, self-esteem, and values in terms of owning or using the product….

      Ordinary people are to be kept voiceless, Simpson concludes, “voiceless in all fields other than selection of commodities.”

      So now, after a century of hammering the values and worldview of a mass consumer culture into the peoples’ heads, how quickly can the public’s worldview be turned around?

      And if we remove “economic inducement” and “vocie in the selection of commodities” from the toolbox of the scientific engineers of consent, what’s left? Propaganda; coercion (violent or non-violent); diplomatic negotiation; and “other techniques”?

      • Fred Magyar says:

        “The conscious and intelligent manipulation of the I’m reading Christopher Simpson’s the Science of Coercion where he notes that Harold Lawswell, one of the seminal “scientific engineers of consent” in the United States, claimed that “successful social and political management often depends on proper coordination of propaganda with coercion, violent or non-violent; economic inducement (including bribery); diplomatic negotiation; and other techniques.”

        That sounds an awful lot like this crap!

        organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. …We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. …In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons…who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind.”
        ― Edward L. Bernays, Propaganda circa 1928

        There is no doubt that this way of thinking is the basis of the so called capitalist infinite growth paradigm. Which only has a chance of working up until the point that physical limits of our finite planet are reached. Then the shit tends to hit the fan for all concerned.

        The interesting thing is that is also part and parcel of the cultural memes presently prevalent in the industrialized societies of wealthy western industrialized nations. These memes have been spreading throughout the world at a very rapid rate and it is MHO that this meme is spreading what amounts to a terminal cultural pathology. In other words it is a dead end with an expiration date.

        The good news is, that it isn’t written stone that the current culture itself can not be deeply disrupted and profoundly changed.

        Technological shifts occurring now because of perfect storm of maturing technologies and the end of age of oil, are bringing us the Uberization of many facets of our civilization that we had taken for granted as almost eternal and immutable. “Like we all need a car to be free!”

        Well, a lot of young people are no longer buying into that world view. So the old guard and power brokers of the linear consumer society such as the Oil Majors, Automobile manufactures,and producers of unnecessary useless consumer goods are losing their grip on economic power to the new crop of digital entrepreneurs who are ushering in a totally new economic, political and social paradigm.

        Technology is changing the way we interact and form connections within society.

        This video a the end of my post might seem a bit off topic but to me it underscores how different this new world has the potential to be. I especially love the example of an expensive commercial failure of a consumer product that suddenly became cheap enough for use as a musical instrument in a computer orchestra and the fact that a thousand people can suddenly come together in a show of support by singing together… And If I could travel back in time, I’d murder Eduard Bernays.

        Ge Wang:
        The DIY orchestra of the future

        https://www.ted.com/talks/ge_wang_the_diy_orchestra_of_the_future

        We need to stop thinking linearly!

        • Glenn Stehle says:

          Fred Magyar said:

          “Like we all need a car to be free!”

          Well, a lot of young people are no longer buying into that world view.

          Well somebody’s still “buying into that world view.”

          http://www.statista.com/statistics/200002/international-car-sales-since-1990/

          • Boomer II says:

            North American car sales appear to be flat and Europe’s sales look like they have declined.

            Only Asia seems to show significant increases.

            Considering that populations have grown in most places in the world, I would say this chart does indicate a lessening of interest in cars.

            • MarbleZeppelin says:

              Boomer said “Considering that populations have grown in most places in the world, I would say this chart does indicate a lessening of interest in cars.”

              Maybe it is not so much interest as need or economics. Much of the new population is in the cities where cars are not generally essential. Also many people are way too poor to afford a car even if they needed one, a bicycle or scooter is about their peak ability to afford.
              Here in the US there are at least twice as many registered cars as there are licensed drivers. So there is little necessity to buy new.

        • Glenn Stehle says:

          Fred Magyar said:

          The good news is, that it isn’t written stone that the current culture itself can not be deeply disrupted and profoundly changed.

          Technological shifts occurring now because of perfect storm of maturing technologies and the end of age of oil, are bringing us the Uberization of many facets of our civilization that we had taken for granted as almost eternal and immutable….

          So the old guard and power brokers of the linear consumer society such as the Oil Majors, Automobile manufactures,and producers of unnecessary useless consumer goods are losing their grip on economic power to the new crop of digital entrepreneurs who are ushering in a totally new economic, political and social paradigm.

          The idea of cultural transformation has been with us for a long time. It’s very much part of the Christian evangelical tradition, and we can see how the idea played out in practice after Spain’s and Portugal’s conquest of the Americas.

          Combining cultural revolution with technological transformation, however, seems to be a purely 20th-century innovation. And the idea has been no less appealing to left Hegelians than it has been to right Hegelians.

          On the left, we see the notion of a combined cultural-technological revolution emerge first with the Russian nihilists. “Drawing heavily on the German materialists Jacob Moleschott, Karl Vogt, and Ludwig Buchner,” Michael Allen Gillespie explains in Nihilism Before Nietzsche, “the nihilists argued that the natural sciences were preparing the way for the millennium.”

          “This turn to materialism was also bound up with the growth of atheism,” Gillespie adds, which was “given a concrete reality by materialism, especially in combination with the Darwinism that became increasingly popular with the nihilists.”

          “We are witnesses of the greatest moment of summing-up in history, in the name of a new and unknown culture, which will be created by us, and which will also sweep us away,” Sergey Diaghilev gushed in 1905.

          This nihilist brand of Futurism, combining cultural revolution with technological revolution, was to prove highly attractive to the later Bolsheviks, even though the Russian avant-garde which occurred under Lennin would be quite different from the Socialist Realism which took place later under Stalin.

          Anatoli Lunacharsky, Lennin’s Commissar for Education and Enlightenment, wrote in 1917, “If the revolution can give art its soul, then art can endow the revolution with speech.”

          “There was a need to explain, encourage, teach and enthuse the masses,” Victor Awars explains in The Great Russian Utopia. “Agit-Prop was to be the means.”

          In the catalogue for the Tenth State Exhibition organized by Lunacharsky in 1919, El Lissitzky wrote:

          Technology…was diverted by the war from the path of construction and forced on to the paths of death and destruction. Into this chaos came Suprematism… We, on the last stage of the path to Suprematism blasted aside the old work of art… The empty phrase ‘art for art’s sake’ had already been wiped out and in Suprematism we have wiped out the phrase ‘painting for painting’s sake.’

          In May 1924 Vladimir Tatlin in his lecture “Material Culture and Its Role in the Production of Life in the USSR” offered a synoptic statement of what was still the task at hand:

          …to shed light on the tasks of production in our country, and also to discover the place of the artist-constructor in production, in relation to improving the quality both of the manufactured product and of the organization of the new way of life in general.”

          The same sentiment is heard again a year later when Vladimir Maiakovskii declared that: “To build a new culture a clean sweep is needed. The sweep of the October revolution is needed.”

          What is happening is “the conversion of revolutionary effort into technological effort,” is how Asja Lacis summed it up in 1927.

          In this poster, one can see how the worker’s revolution was melded with the technological revolution, all under the banner of the Russian Revolution.

          Nikolai Dolgorukov
          Transport Worker! Armed with a Knowledge of Technology.

    • Dennis Coyne says:

      Shadowstats estimates of inflation are not more accurate.

    • Clueless says:

      In 1960, the average US household size was 3.33 people. In 2014, the average household size was 2.54 people. So, the average household size has decreased by 24%. What does that mean economically? Well, the average household income in 2014 is divided amongst 24% fewer people. So, the average person in a household in 2014 has more real income to spend than the average household person did in 1960.

      • TechGuy says:

        Clueless wrote:
        “What does that mean economically? Well, the average household income in 2014 is divided amongst 24% fewer people. So, the average person in a household in 2014 has more real income to spend than the average household person did in 1960.”

        More likely households have less money to send since more income is used to service the debt on the home. In 1960 a family of four could get by on a single income. Today, households are struggling with two income earners. The difference between households of the 1960’s and of the post mid 1990s is the explosion in household debt.

        Interests are low because the industrialize world is insolvent, including gov’t, corp, and personal. Everyone is buried in debt. Interest rates probably will never rise, until there is a currency crisis that forces them up. The US would default if it interest rates normalized since the interest payments would balloon and most of its tax revenue.

        At the moment, the emerging markets (ie Brazil, China, India, etc) are the leading economies heading into a crisis. They used cheap & easy credit for economic development. However their economic boom is now quickly fading into a bust and there is no buyer of last resort left to export excess capacity to.

        • Clueless says:

          What people choose to spend their income on has no effect on the amount of income that they have. In 1960, more people [% wise] rented, which in many cases cost them more than home ownership.

          • TechGuy says:

            Cluesless wrote:
            “What people choose to spend their income on has no effect on the amount of income that they have.”

            I should have used “discretionary income”. They spend a lot more than they earn. They spend all of their income as well as their future income, by going deep into debt. Subtract interest payments to service the debt from their income.

            “In 1960, more people [% wise] rented, which in many cases cost them more than home ownership.”

            Not really. In most instances renting is cheaper when including the cost of location, property taxes and maintenance which are never included in rent vs. ownership. Most people who buy homes, do so at greater distance to their work location than those that rent, because they can’t afford it. Generally the cost of buying a home close to work is much higher. Commuting costs are also never factored in. People that rent generally live closer to work. People also buy bigger homes than they would normally rent.

            • old Farmer Mac says:

              For the last half century or so in my part of the world, renting has been cheaper short term but MUCH more expensive over any term longer than four or five years. I have plenty of acquaintances who have had fixed interest rate PITI loan payments on their houses that were only a third of the going rent for an identical house right across the street after fifteen or twenty years.

              Land lords pay building insurance , property taxes etc just like homeowners.

              House prices can crash by HALF and you can just LAUGH about it if you are in a house you have owned for a decade or more because chances are you will still be above water.

  8. SW says:

    I would agree that falling incomes and the concentration of wealth are inter-related problems. In my view Paul Craig Roberts is no voice of authority, but rather a crank. And “If more accurate measures of inflation are used (such as those available from shadowstats.com)” this statement is utter nonsense. This low inflation environment is one of the major problems facing the world economy and benefits only the top 0.01% of the wealth distribution. They don’t refer to methods of hedging against inflation as wealth preservations strategies for nothing and pretty much the only people with any wealth to speak of are the 0.01%. Everyone else benefits by spending the crap. With great wealth comes great political power. When wealth is concentrated so is political power and when political power is concentrated economic policy follows. The current economic policy not just in this country but globally reflects the interests of the 0.01% of the world economy and has led to historically low inflation. Low inflation is in the economic interest of great wealth. As are reduced public spending and shrinking public sector.

    • Clueless says:

      If you are an average 40-50 year old working person, check the interest rate on your auto loan. Then check the interest rate on your home mortgage. Look back, say 30 years to 1985, and recompute your payments using 10% for an Auto loan and 9% for a mortgage. Now, tell me that low interest rates only benefit the rich.
      Maybe you are a wealthy, retired person with $1 million in CD’s with average maturities of 5-10 years, and no home mortgage and no car payment. Check your annual retirement income – probably lucky if it is $20,000. Look back to, say 30 years ago to 1985, and compute your retirement income with $1 million invested in a similar mix of CD’s. Probably at least $60,000. Now tell me how happy you are that you are rich and that you are a huge beneficiary of low interest rates.

  9. shallow sand says:

    Interesting to see the large publicly traded companies are selling legacy assets.

    In particular, Chevron is selling its interest in the Seminole San Andreas Unit in Gaines Co., TX. The unit is generating them over $400K per month. It is a CO2 flood still producing over 20K BOE per day gross, and is operated by Hess.

    Shell is selling a large block of lower 48 royalty interests located in 10 states, generating over $250K per month.

    Chevron is also selling another legacy block of conventional wells operated by them in the Permian Basin, which currently generates over $300K per month.

    What is also interesting is of all is these are all listed for sale on the Internet auction. IMO they are selling these assets at a really poor time. Are even the super majors in need of cash to the extent they would sell premium onshore lower 48 assets at the low end of the market? Maybe they do not see a rebound anytime soon? Yikes. However, the same things happened in 1998 and many buyers hit it big with prices from late 1999-2014.

    Also looked at conventional wells for sale in Dunn Co. ND. They are under water with oil at the well around $30. I note that the wells produce super saturated salt water and require fresh water flushes to operate. Watcher has mentioned this before. These wells are in the Duperow formation. Do middle Bakken and TFS require large amounts of fresh water also?

    Edit: I found the answer. Per a 2013 National Geographic article, all Bakken and TFS wells require water flushing such that when the field is fully developed with 40-45K wells, the field will require in excess of 10 billion barrels of fresh water annually.

    Looking at the production and lease operating statements for the older conventional wells I examined, I estimate 10+ year old middle bakken and TFS wells will need over $50 WTI just to break even on an operating basis, not including any work over expense.

    North Dakota wells are at a distinct disadvantage due to the salt issue.

    Throw on top that the companies have added to product gathering and salt water disposal costs by selling of this infrastructure to raise cash, I believe long term ND oil production will be among the hugest cost in the lower 48 on strictly an operating basis.

    • Doug Leighton says:

      Perhaps selling off assets looks better than borrowing money from a bank to pay dividends to your shareholders? Watcher would probably know the answer to this.

    • AlexS says:

      shallow sand,

      For big oil companies, selling and buying assets is a constant process. They are “optimizing asset portfolio”

    • Glenn Stehle says:

      shallow sand said:

      IMO they are selling these assets at a really poor time.

      It’s hard to tell, since everything hinges on what happens in the future.

      One thing is for sure, and that is that Permian Basin O&G assets are, despite the low oil and gas prices, still selling for several times what they sold for in the pre-shale days.

      Take Concho Resources purchase of Marbob in 2010, for instance:

      Based on the acquisition price, Concho’s purchase is equivalent to $19.84 per BOE of proved reserves and $104,167 per flowing barrel.

      http://www.b2i.us/profiles/investor/NewsPrint.asp?b=1977&ID=40931&m=rl

      Concho picked up 150,000 net acres in the deal. That’s a little bit north of $8,000 an acre.

      At the time of the sale, the old timers thought Marbob’s founder and president, Johnny Gray, had cut a fat hog.

      But if you compare $8,000 an acre to the more than $30,000 per acre Aubrey McClendon just paid, it looks like Gray sold too soon.

      One could find other comps, but I think the price of Permian Basin O&G assets over the past 15 years has been consistently upwards.

      • Ves says:

        Shallow,
        Analyzing why the companies are selling legacy properties that make some money at this moment can lead you to the trap called “sunk cost fallacy”. “Sunk cost fallacy” is exactly the same for big oil companies as for individuals.

        Sunk-cost fallacy occurs when people make decisions about a current situation based on what they have previously invested in the situation. For example, spending $100 on a concert and on the day you find that it’s cold and rainy. You feel that if you don’t go you would’ve wasted the money and the time you spent in line to get that ticket and feel obligated to follow through even if you don’t want to.

        It’s is cold and rainy in the oil industry right now.

      • shallow sand says:

        Glenn. I got an email from Raymond James which detailed Q3 sales. Permian basin were substantially higher per flowing barrel than the rest of the US lower 48.

        AlexS. I do agree companies are always selling assets, but interesting to see larger higher quality assets on the public block. Either no solid offers privately, or maybe companies are finding online sales are the best way to go.

        • Glenn Stehle says:

          Yes, but if the $30,000/acre price Aubrey McClendon paid is typical, it looks like oil & gas asset prices in the Permian Basin are hotter than ever. And this despite the drop in oil prices.

          Diamondback Energy, for instance, in September 2013 paid $440 million for 12,500 acres of net mineral rights in the shale play in Midland County. That’s $35,000/acre, but for mineral interest, and back when oil was selling for well over $100/barrel.

          http://ir.diamondbackenergy.com/releasedetail.cfm?releaseid=788419

          Just imagine, McClendon paid over $30,000 per net acre for leasehold working interest, with oil at $45.

  10. islandboy says:

    The EIA’s Electric Power Monthly was updated last Tuesday (October 27) and I stumbled upon a utility focused blog that reported with the following headline:

    EIA: Gas generation edges out coal for 2nd consecutive month, 3rd time this year

    For the second consecutive month, but only the third time ever, gas generation exceeded coal according to data from the U.S. Energy Information Administration. The shift has been recognized for years, but cheap gas and tighter environmental regulations have accelerated the trend. Coal power production is down significantly in the last decade — falling from more than 2 million GWh in 2015 to about 1.6 million GWh last year. In that same period, gas-fired power went from 761,000 GWh to 1.1 million GWh.

    To put the figures another way, Argus points out that in 2008 coal generated twice as much power as gas, but last year only produced about 40% more.

    Earlier this year, April marked the first time gas generation exceeded coal. Electric Power Monthly data showed gas-fired plants around the country produced 92,516 GWh, compared with 88,835 GWh of coal. Coal regained its top status in May and June, but in July was once again edged out.

    For anybody interested in electricity generation from the utility standpoint Utility Dive appears to be quite an interesting site.


    About Utility Dive

    Welcome to Utility Dive. Our mission is to provide busy professionals like you with a bird’s-eye-view of the Utilities industry in 60 seconds.

    We cover industry news and provide original analysis. Throughout the day, our editorial team analyzes the top news stories and publishes in-depth feature articles. You can also use our site to check out industry stock prices, browse jobs, and more.

  11. islandboy says:

    Graph of electricity generation by source as a percentage of total, from the EIA Electric Power Monthly.

  12. islandboy says:

    Graph of solar thermal and solar pv electricity production from the EIA Electric Power Monthly.

  13. Longtimber says:

    The Spanish Ship ” El Galeon ” is open for tours in the port of Pensacola till Nov 8th.
    El Galeon Andalucia (refered to as in Spain) is a 170 foot, 495 ton, authentic wooden replica of a galleon that was part of Spain’s West Indies fleet. With information about 16th century European sailing techniques and technology, as well as important Florida history exhibits, El Galeón will tell the 500 year story since the arrival of Juan Ponce de León on the eastern shore of Florida.
    http://www.elgaleon.org/galleons.html

    She was protected from last weeks storm by the Deepwater Pipe Layer “Global 1200. ”
    http://www.marinetraffic.com/ais/details/ships/shipid:738385/mmsi:576725000/imo:9463815/vessel:GLOBAL_1200

  14. Ovi says:

    U.S production without Alaska and Federal Offshore. An almost linear decline rate of 67 kb/d/mth.

    • MarbleZeppelin says:

      Does that graph represent crude only or C+C?

    • AlexS says:

      Lower 48 onshore C+C production is down 334 kb/d between March and August, of which Texas is down 221 kb/d, of which Eagle Ford is down 170 kb/d (EFS estimate from DPR).
      Thus the Eagle Ford, which was always viewed as the lowest cost LTO play, accounts for more than half of the decline in total US onshore production ex Alaska. Furthermore, the EIA’s DPR predicts an even bigger drop in EFS production of 190 kb/d between August and November.
      How can this be explained?
      I tend to agree with Rystad Energy and some others claiming that the EIA overestimates the decline in U.S. C+C production

      • Dennis Coyne says:

        Hi AlexS,

        I updated my estimate of Eagle Ford output using RRC data on the percentage of total Texas C+C output each month from the Eagle Ford (EF) play and multiplying this by Dean’s most recent Texas C+C estimate. EF C+C output was 1577 kb/d in March and 1422 kb/d in August, so fairly close to the DPR estimate for the change in output.

        The difference may be accounted for by the DPR including all output from the Eagle Ford region, where I only count the specific output from the fields considered a part of the Eagle Ford play by the RRC.

        Chart below gives the EF C+C estimate on the left axis (green line) and the percentage of Texas C+C output from the Eagle Ford play (%EF/TX) on the right axis (blue line).

        • AlexS says:

          Dennis.

          I know that EIA DPR numbers are for the “Eagle Ford region”, which is bigger than EFS. But was is important here, are not the absolute numbers, but the estimated decline in production.
          According to the EIA, EFS production dropped by 170 kb/d between March and August, and is expected to decline by 190 kb/d between August and November.
          This compares with relatively modest declines in the Bakken and continued growth in the Permian.
          I am wondering, what are the causes of divergent performance in EFS compared with other shale plays.
          Maybe the EIA is just underestimating Eagle Ford production?
          As I see from your chart, your estimate is close to the EIA’s

          • Dennis Coyne says:

            Hi AlexS,

            I agree that the change in output is the important thing. The estimate from the EIA’s DPR for March to August decline is fairly close to my estimate, I was simply sharing with everyone that the DPR estimate is not LTO only, it includes all output from the region (which you have pointed out to me in the past). The difference between my estimate and the EIA’s DPR might be explained by this difference.

            I do not have a good explanation for why there has been such a drop in the Eagle Ford, possibly the sweet spots are all drilled up, perhaps the number of wells producing has dropped relative to the Bakken, or perhaps they are choking their wells to a greater extent in August relative to March. There are petroleum engineers, geologists, and oil men who would know better than me what might be going on.

        • Don Wharton says:

          According to Baker Hughes there were 186 oil drilling rigs in the EF at the beginning of the year. That is now down to 64. What is amazing is how much the production has been maintained with nearly 2/3 fewer rigs.

          The Permian went from 522 to 222 oil rigs over the same period. That’s a 57% decline in oil rig count. Combine this modestly lower degree with which rigs were removed from oil drilling with the lower decline rates for Permian wells and we should be able to explain most of the difference between the EF and the Permian.

  15. Ovi says:

    It’s C + C data from PSM. Note it stops at Aug.

  16. Enno Peters says:

    I had a look at the wells that got plugged and abandoned in ND over the last year. I found that since July 2014, the 47 wells that got plugged for good (status = PA, plugged and abandoned) were really horror wells: the average PA well produced for 8 years, and produced 22 kb of oil, while producing 5 times as much water (110 kb), and 3 times that much gas in MCF. Only 7 of these 47 were Bakken wells (5 MB, and 2 TF).

    Several of these wells were producing before 2007, of which I don’t have the production history though, so they are less bad than indicated above.

    Many more wells got at least temporarily plugged (200-300, but didn’t get the status PA yet). Based on Shallow’s info on well economics, I had expected to see more uneconomical wells plugged and abandoned with less terrible production profiles.

    It appears so far that wells are only plugged and abandoned when there is literally no chance that they will ever become economical. Does PA’ing a well affect HBP? Temporarily abandonment may be a cheap option compared with plugging, and it keeps open the option to start the well again?

    • AlexS says:

      Enno,

      Thanks for the info.
      As I understand, most of the PA wells in ND are conventional stripper wells. If more such wells are plugged, that would have only a marginal effect on ND’s overall production.

    • John S says:

      Enno,

      In Texas, the general rule is that wells must be plugged and abandoned when the lease is no longer producing oil and/or gas in paying quantities. There is much debate over exactly what “producing in paying quantities” means but again speaking in general terms a wells is considered to be “producing in paying quantities” so long as the operator earns at least $1 over and above its operating and producing costs.

      This is not a very high hurdle and so many, many wells are left temporarily abandoned until the last wells on the lease stops producing. There are other abandonment costs too. Many current oil and gas lease require the surface to be restored to its original condition. So caliche must be removed, grass reseeded, tank batteries removed, environmental damages remediated.

      As an aside comment, oil and gas law in Texas, and current case law, DOES NOT require an Operator to pay the surface owner for damage to its surface. As a practical matter today most if not all oil and gas leases provide for the payment of damages. But again, generally speaking, the amounts are negotiated between lessor and lessee. This is problematic when the mineral ownership has been seperated from the surface owner.

      As another aside, I try to preface my comments by saying “In Texas or the general rule” because other states may have different laws or case laws BUT OFTEN, Texas law is adopted by other jurisdictions because Texas is seen as the precedent setting state.

      • shallow sand says:

        Enno. Companies will hold off as long as possible on plugging a well.

        It seems to me there are many wells in ND on the monthly report showing zero production. Most are not Middle Bakken TFS.

        There are two early 1980s Duperow wells for sale in Dunn Co., that have been operated at a loss all year. I’m sure they were very profitable 2010-2014. The owner will not plug them out until there is absolutely no other option. Like almost all ND wells, they have to be flushed with fresh water to produce them.

        By the way, each of those old wells are at about 400K BOE from IP to date. Sound familiar? They are making about 15 BOE per day average each and OPEX is running in the $40s. This will be how almost all Middle Bakken and TFS wells will be 10 years plus out, IMO. Not going to be huge cash flow from them. And all that debt will still be there.

      • Glenn Stehle says:

        John S said:

        This is problematic when the mineral ownership has been seperated from the surface owner.

        Not only then, but sometimes when it hasn’t been separated.

        There was a rancher in Borden County who owned both the mineral and surface rights to his ranch, and he was hell on wheels to negotiate surface damages with. And any little old leak or spill would cost you a bundle.

        I was friends with his son, and he told me some great stories about Claytie Williams, who you mentioned in the last thread.

        Modesta, Claytie’s second wife, my friend told me, was from a ranching family in Borden County. Her grandfather’s surname was Good.

        Anyway, the first oil field they discovered on the Good Ranch they named the Good Field. And then later on, when they discovered a second field, they dubbed it the Very Good Field.

        Modesta’s first husband was impotent, the story goes. So her family prevailed upon her to divorce her first husband and find her a real stud. That was Claytie Williams.

        Claytie was a poor boy, but man did he take the ball and run with it. He began by building out gas gathering systems to capitalize on the large amounts of associated natural gas in West Texas that had previously been flared.

        Later he got into the upstream business and was very active in drilling wells in the Giddings Austin Chalk Field. By the 1980s, he was on the Forbe’s 400 list of the richest Americans. He sold his Austin chalk interests just in the nick of time to PetroLewis, which is rumored to have saved him from financial ruin.

        Anyway, Claytie was always flamboyant. My friend told me some promient rancher’s daugher in Borden County was getting married, and all the wedding guests were gathered on the ranch for a big party. Everyone was decked out in their sunday best, and low and behold Claytie and Modesta show up in a helicopter, blowing dust and dirt on everyone. Claytie’s grand entry didn’t go over too well with the other guests, I am told.

        Claytie became even more legendary when he ran for governor. At one point he refused to shake hands with his Democratic opponent, Ann Richards, who he boasted he would “head and hoof her and drag her through the dirt.” That went over almost as well as when he said “Rape is like the weather. If it’s inevitable, relax and enjoy it.”

        Claytie managed to lose the election to his Democratic opponent, and this in an overwhelmingly Republican state. So his knack for making money didn’t extend to the realm of politics and getting votes.

        Claytie is one of the most colorful oilmen to have ever hailed from West Texas, which is no small feat considering West Texas was home to any number of highly colorful oil barons and baronesses, including Dora Roberts, J.E. Mabee, and Roy Parks, amongst others.

        • Synapsid says:

          GlennS,

          What was his swimming pool shaped like?

          • Glenn Stehle says:

            I don’t know. I never met Claytie or Modesta, and never stepped foot in any of their houses.

            I’m told, however, that at their place in Alpine they had a pool in the shape of a cowboy boot. But I moved away from West Texas 30 years ago, so who knows what’s going on now.

            I’m also told that the scions of quite a number of the West Texas oil and ranching barrons were gay. And Tom Good, I am told, was no exception.

            Modesta had a brother named Wade, and he and his husband, I’m told, had an oil company in San Angelo back in the 70s and 80s called Simpson-Mann.

            Anyway, Modesta’s brother was rumored to be a lot like his brother-in-law Claytie, flamboyant and showy, with lots of costly signalling going on. Wade and his husband, I’m told, had matching Rolls Royces. A lot of folks don’t remember this, but back then there was a Rolls Royce dealership in Midland.

            Anyway, I’m told there was a flourishing gay sub-culture in West Texas in those days. During the Christmas season the number of gay parties one was invited to, if one was in the gay and lesbian party circuit, was almost without end.

            One of Dora Roberts’ grand daughters had built a mansion in Big Spring, but she had tired of it and moved away somewhere else to live. But she had a caretaker who watched over the place.

            Anyway, the caretaker, I’m told, decided to throw a fabulous Christmas party one year. All the gay and lesbian royalty of West Texas were in attendance, including Wade and husband.

            Also in attendance, I’m told, was an outrageous drag queen named Kenneth Anne. She wasn’t part of the gay and lesbian royalty, but nevertheless always proved to be the life of the party, so invariably was invited to events like this.

            Anyway, I’m not sure how it came about, but at one point during the party, I’m told, Kenneth Anne, radiating in her sequined Christmas frock in timeless lush red with glittering gold lace and metallic illusion panels, turned to Wade and said: “Listen honey, if you want to impress me with your money, then write me a check!”

            It was high camp at its best.

            Anyway, keep in mind that all the things I have related above are merely things I was told. Maybe some of them are true. Maybe none of them are true. Maybe they’re all true.

            For my part, I’ve always admired drag queens, who I always found to be far more interesting than most LGBTs, whose only goal in life these days seems to be to join the army, get married, move to the suburbs and raise a couple of kids. (Ann Richards, on the contrary, preferred the later type, and flat out told me she despised drag queens.)

            Too nellie to pass for straight, drag queens had to bear the worst of what society dished out. And if they managed to survive the gauntlet, they came out the other end tougher than nails. Already outlaws from mainstream society, with nothing to lose, they risked nothing by cutting through all the pretense, hypocrisy and bullshit to tell it like it is. For these outcasts, nothing remained sacrosanct. Society’s sacred cows were slaughtered, its precious icons smashed.

            Keep in mind all this reputedly took place back in the 70s and 80s, before DSM-III-R. So it was a time when even the scientists had banished gay men from mainstream society, branding them as “pathological” and “mentally disordered.” And even to this day, some scientists are still sore that the DSM was changed, charging that the decision to drop homosexuality as a pathological diagnostic category was “primarily political.”

            So where does one draw the line between science and politics?

  17. R Walter says:

    Using Mr. Peabody’s Wayback Machine, I found this quote:

    “We will never see eighty five dollar oil again except maybe as the whiplash negative feedback response to a sudden spike as happened the last time prices spiked very high. Think five hundred car pile up on a freeway after that happens with everybody flying and then traffic stopped or almost stopped with nobody buying but a lot of people contracted to take delivery- and the gasoline and diesel piling up at the retail end. Prices may collapse temporarily into the eighties or even lower but only for a few weeks or months.” – Old Farmer Mac

    http://peakoilbarrel.com/enno-peters-post/

    Oil is at 45, so the price can fall and it did. 147 to 135, 125, 115, 105, 95, 85, 75, 65, 55, 45, then as low as 39, back to 45 and holding. Nowhere near 85, let alone 100. 45 dollars is a dead man walking.

    Wendell Lawson, the character played by Burt Reynolds in the movie ‘The End’, was swimming out to sea to make his final exit, deciding he wanted to live, he turned back and began to swim to shore.

    “90 percent, Lord, I’ll give you 90 percent if you get me out of this.” As he swam closer, the pledge began to decrease, it falls to 80 percent, then to 70 percent, by the time he got back to shore, the Lord was not getting much. When Sonny Lawson finally got there, Marlon Borunki, played by Dom Deluise, started to shoot rounds from a pistol at Sonny. He was helping out Wendell to kill himself.

    It was funny.

    The kind of help the oil industry is getting.

    • Dennis Coyne says:

      I thought output would decrease at these prices much faster than they have. Until output drops prices will remain under 85 per barrel.

      Lots of people are wrong on oil prices. Only very wide guesses will be correct such as 5 to 200 per barrel.

      • 40 to 150 over the next 30 months. 😐

        • Dennis Coyne says:

          Hi Fernando,

          That is probably wide enough to get it right. I have seen some really bold price predictions from others such as, the oil price will be a positive number. 🙂

          I have lost confidence in my ability to predict future oil prices so $15/b to $200/b over the next 60 months(in 2015$) is about the best I could do. There are others who will only go so far as to say that oil prices will be “low” or “high” in the future which means very little with no number attached.

      • R Walter says:

        Dennis, thanks for the reply, it is a mere time delay. My prediction is the price of oil will go about as high as it can go and about as low as it can go, no further. 😊

        The oil will flow, regardless of the price.

        The price of gold is 1100 plus some more.

        Oil at 45 gives us 24.44 barrels when you pay for oil with a Troy ounce of gold.

        In the days of gold priced at 35 USD per ounce, oil was about one dollar per barrel, circa 1940, you would be able to buy 35 barrels of oil.

        Oil needs to fall to 30 dolares per barrel to have 35 barrels for an ounce of gold.

        The price of gold is too low, sellers are getting hosed when they sell for a measly 1100 frns. Gold should be priced at 1575 dollars with oil at 45 USD.

        Wait for oil to fall to 30, then buy gold at 1100. har

        A bushel of wheat today is about 4.50 USD, ten bushels of wheat to buy a barrel of oil. In 1940, a bushel of wheat was priced at 0.67 USD. A mere 1.3 bushels of wheat would trade for a barrel of oil in 1940 when oil was at 1.02 per barrel.

        http://www.indexmundi.com/commodities/?commodity=wheat

        http://chartsbin.com/view/oau

        In the days of 21 bushels per acre, one acre of wheat production would buy you about 14 barrels of oil. Today’s yields are 50 and higher due to auxiliary inputs, pesticides, herbicides, an acre of wheat is going to buy about 5 barrels. Even at a 100 bushels per acre, you still can only buy 10 barrels of oil.

        You need more wheat today to purchase a barrel of oil compared to what wheat could purchase in 1940.

        Looks like peak oil, but I’m not sure.

        The immovable object has met the irrepressible force, that’s for sure.

      • Heinrich Leopold says:

        Dennis,

        There is a time lag of six to nine months between initial capex decision and actual production. The production we see now is the harvest of the capex made in 4q14. As we see now the numbers come out from 1q15 capex, production will come down significantly this quarter. The annual production growth rate came already down. Texas is here a frontrunner (see chart below). Although the data from Texas are subject to revision, the trend is clearly to the downside, especially when annual growth rates are seen as leading indicator. I remember very well your forecast of over 70 USD/bbl for September and over 80 USD/bbl for November and here we are in November and oil is far off this mark. The prediction (oil far above 85 USD/bbl by end of this year) of many oil veteran experts seems also to be on shaky grounds. In my opinion oil can only go up in the short term, when US production falls signifcantly as this reduces supply and increases demand over a lower dollar. We will see how this works out next year.

        • Dennis Coyne says:

          Hi Heinrich,

          Yes your guesses have been better than mine have been on oil prices. I did not appreciate how long the lag times were, I was thinking it would be more like 3 months between an investment decision and changes in output in the LTO plays such as the Bakken, Eagle Ford and Permian basin. A second mistake was my belief 9 months ago that low oil prices would reduce the rate of drilling and well completion rates in the various LTO plays and cause a fairly quick decline in the level of LTO output.

          When oil supply goes down, oil prices will go up, unless there is an economic recession which reduces demand for oil. That is pretty obvious. When this will occur I will leave to others to guess as my guesses for the short term have been pathetic, at best.

          I would recommend using drilling info or EIA data for Texas rather than RRC data. The most recent 12 to 18 months of RRC data from the Production Database Query (PDQ) is not very accurate, it underestimates Texas C+C output by up to 25% for the most recent month.

          • Heinrich Leopold says:

            Dennis,

            I know RRC data are subject to revisions, yet they describe a more homogenous model and update earlier. The trend and the internal dynamics however are very clear and it is likely that the numbers are confirmed. The US total is more a mixture of conventional, shale and deepwater production, which have different decline rates. For instance Golf of Mexico offshore oil production is still on the rise and they will start to decline by mid year. This shows that conventional oil production has around three times longer capex/production cycles which is in stark contrast to shale production cycles.

            • Dennis Coyne says:

              Hi Heinrich,

              Dean’s data is updated each month as the RRC reports. You would be much better served by using Dean’s data which is based on the revisions to the RRC data over time and is far more reliable than data from the RRC.

    • old Farmer Mac says:

      I made a fool out of myself that time sure enough by forgetting to add my usual weasel words such as barring miracle breakthroughs, the economy being in assisted living mode etc.

      It ( warning attempted humor) is all the fault of them there pinko commie environmental types that hang out in forums such as this one misleading me into believing that oil comes out of holes in the ground and does not grow back, that the population is growing and wanting more oil, etc etc.

      Seriously I forgot to consider the possibility that bankers would continue to loan money to tight oil losers at zero percent, that Russia and Saudi Arabia would be at war with the price of oil being the only real weapon the Saudis can bring to bear etc.

      The industry moves a lot slower than I thought, no question. It is taking a LOT longer than I would have thought for high cost producers to cut back their money losing production.Everybody with a barrel to sell seems to be really desperate for cash and willing to run in the hole to put their hands on it. Sooner or later enough production is going to be curtailed to put the price back into black ink territory for high cost producers.

  18. MarbleZeppelin says:

    Referring to Ovi’s graph above.
    There is a 4.6% drop in production from March to August which gives a monthly loss of 0.92%.
    Alternatively from January to March there was a 5,6% gain in production. That gives a gain of 2.8% per month.
    Overall the graph shows a 1.4% gain in production or 0.14% gain in production per month.
    The graph does indicate the ability to increase production generally faster than it declines.
    The range is quite wide and the timescale short so it is not feasible to determine the typical range of variation or extrapolate future production.
    The only conclusion that can be made from this graph requires other sources of information, such as the current economic situation in the oil fields. One might conclude that this particular downturn in production is due to economic constraints involving low cash flow and loan contractual terms. The economic constraints lead to the need for a further analysis of situational parameters in the economic environment, such as involvements with other energy sources, demand analysis, efficiency changes as well as psychological changes in the social/political structure.

  19. Jeffrey J. Brown says:

    Lights Out: A Cyberattack, A Nation Unprepared, Surviving the Aftermath
    Oct 27, 2015
    by Ted Koppel

    http://www.amazon.com/Lights-Out-Cyberattack-Unprepared-Surviving/dp/055341996X/ref=sr_1_1?ie=UTF8&qid=1446395040&sr=8-1&keywords=lights+out+book

    In this tour de force of investigative reporting, Ted Koppel reveals that a major cyberattack on America’s power grid is not only possible but likely, that it would be devastating, and that the United States is shockingly unprepared.
     
    Imagine a blackout lasting not days, but weeks or months. Tens of millions of people over several states are affected. For those without access to a generator, there is no running water, no sewage, no refrigeration or light. Food and medical supplies are dwindling. Devices we rely on have gone dark. Banks no longer function, looting is widespread, and law and order are being tested as never before. 

    It isn’t just a scenario. A well-designed attack on just one of the nation’s three electric power grids could cripple much of our infrastructure—and in the age of cyberwarfare, a laptop has become the only necessary weapon. Several nations hostile to the United States could launch such an assault at any time. In fact, as a former chief scientist of the NSA reveals, China and Russia have already penetrated the grid. And a cybersecurity advisor to President Obama believes that independent actors—from “hacktivists” to terrorists—have the capability as well. “It’s not a question of if,” says Centcom Commander General Lloyd Austin, “it’s a question of when.” 

    And yet, as Koppel makes clear, the federal government, while well prepared for natural disasters, has no plan for the aftermath of an attack on the power grid.  The current Secretary of Homeland Security suggests keeping a battery-powered radio.

    In the absence of a government plan, some individuals and communities have taken matters into their own hands. Among the nation’s estimated three million “preppers,” we meet one whose doomsday retreat includes a newly excavated three-acre lake, stocked with fish, and a Wyoming homesteader so self-sufficient that he crafted the thousands of adobe bricks in his house by hand. We also see the unrivaled disaster preparedness of the Mormon church, with its enormous storehouses, high-tech dairies, orchards, and proprietary trucking company – the fruits of a long tradition of anticipating the worst. But how, Koppel asks, will ordinary civilians survive?

    With urgency and authority, one of our most renowned journalists examines a threat unique to our time and evaluates potential ways to prepare for a catastrophe that is all but inevitable.

    • Jeffrey J. Brown says:

      I remember a presentation by an official with Homeland Security a few years ago at an ASPO-USA conference in Washington D.C, on the vulnerabilities of the electric grid. One of the key things he focused on were the very large transformers. In most cases, I think that they had to be transported by rail, and in many cases, the rail lines that delivered the transformers to substations are no longer there.

      How to Kill a Transformer

      http://electronicdesign.com/blog/how-kill-transformer

      The main components in our power grid distribution system are transformers.  They step up the generated voltage to a higher level for more efficient transport over very long lines.  Then they step the voltage back down in several stages for final consumption.  These transformers are located at the power plants and thousands of substations.  They are big and right out in the open.  Weather does not bother them, but bullets do.  They are the weak links in our power grid.

      Last year someone decided to shoot out the transformers at PG&E’s Metcalf substation in Silicon Valley taking the substation out of service.  Luckily, PG&E was able to reroute the power to prevent a total blackout.  But it took months to get replacement transformers and restore service. . . .

      Power transformers are not an off-the-shelf item.  Most are custom made to match the utility’s system.  Each transformer is unique so requires special manufacturing efforts.  It takes months to make small transformers and as many as two years for the big transformers.  And they cost a fortune with small ones going for up to $1 million and as much as $10 million for the big ones.  In addition, transportation is an issue.  How do you ship a monster transformer weighing a couple hundred thousand pounds?  So while replacements are possible, it takes a significant amount of time.  This could cause a black out for months or longer.

      • Stilgar Wilcox says:

        I’m sure you recall the last parts of the movie, ‘First Blood’ with Sylvester Stallone. I read about the making of that movie. They used an actual small town to film it (even though the Chinese restaurant was the only business to refuse to close the evening of the filming), and it appears Rambo is shooting out the transformers to knock out the power. But it was going to cost too much and take too long to replace them, so they set up small explosions to make it appear they were being shot.

        So you bring up a good point. Now we’ll just have to wait and see if that occurs on a grander scale than what happened in Silicon Valley. Maybe some enterprising company should develop bullet proof jackets that can be attached to the transformers.

      • MarbleZeppelin says:

        Speaking of weak links, the line transformers in my area are popping their circuit breakers when small limbs fall and bounce off wires. That just causes local outages.

        The whole system is weak links. There has been a couple of fiber optic cable systems damaged by fire in the region lately, messed up the internet and a tollway.

        Hurricane Sandy showed the interdependency of the system. No power, no fuel. No roads open, no fuel.. No roads open, no tree removal. No tree removal, no power line repair. No power, no pumps to remove crude from the ships and no refinery operation. No power, no stores open, no commerce. No power, no internet, no cable TV. No power, no food deliveries.

        Personally, when the power goes out, I have refrigeration, lights, water, hot water, etc. I have my own back up system. It’s the rest of the local world that does not operate very well or at all.

        As far as transformer transport, there are special railroad cars and trailers that are capable of transformer transport. I have seen three transformers brought into a local power generating station by rail. Transport appears to be the least of the problems.

        • Jeffrey J. Brown says:

          Transport appears to be the least of the problems.

          The Homeland Security guy disagrees, and as he noted, in many cases the rail lines–that delivered the transformers to substations–are no longer there.

          Chapter Nine in “Lights out” covers Large Power Transformers (LPT’s). As Koppel noted, “Some of the original transformers were delivered so many years ago that the rail lines on which they were transported no longer exist.”

          Apparently it is possible to transport by road in some cases, requiring very specialized and very heavy duty equipment–a modular device 70′ long with 12 axles and 120 wheels, occupying two lanes of traffic.

          But apparently about 75% of LPT’s purchased by US utilities are made overseas.

          A systematic and widespread attack on LPT’s in the US would make for some very, very unpleasant months.

          • Longtimber says:

            A 1% Fuel or capacity shortfall ( less than demand ) for less than a few 16.6 ms cycles could get really ugly.

          • wimbi says:

            Distributed power, everywhere, fuel omnivorous, redundant and varied. I remember lectures on the multitudes of advantages of DP in undergrad engineering in 1948. That’s a long time, adequate to make preparations for grid outage, no?

            Since such the multitude is not working on it, I am. Having lots of fun making a wood stove steam engine somewhat related to put-put boat, but way stronger. Has side effect of providing vast amusement when it blows up inside the wood stove.

            But my favorite antidote is to learn how to do without. Ever try salt beef? Telling stories insteada TV?

            • Boomer II says:

              Distributed power is a popular thing with Silicon Valley type investors. More opportunities for them and their technology, less political influence and economic power being held by utilities and fossil fuel advocates.

              People who like the Internet because it operates without centralized control also like the idea of a power system that can operate without centralized control.

              • Longtimber says:

                Most Network gear in the US require regulated power. This is Stupid since you can NOT operate from from a 12/24/48V PV Charged System without additional conversion/regulation/stabilization. We spec gear to Operate with 8-30V A lot of newer gear is 10-57V.
                For Example – http://routerboard.com/CRS109-8G-1S-2HnD-IN. Actually in a pinch, you can run this gear on a few protected 18650’s and a small but properly sized PV panel.

          • MarbleZeppelin says:

            Then the railroads move them to a nearby area and a specialized tractor trailer takes over from there. I have seen that one. They usually have to raise or remove some traffic lights and low hanging wires to get through towns, but it still can be done.

            • Here’s a video showing how they move a large transformer. I’ve done conceptual studies for plants which required moving an 800 metric ton load overland. It can be done, but it does require planning. If local governments cooperate it’s not a huge deal.

              http://youtu.be/uiRNJ2LauQ4

      • hightrekker23 says:

        What is really scary about the SillyCon incident, it appears to be a test run.

        We are so venerable.

      • Longtimber says:

        “Weather does not bother them, but bullets do.” Moisture is a cause of breakdown especially since banning of PCB’s oils for it’s anti-hydroscopic and insulation properties. Most run quite hot preventing moisture but there is a danger from condensation if they drop off-line for any period. Who knows if this fireball is just insulation failure or a transformer. Normally fusible links would disconnect this from Primary. Take off the ** and cut and paste.
        **https://www.youtube.com/watch?v=mqxXd09Wv94&spfreload=10

    • KIC 8462852 says:

      This is old, old news.

      Still important though.

      G. Gordon Liddy published an article way back in ’79 or so in either Omni magazine or Next Magazine outlining 10 ways terrorists could cripple U.S critical infrastructure.

      I doubt that article could have been published after 9/11/2001.

      I speculate that his warnings may have gone largely unheeded for decades…but…has anyone else noticed that high cement block walls have slowly but steadily been (and are still being) built around transformer substations? This activity seemed to have taken off after Sep 11, 2001…not immediately, but starting a few years later.

      Leviathan is ponderously slow, but it can learn, and it can move quickly when it feels truly threatened. Thank your lucky stars.

      Perhaps some of our offense budget should be allocated to the defense budget to pick up the pace to build in better detection, resilience, protection, redundancy, spare kit, and plans?

      We’ll never hear that in a Presidential debate or in any election politics ‘news’…too much O2 sucked out of the room by clown car public circuses and spectacle…Trump, Benghazi, what have you.

    • Educational material explaining causes for flooding and subsidence

      http://pubs.usgs.gov/circ/1392/pdf/circ1392.pdf

      This way the readers can learn to discern between sea level rise and the usual climate change bs.

      • Fred Magyar says:

        What exactly does that have to do with the price of tea in China?

        And on the six o’clock news, helium filled weather balloon disproves theory of gravity.

        The world’s burning. Moped Jesus spotted on I-50. Details at 11
        Jesse Hathaway, Managing editor, Heartland Institute

        • Nothing. I anticipated a post about flooding. It showed up below. Sea level rise seems to be a popular discussion topic as we approach the Paris climate whine.

  20. John S says:

    You are right Glenn about CW, except being born a poor boy. I am not a fan. If ego was air, CW’s head would have exploded would have exploded @ birth.

    • Glenn Stehle says:

      I don’t know Claytie, so I don’t have an opinion.

      I just like sitting back on my porch in my rocking chair, watching the show go by. It never ceases to amaze.

      As the slaves on the plantation used to exclaim: “My, how the white folks carry on!”

      • Synapsid says:

        GlennS,

        The swimming pool shaped like a boot tells me that it was Clayton Williams’ company that flew me to their office in Denver back in the 1980s. I couldn’t remember the name of the Texas oilman but I did remember being told he had that boot-shaped pool.

        They wanted to know why Shell was drilling for NG at Badger Mountain in the western Columbia Basin, east of the Cascades in Washington State. Quite a landrush was set off by their activity but nothing came of it. There are active anticlines in the area that have supplied NG locally for decades, the gas coming out of interbeds in the Columbia River basalts.

  21. AlexS says:

    Big U.S. shale oil savings fast becoming a thing of the past

    http://www.reuters.com/article/2015/10/30/oil-results-costs-idUSL1N12M2KI20151030

    Huge cost savings are waning for U.S. shale oil companies, marking an end to the drastic price cuts on equipment and services over the past 16 months that helped them survive the worst industry downturn in six years.
    Companies including Anadarko Petroleum Corp, ConocoPhillips and Occidental Petroleum Corp have saved millions on drilling and fracking wells in Texas, Colorado and North Dakota since the oil price slide started by demanding that oilfield service companies slash prices by 20 percent to 30 percent or more.
    Those savings, coupled with big gains in rig productivity that allowed more oil to be pumped with less equipment, created a lifeline for companies coping with a more than 50 percent drop in crude prices. But productivity gains have stalled in the last few months and deflation may be slowing as well, just as producers try to withstand a lower-for-longer price outlook.
    ConocoPhillips has seen its onshore drilling and completion costs fall. More savings are expected, but not as much.
    “If prices stay low and activity levels stay low I think you will see more pressure on deflation, but not another magnitude of the leg down we’ve seen so far,” Jeff Sheets, Conoco’s chief financial officer, told Reuters on Thursday.
    The U.S. rig count has fallen by more than half from a year ago when nearly 1,600 rigs were working, so companies that lease rigs or do hydraulic fracturing have offered double-digit discounts to get work contracts.
    When asked if cost deflation is likely to continue, Darrell Hollek, head of U.S. onshore exploration and production at Anadarko, told analysts on Wednesday the company continues to see decreases in prices, but those declines are not “as significant as what we saw earlier in the year.”
    In West Texas, Occidental said the cost for a 4,500-foot well has fallen 45 percent from a year earlier to $6.3 million now. The company said on a call with analysts it expects costs to come down more, but did not say by how much.
    RigData, which tracks oilfield activity, forecast cost declines for U.S. onshore wells of $1.2 million on average in 2015, a drop that is unlikely to be repeated next year, Trey Cowan, senior industry analyst with RigData, said.
    Currently, operators are drilling wells in so-called sweet spots that produce the most oil and gas. After they go through that inventory and move on to less prolific spots, it will cost more to drill, said Cowan.
    The chief executive of Baker Hughes, Martin Craighead, on the third-quarter conference call of the oilfield services giant, downplayed more cuts when an analyst asked if his company could offer additional cost reductions of 15 percent to 30 percent.
    “You are just not going to get out there and take your hats off to any customer,” Craighead said. “They are going to obviously try to get as much as they can and there will be a point where it just doesn’t make any sense.”
    Mark Hanson, an analyst for Morningstar in Chicago, said the days of huge price cuts are nearly over.
    “I don’t think there is going to be meaningful reduction from here,” he said. “To use a baseball analogy, you are probably in the seventh or eighth inning.”

    • shallow sand says:

      AlexS. Thanks for the post!

      Given that many US oil companies were cash flow negative prior to the price collapse, do you think that US oil companies will be able to increase production in the future without being cash flow negative?

      It seems to me that if oil prices shoot back up at some point, service rates will also.

      Our lowest two OPEX years since 2006 will be 2009 and 2015. The highest 2008 and 2013.

      I really question whether US oil companies will ever be able to be “growth” companies anytime soon.

    • Heinrich Leopold says:

      AlexS,

      As there is a time lag of six to nine months between initial capex decision and actual production, it is in my view premature to have a final say about current emerging capital efficiency. The production numbers we have now are the harvest of the capex in the last quarter of 2014. It will be interesting how the production numbers will develop over the next few months. Range Resources had for example 400 mill capex in 4q14, which came down to just 188 mill in 3q15, when production went up 20% year over year. This is in my opinion not extremely capital efficient , yet is a harbiger of much lower production in the months ahead.

      • HR says:

        Heinrich
        I am using the same logic as you. I guess the question is how long before reduced capex turns into lower production.

      • AlexS says:

        Heinrich,

        I agree with you about time lag between capex and production, but I think it is shorter than 6-9 months. Most of the upstream capex is spent on drilling and well completion. The average lag between well spud and initial production is 4-5 months.
        The U.S. upstream capex in 4Q14 was marginally lower than in 3Q14. The decline sharply accelerated in 1Q15 and continued in 2Q15 and 3Q15.
        The U.S. oil rig count peaked in October 2014 and started to decline in November. The decline sharply accelerated from January 2015, in line with the changes in capex.
        The U.S. onshore oil production peaked in March 2015 and started to decline in April, with a 5-month time lag to the rig count.
        This correlation is particularly visible if we compare the U.S. oil rig count with y-o-y changes in monthly oil production (see the chart below).
        As regards Range Resources, there could be some company-specific factors explaining a longer time lag.

        U.S. land oil rig count vs. y-o-y change in onshore C+C production (kb/d)

        Sources: Baker Hughes, EIA

        • Heinrich Leopold says:

          HR, AlexS,

          It is good to see that we agree within a small band. See please also my above reply to Dennis. The oil industry is a cyclical industry. It has always been. Over the latest decades this has been masked somehow by the vast spare capacity of OPEC. However, the cycles get over time shorter and more steeper as Opec spare capacity diminishes. This is in my view especially the case for shale gas and oil. Below Texas gas well gas chart shows that from 2006 the cycles got much steeper. Huge upswings were followed by enormous downswings of over 30%. The last cycle from 2012 to 2015 looks much steeper especially on the downside. As this must have some consequences, I am curious already how this will work out over the next few months.

          • Dennis Coyne says:

            Hi Heinrich,

            Again I would caution you against trusting the RRC data, any data From Sept 2014 to August 2015 is likely to be an underestimate from the RRC (with more recent data being worse). Use Dean’s estimates which are excellent and far more reliable.

            Also remember that as Texas gas output decreases, we are seeing increases from the Marcellus which are offsetting the decreases in Texas.

            At some point natural gas output will plateau and slowly decline in the US, but a rise in natural gas prices may keep us on the plateau for quite a while, hard to foresee how this will play out, but basically natural gas output will decline a bit, prices will rise and output will then rise somewhat and in this way an undulating plateau is likely to be maintained. If natural gas prices rise significantly we may see output rise significantly, but prices would soon fall followed by a fall in output.

            Note that the most recent natural gas weekly report from the EIA has natural gas in storage near the 5 year maximum and falling natural gas prices, not really signs of impending shortages. The Jan 2017 Henry Hub futures contract is trading at about $2.93, so the futures market sees natural gas prices rising a little, but there is not a lot of profit for petroleum companies at that price, so if the futures market is right about the price I would expect a slow decline in output.

            • Heinrich Leopold says:

              Dennis,

              I get your point. However, the more general a data set, the more interactions exist and it is not possible to see what is going behind the curtain. And then it is not possible to make any reliable remarks about what is going on. In order to prove my point I have compared the gas well gas data from RRC with the more general data for total gas in Texas, which contains associated gas. You can see in below chart that the change in production follows the same pattern, which I call fingerprint of a certain data set and a more modern word would be fractal. The production cycles are very clear, yet total gas follows a more shallow path than the pattern for gas well gas. The explanation is clear as total gas contains associated gas which grew much faster over the last decade than gas well gas. However, as oil prices fell over the last year, associated gas is now falling much faster than gas well gas and the total is now falling faster than gas well gas alone. This is very valuable information for me to find out what happens in the Texan and US gas market. If I would throw in the data in a pot and then try to find out some correlations, I would have lost this information completely. And this information tells me that the US natgas market is in freefall. Even if we do not agree, we have at least another point we can discuss in about four months at this place again.

              • Dennis Coyne says:

                Hi Heinrich,

                It is still RRC data, use any data after Sept 2014 at your peril. US natural gas is not in free fall. Output may be down a bit due to high storage levels and low prices. Also about 30% of natural gas output is from outside Texas, other areas may be offsetting the declines in Texas.

                If you are correct and natural gas output is in freefall, it has not shown up in increased imports, or a significant decline in output (about 1% lower than the previous week) or in higher prices. Most indicators point to flat output or modestly lower natural gas output.

                A freefall will cause a price spike and then output will increase.

                • Heinrich Leopold says:

                  Dennis,

                  By next year in March we will have for sure a clearer picture.

            • Don Wharton says:

              Heinrich,

              Dennis is right about Texas data and he is right that nat gas is not in freefall. He is likely to be modestly wrong about the Marcellus. In the last EIA DPR it was projected to decline by a modest 215 mcf/d in November. The Utica is increasing so the Marcellus decline is unlikely to be enough to have a net decline for the Northeast in general. I am projecting 4 bcf/d for the Utica between the middle and end of 2017 with the potential for much more. Over the last two weeks Baker Hughes reports the NG rigs in the Utica went from 15 to 21. Frankly the Utica could blow away any NG decline in the rest of the nation. It is early in the definition of the resource and some companies seem to be ramping up commitments to exploit it.

              • Heinrich Leopold says:

                Don,

                You have to multiply the DPR number of 215 mmcf/d over one month by 12 (months) and then you get the year over year decline. So the actual decline is already 2.5 bcf/d. This correlates very well with the actual number from bentekenergy.com which is currently on a weekly average of 70.7 bcf/d. Last year the dry production has been around 73 bcf/d for November and 74.5 bcf/ for December. So dry natgas production is already in decline by around 5%, which is roughly half a million of boe/d. In addition, according to the latest Baker hughes report Utica rig counts are down year over year by 25 rigs from 46 to 21 and just 1 rig lower from last week. I have checked in the October drilling report page 9 and Utica rig count has never been at 15 this year. So, it could not have been up from 15 to 22 two weeks ago. Utica wells are monster wells with a monster decline and most of these wells are down to a trickle within one year.
                Nevertheless, I will keep your post on my records and I am happy to discuss this in the next year when the current numbers are confirmed.

                • Toolpush says:

                  Heinrich,

                  I am happy you are keeping track of peoples claims, as I believe it as late July you stated that HH would be $20+ in 6 months. That is around now. It is currently hovering around $2 mcf.

                  I think the major point you are missing, during the great Artic freeze of 2013-14, nat gas storage levels dropped very low. Production was brought on line that recovered these extremely low stock levels within one season. The fact that last winter did not draw anywhere near as gas as the previous, yet production capacity was still high has now lead us to a point where, stock levels are about to break an all time high. Yes production capacity needs to settle back to balance the market.

                  It is a solution not a problem

                • Don Wharton says:

                  Please do not consult the EIA Drilling Production Report for any understanding of the number of rigs. Those stats are complete crap. They assert that their numbers come from Baker Hughes but they are quite incompetent in actually using Baker Hughes data. You are confused about what is happening in the Utica natural gas drilling if you imagine that the decline by one rig in that basin implies a decline. The 4 rigs that had been drilling for oil ceased to be used for that purpose in the last week. There was an increase of 3 rigs dedicated to nat gas.

                  And no you cannot just multiply the “215 mmcf/d over one month by 12 (months)” to get the year over year decline. These EIA projections are extremely unreliable. Moreover, there has been a radical increase in the major takeaway pipelines for the Northeast sources. This has minimally influenced that actual prices received for product to date. There are about 40 total pipeline projects on the drawing board. Many are required to actually get nat gas to the major trading hubs. Once the differential with Henry Hub is substantially reduced it is quite reasonable to expect a massive expansion in product from the Marcellus. My expectation (and the expectation of professional prognosticators) is that the Marcellus can provide billions of additional cubic feet per day when that happens. Obviously the improvement in takeaway capacity will also apply to the Utica.

                  The Utica is currently running about 3 bcf/d. My projection of 4 bcf/d sometime in 2016 is almost certainly on the low side for the end of the year.

                  And please stop confusing yourself with your uniformed understanding of the Texas data. The Permian is producing an increasing amount of gas and it is not yet clear that the declines in the Eagle Ford and possible future declines in the Haynesville will be providing even a modest net decline for the state. The DPR has Haynesville continuing a modest increase in production. This should not be taken to suggest that I have any real faith in the EIA DPR.

  22. MarbleZeppelin says:

    There has been some discussion about strong and lightweight materials in this forum lately. Here is a material/structure that can hold 160,000 times it weight.

    http://www.science20.com/inside_science/ultralight_material_can_hold_100000_times_its_own_weight-152860

    • hightrekker23 says:

      So, when is this going to replace carbon fiber in my fly rods and hiking poles?

      The graphite fly rod is the high point of of our technological culture so far.

      • MarbleZeppelin says:

        I have a carbon fiber kayak paddle that is so strong it never broke and lasted through more than 20 years of pounding and scraping rocks in whitewater. Will outlast me.
        Talk about quality, it’s amazing. Pretty too. Somebody else will use it for their lifetime.

        Would you want a rod that had no flex whatsoever and was strong enough to use as a temporary support in large buildings?

        • wimbi says:

          No flex! meaning no energy store by bend. How about stretch or compress? Or does it just sit there in a pout doing nothing until it cracks?

          I’m always looking for high energy storage springs, that is, high max stress and low modulus of elasticity.

          • MarbleZeppelin says:

            It appears they are using UV curable adhesives to bond a matrix of lightweight strong fibers together. Much of the strength and rigidity comes from the architecture. Probably flexes on a micro scale but should fail catastrophically if a portion of the structure is compromised.

            • wimbi says:

              I prefer my failures to be long dragged out and highly visible , like a stainless structure just sagging under load in an unsightly manner.

              After all, Portions are always compromised , like in dislocations.

              • MarbleZeppelin says:

                I prefer no failures at all. Breaking a kayak blade off in the middle of a class V rapid is not a happy circumstance.

                Same with airplane wings, no failure is the best kind. If it’s 5 times stronger than needed it will never fail.

                Of course one could build the flex in at support points as they do to reduce earthquake damage in buildings.

                • wimbi says:

                  Sure. Problem is, what’s needed?

                  In my first job, I asked the boss how strong the new fighter wing spar needed to be.

                  Answer “just barely strong enough”

                  • MarbleZeppelin says:

                    Strong enough for what? 10 g’s? 12 g’s?

                  • wimbi says:

                    Strong enough to out-G that MIG, but not so strong/heavy as to let him catch them in the first place.

                    We talked with the fighter jocks and many agreed that they would rather be able to pull the wing off themselves than not be able to avoid it being knocked off by a commie 20mm.

                    Tough decision. That was my point.

                  • MarbleZeppelin says:

                    But with new technologies, the limitation would be the human, not the aircraft. Materials are reaching the point where failure will only occur upon being hit by bombs or bullets.
                    Of course remotely piloted vehicles could pull 20 G’s or more and outmaneuver any human piloted vehicle or rocket.

                    Those MIGs were light weight at first and sub-sonic. Very maneuverable. But we proved long ago that was not a great advantage if proper tactics were used. Speed, firepower and the ability to take some hits were more important. Now it’s speed, stealth and ability to target the enemy before they even know there is an enemy out there or where.

                  • wimbi says:

                    That’s why I don’t see any hope for any aircraft that needs to carry a mere frail human anywhere near a hostile missile site .

                    Anyhow, a weapon race between equals has gotta be a tit for tat tie, so why bother? Better think up some better approach that might work. Weapons sure won’t. History carries ample proof of that.

  23. aws. says:

    Rising sea levels meet high tide… no storm needed.

    Your photos of Tybee Island flooding — and some heavy reading
    October 29, 2015

    Driven by a “super” moon and rising sea levels, coastal flooding shut down Tybee Island on Tuesday as flood waters closed U.S. Highway 80 — the only road access to Tybee Island, off the Georgia coast.

    • John S says:

      Drove to Tybee Island this past June. What a beautiful place. But West Texas is still home.

      “The South Will Rise Again!” Damnation AWS. One more dream burst!

  24. shallow sand says:

    Statoil sees no oil price recovery till 2018. Any guesses on what that scenario does to US oil production?

    • Dennis Coyne says:

      Hi Shallow sand,

      What does price recovery mean?

      Is that an oil price below $60/b until 2018?

      If so, I would expect US C+C output will fall to 6 Mb/d by 2018, possibly more, however, the oil price prediction will likely be incorrect as the fall in oil supply will lead to an earlier price recovery in 2016 or 2017 at the latest. By price recovery I mean an oil price above $75/b in 2015$.

      • shallow sand says:

        Dennis. It is difficult to tell from the CNBC article, but looks to me that initially Statoil was looking for $60 in 2016, $70 in 2017 and $80 in 2018, for planning purposes. Now, possibly, they are looking at below $60 to 2018.

        I still feel that OPEC will cut at some point, the question is when. Read an analyst who thought they should 12/4, but would not to save face, as US production has not fallen much and Russian production has not fallen at all (see AlexS post herein). So very possible there will not be a production cut until US production falls significantly, maybe not till late 2016.

        • It should go over 60 soon. The Saudis need at least $60 to get by. But the Saudi elite doesn’t seem to fire on all cylinders.

          • Dennis Coyne says:

            Hi Fernando,

            I don’t think futures markets tell us much (they usually are incorrect at more than 2 months out), but Brent Dec 2017 futures are currently trading at about $60/b. I agree we will get there sooner than Dec 2017. When OPEC and the IEA start reporting a fall in oil output, then prices may start to rise. I hestitate to guess when that will occur, oil output has been far more resilient than I had anticipated. Do you have a time frame in mind for oil reaching $60/b? “Soon” can mean tomorrow or 12 months from now.

    • AlexS says:

      shallow sand,

      Statoil expects $80 by 2018. Here is a Bloomberg article:

      ‘Too Low’ Crude Prices Seen Rising to $80 in 2018 by Statoil

      http://www.bloomberg.com/news/articles/2015-10-29/-too-low-crude-prices-seen-rising-to-80-in-2018-by-statoil

      • Supply growth seen falling amid industry cost-cutting
      • Current high oil inventories preventing price recovery

      Crude prices that have almost halved in the past year are unsustainable at current levels as cuts to investments and postponement of projects will lead to a decline in supply growth, according to Norway’s biggest oil company.
      “We think that the price level now is too low,” Eirik Waerness, chief economist and vice-president at Statoil ASA, said in an interview in Singapore on Thursday. “Some people will stop exploring for oil. With oil prices around $50, you get a stimulus for demand growth. That will tighten the market.” Crude is expected to climb to $80 a barrel in 2018 and increase gradually after that as existing supplies get used up, he said.
      Oil slumped more than 44 percent in the past year as U.S. stockpiles expanded at a time when OPEC producers bolstered output to retain market share, exacerbating a global supply glut that the International Energy Agency estimates will remain until at least the middle of 2016. Producers hurt by the collapse in prices have had to fire workers, cancel projects and sell oil fields to conserve cash. Statoil on Wednesday announced cuts to planned investments in 2015 by $1 billion to $16.5 billion.
      “The question is how much of the current change in the industry will lead to long-term cost reductions,” said Waerness. When “demand becomes larger than supply, and we will start drawing down storages. The market will suddenly realize that there’s very little spare capacity out there.”
      “The underlying trend is that it’s going to come up, but it’s going to take a while,” Waerness said, referring to prices. “One of the reasons why it takes a while is because the storage is too high, and therefore the price mechanism doesn’t really work.”

  25. AlexS says:

    Russian Crude Output Hits Post-Soviet Record Defying Price Slump

    http://www.bloomberg.com/news/articles/2015-11-02/russian-crude-output-hits-post-soviet-record-defying-price-slump

    • October output averaged 10.776 million barrels a day
    • Oil exports increased 10% compared with October last year

    Russian oil production broke a post-Soviet record in October for the fourth time this year as earlier investments boosted output and producers prove resilient to lower crude prices.
    Production of crude and gas condensate, which is similar to a light oil, averaged 10.776 million barrels a day during the month, according to data from the Energy Ministry’s CDU-TEK unit. That is an increase of 1.3 percent from a year earlier and up 0.3 percent from the previous month.
    “Russian oil production is still reflecting oil prices above $100 a barrel due to long lead times in the investment cycle,” Alexander Nazarov, an oil and gas analyst at Gazprombank JSC, said by e-mail from Moscow. “The reason behind growth this year dates back to 2010-2014, when a number of projects were financed.”
    ——————————————-
    My comment:
    – Using 7.3 barrels per ton conversion rate, Russian C+C production was 10,731 kb/d.
    – The industry only reduced production m-o-m in 2015 in April and July, indicating stable performance.
    – The companies’ upstream margins are supported by weaker rouble and progressive tax system with a very steep scale.
    – There are no signs of reduced investment/drilling activity in the sector in rouble or volume terms.

    Russian C+C production (mb/d) (7.3 bbl/ton conversion rate)
    Source: Russia’s Energy Ministry

    • Dennis Coyne says:

      Hi AlexS,

      Thanks. Has there been any slow down in new oil field developments in Russia due to the lower oil price environment? I wonder if lower capital investment today may result in a fall in Russian output (or possibly an end to the recent growth in output) a few years down the road. Is your expectation a continued plateau in output between 10.6 and 10.7 Mb/d, even if oil prices remain under $60/b (2015$) until 2018?

      • Dennis, the way this usually works the government will react and change taxes. As increased taxation takes effect production starts to drop. Evidently the Russian government is reluctant to change the current rates to signal it has a reliable tax system which allows investments to proceed with a very long term outlook. But I expect they’ll be putting on the squeeze if they haven’t done so.

      • AlexS says:

        Dennis,
        Development capex increased in local currency terms in 2015.
        From the IEA OMR: “Record high output follows a boom in development drilling, up 8.9% y-o-y for the first 8 months of 2015 compared with the same period a year earlier, as well as a greater share of horizontal wells and a continued focus on brownfield maintenance.”

        The IEA now expects Russian oil production to decline by 85 kb/d in 2016. But in July they were expecting a decline of 120 kb/d.
        Similarly, the IEA had projected a decline of 140 kb/d for 2015 (January 2015 OMR), and now they forecast an increase of 110 kb/d (October 2015 OMR).

        As regards longer-term prospects, new projects, which are expected to come onstream in the next 5 years, are on schedule. Only some Arctic offshore projects were postponed, but they were not expected to start production before 2020-2025.

        The Energy Ministry’s long term projections anticipate more or less flat production until 2035. I think production can be maintained close to current levels in the next 5-6 years. Longer term prospects depend on the development of the new resource base in the Arctic offshore and unconventional resources, such as tight oil

        • Dennis Coyne says:

          Hi AlexS,

          Thanks. Has there not been a drop in oil prices in terms of Rubles? It really does not make sense to me that everyone is drilling all out at low oil prices. If everybody (OPEC, Russia, and the US) cut back a little on C+C output, prices would rise to more profitable levels. I think OPEC should change its name to OPPC (change Exporting to Producing) and Russia and the US should join. Get oil prices to manageable levels by having a quota system for all major producers.

          That is a very unlikely scenario, but would be far better for the oil industry worldwide.

          • Nick G says:

            Net oil importers like the US would be far better served by raising fuel taxes.

            If you raise the price by reducing supplies, then the value of all of that increase goes to the producing countries. If you raise the price with taxes, then the value of that increase goes to the consuming countries.

            If you’re a net importer, you’re far better off capturing the value of that increase with taxes. And, of course, you’ll reduce consumption and incentivize the transition away from oil.

            • Dennis Coyne says:

              Hi Nick,

              You are correct, but this is even less likely than controlling output as the RRC has the ability to do in Texas. You won’t find a lot of Texans in favor of an increase in taxes, or many US citizens.

              The restriction on output will also only work if done by OPEC and Russia, for now we will just have to live with oil price volatility.

              • Nick G says:

                You are correct, but this is even less likely than controlling output

                True. Oil interests (especially the Kochs) have disproportionate power, and have managed to make fuel tax increases impossible.

                It’s worth noting that rebating the revenue to make fuel taxes revenue-neutral (and non-regressive) would address the major concrete objections.

                • Dennis Coyne says:

                  Hi Nick,

                  I like the “feebate” idea as well, but selling it to the average American is tough. It will still be labelled as a tax (which it is) even if all revenue is returned to citizens in the form of rebates.

                  You and I may be among a handful of people that think it is a good idea.

                  • Nick G says:

                    I think it’s a pretty accepted idea among many environmentalists.

                    And even conservative economists agree that Pigovian taxes (taxes that internalize things like pollution) are a good idea…though they don’t say it very loudly…

                  • MarbleZeppelin says:

                    If the tax goes to subsidize PV and EV’s as well as energy efficiency and supporst research in those areas I am for it. If it goes back to consumers for buying ipods , Xboxes and such then I am fully against it. If it just goes into general government funds, I am against it.
                    I also think a big chunk (at least 20%) should go directly to supporting climate change research programs.

                  • Nick G says:

                    The whole idea of the rebate is that net tax revenue is zero.

                    Maybe you apply a $1 per gallon tax. That brings in about $135B. You cut the FICA/social security tax by just enough to reduce it by $135B, and transfer the fuel taxes into the SS fund.

                    That makes the net tax zero, and gives the rebates to lower income consumers, who pay a disproportionate percentage of their income for fuel.

                    ——————-

                    Alternatives include spending it on EVs and PV, and

                    considering it a user fee for pollution and military costs. That way you apply it to environmental remediation (Climate Change, acid rain, etc) and the military budget.

                    Applying it to the military might seem like something that would encourage military spending. But, it would simply displace funding from other sources, and most importantly it would raise awareness that our military spending is going to feed our oil habit.

                  • Dennis Coyne says:

                    Hi Marblezepplin,

                    Do you live in the United States? You sound a little like the current right wing in the US, it is my way or the highway. This attitude gets us no carbon tax, pure and simple.

                    You can either have your cake or eat it, but not both.

                    We do not live in a World where consumer choices are decided by you or me.

                    If taxes on carbon are raised, then people will buy more fuel efficient cars, put more insulation and better doors and windows in their homes, drive less, buy heat pumps or more efficient boilers, and they may even demand better public transportation.

                    All of these would be better for the environment and increased demand for wind, and solar power are also likely to be a result.

                    But to accomplish all this you want to also decide how any collected money (from increased taxes) is spent, rather than let consumers decide for themselves how to spend their money.

                    Have you ever heard the expression, “The perfect is the enemy of the good”? That is a recipe for accomplishing nothing.

                  • Dennis Coyne says:

                    Hi Nick,

                    Yes conservative economists agree that taxing externalities is efficient, but the right in the US does not think that carbon dioxide is an externality, they think fossil fuels will never deplete, and generally they think that tax is a four letter word unless it follows the word “reduced”.

                    And yes most environmentalists (with at least one exception) would agree with the “feebate” revenue neutral concept for carbon. The “handful” was metaphorical, the idea is a good one that will never happen in the US in the next 10 years. Perhaps in 2025 when peak oil is in the rear view mirror, it is a possibility, but only if people are willing to compromise.

                  • How about an inverse tax reduction?

                  • MarbleZeppelin says:

                    Dennis, you have to look at the evidence. The price of gasoline rose by four times this century. Did it stop demand and everyone make a run to alternatives and a different lifestyle. NO.
                    Adding a dollar or two tax would cause some grumbling and maybe move things forward a small amount. But it will soon be forgotten and just become part of the scene.
                    The fact is that adding a steadily increasing tax on fuels 20 years ago might have gotten results by now. But it is far too late for half measures that might do something. Something is not enough, it’s merely soothing to the mentality and does little in the long run to change things or solve problems.
                    Yep, it’s time to force the issue or leave the field. If I can live using 75% less fossil fuels then so can the rest of them. They don’t need 1/2 of what they think they do.

                  • Nick G says:

                    I think if you look at the inflation stats, you’ll see that the price of gasoline hasn’t gone up signficantly. Just as cheap as ever, really.

                    I’m not talking about any namby-pamby $1 increase: I’d say we need about a $4 per gallon fuel tax just to account for traditional pollution, military, CO2, etc.

                    Combine that with much more aggressive CAFE standards (75MPG, maybe?), and now you’re talking.

                    Don’t forget: fuel taxes and CAFE regs exist right now, so making them tougher doesn’t add any new government.

                    No communism required!

                • MarbleZeppelin says:

                  Dennis, you are dreaming. That tiny tax will change nothing. Well it will add another useless layer to the government. Nice idea to increase SS but that group won’t change the world.
                  Action, real action will change things.
                  Nature does not work in half measures or politically correct ways. Every time we waste time not actually attacking the problem, people in the future will suffer and die. Animals and plant will die in the future. The balance of nature will swing to a place very unlike what we live in now.

                  Why don’t we have the guts to say the truth and act upon it. When did we become so lame and ineffective?
                  Don’t you understand that you can’t make a new system without getting rid of the old one?

                  • Caelan MacIntyre says:

                    You want to retrofit the old system? Make it truly democratic. Make the media so as well. Make taxes be opt-in and opt-out. Then you will get at least closer to a true government than some monopoly-on-violence mob of non-plural anarchists you have today that you call government.

                    Wave your magic wand and make it so.
                    If that doesn’t work, bail from the system. Go underground; join an ecovillage.

                  • MarbleZeppelin says:

                    Caelan, you are right. I knew a WWII veteran who played a key role in stopping an advance of Germans in the Battle of the Bulge. He paid a heavy price, badly injured, but kept calling in the artillery on them even though he was being shelled himself.
                    He told me, way before internet, cellphones and such, that we should convert to a full democracy. He said do it through the TV and phone lines. So we all vote on government laws and activities.
                    It would be a great experiment, but it would make many people citizens rather than controlled consumers.
                    Might just work to get things done. Put the fear into big corporate structures wouldn’t it? They of course would not be allowed to vote and getting caught coercing employees to vote a certain way would be a mandatory life sentence.

                  • Nick G says:

                    MZ,

                    There’s an old quote: “the power to tax is the power to destroy”.

                    Tax fossil fuel enough, and it will go away. Want it to go away faster? Tax it more.

                    The FF industries know this very, very well: that’s why they’ve demonized tax increases, especially fuel taxes.

                  • Dennis Coyne says:

                    Hi Marblezepplin,

                    I would rather try to accomplish something than wait for the revolution. I also think revolutions are not always an improvement.
                    Examples abound. Radicals on the right and left accomplish little except preventing any change at all from occurring due to their unwillingness to compromise.

                    So no carbon tax it is, we will wait for higher fossil fuel prices and then some change will occur. Doesn’t really matter as the policy will never be enacted, especially the one that you (and I) would prefer.

                    You seem to think someone should be deciding what people should be purchasing.
                    I prefer that the government taxes externalities, enforces the law, protects its citizens, and regulates the market when there is a market failure (due to free rider problems or externalities). The one other place the government has a role is in monetary and fiscal policy, but when there is no compromise there can be no effective fiscal policy.

                  • Dennis Coyne says:

                    Hi Caelan,

                    That’s very funny, make taxes optional.

                    Have you heard of the free rider problem?

                    It sure would reduce the size of government.

                    No roads, no bridges, fossil fuel use would be reduced as well, a perfect system!

                    🙂

                  • Caelan MacIntyre says:

                    Hi Dennis,

                    I can see how the actual free-riders might find the hypothetical ones funny…

                    “It is well known that Americans consume far more natural resources and live much less sustainably than people from any other large country of the world. ‘A child born in the United States will create thirteen times as much ecological damage over the course of his or her lifetime than a child born in Brazil’, reports the Sierra Club’s Dave Tilford, adding that the average American will drain as many resources as 35 natives of India and consume 53 times more goods and services than someone from China…” ~ Scientific American, September 14, 2012

                    …Unfortunately for you perhaps, I don’t.

                    And, ironically, you are not going to get your roads or bridges, etc., for much longer the way your corrupt system is currently set up anyway.

                    To be continued under subsequent article…

  26. Green People's Media says:

    Ron, have you (or your readers) seen this one yet? As a regular follower of Peak Oil Barrel I have to count myself a “BP Skeptic” with regard t o this headline “BP sees technology nearly doubling world energy resources by 2050.”

    It’s the ancient “technology will save us” mantra re-applied. Wondering if you or any readers have any wisdom or insights on this article. Where is BP getting the claim of a doubling of “global reserves?” (Not daily production in MM Bbl/day, just “reserves,” mind you.

    http://finance.yahoo.com/news/bp-sees-technology-nearly-doubling-world-energy-resources-143523912–finance.html

    • Doug Leighton says:

      Well it was BP who developed (and deployed) wide azimuth towed streamer technology which totally revolutionized marine seismic acquisition and decades before that they invented hydraulic fracturing (in the 1940s, I think) plus they pioneered ways of refining so-called dirty oil so God knows what kind of stuff they’ve got up their sleeve. Actually, credit where it’s due, wasn’t it BP who gave birth of the offshore oil/gas industry with exploitation of the North Sea via development of the Forties platform, what, 50 odd years ago.

      • BP was a late comer. The early North Sea developments were in the southern gas fields. But the Gulf of Mexico offshore predates the North Sea. BP doesn’t really have much technology development. They don’t believe in it like ExxonMobil, Shell, and others.

    • Fred Magyar says:

      Yes, I read that article and almost posted it myself. There is so much contradictory information in that article that I think one would really need to read BP’s actual press release. It’s quite the mish mosh.

      Just this little tid bit should underscore what I mean:

      When taking into account all accessible forms of energy including nuclear, wind and solar, there are enough resources to meet 20 times what the world will need over that period, David Eyton, BP Group Head of Technology said.

      “Energy resources are plentiful. Concerns over running out of oil and gas have disappeared,” Eyton said at the launch of BP’s inaugural Technology Outlook.

      Oil and gas companies have invested heavily in squeezing the maximum from existing reservoirs by using chemicals, super computers and robotics. The halving of oil prices since last June has further dampened their appetite to explore for new resources, with more than $200 billion worth of mega projects scrapped in recent months.

      By applying these technologies, the global proved fossil fuel resources could increase from 2.9 trillion barrels of oil equivalent (boe) to 4.8 trillion boe by 2050, nearly double the projected 2.5 trillion boe required to meet global demand until 2050, BP said.

      With new exploration and technology, the resources could leap to a staggering 7.5 trillion boe, Eyton said.

      So basically BP is counting on alternative energy sources, electric vehicles, carbon taxes and reduced demand on top of new discoveries for which they no longer have financial incentives, to all come together to increase resources… Yeah, right!

      The article stinks!

      • Watcher says:

        If profit is not relevant to the exercise, a great deal more oil can come out of the ground than we have believed.

        • Fred Magyar says:

          True, but then why would they say this?

          The halving of oil prices since last June has further dampened their appetite to explore for new resources, with more than $200 billion worth of mega projects scrapped in recent months.

          On the other hand you may be right and if things really go south then Big Fed can provide ways for Big Banks to provide Big Oil with a Big Bailout. Much better than giving tiny subsidies to little solar and wind to help the little people 🙂

        • Green People's Media says:

          Watcher has the succinct, nail-it-in-one-sentence reply. Yes, that sticky “profit” problem. AKA the “Money Return On Money Invested” (MROMI) !!

    • Dennis Coyne says:

      Hi Green People’s Media,

      You make a good point about the distinction between resources and output. My scenarios, based on research by Steve Mohr, the work of Jean Laherrere, and the models developed by Webhubbletelescope suggest Natural gas and oil resources of about 2700 Gboe total in 2050 and cumulative production of oil and natural gas of about 4100 Gboe by 2050, with another 400 Gboe discovered (including backdated reserve growth) after 2050. The BP scenario seems too optimistic to me and I am often seen as too optimistic by many at Peak Oil Barrel.

  27. Doug Leighton says:

    NATURAL GAS LOSING ITS SHINE AS ASIA HOLDS FAITH IN COAL POWER

    While much attention has been given to a potential peak in China’s coal demand and worries about emissions, in Asia alone this year power companies are building more than 500 coal-fired plants, with at least a thousand more on planning boards. Coal is not only cheaper than natural gas, it is often available locally and has no heavy import costs.

    Forty percent of the 400 gigawatts in generation capacity to be added in Southeast Asia by 2040 will be coal-fired, the IEA says. That will raise coal’s share of the Southeast Asian power market to 50 percent from 32 percent, while natural gas declines to 26 percent from 44 percent.

    And growth in coal is not only seen in developing economies. Coal’s share of the energy mix in Japan, top importer of LNG, will rise to 30 percent by 2030, up from 22 percent in 2010, according to the nation’s Institute of Energy Economics, while natural gas will hold at 18 percent.

    http://newsdaily.com/2015/11/natural-gas-losing-its-shine-as-asia-holds-faith-in-coal-power/

    • MarbleZeppelin says:

      They are addicted to coal!!!!
      Now doesn’t that throw a spanner into the carbon reduction plans?
      Of course I like steam locomotives, so why not start running them again if coal is so cheap?
      I guess that is already happening with the electric locomotives, the coal and steam are just located elsewhere.
      What happened to the pollution reduction initiative over in China?

      • Doug Leighton says:

        Yes, it makes you wonder. I’d managed to convince myself (via wishful thinking) that NG would quickly replace coal for power generation, however, I see that according to a World Resources’ Estimate (Nov. ‘12) , 1,199 new coal-fired plants, with a total installed capacity of 1,401,278 megawatts (MW), are being proposed globally; these are spread across 59 countries. And, China and India together account for 76 percent of the proposed new coal power capacities.

        • Nick G says:

          2 thoughts:

          I think India is the big kahuna – this is a reflection of impressively bad management of Indian energy consumption in general, and utilities in particular. The same is true of Japan: their utilities are famously resistant to change. Look at how badly they managed Fukushima, both pre and post crisis.

          Proposal numbers are often misleading – look at the enormous disparity between proposals for nuclear plants a few years ago, and actual construction (especially in the US). Also, many plants are replacements – e.g., German coal plants are typically replacements of older, much less efficient plants.

          • R Walter says:

            It is called King Coal for a reason!

            • Dennis Coyne says:

              Hi all,

              Coal is likely to peak by 2020 to 2025, coal prices will rise and less will be used the URR for coal is likely to be about 950 billion metric tonnes and about 340 billion tonnes have been produced (through year end 2014). We are currently (2014) producing about 8 billion tonnes per year and are about 135 billion tonnes from the halfway point (425 billion tonnes) or about 17 years if output does not increase (a plateau at 8 billion tonnes for 18 years).
              If we call the mid point of the plateau the peak, that would be 2024, if coal output increases (highly likely in my view), the peak will be reached before 2024, my best guess is 2020.

              • Nick G says:

                It would be interesting to see that analysis broken down for (IIRC) the three biggest consumers: China, the US and India.

                • Dennis Coyne says:

                  Hi Nick,

                  I do not do it by country. Steve Mohr does in his thesis (or possibly by continent) just search on steve mohr thesis.

                  I take Steve Mohr’s case 2 (his best guess scenario) for coal and use a shock model to develop the scenario below for the World.

              • R Walter says:

                I am not the biggest fan of coal, but the electricity they produce is fantastic, superb. Just have to be realistic, people want electricity. Hydro is better.

                On a bad day near a coal-fired power plant the air quality is not so hot. Cow chips would smell better.

                Not a big fan of wind turbines, but investments force me to accept the reality.

                Good News!

                Hitachi scrubbers:

                http://www.hitachi.com/New/cnews/120329.html

                On a bad day near a refinery, the air is so bad, it will drive you out of there. Much worse than coal.

                Nick G is right, very good with his words, but it is more fun to disagree. ☺

                • MarbleZeppelin says:

                  RW, stink is one thing. Oil can produce all kinds of smelly productspartly due to the menagerie of organic compounds. None of it is good for you, but just because a coal burning power company might not smell, doesn’t mean it’s not killing you.

                  What I do know is that we (three states involved and grass roots organizations) fought to stop a coal plant from spewing SOx compounds into the air and wrecking our lungs plus causing deaths.
                  It took over 20 years of fighting, two state governments, and the EPA to stop them. They did not give a crap what they were doing (the fly ash problem was another one) and had to forced into submission. Now they could have put on scrubbers or used cleaner coal, but this company likes the high profits. So it shut it down now for three years. Probably waiting for a repub government to start all over again.
                  No stink involved, just ill health and death.

                  We won’t even discuss the radioactive elements spread all across the landscape downwind of coal burning facilities.

              • Doug Leighton says:

                Hi Dennis’

                Is that a definitive statement or your opinion? As I recall, according the IEA, coal in all regions will become increasingly concentrated in power generation in the future (which they say will account for almost 90% of the increase in demand between 2000 and 2030). The IEA further noted that coal demand in the power sector will be lifted by an assumed fall in the price of coal relative to that of gas. Perhaps an impending agreement on climate goals will affect these conclusions, or not.

                • Dennis Coyne says:

                  Hi Doug,

                  Every statement about the future is an opinion.

                  Research on coal by Mohr, Patzek, and Rutledge (Mohr’s work reviews the work of Rutledge and many others) suggests a coal URR between 680 Gt and 950 Gt, the cumulative production numbers through 2014 are definitive, my model uses the familiar Oil shock model applied to coal (though I have to guess at the discovery curve because I don’t have any discovery data for coal.)

                  See http://www.theoildrum.com/node/2376

                  for a review of the oil shock model and

                  http://www.theoildrum.com/node/6782

                  for a summary of Steve Mohr’s PhD thesis.

                  Full thesis at

                  http://ogma.newcastle.edu.au:8080/vital/access/manager/Repository/uon:6530

                  Clearly the IEA thinks there is much more coal that can be mined cheaply than the authors I have read. There is much less coal than many believe. It is always strange to me that people don’t believe the IEA is correct about oil production (they are far too optimistic), but think the coal estimates are rock solid.

                  I think the IEA is wrong about all fossil fuels.

                  • Fred Magyar says:

                    Clearly the IEA thinks there is much more coal that can be mined cheaply than the authors I have read. There is much less coal than many believe. It is always strange to me that people don’t believe the IEA is correct about oil production (they are far too optimistic), but think the coal estimates are rock solid.

                    The IEA doesn’t understand the exponential function. If we accept at face value that the Chinese economy is still growing at 7% a year then the Chinese economy would double in size every decade. Personally I think that is an absurd statement but the fact remains that growth is still greater than zero so there isn’t enough coal on the planet to sustain even the Chinese economy.

                    http://old.globalpublicmedia.com/transcripts/645

                    Well, in the energy crisis about thirty years ago, we saw ads such as this (shows slide). This is from the American Electric Power Company. It’s a bit reassuring, sort of saying, now, don’t worry too much, because “we’re sitting on half of the world’s known supply of coal, enough for over 500 years.” Well, where did that “500 year” figure come from? It may have had its origin in this report to the committee on Interior and Insular Affairs of the United States Senate, because in that report we find this sentence: “At current levels of output and recovery, these American coal reserves can be expected to last more than 500 years.”

                    There is one of the most dangerous statements in the literature. It’s dangerous because it’s true. It isn’t the truth that makes it dangerous, the danger lies in the fact that people take the sentence apart: they just say coal will last 500 years. They forget the caveat with which the sentence started. Now, what were those opening words? “At current levels.” What does that mean? That means if—and only if—we maintain zero growth of coal production.

                    Dr. Albert Bartlett

              • Dennis Coyne says:

                Hi all,

                In my comment above there is a typo. I said the halfway point is 425 Gt, it is 475 Gt (I did the math correctly in the calculator I just mistyped the post.

          • Doug Leighton says:

            Well yes but:

            “Chinese firms — which often have financial or policy backing from China’s state banks — have poured coal-power equipment into other Asian countries, partly as a result of China’s slowing domestic power-market growth. The situation could get worse as China pledges to reduce domestic carbon emissions. The researchers found that of the total power capacities in Asian countries other than China that have involvement from Chinese firms, 68 percent in operation, 77 percent under construction and 76 percent in planning burn coal….”

            http://www.sciencedaily.com/releases/2015/10/151027213625.htm

        • old Farmer Mac says:

          If I were a policy maker or politician looking after myself by looking after the short to medium welfare of my people and my country, I would opt for coal rather than gas for new power plants.

          It is my belief that the people making these decisions , coal versus gas, believe that coal is more plentiful and will be cheaper and more easily available. I would not want to be dependent on imported gas if I were a Chinese or Indian policy maker. Gas may be cheap now, but it may not stay cheap.

          Every indication is that coal can STAY cheap for a long time to come, if you disregard the environmental costs of it.

          Short term survival always trumps every other consideration. Most of these policy makers probably believe their own careers depend on opting for coal.

          “Nobody has ever been fired for going with Microsoft. ”

          This little gem of office wisdom may not be true in every last case, but it holds ninety nine point nine percent of the time.

          • Nick G says:

            Yes, you would think they were being smart, at least in the short term.

            But…they’re not. For instance, India and Japan are dependent on expensive, unreliable, polluting imported coal. Wind and solar would be a better choice for them, even in the short term. They’re dependent on expensive, unreliable oil imports – EVs would be a far better choice, even in the short term.

            India and Japan are simply very badly run.

          • Dennis Coyne says:

            Hi Old Farmer Mac,

            It is not clear to me that coal will remain cheap when it peaks in 2020.
            China already depends on coal imports, as do many other countries in Southeast Asia. So the money spent on power plants that will last for 40 to 60 years will be wasted.

            Even in the medium term coal is a bad decision, by 2025 at the latest this will be clear. The smart choices are hydro, wind, solar and nuclear power, with some natural gas peaking plants for backup.

            • old Farmer Mac says:

              Hi Dennis, you may well be correct.

              I should make it clear that I do not expect coal to STAY cheap long term. Quite the contrary. I believe coal prices will be going up substantially within the foreseeable future, along with the prices of oil and gas.

              I just think coal will likely be cheaper than gas.

              Any body or any country that can AFFORD gas will opt for gas.

              That leaves coal for countries such as India.

              Personally I advocate pedal to the metal investment in renewables. The costs of any subsidies spent on well located and properly engineered renewables infrastructure will be amply repaid in the form of savings thru REDUCED consumption of coal and gas purchased to generate electricity, and REDUCED PRICES of both coal and gas right across the board for the entire economy.

              When you take away the market for five percent of the coal and gas needed to generate electricity in the USA, that necessarily DEPRESSES the price of BOTH oil and gas.

              So you buy five percent ( approximately ) less, and you get the other ninety five percent CHEAPER.

  28. Doug Leighton says:

    Video.
    JAPAN AIMING FOR A ‘HYDROGEN SOCIETY’

    Japan has lofty ambitions to become a “hydrogen society” where homes and fuel-cell cars are powered by the emissions-free energy source.

    http://www.sciencedaily.com/videos/8233aa9ed0381ef7a78ce2e30a968a9e.htm

    • I hear they find an exotic solid hydrogen crystals buried in basalt below 12000 meters. But they need to sign a treaty with Middle Earth to get the rights to mine these huge resources.

  29. Watcher says:

    Car sales for Oct!

    “GM sold almost 263,000 vehicles last month, led by a 10 percent increase in sales of the Chevrolet Silverado pickup to nearly 52,000. Sales of the Chevrolet brand rose almost 18 percent for its best October in 11 years.

    Ford’s sales jumped to nearly 214,000. The recently updated Edge SUV saw big gains, while sales of the sporty Mustang more than doubled. Ford’s biggest seller, the F-Series pickup, rose 3 percent to 65,500.

    Nissan sales rose to just over 116,000. Sales of the Nissan Rogue small crossover SUV jumped 70 percent.”

    Nissan Leaf sales Oct 2014 2589 units. Oct 2015 1238 units for sales growth of -52% hahahahahahahaha

    Chevy Volt cannibalized sales from prior months (Aug 1380 Sep 949) and Oct 2035 for an upgrade.
    For 2014 Aug 2511 Sep 1394 Oct 1439. There’s nothing probably to be learned in the Volt given the huge variance month to month (600 units in March this year and a cut of unit totals in half from 2600 to 1300 Aug to Sep of 2014).

    The Leaf is the darling of the wacko crowd and it’s obviously in freefall.

    BMW i3 btw . . . Sep 1710 units, Oct 986.

    The whole industry should just shut down and stop wasting energy.

    • Dennis Coyne says:

      Obviously gasoline prices have no effect on any of this. 😉

      • Caelan MacIntyre says:

        “Saudi prince: $100-a-barrel oil ‘never’ again” ~ USA Today

        hahahahaha… ^u’

        “Occupying about 1,000 acres in the Nevada high desert, the gigafactory will span 5 million square feet once finished. The giant battery factory will have such an enormous footprint and manufacturing capacity that Tesla Motors CEO Elon Musk claims it will be larger than all lithium-ion battery plants in the world combined… With tax incentives [from all the good little wage slaves] for the gigafactory scheduled to last for 20 years, the $1.3 billion question is…” ~ RGI

        “Keep those spigots full-open and flowing, folks, we ain’t finished yet!” ~ The Governpimp

        “Nick Gigafactory?! Take it away!” ~ The Governpimp

        “bla bla bla EV bla bla bla EV…” ~ Nick Gigafactory

        FrescoWorld coming soon right here, folks, right here in the good ol’ US of A! Yeeehawww!”~ The Governpimp

        “We tortured some folks…” ~ Obama

    • BC says:

      http://insideevs.com/monthly-plug-in-sales-scorecard/

      US EV sales are down 21% YoY and -12% annualized.

      Down 23% since 2013 (Oct-Oct).

      Average growth rate of 2.7% since 2013 (average rate of US nominal GDP since 2007).

      But the annualized growth rate since 2012 is ~24%.

      The deceleration from trend 24% from 2012 to 2.7% since 2013 to -12% to -24% is a classic textbook “anti-bubble” trajectory, implying that gov’t subsidy-induced EV sales resulted in a bubble that is now bursting, including sales of Teslas, which are hardly more than way-cool, high-tech, overpriced status toys for Tesla fanboys with more discretionary income than they know what to do with.

      • Caelan MacIntyre says:

        BC, it is possible that (The Governpimp™ thinks that) once/if this Gigafactory is ready, the price of oil will or can go up and, along with it, EV sales again and maybe along with ICE cars with their ICE engines ripped out and replaced with electric motors, such as if this lithium-air battery works as is claimed. But, again, it looks like a race against time.

        …Empires’ large desperate last ditches just before decline…

        • MarbleZeppelin says:

          In a few years it is likely that the cost of oil will mostly irrelevant. The next big breakthroughs in battery technology and materials technology are lining up already. It will be far less expensive to buy an EV than an ICE. The car companies will start hitting the low end customers and that will be that.

          Expect 20 percent EV penetration by 2030 and 60 percent PHEV+EV by then also. The demand for fuel will be falling fast.

      • Nick G says:

        And, one more time:

        BC, have you looked at the Total Cost of Ownership on Edmunds.com for the Nissan Leaf? Have you compared it to other ICE cars?

        I think if you did you’d see that the Leaf is the cheapest vehicle on the road to own and operate.

        So…have you looked at Edmunds.com for Total Cost of Ownership for the Leaf??

    • wimbi says:

      Free fall? Nope, closer to free go.

      Friends F150 on same mission? NOT by a long fall is it a free go.

      Sorry, Fred, you are right. Should reck my own rede and say nothing to this sort of idiocy.

    • R Walter says:

      Didn’t Ferd have a few electric pickups leased out to Ferd drivers out there that were repossessed by Ferd back some years ago now, much to the chagrin of those Ferd electric pickup truck lease holders? The drivers were very satisfied with the product, but couldn’t keep them. Something smells rotten in Pennsylvania, and it ain’t tomatoes.

      • MarbleZeppelin says:

        ICE pick-ups are simple to build and have a higher profit margin than cars. Why undercut your profits until you have to?

    • Longtimber says:

      The depereciation of EV’s is catastrophic for 1st time buyers and a buying opportunity for used EV buyers. .. EV’s are so 1900’s.
      In a Gallup poll released today, Americans chose dilithium crystals as the “most likely” fuel to run future cars and power plants, with 84% of Americans choosing the crystals over other options including nuclear, hydrogen, corn ethanol, shale gas, and photovoltaic solar panels. Respondents indicated that dilithium crystals are popular for providing quiet, clean energy, with a proven track record of seven-hundred twenty-six episodes in four different Star Trek television series.
      http://www.resilience.org/stories/2011-07-11/americans-select-dilithium-crystals-power-next-generation

      • Ralph says:

        I’ve been tracking Leaf second hand prices for a couple of years here in the UK, with a view to buying. Since the VW scandal has tainted the diesel brand I have noticed that the number of used Leafs on the market has fallen by half and the prices have gone up 10%. I’m hoping this effect blows over in a few months – I own one of the tainted diesels.

  30. ezrydermike says:

    “As newspapers’ ad revenues have fallen over the years, prestigious publications have been going to increasingly extraordinary lengths to make up for the financial shortfall. Consider the Los Angeles Times, which has recently provided prime front page real estate to advertisements for companies like American Airlines and products like the Universal Studios film, Minions.

    But while these kinds of advertising arrangements aren’t particularly new for the Times, the same cannot be said for a newly-launched oil industry propaganda website the newspaper created for California Resources Corporation, an oil and gas spin-off company of Occidental Petroleum. The website, called poweringcalifornia.com, has raised concerns despite assurances from the Times that it is produced by a department of the Times company that is wholly independent of the reporting and editorial staff.”

    http://www.truth-out.org/news/item/33502-in-quest-for-revenue-los-angeles-times-creates-oil-industry-propaganda-website

  31. ezrydermike says:

    NYMEX WTI 11/3/2015

  32. Caelan MacIntyre says:

    “Our prognosis for the rechargeable Li/air system is that it will primarily remain a research topic for at least the next five years. Even if the challenges discussed in this review are successfully addressed in that time period, the stringent requirements of durable and safe operation in an automotive environment will further delay commercialization of Li/air EVs. However, as a long-term solution to the daunting challenge of low-cost, high-range electromobility, Li/air batteries remain one of the few and most promising, and funding of research to accelerate their introduction into the marketplace [whether the tax-coerced public like it or not] should be a top priority for government, academic, and industrial research institutions.” ~ A Critical Review of Li/Air Batteries; Jake Christensen et al.; Journal of The Electrochemical Society

    And therein lies, incidentally, another problem with science (among other usuals).

  33. Caelan MacIntyre says:

    Keep your eyes on the G i g a f a c t o r y, folks, (you’re paying for it, whether you like it or not), it may be the litmus test, lynch-pin and/or coal mine canary for where we are headed…

  34. old Farmer Mac says:

    “Tesla also said it has begun producing its battery-storage systems for use by homes, businesses and utilities at its Gigafactory, the massive battery plant currently under construction outside of Reno, Nevada. Tesla said there’s strong demand for Tesla Energy products in Australia, Germany and South Africa.”

    My opinion is that Tesla will be delivering both the new model and the new stationary batteries in significant quantities within a few months.

  35. old Farmer Mac says:

    Tesla also said it has begun producing its battery-storage systems for use by homes, businesses and utilities at its Gigafactory, the massive battery plant currently under construction outside of Reno, Nevada. Tesla said there’s strong demand for Tesla Energy products in Australia, Germany and South Africa.

  36. Jeffrey J. Brown says:

    China Burns Much More Coal Than Reported, Complicating Climate Talks

    http://www.nytimes.com/2015/11/04/world/asia/china-burns-much-more-coal-than-reported-complicating-climate-talks.html?hp&action=click&pgtype=Homepage&module=a-lede-package-region&region=top-news&WT.nav=top-news&_r=0

    BEIJING — China, the world’s leading emitter of greenhouse gases from coal, is burning far more annually than previously thought, according to new government data. The finding could vastly complicate the already difficult efforts to limit global warming.

    Even for a country of China’s size and opacity, the scale of the correction is immense. China has been consuming as much as 17 percent more coal each year than reported, according to the new government figures. By some initial estimates, that could translate to almost a billion more tons of carbon dioxide released into the atmosphere annually in recent years, more than all of Germany emits from fossil fuels.

    Officials from around the world will have to come to grips with the new figures when they gather in Paris this month to negotiate an international framework for curtailing greenhouse-gas pollution. The data also pose a challenge for scientists who are trying to reduce China’s smog, which often bathes whole regions in acrid, unhealthy haze. . . .

    The adjusted data, which appeared recently in an energy statistics yearbook published without fanfare by China’s statistical agency, show that coal consumption has been underestimated since 2000, and particularly in recent years. The revisions were based on a census of the economy in 2013 that exposed gaps in data collection, especially from small companies and factories.

    Illustrating the scale of the revision, the new figures add about 600 million tons to China’s coal consumption in 2012 — an amount equivalent to more than 70 percent of the total coal used annually by the United States.

    “It’s been a confusing situation for a long time,” said Ayaka Jones, a China analyst at the United States Energy Information Administration in Washington. She said the new data vindicated her earlier analysis of China’s preliminary statistics, which flagged significantly increased numbers for coal use and overall energy consumption.

    • sunnnv says:

      Confusing indeed, like oil statistics in the U.S.

      Nature just had a study that looked at coal QUALITY, and finds that CO2 from China coal is lower than thought, though coal TONS seems higher.
      Evidence of approaching peak coal – if you have to burn the poorer quality stuff.

      http://www.nature.com/news/china-s-carbon-emissions-overestimated-1.18199
      “… The Chinese government releases data on energy consumption and production at the provincial and national levels, but those statistics often conflict with each other, and are revised frequently. Liu and his team analysed government data on energy production and on exports and imports of coal, oil and gas. They found that China’s fossil-fuel use was 10% above the official government estimate, but that the country’s overall emissions were lower once China’s reliance on low-quality coal from domestic mines was taken into account. This is because lower-quality coal contains less carbon than higher-quality deposits, so burning it produces less energy and less heat-trapping CO2. …”

      • Synapsid says:

        sunnnv,

        That still leaves China doing a better job than Germany or Texas, both of which burn lignite. If I remember correctly, the low-quality coal China is using is sub-bituminous; lignite is only one step up the scale from peat.

        Of course, China burns a lot more.

  37. shallow sand says:

    Oasis Petroleum reported Q3.

    They were well hedged in first nine months, $68.84 per barrel of oil, versus $44.77 without hedges.

    9 month average production was 50,418 boepd. Q3 was 50,546 and Q4 guidance is for 49,900.

    Looks to me they can hold production flat by realizing around $64-66 per barrel for oil, which translates to around $70-72 WTI. That assumes $2.13 gas, which is their first nine months price. They are 88% oil weighted, so gas not a big consideration.

    The above break even calculation doesn’t include interest expense, which was $112 million first nine months on $2.38 billion of long term debt. Interest expense runs about $8 per BOE.

    CAPEX was just $78.1 million in Q3, $519.6 million for 9 months. CAPEX even less in Q4 per guidance.

    Looks like production in ND will fall slightly in September thru December, based on companies’ guidance. I foresee the larger drop coming 1/16-6/16 as it looks like November-February will see a big decrease in CAPEX.

    As with other LTO companies, I give Oasis credit for really hammering down on expenses. They still need a major price recovery to begin to chip away at long term debt. I have read there is a concern that they do not have enough core locations left, given the magnitude of the debt. Also, hedges not so strong in 2016 compared to 2015.

    • Heinrich Leopold says:

      shallow sand,

      It looks like companies are finally slowing down. Range Resources reported last week capex of just 188 mill USD (from 400 mill USD in 4q14) in 3q15 and only 20 net wells – a five year low and three times lower than the previous average. From the analysis of production numbers I can see that the slowdown will be very swift. I share the view that there are some signs of depletion of sweet spots. Luckily this will pave the way for a price recovery by next year. Finally companies are doing the right thing. There is nothing wrong reducing capacity during a slowdown in prices.

    • Longtimber says:

      A Bloodbath without hedges. No one has ever answered the question. Who is on the wrong side of the Hedges? At 20+ $/BOE the transfer of wealth is mind-blowing. Where does this money come from and how can they be solvent?

      • Silicon Valley Observer says:

        This isn’t about hedges in particular, but gets to the question of who is losing money:

        http://www.wsj.com/articles/funds-hot-money-gets-burned-in-energy-trade-1445279458

        Hedge-fund and private-equity managers over the past year began piling into debt issued by troubled energy companies, hoping to profit off a reversal of oil’s slide. They raised billions of dollars for the effort, in many cases telling backers it was a once-in-a-generation chance to pounce. But crude has continued to fall, slamming the companies and many large investors who thought they had bought in near the bottom.

        “A lot of hot money chased into what we believe are insolvent companies at best,” said Paul Twitchell, partner at hedge-fund firm Whitebox Advisors LLC, which he said steered clear of the trade. “Bonds getting really cheap doesn’t mean they are a good buy.”

        Insolvent AT BEST? So, what’s the AT WORST?

        Of course, it’s not the hedge funds themselves who lose, it’s their investors which includes pension funds, 401K investors, ordinary people who are several levels removed and probably don’t even know what the funds are doing.

        • Heinrich Leopold says:

          Silicon Valley Observer,

          It is the unsecured lender – a more elegant synonyme for small investor – who holds the bag through equity and fund investments.

  38. Fred Magyar says:

    Meanwhile Goldman Sachs has upped their planned investments in clean energy.

    http://fortune.com/2015/11/02/goldman-sachs-clean-energy/

    The investment bank is almost quadrupling its commitment to finance clean energy infrastructure around the world.

    Financial giant Goldman Sachs announced on Monday that it plans to invest $150 billion in clean energy projects and technology like solar and wind farms, energy efficiency upgrades for buildings, and power grid infrastructure.

    The investment bank previously had a target to invest $40 billion in clean energy technologies by 2012, and will now almost quadruple that amount by 2025.

    http://finance.yahoo.com/news/goldman-raises-green-financing-target-230611514.html

    Also, the company will refrain from providing finance to coal fired power generation projects and apply increased due diligence before investing in coal mining as well as hydraulic fracturing projects.

    Disruption is the name of the game
    https://goo.gl/dKODSI

    • Does this outfit invest or lend? The ones I met were bankers wearing extremely fancy suits. Fairly useless.

      • Fred Magyar says:

        Um, I think they are called an investment bank for a reason…

        But more importantly, whether they wear fancy suits and are useless or not, completely misses the point, which is, that things are changing very fast. Power is changing hands.

        The oil and fossil fuel businesses are no longer seen as a sure bet, so the capitalists are beginning to hedge their bets and are investing more in alternatives. Anyone who has followed the peak oil story should not be surprised by any of this.

  39. AlexS says:

    From Reuters:

    Despite gloom, four U.S. shale oil firms lift output views

    http://www.reuters.com/article/2015/11/04/us-oil-results-production-idUSKCN0ST0ET20151104

    A handful of U.S. shale oil producers are pushing up their production forecasts, saying efficiency gains from drilling in prime rock are helping them eke out more crude in the middle of the worst price crash in six years.
    The slightly bolder outlooks this week from Oasis Petroleum, Devon Energy, Pioneer Natural Resources and Diamondback Energy show that the confident swagger that typified the U.S. shale boom’s early days has yet to be fully tempered by the more than 50 percent drop in oil prices since last year.
    Though the consensus view is that rig productivity in U.S. shale basins is stalling to portend a drop in national output as companies struggle to pump more with less, some firms appear to still be finding new ways to drill wells faster and frack them more intensively at a lower price.
    “Over time, we continue to think we’ll need less rigs than we’re even saying now,” Pioneer Chief Executive Officer Scott Sheffield told investors on Thursday.
    Sheffield said Pioneer, which is adding rigs, expects to grow production 11 percent this year, up from a previous view of 10 percent. The company also confirmed it would grow 15 percent per year through 2018 thanks in part to cost cuts and tweaked technology. It produced 211,000 barrels of oil equivalent per day (boepd) in the third quarter.
    Some of the flatlining of U.S. rig productivity has come as producers experiment with lower cost techniques for fracking, which involves injecting liquids and sand at high pressure into wells to coax oil from rock.
    Pioneer said some of its well performance in the Eagle Ford shale of Texas was hurt recently when it tried to complete wells with lower fluid concentrations. In the future, it said wells would be fracked with more fluid and more sand so as to boost production.
    At Oasis, executives now expect the company to produce 49,700 to 50,100 boepd, up from a previous estimate of 49,000 to 50,000 boepd.
    Oasis Chief Executive Thomas Nusz cited the company’s use of ceramics and other techniques to boost production, and touted a drop of more than 50 percent in capital spending and other costs.
    And at Devon, Chief Executive Dave Hager raised the company’s full-year production growth outlook for the second time this year.
    “We are delivering this incremental production growth with significantly lower costs,” Hager said in a statement, adding he expects Devon to cut about $1 billion from its budget by year end.
    Diamondback raised the lower end of the range for its production guidance to 31,000 boepd from 30,000 boepd while saying it would come in at the low end of its expected capital spending of $400 million to $450 million. The top end for production stayed at 32,000 boepd.
    “We continue to deliver robust well results … while lowering both well costs and total expenses,” stated Diamondback CEO Travis Stice.

    • They use Boepd in this statement, do they mention crude oil anywhere?

    • shallow sand says:

      AlexS. I do tend to agree with you that production may not fall off a cliff right away in US. OPEC strategy definitely stopped the rapid output rise. It appears most companies production is either slightly rising or slightly falling.

      Companies are spending much less in the second half of 2015 than the first half, and most look to spend much less in 2016 than 2015.

      The third quarter results show that cost cutting is still in effect. The low prices definitely have resulted in lower costs. The question is whether low costs will hold if oil prices rise.

      My review so far indicates that the companies are not profitable with WTI below $50. They are generally cash flow negative with at best roughly flat production.

      It is clear the Permian is the most economic. However, although PXD is boosting production, they are not making money.

      The OPEC strategy is working, but will take another year at least. Hedges, cost cuts and liquidation of gathering/water infrastructure and mature conventional assets are allowing US LTO firms to hang in there.

      • AlexS says:

        shallow sand,

        I do agree with your analysis.
        When assessing the impact of low oil prices on LTO production, we should keep in mind that in 2014 U.S. C+C production was not only growing at record rate, but at an accelerating rate. Thus, y-o-y growth in the U.S. Lower 48 onshore output increased from 974 kb/d in January 2014 to 1413 in December (see my chart from this post
        http://peakoilbarrel.com/us-production-by-states/comment-page-1/#comment-544909 )
        If oil prices remained at $100+ levels, 2015 would be another year of well above 1 mb/d (probably, up to 1.5 mb/d) growth in U.S. production.

        And now even shale optimists admit that LTO production is in decline.

        From Bloomberg:

        “U.S. crude output, which surged to the most in more than three decades this year and triggered a price collapse, will retreat by about 10 percent in the 12-months ending April, according to Yergin, vice chairman at IHS Inc. ”

        http://www.bloomberg.com/news/articles/2015-11-02/yergin-sees-oil-prices-near-bottom-as-u-s-output-poised-to-fall

        • Silicon Valley Observer says:

          Love the wording. “Retreat” instead of “Decline”.

          He says “We are in the bottom part of the cycle and a year from now the the market will be looking different,” He seems to think this is a temporary “retreat” which will be followed by a forward march! in production. In other words, nothing to worry about, just a part of the natural business cycle in the oil industry. He claims that there is tons of money waiting on the sidelines ready to get back into the LTO game.

          “There is a lot of money in private equity firms and others waiting on the sidelines, waiting to come in.”

          Yeah, we’ll see about that. Even back in January things were bad for investors:

          http://www.bloomberg.com/news/articles/2015-01-30/oil-plunge-puts-390-billion-hole-in-investors-pockets

          And signs are still not good:

          http://www.wsj.com/articles/occidental-petroleum-swings-to-loss-1446034163

          Occidental said it will net $600 million by selling its Bakken acreage to an undisclosed buyer and will turn its attention to the Permian Basin in West Texas.

          “With this $600 million we could run four to five rigs in the Permian for a year and generate more production than we would get out of the Bakken,” said Steve Chazen, the company’s chief executive. “We just don’t see how it competes for capital inside the company in any reasonable price scenario,” he told investors and analysts Wednesday on a conference call to discuss earnings.

          As interesting as 2015 has been, it looks like 2016 will be even more interesting.

          • shallow sand says:

            Something I find very interesting looking at CHK third quarter financials.

            Realized product prices before hedging:

            Oil $41.25 per bbl

            Gas. $0.87 per mcf

            NGLs ($1.38) per barrel

            BOE $10.63.

            They are paying gatherers to take NGLs?

            • AlexS says:

              Negative price is something … 🙂
              BTW nat gas at $0.87 per mcf is also loss-making, even in Marcellus and Utica

            • Don Wharton says:

              There have been recent startups of NGL exports by tankers heading to Europe. Also the differential in gas prices received in the northeast and Henry Hub will be radically reduced over time. There are massive investments being made in pipelines. The major pipelines for takeaway are now in place. The more minor local projects are needed to take advantage of the major pipelines. I would not be too optimistic about these low prices causing reduced production.

  40. Obdacher says:

    Interesting link to a story about the biggest oilfield discovered in recent years, wich still is off-line after a spend of upwards of 50 Billion dollars…..
    http://earthobservatory.nasa.gov/IOTD/view.php?id=86890&src=eoa-iotd

    • Silicon Valley Observer says:

      “Conditions at the Kashagan gas and oil field—the largest oil field discovered in several decades—are far from ideal. Temperatures around the northern Caspian Sea range from -40 degrees Celsius (-40 degrees Fahrenheit) in the winter to 40 degrees Celsius (104 degrees Fahrenheit) in the summer. Frigid winters and shallow water make this part of the Sea particularly prone to freezing over. Thick layers of ice build up around Kashagan for five months, and water levels vary markedly throughout the year.”

      Yeah, I’d say that’s pretty far from ideal.

      • AlexS says:

        In fact, winter temperatures there can drop to -25-30 degrees Celsius, but normally it’s not that cold.
        -40 is an obvious exaggeration

        • Silicon Valley Observer says:

          Whew! Glad to know it’s only -30! LOL. Plus the ice, plus the shallow water, plus the sulfer, plus the political instability and graft. Doesn’t sound like a great business environment to me.

          • AlexS says:

            -25-30 Celsius only couple of days per winter is not big problem.
            A lot of oil is produced in much colder areas, such as Siberia and Alaska.
            Kazakhstan is politically stable.
            High sulphur content is indeed a real problem

  41. Doug Leighton says:

    ONLY 1% OF THE BAKKEN PLAY BREAKS EVEN AT CURRENT OIL PRICES (An analysis by Art Berman)

    Only 1% of the Bakken Play area is commercial at current oil prices based on my analysis that follows.

    Only 4% of horizontal wells drilled since 2000 meet the EUR (estimated ultimate recovery) threshold needed to break even at current oil prices, drilling and completion, and operating costs.

    The leading producing companies evaluated in this study are losing $11 to $38 on each barrel of oil that they produce, the very definition of waste.

    http://www.forbes.com/sites/arthurberman/2015/11/03/only-1-of-the-bakken-play-breaks-even-at-current-oil-prices/

    • shallow sand says:

      Doug, thanks for the link. I agree with the analysis, but do not like Art Berman’s call for still lower oil prices (although he may be correct). 40s WTI is low enough for me!

  42. Doug Leighton says:

    And now some good news to enjoy with your morning coffee.

    INDONESIAN WILDFIRES ARE RELEASING GIGATONNES OF CARBON DIOXIDE

    It’s a health disaster in terms of dangerous air pollution. It’s an ecological disaster in terms of the loss of habitat for threatened species like the orangutan. And it’s a global disaster in terms of releasing massive quantities of carbon dioxide.

    Tens of thousands of fires have raged in Indonesia this year, largely on Sumatra, in Papua and in the Kalimantan region of Borneo.

    The fires have emitted 1.6 gigatonnes of CO2 so far, says Guido van der Werf of the VU University in the Netherlands, who works on the global fire emissions database. To put that in perspective, it has been estimated that the entire world must emit less than 1000 Gt of CO2 from 2011 onwards if we are to avoid dangerous warming.

    https://www.newscientist.com/article/dn28441-indonesian-wildfires-are-releasing-gigatonnes-of-carbon-dioxide/

    • Doug Leighton says:

      The bad news is: CO2 from wildfires is normally taken back up again as plants regrow. But this won’t be the case in Indonesia, because the fires are also burning peat that has accumulated over thousands of years, releasing buried carbon. “You can assume that almost all CO2 emissions [from the fires] will stay in the atmosphere,” says van der Werf.

      • Doug Leighton says:

        Of course peat fires are notoriously resilient, smoldering for days, weeks or even popping up again after a winter of smoldering beneath the surface. This is recorded increasingly in the fires that scorched Canada’s NWT (plus parts of Alaska and Siberia). Fires manage to smolder through the winter and re-emerge the following year. Not encouraging.

    • Rob Hunter says:

      Let’s face reality here and own up to the fact that no gas at any concentration in the atmosphere can warm said atmosphere. In this instance, the upper tropical troposphere is the region that is claimed to be warming Earth’s surface since Indonesia is located in the tropical region of the globe close to the equator. The big problem here is that the upper level of the atmosphere there averages -17 deg C while the surface averages 15 deg C, in other words 32 degrees warmer. The basic scientific fact is that cold bodies simply cannot warm hotter bodies. So unfortunately for the Democrats basic thermodynamics will never be subject to any political needs or agendas.

      • Nick G says:

        Where have you seen claims that the upper atmosphere is conducting heat to the lower atmosphere?

        The problem is the atmosphere is absorbing too much infrared light emitted by the ground, rather than letting it radiate away from the earth.

        Have you ever gotten into a car that’s been left in the sun for a while? It gets very hot, because visible light enters the car, heats up the seats, and the windows don’t let out the infrared light emitted by the car seats.

        Same thing.

      • Don Wharton says:

        Let’s face reality here and own up to the fact that no gas at any concentration in the atmosphere can warm said atmosphere.

        Rob Hunter is posting crackpot anti-science nonsense that in unworthy of any attention.

        • Doug Leighton says:

          The atmosphere of Venus is the layer of gases surrounding Venus. It is composed primarily of carbon dioxide and is much denser and hotter than that of Earth. The temperature at the surface is 740 K (467 °C, 872 °F). Maybe we should give Rob Hunter a complementary (one way) ticket to Venus.

          • Doug Leighton says:

            Oh Rob, the atmosphere of Venus allows the light from the Sun to pass through the clouds and down to the surface of the planet, which warms rocks. Then the infrared heat from the warmed rocks is prevented from escaping by the clouds, and so the planet warmed up. I presume this is taught in school by about grade seven or eight.

            • MarbleZeppelin says:

              Poor Rob, a prime example of global dimming.
              When will they learn?
              Never.

            • Dennis Coyne says:

              Hi Doug,

              I had a pretty good education and did not know about global warming in grade 8 (it was not really on the radar). Most non-science majors at University that are 55 or older, probably never learned anything about climate change.

              In any case, Rob Hunter has clearly never learned this and may get his science from blogs like Watts Up with that. He doesn’t believe those liberal ravings over at Real Climate 🙂

              • Doug Leighton says:

                Dennis,

                I wasn’t talking about global warming, it was a response to the matter of carbon dioxide and its “greenhouse warming effect effect”. I was taught about this in very early science classes. Perhaps you weren’t.

        • Boomer II says:

          I know, for a fact, that disease doesn’t come from bacteria and viruses. Hand-washing was just a scare tactic to sell soap. 🙂

        • Nick G says:

          Or, you can use it as a “teachable moment”, and calmly and thoroughly debunk the ideas.

          Might be useful for lurkers, who are looking to learn.

      • Dennis Coyne says:

        Hi Rob,

        Your knowledge of thermodynamics is amazing! Can you explain to us why the tropics are so warm?

  43. Doug Leighton says:

    CHINA’S HIGH-OCTANE APPETITE A HINT OF 2016 GLOBAL OIL DEMAND

    https://ca.finance.yahoo.com/news/chinas-high-octane-appetite-hint-163638982.html

  44. AlexS says:

    A new report by The Carbon Tracker:

    “Lost in transition: How the energy sector is missing potential demand destruction”

    http://www.carbontracker.org/wp-content/uploads/2015/10/Lost-in-transition-Exec-Sumary_221015.pdf

    • Fred Magyar says:

      The fossil fuel based energy sector, more and more, reminds me of Nassim Taleb’s turkey voraciously gobbling up the corn, the farmer is feeding it, just a few days before Thanksgiving.
      What could possibly go wrong?!

  45. Pingback: My TFSA Update October 2015 - Is An Oil Shortage Imminent?

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