World Natural Gas Shock Model

This is a guest post by Dennis Coyne.

The views expressed in the post are those of Dennis Coyne and do not necessarily reflect the views of Ron Patterson.

The post that follows relies heavily on the work of Paul Pukite (aka Webhubbletelescope), Jean Laherrere, and Steve Mohr. Any mistakes are my responsibility.

For World Natural Gas URR Steve Mohr estimates 3 cases, with case 2 being his best estimate.

Case 1 URR= 14,000 TCF (trillion cubic feet)
Case 2 URR= 18,000 TCF
Case 3 URR= 27,000 TCF

Jean Laherrere’s most recent World natural gas URR estimate is close to Steve Mohr’s Case 1 at 13,000 TCF.

A Hubbert Linearization(HL) of World Conventional Natural Gas from 1999 to 2014 suggests a URR of 11,000 TCF, an HL from 1982-1998 points to a URR of 6000 TCF for conventional natural gas.

Note that “Conventional” natural gas subtracts US shale gas and US coal bed methane (CBM) from gross output minus reinjected gas for the World.

World Conventional Natural Gas HL (shale gas and CBM output from US deducted)

WorldshockNatgas/

Currently World cumulative conventional natural gas output (using gross minus reinjected gas following Jean Laherrere’s example) is 4200 TCF, about 38% of the URR.

When shale gas and coalbed methane gas output in the US are added to World Natural Gas, the HL points to a URR of 20,000 TCF, this implies that shale gas, tight gas and CBM might have a combined URR of as much as 9000 TCF. This matches well with the EIA’s 7000 TCF TRR estimate for shale gas and Steve Mohr’s 2500 TCF estimate for CBM.

I suspect the combined shale gas and CBM numbers will be lower(4000 TCF), but that conventional gas will be more than 11,000 TCF (about 15,000 TCF) .

World Natural Gas HL below (includes all types of natural gas)

WorldshockNatgas/

Note that the HL estimate is highly uncertain, the conventional estimate could be a little low (Jean Laherrere estimates 12,000 TCF) and combined shale gas, tight gas, and coal bed methane could vary from 2000 to 9000 TCF.

For the World the USGS estimates about 16,000 TCF of conventional natural gas resources, the EIA estimates 7000 TCF of shale gas resources, and Steve Mohr estimates 2500 TCF of coalbed methane (CBM). The total of these three is similar to Steve Mohr’s high case (case 3), I will use 26,000 TCF for my high case (case C).

The USGS estimates about 1000 TCF for US continuous gas (tight gas, shale gas, and CBM) and my low estimate is that the rest of the World will add another 1000 TCF from continuous natural gas resources.

The total when added to the HL estimate for conventional natural gas resources is about 13,000 TCF, which is my low case (case A).

I suggest 3 cases, with Case B (the average of case A and C) as my best guess.

Case A URR=13,000 TCF
Case B URR=19,000 TCF
Case C URR=26,000 TCF

Cumulative discovery data from 1900 to 2010 is used to estimate a discovery model for each of the three cases. The equation is Q=U/(1+(c/t)^6), where t is years after 1871 (1872=1, 1873=2, etc.), Q is cumulative discoveries of natural gas in TCF, U=URR in TCF, and c is a constant found by a least squares fit to the data.

URR (TCF)    c
13000           112
19000           125
26000           136

Chart with 3 discovery models and cumulative discovery data below.

WorldshockNatgas/

The gap between the discovery model and the discovery data (for the 19000 and 26000 TCF cases) will be filled by backdated future reserve growth of both conventional and unconventional natural gas discoveries.

As a quick reminder the maximum entropy probability distribution is used to estimate the time from discovery to first production and has the form p=1/k*exp(-t/k) where p is the probability that resources discovered in year zero will become a producing reserve after t years(t=0.5, 1.5,…) and 1/k is the average number of years from discovery to first production.

Note that the median time from discovery to production is about 63% of the mean.  If 1/k=29 years, the median time from discovery to first production would be 18 years.

For the models presented, case A has 1/k=25, case B 1/k=29, and case C 1/k=32.
The three scenarios can be compared on the chart below.

WorldshockNatgas/

Details for the three cases are in the following three charts, with extraction rates (from producing reserves) and annual decline rates on the right axis. The gas output is gross gas minus reinjected gas, dry gas will be about 91% of the gross minus reinjected gas (1980-2011 average).

Case A below.

WorldshockNatgas/

Case B:

WorldshockNatgas/

Case C:
WorldshockNatgas/

Below I present a few more charts with the focus on case B, note that the eventual URR is highly uncertain but is likely to be between Case A and C in my view, case B is just the average of the case A and case C URR.

My guess is that the World URR for natural gas will be between 17,000 and 21,000 TCF or +/- 10% of case B, future extraction rates and thus the shape of the output curve after 2014 are unknown.

Producing reserves for case B (also called proved developed producing (PDP) reserves):

WorldshockNatgas/

Case B discoveries, new producing reserves(n) added to producing reserves (P) each year, and natural gas extracted from P each year (x), aka production.

The extraction rate is e and x=e*P.

Every year n reserves are added to P and x reserves are extracted, if n>x. then P increases and if n<x, P decreases.

If P1 is producing reserves in year 1 and P2 is producing reserves in year 2, then
P2=P1+n2-x2, where n2= new producing reserves added in year 2 and x2 is natural gas produced in year 2.

Often when the decline rate of the model is lower than expected it is because we are forgetting about the new reserves that are continually being developed. It is unlikely that new reserves will stop being developed in the near term, so n is not zero, n will gradually decrease unless disrupted by political or economic crises.

WorldshockNatgas/

Summary

Natural Gas is at an earlier stage of development than crude oil and there is greater uncertainty about the eventual ultimately recoverable resources (URR). Estimates range from 13,000 TCF (Jean Laherrere) to 28,000 TCF (combined EIA and USGS estimates for conventional, shale, and tight gas plus Steve Mohr’s case 3 estimate for coal bed methane.)

I decided to match Laherrere’s estimate (13,000 TCF) for my low case based on Hubbert Linearization for conventional natural gas and conservative estimates of World shale gas, tight gas, and coal bed methane URR (2000 TCF total). For the high case I decided to use Mohr’s case 2 estimate for coal bed methane along with USGS and EIA estimates for other natural gas rescources, URR =26,000 TCF. My best guess is just the average of the low and high case, the scenarios presented peak in 2018, 2039, and 2049.

Supplemental charts for Case A and C below:

Case A

Producing reserves

WorldshockNatgas/

Discoveries, new producing reserves, and production

WorldshockNatgas/

Case C charts:

WorldshockNatgas/

WorldshockNatgas/

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674 Responses to World Natural Gas Shock Model

  1. Chris says:

    Very good work. Peak natural gaz would be between 2020 and 2050.
    Do you know what has changed before/after 1998?

    • Dennis Coyne says:

      Hi Chris,

      Thanks.

      I believe you are referring to the bend in the HL plot around 1998 and I do not have a very good explanation for it.

      Some guesses are the development of a huge find in Qatar and Iran which was found in the early 1970s and may have started hitting the market around that time.

      The development of shale and tight gas resources in the US may have begun around that time (though I think it was around 2000 or later).

      Russia may have finally recovered from the turmoil which resulted as the soviet Union broke up.

      I took a quick look at natural gas output data and Russia was pretty flat over this period (1995 to 2014) and US output started increasing in 2005 and was flat before that so the output from Iran and Qatar may be the best explanation.

  2. The Wet One says:

    I’ve been on holidays, taking a break from it all and flying all over the western hemisphere burning up precious fuel.

    Now that I’m back to reality, is there any reason to believe that the world will not go to hell in handbasket before I die in about 40 or so years?

    I mean, I know WTI is around $47.00 due to the temporary lull in world oil consumption (leading to a temporally local oversupply of 2 million or so barrels a day), but that won’t last (after all, what’s the solution for low prices? Low prices, which spurs consumption. Duh! Econ 101 right?). Still though, it does seem like some optimism is perhaps not out of place.

    But then I read Albert Bartlett’s comments about the exponential function and, yeah, I’m hoping against hope aren’t I? World population growth, carbon continues to be added to the atmosphere, and bad things will still probably arrive before I die in about 40 years.

    And my planned for, but presently non-existent children, will be going into that maelstrom along with my grandchildren.

    Ok, I’m properly depressed again now.

    I need to go back on holidays. Perhaps somewhere a little closer this time (seriously, no need for another 15,000 km round trip. That was a lot of travel).

    • Dennis Coyne says:

      Hi Wet one,

      There is a good possibility (better than 50% chance) that within 5 to 10 years of the beginning of oil decline (more than 0.5% per year for 3 years or more so people recognize it) that there will be an economic depression. My guess is between 2028 and 2033 for the start of Great Depression 2.

      How the world responds is key, will we also repeat WW2 or worse or will there be a focus on solving the energy problem and associated environmental problems with wise social investments? A build out of rail, light rail and High Voltage DC transmission would be a start. Tax credits for non fossil fuel energy production and development might also help along with a stiff tax on carbon emissions.

      Much is possible, higher fossil fuel prices as they deplete will help move society towards alternative energy, but it probably won’t be fast enough to avoid a crisis. The response to crisis will determine the ride.

      • Nick G says:

        Dennis,

        Would you agree that PO is likely to not happen at the same time as Peak Coal & Peak Gas? Probably at least 10 years before?

        • Dennis Coyne says:

          Hi nick

          if case b is a good guess, then for natural gas, yes.

          Based on Steve Mohr’s work on coal I think coal will peak within 5 years of oil, around 2022-3.

          I haven’t looked at coal for a couple of years so this is an old estimate.

          • Those peak estimates make the EPA “social cost of carbon” study irrelevant.

            • Nick G says:

              Sadly, no.

              The peak estimate for coal is based on what we’re actually doing, not what is possible. There are enormous coal resources which are not likely to be used. But, they’re there.

              For instance, roughly 200B tons of bituminous coal in the Illinois basin, not used simply because it’s high sulfur. That coal could be scrubbed at a cost of about 2 cents per kWh, or even burnt in dirty plants like the Chinese currently do.

              I agree that we’re on track to not burn most of the resource available, but that’s because there are cheaper alternatives, like gas, or low-sulfur sub-bituminous Powder River coal. And, of course, wind and solar, growing fast.

              There’s also Green River kerogen. It’s miserable stuff to turn into liquid fuel, but it will burn just fine, and there’s a LOT of it.

              Sadly, geology won’t automatically save us – we have to actually decide not to burn the stuff.

              • Your comment is wrong. The EPA reports their case yields a forcing = 8.6 watts per m2. That forcing exceeds the one used by the ipcc rcp8.5. If Dennis is right and world production peaks within a couple of decades then everything in your statement and the EPA report falls like a drunk on stilts. As far as I can see we may never reach 600 ppm. The EPA landed at 1600 plus ppm. I call bullshit.

                • ezrydermike says:

                  where do you find the calcs that show fossil fuel usage as CO2 emissions. I’ve been going over lots of this stuff and I am sure I have seen this, but…lots of references and stuff but I have not seen the conversion calcs. i.e how much CO2 is emitted when one burns 1 ton of coal…

                  also, the forcings aren’t just fossil fuel combustion

                • Doug Leighton says:

                  With perfect combustion, a (short) ton of coal will generates about 5,720 pounds of CO2. But, carbon content ranges from about 60% for lignite to roughly 80% for anthracite. The atomic weight of carbon is 12 and oxygen is 16, the atomic weight of carbon dioxide is 44. So, it’s easy to calculate as long as you know the “grade” of coal involved.

                • Nick G says:

                  Your comment is wrong.

                  What part?

                  If Dennis is right and world production peaks within a couple of decades

                  IF is the operative word. What if he’s not?

                  And, if coal is needed to prevent a depression, he will be. That’s the point.

                  Have you looked at Illinois basin coal? How about Green River kerogen (aka oil shale)??

                  • My comment was referenced specifically to Denis’ statements about peak fossil fuels.

                    This is a very simple issue: either you use a rational approach, establish the fossil fuel likely emissions pathways and volumes, use a carbon cycle of some sort, and estimate the atmospheric concentrations. The other option you have is to go irrational, wave both arms in panic and cry “what if Dennis is wrong”.

                    If Dennis and Ron are wrong we will have a pretty good idea in 5 years. And by 2035 I’m pretty sure 97 % of engineers will be pretty sure we are running out of fossil fuels in a hurry.

                  • Nick G says:

                    use a rational approach, establish the fossil fuel likely emissions pathways and volumes

                    Exactly. And those likely emissions pathways depend critically on public policy.

                    At the moment, public policy is pushing to reduce coal consumption. If that push continues, then coal consumption appears likely to stagnate and then decline reasonably soon.

                    But, if people say things like “Those peak estimates make the EPA “social cost of carbon” study irrelevant.”, then they’re advocating a different public policy, in which we no longer worry about coal consumption on the assumption that geological resource limits will take care of the problem for us.

                    You can’t have it both ways: responsible public policy is *required* in order to prevent serious climate change.

                  • Dennis Coyne says:

                    Hi Nick,

                    Steve Mohr has done a lot of work on coal resources. There is much less coal that is economically recoverble than is commonly thought.

                    In Gboe (billions of barrels of oil equivalent) his low estimate for coal is 2600 Gboe, his high estimate is 4900 Gboe, and his best guess is 3300 Gboe.

                    Multiplying these values by 2.1 gives an approximate Gt of coal in metric tonnes.

                    In Mohr’s analysis the high case for natural gas peaks in 2062 and the coal high case peaks in 2030, the high oil case peaks in 2019, so your 10 year estimate is correct for the high case.

                    For Mohr’s best guess (case 2) coal peaks in 2019, natural gas in 2034, and oil in 2012.

                    I think oil will peak in 2018 and coal by 2023, natural gas may be 2035 as extraction rates will increase to meet demand, which is not included in my scenarios.

                  • Nick G says:

                    There is much less coal that is economically recoverble than is commonly thought.

                    The key here is “economically recoverable”.

                    Coal reserves have been plummeting, simply because demand for coal has been falling.

                    As a test case (there are others that are even larger), look at his estimates for the US, lower 48. It clearly doesn’t include the Illinois basin, which holds a 200 year supply for the US, at only *slightly* higher costs.

                    And, what about Green River kerogen (aka shale oil)? Again, it’s miserable for liquid fuels, but it burns very nicely. A little dirty, but it will generate power just fine, should we choose to use it.

                    Have you looked at the Illinois Basin, and Green River shale??

                  • Kerogen isnt viable, but if you wish…. Use kerogen. I guess you will have to assume kerogen is cheaper than wind power and nuclear.

                    But please stop the armwaving to make zero argument. Go get back up. As far as I can see Dennis has very reasonable numbers. And those make the EPA 8.6 look like feces.

                  • Nick G says:

                    Kerogen isn’t viable for liquid fuel (because other things are much cheaper). But nobody has said you couldn’t burn it for fuel. It’s very much like a low quality coal.

                    As for the rest: there’s nothing arm waving about it. It’s very specific. Mohr excludes some very large coal resources. Look at his work, and look at his value for US coal – it clearly doesn’t include the Illinois Basin. The Illinois Basin is still there, and still available to mine, should we choose to. I don’t think we will, but that’s very much a policy decision – it’s not geology.

                    So, that means that the high end scenario for emissions is very possible. I think it’s unlikely, due to current and likely public policy….but the Public Policy is *essential*.

                  • Nobody who knows much about kerogen believes its use is very possible. None of the emissions pathways assumed it could be used. I think you just pull garbage out of the air to try to defend super alarmist hysteria panic mongering emissions projections.

                    And the amount of hysteria peddling I see is starting to make me think there’s money behind it

                    https://thelukewarmersway.wordpress.com/2015/07/30/the-climate-change-industry-is-worth-1-5-trillion/

                  • Nick G says:

                    Yes, of course, everyone thinks kerogen is unrealistic. As I said, it’s a miserable source of liquid fuel. And, it’s lower quality than coal. And, we have enormous amounts of coal.

                    But, that’s the point. Anyone who dismisses kerogen is also dismissing the possibility of Peak Coal. Very, very few people see a peak in coal production caused by a limit to the resource. If we run out of coal (and gas) and we choose not to care about pollution, and we allow wind, solar and nuclear to be blocked by resistance to change, then we have more hydrocarbon in the ground to burn, should we choose.

                    I agree that the high-emission scenarios are unlikely, but that’s only because we’re *choosing* to limit our use of fossil fuels.

                    Let me say it again: fossil fuel resource limits will not prevent excess carbon emissions. Only deliberate planning and public policy choices will do it.

                  • Dennis Coyne says:

                    Hi Nick,

                    The kerogen is not viable as a liquid fuel due to lack of water in the west. To burn as a solid fuel it is much more expensive than coal.

                    It is a question of both geology and economics, if the energy is not profitable to produce, it won’t be produced.

                    That is likely to always be the case for kerogen. Nuclear, wind , and solar will all be cheaper so kerogen will not be produced.

                    In this case I agree with Fernando, citing kerogen as a reason for worrying about climate change amounts to alarmism.

                    Wher I disagree with Fernando is that there are plenty of resources for there to be an issue with climate change.

                    My oil and natural gas cases at the high end, along with Steve Mohr’s high case for coal would lead to about 1700 Gt of carbon emissions ( about 1500 Gt of carbon emissions by 2250).

                    The best estimate by Myles Allen et al is about 1000 Gt of carbon emissions for a 50% probability we will remain below 2C above the per 1750 Holocene average global temperature.

                    See

                    http://www.nature.com/nature/journal/v458/n7242/full/nature08019.html

                    From the abstract at the link above:

                    Total anthropogenic emissions of one trillion tonnes of carbon (3.67 trillion tonnes of CO2), about half of which has already been emitted since industrialization began, results in a most likely peak carbon-dioxide-induced warming of 2 °C above pre-industrial temperatures, with a 5–95% confidence interval of 1.3–3.9 °C.

                    Also peak fossil fuels was always about economics and geology. Anyone who thinks that there is no limit to how high fossil fuel prices can rise understands little about economics.

                    Coal will peak for the same reason that oil will peak. It is not because there is no resource to extract, it is because there are limited economically recoverable resources to extract.

                    Kerogen will never be extracted simply because it will never be more economically favorable to extract than coal.

                    Some of the IPCC scenarios (RCP8.5) are ridiculous, on that point Fernando is correct. My high case scenarios for fossil fuels (including Steve Mohr’s case 3 for coal), results in a peak atmospheric CO2 of about 570 ppm for 1500 Gt of carbon emissions (fossil fuels, cement production, natural gas flaring and venting, and land use change) emissions from land use change fall to zero by 2070 (total is 190 Gt of carbon). The best guess estimate for 560 ppm od CO2 is 3C of warming, and 570 ppm would be about 3.1 C.

                    Also note that very pessimistic resource estimates leads to low risk of warming above 2C. So the people that are convinced that a Seneca cliff is most likely should have little concern about global warming based on the main stream climate science.

                  • Nick G says:

                    Dennis,

                    As a practical matter, I generally agree with you: I think that we’re likely to follow one of the lower emissions scenarios.

                    But, people like Fernando can’t have it both ways: current public policy is pushing us to reduce emissions, and move to wind, solar and nuclear (at least in China). We can’t relax, and say: leave it to big business, because geological limits will fix the problem, and there’s no need to worry and continue the pressure for change.

                    As for economics: no. Low quality coal, and kerogen, are perfectly viable from a cost point of view, if there are no competitive substitutes like wind, solar and nuclear.

                    Look at Powder River coal: it’s substantially lower quality than bituminous Illinois Basin coal: lower density, and much further from population centers. But, it’s low sulfur, and that makes it competitive.

                    Kerogen is very unlikely to be consumed, but…it’s there, and it could produce entirely affordable electricity.

                    Not to mention the 200 billion tons of Illinois Basin coal not included in Peak Coal analyses; the 200 to 5,000 billion tons of Alaskan coal; and perhaps as much in Alberta – no one knows because it hasn’t been needed.

                    Again, coal consumption is leveling off due to those commies like Jimmy Carter, who kick started wind and solar R&D; Clinton, who kick started hybrids with the Partnership for New Generation Vehicles; and the German renewables projects. And, of course, we need to continue such efforts and push even harder. We can’t relax and say, hey, no worries – there’s not that much stuff to burn.

                  • Don’t be silly, we can compete with kerogen using mule powered generators. Your logic is completely shot full of holes. If wind, solar, hydro, geothermal, and nuclear can’t compete with kerogen then why is kerogen sitting there and nobody is serious about investing in it? Do you even know what it takes to get it out?

                  • Nick G says:

                    If wind, solar, hydro, geothermal, and nuclear can’t compete with kerogen then why is kerogen sitting there and nobody is serious about investing in it?

                    I’m not arguing that renewables can’t provide affordable power. I believe that was your argument. If you agree that non-fossil fuel sources can be adequate, effective and affordable, than we’re in agreement.

                    My point: it’s not realistic to say that fossil fuels will “peak” any time soon. There are enormous amounts of affordable coal and others, such as kerogen.

                    Do you even know what it takes to get it out?

                    Strip mining, just like sub-bituminous Powder River coal.

              • Synapsid says:

                NickG,

                I don’t see any question that coal from the Illinois Basin will be used–the White Stallion plant in Matagorda County, Texas, was to have been fueled by that coal; the plant was rated at 1200 megawatts.

                What stopped it was the low price for NG and “regulatory difficulties.” Those can change, as we know too well.

                Matagorda County got up on its hind legs and said “Hell no”, too. The courts in Texas side with the landowners, not with the energy companies, according to Rockman.

          • Nick G says:

            So, that means that if you’re worried about economic impact (as opposed to pollution and climate change), the solutions to Peak Oil should come first.

            Personally, I think Climate Change is more important, but if you think the economics of the various Peaks is the important thing, then EVs (and mass transit, etc) are the priority. EVs can be ramped up within very roughly 10 years.

            Of course, EVs will pave the way for wind, solar and nuclear by providing a large storage buffer…

            • Do you own an EV dealership? Or you didn’t get the memo that an EV ain’t got the range and loses efficiency in very hot or cold weather?

              • Nick G says:

                EVs include electric hybrids and Extended Range EVs, like the Chevy Volt and Opel Ampera. They have plenty of range, and don’t suffer from temperature problems.

                Of course, what you’re thinking of is the Leaf, which had hot weather problems which have been pretty much fixed. Or didn’t you get the memo?

                • Caelan MacIntyre says:

                  It’s quite a narrow memo.
                  And other memos get deliberately ignored.

                • They don’t work here. Too hot in the summer, too cold in winter, mountains, and expensive to set up charging units in condos with individual parking spots which require separate meters.

                  One serious problem Americans tend to have is the inability to visualize other environments. Go try to sell an EV in Egypt and see how far you get.

                  • Bob Nickson says:

                    Considering that EV’s are incompatible with cold weather and hills, it is curious that Norway now has over 50,000 EV’s on its roads, and 23% of new car registrations there are EV’s.

                    http://www.evnorway.no/

                    http://gm-volt.com/2015/07/15/more-than-one-in-five-new-cars-in-norway-plug-in/

                    It’s very strange.

                  • I suppose norwegians have two family cars. Or electrics are heavily subsidized, or electricity is very cheap, or they never go anywhere? Who knows? I don’t suppose you think everywhere it’s like Norway?

                    Let me ask you, have you ever driven the expressway from Murcia to Valencia by way of Alcoy? If you haven’t then I suggest you try it in a) mid August and b) mid February.

                    I believe we got around 80 thousand Norwegians living in Alicante province, and I have never seen or heard of one driving an EV. They have one single charging station that I’ve ever seen, and I never saw a vehicle getting a charge.

                  • Doug Leighton says:

                    In Norway, you pay a purchase tax of 25% on a car’s value but EV buyers pay nothing. EV drivers are exempt from downtown parking fees, road tolls, and ferry fees. EV drivers can charge their cars for free and drive in the bus lane: They represent about one percent of all cars in the country, I think.

                  • Bob Nickson says:

                    It’s true. Electric cars will not work for everyone, after all, 1% of all single trip passenger car journeys in the U.S. are more than 70 miles.

                    http://www.greencarreports.com/news/1071688_95-of-all-trips-could-be-made-in-electric-cars-says-study

                    But then, as you point out, Egypt is nothing like the U.S. or Norway.

                  • Javier says:

                    In Norway, you pay a purchase tax of 25% on a car’s value but EV buyers pay nothing. EV drivers are exempt from downtown parking fees, road tolls, and ferry fees. EV drivers can charge their cars for free and drive in the bus lane

                    As usual, a way for the poor, who have to buy cheap gas cars, to subsidize the rich, that buy expensive EVs

                  • Nick G says:

                    way for the poor, who have to buy cheap gas cars, to subsidize the rich, that buy expensive EVs

                    European countries tax cars heavily in large part because they want to discourage oil consumption. EVs don’t have that problem. Don’t forget – there are plenty of lower priced EVs for lower income buyers.

                  • Javier says:

                    Nick G,

                    Either you have no clue or you just deny reality.

                    Prices in Spain after rebates and subsidies:
                    Gas cars
                    8.800 € FORD KA 1.2 Urban
                    9.040 € FIAT PANDA 1.2 Pop
                    9.180 € DACIA LOGAN1.2 Ambiance
                    9.190 € SUZUKI CELERIO 1.0 GL
                    9.230 € DACIA SANDERO .2 Ambiance
                    9.290 € SKODA CITIGO 1.0 60 Active

                    EVs
                    16.000 € Renault ZOE
                    17.690 € Citroën C-Zero
                    17.690 € Peugeot iON
                    18.900 € Mitsubishi i-MIEV

                    You can buy 2 gas cars for the price of 1 EV. The gas cars will blow the EVs in autonomy and convenience. And as long as oil prices are low will probably have a much lower total cost of ownership.

                    Yet the government has decided that we are all going to pay to subsidize the rich people having a second car, an EV for city driving to take advantage of free parking spaces and other perks, as they boast how they are saving the environment.

                  • islandboy says:

                    “a way for the poor, who have to buy cheap gas cars, to subsidize the rich, that buy expensive EVs”

                    Just wanna invite Javier over to the EV blog, insideevs.com to learn a little about car markets around the world and particularly in Norway. Here are a couple of the things I picked up there:

                    A Nissan Versa (Tiida in some markets) costs more than a Nissan Leaf and in fact the Tesla Model S costs less than half of what the comparable Mercedes costs. See:

                    Tax Exemptions in Norway Cut Tesla Model S Price in Half

                    Norway is pioneering the use of battery electric ferries

                    Norway has the most expensive gasoline in the world (more often than not)

                    So, actually. in Norway they have a way for the poor to buy relatively cheap EVs, using subsidies funded by the rich, that buy expensive gas cars! Weird, isn’t it?

                  • Javier says:

                    islandboy,

                    Who says Norway is representative for anything? EV subsidies are very common all over the OECD. As every subsidy, they are a way of taking money from everybody so it ends in somebody’s pocket. In this case is very clear that drivers of EV in most if not all countries are more affluent on average than drivers of gas cars, so it is a subsidy from the poor to the rich.

                    Subsidies are a very common way of redirecting wealth from the poor to the rich, and with a smart spin, poor people seem to be ok with it. They don’t seem to understand that their money is being taken away to be given to people with more money.

                  • islandboy says:

                    Javier, since I was replying to a string of five posts that mentioned Norway, I thought we were talking about EV incentives (subsidies?) in Norway in particular. The fact that two comments by yourself and Nick got in between mine and the one I was responding to makes that less clear.

                    Where I come from, the current ruling party used to be very fond of subsidies, starting from the early seventies when a populist leader jacked up the royalties on bauxite mining and declared free education among other goodies. After the oil shocks, starting in the seventies sent the local economy into a tailspin, several IMF rescue packages have reduced the tendency to subsidize tremendously.

                    In poor developing countries, such as mine, subsidies are quite popular among the poor unemployed portions of the population who like the idea of less expensive food or fuel or whatever. Subsidies are usually despised by those who feel that they end up footing the bill, while freeloaders get to enjoy paying less for whatever.

                    If you’re curious you can take a look at the list of sales tax exempt items in Jamaica and tell me which one them represents giving a minority a tax break that does not benefit the majority, apart from the first one and the last two (international travel tickets, solar water heaters and PV cells.modules)?

                    Bear in mind that in Jamaica, a television news report showed a woman lamenting that some action taken by the local authority had halted the little business she had, selling stuff from her little stall and that was her only means of supporting her nine children, all with deadbeat fathers! Her situation is not a particularly unique one and I doubt very much that people in her circumstances pay much in the way of taxes and what little they do pay would be for items that are not on the tax exempt list.

                    I’d say subsidies (tax breaks) can get really complicated and the idea of taking from one set of people to give to another set can have quite unintended consequences. IMHO, in the case of Jamaica, tax breaks have masked the true cost of raising children, resulting in what I consider to be a cavalier attitude amongst my fellow citizens to what I consider irresponsible reproductive behavior. Problem is, once the kids are born, how do you sanction the (irresponsible) parents without harming the kids?

              • Fred Magyar says:

                So put on a sweater and ride a bike 🙂

            • Tristan Zuckerman says:

              With all the debt and budget deficits our country is in, climate change should be one of the least of our worries, man-made climate change even less so since the evidence on that is still up in the air. The climate has been changing ever since the last ice age and we haven’t fully come out of that yet. What I believe is that The Left only loves global warming because they think it grants them the scientific inevitability that we must make the transition to renewable energy and socialism, or else. However when the working class majority failed to give them the scientific inevitability they required, they had latch onto something else by redefining the wording. “The Environment” happened to be what was latched onto.

              • Synapsid says:

                Troll alert.

              • Tristan Zuckerman says:

                You got me, Synapsid! 😐

                True, climate change is bad bad bad, but I have vested and monied interests tied up in what in part is baking the planet and wrecking the ecosystem, so I feel I have to create FUD (fear, uncertainty and doubt), otherwise it’s game over for me and my family. The planet will live on without us, so what matters to me is the short-term, and my cronies.

                • Nick G says:

                  Yes, that’s pretty much it.

                  Except, probably it’s not you and your family who are creating the FUD, it’s others…who you believe.

    • old farmer mac says:

      Don’t let people like Bartlett get you too far down.

      Back when I was an agriculture undergrad in the fabled sixties I heard all the doom and gloom predictions made up until that time in the biology classes that made up well over a third of my studies. Those classes sometimes carried ag id such as Ag BioChem 201 as opposed to Intro BioChem 201 etc but they were taught in the same classrooms at the same hour by the same professors to the biology majors.I had a long conversation with Erlich himself, the guy who wrote The Population Bomb, when he came to Va Tech as a visiting scholar.

      Back in those days I had a ”hot young blossom” ( Twain) of my very own, who although she was a hot blooded Baptist farm girl with four sisters and a brother make it perfectly clear that SHE would never have more than two kids. Of course being young and intellectually arrogant and extremely well read (for a youngster) and all that sort of thing it never even occurred to me in my ignorance that women all over the world might be thinking the same way in a couple of generations.When I look back the width and depth of my ignorance in those amazes the hell out of me. Nowadays I am so far behind when it comes to really understanding the new technological realities the youngsters look at me with pity if not outright contempt. But I know ONE thing they have not yet learned – that thing being that they just might be WRONG about the future.

      I looked at people like Erlich as demigods back in my youth and promptly forgot about them -believing that the shit would hit the fan SOMEDAY just as they predicted but also believing that someday was too far down the road to concern myself with it.

      There is NOTHING wrong with Bartlett’s actual science but as Yogi sez, predicting is HARD, especially the future. Bartlett and Erlich know (knew) their stuff but they failed to anticipate falling birth rates and they grossly underestimated or ignored the rate at which progress was being and is still being made in energy efficiency and conservation measures.

      They did not foresee the computer and electronic communication revolution that is making it possible for poor people’s kids in backward countries to get a basic education formerly totally out o their reach.

      They did not foresee the coming of cheap photovoltaics or the sort of genetic engineering that allows modern farmers to grow more food on less land without the topsoil washing away due to plowing over and over.

      There is as much critical knowledge to be gained from the study of history and literature as there is from the hard sciences themselves.

      A sustainable industrial civilization IS at least technically possible. Anybody who tells you otherwise is basing his arguments on outdated assumptions such as the EROEI of renewables being too low to get the job done. Plenty of capable physicists will tell you the same. I have asked four personally. None of the four is willing to predict such a civilization WILL come to pass but all four believe it is within the realm of the possible.

      Falling birth rates and changing life styles in combination with new technology mean we DO have a chance – some of us at least.

      There is no reason to assume that the entire world is going to suffer a silmantaneous hard crash, although the cards might fall that way-especially if we fight a flat out WWIII which is a real possibility.There ARE plenty of good reason to believe large parts of the world WILL suffer such a crash at somewhat different times. This is what overshoot is all about.

      Western European countries will sooner or later do whatever they must do to stop the flow of immigrants from Africa and other nearby places. If it takes machine guns at the borders, machine guns will eventually be deployed.

      I anticipate our southern American border being closed up tight within ten years or so regardless of which party controls the country. As times get tougher the voters are not likely going to tolerate much immigration legal or otherwise.

      Life IS a Darwinian affair and while we have a great capacity to show empathy and assist each other in times of trouble, we look after our nested “in” groups starting with the immediate family, the extended family, the local community… right on up to the nation state we call home.

      With a little luck – more than a little – the USA, Canada, and a few other nations possessed of plenty of resources, defensible borders, large educated populations, very powerful armed forces or very powerful allies etc etc have a decent shot at pulling thru the coming crisis, although I expect some very hard times even here in the USA.

      There really isn’t ANYTHING at all that we MUST have to survive and live decent lives that we do not possess already within our borders.

      Stay well away from places such as Egypt and Detroit and go ahead and have a couple of kids.

      It times past they would have been at high risk of dieing from starvation, a dozen different contagious diseases, war, snake bite, exposure, food poisoning, a broken bone or an abscessed tooth or old age at thirty five due to working themselves to death.

      Pick a good spot to raise them and teach them how to think for themselves and to work hard and smart and they will probably have about as good a shot at living to be old and providing you with grandchildren as any generation that has ever lived.

      There is a LOT to be said for the Bible Belt mountains of the southeastern USA. In the event the shit hits the fan really hard, there is no better place to be. In the lottery of life I am a damned lucky individual, having been born to a family with the right color skin and a suitable name etc in the strongest and best situated nation on earth. I got lucky again coming from one of the best spots in the USA. Call my hand four of a kind. If my parents had been rich and connected, I would have drawn a royal flush. I am guessing that you are holding not less than a full house yourself but I don’t know where you are from.

      Safety is an illusion. The grave worms WILL have their way with us unless our carcasses are pumped full of nasty chemicals and in that case the anaerobic bacteria will get the carcass anyway. When we quit believing in God we did not just immediately start believing in NOTHING. Without something bigger and grander to look up to we have gotten to looking at our navels too often and want to live forever since death is so scary.

      I don’t have any qualms about life being dangerous. Life has always been dangerous until very recently indeed. Quite a few of the people buried in the church cemetery where I will rot away next to my parents met violent ends. Men who wear panties feel compelled to call the police when troubles come to them but men around here just make it clear that trouble is met with more and BIGGER trouble. Consequently we have very little trouble excepting domestic troubles and occasional burglaries etc. Home invasions and armed robbery are just about unheard of.

      Something will get us all sooner or later but later might very well be a century or ten centuries down the road for YOUR bloodline. That something might be ten thousand years down the road.

      Your kids and grandkids will not miss what they did not experience themselves. They might have to fight and they might have to work themselves to death but there is nothing new about such fates.

      • Ellen Anderson says:

        Not bad advice at all. I have a daughter and son-in-law asking the same question.

        • The Wet One says:

          I’ve said a few times that OFM is the wisest man I know. His words are always worthy of consideration.

          • Caelan MacIntyre says:

            He’s ok, even though I beg to differ with him on occasion.

            For examples, he seems to hold Steven Pinker’s violence contentions somewhat too close to his heart (‘love is blind’) and his apparent knowledge of farming– ironically, given his moniker– seems dated, defunct and/or fundamentally unworkable, and even dangerous (monocropping, tilling, soil nutrient draw-down, pesticides?).
            Alas, if so, those two examples possibly detrimentally influence other of old farmer mac’s related contentions.
            He also ostensibly likes to ‘frame reality’ (and people) ‘for the rest of us’ (which is in part kind of why I am writing this comment and this way)
            I also question whether he could sometimes at least write essentially the same thing with less words.
            So there may be a little more room in old farmer mac’s wisdom closet, but of course that’s the case with everyone.

            Oh yes, with regard to his ‘persimmons-and-vinegar’ reply to myself under the previous article, I would simply caution him with the fundamental attribution error as well as, and speaking of vinegar, his propensity to invoke the occasional ad hominem attack. While vinegar can be nice on chips, stepping on someone’s chips is probably less effective unless we are talking about mashed potatoes, but even then.

            “The first step on the road to wisdom is admitting that you don’t know anything.” ~ Howard Jacobson

            • SatansBestFriend says:

              Caelan,

              The way you structure your sentences is tough to follow. This is meant to be constructive.

              Try writing in simple to understand sentences. Instead of jumping back and forth with odd punctuation and moods within a single run on sentence.

              When I was trying to understand your anarchy nonsense, it detracted from the communication of your message.

              • Caelan MacIntyre says:

                Well then you’ll just love my most recent post previous to this. ^u^

                But I’ll keep your contentions in mind and attempt to streamline my writing more.

                Anarchy is not nonsense and is how things have to go, incidentally, and it’s not just me who is saying that. But even if it was, I’d stick to it.
                Anarchy– the real kind, not the corporate media kind or maybe the kind in your head– is about ethics, lateral hierarchy, real democratic input and equality– stuff we often only have the illusion of. But if you want your perspective to equate to The Matrix/the blue pill, knock yourself out.

                • SatansBestFriend says:

                  Caelan,

                  The voluntary implementation of Anarchy, is foolish beyond belief, in the ACTUAL world.

                  In an Academic setting, I can sympathise/empathise with an understanding of anarchy, hippie love communities, free love communities, Polygamy, etc.

                  I can imagine something better than that.

                  Imagine a world where the currency is CUP CAKES with sprinkles on top. And everyone gives each other a BIG HUG everytime a transaction is made.

                  If you are late on your PAYMENT, everyone laughs and blows kisses!!!

                  WOW!!! That would be great. Better than the silly versions of ANARCHY!!!! that you propose.

                  Unless you are a COMPLETE BUFFOON, then you realize these are only academic excercises and are completely unrealistic.

                  ELM + Putin = Bad News for NATO aligned countries…..

                  Keep an eye on NATO and Russian/Chinese pipeline movements. It is on NOW IMO!

                  Woot Woot!

                  • Caelan MacIntyre says:

                    “A major point of dispute among libertarian theorists and thinkers today as always revolves around the age-old question of whether man can live in total anarchy or whether the minimal state is absolutely necessary for the maximization of freedom. Lost in this dispute is the question of whether man is capable of getting out of anarchy at all.

                    The purpose of this paper is to question this venerated assumption and to argue that the escape from anarchy is impossible, that we always live in anarchy, and that the real question is what kind of anarchy we live under, market anarchy or non-market (political) anarchy.” ~ Alfred G. Cuzan

                    I’ve quoted that before more than once, and Alfred wrote a followup essay that I skimmed some time ago.

                    I also quote this in a separate comment below:

                    “… are we as a species destined to live by the Maximum Power Principle to its seemingly inevitable and calamitous conclusion–a story in which the drive for maximum energy gain is no longer adaptive, but rather dangerous to the continued existence of humankind?

                    Our actions will be our answer.”

                    I have also suggested that if anarchy ‘external to the state kind’ is unachievable, it will be achieved if we survive as a species after the dust has settled and after the state has dissolved.
                    Issues about NATO, China, Russia, etc., are all state-perspectives/narratives/issues that won’t likely stand the test of time if they continue along their modus operandi.

                    That writ, pass me a cupcake if it is baked– adaptively– with love and the right kind of anarchy. ^u^

            • Stephen Pinker can speak for himself , and does. The world IS undeniably at THIS time statistically safer for human beings than it has ever been before.

              Noboby who actually reads his work can deny this fact.

              If I forgot to put a smiley face on the vinegar and persimmon comment I apologize. 🙁

              I have often said your heart is in the right place. Speaking as an educator I assure everybody that a constant message of forced hard change turns the audience off. It works much better to add a little honey to the message mix once in a while. 😉

              Now as for holding this truth and Pinker too close , anybody with a good memory who has been following this forum and who followed the old TOD forum is well aware that I am extremely pessimistic about the FUTURE when it comes to violence on the small scale as well as war.

              Now insofar as my knowledge of farming is concerned I have been at it off and on forever with a degree and many additional credit courses from major universities.

              It could be that YOUR knowledge of farming is limited and based on unworkable wishful thinking. I used to go on as many demonstration tours as I could find the time for as well.

              I often acknowledge that our current industrial farming system is not workable LONG TERM. BUT we are absolutely stuck with it for reasons technical, ecological, economical, and political for now and for the easily foreseeable future.

              If for instance we want to continue to live in the suburbs and eat meat and have pet dogs etc etc, then we MUST have a certain amount of grain to raise the meat.

              Now is it possible under laboratory conditions to make a go of so called food forestry for instance ? Certainly. I read quite a bit about such things, written by the people doing it. They seldom have much at ALL to say about the down and dirty economics involved in terms of land area, labor costs, yields per acre etc. Lots of talk but DAMNED few verified hard figures.

              MY great grand parents and grandparents practiced half or more of what is currently called sustainable farming including some major elements of forest farming.

              It is true that a cow can graze under an apple or nut tree but she will get every apple within five feet of the ground and eat all the smaller productive limbs sometimes as well. Incidentally grass doesn’t grow very well in the shade of a tree either.

              I am telling ya true dude – corn and tomatoes will NOT grow in the shade. Mushrooms now, mushrooms thrive in shade but they are damned near useless in terms of calories and protein. We used to intercrop some garden species between the rows of our fruit trees – but eventually gave it up as too time consuming even for home consumption.

              Now about that meat- it takes grain. SHOW ME a farmer -just ONE farmer- who averages a hundred and fifty bushels of corn per acre organically. If you find one I guarantee he is extremely lucky in having lots of manures handy that are simply NOT available to the VAST majority of farmers who produce the vast bulk of all the food and fiber we must have -although it is obvious we could get by with much less – by dropping down the food ladder.

              It is also obvious for that matter we rich westerners would be the healthier for doing so. I am myself overweight but put a higher value on sausage and pork chops and mashed potatoes with butter and gravy than I do my own life. Why ? Because my neocortex is not my boss, is why. If you do not understand this then Stephen Pinker is the VERY man to educate you in this respect given that he is one of the worlds foremost men in the field of evolutionary psychology and a SUPERB writer.

              I have acquaintances who pride themselves on using bone meal and green sand and bagged and dried manure, etc, in their gardens. They get good results – but they do not realize these products consume as much energy to produce and ship as ordinary ten ten ten – or that bone meal is available only in trivial amounts in comparison to the amount needed to use it on the grand scale.

              I live in Virginia in the modest Blue Ridge mountains where the climate is just barely cold enough in the winter to make us reasonably safe from tropical and semitropical communicable diseases. But I can’t harvest a tomato outside before July 4 and usually a couple of weeks later.Frost gets my field crops by mid October.If I want a semi fresh tomato from mid October until the fourth of July it must be SHIPPED here from someplace maybe a thousand or two thousand miles away.

              Pesticides are like everything else. They have their good and bad points. The technology evolves. We use less than half as many by mass as we did twenty five years ago in my specialty and the ones we use now are unquestionably safer. This is not to say they are COMPLETELY safe but on the other hand devoting more labor more oil more land to getting the same production is not exactly an IDEAL solution.

              Now let me tell ya true dude about soil fertility. A FARM is not an ecosystem in any real sense unless it is a subsistence farm that never EXPORTS anything beyond the property lines. When you grow a crop and ship it to a far away city the laws of physics and chemistry and biology tell you that you ARE exporting soil fertility – unless you can get back the elements exported.

              Since the only real world means of replacing the lost fertility is manufactured fertilizer we WILL continue to use such fertilizer.

              We will continue to do so until – well , until we can’t. Or just maybe a population collapse will come sooner for other reasons. There is only a near zero chance that any new technology will enable us to lick this problem- barring a CHINESE GREAT LEAP FORWARD back to the land. I have a VERY hard time envisioning this coming to pass.

              If you care to read “Farmers of Forty Centuries” you can gain some REAL insight into what is involved in getting everything back to the land.

              I doubt you will find more than one person in ten thousand interested in actually PRACTICING this way of life.Furthermore I should point out that the area described possesses very favorable geography and climate for such an agricultural system. It would be nearly impossible to reproduce this system in most places for economic and climatic reasons.

              Localized food production in a world with cities with millions of people located in unsuitable climates for year round production is neither technically nor economically nor politically feasible. If you want that grain it WILL be grown elsewhere. If you want it with a minute percentage of people growing it for you it WILL be produced for now and for the easily foreseeable future by the current industrially based farming system.

              Now IF you want to come into let us say into Piedmont Virginia or North Carolina and cut down a few hundred thousand acres of trees to triple the amount of land necessary to grow enough grain to support the people of these two states in their accustomed lifestyle, well then, you have LOST the forest.

              You can do without the herbicides by burning three times the oil to plow and cultivate – in addition to losing the topsoil to erosion three or four times as fast. Maybe faster on rolling or hilly land. You will also have MORE rather than less fertilizer runoff – except that I just forgot the fact that your are not going to use manufactured fertilizers.

              I don’t have any problem eating crops grown with human waste, being technically literate, but the PUBLIC might not care to eat food fertilized with the stuff they send down the toilet at the office. The PUBLIC is most certainly not interested in moving to the boonies to non existent housing to grub in the dirt after the fashion of the sustainability movement.

              The Public is not interested in paying for a vast new sewage treatment infrastructure that would get the number one and number two products out to the farms.

              Lets act like adults and face up to reality. The grain will continue to come from big farms in the Midwest for the foreseeable future. The apples will continue to come from people like me who produce tens of thousands of bushels annually with extremely little help except during harvest season. Citrus fruit will continue to come from the tropics and semitropics.

              Now a few decades or a century or more down the road I expect the population of this old world to have declined substantially and if the public at that time CHOOSES to adopt a localized food production system involving the use of little or no manufactured and shipped fertilizer or chemicals etc then it COULD be done – and as a matter of fact there might not be ANY CHOICE about the doing of it.

              If it happens then the world and the people in it are sure as hell going to be living extremely different lifestyles in extremely different places. Food will again be a major portion of the budget even for relatively well off people.

              If I come across as abrupt and arrogant then so be it. I have said here that I feel the same way about WHT as you feel about me.

              Never the less with Dennis’s help I have come to realize that his professional qualifications are such that he is doing the best work on the modeling of future oil production that is available free to the public.

              My goals posting here are basically two. ONE is to pass the time in an interesting way while mostly stuck in the house looking after my ancient Daddy. The other is to get the truth out as I see it.

              You will notice that I QUESTION the people who are oil experts and compare the oil industry to other businesses and industries to make general points but I NEVER question their professional expertise except when it comes to predicting the mid term and long term future. Nobody can be sure his LONG TERM predictions will come to pass because while such predictions can be based on sound science people sometimes do the totally unexpected thing -such as having less than two kids per couple. Or inventing a new technology that requires less material input than an older technology it replaces. Or maybe just dieing in a new variety of plague.

              I have already acknowledged many times that industrial farming as it is practiced today will not work forever. But I DO know my stuff.

              The stuff you post indicates that I have forgotten more about agriculture than you have ever learned. It is not that some of the stuff going on in the alternative agriculture movement will not go mainstream. This has always been the case with some people always trying new things except maybe in peasant societies.

              It IS that such schemes, even the ones that might work, simply CANNOT be implemented NOW or for the easily foreseeable future on a WIDE ENOUGH SCALE to matter for all the reasons I have enumerated above.

              If it comes down to farming on the local scale using next to nothing in the way of fertilizers, pesticides, herbicides, shipping containers grid sourced electricity etc etc I am ready in terms of the skills needed and the tools on hand to make a go of feeding myself and a handful of carefully selected old friends. . The only thing really lacking is draft animals and a young strong back.

              If I see collapse coming in the very short term you can bet I will buy up a few pleasure horse mares and a couple of work horse stallions pronto while they are still dirt cheap- before people start eating them. I am not woefully lacking in the skills needed to train horses to the plow or wagon but I suppose I can manage it after a fashion.

              No doubt it indicates a certain arrogance on my part to say so in so many words but I do know a great deal when it comes to the art and industry of agriculture. You have not yet posted anything to convince me otherwise.

              Now as far as what I DO know- it is but a grain of sand in a bucketful compared to what I could learn if I were to live a thousand years.I could start with astrophysics and finish up with a few foreign languages.

              And as far as being long winded – sound bites just don’t get across any nuance or context at all. Electrons are so cheap as to be basically free for now at least.

              Nuance and context are EVERYTHING when it comes to truly understanding any complex subject.

              • The Wet One says:

                I will concede that OFM doesn’t use the fewest possible words to make his point, but there is wisdom in his words all the same. The most wisdom on a consistent basis for the number of words written, in my humble opinion.

                But that’s just one person’s opinion after all.

                However, this gem:

                “Nuance and context are EVERYTHING when it comes to truly understanding any complex subject.”

                Demonstrates to me just how wise OFM really is. Anyone who’s studied up in an area of knowledge (you know, the ones where books are written on the subject) recognizes the truth of what OFM said above and has to realize that OFM isn’t just full of hot air for hot air’s sake. The world is a complicated place, fields of knowledge and know how are complicated and can’t be shoe horned into a sound bite.

                Given how much info is mere sound bites these days, rather than fulsome discussion of a point, on that basis alone, OFM is miles ahead of just about anyone else. Furthermore, he’s quite prepared to admit when he’s wrong, revises his opinion, and shows his thinking. How often do you see that in your internet interlocutors?

                OFM is a treasure. And no, I’m not saying this because I hope I get a spot on his farm WTSHTF, but because it’s my honest opinion of the matter. It’s just one person’s opinion though. Maybe some of the Heritage Front (or whoever they are) trolls are wiser. But I doubt it.

                • Fred Magyar says:

                  I have learned to have a great respect for OFM’s wisdom and unfortunately there are no shortcuts that can be taken when explaining certain complex subjects. There are concepts and ideas that just can not be adequately discussed in a tweet 🙂

                  “Today the network of relationships linking the human race to itself and to the rest of the biosphere is so complex that all aspects affect all others to an extraordinary degree. Someone should be studying the whole system, however crudely that has to be done, because no gluing together of partial studies of a complex nonlinear system can give a good idea of the behavior of the whole. ”
                  ― Murray Gell-Mann

                  • Caelan MacIntyre says:

                    I seem to recall old farmer mac mentioning creating his own blog or something around the time of his fiasco with Futilitist.

                • Caelan MacIntyre says:

                  If you want to break out the pompoms, party hats and noisemakers for old farmer mac, that’s your prerogative. Go hog-wild. ^u^
                  (Myself, I prefer to go on commentary than, say, [self-promo’d] cult-of-personality.)

              • Caelan MacIntyre says:

                “The world IS undeniably at THIS time statistically safer for human beings than it has ever been before.” ~ old farmer mac

                I don’t have time to read your entire comment. If you insist, then I will consider it.

                I have already made arguments regarding Pinker. (Remember the part about statistical fat tails or The Truman Show for example?)
                Some of it is a little like saying that we are producing more food than ever before without considering the detrimental effects over time of industrial agro. One would think that you of all people with farmer in your moniker should know, but I will give you the benefit of doubt that you might, seeing as I have not read your entire comment.

                As for context/nuance, I’ve already wrote about that as being important (duh) hence my contentions about this violence issue.

                • I take it you have not read Pinker either. LOL

                  • Caelan MacIntyre says:

                    So for every discussion/debate, we’re all going to rush out and read every related book? LOL indeed.

                    (You even admitted that you hadn’t read Pinker’s most recent book, either, right? So if so, it is funny how you word your question that I ‘have not read Pinker’. IOW, rephrase the question and maybe ‘neither have you’.)

                    This isn’t an academic forum, and any ‘putz’ can write a book. (And read the same one.)
                    And to repeat; our limited lifespans preclude reading (fractions thereof of) everything that’s out there.
                    (Actually, I could say something about that with regard to complexity and collapse, but anyway…)

                    So I often rely on reviews, summaries and critiques and the like, and then sometimes, if warranted, the book-in-question, itself, or parts of it.

                    Lastly, and to drive my point home in one of Nick’s EV’s, Pinker wrote his own book, and he still may not get the full picture/issue of violence. So even writing a book, never mind reading it, is no guarantee of anything. (‘LOL’)

              • SatansBestFriend says:

                OFM,

                I have learned heaps from you.

                But Wow, that is a long post. It makes the eyes blurr.

                No one reads a long post like that.

                • I understand your point well Friend Satan.

                  But every complex subject requires long and involved discussion if the people in the conversation are to REALLY understand the subject.

                  It took me four YEARS at university plus many more courses plus a lifetime of experience plus reading literally thousands of books to arrive at my CURRENT understanding of the realities of agriculture.

                  I am not sufficiently gifted to compress this understanding into fewer words than I have used.

                  Given that the people who comment here are generally technically and scientifically literate enough to understand what I have said in a few hundred words I can get by with that few hundred in this forum.

                  If I wanted to make the same arguments INTELLIGIBLE to the readers of a general interest magazine read by the general public I would have to write ten or twenty thousand words, literally a whole book.

                  Now – about reading a REVIEW of a given book- you may wind up with a FAR different impression of the authors actual work than if you read the book.

                  The review may well be highly biased or highly misleading because the reviewer is not knowledgeable enough , or in too big a rush to do a good thorough job.

                  I have not read all of Pinker. Nor all of Odum or Dennis Coyne or WHT or all of Shakespeare etc.

                  But I have read ENOUGH of Pinker including The Angels of Our Better Nature to know that he is a superb scientist and a realist of the first order.

                  I am not going to go and hunt up and type up quotes but he recognizes and writes about realities such as rioting, mass migration in the face of famines, civil and racial tensions , wars etc etc etc.

                  CONTEXT AND NUANCE ARE EVERYTHING when it comes to true understanding of any complex subject.

                  Many years ago I used to think of people like the guy who runs the Rocky Mountain Institute and Noam Chomsky as idiots – because I had read only other peoples biased and often intentionally misleading words about them and their work.

                  As I grew older and wiser I came to realize that these guys are ten times smarter than the people whose opinions I accepted earlier.

                  Once upon a time I totally believed in this statement:

                  “If you think health care is expensive NOW, just wait until it is FREE”.

                  But I now recognize that European style socialized health care is not only cheaper but also BETTER by far on average than our supposedly free market system here in the USA.

                  I assure you I did not change my mind on this matter on the basis of reading sound bite level articles about it.

                  • SatansBestFriend says:

                    OFM,

                    I want to thank you for sharing your wisdom.

                    I agree that many topics cant be resolved on a blog message board.

                    I simply think human cognition can’t deal with a lot of words on a screen so no matter how insightful you are, humans can’t cope with it.

                    For me, my sensory inputs start to go foggy on a really long one. Not by choice. It is just our mechanics.

                    Where I work, I got chastised for writing long posts/emails because they are bad for sales.

                    People have a very short attention span and will not struggle with something that makes them uncomfortable.

                    I think what you have to say is very important and relevant…I think if you shortened them to the relevant points it would help you add value.

                    thanks!

                • The Wet One says:

                  SatansBestFriend,

                  Further to your comment below (which I can’t reply to), that is precisely why most people aren’t worth listening to and OFM is.

                  It’s always why humanity is generally completely f#cking screwed. It can’t, in general, be bothered to do the work to come to a decent understanding of things to make decent decisions about things. And here we are.

                  F*&king morons.

              • Nick G says:

                Mac,

                I don’t have any problem eating crops grown with human waste, being technically literate, but the PUBLIC might not care to eat food fertilized with the stuff they send down the toilet at the office.

                I think that might not be a big deal. For instance, the city of Las Vegas recycles it’s water. Residents and tourists are drinking water that came down the toilet the week before (after purification, of course).

                The Public is not interested in paying for a vast new sewage treatment infrastructure that would get the number one and number two products out to the farms.

                The vast majority of people in the US send their waste into municipal waste treatment systems that separate out solid waste.

                What would be needed to separate out the phosphorus, and other nutrients that need to be recycled? I suspect it might not be as hard as it seems…

                • Hi Nick,

                  People do eventually learn to ignore some things such as where their drinking water comes from. In the case of water they have essentially no choice and virtually everybody goes along to get along on the reuse of water. The health department and the mayors office are on board.They are politically COMPELLED to be on board.

                  But they sure as hell never make any plain language speeches about your own SMELLY NASTY PEE PEE and DOO DOO being separated from your soggy toilet paper and used condoms and tampons and cigarette butts and returned to you via your kitchen faucet.

                  The use of human manure on crops is technically ok so long as the processing thereof is properly regulated .

                  Otherwise we risk exposing ourselves to some very serious health threats.

                  There is and /or will be an extraordinary level of resistance to the adoption of human wastes as fertilizers in rich western societies..

                  No supermarket is going to advertise that the corn on the cob is grown using sewage sludge.

                  We WILL sooner or later run short of both energy and easily mined minerals – then we will be forced to use humanure.

                  When that day arrives the health department and the mayors office and all the other powers that be will hire a super duper public relations outfit to come up with a way to convince us all that eating food grown in our own DOO DOO is a great idea.

                  For now we can still afford conventional manufactured fertilizers .

                  Now as to what separating and recycling the actual chemical nutrients in humanure would cost -I have no real idea but it would cost a lot more AT THIS TIME than using conventional manufactured fertilizers.

                  Dehydrating and composting cow manure is an expensive proposition .You can get close to ten times the basic NPK nutrient package per dollar buying ten ten ten.

                  Bagged and composted humanure is NOT going to be a big seller. We have an inborn aversion to our own Doo Doo.

                  Separating out the actual chemical constituents such as nitrates phosphates etc and manufacturing them into nice pelleted form similar to the ten ten ten we all know so well is a technical possibility but not economically feasible at this time.

                  As usual the time frame is critical to understanding this sort of discussion. Your grandchildren will likely eat some corn on the cob grown with sewage sludge.

                  • Dennis Coyne says:

                    Hi OFM,

                    It is not clear why human waste would be more of a problem than animal waste.

                    I imagine the sewage sludge could be processed at a “fertilizer plant” that turned it into something more paltable and easier to apply with modern equipment.

                    When natural gas starts to increase in price due to depletion, such an industry would be very competitive because the inputs would be relatively low cost.

                  • MarbleZeppelin says:

                    According to the EPA:
                    About 50% of all biosolids are being recycled to land. These biosolids are used on less than one percent of the nation’s agricultural land.

                    Biosolids being treated sewage sludge.
                    http://water.epa.gov/polwaste/wastewater/treatment/biosolids/genqa.cfm

  3. Ron Short says:

    Apologies if this is old news –

    “…in a world where a producer sees the end of its market on the horizon, then every barrel sold at a profit is more valuable than a barrel that will never be sold.”

    http://cleantechnica.com/2015/02/06/saudi-arabia-sees-end-oil-age-horizon/

    • Dennis Coyne says:

      Hi Ron,

      It will be a long time before any Middle East oil producer needs to worry about finding a market for their oil, they have most of the lower cost oil.

      • Javier says:

        As KSA, UAE and Irak are increasing production and decreasing spare capacity over a global declining demand in the last six months, it follows that they must be expanding their market share. It is not clear who should be contracting theirs.

    • I wouldn’t be looking at cleantechnica as a serious source for information about oil. It’s a very light weight site.

      • old farmer mac says:

        I am not so quick to dismiss Clean Technia as Fernando,but the author of this particular piece impresses me as either less than half as smart as he THINKS he is , or else he is playing the hide the pea game from the sucker quite skillfully.

        The game involves distracting the suckers eyes from what the hands are doing. In this case he spouts on and on like a blown out water pipe about the Saudis getting stuck with unsalable oil.

        Get rid of the smoke screen and take a good look at the actual supply and demand situation and the picture becomes crystal clear in a flash.

        First off, the Saudis could get twice the money for half their current production and a far far higher percentage of that money would be clear profit.

        Getting stuck with the oil is bullshit. While I am cautiously optimistic about renewables growing fast enough to relieve SOME of the pressure building up in the resource depletion boiler, I do not know of ANYBODY that seems highly creditable that believes we can transition away from oil in less than two or three more decades- and even then the transition is going to require good luck, mandates, and incentives in the form of subsidies to get renewables up to scale etc.

        Shell is giving the EFFING NORTH POLE a go due to a lack of any better spot to drill. Depletion virtually GAURANTEES that the Saudis will be able to sell their oil at a substantially higher price a few years down the road. Only an idiot or an incurably optimistic technocopian could ever believe there will be NO SALE for it.

        Money they are borrowing now at near zero interest rates will be repaid with oil sold at twice todays price a few years down the road. They would be foolish not to seek out such low interest money.

        THINK a bit. Pull out a typical amortization schedule for a thirty year mortgage and look at the amount of principal and the amount of interest for the first years payments. I paid five or ten bucks extra for the first couple of years on such a mortgage once and wiped out the LAST TWO YEARS of payments. Money in the hand today is worth a fortune decades down the road if you believe you can invest it wisely. I repeat myself. They could get twice the money for half the oil right now -except for the very pertinent fact that that would SERIOUSLY upset UNCLE and his good buddies. The House of Saud CANNOT afford to seriously piss off UNCLE given the state of the world in general and their own home turf at this time.

        Diplomatic relationships that are deep and long standing can occasionally take unexpected and even un remarked turns that are missed by the media but obvious enough to anybody with eyes to look.

        Does ANYBODY in this forum believe the House of Saud would be sitting on the largest single material fortune in the world and living lives unimaginable even to the Bourbon kings WITHOUT the BACKING of UNCLE SAM and his good buddies?

        Does ANYBODY in this forum think anybody in Washington ,excepting a few oil state congress critters and lobbyists gives a flying XXXX at a rolling donut about the oil industry – when the economy is wobbly and cheap oil is a well known tonic for the economic flu?

        In times of extreme crisis leaders sit down together quietly sometimes and cut deals that are never publicly and specifically acknowledged. I strongly suspect that the Saudis and the people at the very top in Washington and London have an institutional understanding based on the last fifty years plus of cooperation. Just because they have stuck it to us a time or two on the price of what is after all THEIR oil some people think they are not our friends. In actuality they probably mostly despise us as infidels and worse but they ARE our allies and mutual interests rule in such cases. Their very survival depends on us. Our way of life depends on them.

        We all laugh at Yergin and oil priced in Yergins but the man is a SUPERB writer and a very good historian of the oil industry and I remember very well what he wrote about the Rockefeller family and the oil industry. One or another of them said it is time to ”sweat” a little guy on a regular basis as he moved into the little guys territory and sold at a loss until he ran the little fellow out of business and then bought up his assets for peanuts.

        I do not know where the Saudi family invests the hidden portion of the family fortune and I doubt if anybody else does(barring some people in the big banks and government) given that they no doubt have the best accountants and lawyers etc that money can buy.

        But I would not surprised AT ALL to learn a few years down the road that they OWN major chunks of oil field service companies etc bought at fire sale prices THIS year.Did I mention also nifty mineral resource properties all over the world that are unusually cheap right now?

        They may dress somewhat like circus clowns ( no offense intended. I realize my own mode of bibs and boots and straw hat dress is clown like to some people.This dress has enabled me to make fools out of a few people who took me for one when doing business with them. ) but they send their smartest sons to the very best universities to learn how to manage their money.

        Only a fool could possibly think they are simpletons but over the years I have come to realize that most people are quite foolish about most things as the result of being unwilling to think about particular subject more than thirty seconds.

        Who here believes the Saudis are NOT SERIOUSLY threatened by IRAN IRAQ RUSSIA ISIS etc and eager to deprive their enemies of revenue?

        Does anybody believe that they are not DETERMINED to make it perfectly clear to the rest of OPEC that they will no longer unilaterally bear the diplomatic cost and material costs of cutting production to raise prices while the rest of the members cheat their asses off?

        Anybody who thinks in simple black and white one variable terms about international politics is too naive or too stupid to engage in a serious conversation.

    • Sam Taylor says:

      I very much doubt that this will be of concern to Saudi any time soon. Global oil demand moves ever upwards with the population. Recent years have only seen consumption slowed by the inability of oil companies to find and drill the stuff fast enough, leading to high price.

  4. Dennis, as you know, I don’t think using these shock models. But they your models seem to give a reasonable answer. The problem I see with gas is the huge amount of stranded gas we have had in the past, the huge flared volumes, and the way very large reserves are bottled up by politics. There’s also a wildcard: the high pressure geothermal gas we find in the USA gulf coast.

    • Dennis Coyne says:

      Hi Fernando,

      I attempted to estimate past flared volumes by using the percentage of associated gas to oil volume from 1970 to 1980 to find the gas per barrel of oil and then used my best guess oil shock model to estimate all natural gas output from associated gas , the estimate was pretty close to what Jean Laherrere has for cumulative gas output. He has much better access to proprietary data bases than I have and his estimates are about as good as it gets in my opinion.

      Do you expect that high pressure geothermal will amount to much? It sounds very expensive.

      On the stranded supplies, I imagine as energy supplies get tight we will see a lot more shipments of LNG especially from cheap producers such as Qatar and Iran. Pipelines can also be laid down where possible.

      • Doug Leighton says:

        Don’t forget the proposed Alaska LNG export project, potentially among the world’s largest gas projects at $45 to $65 billion for a project that includes a plan to cleanse produced gas of carbon dioxide and a 42-inch-diameter 800-mile pipeline from the North Slope to a liquefaction plant and then to an LNG plant storage and shipping terminal at Nikiski (26 trillion cubic feet of natural gas at Prudhoe Bay and more in satellite fields).

        • Doug Leighton says:

          Of course they need to raise the $45 to $65 billion for the project.

          • Synapsid says:

            DougL,

            That won’t be a problem (the money) because the State of Alaska is a partner in the project, and has lots of money from all the oil that, uh, flows through, um, TAPS…um…

            Time for more port.

          • That gas will have a huge NGL side stream. I remember back about 17-18 years ago the Alaska LNG was being pushed very hard, but it got killed by the pipeline tribe.

            • Synapsid says:

              Fernando,

              Would that NGL side stream contribute strongly to making the project profitable? I have no feeling for this, that’s why I’m asking.

              The original market, if memory serves, was South Korea and maybe Japan, back when LNG prices in East Asia were higher than they are now. Of course, they may be higher again by the time the project is ready to ship product.

              • I’m not sure about the NGL. Maybe they want to wait and inject it into the Kuparuk and other fields together with the CO2? I believe it could really help to use electric heaters and NGL in the heavy oil sands, that ought to produce about 60,000 BOPD. But they need to hurry, and I don’t know if the local staff is up to speed in heavy oil recovery. The last time I met them they were about C minus.

      • Toolpush says:

        Dennis,

        I realize you put a lot of work into your modeling, but I feel Nat gas is hard to compare to oil. We have been searching for oil, high and low for years, and it can be said we are hitting up against the stress points. On the other hand, Nat gas has mainly been used as a by product of the oil industry, and therefore only in the cases where the prospective Nat gas has been close to a market, that anybody has spent money to actually go looking for it.
        Most of the LNG projects off the Aussie NW shelf are supplied by gas that was found while looking for oil, and there are still a heap of known gas there waiting to find market. Qatar is exporting their gas, but Iran still finds it more worth while to re-inject gas into oil fields to maintain oil production.
        The advent of more economical LNG conversion and transport has really opened up the world market for long distance Nat Gas transport, and these supplies are all there before we even look at the shale gas that is available in the US.
        I am sure your model is correct, for the given URR. We seem to only have a loose handle on the URR for oil, but to me the URR for Nat Gas will only be known once there is a full blown effort to determine what is available, rather than just using what we stumble across whilst looking for other things!

        • Dennis Coyne says:

          Hi Toolpush,

          There are three models. Are you saying that case C may be most reasonable, or just that we don’t know? Or maybe a case D which is between case B and case C?

          • Toolpush says:

            Dennis,

            I feel we do not know what is out there as of yet. Not until we have an absolute search for gas for a reasonable amount of time will we be able to determine what is available. And just to throw in a wild card, we have the climate debate, where Nat gas is being branded as nearly as bad as coal. I suspect the we will hit other limits before we hit extraction limits, whether they be climate or political limits.

            • Dennis Coyne says:

              Hi Toolpush,

              I agree there is much to be learned. It seemed you were implying that as we searched more thoroughly we may find more, but the correct interpretation is that we do not know. Jean Laherrere estimayes that 10,000 TCF of 2P reserves have been discovered (about 4000 have been produced so there are roughly 6000 TCF of 2P reserves as of Jan 2011. Does it seem reasonable that another 9000 TCF of discoveries plus reserve growth of conventional, shale, tight, and coal bed gas may be found in the future? Jean Laherrere thinks it will be 3000 TCF (URR=13000 TCF), the USGS, EIA, and Steve Mohr think it might be as high as 16,000 TCF (for a URR of 26,000 TCF), that is a very large range (a factor of 5 difference) for future discoveries plus reserve growth. I just took the average (9500 TCF) and then rounded down to 9,000 TCF (for a URR of 19,000 TCF).

              For those who are pessimistic, the most realistic guess would be no lower than URR=13,000 TCF, for the optimists a URR above 26,000 TCF is not realistic.

              Which estimate seems most realistic to you given the limited knowledge that we have?

          • Futilitist says:

            Hi Dennis.

            Your “models” claim to be intelligently designed, but your creations are certainly not science! 😉

            None of your three models are reasonable. They all assume BAU. They all disregard physical limits. You just input a URR that you hope will happen. The only criteria you use is what you think is “reasonable”. And your graphs are just Gaussian curves. “For a single real variable, the distribution that maximizes the entropy is the Gaussian” and “Multivariate distribution with maximum entropy, for a given covariance, is a Gaussian”.
            ~Christopher Bishop, Foundations of Bayesianism

            The bottom line is your baseless, pointless “models” are just wishful thinking dressed up to look scientific. You are trying to repackaging hope as science. What you are really doing is pseudoscience.

            And to Toolpush’s climate and political limits I would add, and emphasize, economic limits. Your “models” are about to be falsified by the reality of the coming economic crisis. People can feel that one coming, Dennis. Your projections seem very out of step with reality. That is why your fantasies are getting less and less support these days.

            • ezrydermike says:

              then just ignore them, you’ll probably feel better

              • Futilitist says:

                Hi ezrydermike.

                1. Not a very rousing defense of Dennis’ “models”.

                2. Do you mean if I don’t have something nice to say, I shouldn’t say anything at all?

                3. Why don’t you take your own advice and ignore me so as to feel better?

                4. What useful thing did you learn from Dennis’ gas shock model?

                • ezrydermike says:

                  you are right. I should take my own advice and ignore your “Dennis model” posts. I apologize for this and moving forward I will just ignore. I have some dead horses I need to flog anyway.

            • Dennis Coyne says:

              Hi futilitist

              I justified the URRs in the post. Search Steve Mohr’s thesis and read Jean laherrere’s work.

              You are correct these are BAU scenarios. Case A is quite conservative.

              Economics will play a role but your collapse scenario is not realistic.

              Also notice that natural gas has not been affected much by recessions, nothing like oil shocks of the past.

              • Futilitist says:

                “Economics will play a role but your collapse scenario is not realistic.”

                So says you. You never really say why. Your statement is just an unsupported declaration that collapse doesn’t sound “reasonable” to you. That’s an argument from personal astonishment.

                But we are only talking here about your shock models, not my collapse scenario.

                Your BAU scenario is not remotely realistic. There are real signs that the economy is not doing well. One of them is the price of oil.

                And if you assume the URR variable, all you are doing is drawing a Gaussian curve from point A to point B on a graph.

                Oh yeah, and you ignore physics. And you do not accept any limits to growth. These are very unscientific (quasi-religious) positions.

                You admit to being a Seneca Cliff denier. You said you tried to get your oil shock model to simulate a crash, and found it was impossible to do. From this you draw the conclusion that collapse is impossible, when the obvious problem is that your so called model is as false as the false belief system which gave rise to it. You only get the answers you want. Garbage in, garbage out.

                “I justified the URRs in the post. Search Steve Mohr’s thesis and read Jean Laherrere’s work.”

                You use Jean Laherrere to justify your “model”. Here is what Jean Laherrere had to say about you and your general competence:

                “When some one claims that he is 99% sure of the ultimate reserves being 6 Gb, means that he does not understand accuracy and probability and is incompetent in reserves estimate.

                My guess is that there is about 90% probability that Dennis Coyne has never estimated oil reserves. As far as I can find on the web he is general manager of marketing with Tesoro in Texas.

                Dennis Coyne…should…be more reluctant to believe the assessment of ultimates using current proved reserves to please theSEC and the bankers.”
                ~Jean Laherrere

                • Dennis Coyne says:

                  Hi Futilitist,

                  Yes I have been criticized by Jean Laherrere.

                  Have you noticed that my low case matches his estimate for Natural Gas URR, the other cases are also from authoritative sources.

                  I have repeatedly stated why I think your collapse scenario is not realistic. You disagree, that is fine.

                  Rune Likvern also doesn’t think much of your scenario, and to be frank thinks the shock models are also inadequate.

                  The weakest point in the ETP model is the maximum consumer price, which essentially plays the role of a demand curve (or a maximum possible demand curve). The price that consumers are willing to pay for a good has to do with its relative utility and less to do with the net energy of the product. The EROEI of electricity is generally less than one for electricity produced by fossil fuel, but there is still a positive price for electricity.

                  How do you explain this? Oil prices will not follow the maximum consumer price curve and that the idea that oil prices will fall close to zero by 2021 as you predict (or any time before 2050) is indeed astonishingly incorrect.

                  • Futilitist says:

                    “Yes I have been criticized by Jean Laherrere.”

                    I know. That is why I brought it up. Is that all you have to say about the subject of your basic credibility?

                    You use a weak argument from authority to justify your use of Jean Laherrere’s URR estimates in your “model”. Then you turn around and disregard Jean Laherrere’s authoritative opinion about your general competence to do the sort of analysis you are attempting. That is not very consistent, is it? How do you justify blindly accepting Jean Laherrere’s authority in one area but not another? Why is Jean Laherrere right about URR and wrong about your competence?

                    “Rune Likvern also doesn’t think much of your scenario, and to be frank thinks the shock models are also inadequate.”

                    So, Rune thinks both of us are wrong. Is he also an authority? If so, why do you accept his view that I am wrong, but disregard his view that you are wrong?

                    “The weakest point in the ETP model is the maximum consumer price…”

                    I made some graphs showing that the rising oil price might seem random, but it is actually driven by physics. You haven’t commented on that proof yet. Are you now conceding that the original Etp model curve has some merit?

                    “The price that consumers are willing to pay for a good has to do with its relative utility and less to do with the net energy of the product.”

                    What a strange sentence. You used to claim that the oil price had nothing to do with net energy. You now claim the oil price has less to do with net energy and (more) to do with relative utility. That sounds like some kind of a ratio. What percentage of the oil price is determined by each factor?

                    I pointed out before that oil is not just another commodity. It is our primary energy source. It’s use is responsible for a large percentage of overall GDP. That explains why the oil price must have a maximum limit. The net energy in a barrel of oil must be sufficient to produce enough economic activity to pay for the total cost of current oil production plus investment in future oil production. This is extremely logical.

                    If relative utility was the only consideration and we are hypothetically going to use oil at any price, that still doesn’t change the fact that the overall net energy of the system has to balance. There must be positive net energy for the economy to function and produce GDP. That energy has to come from somewhere. The loss of net energy from oil has to be replaced or the economy will crash. If alternative energy sources were really able to make up this gap, they should already be doing it. The current oil price would be something like $150/barrel. Why isn’t it? Please explain why the steady exponential rise in the price of oil suddenly failed.

                    ————————–

                    I think you are trying to muddy the waters. You are dodging my direct questions. Much of my post above is in answer to your references to my model in your responses to me questioning aspects of your “model”. But we are talking about your “model”, not mine. You gloss over my direct objections that are just about your “model”.

                    For example:

                    I don’t think it makes much sense to project BAU 50 years into the future when the economy is as weak as it is. The oil price is too low for frackers to stay in business right now. BAU has already changed significantly since 2008 and not in a good way. This is all due to the effects nearing peak oil. We haven’t even reached the absolute peak yet and the economic problems are only getting worse. Thus, depending on BAU is not logical. That is my common sense point.

                    Your one line answer is: “You are correct these are BAU scenarios. Case A is quite conservative.”

                    Can you understand why your answer is not sufficient to address my point? Case A may seem quite conservative to you. But that is only your completely unjustified opinion. It cannot be legitimately justified by claiming that other people agree with you, even if you claim these people are authorities. That is an argument from consensus and authority. There is no logic in arguments such as these. Do you have any logical argument for assuming BAU?

                    You don’t even bother to answer these points:

                    1. If you assume the URR variable, all you are doing is drawing a Gaussian curve from point A to point B on a graph. Your graphs are just smooth Gaussian curves that unrealistically illustrate what a certain URR might look like in a perfect world. They have no predictive value whatsoever.

                    2. Your “model” does not account for physics in any way. By insisting on BAU, it could even be seen as denying physics.

                    3. You do not accept any limits to growth. This is a quasi-religious position that undermines your basic credibility. It seems like this giant blind spot might explain why you keep producing such optimistic scenarios.

                    4. You admit to being a Seneca Cliff denier. You said you tried to get your oil shock model to simulate a crash, and found it was impossible to do. From this you draw the conclusion that collapse is impossible, when the obvious problem is that your so called model is as false as the false belief system which gave rise to it. You only get the answers you want. Garbage in, garbage out.

                    I took my time to carefully, logically, and thoroughly critique your claims. Please show me the same respect and answer my critique using some sort of sound logic. Thanks.

                  • BW Hill says:

                    Dennis Coyne says:

                    The weakest point in the ETP model is the maximum consumer price, which essentially plays the role of a demand curve (or a maximum possible demand curve).

                    What demand curve? The consumption of petroleum has equaled its production for the last 150 years, less 0.o7 % now in storage. The supposed “demand” curve has followed the supply curve almost exactly. That means that the “demand” curve has been sloping up, and to the right. According to Samuelson a demand curve slopes up, and to the left. What you are calling a demand curve is not a demand curve; it slopes in the wrong direction!

                    If you are going to attempt equating a thermodynamic model to a model based on a pseudo science like economics it would be advisable to follow the rules governing economics. In economics demand curves slope up, and to the left. Creating one’s own interpretation of the discipline is generally not allowed.

                    The Maximum Consumer Price is merely the point where petroleum can no longer power enough economic activity to pay for itself. The logic being is that no one is going to pay $2 for petroleum when it can only generate a $1 worth of goods or services. It has nothing to do with presumed “demand”. Finding consumers who would be willing to pay more for petroleum products than what they are worth is as likely as finding someone who is willing to trade $100 bills for $1’s. If you do find someone doing that (outside of a Central Banker) you have met the original snake oil salesmen.

                    Presuming that petroleum can support an unlimited price just because it is needed is an excursion into fantasy land. Life boats were needed on the Titanic; but not one of them appeared because of that.

                    http://www.thehillsgroup.org/

                  • Caelan MacIntyre says:

                    Futilitist, I appreciate your comment here and those of BW Hill, even though they are hard to understand completely. But in the search for a better understanding, they inspired my own.

                    Indeed, oil is not just another commodity, and I get a feeling that its price is about energy (I mean if money is about energy ‘credits’ right?), and that the economy is eating its tail or getting close (with certain price levels). Once the economy progresses further up and starts munching on its vital organs, it would seem to be game over or close to it, as well as the usual accompanying contortions of pain. What do you think?

                  • Dennis Coyne says:

                    Hi Futilitist,

                    I do accept that there are limits to growth.

                    Where those limits are is not clear. You believe we have already reached them, I think it will be between 2030 and 2050. As we approach those limits prices will rise, which will tend to reduce the rate of growth.

                    Eventually population will peak (hopefully by 2050 to 2060) and will begin to decline as total fertility falls towards 1.5 births per woman by 2100.

                    Fewer people will limit growth.

                    Jean Laherrere disagrees with my model for the Bakken/Three Forks which is similar to the model first developed by Rune Likvern in his “Red Queen” series.

                    Jean Laherrere certainly can question my competence as few are as accomplished as he is.

                    My estimates of Bakken output at the time of Laherrere’s criticism were based on higher oil prices. If oil prices remain under $60/b my Bakken estimate is similar to that of Jean Laherrere and at the low end of USGS estimates for TRR and with economically recoverable resources (ERR) at about 5 to 6 Gb from the North Dakota Bakken/Three Forks.

                    Hi BW Hill,

                    Of course supply is equal to demand, are you suggesting that demand for oil does not matter?

                    The consumer demand for oil has nothing to do with the net energy of oil. Just as demand for electricity has nothing to do with the net energy of a GJ of electricity, the same is true for oil.

                    The slope of the demand curve is negative not positive (at a low price there is a higher quantity demanded) it is negative.

                    Your maximum consumer price curve will continually shift to the right as income increases.

                    You may assume GDP growth will cease and at some point that may be correct, but it will be 20 to 30 years after 2020.

                    Time will show who is correct.

                  • Futilitist says:

                    “I do accept that there are limits to growth.”

                    Bullshit, Dennis! You are being completely disingenuous. Judging from the vacuous content of every one of your posts, going back several years, it is very clear that you do not accept that there are limits to growth. You are just saying that you do now so as to sound “reasonable”.

                    You are talking out of both sides of your mouth. You can’t just say that you accept there are limits to growth, and then turn around and say:

                    “Where those limits are is not clear.”

                    That is just a wishy-washy cop out!

                    Keep proclaiming, “Oh, we just don’t have enough evidence”, while at the same time ignoring all of the very substantial, mounting evidence…hmmm…now where have I seen that before?

                    Oh, yeah, I remember.

                    Global Warming deniers use the same kind of argument (and they have recently begun to manufacture their own pseudoscience like you do!). Hell, even evolution deniers try to use the same stupid trick.

                    Allow me to fill in some missing links for you.

                    Limits to growth were becoming visible as far back as 1972 when the original Limits to Growth study was published. The evidence continues to mount that the study was valid.

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

                    “You believe we have already reached them, I think it will be between 2030 and 2050.”

                    Yawn…another vacuous statement in which you pit your totally baseless, blindly optimistic belief against a mountain of evidence to the contrary, and judge the whole thing to be just a matter of opinion, impossible to decide, we don’t have enough evidence.

                    “As we approach those limits prices will rise, which will tend to reduce the rate of growth.”

                    Are you blind? Prices did rise. That has reduced the rate of growth. This is evidence that we have reached limits to growth.

                    In my last post, I urged you to show some sort of logic or basis for your reasoning in your answer to me. You failed.

                    And you only tried to address number 3 (You do not accept any limits to growth).

                    What about:

                    1. If you assume the URR variable, all you are doing is drawing a Gaussian curve from point A to point B on a graph. Your graphs are just smooth Gaussian curves that unrealistically illustrate what a certain URR might look like in a perfect world. They have no predictive value whatsoever.

                    2. Your “model” does not account for physics in any way. By insisting on BAU, it could even be seen as denying physics.

                    4. You admit to being a Seneca Cliff denier. You said you tried to get your oil shock model to simulate a crash, and found it was impossible to do. From this you draw the conclusion that collapse is impossible, when the obvious problem is that your so called model is as false as the false belief system which gave rise to it. You only get the answers you want. Garbage in, garbage out.

                    So, go ahead and address these basic problems with your “model”, if you can. Thanks.

                  • Nick G says:

                    That’s an interesting comparison of the Club of Rome BAU scenario.

                    We see several things:

                    1) these charts are pretty close to the forecasts that anyone else would have made;

                    2) things are going better than shown in the projection: death rates are lower, birth rates are low, goods and services are higher, remaining resources are larger, pollution is lower; and

                    3) There’s no sign of a peak, or collapse. There’s nothing here that says “LTG was right”. That’s a matter of faith in the original models…which were not intended as forecasts in the first place.

            • Dennis Coyne says:

              Hi Futilitist,

              The Senecas cliff can be created, but it requires unrealistic extraction rates. In the scenario below I assume a severe depression from 2035 to 2045, and then recovery. We could assume that extraction rates go to zero as well, but again just because some people think that is realistic does not make it so.

              • Futilitist says:

                “The Senecas cliff can be created, but it requires unrealistic extraction rates.”

                You have no basis for deciding what is realistic or unrealistic. All of your claims are just your personal opinion only.

                “In the scenario below I assume a severe depression from 2035 to 2045, and then recovery.”

                Ha ha. When you “assume”, you make an ass out of you, Dennis. 😉

                In your fantasy scenario above, you “simulate” a severe depression beginning in 2035 which never results in extraction rates falling below 3%. That is the same extraction rate as the year 2000. In 1986 the extraction rate was lower and we weren’t in a severe depression then. You have absolutely no basis for the 3% extraction rate except your wildly over optimistic imagination.

                When you say you “assume” a severe depression, you really mean it, since there is absolutely no connection between your “model” and the economy. So you are just assuming what a severe depression might do to extraction rates. Your arbitrary and baseless assumption is a pure fantasy.

                And your assumed severe depression has an assumed placement in time as well as an assumed level of severity. Why not assume a severe depression sooner than 2035, since so many people seem to think the economy is very shaky right now?

                “We could assume that extraction rates go to zero as well, but again just because some people think that is realistic does not make it so.”

                Well, we could “assume” just about any damn thing we want and make scientific looking graphs of it. It wouldn’t prove a fucking thing, Dennis. That is my point. Your so called models are totally meaningless and useless. They have no predictive capability. They are a complete waste of time.

                Your “models” make all sorts of totally baseless, ridiculously optimistic assumptions. You then produce scientific looking graphs of these assumptions to make your stupid assumptions seem scientific. You are a pseudoscientist. And you have an agenda.

    • Wake says:

      effing jimbob do you mean, Fernando?

      If not I am not sure I am familiar with this potential

    • old farmer mac says:

      Fernando please tell us what you think about this ”wild card high pressure geothermal Gulf Coast gas”.

      I place considerable value on your opinion on things having to do with oil and gas and commies.

      • Mac, here’s a reference to an old paper

        http://www.searchanddiscovery.com/abstracts/pdf/2006/gcags/images/ndx_abstract.john.et.al.pdf

        As far as I can tell, it would take about $200 billion to produce 3.5 BCFD, plus around 100 MW of electricity via geothermal heat in the water. My wild guess is this requires the ability to dump 100 million barrels per day of brine in the Gulf of Mexico, in deep water.

        Interestingly, the brine helps sea water absorb CO2 and has minerals which reduce water acidity.

        The gas has to fetch $15 per mcf, the electricity yield is fairly low, but it ought to sell for $0.20 per kWh because it doesn’t cause emissions.

        As you can see, this is very marginal. The resource is large but there’s a limit to the amount of water we can dump in the Gulf of Mexico.

        • old farmer mac says:

          If this gas is ever brought to market it will be years and years from now. I presume the brine you mention is going to come up from way down deep along with the gas and be highly concentrated.

          The effects on the Gulf ecology of such large quantities would likely be catastrophic in terms of fisheries etc.

          Given the size of the resource it MIGHT be possible to construct a pipeline to carry the brine out into the open Atlantic where it MIGHT be possible to dump it safely.That old rhyme about dilution being the solution to pollution comes to mind. If the brine were released in the right spot ocean currents might dilute it safely. Might not.

          The quantity staggers my imagination. The byproduct of this one gas field would be equal to the entire world oil production and then some.

          Even the very biggest companies will likely be afraid of this one.

          • Yep, it’s a lot of brine. 15 cubic km per day. The way I figure it they can lay 100 each 30 inch pipelines into deep water. The brine will stay down there and flow into the Atlantic on its own (the density difference should keep it on bottom. Everything will probably die and be preserved without rotting. But don’t forget that brine is ancient concentrated sea water. Like an old wine.

            By the way, I believe there are a couple of oil fields producing about 1 million barrels of fresh water per day in Colombia. The water gets dumped in a river. That river flows to the Atlantic.

            • Synapsid says:

              Fernando,

              Can you describe the geology that makes it possible for producing an oil field to yield fresh water?

              I’m not disagreeing, just curious.

              • I thought I answered this? The sands outcrop or subcrop nearby, they get recharged with rain water, and this results in a nearly perfect water drive.

                • Synapsid says:

                  Fernando,

                  I guess I missed it.

                  If I have the picture correct there’s a rain-fed aquifer underlying an oil reservoir. How deep is that reservoir?

                  Is this one of the Pacific Rubiales developments?

  5. Watcher says:

    Core Labs guy on Cramer radio show. Amusing. No, annoying. No, insane.

    Cramer: So you see right now as the probable oil bottom and US oil companies just need to hang on?

    Core Labs guy: Well, a lot of this comes down to shale decline rates. (he then proceeded to explain and quoted scary numbers like 1000 bpd in week 1 and 300 bpd overall for year 1, then 40% in year 2 and 20% in year 3). And the Saudis and Russians have their own decline rates and won’t be able to maintain output much longer. [It was literally 5:1 ratio in time allocated . . . talking about shale decline rates vs Saudi/Russia decline — and he was nervous and was saying depletion rate when he had said decline rate seconds before] [He even gave a 3 year estimate of declining US oil output and used the word “Peak” for April]

    Cramer: Wow. So you’re saying the Saudis won’t be able to hold the price down much longer.

    Core Labs guy: [hesitation] I’m saying any oversupply won’t be in place much longer.

    Cramer: This is great news for some of my viewers in US energy positions.

    Core Labs guy: I, uhm —

    Cramer: Thank you so much for coming on the show!!

    • Listener says:

      Sounds like a guy selling his product, no need to be amused.

    • “Looks like any oversupply won’t be around much longer” depends on the time span, and the human factor: how many investors are willing to bet oil prices will recover to $80-90 per barrel by 2017? The key is to understand there’s a large dose of unquantifiable human behavior in this game.

  6. SRSrocco says:

    Dennis,

    Your World Natural Gas Shock Model doesn’t shock me at all.

    steve

    • Doug Leighton says:

      Personally, I think it’s shocking.

      • Fred Magyar says:

        Hi Doug,
        Yeah it is shocking 🙂

        BTW, off topic but I just posted a reply to your question about the drought situation in South Eastern Brazil, still critical and I think most Brazilians are in denial. My response also includes a link to my first video blog post on Youtube. Looks can be deceiving and the scene from the Sao Paulo street market may give people the impression that things are just fine, they aren’t!

        Cheers!
        Fred

    • Futilitist says:

      Dennis,

      With so many types of gas shock models, all so readily available on ebay, what makes your gas shock model special?

      How does your gas shock model differ from these other more well established gas shock models?

  7. Kam says:

    Dennis Coyne – Please stop your crappy charts, because we DO NOT KNOW (!!!!!) URR for oil , or nat gas. It’s all about economics, and not some made up URR. You’re trolling this site for years with URR’s which are useless (!). Nobody knows what the URR for oil and nat. gas is. The economy will determine what the urrs will be. If the economy will collapse this autumn, the URR will be much lower than if the economy collapses in 5 years time.
    The smooth downslopes are also useless.

    • MarbleZeppelin says:

      I don’t think Dennis is claiming prescient knowledge. These are just extrapolation with various URR’s, probably chosen within the range of current knowledge. They might give a range of future occurrences within their assumptions. Those assumptions do not include disruptive elements such as war and disruptive technologies or policies (correct me if I am wrong on that Dennis). He works from past data and shows what might happen in the future.
      To think otherwise is to show a tremendous lack of understanding on how science operates. If you are looking for absolute knowledge about decades into the future, then wait those decades. Even then the data will be a bit fuzzy as we do not even know with any certainty what is happening right now.
      I think policy and geology have more to do with determining the URR of natural gas or other fossil fuels. The geology and policy determine the economics to a large degree.

      “As we peer into society’s future, we — you and I, and our government — must avoid the impulse to live only for today, plundering for our own ease and convenience the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage. We want democracy to survive for all generations to come, not to become the insolvent phantom of tomorrow.” Dwight D. Eisenhower

      • Dennis Coyne says:

        Hi Marble zepplin,

        Thanks for the thoughtful comment. Your interpretation is correct. Nobody knows what the URR will be and Kam is correct that it will be determined in part by economics and you are correct that it will also be determined by geology and politics. Even Futilitist is partly correct that thermodynamics will also play a role. None of these factors will be the sole determinant of future output and I present a range of URRs from low to high. Generally my view is that reality typically falls between the more optimistic and pessimistic views, but I am not clairvoyant.

        You are correct that in this case I have not included any shocks. A war or depression would reduce the extraction rate by some amount, again we do not know by how much, we would have to guess, but could use past shocks as a guide.

    • old farmer mac says:

      Kam you are either an INCOMPETENT troll or a boorish idiot who does not understand anything at all about why people create models.

      Dennis puts a hell of a lot of hard work into these models- as does WHT- and while he knows and everybody with a brain knows that they MIGHT be wrong, they are a hell of a lot better than NOTHING – which is MORE you have to offer- when it comes to understanding future possibilities.

      Sometimes WHT come across as somewhat arrogant but after studying his model as best I am able – given my rusty and inadequate math skills- I am now convinced there is nothing better available to the public free of charge.

      You know so little about this site that you do not even know that Dennis and our gracious host Ron Patterson have been working together for a long time even though they often disagree about future history.

      ”Trolling” indeed.

      Dennis writes guest posts whenever Ron is too busy to post new stuff himself. Your ignorance is as obvious as the noonday sun.

      Crawl under a rock someplace. The worms and bugs under there will keep you good intellectual company.

    • Berkeley says:

      And tell us Kam – what are you offering? Please go away, far away, unless you have a positive contribution.

    • BW Hill says:

      Kam said:

      “because we DO NOT KNOW (!!!!!) URR for oil , or nat gas.

      URR is a function of price, and production cost. As long as there are resources in the ground it is those two quantities that control the amount that will be extracted. The Shock Models do not address either price, or production cost. They do not include the two quantities that make a projection possible. They are essentially a statement equivalent to “if pigs had wings they could fly”.

      The oil age, and probably the fossil fuel age is rapidly coming to a conclusion. Depletion is taking its pound of flesh. To avoid the unknown consequences of that realization most are willing to grasp any straw floating by in the now rising torrent. That is understandable; escape into fantasy when reality appears unbearable. The danger of that course is as Voltaire remarked: “if we accept absurdities, we will commit atrocities”!

      http://www.thehillsgroup.org/

      • Caelan MacIntyre says:

        what Odum observed is

        “…that living systems–humans, for example–seek to maximize their energy gain. Now, in modern society, the way humans primarily gain access to energy is through money. Money, it turns out, is merely what allows us to command energy–in the form of humans, machines, or even animal power–to do what we want it to do. Money [price?] is essentially a method of assigning ‘energy credits’. And, energy, of course, can used be to make us a product, render us a service, or provide either of these to someone else as a gift or in fulfillment of a contractual obligation. Without energy, nothing gets done…

        As it turns out, we humans have a long history of contemplative traditions, both religious and secular, traditions that preach simplicity and often poverty as a way of life. These traditions eschew worldly goods or at least maintain that each person should have just what he or she needs for a good life and no more. How do such traditions square with the Maximum Power Principle?

        …are we as a species destined to live by the Maximum Power Principle to its seemingly inevitable and calamitous conclusion–a story in which the drive for maximum energy gain is no longer adaptive, but rather dangerous to the continued existence of humankind?

        Our actions will be our answer.”

        – The economy is a machine.

        – The energy flow through the economy is the energy flow through the machine.

        – The economic machine runs predominantly on oil.

        – The energy intake port– the straw– of the economic machine requires a certain amount of energy to run as usual. But this energy (EROEI) is degrading (tar sands, deep sea, fracking, depletion, etc.). By elevating the price, the economic machine is attempting to ‘suck harder on the straw’. But price/money is energy and elevated price is elevated energy…

        So the machine is using more energy of the degrading energy to extract this very energy!

        OMG…

        This is a feedback loop. The economy is/was/might be in the initial stages of a feedback loop. (The recent reduced price of oil may be helping– perhaps a conscious attempt– to contribute to the amelioration or reduction of the feedback effects. (Some low price may be somewhat permanent.) Like turning down the volume on the speakers near the mic or turning down the mic’s input near the speakers.)

        “…the conventional economic equilibrium model of supply and demand supports only ideal linear negative feedback and was heavily criticized by Paul Ormerod in his book The Death of Economics, which, in turn, was criticized by traditional economists. This book was part of a change of perspective as economists started to recognise that chaos theory applied to nonlinear feedback systems including financial markets.” ~ Wikipedia

        “3. Over the 1 million+ years during which humans have been able to control fire, humans have generally been in situations with favorable feedback loops, due to increasing efficiency in producing goods and services required to meet basic needs. Such loops allowed continued population growth and economic growth.

        4. We are now reaching limits on these feedback loops. The result is feedback loops that are changing from favorable feedbacks to contraction.

        5. Part of the change in feedback loops relates to the cost of energy sources, such as oil. A rise in the price of oil tends to reduce salaries of workers (because of layoffs) as well as reduce discretionary income (because of higher price of food and commuting), contributing to the trend toward contraction.

        All of this is very concerning, because in the past, adverse feedback loops of this type seem to have led to collapse.” ~ Gail Tverberg

        The low price of oil may be the water thrown on the economic machine to control/reduce its chaotic ripples/perturbations. Throttling.

        Saudi prince: $100-a-barrel oil ‘never’ again”

      • Dennis Coyne says:

        Hi BW Hill,

        If we look at nominal oil prices we can get many different projections of future price depending on the time period used. Nobody knows what future production costs of different energy sources will be and it is the relative costs of various energy types and economic growth that will determine oil output. This is what will determine oil demand and supply. It is not clear why you used 1960 to 2014 the period for oil prices in your model, or why you chose to drop data points in the 1980s that don’t fit the price model well. Your model for maximum consumer price is based on the notion that the net energy content of a good determines its price. The price a consumer is willing to pay for a good is a matter of personal preference at any given level of income and the relative utility of that good with respect to other similar goods.

        Calling economics a pseudo-science is not any argument at all.

        • Caelan MacIntyre says:

          Hi Dennis,

          Just a shot in the darktwilight from some thoughts in the shower, but if we are talking about money as ‘energy credits’ or ‘energy representation’, perhaps it has more to do with what the price of oil has to be (relative to all the money in circulation and maybe other relativities), rather than what it actually is (or will be).

          The problem with symbolism like money (price) is that it merely ‘represents’ the real world and this ‘representation’ is often very inaccurate, to put it mildly.

          Why, economics is apparently infamous for its disregard for so-called ‘externalities’ even though there’s nothing external about them. (This statement is closer to arguing that economics is a pseudo-science, incidentally, and as you may recall, I’ve made other arguments along those lines.)

          When we attempt to ‘represent’ the real world and operate upon the representation, then we have to be accurate about it, otherwise, the real world reacts in ways that see recessions, ghost cities, peak oil, ecocide and/or collapse.

          Of course an ‘energy commodity’ like oil is not a normal commodity like, say, a chair we might buy from Ikea, unless maybe we split or fuse its atoms.
          A chair has ’embodied’ energy, but AFAIK, oil has no ’embodied chair’. If our economy predominantly ran on chair fission (exploding chairs), it would be different.

          I suspect that collapse happens when our ‘representations’ fail us. (Likewise for ‘representative’ democracy, incidentally.)

          So perhaps that’s at least in part what Hill and Futilitist are suggesting, even if either doesn’t realize it or explain it this way. ‘u^

          “…The map is a simulacrum that, as a model, loses all reference to reality… reality exists only as rotting shreds that are attached to the map, and this is the state of our age according to Baudrillard; that the model, itself, has primacy for us; the real has become irrelevant…” ~ Frances Flannery-Dailey

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

      • The fossil fuel age is good for another century at least. Probably several centuries since there is so much coal that will still be easily accessible.

        Environmental considerations will not stop the large scale use of coal before the economy collapses and AFTER the collapse there will not be anybody around to STOP anybody who wants to burn some coal from doing so.

  8. MarbleZeppelin says:

    Since we are discussing natural gas. How does the use of natural gas effect coal and the implementation of renewables and the amount of CO2 generated. Apparently it is mostly dependent upon policy.
    Research Paper:
    The effect of natural gas supply on US renewable energy and CO2 emissions
    Abstract:
    Increased use of natural gas has been promoted as a means of decarbonizing the US power
    sector, because of superior generator efficiency and lower CO2 emissions per unit of electricity
    than coal. We model the effect of different gas supplies on the US power sector and greenhouse
    gas (GHG) emissions. Across a range of climate policies, we find that abundant natural gas
    decreases use of both coal and renewable energy technologies in the future. Without a climate
    policy, overall electricity use also increases as the gas supply increases. With reduced
    deployment of lower-carbon renewable energies and increased electricity consumption, the effect
    of higher gas supplies on GHG emissions is small: cumulative emissions 2013–55 in our high
    gas supply scenario are 2% less than in our low gas supply scenario, when there are no new
    climate policies and a methane leakage rate of 1.5% is assumed. Assuming leakage rates of 0 or
    3% does not substantially alter this finding. In our results, only climate policies bring about a
    significant reduction in future CO2 emissions within the US electricity sector. Our results suggest
    that without strong limits on GHG emissions or policies that explicitly encourage renewable
    electricity, abundant natural gas may actually slow the process of decarbonization, primarily by
    delaying deployment of renewable energy technologies.

    http://iopscience.iop.org/1748-9326/9/9/094008/pdf/1748-9326_9_9_094008.pdf

    • Doug Leighton says:

      Didn’t you answer your own question? I expect NG will become increasingly important, as oil depletes, because mega gas projects favor the “Big Guys” who benefit via downstream products in the way majors benefit from refining and all the various oil spinoff products. ‘Course, what does an old exploration guy know?

      • MarbleZeppelin says:

        Not my question, just my way of presenting the paper.
        I already know that natural gas is just another double dead end.

    • islandboy says:

      This presents a nice opportunity for me to present the results of this months EIA Electricity Supply Monthly or more accurately Tables 1.1 and 1.1A. The graph shows production as a percentage of total by source and it is worthy of note that while coal regained it’s prominence over all other sources particularly Natural Gas, between April and May, all sources except renewables (both hydro and non hydro) are up in absolute terms. April seems to have been the low point so far for this year, as it has been for the two previous years.

      • old farmer mac says:

        From the same report:

        lectric Utilities
        Year-to-Date
        Receipts Cost Receipts Cost
        (Physical Units) (Dollars / Physical Unit) Number of Plants (Physical Units) (Dollars / Physical Unit)
        Fuel May 2015 May 2014 May 2015 May 2014 May 2015 May 2014 May 2015 May 2014 May 2015 May 2014
        Coal (1000 tons) 47,094 50,122 45.07 48.21 222 237 239,155 239,638 44.57 46.85
        Petroleum Liquids (1000 barrels) 1,192 895 75.86 131.40 109 119 6,842 7,534 74.47 131.26

        Petroleum Coke (1000 tons) 357 383 56.26 60.11 9 8 1,657 1,794 54.27 56.52
        Natural Gas (1000 Mcf)

        Unless my mental arithmetic is off this chart indicates that utilities spent about two billion bucks buying coal in May. Say for conversational purposes twenty four billion for the 2015 calendar year.

        I have found that hard numbers are hard to come by but my best guess is that wind and solar power are saving us very close to what it would have cost to buy another four percent of either coal or gas.

        And when you do things to reduce the sale of a commodity, you are doing things that reduces the price of that commodity. EVERYBODY all across the economy, excepting coal and gas producers and their employees gets just about everything a little cheaper.

        The avoided expense of purchasing that much MORE coal and gas will be repeated month after month year after year for the entire life of EXISTING wind and solar farms.The price reduction resulting from utilities buying less coal and gas will spread out all thru the entire economy benefitting ALL of us for that same lifetime.

        Excepting a mere handful of railroad employees the coal industry produces damned few jobs except in the coal fields and not very many even there.

        Renewables on the other hand create a lot of jobs spread out over the entire country.A wind or solar farm built in Podunk pays taxes locally and provides employment locally.

        • U.S. Gas producers pay taxes. Almost everything used to build wells and facilities is USA sourced. The labor is mostly natives, and a lot of that work is well paid.

          The cheap gas price is caused by over drilling, not by renewables. On the other hand wind turbines and solar require subsidies and increase electricity bills. This reduces disposable income, which in turn cuts business for barbers, hairdressers, plastic surgeons, and dentists. This in turn increases the crime rate, which leads to higher prison costs on society.

          • old farmer mac says:

            The very cheap price of gas is caused MOSTLY by excess supply at this time-you are right about this.Your entire comment is on the money- so far as it goes if you consider only the SHORT term.

            But in your usual mule stubborn way you refuse to recognize any fact that does not reflect well on your own positions. Gas is not always going to be cheap and not everybody believes the good jobs should always go to people who live far away and that property taxes should always be paid to people in far away places.

            You just flat out refuse to put any weight at all on the perfectly well understood and universally accepted (except by Watcher) relationship known as supply and demand-except when it suits YOUR argument.

            CHEAP gas is the result of OVERSUPPLY. Oversupply is as a matter of fact mostly brought on by over drilling FOR NOW but part of the oversupply is due to renewable power cutting into the demand for gas and coal.

            As time passes renewables will produce a larger and larger share of our energy and thus hold down gas prices to a substantial extent.

            Overshoot is a VERY real problem and we are deep into overshoot already and the end result is going to be that barring miracles most of the seven billion people on this planet are going to continue to live very hard lives and meet untimely hard ends.

            But you may be forgiven the typical engineers fault of near total ignorance of the life sciences since they were not taught in the engineering curriculum back in the dark ages and are seldom taught in that field even today.

            People by the BILLION cannot afford coal and gas TODAY. The capital to extend grid system electricity to them does not exist and they would have nothing to export to pay for oil and gas in any case. There is a limit to the amount of throw away junk the rich countries can consume and the supply already overwhelms demand for it.

            Renewables are the closest thing we have to a pressure relief valve on the boiler of overshoot. The valve is going to prove to be TOO SMALL to get the job done PROPERLY but it will nevertheless DELAY the violence of the eventual baked in explosion.

            • Sure. I was just pointing out things have ramifications. For example: if they install lots of wind turbines the atmospherric boundary layer will be impacted (it’s doing work, therefore it will lose temperature and pressure). I’m not sure if this has been properly modeled, but it could change the climate, cause drought, etc.

          • Ellen Anderson says:

            In addition, where I come from they are putting industrial scale solar panels on prime farm soils thus producing what they call “solar farms.” Big BIG loans from big big banks and lots of taxpayer subsidies make these things profitable for the bottom feeding companies that build them.
            The earth is covered with solar panels – we call them “plants.” I have no problem with wasting the tax payers money on industrial solar that will eventually wreck the grid. But I would like them to be restricted to places where man has already removed nature’s solar panels (aka trees and grasses.)

            • Glen Calvin McMillian says:

              The amount of good farm land that is already or likely to be used as solar farms is utterly trivial in relation to the amounts buried under asphalt, houses, shopping centers, etc.

              AND the amount of net energy generated by a well designed and placed solar farm is substantially more than the net energy generated by farming the same amount of land and burning the crop in a power plant or automobile.

              It takes a substantial amount of diesel , coal and natural gas , as well as some hydro wind and nuclear electricity to manufacture fertilizers , trucks, tractors, combines, pesticides,distilleries etc. and run them all to get a few gallons of ethanol.Burning grass and wood to generate power takes a hell of a lot of land and fossil fuel as well.

              The land area footprint of wind and solar farm are not serious problems at all.

            • wharf rat says:

              “In addition, where I come from they are putting industrial scale solar panels on prime farm soils ”

              Where I come from, they are putting some of the best farmland in the world on fluid restrictions, cuz global warming is kicking our butt. Fortunately, the only trees and grasses were planted by man, so it won’t be a problem to pull out dead almond trees and put in panels.

              Drought Takes $2.7 Billion Toll on California Agriculture – See more at: http://www.climatecentral.org/news/drought-cost-california-agriculture-19061#sthash.hbWLdSVH.dpuf

              • Ricky Monon says:

                Climate change, even if it really is caused by humans as the taxpayer supported science theorizes, does not cause droughts, that much is a pure false equivalency. Droughts are caused by a low incidence of atmospheric water vapor, which is caused by low evaporation rates upwind from the drought areas. Increased heat, such as that taxpayer supported climate change theory supposes we now have, also does not cause droughts. Heat causes accelerated evaporation, which creates cooling and passes moisture downwind until it is either absorbed into biomass or absorbed into the ground and lost to the chain of evaporation and precipitation. Drought areas lie at the far end of a broken chain, caused by insufficient water vapor at the source, such as we see in California with the effect of cold sea water yielding little vapor. Another factor is atmospheric density, where we see major vapor plumes falling right back into their source waters because there is no other sustainable vapor source to maintain the heat and pressure required for the Aquarian conveyor to transport water. To suggest that humans can possibly have a role in altering any of these natural processes is pretty preposterous, if you think about it.

                • Ricky Monon says:

                  Nevertheless, I will reluctantly contend that our current business as usual lifestyle, and the burning of the preposterous amounts of fossil fuels that we burn and the shit that it kicks into the atmosphere, is going to wreak some pretty serious havoc on the system in general, including climate, so of course, it’s past high time to annul our modern way of life in that regard.

                  • Ricky Monon (not the impersonator) says:

                    Your attempt at trying to impersonate me and put words into my mouth is not funny. Please stop immediately.

      • MarbleZeppelin says:

        That graph shows renewables (hydroelectric is a renewable) are producing about 18 percent of the power in the US.

        • Yes, which means Hillary wants to double it in 10 years. I think it’s achievable by using lots of clean burning natural gas in fast reaction combined cycle turbines and building lots of pumped hydro. Maybe in places like the Ozarks in ny?

          • Synapsid says:

            Fernando,

            “…like the Ozarks in ny?”

            How did you find out? HOW did you find out? New York’s plan to invade and conquer western Pennsylvania, Ohio, Indiana, southern Illinois, and then cross the Mississippi to seize Missouri on the way to Arkansas–all with the purpose of incorporating the Ozarks into New York State–has had the highest of classifications. This leak could be catastrophic for The Plan!

            Or, you may have meant the Adirondacks.

            Either way: Do not leave your present location. Wait for the knock on the door.

            • Yeah, I meant those. The itty bitty mountains in NY. I must confess I moved away from the ny city suburbs in 1968.

              Anyhow, they’ll have to put up lots of pumped storage in those itty bitty ny mountains. It’s going to look like a bunch of lakes.

              • Synapsid says:

                Fernando,

                Those itty bitty mountains form a massif 160 miles across, roughly circular and ranging up to over a mile high.

                What I like about them, though, is that anorthosite is a major rock there: The Rock that No Longer Forms on Earth. (shivers)

                • Yeah, those, the anorthosite mountains. If I look out my back window I can see slightly higher mountains But these are caused by continents colliding.

        • islandboy says:

          Actually the raw data says 14.4% for May vs 16.7% for April.

    • islandboy says:

      As far as renewables go, all sources except wind, solar thermal and conventional hydroelectric were up, with conventional hydroelectric taking the biggest hit followed by wind even though solar thermal fell by a lager amount than wind in terms percentage. The contribution of solar thermal relative to wind is very small. It is less than one eighth of the contribution from solar PV.

      The production from both solar PV and solar thermal seems to be tapering off as it has in the past three years and judging from year to date numbers the exponential growth phase appears to have ended. Would a different scenario with Natural Gas have made a difference? We’ll never know!

      One last point: the numbers presented by the EIA are for utility scale projects only and do not account for “behind the meter” production. Earlier this month a PV Magazine published a story, US solar output 50% higher than official figures suggest, report finds. The estimate from this story is that production from PV is at least 50% higher than the EIA figures. Could this “invisible solar PV be masking some increased consumption of electricity in the US?

      Oddly enough I find this situation somewhat similar to what is happening with data in the Jamaican electricity market. The latest official figures for grid connected solar PV are about 1.6 MW just about the size of the largest PV plant in the island as of right now. A private tally of all known systems nets over 7.4 MW and I estimate that the actual figure is closer to 10 MW so, when the first 20 MW utility scale plant is completed later this year, more than 30% of the PV capacity will be “behind the meter”.

      • Sam Taylor says:

        Data for 2014 from BP statistical review suggests that solar PV accounted for 0.4% of US electrcitiy consumption. Frankly an increase of 50% is a rounding error in the scheme of things.

        • Ulenspiegel says:

          Your comment only proves that some people understand exponential functions, others not.

          • Fred Magyar says:

            LOL! There are three kinds of people, those who get math and those who don’t 🙂

          • Doug Leighton says:

            Ulenspiegel,

            I’d say if anyone here understands exponential mathematics it would be Sam Taylor. Unlike the shapely blondes most of us see in our sleep, Sam likely sees natural exponential functions.

          • Sam Taylor says:

            I understand exponential functions perfectly well. We quite simply were not talking about them.

      • This reminds me of the time I bragged to my friends I had a 69 corvette, but they couldn’t see it because it was painted with invisible paint to avoid the cops when I was speeding.

        • old farmer mac says:

          Your comment reminds me of the time my long dead maternal grandfather told me about HIS parents first sighting of an airplane. It scared the hell out of them because being illiterate backwoods people without newspapers they did not actually BELIEVE in airplanes – although they had HEARD of them from people who COULD read and did have newspapers.

          Some local people went to their knees and got started getting right with Jesus on the spot when the plane – a barnstormer flying out of the nearest town – passed over the neighborhood .

          He told me how he marveled at the first car he ever saw , this would have been around 1910 to 1912 or so and never dreamed he would own one himself – or that later on he would ever own a tractor after seeing his first one. But by the time he was in his late twenties he owned an automobile and before WWII he owned a tractor as well.It is worth noting that he still owned a horse and a mule and a dairy cow well into the eighties. I learned to plow that mule in the mid sixties myself but I could run a tractor a long time before that.

          Time moves slowly on the human scale but it FLIES on the historical scale.

          Most of Africa is going to skip over the grid phase and go directly to local renewable power the same way the continent skipped over wired phones and went directly to cell phones. Ditto a lot of other parts of the world.

          If they manage to get rich enough such people will build grid systems later on- if there is fuel enough available to run them. Or maybe they will just run when the wind blows and the sun shines and be supplied by LARGE scale pv and wind.

          • Local renewable in Congo? With what?

            • old farmer mac says:

              To start with , small imported pv systems with small batteries.Even a very modest system can run a sewing machine or other power tool or keep a couple of lights on for a few hours or power a small community refrigerator and tv set.

              Little acorns grow into mighty oaks.

            • Farmer ad, I brought up Congo because I used to work there. As it turns out large sections of the country have weak sunlight, because it’s mostly cloudy. And there’s very little wind.

              Most of you have a view of Africa which seems to be a mixture of the Tarzan movies, the Bruce Willis flick Tears of the Sun, and Black Hawk Down. It’s a really funny perception, and you “modernize” it by adding a few solar panels. Maybe I’ll parody it by suggesting West Texans can survive burning cow patties, and Pennsylvanians can burn wood.

              • Nick G says:

                I suspect Congo has more light than you think, but if not, so what?

                Plenty of countries have no oil, coal or gas. Wind and sun are much more widely distributed. An argument for domestic resources is an argument in favor of a transition to wind and sun.

              • The Congo may be lacking in wind and sun but most of the continent has a good solar resource.

                The thing about solar power is that it IS affordable in small increments of a hundred watts at a time, or even smaller increments, and ALSO that the less you have the MORE valuable what you do have becomes.

                So- To me and you an incremental hundred watts is trivial but to a person with NO grid connection a hundred watts means running a very small electric motor- which can do as much work anytime the sun is shining as a man or donkey that must be FED every day day in day out whether there is work available for the man or donkey or no work available.

                Five hundred watts means a well pump will run anytime the sun shines. A sewing machine will run any time the sky is clear.

                Historically speaking we rich westerners were working almost exclusively with muscle power only a few centuries back.

                Most people in very poor countries in my opinion will be able to skip over the central power plant and grid electricity model and get started using electricity generated locally by small solar and small hydro.

                Yes , this is intermittent and very expensive but also still affordable and useful- and the grid is NOT going to reach most such people anytime soon.For them it is small scale solar or NO electricity for decades to come.

                These people will get grid juice EVENTUALLY – if the business as usual economy lasts long enough. It might take a fifty to a hundred years of BAU for very poor countries to build a local grid.

                • Fred Magyar says:

                  These people will get grid juice EVENTUALLY – if the business as usual economy lasts long enough. It might take a fifty to a hundred years of BAU for very poor countries to build a local grid.

                  I disagree! Even if BAU stumbles along for a long time to come I see distributed small scale PV generation catching on big time, in poorer countries, because there will be no need for a grid!

                  I know first hand that when I was a child in Brazil in the city of Sao Paulo a commercial or a residential phone line cost thousands of dollars and there was a waiting list that could be years long. So telephones were only for the wealthy or you had to depend on public phones… which usually didn’t work.

                  Fast forward to the late 90s and there was a paradigm shift because cell phones with internet access suddenly became cheap and ubiquitous.

                  At the time I managed a call center located in Florida that provided technical support to customers of Ericsson and later Sony Ericsson in Brazil. I used to listen in on calls from customers who might be paddling a dugout on a river in the Amazon rain forest and I could hear the sounds of the forest such as birds or tree frogs in the background. In the past these people would not have had access to copper based land lines so they would not have been able to do business.

                  Today practically anyone anywhere in Brazil has a cell phone and there is no need for the old landline paradigm at all.

                  Cheers!

      • Stephen Hren says:

        One other massive omission is solar hot water and, to a lesser extent but still important, solar space heating. Solar is a fundamentally different fuel source, much of it being consumed where it is produced without ever being traded and hence counted in the statistics. The numbers for solar are fundamentally and grossly underestimated.

        • My grandpa used to say: “the number of vampires and witches is seriously underestimated because they hide and never join the union”.

          • Stephen Hren says:

            Fernando,

            Regardless of what your grandpappy may have said, I have enjoyed the benefits of off-grid PV, water warmed by the sun, and passive solar heating for the last decade that previously have been provided by burning coal or natural gas. When I used fossil fuels for these services, they registered as being consumed. Now when I use solar, they simply do not exist according to commonly used metrics. Imho, this represents a major flaw when comparing how much solar energy is actually being used vs. fossil energy, since many other people also use solar energy for off-grid electricity, hot water and heating services.

            • MarbleZeppelin says:

              It is probably better that way, that which is known to exist and can be counted will eventually be taxed and regulated.

            • Nick G says:

              Think about light:

              Most of the light we use on a daily basis is solar. That’s not counted in energy statistics – we just take it for granted.

              Not to mention space heating: conventional HVAC just nibbles around the edges adjusting temperatures. The heavy lifting is done by the sun, without which the surface of the earth would be, what, 450 degrees below zero?

        • Fred Magyar says:

          I agree with your point!

          Solar is a fundamentally different fuel source,

          Though I have a minor quibble with that statement, solar is a radiant energy source and not really a fuel at all, at least not by the time it reaches this planet.

      • MarbleZeppelin says:

        Islandboy said:The production from both solar PV and solar thermal seems to be tapering off as it has in the past three years and judging from year to date numbers the exponential growth phase appears to have ended

        installed PV in 2014 was up 30% beyond what was installed in 2013.
        http://www.greentechmedia.com/articles/read/the-us-installed-6.2-gw-of-solar-in-2014-up-30-over-2013
        From the graph it looks like solar PV is still above a linear growth. Natural gas new power installation is still larger than PV.

        A pleasant surprise for the US wind power industry:
        http://www.aweablog.org/a-pleasant-surprise-usa-not-china-is-1-in-wind-energy/

        Installed wind capacity is 66 GW as of 3/31/2015
        http://apps2.eere.energy.gov/wind/windexchange/wind_installed_capacity.asp
        The large empty area in the southeastern US should start filling in with the new larger bladed. taller tower systems over the next decade.

        On the economic side:
        http://cleantechnica.com/2015/07/21/1-trillion-solar-wind-finance-to-outstrip-oil-and-gas-industry/

        • MarbleZeppelin says:

          Islandboy,
          There is no hidden consumption of power or hidden renewable generation (except for the few off-grid sites). Private installations feed back through the meter, all is recorded. Excess is sent down the power lines to someone else where it is recorded on their meter. States with renewable utility power mandates force the power companies to track renewable power to meet requirements.
          One area that is not recorded is the backup and portable generation of electricity. That uses a lot of fossil fuel and goes unrecorded as power generation. Everything from power outages to construction sites, to military operations. Small solar panel or diesel generator feeds to isolated equipment is not recorded also.

          • islandboy says:

            I invite you to tell us how much electricity is being produced that is not being fed to the grid. One could have a 100 kW installation on the roof of a big box store, in a jurisdiction that allows net metering that, for all intents and purposes, never feeds any power back to the grid but, offsets an average 600 kWh of consumption for the day. Without a production meter or data logging, the utility would never know except for the slightly less than 600 kWh of additional demand on a very overcast day.

            The beauty/challenge of grid interconnected solar PV!

            Your assertion makes it appear that you did not bother to read US solar output 50% higher than official figures suggest, report finds

            • MarbleZeppelin says:

              60 to 80 percent of the electricity is used at the installation. The rest is sent to the grid.
              Meters record both the solar PV production as well as what is sent to the grid (net metering).

              • MarbleZeppelin says:

                The source you sited specifically says the EIA method of accounting ignores installations below 1 MW. So it is an EIA accounting problem, again.

              • Longtimber says:

                You only know what is Produced if you have a production meter as in a PPA . Much Grid Tie Distributed PV in the USA is Net Metered – Only one meter, so you don’t really know how many kWH’s were offset “behind the Meter”.

                • MarbleZeppelin says:

                  Not true in my state, a separate meter is installed to record solar production. That makes two meters (plus the feed from the inverter which makes three).
                  You really must have an excess of capital letters.

                  • islandboy says:

                    That’s one of the amazing things about the USA. It’s 52 “little” states joined to form one big federation and what is legal in one state is not necessarily so in another. Pot, anyone?

                    I did some PV installation training in Florida and they took pains to point out that certain aspects were highly dependent on your jurisdiction. The Utility External Disconnect Switch is a good example. Some jurisdictions require it, some don’t. Sometimes it boils down to the individual inspector who signs off on the installation. I have heard stories of inspectors that refused to pass arrays with integrated grounding systems, insisting that an uninterrupted, bare copper grounding conductor must be attached to each module in the array!

                    For some jurisdictions net meetering simply means that, your system can “spin your meeter backwards”, giving no indication of how much electricity was produced or consumed, only indicating the difference between consumption and production. Not all inverters do a great job of logging production data either. The systems that offer on line monitoring of system performance are best in that regard

                  • MarbleZeppelin says:

                    So according to islandboy, it’s a mess. Typical.
                    That means the EIA will have to employ approximations rather than get real data in most cases (probably all since it’s easier to approximate than actually look things up and handle data).
                    Should not be too difficult, take the amount of installed PV and multiply by a fudge factor to get the power generated for a particular area or state. Might even get within 10 percent if they work at it.

                  • MarbleZeppelin says:

                    Considering the states are the size of countries, and it is a union of states, I guess that explains the state of things.

            • Synapsid says:

              islandboy,

              52 states?!

              We went and conquered someone and I missed it while fixing lunch, I guess.

              I’m dying to know: Who are the two lucky most recent?

        • Fred Magyar says:

          From his post:

          If we show actual energy production we can see fossil fuels almost completely dominate the market and this is not due to cute political tactics but because they are (relatively) cheap, abundant, convenient, etc.

          Well, DUH!

          But I think most of the readers of this site understand that this will probably not be the case for very long, given issues such as ‘Peak Oil’, Jeffrey’s ELM, True Cost accounting of CO2 emissions, etc…etc…

          BTW, he started by calling hydrogen a fuel, so it was a bit difficult to take the rest of his opinion without a large dose of NaCL!

        • Check this out by a Mexican realist.

          Really now, just what is your definition of a “realist”? This guy is a wild eyed optimistic dreamer and about the farthest thing from a realist as I can possibly imagine.

          Is hydrogen as a fuel feasible? Yes.

          No!

          Will fusion power become a reality? You can take that to the bank.

          I have been hearing that for fifty years. And I am sure fifty years from now they will be saying the same thing.

          Compressed air cars? Also, fully feasible and the “battery,” in other words the air tank, can be recharged forever.

          That is about the dumbest idea I have ever heard of. But of course it has been tried. Everything has been tried at east once.

          Compressed Air Car

          The overall efficiency of a vehicle using compressed air energy storage, using the above refueling figures, is around 5-7%. For comparison, well to wheel efficiency of a conventional internal-combustion drivetrain is about 14%,

          Early tests have demonstrated the limited storage capacity of the tanks; the only published test of a vehicle running on compressed air alone was limited to a range of 7.22 km.

          That’s four and one half miles you could travel before you needed to recharge your tanks. But those are just two of the many problems with with compressed air auto travel.

          Compressed air automobiles is a stupid, stupid, stupid idea. Anyone who believes compressed air will power tomorrows cars is truly living in dreamland.

          • ezrydermike says:

            I missed it but Toyota of Orange, which is near where I live, had an open house last night to display the Mirai.

            http://wardsauto.com/vehicles-technology/toyota-600-requests-mirai-refueling-woes-be-expected

          • Fernando stepped it the male bovine excrement when he posted this link.

            Given that he is an engineer the only reasonable explanation I can come up with is that he only read a couple of lines of it.

            He constantly tell us that renewables are unworkable due to the relatively simple problem of storage and then agrees with a guy who tells us fusion power is a coming reality?

            Or maybe he has a twisted sense of humor? I occasionally say this sort of thing myself in a sarcastic vein but not on screen. Sarcasm does NOT work in an online tech forum.

            There are hundreds of problems associated with fusion power that are each individually as tough or tougher than energy storage.

            I would gladly bet my entire worldly assets against one can of beans that there will NOT be a fusion reactor supplying the grid within fifty years- except I will be dead in less than twenty five years.

            Compressed air at the pressures needed to drive a car even five miles is as dangerous as an artillery shell.

            • Well, the way I saw it he listed those technologies, said they were feasible, then demolished them and poked fun at them insofar as he doesn’t think they compete with fossil fuels.

            • MarbleZeppelin says:

              OFM said
              “Compressed air at the pressures needed to drive a car even five miles is as dangerous as an artillery shell.”
              Wow OFM, you could not be more wrong. The composite pressure containers split in crashes releasing a harmless whoosh. The don’t explode, they don’t shoot out like rockets. they don’t shatter.
              The testing was done a while ago in Europe.

              • Caelan MacIntyre says:

                I hope for The Wet One that the air that might come out of their old-farmer-mac-emblazoned balloon at worst only makes a little ‘whoosh’ too. ‘~’

                ;P

              • Such composite containers have never been manufactured in quantity and are apt to cost so much that the battery in a Leaf looks like chump change. It would take a bunch of them to get a useful range unless they were really big ones. So I presume any compressed air car will necessarily have to use ordinary metal bottles perhaps wrapped with kevlar etc.

                To the best of my knowledge the cost of such storage bottles is THE key technical problem holding up the adoption of running highway trucks on compressed natural gas. There is plenty of room to mount them on highway trucks but building them strong enough to hold enough gas is still cost prohibitive.

                I do agree they can IN PRINCIPLE be made to be reasonably safe.

                In actuality I work some of the time with highly compressed gases. I have seen a safety film show an ordinary O2 bottle such as the ones in my shop take off like rockets and go thru a couple of masonry walls at a couple of hundred miles per hour and eventually stop a hundred yards out in the woods. Such bottles are pressurized to only about 2300 psi.

                The round trip efficiency would be miserable in any case. Much worse than batteries.

                • Nick G says:

                  Compressed air can be modestly useful for very short term braking energy storage.

                  It can also be very useful for adiabatic underground storage.

          • MarbleZeppelin says:

            I followed up on the cited references to the Compressed Air Car Wikipedia article. Two refer to the efficiency of the air car, both references do not exist. The one referring to a modeling of the well to wheel efficiency showed about 12 percent, the higher value was for a diesel hybrid.
            Since the cars themselves are about 15% to 20 percent efficient, I don’t believe the 12 percent well to wheel figure.

      • canabuck says:

        Any guesses on what the PV penetration will be in 10 years?
        I think after 20%, there are issues regarding storage etc.
        So, it may stall at 25%, or could it push all the way to 75% with adequate storage capacity?

          • Fred Magyar says:

            In the year 2525
            https://goo.gl/RmjI4Z
            1969 hit song by the American pop-rock duo of Zager and Evans

            BTW if you listen to the song I think you might agree that already in 2015 a lot of what these guys thought would only happen well into the future, has already come to pass.

            In the year 9595
            I’m kinda wonderin’ if man is gonna be alive
            He’s taken everything this old earth can give
            And he ain’t put back nothing

            Keep in mind that it has only been 10,000 years since the dawn of agriculture…

            • Terrible song. We used to call it the party pooper song. People played it when parents wanted everybody to leave.

              • Fred Magyar says:

                People played it when parents wanted everybody to leave.

                That’s kinda the point, Fernando!
                The party is over and it’s time leave.

                • Caelan MacIntyre says:

                  Cool lyrics. Music’s not bad either.

                  In this fan-video of it, they overlay a lot of apocalyptic/sci-fi videos to its lyrics, including the famous The Matrix pill sequence for this section:

                  “Ain’t gonna need to tell the truth, tell no lie
                  Everything you think, do and say
                  Is in the pill you took today…” ~ Zager And Evans, In The Year 2525

                  Fernando, it’s the party that’s the pooper. Glad it’s on the way out. High-five, Fred. (Liked the ‘Cambrian UBC live set’ video too)

        • MarbleZeppelin says:

          I’ll bite canabuck. Since it will take about 10 years to fully build out the production infrastructure for electric cars and there is disruptive technology within the electric car world already, and we will be into the decline of oil production by then, percent penetration into vehicles on the road can vary by quite a margin.
          I would say that a range of 5% to 25% by 2025 and a range of 50% to 90% by 2035.
          There are way too many variables in play at this time, but the direction for electric, autonomous and high efficiency personal transport is positive now.

          • Nick G says:

            It’s really a choice.

            If we, as a society, realize that EVs are superior, and overcome the resistance from the minority of industry employees and investors in the FF and car industries, those numbers will be at the high end of the range.

            If oil prices stay low, and we as a society don’t come together to deal with Climate Change, pollution, oil wars, etc. then not so much.

      • MarbleZeppelin says:

        It’s an EIA accounting problem. No real consequence, the states know how much has been installed. Let the EIA guess.

        Comment from the article below: “No wars are necessary to support solar energy!!”
        Talk about a big savings – add that to the lives saved, the material, the energy and the lower CO2, along with the world view. The governments should be practically installing these things for free.

        One Year With Solar Energy at Home:
        http://www.bloomberg.com/bw/articles/2012-11-12/one-year-with-solar-energy-at-home-mostly-sunny

    • Heinrch Leopold says:

      MarpleZeppelin,

      In my view, the role of NG in combination with renewable resources will be as a swing producer, when wind and solar are not available. The main outcome of the German experiment with renewables over the last five years has been a strong mismatch of supply and demand of electricity. At noon time there is a lot of solar electricity available, yet demand is usually quite low. In the morning and evening when demand is high, usually supply is low from renewables unless there is a lot of wind. Wind and solar are in my view also the reason for a surge in NG power burn in the US. Coal retirements take place not alone for environmental reasons, but also for the inflexible supply.

      • MarbleZeppelin says:

        I sincerely hope you are correct about NG playing a tertiary role in power generation. I have come to the conclusion that moving to a society mostly driven by NG would be one of the most dangerous things we could do.

        • There won’t be enough natural gas to replace coal. Natural gas will become the main power source, on a percentage basis. Unless we start building lots of nuclear power plants. If I were the U.S. Government I would have a plan to have a new nuke built every year starting in 2025.

      • MarbleZeppelin says:

        Heinrich, could you provide the websites showing German solar/wind/fossil power generation?

      • Anon says:

        “At noon time there is a lot of solar electricity available, yet demand is usually quite low. In the morning and evening when demand is high, usually supply is low from renewables”.
        Hi Heinrich, it seems to me you’re talking about domestic consumption, (besides, a washing machine with a timer would solve the problem) in which case you’d be correct of course. But renewables feed in the grid, I think, and in the economy of an industrial nation, noon is the moment of peak consumption, not morning or evening.

        • Not around here. Peak seems to be early in the day and after sunset. The system was designed to overcome this problem by using hydro as a full time swing producer. As the sun comes up and solar can deliver the hydro is shut off. If the wind blows hard then they pump water back to the top, and push some to France. This means ALL the hydro capacity has become like a giant gas turbine.

          And this is why the USA will have to build huge pumped hydro facilities in the Adindoracks, the Ozarks, and everywhere they got hard rock to set up reservoirs.

    • The paper assumes the “process of decarbonization” has to march at the pace decided by the author. This takes us back to the social cost of carbon issue, the discount rates, and whether renewables are able to pull their weight. It always goes back to the same fuzzy arguments.

  9. Karen Fremerman says:

    Thanks Dennis. I have a question. Won’t oil declines really rule over natural gas in the short and long run? If/when oil starts it’s real relentless decline, won’t that limit how much natural gas (or any other resource/commodity for that matter) can be delivered because extraction and transportation all take oil to get to market? Isn’t oil the limiting factor?
    Thanks
    Karen

    • old farmer mac says:

      Oil is for very good reasons known as the lifeblood of the economy but it is NOT absolutely necessary for the economy to continue to thrive IF the supply declines slowly and the supply of gas increases fast enough to compensate for the decline of oil.

      Gas can be substituted as a motor fuel in the gas and oil fields and most mining is already electrified anyway. Heavy industries such as the manufacture of steel and all the things made out of steel depend on only to the extent that they depend on highway trucks to deliver input materials and output product.Otherwise they run on electricity generated mostly with coal and gas.

      Trains can be electrified and so can mining machinery used for surface mining – machinery such as bulldozers and excavators.Trucks can run on natural gas.

      Shrinking oil supplies are going to hurt us and hurt us a LOT but if gas is as plentiful as some think it is then a lack of plentiful oil is not going to KILL us but the pain may well extend to the economy going into the longest and deepest depression of modern times.This would be the MOTHER of ALL DEPRESSIONS and the worst one EVER.

      Eventually both oil and gas are going to come up very short indeed and then the fall back position will probably be coal to liquids.

      The proof that we can get by with less oil is crystal clear. Take a look at the per capita consumption in places such as France and consider that the French will have a totally electrified rail system within the next few years.

      It sounds very mean and harsh to say it but the billions of poor people in the world who use next to no oil at all are going to CONTINUE to use next to no oil at all and stay poor given that the oil they would like to consume does not exist for the most part.

      The rest of us are going to learn to get by with electrified automobiles, mass transit,bicycles and shoe leather sooner or later.

      UNLESS renewables get to be incredibly cheap. In that case we might MANUFACTURE motor fuels using renewable electricity but the odds of this coming to pass look to be exceedingly slim.

      • Nick G says:

        The rest of us are going to learn to get by with electrified automobiles, mass transit,bicycles and shoe leather sooner or later.

        Get by? GET BY???

        EVs are better and cheaper. Trains are safer, faster and chauffered. Bikes and walking are healthier.

        A Leaf will get essentially everyone to work, and is insanely cheap compared to infernal combustion vehicles: the cheapest thing on the road.

        The average new car costs $31k – a Volt is close in price, and if you lease it, the combined lease payment and gas & maintenance costs will be much cheaper.

        And, now, there are starting to be very cheap used Leafs and Volts.

        Get by??

        • thrig says:

          Get by.

          http://granolashotgun.com/2015/07/21/valeries-house-3/

          Oh and look the Senate transportation bill “encourages states to impose user fees on electric vehicles because they use roadways but don’t contribute to federal gas tax revenues” as part of the doubtless 35th consecutive short-term transportation spending band-aid since 2009. Now, I believe you were saying something about simply raising the gas tax? How is that going?

          • manybytes says:

            I just paid $107 for not paying enough fuel taxes here in Colorado for my Volt.

            • MarbleZeppelin says:

              It will take a while to figure out the whole new system. I hear down in Arizona they are taxing sunlight.

        • old farmer mac says:

          Given time enough to change our ways , and enough gas to carry the load during the changeover as oil depletes, we can get by JUST FINE on very little oil by switching to gas powered and electrically powered transport.

          The thing that scares me almost enough to wet my drawers is that we may come up very short of oil, and maybe gas as well, ABRUPTLY some time in the near future.

          We will not be able to manage an ABRUPT transition to electrified and natural gas powered transportation short of suffering an extremely bad economic depression. Things would probably get so bad we would have to resort to draconian war time rationing of fuel and groceries. Tens of millions of people would lose their incomes and have to go on welfare to survive. Those still working would be on reduced hours in more cases than not.

          The biggest two problems in such a scenario would be a lack of capacity to manufacture the large batteries needed in an electric car and the lack of ng filling stations to service ng fueled trucks and cars.

          Even if the gas were available and the filling stations were available it would probably be impossible to manufacture and or convert enough cars to run on gas to keep the economy on its feet.

          • Nick G says:

            Mac,

            I really don’t think we need to worry about running out of diesel to transport freight. At the moment, I hear there’s a world surplus of diesel relative to gasoline, as most motorists outside Europe use gasoline.

            More importantly, the majority of fuel is used for personal transportation, right? Commuters could easily double up, and reduce fuel consumption by 50%.

            And, freight can slow down by 25%, and reduce fuel consumption by 40%.

            These things can be done, literally, overnight. In 2008, when oil prices were spiking, container ships were slowing down to save fuel.

            It’s not that hard to get through temporary shortages.

            In WWII, the economy was stimulated by the transition from cars to tanks. Personal travel was greatly reduced to free up fuel for the war effort – it didn’t hurt the economy. A massive ramp-up of EV manufacturing would stimulate the economy, not hurt it.

            • old farmer mac says:

              Hi Nick,

              Somehow I get the impression that you are well off and have never had to make any really hard choices involving serious sacrifices, or else that you are an academic defending turf. In the first case I envy you and in the second I understand that you will ALWAYS stay on message.

              I also believe you are enough of a ”new generation” business as usual guy that you simply do not give much thought to nasty unanticipated events ranging from killer hurricanes to financial meltdowns to hot wars erupting.

              I live in the tough mundane day to day world along with most of humanity where hard choices are daily matters. Most of the people I know would find it impossible to buy a new car next week or even next year. The one third or so who could would mostly have to rearrange their personal affairs as a result. Such rearrangements would involve cutting out a substantial amount of spending on other things such as clothing ,vacations, meals eaten out, savings etc.

              Yes, people can double up to go to work.No we are not at risk of running short of diesel in the NEAR future.A very few years down the road things might be very different indeed. The population is still growing and depletion never sleeps.

              The millions who will lose their jobs if there is a sudden and lasting oil supply crisis will also lose their cars and their houses and have to go on welfare. Half of the people who still have jobs will earn substantially less and be at high risk of layoffs and cut their spending to the bone. Even the people with virtually fail safe government jobs such as the governors personal staff will quit spending and save every dime they can. This is good strategy for the individual but rat poison for the overall economy.

              This sort of event can easily well morph into an irreversible world wide economic crash – our fine host Ron for example thinks peak oil plus other peak resources will LIKELY to bring on such a crash. I agree with him in large part with the caveat that the baked in crash he believes in will not NECESSARILY be world wide and that a few countries might pull thru ok.

              I understand and have often myself pointed out the power of Leviathan to manage the affairs of the people during a crisis such as WWII but in the event of a really bad oil shock there will be no offsetting pedal to the metal ramping up of the MIC to compensate for the losses in the rest of the economy UNLESS the oil shock morphs into hot war. Some wartime level work will probably be undertaken on the renewables front but it is very apt to be too little too late.

              REMEMBER how WWI got started ?

              A few little acorns grow into mighty oaks. Little problems grow into big ones sometimes.

              • MarbleZeppelin says:

                Old Farmer,
                Isn’t the US economy too big now?
                The top four GDP providers are
                Real estate 13%
                State and Local Government 9%
                Finance and insurance 9%
                Health Care 8%
                The federal government is down the list at 5% followed by Information and Arts and Entertainment both at 4%.
                That is percentages of 17 trillion dollars.
                Utilities are only 2 percent which is the same as Corporate Management.
                I didn’t even know Corporate Management was an industry, but it is a big one.
                Oil cost is about 2 percent of US GDP now. So it is equivalent to Corporate Management.

              • Nick G says:

                Mac,

                My background isn’t really relevant, right? Only the facts matter. Yet, you share a lot, so I’ll share some: yes, I know what it’s like to work for less than minimum wage; what it’s like to be exploited because I don’t have money; what it’s like to be in a train-wreck, where there’s no reserve of time or money or help from friends & relatives, so things get out of control and everything makes everything harder (like, the car goes out, so you can’t get to work to make money to fix the car..).

                But…most people arent in that situation. We should have compassion for people in a bad place, and we should help them. But that doesn’t tell us that much about the country as a whole.

                The average sales price of a new car is over $31k, right? More than twice as much as the cheapest new car. More than a Leaf. Close to a Volt, without figuring in the much lower operating expenses.

                you simply do not give much thought to nasty unanticipated events

                That’s not what we’re discussing. Sure – depressions happen. Hurricanes happen. Wars happen. The question here is: what’s the likely impact of PO, or Peak Coal, or Peak Gas?

                Most of the people I know would find it impossible to buy a new car next week or even next year.

                Well, with all due respect, I think your personal background is coloring your thinking here. About 25% of all car purchases are new cars.

                The millions who will lose their jobs if there is a sudden and lasting oil supply crisis

                I don’t think that’s likely. It’s certainly possible if a crisis is very badly mismanaged. But, not likely. Look at WWII: we cut fuel consumption dramatically. We stopped making cars for four years! But, we switched to making other things, and the economy boomed.

                This sort of event can easily well morph into an irreversible world wide economic crash

                The only reasonable explanation for a depression is panic. That’s what recessions and depressions used to be called, before Herbert Hoover created “depression” as a euphemism. There’s no physical reason: people and goods could still get around with half the fuel.

                REMEMBER how WWI got started ? A few little acorns grow into mighty oaks.

                Not really. Those acorns were just excuses: Germany was hot for war. All of Europe had been preparing for a general and massive war since the war of 1870.

                • In the abstract it is the argument that matters, rather than the advocate. But in the real world the advocate matters because the advocate virtually always has an agenda and virtually always refuses to acknowledge points against if he can avoid doing so.

                  A substantial percentage of all crises WILL be mismanaged. Yes, WWI had been brewing for decades but mismanagement of a single assassination set it off. Without that mismanagement history might have played out very differently.

                  Mismanagement of the German surrender terms after WWI is without a doubt the single key factor in the rise of Hitler and his Nazis and WWII……

                  The more technologically dependent, the more specialized, the more trade dependent we become, the less resilient we become.

                  In 1940 we were a different nation by far than today, far far more homogenous and far far more united in values. We had an identity to rally around and a belief in right and wrong to fight for , we had an overwhelming sense of nationalism once it was aroused.

                  The world was simpler, resources were far more plentiful than today. We have lost a hell of a lot, maybe most of what held us together back then. Nowadays I personally know dozens of people CONTENT to live on welfare. I know only a VERY few young people who are willing to work really hard , excepting my new Mexican neighbors who are mostly very good people.

                  Hence we should be wary indeed when it comes to believing we can pull together thru a crisis these days.

                  It IS ironic that you are now using my own often made argument against ME – my argument that when the shit hits the fan, Leviathan can manage our affairs for us and hopefully keep our society from going all the way to hell in a hand basket.

                  NOW I am making the OPPOSITE argument to illustrate that the job MIGHT be too big even for Leviathan.

                  I don’t mind admitting I might be wrong.

                  You NEVER vary a millimeter from your own arguments. They ARE VERY GOOD arguments but there are reasons they might fail to hold.

                  Hence I wonder who you are and what your agenda might be. Such hard core orthodoxy is consistent with being a spokesmen for a certain variety of a future ” business as usual” and also consistent with being an academic in a managed debate.

                  The fact that our midbrain rather than our neocortex controls our behavior is the biggest and most dangerous one.

                  The second biggest in my opinion is that the technology ambulance hauling our collective butt to the renewables hospital is apt to run out of fuel short of the emergency room entrance.

                  Taken all around, I certainly do think you are one of the brighter lights in this forum and I do agree that there is a distinct possibility your vision of the future will come to pass.

                  Let us all hope it does and do all we can to make it so.

                  You are to a substantial extent correct in saying that economic depressions are largely the result of what used to be called panics.

                  But let us remember than monkeys and cows and other herding type animals ARE SUBJECT TO PANICS due to the evolutionary design of our brains.

                  Bill Gates and company cannot provide a security patch for this shortcoming of our biological computer. We are stuck with it as it exists.

                  • Nick G says:

                    Mac,

                    Let me simplify things:

                    We agree on one basic thing: we, as a society and as individuals, need to take action.

                    We differ from pessimists, who think there’s no point. We differ from optimists, who think there’s no need.

                    There is no sky daddy who will take care of things for us. The free market works well, but only with careful regulation and good accounting.

                    We need to act!

                    Ok, on to details and minor arguments:

                    In the abstract it is the argument that matters, rather than the advocate.

                    The facts are really the only things that matter. Sure, analyzing the advocate can help you decide whether they’re worth listening to in the first place, and occasionally can help you weigh the importance of a particular idea or argument, but in the end, you have to decide for yourself whether something makes sense.

                    And, of course, most of the time you don’t have the time to research stuff, and you just rely on experts. But, if you care about a topic, you have to figure it out for yourself.

                    Yergin is a prize winning historian, but his intuition on price and production forecasts is terrible. Hansen is a great climatologist, but his intuition about renewables versus nuclear is terrible. No one knows everything…

                    In the end, you have to research the facts, and decide for yourself. No one can do it for you.

                    And, I think this is really the way you think. That’s why I take the time to tell you stuff – I think you’ll actually listen.

                    A substantial percentage of all crises WILL be mismanaged.

                    Sure. Heck, a substantial percentage of *everything* is mismanaged. This is a variation of Sturgeon’s rule: “90% of everything is crap”.

                    For instance, the 2008 credit crunch resulted from mismanagement. On the other hand, it could have been much, much worse, and it would have been if we hadn’t learned from the Great Depression.

                    For another instance, I like solar and wind because they’re much less disaster-prone. They do have failure modes, but those failures are far more predictable and much smaller scale.

                    But, is a long and deep depression *likely*? No.

                    WWI had been brewing for decades but mismanagement of a single assassination set it off. Without that mismanagement history might have played out very differently.

                    Really, it only changed the timing. Germany wanted that war!

                    Mismanagement of the German surrender terms after WWI is without a doubt the single key factor in the rise of Hitler and his Nazis and WWII

                    Perhaps. The French were trying to punish the Germans. A different interpretation is that the Germans didn’t lose thoroughly enough. Germany had not given up it’s dreams of empire, and it took a devastating loss (and very thorough reconstruction and re-organization by the US, including military bases that are there to this day) to make them give it up.

                    WWI and II were not random mistakes. They were the direct result of a desire for massive war, and empire, on the part of the Germans. Many people link WWI and WWII. They really should link the war of 1870 as well: it was an “80 years war”.

                    The more technologically dependent, the more specialized, the more trade dependent we become, the less resilient we become.

                    Maybe. Look at the 19th century. Look at the depths and length of the “panics”. They were much worse than anything in the 20th century, including probably the Great Depression. Financial systems, and governmental oversight and regulation, have improved immeasurably.

                    We have more more leeway in terms of resources – locations, substitutions, technical alternatives, etc. We have more failure modes, probably. But we have many more solutions.

                    The world was simpler, resources were far more plentiful than today.

                    I disagree. Sure, things were simpler, but we have far more resources today, including minerals, food, other commodities, as well as technical knowledge and resources.

                    Energy resources are limited only by our ingenuity. The Romans had coal – they didn’t know how to use it. The US had oil before 1859, but not the knowledge. We’ve always had 100,000 terawatts of solar power available – only now is it cheap and easy to access.

                    You NEVER vary a millimeter from your own arguments.

                    That’s not true at all. On the other hand…I’ve been thinking carefully about this stuff for decades, and I have plenty of training and experience with this stuff. My thinking was different when the Club of Rome LTG books came out…but I’ve learned since then.

                    It may look that way partly because my arguments are limited. I agree that there are many risks with oil and other fossil fuels. That’s why I argue that we should take action

                    But, are we doomed to certain collapse? No. And thinking that way only leads to inaction.

                  • TechGuy says:

                    NickG wrote:
                    “But, are we doomed to certain collapse? No. And thinking that way only leads to inaction.”

                    Actually if more people really understood how desperate the situation was, perhaps there was a chance to avoid a collapse. The happy-go-lucky (tech will solve it) is leading to inaction which leaves us doomed!

                  • Nick G says:

                    The happy-go-lucky (tech will solve it) is leading to inaction

                    Yes.

                    That’s why I objected to Fernando’s idea that Dennis’s analysis of Peak Coal and Peak Gas means that we don’t have to do anything.

                    There are a lot of serious risks to oil and FF, and a lot of hidden costs. We need to transition away from them ASAP.

                • MarbleZeppelin says:

                  Thanks for all your thoughts Nick. You are one of the few here who seems to see the way through to a less than catastrophic transition away from fossil fuels.

          • Dennis Coyne says:

            Hi Mac,

            If there is some other shock due to war or financial crisis, an abrupt fall in oil output might result. If the world can adjust to oil output declining at 1 to 2% and higher oil prices, then such a crisis is the only reason there would be an abrupt decline.

            • old farmer mac says:

              Hi Dennis,

              Having studied and lived thru the agricultural price cycles of the last half century plus I have a somewhat different perspective. We farmers tend to over produce when prices are favorable and glut our markets and then pay the price for two or three years. So prices constantly discernibly oscillate around a mean for any given crop, painting with the broad brush.

              It seems to me that with oil prices being so low right now that reduced upstream investment – plus the ever declining quality of the new fields being brought on line – plus depletion of legacy oil of course – plus growing populations – given all these factors –

              We might be at substantial risk of an oil crisis anytime at all even without a hot war or a financial crisis. Demand might simply outrun production in my humble layman’s opinion. It is not so easily discernible but I think there is an oil price cycle as well – the main difference from the agricultural cycle being that it takes a long time to go from shortage to glut back to shortage and around again in the oil industry.

              Furthermore I am not certain that there will not be a sudden and dramatic fall in production from a lot of legacy fields including the supergiants. Ron’s arguments about enhanced recovery techniques such as massive infill drilling eventually resulting in very fast declines seem very persuasive to me.

              However I AM smart enough to realize that models are just that- models – and very useful in terms of gaining insight to our future. Hopefully your modeling results will turn out to be accurate. I do not wish to dispute them but only to point out that given bad luck they will turn out to be too optimistic.

              We are going to be in one HELL of a fix if Old Man Business As Usual croaks on us before the renewables industries have time to grow out of short pants and the population levels off.

              In my own opinion BAU is NOT going to last long enough for the WORLD to turn the resources corner but a few countries such as the USA probably have a good shot at managing the transition to renewables..

              Everybody should pray to the God(s) of their choice for a series of Pearl Harbor Wake UP Events AND the continuation of business as usual so as to ENABLE the hoped for transition to renewables.

              People and countries in truly dire economic straits are not able to pay for huge long term investments. Every dime will necessarily be devoted to short term survival.

              • Dennis Coyne says:

                Hi Mac,

                Even if oil reserves are at my low case URR (about 14% higher than John Laherrere’s estimate), decline rates are unlikely to be very high without some crisis.

                On the infill drilling and EOR, these have been applied to the greatest measure in the onshore US lower 48 and decline rates from 1970 to 2005 were about 3.6 % per year. The rest of the world is unlikely to. reach the aggressive level of development of US oil fields any time soon (probably not ever) so the World is unlikely to reach even 3.6% decline, without some above ground shock (war or depression

    • Dennis Coyne says:

      Hi Karen,

      I am glad I read Mac’s response before replying. I agree with him that it is possible that oil decline will not affect natural gas output very much. Note that in the past, oil shocks have not affected natural gas output very much, this may or may not continue in the future, but the effect will be limited by substitution as Mac suggests IMO.

    • Karen : the answer is no. Natural gas producers burn natural gas for internal energy needs. And they can easily afford to pay triple or quadruple current liquid fuel prices if they have to. That’s just a pass through cost. In the end the customer pays.

  10. SAWDUST says:

    In a world with less oil. The use of other sources of energy will grow exponentially. Unless you believe people will stop doing things that require energy. Or believe there will soon be far fewer people using energy.

    In all likelihood oil shock will bring the day of gas shock forward in time a good bit. As gas consumption will rise a good bit in the wake of oil shock.

  11. shallow sand says:

    Off topic.

    To Rune. Also to Doug, who I recall has a connection in the industry in Norway.

    Read over Statoil earnings release. They beat estimates due to better than expected domestic results, but their international operations lost money for the third quarter in a row. The Wall Street Journal article said the company was the most disappointed in its North American operations, which I presume means shale and tar sands.

    Would be interested in your take on this or any additional information you may have.

    • Doug Leighton says:

      Hi Shallow,

      My knowledge of Norwegian operations is pretty shallow (sorry), mostly derived from post dinner conversations. It’s true they (Statoil) have been pruning participation is projects around the globe, like all the majors, and last week announced that it will deepen cost cuts by 30% and lower planned investment by 10%. For sure, contractors are the ones taking the most heat. At Bergen University, apparently some engineering students, who used to brag about interviews with company recruiters during class breaks, are now talking about extending studies to a Masters level as a way of riding out current slump.

      Meanwhile, Norway is busy exploiting its biggest offshore project in decades, the Johan Sverdrup field in the North Sea (about 2.9 billion barrels of oil); it’s due to start production in 2019 (deemed profitable even at sub- $40 oil). Johan Sverdrup is expected to cost 100 to 120 billion kroner and generate around 51,000 man-years of employment in its first phase.

      Being an utterly selfish brute, I now normally enjoy visiting my niece rather than hearing she’s committed to working more overtime. Perhaps that sums Norway situation up as well as anything.

      • shallow sand says:

        Doug, thanks! Someday I am going to visit Norway and other Scandinavian countries. On my bucket list. Any recommendations on that always appreciated!

        • Doug Leighton says:

          Highly recommended. Beautiful, safe, friendly, everyone speaks perfect English. Just remember, after Switzerland, Norway is most expensive country in Europe and Sweden’s not far behind.

        • Take one of those large containers with everything you need for your trip. Get a hotel with breakfast included. They like to give you that all you can eat deal, so stuff yourself and then take a couple of peanut butter and jelly sandwiches and a can of coke (from your container) for lunch.

          If you go in late June they’ll have leftover sweatshirts from the Oslo summer regatta at the port. Those are the only good souvenirs.

          Don’t forget to visit the Kon Tiki Museum. Just tag along with a tour.

          When you take the train from Oslo to the coast make sure you bring your own food.

          In an emergency you can stand in front of the Kings palace and beg. The guards themselves will push you out but they’ll toss you a few kroner. This is the only way to survive a family trip to Norway.

          • You can buy whale meat in the supermarkets. At a karaoke bar in Stavanger I thought I had died and gone to heaven. Three quarters of the women could have had modelling careers where I come from. The strange thing about Norway is that they increased their debt during the oil boom to finance their lifestyle which is mostly flying to the tropics during winter.

            • Well, we have 80 thousand full time Norwegian residents in our province. They seem to like the area around Benidorm. But they aren’t nearly as visible as the British, who like to wear Hawaiian shirts and rubber sandals.

      • Ves says:

        “Johan Sverdrup, field in the North Sea (about 2.9 billion barrels of oil); it’s due to start production in 2019 (deemed profitable even at sub- $40 oil)” and “after Switzerland, Norway is most expensive country in Europe”

        Hard to believe that $40 figure.

    • Rune Likvern says:

      Shallow, Doug, other interested

      I do not mind sharing my (preliminary) take on Statoil’s Q2 – 15 results, and will only do so in the private domain.
      So those interested, shoot me an email.
      My email address is also found at;
      http://www.theoildrum.com/user/rune_likvern

      I reserve the right to select whom to include.

      On Johan Sverdrup and break even (discounted cash flows at 7%), this according to owners estimates would work at about $32/b (IIRC).

      • Doug Leighton says:

        Rune,

        Thanks for comment. Nice to hear from someone who actually knows what he’s talking about — which I don’t pretend to do. I might take you up on the Statoil’s Q2 – 15 results but remain so economically retarded it might be a waste of good data.

  12. shallow sand says:

    Looked at SM Energy Q2 10Q. Production dropped from 186K BOE per to 181K BOE per day from Q1 to Q2. Full year guidance is 168-175K BOE per day. So will drop significantly in second half.

    Majority of production in EFS. Next most in Bakken, Divide County, which is not sweet spot but wells cost much less also.

    They sold $317 million of assets and used 100% of the proceeds to pay down debt.

    They reduced rigs from 17 to 9 and will pull two more from the Bakken in the fall.

    They did lower OPEX significantly from Q1 to Q2. They greatly benefitted from hedges, and have around 40-45% of production hedged through 2015. Caused realized oil price after hedges to be $65 per barrel and $4.30 for gas. 2016 hedged volumes much less than 2015.

    Playing it smart in my opinion. Should be close to cash flow neutral in second half, due to greatly reduced CAPEX and hedges.

    IMO a company that is playing the down turn smarter than others. Still have over $2 billion of debt, but are choosing reduced production over adding even more debt.

    • shallow sand says:

      Looked at Hess Corporation second quarter 10Q/earnings release.

      Company wide production up to 391,000 boepd from 361,000 boepd in first quarter.

      Bakken production also up to 119,000 boepd from 108,000 boepd in first quarter.

      Company burned over $1.5 billion in cash from 1/1/15 to 6/30/15

      Report that cost to Drill and Complete a well in Bakken decreased to $5.6 million, which to me is a tremendous cost reduction. This to me is very noteworthy.

      Sold interest in their Mid Stream assets for $3 billion dollars, which will (unfortunately) provide them with a lot more cash to keep increasing production.

      For the second quarter of 2015, company posted a loss of ($1.99) per share v. earnings per share in second quarter of 2014 of $2.96 per share. For first six months, posted loss of ($3.37) per share v. earnings of $4.13 per share in first six months of 2014. The ($1.99) includes a large impairment due to much lower commodity prices, operating loss for Hess was ($.52) for the second quarter of 2015.

      Hess did not add debt. That still stands at just about $6 billion. The asset sale gives them a ton of cash to either pay down debt, drill more wells, or both. It closed this month, will be reflected in Q3 numbers.

      Given that they raised production in the Bakken by 11 thousand barrels per day from Q1 to Q2, I think it is doubtful we will see much of a decrease in June Bakken production. Whiting releases after the close, but they have already guided higher production in the Bakken as well, I believe. Will be interesting to see if they disclose similar lower costs per well as Hess. If we are going from $10 million dollar wells, to $5-6 million dollar wells, I assume US production will not decrease and there could be an even more prolonged period of low oil prices. The US companies will not make money, but I really don’t think management like Hess cares about that as much as increasing production, given that they sold a major asset in order to fund more drilling at such low commodity prices.

      • coffeeguyzz says:

        Shallow

        To continue the meme of increasing output despite horrific financials, the July 27 piece on Seeking Alpha by Mike Filloon (Mega fracs increasing production …), discusses the ‘halo effect’ whereby operators are not only increasing production via new frac’ing designs, they are also boosting offset wells’ output, sometimes to a startling degree.
        One CLR well doubled output after a new nearby well was frac’d, and its decline rate practically ceased. Furthermore, the two wells were in different formations, one TF and one Middle Bakken.
        Should these operators continue to successfully implement this, as new wells are frac’d one by one, offset wells will see ongoing elevated production causing all prior predictive decline curves to be inaccurate.

        Could be a lot more hydrocarbons coming to market, shallow.

        • shallow sand says:

          coffee. I know there are a lot of reserves out there to be had. My question is at what cost, of course. Dean’s post below may indicate that 2015 oil pricing is not enough.

          OTOH, when I saw the HESS report of $5.6 million D & C in the Bakken, not good for cutting production.

          Looks like there are two theories out there. Stay cash flow neutral, like SM Energy, but have less production, or grow production and burn cash (and/or sell non-shale assets) like Hess.

          This could be a very low margin business for a long while. Very possible for companies to slightly make or slightly lose money for the next five years until they have fully developed the shale oil plays. Might depress share prices, but as long as the upper management gets their millions by staying in business, no biggie to them. Read a post elsewhere that Hess CEO got a 39% raise while simultaneously writing a letter to all vendors demanding minimum 15% price cuts. That kind of stuff makes Watcher proud! LOL!!

          • shallow sand says:

            One thing I find interesting. SM Energy conserving cash, decreasing production some, stock way up. Hess doing the opposite and stock slightly down, on a day of general gains due to inventory report.

        • Watcher says:

          One of the guys, Dean or Freddy, presented within the last month or so the utterly compelling data showing that there has been no uptick in flow for wells drilled 2010, 2011, 2012, 2013, 2014, 2015. The performance, amid all the alleged technical improvement, is flat. 2014 wells are not flowing better on average than 2012ish wells, demonstrating the true value of technical miracles.

          • coffeeguyzz says:

            Watcher

            I am not personslly able to verify or disprove the graphs you cited as I have neither the time nor inclination to get into this stuff at that level. However, virtually every source that I’ve encountered claims continuing improvement over the years.
            The reporter you admirably cited – and rightly so – Jack Kemp just tweeted a contrasting graph for the 2014 vs 2015 wells output and the latter goes vertical. Don’t know if you can find it on the net. I saw it on Bruce Oksol’s themilliondollarway blog.

            • Watcher says:

              It was right here and probably on the day of bakken release. Maybe you should look. Here. Where you’re typing.

              • coffeeguyzz says:

                Watcher

                Yo, ma main man Watch … I’m not too adept at getting those little blue letters on the screen, but if you google “john kemp @jkemp energy twitter” the first hit is his twitter postings. If you scroll down about 20, the July 28, 9:06 tweet was a one screen graphic contrasting June 2014 IPs with the June 2015 IPs.
                Very dramatic as well as informative.
                Newer wells are WAY more productive.
                You can see it.
                Right there.
                Where you will be typing.

          • AlexS says:

            The vast majority of well productivity charts I’ve seen suggest continuing increase in IP rates for tight oil wells. However, from 2014, there is also a clear trend of increasing decline rates

            Below is a chart from IEA (as of mid-2014) for Eagle Ford wells

  13. Luís says:

    Those that like me did not studied the Imperial system of units (e.g. anyone born outside the US) can get help translating the volumes used here with this short post:

    http://attheedgeoftime.blogspot.com/2015/05/units-of-volume.html

    I am quite glad to see WebHubbleTelescope’s work being followed on. Once more congratulations to Dennis for this and other works of the like.

    • Dennis Coyne says:

      Hi Luis,

      Sorry for using cubic feet, I should have used cubic meters. There are about 35 cubic feet in a cubic meter. So case B would be a URR of 540 trillion (10^12) cubic meters. or 540 quadrillion (10^15) liters.

  14. An interesting post at the Climate Etc blog

    “If your over-arching goal is for the wide penetration of “clean” renewable technologies then generically advancing micro grids will not serve to advance that goal. In most cases the bulk grid will provide for the most economic and reliable integration of large amounts of renewables. The best way to provide the reliability of microgrids is to use low fixed cost, high variable cost fossil fuel gensets. Placing a premium on the integration of intermittent resources as a part of efforts to develop microgrids is a pairing that generally will not work and will likely only serve to retard the advance and acceptance of both technologies.”

    http://judithcurry.com/2015/07/28/microgrids-and-clean-energy/

    • Fred Magyar says:

      In most cases the bulk grid will provide for the most economic and reliable integration of large amounts of renewables.

      Not buying it! That’s the old paradigm which has mostly benefited the utility companies until now!

      And Judith Curry is one of the last people I’d listen to on this subject as she has a vested interest in the old paradigm has received funding from both fossil fuel companies and Utilities to the tune of about 1.2 million dollars! She is not at all an impartial observer in this particular case.

      • islandboy says:

        Don’t worry! You’re far from the only person not buying it. These people really need to step up their game if they want anybody apart from rabid republicans and climate deniers to get their memos! Otherwise its a clear case of confirmation bias for people who choose to believe such rubbish.

      • Don’t buy it. The writers are professionals. What they write jibes with both my training and experience. Now feel free to go sell micro grids in Brazil.

        • Fred Magyar says:

          The writers are professionals.

          Yep! As are used car salesmen! More often then not, they are trying to sell you a lemon…

        • They are professionals in this field. Their conclusions are reasonable.

          I should also explain: in my career I had to work on, or audit, projects and ongoing operations which required electric power. The solutions ranged from connecting to a reliable grid supplied by a large hydroelectric power plant to small grids powered by gas and wind. We had remotes we connected by subsea cables, used solar panels and storage batteries where convenient, used distributed generation with dozens of 1000 hp interconnected using buried armoured cables for security reasons, had installations powered by large gas turbines, back up instant start diesel generators, you name it.

          And I assure you, from the standpoint of cost and reliability it’s a lot easier to connect to a large hydro powered grid and include a small amount of back up power for emergencies. If the hydro grid isn’t available then a third world country regular grid can’t be used because they tend to be unstable, so we build our own system. Offshore it’s hard not to be on your own, but we do run subsea cables if it’s feasible.

          What these two gentlemen wrote coincides very well with my experience. These isolated mini grids are pure bulkshit. They are being peddled by companies trying to make a profit selling electric snake oil.

          • Nick G says:

            I’m pleased to be able to agree with you here.

            I think microgrids have their place, but it’s a mistake to advocate for off-grid microgrids instead of large grids.

            It’s just a matter of statistics: large systems will be much better able to integrate wind, solar and nuclear. The larger the better. The larger, the cheaper it will be, and the more reliable it will be.

            Heck, the whole country of Ireland is too small: it can’t use nuclear because one plant can go out and bring down the whole country.

            Denmark is too small: it integrates with other countries very nicely – often it exports the majority of it’s wind power.

            France is too small – it balances it’s load by exporting to Switzerland at night and importing during the day.

            Germany is too small. The US is barely big enough.

            The bigger the better.

          • Caelan MacIntyre says:

            Fernando, I seem to recall reading that you were for nuclear and that you self-described yourself as libertarian… If so, how do you square nuclear with libertarian?

            The new paradigm on the way in is even older than the old paradigm Curry has vested interests in but that she will help give up, if wrested from bloodied cold dead hands.

            The problem is, we all have vested interests in this dystem, so it may be with most all of our bloodied cold dead hands.

            Tug of war, of the right hand with the left.

            • Caelan, I believe the USA ought to start building smaller nuclear power plants using modules. But I don’t think this move should be encouraged in other nations, because they may decide to use the spent fuel for dirty bombs, or be prone to have nuclear accidents.

              I don’t see a conflict between being libertarianish and supporting some nuclear power. Maybe you have an extremely narrow definition.

              • Nick G says:

                I believe international treaties don’t allow us to deny nuclear power to other countries.

                OTOH, I think Germany is trying to set an example to smaller countries by phasing out nuclear. Certainly, German Greens were deeply influenced by their origins as an anti-war party.

  15. Dean says:

    BREAKING: US #oil production fell 145 kb/d according to latest #EIA weekly data to 9413 kb/d http://ir.eia.gov/wpsr/overview.pdf #crude

    Lower48 down 151 kb/d to 8953 kb/d.First big fall in US #oil production: is fracklog no more sufficient to compensate the fall in rigs?#crude

    • shallow sand says:

      Thanks, Dean. I see 9.4 million bopd. Remind me about how EIA has discrepancies, thought there was a recent report of 9.7 million bopd.

    • learner2 says:

      Oil up big on the news. WLL, OAS and CLR up almost 10%. Does this mark the bottom for oil prices here? Maybe thats why they added rigs to try to keep up production? The EIA number is due to a change in methodolgy ie they are now using actual production numbers reported vs guessing? If thats the case, then the addition to rigs makes sense rather than them being stupid ie increasing drilling while production was still high?

      However, it doesnt jive with layoff news from Chevron and others….

      • Jeffrey J. Brown says:

        The (so far) monthly low Brent price for this price decline is still $48 (January, 2015 average price).

    • AlexS says:

      Thanks, Dean.
      I think the fracklog is still big, but they stopped fracking wells as WTI dropped below $50

      • Dean says:

        I think so, too. It will take 3-6 months to digest the bulk of the fracklog, and probably 1 year to digest it fully

    • AlexS says:

      EIA weekly vs monthly production data vs estimate/forecast from the July short-term energy outlook.
      As you remember, the jump in weekly numbers in May was due to one-time revision. Earlier weekly numbers were not revised.
      The past 4-week average is 9.53mb/d, in line with the 9.52mb/d EIA STEO estimate for July. The expects average production in August at 9.38 mb/d

  16. AlexS says:

    an interesting article in Reuters:

    U.S. oil firms turn to fracking mixology as crude slides again

    Jul 29, 2015
    http://www.reuters.com/article/2015/07/29/us-usa-oil-technology-idUSKCN0Q323920150729

    U.S. oil companies, under renewed pressure from falling crude prices, are increasingly tweaking and mixing fracking technologies as they scramble to squeeze more out of wells and eke out profits after rounds of cost-cutting.
    Shale oil firms need the experiments to payoff now more so than before given that oil prices have resumed their slide to trade around $49 per barrel this week from $60 a few months ago.
    Quarterly earnings – and the reams of data that accompany them – throughout the next few weeks will offer Wall Street the first opportunity to assess those efforts and pick potential winners and losers.
    When oil fetched $100 a barrel and profits were fatter, most companies followed a similar script. Now, many try to go their own way in a race to bring down the price level at which production remains profitable.
    Noting the new trend, CapitalOne Securities said in a recent note to clients that mixing up well completion techniques could result in “a step-change in well performance.”
    For example, Continental Resources Inc is blending so-called plug and perforate well completion techniques with a “sliding sleeve” approach, betting that gains in oil volumes will outstrip additional costs of using more than one technology.
    Effectively, Continental divides a well into 30 or more sections, plugging off some and fracking others. For other parts of the well it uses a “sleeve,” a steel device that moves through the well and isolates small sections of a well at a time to be fracked.
    The approach has lifted initial production rates as much as 50 percent compared with nearby wells where standard procedures using just one method were applied… . The company is expected to report a 95 percent drop in quarterly profit, according to Thomson Reuters I/B/E/S.
    To be sure, it will take months to fully assess the effectiveness of mixing and matching techniques across dozens of wells, though initial production rates, which get reported to state regulators, will offer a first glimpse.
    Whiting Petroleum Corp, North Dakota’s largest oil producer, since this spring has experimented with pumping twice as much sand into a well during fracking as usual and has found it can boost output by as much as 40 percent.
    The Denver-based company, which is expected to barely eke out a profit when it reports quarterly results on Wednesday, was so encouraged by the output rise that earlier this month it increased its 2015 budget by 15 percent to $2.3 billion to finish more wells this year.
    Meanwhile, Hess Corp has opted to stick with just the cheaper “sliding sleeve” technique. Data from state oil regulators show that Hess has some of the most productive wells in North Dakota.
    “I want to preserve that efficacy I have with sliding sleeve,” Gerbert Schoonman, vice president in charge of Hess operations in North Dakota’s Bakken shale oil formation, told Reuters.
    By contrast, Exxon Mobil subsidiary XTO Energy has chosen to continue to use “plug and perforate” in some areas and “sliding sleeve” in others, and not mix them up. Exxon is expected to report a nearly 50 percent drop in quarterly profit on Friday.
    “We’re trying to see what process works best in each part of the Bakken,” Tim McIlwain, XTO’s operations chief, said in an interview.
    Statoil is even looking beyond fracking designs. The Norwegian company is investigating whether artificial proppant shaped like the letter “X” could prove to be more effective at holding open cracks in shale rock than sand or ceramic balls.

    • Heinrich Leopold says:

      AlexS,

      It is difficult to assess the real impact of technology. However, financial results have the final say. And the results of shale companies are horrible. Range Resources also came out with very weak numbers. As these are 2Q15 results, the 3Q15 will be very likely even more cruel. If there is real progress, companies have to show good financial results. A lot of trust has been destroyed over the last days as investors have lost over 100 bn in equity in the last few days alone. In my view it is not really reognized that in chemical engineering it is not that simple to achieve progress and it is not possible to compare this with the development of high tech in other fields.

      • Anon says:

        It’s all Band-Aids on buckshot wounds. No one was making net cash money at twice these prices. They’re sure as heck not making money now.

        Everyone really wants to hide it, but that’s a fact. All that boomtown money in North Dakota came from Wall Street, not from underground.

    • Risto says:

      Hard to figure out what’s really happening with production at well level. Companies talk about huge productivity/efficiency increases of up to 50%.

      On the other hand there’s a far less clear signs of increases on production graphs by Enno Peters and FreddyW.

      http://peakoilbarrel.com/the-eias-short-term-guessing-game/comment-page-1/#comment-526224
      http://peakoilbarrel.com/the-eias-short-term-guessing-game/comment-page-1/#comment-526214

      It’s a puzzling conflict of data. And it would be interesting to know if the productivity figures the companies refer to are really representative or if they are a “blue sky” incident on selected wells. Does anyone have an idea how to verify the claims in the above article? And what are the best metrics or facts to follow regarding productivity development?

      • shallow sand says:

        Risto, I do not know when the latest “new tech” started, but assuming it just began in the last two-three months, it would seem we would need at least a year to know if there is really improvement.

        As Heinrich states, the economics matter. I posted above comparison to SM Energy, who is forecasting cash flow neutrality, but falling production, v. Hess, who is willing to continue to be cash flow negative to increase production.

        As I type this, SM is up 11% and HES is treading water, on a day the entire segment is up strong after several days of losses.

        Oil producers can only hope that wall street beings to punish those who are wasting money increasing production at these price levels, and likewise rewarding those who will stand a drop in production to keep a lid on cash burn. Wall street has not worked in that way so much in the past, so I am not crossing my fingers.

        • Risto says:

          Shallow sand, I totally agree that it’s the economy that matters. Companies should only focus on share holder value creation. Production is not a goal as such, it’s just a “means”. In current price/capex environment it’s really hard to see how aggressive drilling is supposed to add value. I too hope that banks and investors force some sense to shale companies.

          However, If the productivity claims turn out to be right, and if also the cost reductions are real that will change the economics as well. Interesting to see what happens.

          Whitting already had 120 day data on some of their fresh improvements, that should start to show on Enno’s graph pretty soon, if the development is real.

          By the way, I make sure to always read your posts. I like your analytical, consistent and humble style.

      • Ves says:

        “Companies talk about huge productivity/efficiency increases of up to 50%.”

        Risto, there is no magic in this. Rigs, Frac, whatever costs, drops in the range of 50-60%, add layoffs, add 10-15% cut in salaries of who is left and here is you productivity increase. Problem is that is not enough to service the huge debt with reduced drilling=decreased production at current oil price..

        • Risto says:

          Yes, that’s a big part of it for sure. And the cost side improvements seem logical to me.

          What is surprising to me is the type of comments Whitting made on 17. July (below). Is it really that easy? And how come these improvements come now when there should be least resources to use for experimenting and testing of new technologies.

          From Whitting site:
          Operations Update

          We have been testing larger sand volume completions across our acreage in the Williston Basin. These completions incorporated sand volumes of four to six million pounds with well costs ranging from $6.5 million to $7.5 million. Production from enhanced completions in all three areas discussed below is outperforming our 700 MBOE type curve for the production periods cited.

          Enhanced completions at Polar field result in 40% productivity increase. We have completed two higher sand volume slickwater wells at our Polar field in Williams County, North Dakota. On average, these wells had 60-day rates of 935 BOE/d, 40% greater than 12 offsetting wells completed with lower sand volumes.

          Enhanced completions at Walleye field result in 50% productivity increase. We have completed two higher sand volume slickwater wells at our Walleye field in Williams County, North Dakota. On average, these wells had 60-day rates of 1,095 BOE/d, 50% greater than three offsetting wells completed with lower sand volumes.

          Enhanced completions at Pronghorn field result in 50% productivity increase. We have completed nine higher sand volume slickwater wells at our Pronghorn field in Stark County, North Dakota that have at least 120-days of production. On average, these wells had 120-day rates of 755 BOE/d, 50% greater than 42 offsetting wells completed with lower sand volumes. Based on these results, we recently moved a drilling rig back to the Pronghorn field.

          • Ves says:

            ” What is surprising to me is the type of comments Whitting made on 17. July|
            It’s not that surprising to me. They are fighting to stay alive so there is a need for this upbeat operations updates.

          • shallow sand says:

            Risto, thanks for the compliment. Just motivated by trying to figure out if what we own is headed to the plugging list or whether better days are ahead.

            I think we have our answer as to what Whiting will do in the low price
            environment, and likely that Bakken needs a considerable improvement in oil price to be worthwhile over the long term.

            They are cutting back slightly on CAPEX, again. They averaged 170K BOEPD for the second quarter, that will be the high point. They are forecasting 163K BOEPD average for 2015, with fourth quarter falling to 153K BOEPD. Further, they are setting the goal of achieving cash flow neutrality by 2016, and are forecasting 147K BOEPD.

            Clearly, this shows that the Bakken is not profitable in the present oil and natural gas price environment. My view is one must make an acceptable return and keep production flat for things to be okay P/L wise. WLL is striving for break even (not cash flow positive) and to do so will reduce BOEPD from 170K March to June, to 153K 4th quarter 2015, to 147K in 2016.

            If we have a price rebound, to say maybe $60 WTI or so, will WLL and others try to add rigs or alternatively thank their lucky stars oil has rebounded some, and stay the course?

            Also, interesting to note WLL sold a 5% overriding royalty interest (proportionate) on all of their non-operated working interests, to raise $6 million in cash. That harkens me back to the 1998-1999 crash, when mom and pops gave overrides in exchange for getting out of hot water with the service companies.

            • Risto says:

              Shallow sand, that’s an interesting point about Whiting’s guidance you make.

              With their assumptions they will produce 10% less next year. And that “reduction of growth investment” will help them break even on cash flow! So it’s a choice of losing money, or losing business (production). It really is hard to understand how the market justifies the valuation if they 1) can’t make money in steady state or 2) have to burn money to maintain production.

              I hope your wells are not headed for plugging.

              • shallow sand says:

                Risto. Thanks! I don’t think we are headed there unless the long term price WTI is below $40, with long term being 3-5 years.

                I don’t think that will happen, but you never know.

                I do know, with a couple hiccups, late 1999-2014 were good times for stripper wells. Probably too good.

      • Heinrich Leopold says:

        Risto,

        The best productivity measure is in my opinion free cash flow – no matter which business – as this signals the productivity of money. As it is normal for a new concept to burn cash in the initial phase, it should become clear after some years that money works productive. In the shale patch it becomes increasingly clear that free cash flow is far away and companies show actually a massive cash burn. At least shareholders seem to agree as the charts of many shale companies point to further tremendous losses ahead. ConocoPhilips for instance has a quintuple bottom breakdown on the point and figure chart, which is quite unique and shows the strength of the current downtrend.

        • shallow sand says:

          I note Whiting stock tanked after hours. Will see what happens tomorrow.

          I do note production guidance assumes $50 oil and $3 gas, maybe the add CAPEX if price goes higher?

          Note, I absolutely do not invest in this stuff, outside of a little ownership in XOM, COP and EGN, all of which I’ve had for many years, before shale was even heard of. And definitely not enough to matter a whole lot anyway. In fact, should have dumped COP and EGN, given they are going all in on shale. XOM financials are rock solid, keeper IMO.

          Just think we need a shale capitulation to ultimately help the US oil patch. They just got too reckless, and we may finally be seeing the talking heads/wall street/investing public catching on.

    • I wouldn’t put sliding sleeve in quotes. We used them quite often in the 1970’s. Nothing in that article really means much for now. As you know, a higher initial flow rate can also lead to a much higher decline rate. I got the feeling they are doing a bit of selling.

      What they really need is a magic low density expandable proppant shaped like this : £

      • Dennis Coyne says:

        Hi Fernando,

        What some people seem to be missing is that IP rates mean very little, it is cumulative production over the first 6 to 12 months that matters. The high IPs probably just decline faster and end up producing about the same as earlier wells. There was a slight improvement in 6 month cumulative output in 2013 and 2014 relative to earlier wells, but most of the talk of higher IPs is just hype as you said.

  17. ezrydermike says:

    well this will probably make Fernando’s head explode

    “On June 24, 2015, a court in The Hague ordered the Dutch government to act faster in its duty to protect its citizens against the effects of climate change. This marks the first time the issue has been legally declared a state obligation, regardless of arguments that the solution to the global climate problem does not depend on one country’s efforts alone. The decision was based on various branches of law, including, most importantly, human rights. In effect, it makes the Dutch government accountable for greenhouse gas emissions on its own territory, an outcome other countries may also need to heed.”

    http://www.truth-out.org/news/item/32121-are-countries-legally-required-to-protect-their-citizens-from-climate-change

    • Hell, that’s old news. When I read it I laughed so hard I almost peed in my pants.

      I expect the reaction will be a budget law by the Dutch parliament which includes a statement making it clear that global warming isn’t THAT serious. The court lacks the ability to override the parliamentary vote.

  18. islandboy says:

    For those who wonder if PV costs can really go lower much longer:

    350 MW co-generation plant to drive down cost of poly

    The idea that a co-generation plant could drive down the cost of the raw materials for making PV modules is so basic, one wonders how it could have been overlooked for so long!

    • MarbleZeppelin says:

      Someday they will even get bright enough to use solar PV to produce the electricity they need and focused direct sunlight to produce the steam. Thank goodness the Swedes developed a highly efficient method to purify silicon a few years ago, uses much less electricity.

      • Nick G says:

        Got any more info on the Swedish method?

        • MarbleZeppelin says:

          OK, my memory wasn’t that good, turns out to be a Norwegian firm. The original article stated about a 50% reduction in energy to purify the silicon but now I keep running into the words “proprietary method” when I do searches and the original article seems lost. It has been a number of years.
          The company I tracked down was Elkem. One of their major products is solar grade silicon. Here is an article from 2009 as they talk about a new production facility.

          http://www.nib.int/news_publications/cases_and_feature_stories/167/solar_silicon_production_takes_off_in_norway

          • Nick G says:

            Thanks.

            They talk about a dramatic cut in energy inputs. Be interesting to see a followup, and a larger analysis of current polysilicon energy inputs.

            • MarbleZeppelin says:

              It will not be possible, at least not in an accurate way. Businesses keep lots of secrets and how much energy they use or don’t use in a process is usually only published if it will be a PR plus.
              Sadly, new processes that could, if used worldwide, reduce fossil fuel use are held within corporations as business advantages.
              Someday, when silicon is a general commodity, we may see more of the details behind the process. Until then we have to muddle along. Businessmen are not going to hand over their advantages.

            • MarbleZeppelin says:

              Another Norwegian solar cell breakthrough. For being so far north, these guys are really serious. Twenty times thinner silicon wafers without loss of longer wavelengths.

              http://www.extremetech.com/extreme/147019-norwegians-trap-sunlight-with-microbeads-produce-solar-cells-that-are-20-times-thinner-cheaper

              • Here is a quote from the article

                “The researchers are in talks with industrial partners to investigate whether these methods can be scaled up to industrial production. The researchers seem quite confident that their technology could come to market within five to seven years.”

                • Nick G says:

                  Yeah, it looks far away.

                  It would be discouraging, except that it’s just one of probably hundreds of similar projects around the world, many of which are much older and have been successfully commercialized.

                • MarbleZeppelin says:

                  Fernando, have patience. It will come or it won’t. What is great is that it can.

                  • MarbleZeppelin says:

                    These projects would come on line a lot faster if they were not proprietary. Shared technology is the way to go if we want to actually move forward. Even when things get to the production stage, patents limit the product expansion and slow down the whole process of solving problems.

                  • wimbi says:

                    I’ve got gobs if patents on energy things. My son sold my little R&D company on the appeal of just one of them, the others being ignored, albeit worth, in my opinion, much more.

                    So now, I am putting up a web site- wimbi’s widgets- which puts out the whole bunch, stripped to nothing but the already public essentials, free to anybody willing to just take whatever they like.

                    My guess- they will all be ignored, as too odd, and “have no market”, meaning, don’t have one at present, since they don’t exist on today’s market.

                    Sigh.

                  • Caelan MacIntyre says:

                    “So now, I am putting up a web site- wimbi’s widgets…” ~ wimbi

                    Alright! ^u^

  19. Dean says:

    Saudi Arabia to Pull Back Production After Summer

    “The world’s top crude-oil exporter, Saudi Arabia, is planning to pull back from record-high levels of production at the end of the summer when domestic energy demand subsides, according to people with knowledge of the matter.
    The reduction could begin as soon as September and would amount to about 200,000 to 300,000 barrels a day, bringing production to about 10.3 million barrels a day, the people said. Saudi Arabia told the Organization of the Petroleum Exporting Countries that it produced 10.56 million barrels a day in June, a record high.
    “It is purely based on the [domestic] demand situation,” one of the people said, adding that “production is likely to hover around” 10 million barrels until the end of the year.”

    http://www.wsj.com/articles/saudi-arabia-to-pull-back-production-after-summer-1438190236

    • AlexS says:

      Saudi crude oil exports fall to lowest in five months in May

      Jul 20, 2015
      http://www.reuters.com/article/2015/07/20/us-saudi-crude-exports-idUSKCN0PU0VG20150720

      Saudi Arabia’s crude oil exports fell to their lowest in five months in May despite near record production, as the OPEC kingpin turns itself into a major refined-fuels power and as domestic consumption rises.
      Saudi Arabia, the world’s top crude oil exporter, shipped 6.935 million barrels per day (bpd) on average in May, down from 7.737 million bpd in April and the lowest since December, official data showed on Sunday.
      As crude exports slide, the OPEC producer is offering customers millions of barrels of diesel from new refineries as it turns itself into a major supplier of refined oil products, potentially triggering a price war with Asian competitors as its exports feed into a glut.
      Saudi Arabia’s massive refineries are now processing more of its crude at home, moving the country into a tie with Royal Dutch Shell as the world’s fourth-largest refiner and enabling it to export more fuel products than ever before.
      Domestic refineries, including a 400,000-barrels per day plant which opened in Yanbu in April, processed 2.423 million bpd in May, up 9 percent from 2.224 million bpd a month earlier, figures supplied by Riyadh to the Joint Organisation Data Initiative (JODI) showed.
      Crude oil directly burnt by Saudi Arabia to generate power rose to 677,000 bpd in May from 358,000 bpd in April, the data published on JODI’s website showed.
      JODI compiles data supplied by oil-producing members of global organizations including the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC).
      Saudi Arabia’s crude production for May stood at 10.333 million bpd, slightly above the April figure of 10.308 million bpd.

      • Ves says:

        It looks like Saudis are doing the same moves like Russians. Making difference in lower crude export with more expensive refined export products. If I remember correctly quite a few refineries in Europe closed down in the last several years because of that. Could not compete.

        • AlexS says:

          They also increased by more than 300,000 b/d direct burn of crude oil in power stations, as there a seasonal increase in electricity demand for air conditioning.

          • Synapsid says:

            Ves, AlexS,

            The Saudis are indeed putting a good deal of effort into expanding their refining capacity. Two refineries getting going in the last couple of years, Yanbu most recently and each with a capacity of 400 000 barrels of crude a day, will be joined by a third with the same capacity in 2017.

            I keep seeing comments all over the place about how much oil Saudi Arabia will export in Year XX with no mention of the increasing amount the Kingdom is likely to refine instead of exporting. The Reuters article quoted above is a welcome (to me) sign that this may be changing.

    • This is a bit of a guess: maybe they were trying to increase natural gas production due to summer air conditioning demand. I got the suspicion we may see the Saudis start buying solar panels in short order out of necessity. They haven’t paid enough attention to gas development.

      • Glen Calvin McMillian says:

        I personally think the Saudis are actually VERY sophisticated when it comes to managing their money although they are obviously hogtied in some respects due to political considerations.

        Any really good businessman using oil by the millions of barrels to generate electricity to run air conditioners in a sunny desert climate is definitely going to be looking into solar electricity.

        But given that the price of solar is constantly DECLINING – the best overall deal for the House of Saud is probably to delay the installation of solar farms.Getting twice the capacity for the same money five years from now seems possible.

        I don’t have an MBA from the University of Chicago or the London School of Economics but I do have a pad and a pencil and buying solar NOW is not a wise move for me from a financial pov.

        I am betting the price of a system suitable for my needs will fall by another couple of thousand bucks within the next three years and I could not save two thousand on electricity in that length of time.

        The Germans are doing turnkey small scale solar for HALF what we do it for here in the USA to the best of my knowledge. So installed solar prices can still fall a LONG way for sure.

        • Maybe. But you aren’t burning crude oil you could sell at $100 per barrel in the future. I suspect that a dual powered solar concentration and natural gas facility may fly. I suspect they are afraid of the dust issue. Dust is a solar panel killer in a Saudi desert environment.

          • AlexS says:

            Saudi Arabia to Double Solar Capacity With 50-Megawatt Project

            July 31, 2015 —
            http://www.bloomberg.com/news/articles/2015-07-30/saudi-arabia-to-double-solar-capacity-with-50-megawatt-project

            Saudi Arabia’s King Abdulaziz City for Science and Technology is planning a 50-megawatt solar farm that would more than double the amount of energy generated from sunlight in the world’s largest oil exporter.
            King Abdulaziz City signed agreements with Saudi Electricity Co. and Saudi Technology Development & Investment Co. for the project in the city of Saudi Aflaj, according to a statement Thursday from the official Saudi Press Agency. Financial details weren’t disclosed.
            Saudi Arabia has embarked on a solar development program as countries in the region seek to reduce the amount of oil they burn for electricity.
            Saudi Arabia, with ample solar resources and open land, eventually “won’t need fossil fuels,” Oil Minister Ali Al-Naimi said at a climate conference in Paris in May.
            Saudi Arabia has less than 50 megawatts of solar power capacity now, about 0.1 percent of Germany’s 38 gigawatts, according to Bloomberg New Energy Finance’s database of renewable energy projects.

  20. Enno Peters says:

    Thanks for the interesting post Dennis.

    I had an email discussion with a lady from North Dakota DMR (the one who was on holiday recently..), as I was wondering why the well completion numbers in the Director’s Cut often seemed very different from the number of wells that had their first production. Basically, she did not defend the numbers at all, but explained that the well completion numbers in the Director’s Cut are just estimates. The verified well completion numbers can be found in the annual production reports.

    Over the time frame 2013-1 to 2014-12, the (final) well completions cited in the Director’s cut were 15% lower than the actual verified completions (from the annual production reports). I have seen these well completion numbers from the Director’s Cut being used at several sites, so I think this is a rather important issue. The numbers I typically used, the # of wells having first flow, are actually a much more reliable estimate for the number of well completions, and were in the same time frame just 4% lower than the actual completions (probably because a small % of wells is not individually reported). Below you can see the graph with these numbers. For the Director’s Cut, I show both the initial and final completion numbers, if available. The “first flow” numbers are my own best estimates for the well completion numbers, which I derive from the monthly production reports.

    • shallow sand says:

      Enno. The Whiting 10Q likely comes out tomorrow. I have been quoting from the earnings release.

      They are forecasting production drop company wide from 170K BOE in Q2 of 2015 to 146K BOE in 2016, 153K BOE in Q 4 2015. Going to drop to 6 rigs in Bakken.

      We do not know what other companies will do. SM Energy is also going to pull two rigs from the Bakken and reduce production. Hess, on the other hand, is full steam ahead.

      The majority of company guidance will be out by the end of next week. Might be good to total it up, give is some clues about where we are headed?

      • Enno says:

        Looking forward to your findings Shallow.

        • shallow sand says:

          Enno. Just read COP earnings release.

          Company wide production was 1.595 million BOEPD in the second quarter.

          Their third quarter guidance is 1.510 million to 1.550 million BOEPD.

          First half BOEPD was 1.603 million, so they are definitely falling, company wide.

          First six months unadjusted earnings were (.11) per share, compared with $3.42 in the first six months of 2014.

          Per BOE first six months realized was $38.03 v. $70.68 first six months of 2014. I think international gas sales gave them a big advantage over companies with production located only in North America.

          COP increased long term debt by $2.4 billion in the first six months of 2015.

  21. Adam says:

    Did you take into account technology eventually allowing us to recover gas hydrates?

  22. ezrydermike says:

    article from Mother Jones on gas fracking in China…

    http://www.motherjones.com/environment/2014/09/china-us-fracking-shale-gas

    • Anybody seriously interested in the intersection of big business and environmental politics pursued by the Obama administration in general and Hillary at the State Dept. in particular should read this article .

      It is one of the best I have seen regarding both the environmental agenda (basically commendable) of the administration and it’s working relationship with business as usual types- necessary of course but kept out of sight to the extent possible for partisan purposes.

      Nobody I know has ever called Mother Jones a right wing outfit.

  23. shallow sand says:

    Had a little more time to look through Whiting Petroleum earnings release.

    As we know, Whiting is the largest producer in the Bakken. They do have DJ Basin production and as far as I can tell still own North Ward Estes in the Permian basin. I think they have pretty much sold everything else.

    In Q2, Whiting had $380.7 million in free cash flow before CAPEX. Production was just up 2% from Q1. They spent $751.3 in CAPEX in Q2. Their realized price per BOE, net of hedges, in Q2 was $44.65.

    So, just to slightly grow production quarter over quarter. Whiting needed to spend almost double their free cash flow in CAPEX.

    Whiting says they will spend $2.15 billion in CAPEX in 2015. They have already spent $1.5865 billion of that in the first half. So they have just $563.5 million of CAPEX left to spend in 2015. Further, they are just budgeting $1 billion in CAPEX for 2016. They completed 186.1 net wells in first half, so I assume there will be 60-70 in the second half. CAPEX per well was actually higher in Q2 than Q1 with 78 wells completed in Q2.

    They raised over one billion in a dilutive stock issuance and sold over $300 million in assets in the first half of 2016, yet only reduced long term debt by about $400 million. It now stands at $5.2 billion.

    Based on my review of the numbers, for Whiting to grow production at 2% quarter over quarter, they need a WTI price of $95-105 per barrel.

    Feel free to point out my errors. If the Bakken has not been exposed previously, I think it is beginning to be now.

    I’m going to wait on CLR and OAS to make final call. I’m thinking to remain cash flow neutral and keep production flat takes about $90 per barrel WTI, even after all the cost cutting. That is my definition of break even, of course.

    • Rune Likvern says:

      Shallow, thanks.
      Have a look on their consolidated balance sheet and the changes to total liabilities and equity from year end 2014 and as of Q2 -15 (Debt to equity ratio; total liabilities over shareholders’ equity).

      Then cash and cash equivalents (same reporting dates).

    • Greenbub says:

      Appreciate your posts, shallow sand.

    • Heinrich Leopold says:

      shallow sand,

      Just one question about free cash flow. To my understanding

      cash flow – capex = free cash flow

      I am wondering about your definition of free cash flow.

      • AlexS says:

        You are right,
        free cash flow = operating cashflow – capex

        • Heinrich Leopold says:

          AlexS,

          I have just checked the website of Whiting WLL. They have a discretionary cashflow of 380.7 mill of which 325 mill is net operating cash flow. CAPEX is 751 mill so free cash flow is a negative (cash burn) of 426 mill. As WLL produces around 60 mill barrels per quater cash burn per barrel is 7 USD per barrel. This would not be a big deal if the company would be a start up company, oil prices would rise quickly and WLL would make some long term investments yelding future payments. However, oil prices just went down and for Q3 cash burn of WLL will be in the magnitude of 20 USD per barrel. And it is questionable that oil prices will go up again due to the strong dollar. This is exactly why WLL went down sharply over the last weeks and will go down much further. Amazon AMZN for instance can afford some cash burn as well, yet the difference is that Amazon builds up some long term customer base and selling infrastructure, which will provide future revenue. Yet in the case of WLL cash burn means forgone cash, which will never return. This is why WLL cannot be treated the same way as an high tech or internet company, which is what Wall Street wants to do.

          • shallow sand says:

            Yes, I used the wrong term. Discretionary, not free. They never have had free. My bad.

          • shallow sand says:

            Heinrich, do you think I am off that they need $90 WTI un hedged to be cash flow neutral and maintain flat production (170K BOE per day)?

            It is not an easy calculation, given Whiting sold 8,300 BOE per day of production, and assumes future wells have the same productivity as Q2?

            Also, did you read Range conference call transcript? If not, please do. Big drop in Marcellus production coming, straight from their CEO.

            • Jeffrey J. Brown says:

              Did the Range guys discuss some projected volume or percentage production declines from the Marcellus?

              • shallow sand says:

                Jeffrey. Probably best to read transcript rather than to have me paraphrase, but gist of what I got was that they are noticing significantly reduced pipeline flows. Also mentions large percentage rig reductions in Marcellus and Utica. Also, Antero reported flat production from Q1 to Q2.

                • Jeffrey J. Brown says:

                  If memory serves, the EIA was estimating that the Marcellus needs something like 8 BCF/day per year of new gas production in order to maintain current production, which would be about 3 TCF/year of new gas production, needed to maintain current production.

                  Note that 3 TCF/year would be greater than the 2013 dry gas production of all but nine countries around the world*.

                  Assuming about a 24%/year rate of decline from existing US gas production, we need about 6.5 TCF/year of new gas production every year, in order to maintain current production. 6.5 TCF/year exceeds the 2013 dry gas production of every country in the world, except for Russia and the US, and 6.5 TCF/year is roughly equivalent to the combined 2013 dry gas production of Canada + Mexico.

                  I think I agree with Heinrich that the 2015-2016 winter may be “interesting” for the North American gas market.

                  *US, Canada, Netherlands, Norway, Russia, Iran, Saudi Arabia, China, Qatar

          • shallow sand says:

            Heinrich. They forecast production of 59.5 million BOE annually.

            This quarter was 15.66 million BOE.

            Therefore, I come up with them burning about $27.20 for every BOE produced in the second quarter.

            This is how I come to them needing over $90 WTI. They need around $70-75 per BOE, but keep in mind 10 % is gas that realizes just $12-15 BOE and oil is $8+ discount to WTI.

            I don’t think the non-oil analysts understand. Have read/heard several comments wonder why the weakness when they and COP “beat” earnings estimates.

            The current oil price is half of what WLL needs to maintain production flat and be cash flow neutral. $5.2 billion of debt no ability to pay back without liquidating.

            They are lucky to still have a market cap where it is.

            • learner2 says:

              shallow, if all the shale companies went bankrupt, we would lose a substantial fraction of US production. How then can one properly value oil and WLL/OAS etc?

              • shallow sand says:

                I have no idea how to value oil, having sold it for a price ranging from $8 to $140 in the last 18 years.

                I just go by what the futures show and metrics used by banks for collateral purposes.

                If you think oil will average $100+, Whiting should be good. If you think prices in the next three years will be per the WTI futures strip, they will be bankrupt.

                Their PDP PV10 is likely less than long term debt using the current strip. They could likely sell assets for more, as surely these low prices cannot last long and many buyers would be thinking along those lines.

                I guess I feel the oil price at these levels is a tremendous overshoot on the down side, just as $140 was in 2008 and $31 was in 2009. But it could last a long time, especially as a lot of people on wall street aparently burning $27 per barrel is ok. Whiting has more buy recommendations than sell, some by people who are calling for WTI below $40 and 2016 price in the $50s.

                • shallow sand says:

                  Halcon, who has two rigs still running in North Daktoa Bakken (and one in East Texas) was able to not burn much cash by being well hedged. They realized over $23 per BOE in hedging gains. Most of that will be gone by year end.

                  Their production from Q1 to Q 2 fell about 2000 BOEPD, from 43K to 41K. They have $3.6 billion of long term debt, or about 1/3 of ExxonMobil, which produces 100 times the BOE, not to mention refining and marketing, chemicals, etc

              • Learner2, not all oil and gas producers will go bankrupt. This is a very competitive industry. The weak ones will probably start selling properties or go bankrupt. The lenders will take over and sell such properties to prospective buyers. There will be buyers.

                It’s better if one thinks of these as oil and gas companies with a focus in very lousy quality rocks. They aren’t really “shale” companies.

            • Heinrich Leopold says:

              shallow sand,

              Thanks for your reply and sorry for the mistake with WLL production. At 60 mill BOED per quarter WLL would have half of the Bakken production, which is clearly very high. For shale companies all depends on if oil prices will rise again. So there is much hope built into the stock prices. However the strong dollar (through low current account deficit) will prevent any rise of the oil price in the future. There is now a massive squeeze going on. How will the market resolve this situation?

    • Rune Likvern says:

      From Whiting Q2 15 Financial and Operational Results
      http://www.whiting.com/investor-relations/press-releases/

      ”We plan to run eight rigs in the second half of 2015 versus our original plan for 11 rigs and have established a new 2015 capital budget of $2.15 billion versus our previous estimate of $2.3 billion.”

  24. Futilitist says:

    Here is another oil price graph showing various moving averages and how they were effected as the exponentially rising Etp model curve intersected the rapidly falling Etp maximum oil price curve. My hypothesis was that if the Etp model were valid, some kind of signature of such a momentous slow motion collision, kind of like shock waves, should be detectable in the price curves. And they are! It is easy to see the jagged angular trajectory changes in the volatile cross over zone. The price trajectories alternate wildly, paralleling first one curve, then the other. I believe this is due to the oil price’s violent transition from freely rising exponentially, to suddenly being constrained by the physics limit of the maximum price curve.

    If I am right, this is empirical proof that the Etp model is likely valid.

    • AugustusGloopius says:

      Interesting graph, along with the prior two earlier in the thread. Hill’s Etp model is very intriguing. What do the gray dotted lines mean though?

      • Futilitist says:

        Hi AugustusGloopius.

        The dotted curves are parallels to the two Etp curves. They are just a visual aid to help highlight how, in the crossover zone, the angular price moves in the various moving averages follow volatile trajectories that parallel first one curve, then the other. These jagged moves are real world evidence that the seemingly irresistible, exponentially rising oil price has finally met the immovable, physics dictated maximum price limit. It would seem to be independent, empirical confirmation of the validity of the Etp model.

        • Futilitist says:

          I just remembered this. Non-linear systems dynamicists refer to this type of pattern as “squealing”. This happens right before a change of phase.

          http://www.scielo.br/scielo.php?pid=S1807-17752009000100005&script=sci_arttext

          “Changes in a non-linear system are determined by a series of phases, each one of which is governed by an attractor. An attractor is a pattern of behavior to which the system fixes itself. Each phase has specific sets of unique behaviors that exist latently in the original non-linear configuration of the system.” and “A chaordic system life cycle may be described like this: the system is born or is started, starts to develop and grows until maturity. Then, it reaches a growth limit, from which it might jump to another complexity level, where it starts a new development cycle. From the growth period to maturity a chaordic system goes through a period of relative stability. When the system arrives near its limit, the system starts to bifurcate and then enters a period of relative instability.” and “During a non-linear change period, the system oscillates between different modes of behavior.” and “During instability phases, chaordic systems are very sensitive, being that little changes in the initial conditions may cause dramatic effects.”

          • Glomerol says:

            This seems to challenge the ‘smooth transition’ narrative about leveraging the increasingly-complex and unstable system, itself, at least in certain ways, and on the way down to boot.

            We might do well to shift some of the narrative like this on POB to better reflect impending economic/civilizational/social-dynamic phase-shifts.

            “There will always be contention regarding the depletion status of world petroleum reserve as long as analyst continue to ignore the thermodynamic ramifications of depletion. This in itself is an interesting phenomena as petroleum is our primary source of energy for powering the world’s transportation fleet. Regardless, they continue to attempt to sum up the barrels that might be used to accomplish that without regard to which barrels might serve that purpose…” ~ BW Hill

            • AugustusGloopius says:

              Thank you, Futilitist.

              Glomerol, that is a great Hill quote that covers something I have thought myself.

            • Futilitist says:

              “This seems to challenge the ‘smooth transition’ narrative…”

              Yes, it certainly does. And it similarly gores every other false narrative ox that has been spawned to obscure the true nature of the peak oil dilemma. These stale, false hope filled narratives have been endlessly hashed and rehashed for the last ten years by this group going back to theoildrum days, all to no conclusion. Yawn.

              Well, the times they are a changin’. What used to sound “reasonable” doesn’t sound so reasonable anymore. The old narratives just aren’t selling the way they used to. They were passed up by reality like they were standing still. The future is here today! Who could have seen this coming? Time for a major rewrite.

              “We might do well to shift some of the narrative like this on POB to better reflect impending economic/civilizational/social-dynamic phase-shifts.”

              That is good advice if people want this site to be taken seriously.

    • Futilitist says:

      Hi Everyone.

      Here is another graph of various moving average oil prices. I call this one “The Dragon in the Sky”. It illustrates the most momentous non-linear phase change in the short history of our doomed species.

      Just stare at it for a while. I will have more to say about this later.

    • Futilitist says:

      Here is a close up of the crossover zone, this time WTI with daily moving averages.

    • Futilitist says:

      This one might read a little better.

  25. Ronald Walter says:

    Natural gas seeps from the floor of the Gulf of Mexico. Natural gas was in use by the Chinese in 2000 BCE. It will take some time to burn it all.

    When the power goes out, you can still cook with gas.

    Natural gas is an inexhaustible resource, it can never be depleted to zero. The volumes can be burned to low levels and ready supply issues might become a problem, but it can never be all gone.

    S-M Energy had one rig work a stretch of properties along one road in Divide County for the past five years and has probably drilled them all by now. I did see three new permits issued to them here the other day.

    At 38.13 and earnings of 8.05 per share, they’re in good shape. A very good company.

  26. MarbleZeppelin says:

    Desert farming causes carbon sequestration.

    “Remarkably, over human history, the rate at which carbon was sunk into the groundwater rose dramatically, increasing by more than 12 times over the past 8000 years. The particularly high levels of carbon storage in this region began 2000 years ago when the Silk Road opened up, which resulted in increased levels of human activity and farming around the Tarim Basin.

    Desert sands have been examined for carbon storage before, but that did not reveal this process because the carbon is not stored in the sand – it is transported down into the groundwater, Li says.”

    https://www.newscientist.com/article/dn27971-humans-accidentally-created-hidden-carbon-sink-in-the-desert/

  27. MarbleZeppelin says:

    The Little Ice Age and the Maunder Minimum are often discussed here. Well, way back in 2012, the real answers were discovered. It was major volcanic eruptions and later melt water into the northern oceans that caused the Little Ice Age, not solar variation.

    http://blogs.discovermagazine.com/badastronomy/2012/02/01/what-caused-the-little-ice-age/

    http://www.colorado.edu/news/releases/2012/01/30/new-cu-led-study-may-answer-long-standing-questions-about-enigmatic-little

  28. g says:

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    • Fred Magyar says:

      Do you perchance have numlock activated on a laptop that doesn’t have a numerical keypad?
      It looks like some function key might have been accidentally activated.
      Good Luck!

  29. g says:

    `
    ZZEB.UV S3T1UP`I[D

    Has anybody heard of a keyboard going nuts? swapped out key board it works again.

    • Fred Magyar says:

      Yep! Keyboards do fail for a number of reasons. Spilled coffee comes to mind.

  30. Good analysis Dennis, and deep and thorough as usual.

    Richard Muller at UC/Berkley has been on the NatGas kick recently, suggesting strongly that that is the way to go for FF. He is the guy that wrote the book “Physics for Future Presidents”.

    • Synapsid says:

      WHT,

      Richard Muller also wrote “Nemesis, the Death Star.”

      The Nemesis idea was based on the announced 25-million-year periodicity in mass extinctions that grew out of statistical errors in handling a great deal of data on extinctions. Nemesis was supposed to pass near enough every 25 million years to destabilize comets’ orbits in the Oort cloud, with horrendous results in the inner Solar System.

      But then, he also started the BEST review of published work on AGW (he was skeptical) and concluded that the work was solid and AGW is a real problem. Interesting guy.

    • Dennis Coyne says:

      Thanks Paul.

      It would be interesting to hear your take on BW Hill’s ETP model. There is a discussion about it at peakoil.com under peak oil studies and models. It doesn’t look very solid to me, especially the maximum consumer price curve,which essentially posits that the net energy in a barrel of oil (after discovery, build, extraction, refining and distribution energy costs are deducted and that at most 62% of the remaining energy could be converted to work) will determine the maximum price that consumers will pay for a barrel of oil. I keep suggesting that net energy in a single product has little to do with its price, on the demand side it is about the relative utility of the marginal barrel purchased.

      • Futilitist says:

        “It would be interesting to hear your take on BW Hill’s ETP model.”

        Yes, it would. I wonder why we haven’t yet heard from WebHubTelescope on this important topic.

        Hey Web, you should help poor Dennis out.

        “It doesn’t look very solid to me, especially the maximum consumer price curve, which essentially posits that the net energy in a barrel of oil will determine the maximum price that consumers will pay for a barrel of oil.”

        Yet it makes so much logical sense. You never really say why you think this is not correct.

        “I keep suggesting that net energy in a single product has little to do with its price, on the demand side it is about the relative utility of the marginal barrel purchased.”

        Yes, you do keep suggesting that. But you have no proof that such a thing must be true. And offering up an unsupported, alternate explanation that does not even account for the observed phenomena is not sufficient, scientifically speaking, to be a serious objection. You think you have a better idea, but the Etp model explains the observed phenomenon quite elegantly. Before you offer up your substitute pseudoscientific version of the truth from the economist’s bible, you must first offer some kind of logical argument to explain why the Etp model seems to be so valid.

        The Etp model is based on the laws of thermodynamics and it keeps performing accurately, regardless of your objection based on personal astonishment. I have even presented independent empirical evidence that seems to show a non-linear phase change signal (squealing) in various moving oil price averages corresponding precisely to the crossover of the two Etp curves. You have remained silent on this recent evidence, with your last comment chalking it all up to coincidence.

        If some economic voodoo mumbo jumbo is your best way to try to explain away the Etp model, then you are standing on very weak ground, indeed.

        • Caelan MacIntyre says:

          Speaking of ‘squealing’, did you notice the sea ice graph that Fred posted? The highlighted area in the circle looks remarkably regular, compared with the rest, almost as if you could time drum beats to it. And this may be just before the time– the ‘phase-shift’– where the Arctic becomes completely ice free in the late summer.

    • Caelan MacIntyre says:

      Thanks for putting out feelers, Dennis.

      I would also like to hear from Paul, too, as well as BC (and anyone else) if they’re around and reading and would like to take a stab (even if they think they might miss), and maybe also in reference to my previous post that attempts (maybe fails) to make some sense of it.

      For those who do, if we could have the language as elementary as possible too, it would be appreciated.

      Dennis, I am unsure we have not already crossed the threshold into a permanent recession/long emergency, despite any statistics that say otherwise, and that collapse hasn’t already begun. There’s a lot of talk out there and even some smidgeons hereon about how many books, at least that pertain to this issue, are being cooked and have been since 2008 and maybe earlier.

  31. Frugal says:

    Suncor cuts spending by $400 million

    More cuts in the tar sands.

    It’s the second time in 2015 that Suncor has slashed its budget. In January it announced it would reduce its budget by $1 billion to between $6.2 billion and $6.8 billion.
    As of April, 1,200 jobs have been cut at Suncor.

    • Anon says:

      Canadian production is going to be waaaay below projections over the next 5-10 years. Can’t make up lost time with that stuff.

  32. islandboy says:

    What happens if/when this stuff gets to be only slightly more expensive than tinted/treated glass?

    SolarWindow Announces Webcast to Unveil Commercial Pathway for First-Ever Electricity-Generating Windows

    ” This announcement follows important technical milestones recently achieved by the company, including:

    Independently validated financial payback of under one year. This fastest-ever published, calculated financial payback is based on recent modeling of SolarWindow modules on a 50 story building, which demonstrates more than 50 times the energy and more than 15 times the environmental benefit generated over conventional rooftop systems

    New research outcomes favorable to low-cost high-speed production in diverse geographic locations where altitude, air-pressure, and humidity can otherwise effect chemistry and manufacturing”

    This story is a little light on technical details but, it’ll be great if it works!

    • Fred Magyar says:

      This story is a little light on technical details but, it’ll be great if it works!

      Well, on their website they say * SolarWindow™ products are currently under development and not available for sale.

      On the other hand, here’s the lowdown on their chief scientist, also posted on their website… Granted he’s probably either a Silicon Valley mole or a left wing, greenie weenie watermelon type with strong socialist leanings. He does sound like the type of guy who might favor microgrids and distributed power generation vs the old monopolistic utility company mode of centralized power generation. If their ideas work and catch on it might just be the last nail in the coffin of the utility company’s economic model.

      Dr. Hammond is Principal Scientist at SolarWindow Technologies, Inc., leading development of SolarWindow™ systems. Dr. Hammond brings extensive experience with all areas of Organic Photovoltaics (OPV), including: the design and synthesis of small molecule and polymeric donor materials, the development of new solution-processed contact materials, the fabrication of laboratory-scale OPV devices, large-area device fabrication using slot-die coating, and the development of solution-processed flexible and transparent moisture barriers.

      Dr. Hammond also has a strong background in nanostructured organic materials, with an emphasis on optoelectronic materials. His experience spans materials design, synthesis, nanoscale characterization, processing, and optoelectronic device fabrication. He has over 30 publications and presentations, a book chapter, and one U.S. patent application.

      Dr. Hammond earned his B.S. in Chemistry with High Honors from the University of California, Berkeley in 2001, and his Ph.D. in Organic/Materials Chemistry and Nanotechnology from the University of Washington, Seattle in 2007. His awards include a Hypercube Scholar Award, a Mindlin Brothers Fellowship for Creativity in Science, a NSF Graduate Research Fellowship Honorable Mention, and a Joint Institute in Nanotechnology Fellowship. He is currently a member of the American Chemical Society and the Materials Research Society, and a Sigma-Aldrich Global Advisor.

      Dunno, but what the hey, I think I’ll give this guy at least the benefit of the doubt.
      I will do a little more digging into his publications and see what they are all about. While most of that is probably way above my pay grade, though my girlfriend has dual Ph.D.s in physics and chemistry so I’ll ask her to read up on this as well and see what she thinks.

      Who knows a company like this might be a better investment opportunity than pouring good money after bad in places like North Dakota.

      Cheers!

      • MarbleZeppelin says:

        Organic solar cells are not new. Typically low efficiency and low stability. If they have solved the stability problem and gotten efficiency up to 4 percent or more it should fly.
        There are so many tall windowed buildings across the country, not just deep in cities, that their market is quite large.

        This type of company, one with a new technology or material that competes with established technologies, are a minefield for investors in the early stages. They could become the fastest growing company around or disappear into nothingness. Good shot if you have money to throw away, might make you very wealthy or slightly poorer. Black Swans are generally like that.

    • Then we will live happily thereafter.

      Here’s a link, read Martin Siegel’s comments:

      http://www.technologyreview.com/news/427592/tinted-windows-that-generate-electricity/#comments

  33. Watcher says:

    Concerning the purity of markets and how the price of things is determined by supply and demand — I give you the wiki of the China stock market crash and gov’t response:

    The Chinese government enacted many measures to stem the tide of the crash. Regulators limited short selling under threat of arrest.[9] Large mutual funds and pension funds pledged to buy more stocks. The government stopped initial public offerings. The government also provided cash to brokers to buy shares, backed by central-bank cash.

    . . .

    In addition, China Securities Regulatory Commission (CSRC) imposed a six-month ban on stockholders owning more than 5 percent of a company’s stock from selling those stocks, resulting in a 6 percent rise in stock markets.[12] Further, around 1,300 total firms, representing 45 percent of the stock market, suspended the trading of stocks starting on 8 July.

    This Is Not Unusual. There is nothing exceptional about the Federal Reserve. The same sort of things are done in the US. We just had GDP revisions released this morning. All upwards. It’s all an exercise in goal seeking. Ask Japan, where the BoJ explicitly buys equity ETFs.

    The real issue is this extrapolates. The profs at Wharton would cringe at me saying this, but economic considerations are gone. We analyze what happens in the shale fields and what is going to happen to companies based on what we can see from the audited results and that analysis is largely worthless. What will happen is what the central banks dictate to happen. You can’t imagine the Fed bailing out shale? Well, the PBOC took those actions after just a 20-30% stock market drop. The US S&P hasn’t had a 10% drop in 3 going on 4 yrs now. This is unprecedented.

    We really need to know how much oil can flow with infinite money provided. THAT would be valuable to know, because it’s likely to unfold that way.

    • SAWDUST says:

      China needs a weak US dollar and they are not getting it. In particular they need a weak USD/JPY. It’s all about currency flows. USD/JPY is the weapon of choice against china. China will either have to de-peg to the dollar or blow through all their built up currency reserves to manage their currency. This is no coincidence as them and the rest of BRICS moved to de dollarize.

      Fed’s rate hikes ambitions are more to do with the war between east and west than anything else.

      A strong USD/JPY causes money to flow out of China and they fact the PBoC is in interest rate cut mode doesn’t help. Nothing they can do about it they have to cut rates to hold off implosion. Then they have to sell US treasuries to maintain currency peg.

      They de-peg and overnight they become non- competitive as worlds manufacturing floor.

      I think the up and coming war between China/Japan is closer than most imagine.

      FED, BOJ and ECB can buy any mass selling of US treasuries. Not only can they buy those bonds they can pay whatever price is needed in order to maintain the value of those bonds.

      As long as there is oil out there to go get they will go get it. Price doesn’t matter. Cost doesn’t matter.

      • SAWDUST says:

        One thing to consider is that using a infinite amount of money to get oil out the ground only leaves you with less oil sooner than you would have if you hadn’t used an infinite amount of money to go get it. All their doing is bringing the day of reckoning forward in time. Instead of delaying it into the future.

        • Jeffrey J. Brown says:

          AKA an accelerating rate of depletion, but in any case at current consumption levels the rate of depletion in remaining recoverable C+C reserves is almost certainly accelerating.

          • SAWDUST says:

            It will likely accelerate exponentially as in order to preserve BAU they will through as much money at it as takes. But at some point flow slows down even as money spent increases. Which is when the wheels fall off the wagon of BAU.

            Probably will be the case where the more money that is spent the less flow there is. It will become a self defeating proposition. At some point depletion rate reaches a critical mass and no amount of money, drilling, and pumping are able to overcome it.

            • Jeffrey J. Brown says:

              I think you meant to say decline rate.

              Production can increase, stay the same or decline, but depletion is a one way street.

              Assume two URR scenarios for a hypothetical region: (1) Remaining URR of 1,000 Gb and (2) Remaining URR of 2,000 GB.

              Let’s assume consumption is flat at 25 GB/year, or 250 Gb in 10 years.

              Under scenario (1), 2.5% of remaining URR is consumed in year one (2.5/1,000) and 3.3% is consumed in year 11 (2.5/750).

              Under scenario (2), 1.25% of remaining URR is consumed in year one (1.25/1,000) and 1.43% is consumed in year 11 (2.5/1,750).

              Under both scenarios, we see an accelerating rate of depletion, i.e., the percentage of remaining URR consumed per year is increasing in both cases as time goes on.

              • Jeffrey J. Brown says:

                Should read:

                Under scenario (2), 1.25% of remaining URR is consumed in year one (2.50/2,000) and 1.43% is consumed in year 11 (2.5/1,750).

            • islandboy says:

              “But at some point flow slows down even as money spent increases. Which is when the wheels fall off the wagon of BAU.”

              That sounds pretty much like what is happening/has happened in various places all over the world these past few years! A few places have been able to increase flows by spending more money but, not many.

      • Heinrich Leopold says:

        Sawdust,

        Central banks can indeed do very much regarding buying bonds within themselves (China, Japan buying Treasuries…). This ensures an inflation free bond bubble. However current accounts do matter. The huge US current account inflated the oil price and deflated the US dollar. However the 50% reduction of the US current account through high shale oil production reversed the situation and the dollar is up and oil price down again. This took around 300 bn Treasuries per year out of the market, which is somewhat counterbalanced by Chinese selling of around 150 bn Teasuriies per year. Despite a much lower currency, Japan cannot re-industriualize again and the Japanese current accout remains low and Japan is not able anymore to soak up many Treasuries. The reversal of oil price puts now a squeeze on shale producers and the dollar will come under pressure again when oil production will fall. The recent massive crash of shale producers burning cash in unprecedent manner is a harbiger for a precipituos fall in US oil production, which will change the balance again.

        • How many treasuries are the Chinese selling NET?

          • Heinrich Leopold says:

            Old farmer mac,

            You can find the official Chinese holdings at http://www.treasury.gov/ticdata/Publish/mfh.txt. Yet Chia has big accounts in the UK and Belgium and most likely some unofficial holdings elsewhere. Over the last ten years China has bought on average 100 bn Treasuries per year. Now they do not buy anymore and have sold around 150 bn from their Belgium account this year.

            • Thanks Heinrich,

              Do you know what the Chinese are doing with the proceeds of these sales?

              I strongly suspect they are happy to be rid of dollars expecting them to be useless in the long run, whereas those same dollars are extremely valuable at this time IF spent on buying up hard physical assets such as shares in the Canadian oil industry, etc.

              Scrap steel is cheap too. It can be stockpiled for virtually nothing in terms of storage costs. When the economy turns up again it will be worth double or triple what it is now.

              Anybody who believes in future resource shortages and has plenty of long term cash is apt to be investing with these future shortages in mind.

        • SAWDUST says:

          Interesting enough Oil futures topped out on 5/8/2014 and the dollar index bottomed out also on 5/8/2014

          It was a weak dollar in the wake of 2008 with interest rates being dropped from 5.25% to 0.25% and all the rounds of QE that drove oil off it’s lows. To it 5/8/2014 highs.

          Then we got a stronger dollar. Oil is priced in futures markets. Strong dollar is forcing money out of futures market. It’s no different than carry trade unwind. All those borrowed dollars at rock bottom interest rates and invested in oil futures and HY bonds. A stronger dollar than where they borrowed from forces them to sell. They have no choice or they loose their asses on the currency move.

          This entire move south for oil wasn’t a fundamental supply and demand driven move. It was a currency move.

  34. Watcher says:

    http://portal.ransquawk.com/headlines/as-a-note-the-senate-energy-committee-approves-energy-bill-that-would-lift-the-export-ban-in-place-on-crude-oil-30-07-2015

    Note the Dems have nothing to lose by asserting the anti cloture 60 vote reqmt and pandering to the Sierra Club donors. The states involved are largely deep red anyway.

  35. ezrydermike says:

    there has been some discussion about changing people’s thinking about fossil fuels, consumption, environmental issues, ecology, etc.

    There are lots of ways to try to do this and lots of theory’s about how and why people think about things.

    I wonder if this bit of green washing by NASCAR will make anyone change their thinking. If so, will it change it in the right direction?

    “Since its inception in 2008, NASCAR Green has become one of the most innovative and holistic environmental awareness platforms in the country. NASCAR and the industry have been on a joint mission to reduce the sport’s environmental footprint by championing sustainable behavior to millions of fans. NASCAR has the three largest sustainability programs in sports: renewable energy, recycling, clean air.”

    http://green.nascar.com/

  36. The Wet One says:

    Ron,

    I know you’re on holidays and not attending to the blog (or at least I think you’re not anyways), but I have to share some hate with you (heh!).

    You got me on to Desdemona Despair (a more accurate name I could scarcely imagine). Now I go there regularly and I’ve become The Despairing Wet One as a result of what I learn there.

    Damn you Ron!

    Damn you to Hell!

    And I mean that in the best possible way of course, because I am a curious fellow and always enjoy obtaining new sources of knowledge. But jeez louise, Desdemona Despair is on heck of a depressing site, and I have you to thank for knowing about it. And now that I know about it, I can’t unknow about it and become blissfully ignorant again.

    Maybe I need some brain damage or something like that so I can live happily again.

    Sigh…

    P.S. Hope you’re enjoying your break on vacation. I know I enjoyed mine.

    Cheers!

    • Futilitist says:

      “I know you’re on holidays and not attending to the blog…”

      How do you know this?

      “P.S. Hope you’re enjoying your break on vacation.”

      When will Ron be back?

  37. R2D2 says:

    ConocoPhillips in their 2Q conference call today at about 52 minutes mark said their individual wells of unconventional at Eagle Ford break even point is 12 to 18 months. Also cancelling deep water projects in the GOM with major penalty. Increased dividend amount this month.

    Valero sees additional downward pressure on oil prices after driving season. Also sees increased gasoline consumption because of price.

    • shallow sand says:

      R2D2. I read the transcript and the VP did say that about EFS payout being 12-18 months.

      They went over that pretty quick.

      I would sure like to see that calculation. I think you would need a well that averages 500 barrels per day for 12-18 months to achieve payout at current oil prices. Not aware of too many of those, but there must be some out there.

  38. shallow sand says:

    I’ll read that when a transcript is out
    tomorrow. Hard to believe could hit payout at 12-18 months at these prices in EFS.

    Of course Valero is going to talk the price down. They are minting money. Kind of like asking an umbrella salesman for a weather forecast.

  39. MarbleZeppelin says:

    As summer heats up, so do the western fires. Alaska is a real stunner, way too many fires. How are we going to put the carbon back if it keeps going off on it’s own?
    Interactive map of US fires from Climate Central:
    http://www.climatecentral.org/news/interactive-wildfires-map-tracks-blazes-in-us-17916

  40. Frugal says:

    Shell axes 6,500 jobs worldwide to cope with long period of cheap oil

    Shell has eliminated 6,500 staff and contractor positions this year around the world as it seeks to reduce operating costs by 10 per cent, the Netherlands-based company said Thursday. The company also plans to reduce capital investment by $7 billion, or 20 per cent.

    All this cost cutting is bound to reduce world oil production — how can it not?

    • Greenbub says:

      It has to, but when? 3 years from now? 5? Offshore projects take a long time to get going.

      • Frugal says:

        Offshore projects take a long time to get going.

        Yes but natural decline happens right away.

        • Greenbub says:

          Wake me up when there is less oil coming to market.

          • R2D2 says:

            Exactly, ConocoPhillips has projects they have been working on for 2 or 3 years that are about to come online. World production has been beating natural decline since pretty much the beginning of the oil age.

            Peak 2015, not going to happen

            Rollen rollen rollen, keep more vehicles rollen, Exxon !

            • shallow sand says:

              I dont know. I am biased, but I’m trying not to be.

              One of the Bakken heavyweights pretty much announced they can’t go on too many years at these prices. In fact, they are forecasting a year over year decline in production of roughly 15% at $50 oil. That being Whiting.

              COP wasn’t exactly growing at a huge clip when they were spending several billion more per year in CAPEX. Will be interesting to see how things go down with them too. They are guiding less for Q3 than Q2. Of course, Q2 was lower than Q1.

              SM Energy and Halcion both saw production drop.

              Hess and Anadarko intend to keep growing production. WSJ compared that course of action to the “invincible” black night in Monty Python’s The Holy Grail. Great comedy. For those who don’t know, the black night refuses to surrender even though King Arthur cut off both his arms and both his legs. Bleeding profusely, just like all upstream US and Canadian companies are now with their cash.

              CEO usually keep up the happy talk. Massive firings are not a sign that business is booming.

              When North America has been beaten down enough, OPEC will cut, and it will take awhile for the shale boom to begin anew.

              • Watcher says:

                When North America has been beaten down enough, OPEC will cut, and it will take awhile for the shale boom to begin anew.

                They cut regardless of North America if they deplete.

            • Frugal says:

              Peak 2015, not going to happen

              We’ll have to wait and see what Ron’s graphs show at the beginning of 2016.

            • Peak 2015, not going to happen

              Don’t be too sure!

              JODI Non-OPEC photo JODI Non-OPEC_zpsv8e4sujp.jpg

              • AlexS says:

                Ron,

                multiple local (temporary) peaks can be seen in your chart. They were followed by declines, and then by further (and higher) local peaks.
                What are the reasons to believe that monthly declines in 2015 are a sign of an ultimate peak in non-OPEC production?

                • What are the reasons to believe that monthly declines in 2015 are a sign of an ultimate peak in non-OPEC production?

                  Alex, the monthly declines in 2015 are not any sign of anything as far as I am concerned. They are exactly what I expected but not any kind of sign.

                  I have been examining every oil producing nation in the world for several years now. I see far more nations, that produce far more oil, declining than I see nations producing more oil in the near and far future.

                  I place very little value in charts. I love to post them to show what has happened.
                  They are not an indication of what will happen however.

                  Bottom line, not every nation has peaked. But far more nations, who produce far more oil, will peak, or will have perked, by 2015, than nations that have not yet peaked.

                  • R2D2 says:

                    I have no doubt the Middle East could produce 40 million barrel a day at $60 with a few years of capital investment and make a lot of money. Look at the USA 45 years after peak and $100 oil.

                    Demand will be met with production and at $60 oil you haven’t seen peak demand yet after $100 oil . A lot of the easy oil has been recovered, but there is a shit load more to be produced at $80. We had over 4 years of $100 oil with increased production and demand.

                    We are going higher. Buckle up !

                  • R2D2, the Middle East doesn’t produce 30 million BOPD. Where are the extra 10+ million supposed to come from?

                  • R2D2 says:

                    From the earth below the ground in Iraq, Iran, Saudi, etc. It could be done with infrastructure.

                    Drill Baby Drill, pipelines, ports

                    I said could. Clearly the price would fall to unacceptable levels for them if they did. They have no financial reason to do it today. Their goal is to optimize production and income. Today long term $100 oil doesn’t optimize current infrastructure. SA currently fighting for market share.

                  • canniBAU says:

                    You’ve been saying for years that Iran has peaked, failing to give credit to economic sanctions.

                    You’ve also been saying Brazil has peaked. Sure, brazilian post-salt oil is declining at North-sea rates and pre-salt oil has not come online as fast as predicted, so production has stalled. But regardless of corruption scandals and financial difficulties, those reserves are HUGE and will be extracted eventually (BTW brazilian congress is about to change the law that obliges Petrobras to be the operator of every single brazilian pre-salt field)

                    Lybia, Iraq have huge upside potential as well.

                    SA has surprised all the doomers, and will probably surprise even more in the future.

                  • R2D2 says:

                    Iran could produce 10 million BPD easily with modern western technological infrastructure. All you need is another CIA 50’s style coup to pave the way.

                  • R2D2 says:

                    Iran historical production. This chart makes it clear that is politically constrained and not economically.

                  • Javier says:

                    R2D2,

                    You are not taking into account the demand side of the equation. With oil at half price the average of 2010-2013, the demand is growing less, not more.

                    Why would a cheaper essential energy input be met with reduced growth of consumption?

                    What would have happened to oil demand had oil prices stayed above 100$?

                    Can the economy grow sustainably if energy consumption is reducing?

                  • C3Po says:

                    Javier,

                    “You are not taking into account the demand side of the equation. With oil at half price the average of 2010-2013, the demand is growing less, not more.”

                    EIA recorders for US disagrees with your above statement.

                    EIA US petroleum product supplied-

                    2015 YTD + 4.4%
                    2014 + .9
                    2013 + 1.8
                    2012 – 1.7
                    2011 – 1.3

                    http://www.eia.gov/petroleum/supply/weekly/

                  • Javier says:

                    EIA recorders for US disagrees with your above statement.

                    C3Po,
                    What makes you think that cherry picking a part of the world makes my statement about the world less correct?

                    Probably Luxembourg also has a healthy growing oil demand, so what?

                    It is still correct that with oil at half price the average of 2010-2013, the demand is growing less, not more.

                    Do you have an explanation for that?

                  • R2d2, it really can’t be done. It doesn’t make economic sense because it would deplete a limited amount of oil in a shorter time period. What’s your background?

  41. Ronald Walter says:

    Some good numbers in the daily activity reports for producing wells completed at the NDIC today.

    I can write it all down on paper, but that won’t do any good if it doesn’t happen in the real world.

    That’s when my puny brain that is all bone all the way through, a bonehead, finally realizes that it takes brawn to make what is down on paper happen in the real world. From no brains to all brawn, nothing in between.

    You can go from useless eater to useful idiot in one fell swoop.

    • ”From no brains to all brawn, nothing in between.

      You can go from useless eater to useful idiot in one fell swoop.”

      Damned few top flight comedians in Hollywood have a better feel for the ridiculous behavior of the naked ape and express it so well in so few words.

      Too bad the subject matter is so serious, it is hard for me to laugh at tragedies.

      In this case read all brains to mean the environmental science establishment , and all brawn to mean the business as usual establishment.

      Useless eaters are in the literature both far left and far right are non productive members of society and useful idiots are the fools who make it possible for the big boys ( the pigs ) to control the rest of us, the horse who works himself to death etc in books such as Animal Farm.

      Some of us are always going to be more equal than the rest of us. In deep time our ancestors dominated their fellow monkey men by the strength of their arm. As our brains evolved the art of mastery of our fellows gradually shifted from brawn to brain.

      Ninety nine point nine percent of us are such poor thinkers we don’t even know if we are useless eaters or useful idiots.

      • Watcher says:

        On the other hand Forrest Gump eats 2000 calories a day. He can walk behind a plow, and probably do so well.

        All those folks in wheelchairs can’t. They won’t be around much longer.

        • Well said Watcher.

          But if he is plowing all day he will need more calories.

          • Caelan MacIntyre says:

            He can do permaculture, vertical food forest gardening, native perennials, and no-till agro, etc.. Lots of calories growing and less work.

  42. Caelan MacIntyre says:

    Attempts to fix our problems with industrial scale technology

    “…may impact communities due to the scale of the impacts. The picture of a cruise ship visiting a small fishing port in Alaska called Whittier is a metaphor for this process. Odum would have viewed this cruise ship as a sharp pulse from the larger scale as a pulse adaptation similar to an ecosystem adaptation to flood, fire, or earthquake. Big pulses from industrial scale impacts of pollution and its mitigation may overwhelm relocalization efforts, causing benefits to funnel upwards to the top of the hierarchy, while negative impacts fall on local environmental support systems. Industrial tourism creates damaging effects on communities, requiring adaptation to the large pulses that may not be sustainable once the pulses are removed…

    Similarly, large commercial enterprises impact bush communities in Alaska when they come in and hire workers at relatively higher wages to extract resources, causing disruption of culture within the communities. Some of our elders call this process Losing Focus. Aiming industrial strength fire hoses of money and influence at small communities is disruptive to traditional local cultures, and small local businesses have difficulty competing against introduction of big box stores. Global industrialization spreads harmful impacts to small communities, creating uncertainties about growing your own food, lack of resilience, and yes, even climate change. Relocalization efforts may need protective policies and laws for locales and small business–instead we are seeing the opposite, with municipal laws geared towards larger businesses and powerful corporate/federal initiatives that boost aid to dangerous experiments.

    In the geopiracy experiment by the US businessman, NOAA loaned the businessman 20 buoys for an enterprise that made the gent $2.5 million from a local Haida tribe hopeful for larger salmon runs. Corporate control of powerful governments creates industrial strength tools that can create industrial strength catastrophes, that exacerbate the damage to the environment created by climate change, population overshoot, over-harvesting and other problems. When there are large available flows from outside, the scale of self-organizational processes increases… If a surge of input energy of one kind is added to a system, it creates a bulge in the energy spectrum, causing energy to be propagated upscale and downscale (Odum, 2007, p. 86)…

    In this case, additional insult comes from NOAA, a federal agency whose mission is to protect the oceans and air. Where is the ecoliteracy in this agency, and how come it is helping a businessman profit by dumping in the commons? Our education process is transforming into jingoistc behavior modification complete with stimulus response devices such as galvanic response bracelets, microchipping, and corrupted science to make us into performing monkeys, or perhaps Pavlovian dogs marching to the corporate goose-step.

    While the MPP dictates that we will use available energy, we can opt for wisdom instead of waste and use energy wisely to maximize efficiency, helping to adapt infrastructure for a prosperous way down. But that will require awareness and a shift in consciousness. Eventually, the MPP will mandate that we maximize (real) world wealth and emergy by abandoning wasteful high-tech projects that funnel wealth and harm the environment. Wars and revolution will reboot world opinions about equity in resource use. The imbalances that we see cannot and will not last.

    From Morning On

    • Whittier is an interesting town. It was built by the USA armed forces during World War II. Has an interesting one way tunnel dug through the mountains, and in winter everybody lives in the same building.

      • Caelan MacIntyre says:

        Then it seems like a bad example– possibly the worst– for the metaphor. Good call. (I just let them know at the blog.)
        However, in another, ironic sense, it’s a great metaphor, (and makes your call even better).

        • Caelan MacIntyre says:

          Blog’s Response:

          “Yes, Whittier is . . . unique, odd, strange. But the point was that Whittier is very small, with a big pulse of people overwhelming it. I chose it for the photo. Kind of like the passenger jets that occasionally make an emergency landing in Cold Bay (pop. ~60). Or the cruise ships that overwhelm Ketchikan and Juneau in the summer.”

          …Or the mass waves of refugees that overwhelm entire nation-states.

          • Teeheehee. Cruise ships overwhelm everything. I suspect cruise ship passengers aren’t aware the way they alter prices and ambiance whenever they arrive. They have a really weird perspective.

            I agree with you, Whittier isn’t really a good example. It gets lots of visitors in summer time because it’s so isolated. It’s an unnatural settlement, only exists thanks to uncle sam’s military.

  43. Frugal says:

    Imperial Oil’s profit plunges 90 per cent on oil slump, charge

    Imperial’s net income fell to $120-million, or 14 cents per share, in the quarter ended June 30 from $1.23-billion, or $1.45 per share, a year earlier.

    Total revenue fell 27 per cent to $7.30-billion.

    Imperial Oil is owned by Exxon Mobil.

    • shallow sand says:

      Yes. ExxonMobil stock is down significantly today. Earlier today they reported earnings that missed estimates and were the lowest quarterly earnings reported by the company since the 2009 price crash. Even they are burning cash in their upstream business.

      The overshoot regarding the price of crude oil is going so much further than anyone anticipated. Really do not know what is in store, but many companies are guiding lower production in the coming quarters.

      KSA wanted non-OPEC production cut, and by golly, they are getting it. US shale is still in denial mode, but the financial reports tell the truth. $80 will work, maybe, for EOG and a couple others. The rest need $90 to maintain production and be cash flow neutral.

      I have never invested in anything hoping to be cash flow neutral. Keep in mind, cash flow neutral does not mean paying down principal.

      • R2D2 says:

        “US shale is still in denial mode”

        That’s probably not a far statement. I think a lot of the posters here don’t understand the lead time required to change course. You don’t do half a job and walk away from it. It took years to get it ramped up. It doesn’t shut down over night.

        Regarding the 12 to 18 months breakeven point. There were other subjects in that conference call that they based their statement off of $60 oil and not todays current mid to high 40’s. That 12 to 18 could have been based on $60 oil.

        “The rest need $90 to maintain production and be cash flow neutral”

        This is a pretty meaningless statement without knowing the details.

  44. Schinzy says:

    Thanks Dennis. You are my hero. Nobody gets their hands dirty like you. You jump into these models and turn the crank to see what comes out. Assumptions are always clear. The best way to understands physical/social phenomena is to write down a mathematical model that simulates the phenomena and turn the crank with respect to different scenarios and keep refining. That’s exactly what you continue doing, great work.

  45. AlexS says:

    U.S. oil production numbers from Monthly Energy Review released on July 28, 2015.
    http://www.eia.gov/totalenergy/data/monthly/

    US total (kb/d):
    April: 9701 kb/d; May: 9463; June: 9599

    Oil production ex Alaska:
    April: 9192; May: 8987; June: 9153

    Note that the numbers to April were first released in the end of June, the numbers for May and June are preliminary estimates. Revised numbers to May should be released later today

  46. AlexS says:

    Saudi Aramco Testing C02 to Get More Oil From Giant Ghawar Field

    July 31, 2015
    http://www.bloomberg.com/news/articles/2015-07-31/saudi-aramco-testing-c02-to-get-more-oil-from-giant-ghawar-field

    Saudi Arabian Oil Co. started injecting carbon dioxide to try and boost extraction rates from the world’s biggest oil field as the company steps up plans to recover more crude from its deposits.
    Saudi Aramco, as the company is known, already started injection and will put 40 million standard cubic feet per day of CO2 into the Uthmaniyah area south of the Ghawar field, it said Thursday in an Arabic statement on its website. About 40 percent of what’s injected will be stored in the field.
    “The project aims to enhance oil recovery beyond the more common method of water flooding, and is the largest of its kind in the Middle East,” it said. The project is part of the company’s efforts to reducing domestic carbon emissions and meeting environmental goals, it said.
    Oil-rich nations across the Persian Gulf are seeking ways to continue output from fields that are at least half a century old. While the industry average is for producers to recover about 35 percent of fields’ total deposits, Saudi Aramco is developing technology that could double that rate, Ahmad al-Khowaiter, chief technology officer, said in March.
    Injecting CO2 into Uthmaniyah will boost oil-recovery rates by 10 to 15 percentage points, Khowaiter said in March. The CO2 for the project will be captured at Hawiyah gas recovery plant and then piped 85-kilometers to the site. The project will be tested for three to five years before Aramco applies the technology to other fields, it said in Thursday’s statement.
    “Saudi Aramco is carrying out extensive research to enable us to lower our carbon footprint while continuing to supply the energy the world needs,” said Amin H. Nasser, acting president and chief executive officer.

    • clueless says:

      Does anyone on this blog have information of what the expected additional per barrel cost of production would be from using CO2 injection? I realize that it would be a range, depending upon the facts of each field. But, it does seem that since the Saudi’s are receiving a lower price currently, that each additional $ of cost would be significant.

    • Frugal says:

      Why are they injecting CO2 when they have 268 billion barrels of claimed reserves? Or are most of these reserves based on a 70% recovery rate?

      • Doug Leighton says:

        I think the idea is to employ CO2 injection as an EOR tool and then combine this with CO2 sequestration (Carbon Capture/Storage). This is done in a few places and seems to be cost effective when the gas reservoir is close to a power generating plant. Actually, stripping CO2 from NG and injection into the Prudhoe Bay reservoir is a condition for eventually sending gas south. My impression is the Saudis have remarkably little NG and the gas they do have is mostly a long way from where they want it. But, I may be wrong.

        • The cost of capturing it seems to be out of reach but they generate plenty of co2 burning oil at power plants.

          If coal C and C can be made to work so can oil C and C. I personally think that efficiency and conservation are substantially lower hanging fruit.

          Now this next is pure speculation but if solar and wind powered water cracking ever works, we will have lots of hydrogen as well as lots of pure oxygen as well. Manufactured H2 is a good fuel , or expressed differently, a good energy carrier.

          Burning oil with pure oxygen would result in a near pure stream of CO2 which would not NEED separation before injection into an oil field.

          This speculation is very unlikely to likely to pan out – but it brings to mind the question of the value of a large scale relatively pure stream of O2.

          Would it have much value on the market?

          If it were available in large enough amounts it could be used to enormously enhance the efficiency of stationary internal combustion engines and fossil fuel fired fired boilers etc .

          If there is a good use for the ” waste ” heat produced by a stationary internal combustion engine is it possible that an IC engine can be used more efficiently than a gas turbine in some cases to generate electricity?

          I C engines up to a couple of thousand horsepower or more are not outrageously expensive if used at a high capacity factor. So – maybe an industry that could use the thrown off heat could afford to generate it’s own electricity cheaper than it could buy electricity from a utility where natural gas is readily available.

          Such an engine designed to burn pure O2 plus gas would be extremely efficient and produce a very hot exhaust stream compared to one designed to run on ambient air.

          District heating comes to mind as a possible use for such relatively low level heat six months or more out of the year in really cold climates.

      • Frugal may have come up with THE sixty four dollar question of the day.

        But it COULD be that IF the CO2 IS available at a low enough cost THEN it MIGHT be cheaper to produce oil from an existing developed but aged and tired field than it would be to just move to a new field and start drilling and laying pipe etc from scratch.

        Hopefully one of the hands on guys will have something to say about this possibility.

      • Frugal, they are piloting the process, and starting a CO2 daisy chain. CO2 injection swells the oil, reduces its viscosity, this makes it easier to sweep with water. But some of the injected CO2 stays behind dissolved in oil and water which are left behind.

        The “EOR oil” carries large quantities of CO2, which is separated and reinjected. As the initial pilot begins to deplete it’s possible to use the CO2 which comes out with the water and oil to inject in a different sector.

        Eventually the CO2 can be cycled into five-six sectors, each sector takes new CO2 plus recycled CO2. The Saudis realize they need to start the injection to have this daisy chain started.

  47. AlexS says:

    Fresh oil rig count from Baker Hughes:

    Oil and gas rigs: -2
    Gas rigs: -7
    Oil rigs: +5

    Oil rigs by key basins:
    Cana Woodford (SCOOP, STACK, Springer shale): +4
    Permian: +3 (+17 since June 26th)
    Williston: +1
    Utica:+1
    Eagle Ford: -1
    Nibrara: -1
    Granite Wash: -1
    “Others” (conventional): -1

    Horizontal rigs: +2
    Vertical: – 5

  48. Dean says:

    #EIA Petroleum Supply Monthly is out: US #oil production revised down
    http://www.eia.gov/dnav/pet/pet_crd_crpdn_adc_mbblpd_m.htm

    US #oil production down in May: Jan15 9309 kb/d Feb15 9432 Mar15 9693 Apr15 9691 May15 9511

    Texas data down in May (more of this later)

  49. Dean says:

    #EIA monthly #natgas (gross) production data for May 2015 out (and strongly down):

    http://www.eia.gov/petroleum/production/

    • AlexS says:

      The EIA just released new estimates for US C+C production.
      There are only minimal (mostly downward) revisions (-10kb/d for April).
      The report shows a 180 kb/d drop in May vs. April.
      However the new number for May is 48 kb/d higher than the estimate from the Monthly Energy Review released 3 days ago.

  50. AlexS says:

    There are small downward revisions for Texas.
    Production in Texas was 106kb/d lower in May vs. March

    • AlexS says:

      The revised numbers for May are lower than weekly estimates and than forecast from the July EIA short-term energy outlook

      • shallow sand says:

        AlexS, Again, thanks for the information.

        • AlexS says:

          shallow sand,

          thanks for updating on 2Q results

          • shallow sand says:

            AlexS. Interesting that much of drop from April to May was offshore GOM and Alaska.

            Also, will be interesting to see how remaining shale players report next week.

            If XOM, CVX, COP are all cash flow negative, would say going to be a tough one for those who are only operating in the lower 48 US.

            Looks like the US is going to be increasingly dependent on foreign oil, as demand continues to rise in the US, while production looks to be falling. Given the forecasts some of the US shale drillers are putting out, US production could be down by 10% or more one year from now.

            For example, Whiting is reporting BOE, but 90% is oil. They are looking to drop from 170K to 147K.

            • AlexS says:

              Shallow sand,

              WLL’s full-year production guidance is 59.2 – 59.8 mboe (mid-point 59.5 mnoe). 1H15 production was 30.5mboe, so 2H15 should be 29.0 (mid-point). Guidance for 3Q15 is 14.7 – 15.1 mboe (mid-point 14.9). Hence, 4Q15 mid-point is 14.1 mboe, or 153 kboe/d vs. 170 kboe/d in 2Q15. Given that they sold assets producing 8.3kboe/d in 2Q, that results in a decline in like-for-like production of about 9kboe/d between 2Q and 4Q. In relative terms, this is 5.5% – quite significant drop in two quarters.

              • shallow sand says:

                Hopefully not asking too much of you AlexS, but if US shale mimicked Whiting Petroleum’s forecast, what does 4 quarter production look like for US shale and US total, in your view?

              • AlexS says:

                We will see what other companies are guiding for.
                But, interestingly, the EIA in its July STEO is forecasting a 5.3% decline in U.S. C+C production, ex Alaska and GoM between 2Q and 4Q. ( from 7626 kb/d to 7220 kb/d), and 5.5% decline between June and December
                (7571 and 7152 kb/d, respectively).
                For the U.S. total production the EIA is projecting a decline of only 3.1% from 2Q to 4Q average (9651 and
                9352 kb/d). However they expect oil production in the GoM to increase by 6.9% and Alaska to remain flat in 4Q vs. 2Q. That could be too optimistic, as May production in the GoM was 120 kb/d lower than the EIA’s forecast, and Alaska 20 kb/d lower.
                Besides, the EIA’s July STEO assumes WTI prices in the $57-59/bbl range in the second half of the year, which may also prove too optimistic. If WTI averages $50 in 2H15, companies may further cut their capex.

      • Dean says:

        Thanks Alex for the plot and comparisons!

        Dean

  51. Watcher says:

    A lot of guidance would evolve like this in the budgeting meetings.

    “Okay, at $28 / barrel at the wellhead in NoDak, how much should we allocate to that field?”

    Silence. Then a quiet voice. “At $28, we shut down NoDak.”

    Eyes traverse to the 8 guys sitting at a corner of the desk and then away. Those 8 won’t be there if they shut down.

    One of them says, “Nowhere else stays operating at those levels, either.” Murmurs.

    Then a voice of pretended gravitas speaks up. “These are just unlikely speculations. We all agree we’re likely to see $48 at the wellhead the rest of this year, right?”

    Everyone agrees. Guidance is constructed around that number, with everyone feeling a bit confident because of the sophistication of the equations that generate output suggesting no one at that table will be looking for work any time soon.

    And that’s what will be released to the public.

    • Risto says:

      Yes, that’s how it goes until budgeting is done with bank/creditor oversight. With current prices that won’t take long before that happens. And then the budgeting will be made to optimize cash-flow not production.

    • shallow sand says:

      Problem. $48 doesn’t work either. Nor $68. $78 is getting there. $88 probably will.

      And not $48 to $88 and back to $48. $78-$98.

      I’m talking about a viable, successful business, not “break even”.

      • Watcher says:

        I was just talking about what keeps those guys in the corner employed. They just need a number to sell the lenders while promising to lay off grunts and buy them time at their salary and bonus. All they have to do is operate for that.

  52. ezrydermike says:

    Impacts of good practice policies on regional and global greenhouse gas emissions
    Authors:
    Hanna Fekete (NewClimate Institute), Mark Roelfsema (PBL), Niklas Höhne
    (NewClimate Institute), Michel den Elzen (PBL), Nicklas Forsell (IIASA), Sara
    Becerra (NewClimate Institute)
    July 2015

    “If current good practice policies that are currently implemented by example countries were scaled up
    and implemented by all countries, global emissions in 2020 and 2030 would decrease the growth in
    emissions close to the range necessary to hold temperature increase below 2°C. This requires fast
    implementation of policies, as well as complete geographical and broad sectoral coverage. All the
    parameters chosen for this analysis are based on analyses of policies that have already been
    implemented by several countries and have proven to be feasible, successful and effective.”

    “Good practice policies are climate- and energy policies that have been – or are being –
    implemented in specific countries and have resulted in significant deviation from business-as-usual
    emissions development in specific (sub-)sectors. These policies show it is technically and politically
    possible to implement such policies in one country. We translate this into global implementation to
    illustrate the impact of replicating very ambitious climate policies and try to learn how far it could
    bring the world to hold global warming below 2°C.
    Further, we give an indication of what these good practice policies mean for the decarbonisation of
    sectors. Note that, although we show results for six exemplary large emitting countries, the
    approach does not give a recipe for these specific countries on how to implement ambitious climate
    policies. It merely inspires to show the possibilities of some chosen standard measures. Actual
    implementation should consider local circumstances and criteria that go further than mere emission
    reduction. Based on these considerations, other measures might be more appropriate based on
    these considerations.”

    https://newclimateinstitute.files.wordpress.com/2015/07/task2c_goodpracticeanalysis_july_2015.pdf

  53. Dean says:

    The latest #EIA data for Texas #crude production together with my latest estimates up to May15:

    https://sites.google.com/site/deanfantazzini/nowcasting-texas-rrc-oil-and-gas-data-ongoing-project

    • AlexS says:

      Thanks, Dean

      You think the EIA numbers for Texas are still too high and will be revised down?

      • Dean says:

        It could be the case. Unfortunately, the variability in Texas RRC data has increased a lot in the last months (the confidence bounds are much larger now), so that I really need more monthly data to say something with strong confidence

    • AlexS says:

      Excerpt from an article in Oil & Gas Journal:

      “A week after jumping by its highest margin since April 2014, the overall US drilling rig count lost 2 units during the week ended July 31 to settle at 874, according to data from Baker Hughes Inc.
      Rigs targeting oil, however, continued their upward momentum, gaining 5 units. Since the week ended June 26, the oil-directed count has added 36 units.
      A primary indicator of rig count activity, 950 new well permits were issued last week in the US, representing a noticeable rise from the 806 issued during the previous week.
      In an energy update released earlier this week, however, Raymond James & Associates Inc. explained that it’s “hard to believe that this will translate into a large increase in activity” given the recent dip in oil prices.
      “This is more likely reflective of plans for increasing activity predicated on a $60[/bbl] oil price, seen just one month ago,” RJA said. “If prices continue to fall—or even stay flat—from where they are currently, we do not expect to see any meaningful pickup in activity. In fact, we could see further declines.”
      http://www.ogj.com/articles/2015/07/bhi-overall-us-rig-count-drops-slightly-but-oil-rigs-continue-rise.html

  54. Doug Leighton says:

    A REALITY CHECK FOR U.S. NATURAL GAS AMBITIONS

    http://oilprice.com/Energy/Natural-Gas/A-Reality-Check-For-US-Natural-Gas-Ambitions.html

    “For now at least, the U.S. is producing less natural gas because shale gas is stalled and conventional gas production is in terminal decline at 10% per year. The country is consuming more gas for electric power generation thanks to government regulations, and we are poised to export more gas outside the country both as LNG and as pipeline gas to Mexico.”

    • coffeeguyzz says:

      Mr. Leighton

      In a few hours, August 1, the REX pipeline will initiate the east to west flow of Appalachian gas. In short order, an additional 1.8 Bcfd gas will leave the Marcellus/Utica/Upper Devonian formations, giving the operators there a long-awaited boost in pricing for their product.
      In the next 6/12 months, additional takeaway is expected to exceed several Bcfd.

      There are currently less than 8,000 producing wells in PA, OH, and WV with approximately 3,000 already drilled and awaiting fracturing.
      The two most recently announced Utica monster wells – Consol’s 61 MMcf IP and EQT’s 72.9 MMcf IP – are so huge as to have, quite literally, changed the business paradigm for operators there.
      Despite EQT’s targeting the Upper Devonian formations (which Wrightstone Energy described as having over 30 trillion cubic feet recoverable), its’ Scotts Run production being 25MMcfd – 1 Bcf in 6 weeks’ time – has prompted it to completely phase out UD development in favor of the Utica.

      Mr. Leighton, anyone can see the near unfathomable quantities of natgas emanating from the Marcellus, the Utica, and the Upper Devonian formations by simply following ongoing developments.
      I do not know why Mr. Berman seems to think otherwise.

      • Heinrich Leopold says:

        coffeeguyzz,

        In the mining business there are always production cycles, no matter how much reserves are in the ground. The fact is that gas companies cannot make money at current prices, therefore they have to scale back production. The crashing stock prices for RRC, … are telling already a story of a huge fight for survival for these companies. It is exactly for the current monster well production that we get a temporary and local oversupply, which depresses prices and makes further investments unattractive which will reduce future supply. According to my research shale has made the production cycles more volatile – huge growth followed by sharp declines in the correction phase. This has nothing to do with the actual reserves in the ground, which might be big or not. A new pipeline does not change the overall picture as there will be not more production overall. Actually I expect a drop in production over the next two weeks as gas is needed to fill the pipeline. There may be an equalizing of prices in the next months ahead, yet this is very unlikely to stimulate new capacity as the real threat for gas companies is the low price for NGL and oil.

      • shallow sand says:

        coffee. I suggest you read the transcript of Range Resources second quarter conference call. The CEO reported gas production was falling in Marcellus, and reported that as a positive, not a negative.

        • coffeeguyzz says:

          Shallow/Mr. Leopold

          I agree, and have nearly always agreed, that the economic environment for E&P operators is precarious and rapidly approaching implosion phase for many.
          Absent a large, near-term price increase for their products, these guys are toast.
          My main interest focuses on operations, advances in processes and technology, as well as overall resource recovery potential.
          Mr. Berman or any other observer should be aware that the second largest gas formation on the planet (the Marcellus) is in the process of being surpassed by the larger, underlying Utica.
          All the while, the shallower, world-class Upper Devonian is being bypassed as it fares unfavorably to its bigger brothers.

          Economics will largely determine how and when these hydrocarbons will be extracted … but they sure are there.

          • Heinrich Leopold says:

            coffeeguyzz,

            Natural gas growth is for sure impressive in Marcellus and Utica. However my interest is how this impacts the short term production in the US. Marcellus and to some degree Utica are crowding out a lot of gas production in the rest of the US. In addition, it makes currently new capacity in Marcellus unprofitable. This creates volatility and imbalances. This is interesting why I think natural gas prices are one of the main factors for financial stability and investments.

        • AlexS says:

          Utica is still far from bypassing Marcellus

          Source for the chart below:
          Marcellus, Utica provide 85% of U.S. shale gas production growth since start of 2012
          EIA, July 28, 2015
          http://www.eia.gov/todayinenergy/detail.cfm?id=22252

        • Heinrich Leopold says:

          shallow sand,

          Range is a good example for what is going on in the Marcellus field. They started 2015 with 15 rigs, have currently 10 and will end the year with 6 rigs. Wells brought in line have been 120 in the first half and just 49 in the second half. The 49 wells include their famous inventory of uncompleted wells. Yes it could have been much worse without uncompleted wells, yet the total number is 60% lower. Also the much famed Spectra pipeline opening August 1 just transports 400 Mmcf gas of which Range sells 200Mmcf, which is not really a sea change for the total US market. Range has to cope with three times lower NGL prices and is even lucky as some producers have to pay to get rid of propane. At the end the most striking argument for me are shareholders who vote and argue with their money. And they are dumping Range merciless. So there must be something going on.

          • coffeeguyzz says:

            Mr. Leopold
            The Spectra line is different from the much larger Rocky Mountain Express (REX).

            Alex
            Along with others I thank you for your ongoing contributions to this site.
            The Utica is many years(decades?) away from challenging the Marcellus in output. The handful of wells targeting the ‘dry’ Utica have simply demonstrated that the gas is there, is recoverable, and exists in huge quantities. The fact that it underlies the Marcellus and is subject to being developed in tandem (same pads, roads, pipelines, etc) should bring the economics more in line to feasible development.

            • Heinrich Leopold says:

              coffeeguyzz,

              The REX E2W project started already in January this year with 570 mmcf/d and expanded over the year to 1.5bcf/d and increased capacity by an additional 300 mmcf/d in August 1. So the impact of the REX is even smaller than the Spectra pipeline. This explains also my point that the media overhypes the building of new pipelines which will change everything.

              • Toolpush says:

                Heinrich,

                You are correct, that the REX pipeline started transporting 600 MMcfpd earlier this year. I believe this was achieved by just not compressing gas in the easterly direction and allowing natural flow to the west. As of the 1 st Aug, several compressors are coming on line that will make the pipeline bi-directional, with 1.8bcfpd capacity.
                Currently there is not the feed capacity from the Marcellus for 1.8 bcfpd, but by Nov 2015, there will be 5.2 bcfpd capacity feeding the REX pipeline. It sounds like the 200MMcfpd feed capacity from Range is due to be available as soon as it can be used. Obviously if these feeder lines are full they will not all fit into the REX. That is why there are plans to expand the REX by another 800 bcf by installing more compressors next year. I believe there is also looping plans in the mix as well.
                As long as the gas is available, this westward expansion will eventually push north and lower/replace the gas supplies from Canada.
                In Range’s presentation, they stated, that this year there are capacity constraints. Next year, the market will be in balance, and 2017, there will be over capacity. What we need to watch is how far the price moves to get a reaction from the Marcellus/Utica gas companies and how they manage to meet the demand that has been created due to 3 years of cheap Nat gas prices.

                Though price rises are most likely, I still can’t see your $20 plus scenario for Henry Hub coming to pass?

                https://rbnenergy.com/big-deal-rex-to-open-the-floodgates-5-2-bcf-d-of-marcellus-utica-natural-gas-receipt-capacity

                http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NTg4NDY1fENoaWxkSUQ9Mjk2ODgxfFR5cGU9MQ==&t=1
                Page 41

                • Heinrich Leopold says:

                  Toolpush,

                  Thanks for your reply and information. As I get here a lot of insight, I appreciate very much having the opportunity to participate in these discussions.

                  I had many discussions here about the oil price and I have been warning people who believed there will be a V shaped oil price recovery . Oil will only go up if the US dollar will be allowed to fall either through much lower oil production which increases the US current account or through monetary action (Q4). So far I have been vindicated on this claim.

                  The second claim about much higher natgas is based on my exprience in the commodity business: low prices are a harbiger of future high prices and low supply. Of course it is a question of timing. However I can see this from production growth rates and production cycles. Shale has significantly changed production and growth cycles in the US. There have been three growth and two decline cycles in the last decade with increasing shale share in the US. The down cycle in 2008/2009 has been quite mild as the shale share has been quite low, yet the decline in 2013/2014 has been already ferocious. As the declines got increasingly sharper, the numbers tell me that the 2015/2016 decline cycle gets really horrible. I look here just at the big numbers and at no detailed project and the big numbers never lie and cannot be manipulated as well. I do not think that new pipelines will add very much capacity. In the contrary, it will crowd out the rest of US production even faster. Who invests outside of Marcellus/Utica? So many producers already anticipate low cost supply from Marcellus and go out of natgas at all. BHP is one example, which has got rid of any natgas rig. And also from the Baker Hughes rig count you can see that companies go out of gas rather than oil. And there is also the widespread opinion that there is plenty of new supply and reserves from Marcellus and Utica based on the production of monster wells. However, it is also important to understand how reserves are calculated from and oil and gas wells: in many cases initial production is just discounted over an assumed time period based on experience. Due to the high depth of many monster wells, the initial pressure and production is very fast, yet declines are also much faster than for shallow and conventional wells. This leads to serious miscalculations about the reserves of Utica and Marcellus. As this is so far just an assumption, I can see this also from the financial numbers of Range Resources, which has in its latest financial report depletion rates close to revenue. This can only mean that they have much higher depletion rates than anticipated.

                  • Toolpush says:

                    Heinrich,

                    I must say I look forward to your V shape recover in the oil price, I am sure shallow and Mike would as well, but the only way I imagine this happening, is a total capitulation by the shale industry. This may happen in the short term, but it will require the banks to play their part, as in taking better care of their own money and bankruptcies of the shale oil plays being wide spread.

                    The same scenario, could happen in the nat gas area, but as the Nat gas market is more closed than the oil market, reactions will be much faster. I assume you see the same, with your $20 price of gas. Maybe I have more faith in the players in the Nat gas to move quickly than you. Time will tell.

              • coffeeguyzz says:

                Mr. Leopold

                I was surprised at the info in your post and would suggest you recheck the accuracy. (I would appreciate the sources, also).
                In June (18th) 2014, the EIA posted that .25bcf of gas entered REX through the Seneca Lateral … the gas originating at the Seneca processing plant.
                In early March of this year, an additional .35bcf was inputted (?) bringing the Seneca Lateral up to its rated 600MMcf capacity.
                What occurred today, August 1, was the reversal of the section of pipe between Clarington Ohio and Moultrie, IL, allowing an additional 1.2 Bcf to flow west. The existing flow from the Seneca Lateral of 600mmcf brings the total flow to 1.8 billion cubic feet of gas. (By this time next year an additional 700MMcf is expected to be added).
                As this information has been discussed at length for months on various gas related sites, I would be glad to be corrected if this info is erroneous.

                • Heinrich Leopold says:

                  coffeeguyzz,

                  Here is my source of information. It is crystal clear that just 400 mmcf/d of supply is redirected to the west on August 1:

                  bentekenergy.com

                  ……REX will commence full service of its East-to-West project Aug. 1. The project has advanced in several stages, increasing from 570 MMcf/d in January to 1.5 Bcf/d currently. The full in-service start will increase capacity by another 265 MMcf/d, bringing total capacity to the project’s design 1.8 Bcf/d. Westbound receipts onto REX have averaged above operational capacity at the listed meters. Of the four active receipt meters, only Eureka Hunter has gone under-utilized; an average of 252 MMcf/d was delivered onto REX in July, leaving upside potential for 148 MMcf/d of production to fill the 400 MMcf/d of operational capacity. Westbound flows will be able to reach the Midcon via NGPL, ANR and PEPL. Also on Aug. 1, TETCO’s Uniontown to Gas City project will commence partial service on its mainline portion, which will bring online 244 MMcf/d of the project’s 425 MMcf/d design capacity aimed at the Midwest. The two projects may provide uplift to production by 400 MMcf/d as they enter service……..

                  As Toolpush has indicated there is probably more in the fall, yet this is not new supply it is just redirected supply which will put even more pressure on the rest of US to reduce capacity.

                  • Toolpush says:

                    Heinrich,

                    To be honest, I was very surprised, to say the least, when you stated that the REX Zone 3 was carrying up to 1.4bcfpd during July.

                    I found this article backing up your statement.
                    http://www.naturalgasintel.com/articles/103127-westbound-rex-brings-new-gas-frontier-to-midwest-beyond

                    The point I find strange is the author, writes about the “flood” of Nat gas after Aug 1st.
                    The flood of natural gas that will exit Appalachia for the Midwest when Rockies Express Pipeline (REX) brings online new reverse capacity in its easternmost segment (Zone 3) is expected to rearrange markets around much of the continental pipeline network.
                    That shakeup will begin Aug. 1 when REX starts up its East-to-West expansion to add 1.2 Bcf/d of incremental westbound capacity from its easternmost point in Clarington, OH, to Moultrie, IL.

                    Yet continues to quote your figures later in the piece.
                    REX has already been moving some gas westward in Zone 3 since last year when the Seneca Lateral entered service (see Daily GPI, June 18, 2014), providing about 600 MMcf/d of capacity to serve MarkWest’s Seneca gas processing plant. More recently, the pipeline has been moving an incremental 400 MMcf/d for the past four months, and in recent weeks it has been moving upwards of 1.3 Bcf/d westward with the Seneca Lateral and incremental capacity combined, Sheehy told NGI

                    I can only imagine that there has been excess gas supplied to REX receipt points, and a corresponding ready market at the delivery point, that things have operated at way above capacity, and after the reversal of the compressors,things will continue in the same manner. Other wise, as you say, what is the big deal.

                    No doubt in a few weeks when the numbers come out, we will be able to see the true effect, and we will all be a bit wiser.

                  • coffeeguyzz says:

                    Mr. Leopold

                    I thank you for the reply and the information contained therein. As you say, a few extra hundreds of million of cubic feet is not a particularly large amount. The amount that REX has already been transporting is far higher than I had been aware of from any source that has been reporting on it.
                    Curious about all the hoopla …
                    Just to be clear, the natgas emanating from the Appalachia Basin will NOT increase overall USA production, as you have noted. It will, in the near term, displace the higher cost sources. which, in fact, is already happening.
                    The construction of any of the three to five ethane crackers which are on the drawing boards could give the Utica/Marcellus operators some financial breathing room, but I do not see much reason to question an over abundance of supply of gas for the foreseeable future.

                  • Toolpush says:

                    Another flood of gas, but not just yet the article goes onto say. It will be interesting to see if, with the compressors running, if the pipeline is able to operate at the same over design capacity, the it has maintained over the last few months.

                    https://rbnenergy.com/waiting-for-a-rex-like-you-full-scale-reversal-opens-marcellus-utica-natural-gas-floodgates-to-the-west

                    Waiting For A REX Like You – Full Scale Reversal Opens Marcellus/Utica Natural Gas Floodgates To The West

        • AlexS says:

          Combined Marcellus+Utica are now the world’s #3 natural gas producer after the U.S. and Russia

          Production in bcf/d, monthly for Marcellus and Utica, annual averages for the countries.
          Sources: EIA Drilling Productivity report July 2015; BP Statistical Review of World Energy 2015

          • Jeffrey J. Brown says:

            Assuming about a 24%/year rate of decline in existing US dry gas production–a volumetric decline of about 18 BCF/day per year–the estimated annual year over year decline from existing US production exceeds the dry gas production from every country in the world except for the US and Russia.

            • AlexS says:

              Jeffrey,

              24% annual decline rate is for shale gas or entire U.S. production?

              • Jeffrey J. Brown says:

                EIA puts US dry gas production in December, 2014 at 75 BCF/day.

                24%/year X 75 BCF/day = 18 BCF/day per year

                Of course the volumetric rate of decline from existing 2014 wells would decline with time, but this is a plausible estimate for how much new gas production we need per year in order to maintain current gas production, i.e., we have to put on line, every year, more new gas production than any other country’s annual gas production, except for the US & Russia.

                As I have frequently pointed out, the exponential net rate of decline in Louisiana’s marketed gas production from 2012 to 2014 was 20%/year (this was net decline, after new wells were put on line).

                • AlexS says:

                  what are annual decline rates for U.S. shale gas and conventional production?

          • AlexS says:

            U.S. Dry Natural Gas Production excl. Marcellus, Utica and Eagle Ford (bcf/d)
            Source: EIA

      • I bet those wells are completed with 3 1/2 inch tubing. Or possibly smaller. They aren’t really “monster wells” if they only recover a few bcf.

        • coffeeguyzz says:

          Fernando

          I have not been able to get much technical operational details about these wells, but I believe the tubing is 5″.
          The one billion Bcf from EQT’s well would be from a projected first six weeks at 25MMcfd. For comparison sake, Rice’s Bigfoot 9H well – one of the early Utica monsters – has produced over 5 Bcf its first full year.
          While these numbers pale when compared to offshore production, putting a half dozen or more on the same 5 acre pad starts to add up to serious output.

          • Coffee, putting 5 inch in a well like that sure sounds kinda dumb. 3 1/2 inch will allow 25 mmcfd, and the way those wells decline it just doesn’t make much sense to put in that size tubing. Later in life, when they loose pressure they’ll yield a very low string velocity and start loading up with liquid, slug like hell, and cause all sorts of problems.

            About 9 years ago I had to audit an offshore operator putting in 7 inch tubing to flow wells at 200 mmcfd. It was the dumbest design I ever saw, they had to put in huge Xmas trees, 8 inch flow lines, and the manifold was 30 inches, which turned it into a huge safety hazard. You see, the individual well reserves didn’t allow the 200 mmcfd flow to last longer than 6 to 12 months, this implied the wells were hellishly over designed. I think in many cases the engineers forget to design for full cycle economics and putting in the steel that’s going to stretch well life and reserves. It’s a common flaw.

            • Doug Leighton says:

              Sort of like the Trans Alaska Pipeline (TAP), designed to move two million barrels of oil a day but, with a steady decline in production, it now moves less than 500,000 barrels a day – with great difficulty.

            • Jeffrey J. Brown says:

              I remember a midstream guy saying one time that there is basically always a mismatch between pipeline infrastructure and unconventional gas production–there is almost always too little pipeline infrastructure, or too much.

              • coffeeguyzz says:

                Fernando

                Everything you just mentioned is, apparently, of utmost importance to the engineers designing these wells.
                I exchanged info with Push about a year ago regarding Range’s 59MMcf IP well – the Sportsman 11H. I cannot track down the particulars, but, IIRC, that was a 11,700′ deep well, flowing 8,600 psi through 5″ tubing. That well has produced 1.6bcf in 4 months, but there has been a dramatic month by month dropoff in output (18mm/16mm/15mm/10mm).
                The SPE folks have a bunch of papers saying deep, high pressure shale gas wells will decline rapidly as the overburden ‘weight’ forces the closure of the pore throats as the pressure declines. The Sportsman’s brief history validates this.
                This may call into question the viability of deeper Haynesville and Utica development.
                In sharp contrast, the shallower Rice wells – Bigfoot and the two Blue Thunder wells – (9,500′) are flowing on restricted chokes at 16/20 MMcfd for several (12+ months).

                This most recent EQT well had a flowing casing pressure of 9,565 psi at a depth of over 13,500′.
                There will be a great deal planning concerning the development of this formation. (Hundred of miles to the northeast, Shell is quietly drilling/developing numerous Utica wells that are flowing a steady 10 MMcfd).
                Interesting times.

                • Toolpush says:

                  Coffee,

                  For theses high pressure wells, we may see another round of R&D into extra hard proponent.
                  As for tubing sizes, I agree with Fernando. No use designing for massive peak flows with all the extra costs involved, and have them die early. I realize early pay out of the wells are desired, but if the shale industry has any chance of survival past infancy, then it will be the so called long tail production that will give the industry it place in history.
                  If they allow the wells to give a quick fart and collapse, then the Jeff Brown’s scenario, may well come to pass. If the wells can be kept alive for the time frames the shale companies advertise, then it seems production can plateau, with relatively few (for the shale industry) rigs working to maintain it. As an example Haynesville, has steadied production with 20- 40 rigs working after there 2012 peak.

              • Doug Leighton says:

                coffeeguyzz

                “….high pressure shale gas wells will decline rapidly as the overburden ‘weight’ forces the closure of the pore throats as the pressure declines.”

                How could it be otherwise? Besides, and I expect you know this, geostatic gradient is the rate of change of pressure with depth. A gradient of one psi/ft results from a typical average density of say 2.3 g/cm3. Naturally geostatic gradients vary with depth and location and the gradient increases with depth for two reasons: Rock density increases owing to increasing compaction and formation water density increases because the dissolved solids in the water generally increases with depth. So, for example (which I just looked up) in the Cenozoic of Louisiana, the gradient is 0.85 psi/ft at 1000 ft and 0.95 psi/ft at 14,000 ft.

                • coffeeguyzz says:

                  Push, Mr. Leighton

                  Yes it’s absolutely fascinating to me all the moving parts in this ongoing ‘shale revolution’ … the economic, social, political impact that continues to reverberate.

                  The R&D boys will be working overtime on how to effectively stave off the closing of the pores at these depths. As this EQT well had a lateral only 3,200′ long, the potential payout could be enormous if the operational and geological hurdles can be overcome. The aereal extent and thickness of the Utica far exceeds the Marcellus.

                  Don’t know if you gentleman checked out what may be some highly significant developments in ‘shaledom’ regarding enhanced production in offset wells after a well is frac’d. This ‘halo effect’ was briefly discussed on this site awhile back.
                  Mike Filloon wrote about it in a July 27th piece on Seeking Alpha. (Filloon and Enno got into an enlightening, spirited back and forth in the comment section).
                  If, in fact, closely spaced wells can INCREASE output when a well is fractured – as is demonstrably occurring – a whole new view of things may be in order.

  55. wiseindian says:

    UAE got rid of petrol subsidy
    http://gulfnews.com/news/uae/environment/huge-rush-at-petrol-stations-in-uae-1.1559107

    Diesel and Petrol are at parity now

    • Watcher says:

      The price is low enough that there is no populace reaction risk in this.

      If the price rises, the subsidy will be reinstated. No reason it would not be. It’s their oil. Why should their people pay a price defined outside the borders?

      • Common sense might have a little to do with it.

        People should not think a liter of gasoline is of the same value as say one orange when the true exchange value is say six oranges.

        This erroneous impression of the value of gasoline will lead to the over consumption of gasoline and lower consumption of oranges.It means less of everything else good that can be imported into the country with the revenues earned by exporting gasoline.

        Keeping gasoline cheap IS a good way to keep the poorer classes of people happy and ignorant when it comes to understanding just exactly who collects the fifty million bucks or more earned on a million barrels of exported oil , day after day , week after week, year after year.

        • Nick G says:

          Keeping gasoline cheap IS a good way to keep the poorer classes of people happy

          It’s true.

          But, a better way is to just give the subsidy to the minority of the population that needs it – most current subsidies go to the middle class and wealthy, who are much more like to have cars and use them. Hand out a ration card, or setup deep discounts with the major credit card companies, with a modest screening process for income.

          • Caelan MacIntyre says:

            Special subsidies, discounts, ration cards and screening processes…
            Sounds like adding layers of bureaucratic complexity to an already increasingly complex system. Any problems with that (I mean, besides my usual gripes)? If so, well, I guess yet more layers can be added on top to deal with those. And so on…

            • R2D2 says:

              Not any more complex than the computer you voice your opinion with every day and that doesn’t seem to stop you

              • Caelan MacIntyre (but more like C3P0 when online) says:

                Increasingly complex as a whole of which computing is an aspect– which may be among the first to succumb, thus stop (and yet free) not just me, but you as well. I am inclined to welcome that time… (less stiff, isolated…) You’ll feel better when you can get out of your can too.

                “…The map is a simulacrum that, as a model, loses all reference to reality… reality exists only as rotting shreds that are attached to the map, and this is the state of our age according to Baudrillard; that the model, itself, has primacy for us; the real has become irrelevant…” ~ Frances Flannery-Dailey

                Nothing Is Real

                • C3Po says:

                  Correction, you don’t have your own opinions, but you still need a complex computer to cut and paste.

                  • Caelan MacIntyre (The Program) says:

                    If I don’t have my own opinions (or moniker for that matter), then no one does. ‘u^

        • MarbleZeppelin says:

          Maybe, unlike other countries, they know that the oil is the people’s inheritance and do not think of them as just consumer victims to be overcharged for their own resources.

          • Nick G says:

            I like to maximize my inheritance. Why underprice it, and throw it away on enormous, single-occupancy SUVs?

            • Caelan MacIntyre says:

              Ok, ‘overprice’ it and see what happens. (Do we already know?)

              Incidentally, do more layers of bureaucracy/complexity add to the energy-requirements of the system? Make it run hotter?

  56. I forget if I mentioned that a BP oil tanker captain refused to load in Eastern Venezuela due to the poor and unsafe conditions at the loading berth. I hear they were loading a 17 API blend. This tells me PDVSA is blending crude as heavy as possible to save on the crude they import to use as diluent. And this also limits the load to the USA Gulf of Mexico.

    Meanwhile the Obama administration keeps trying to hinder 18 to 19 degree API Canadian oil access to the same market. Curious, isn’t it? They block the slightly lighter Canadian blend and favor the heavier Venezuela blend coming in by tanker.

    • CouchPotato says:

      Ya, that commie Obama. Next thing you know, he will want to open up relations with Cuba. Got to go, Hannity back on the tube.

    • Hi Fernando,

      Recalling what Rockman used to say may throw a little light on this situation. Internal industry politics – meaning the American refining industry- favor using Venezuelan crude because it is cheaper, as best I can remember. Keeping the Keystone pipeline bottled up also meant higher prices for local light sweet production in the Gulf Coast area because it put a major damper on the North Dakotan tight oil industry.

      American politicians are pretty devious when it comes to cutting deals to favor local businesses and scratch each others backs to make these deals possible.

      I am in total agreement with you about the apparent political hypocrisy.

      If we really were the cops of the world we would go to Venezuela and kick some ass and free the people of the Maduro regime. But while we could get rid of him and his commie cronies, as we did Saddam Hussein etc in other places, we lack any means of putting a decent government in place, excepting one and one only.

      That means is to colonize the place the way the English did India and the former US colonies long enough for the rule of law to become the rule.Colonialism did not last long enough in Africa for this to happen. It did not last long enough under a civil enough empire for rule of law to thoroughly take root in most parts of Central and South America.

      Historically painting with the broad brush the rule of law has not meant much in Spain or in Spanish colonies. Corruption has always been the primary rule.

      To the best of my knowledge Spain now has government that is reasonably ethical and honest, maybe not up to Western European standards but respectable at least.

      The default position for the USA has morphed into imposing as much misery as possible on countries we do not approve of thru sanctions. This may or may not have the effect of driving the people running such countries out of power.

      It has not worked in the case of the Castro regime.

      If I were the president and thought I could get away with it I would organize an invasion and occupation of the country and set your people free. Whether they are prepared to handle freedom IMMEDIATELY after living in a brutal police state for generations and a really corrupt government previous to that is doubtful, in my mind at least.

      WHO in your opinion will wind up in power when the Castro regime finally falls?

      The Russians are substantially better off than they used to be. Hopefully the Cubans will be too.

      • Mac, the Venezuelan crude isn’t cheaper. Let me explain how this works: when a producer like PDVSA projects it will have a tanker load available in the future it sends notices to prospective buyers. The notes describe the type of oil in detail. The refiner purchasing agents pass it on to the refinery planning department. The planning department runs something called linear programs and establishes how that particular load could fit in their future runs. This in turn sets the bid price. Purchasing bids for the load. The seller PDVSA picks the buyer with the best offer. And the deal is closed.

        If the Keystone XL pipeline is built the Canadians will start offering a similar blend and the refiners will see competition between Canadian and Venezuelan crude. And because the Canadian will already be onshore it will displace a lot if not most of the Venezuelan crude.

        The Obama administration ought to have a handle on this issue, there are consultants who can run models to show the pipeline impact. By the way, I’m very familiar with this issue because I used to work in Venezuela, and our models showed the keystone XL was a potential threat to our marketing ability and price realization. Our partner or sister companies operating in Canada saw it as a means to displace the Venezuelan heavy.

        I realize this is a very complex dynamic, but as I say, I expect that turkey in the White House to have been briefed about it.

  57. Caelan MacIntyre says:

    If understood correctly, if money represents energy, or emergy, then it would seem that, in a world post-peak oil, the relative price of that commodity may never go beyond certain previous high levels and/or at their previous frequencies ever again, at least until it becomes more of a normal commodity and/or the economic machine transfers to more of an equilibrium with its surroundings.

    “…when two or more different energy sources drive a system they cannot be added without first converting them to a common measure that accounts for their differences in energy quality. [here, also consider the energy quality of renewables and unconventional oils, for examples] This led him to introduce the concept of ‘energy of one kind’ as a common denominator with the name ‘energy cost’. He then expanded the analysis to model food production in the 1960s, and in the 1970s to fossil fuels.

    Odum’s first formal statement of what would later be termed emergy was in 1973:

    Energy is measured by calories, btu’s, kilowatthours, and other intraconvertable units, but energy has a scale of quality which is not indicated by these measures. The ability to do work for man depends on the energy quality and quantity and this is measurable by the amount of energy of a lower quality grade required to develop the higher grade. The scale of energy goes from dilute sunlight up to plant matter, to coal, from coal to oil…

    Emergy per unit money — the emergy supporting the generation of one unit of economic product (expressed as currency). It is used to convert money payments into emergy units. Since money is paid to people for their services and not to the environment, the contribution to a process represented by monetary payments is the emergy that people purchase with the money. The amount of resources that money buys depends on the amount of emergy supporting the economy and the amount of money circulating. An average emergy/money ratio in solar emjoules/$ can be calculated by dividing the total emergy use of a state or nation by its gross economic product.” ~ Wikipedia

  58. MarbleZeppelin says:
  59. Jeffrey J. Brown says:

    ‘This is a global migration crisis’
    Home Secretary Theresa May and her French counterpart, Bernard Cazeneuve, call on countries across Europe and Africa to help solve the emergency caused by thousands of migrants congregating at their border

    http://www.telegraph.co.uk/news/politics/11778497/This-is-a-global-migration-crisis.html

    • Toolpush says:

      Jeff,

      It certainly is a global migration crisis. But as long as people can fly from their “poor” country, to a second country, hop on a boat or jump a fence to a “rich” country, “loose” their passport, and then be accepted as an asylum seeker/refugee, it will never end.

      All these migrants have bought their way out of their “poor” counties. They are not the poor ones of the the poor counties!

    • The emergency is caused by eu policy. If they let them in more will come. It’s an exponential growth issue. What they need to do is send them back. Use troop transport type ships and drop them off back where they started.

      • Toolpush says:

        Fernando,

        First they have to work out what country they are suppose to come from. From the Telegraph link.

        Advice sheets for migrants on how to improve their chances of claiming asylum in the UK are widely available in the camp at Calais. The documents warn them that British Home Office officials are “not your friends” and “will try to refuse your claim and remove you” unless convinced otherwise.
        They also include the questions that British officials use to identify bogus applicants, such as the denominations of the currency in the country they claim to have come from. “Prepare for the interview and know your story well,” one leaflet advises.

        • Tool push, I’ve been rolling around in the refugee game for 50 years (i was in a un refugee camp for minors fleeing communism when I was 14).

          They will be checked for knowledge, the clothes they wear, tattoos, tooth fillings, scars, and what they eat. In the end it’s fairly easy to catch them because they are amateurs. Since some of them are likely to be terrorist sleepers I wouldn’t let ANY to come in. It’s too dangerous. In Venezuela they had a designation for somebody with the stupid behavior we see in Europeans: güevones.

      • Ron Short says:

        Fernando, correct me if I am wrong, but I thought you have told us on here that you were a refugee from Cuba? Does this mean you believe the US should have sent you back?

        • Jimmy says:

          It’s still not too late to send him back.

          • On the other hand I’m a bonafide political case. I’ve done so much to get under the commies’ skin they’ll have me executed.

            This is one reason why I was so keen in joining the USA armed forces when I was young. I wanted to off them by the bushel. And I would have worn their ears mounted on a necklace with lots of pride. Living in a communist dictatorship really teaches one to hate their guts. It messes up your head. But relax, I’m now completely sane.

        • Ron, i spent months waiting around to pass background checks. Eventually they felt I was fine, they sent me to pass a physical. I had my documents (a Cuban passport the dictatorship had cut up and stamped “cancelled”, my vaccine yellow card, my school grades, etc). They sent me to live with a family in the ny suburbs, and I did fine.

          Would I send a 14 year old economic job seeking illegal immigrant? It depends on the kid. Would I send back a 25 year old I know is flooding in looking for work when unemployment is so high? Of course I’ll send him back. I wouldn’t blink. Accepting them just encourages more to depart. The result is exponential growth in a massive flood of illegal uncontrolled aliens. To support accepting them is incredibly stupid as far as I’m concerned.

          • Ron Short says:

            Ok, in your eyes you were a deserving entitled refugee, these new guys are not.

            In the end your available choice of residencies depends on your wealth. If you have enough money you can pretty much choose where you wish to live.

            I have to assume that a US citizen resident in Spain has all the paperwork in order.

            If the commies ever take over in Spain you could move to London. The cost of property is high, because Russian gangsters and others can pay cash, but at least they are “legal”.

            In reality, what London needs is not more millionaires pushing up the cost of living, but more employees willing to work for minimum wage.

            http://www.mirror.co.uk/news/uk-news/not-migrant-hordes–people-6165167
            ” There are about 5,000 stateless people in Calais
, and 64.1million people in the UK. That means if we let in every single person who’d currently like us to, the population would explode by 0.000078%.
 That’s not a flood. It’s barely a drip. 



            Total UK welfare spending is expected to be £217billion this year, 29% of our overall budget. It includes benefits, tax credits, and pensions.


            That works out to £3,385 per head of current population, or £7,406 per taxpayer.


            If we let in those 5,000 extra people, and we assume they get benefits and pay taxes at the same rates as everyone else, we’d turn a profit. They’d cost us about £17m, but make us at the current rate of GDP £100m extra.
            Even if they didn’t work, that £17m divided by all the taxpayers is an extra 57p each.


            That’s not a drain on resources. And when you consider that over their lifetimes those immigrants are more likely than those born here to work harder for longer while taking less out of the system, it might even turn into a plus.

”

            • Fred Magyar says:

              There was a study done a few years ago on the relative value to society provided by low paid workers such as hospital cleaners (who tend to be immigrants) vs highly paid bankers and lawyers etc…

              http://news.bbc.co.uk/2/hi/8410489.stm

              Hospital cleaners are worth more to society than bankers, a study suggests.
              The research, carried out by think tank the New Economics Foundation, says hospital cleaners create £10 of value for every £1 they are paid.
              It claims bankers are a drain on the country because of the damage they caused to the global economy.
              They reportedly destroy £7 of value for every £1 they earn. Meanwhile, senior advertising executives are said to “create stress”.
              The study says they are responsible for campaigns which create dissatisfaction and misery, and encourage over-consumption.

              So you would think that someone who has supposedly benefited by having been allowed to emigrate from Cuba to the west would have a more nuanced view of how immigrants actually benefit the societies into which they eventually become integrated.

              BTW, case in point, I had the opportunity to get to know some of the hardest working people you could ever wish to meet over the last few years in South Florida. They all worked for very little money and practically zero benefits. Most of them were illegal Mexican and other latin Americans… I happen to know first hand the value they provide to local economy and community.

            • If Europeans allow in 5000 then 20,000 go on the move, 5000 die on the way, 15,000 arrive. If 15,000 arrive, the word goes out, and the next year 80,000 go on the move, 20,000 die, and 60,000 make it and are allowed to stay. This in turn causes 250,000 to go on the move, 50,000 die, and 200,000 arrive and stay. I believe right now there must be several hundred thousand on the way. Africa has a high birth rate and they’ll be invading by the millions in a couple of years. And that, as far as I can tell, will make sure the French Socialists, and every political party which backs this absolutely idiotic anarchy we see, loose BIG TIME. Europeans tend to be pansies when it comes to illegal and completely out of control immigration like we are seeing. But it’s just a matter of time until we see either a terrorist attack or a series of murders and hold ups, and they’ll embrace their medieval inner soul.

              Spain has several hundred thousand foreign residents from the USA and other European nations, and I got a pretty good sense of the way people think about it. They tolerate us, but they will turn on a dime.

              I’m used to rolling around, quite a few left wing types always insult and despise me because I wouldn’t put up with their darling Fidel,

              http://translatingcuba.com/angel-santiesteban-most-of-our-people-pretend/

              some right wing types don’t like me because I’m not lily white. But I do fine. If the commies take over, which I sincerely doubt. I’ll take off, like most foreign investors and residents. And the economy will dive and go to hell, like it always does when commies take over. They are like cancer.

      • Jimmy says:

        Sending them back won’t stop them from coming again and again. They will keep coming. Eventually they will fight their way in. It’s not hard to see. This is collapse. This is how it proceeds.

        • If they try to fight their way in I got a feeling these Europeans will stop being such pansies and start shooting for real. I guess I could get the kids in our electronics club to build sensors and automated guns we can use to stop them before they reach the beach. Modern warfare is going to be fought with sensors, remotes, and robotics, and these kids I mentor are real wizards at the first person shooters.

          • Ron Short says:

            Shoot the refugees.
            This chimes very well with the nonsense that has been appearing on this thread.
            I would recommend that it is deleted as soon as possible.

            • Caelan MacIntyre says:

              Fernando’s likely being sarcastic, and it seems to work quite well as a side-dish to the recent comic from the kid who seems to want attention, whether of the good kind of bad, it doesn’t matter. Right, kiddo? Now here I go with the kids, shame on me…

              How about a ‘white neanderthal’ comic now? For the ones in Africa. What is it? 3% of the genes? 99% chimp-shared?

              You don’t have to be only Jewish to salivate over counting money, do you? It’s built into the system. It’s system-creep. And you’ll notice that the comic-chimp’s skin-tone is somewhat lighter and chimps don’t have thick lips either, do they? Oh-oh. Back to the ol’ drawing board. I have a good mirror if you need it.

            • If they start invading they won’t be “refugees”. About 80 to 90 % of the ones we got here are from West Africa, mostly Senegal and the likes. They hang around the beach, sell trinkets. Some are male prostitutes. Last year they ganged up on a couple of cops who told the peddlers they had to move on, because they block the sidewalks.

              Our friend “Jimmy” wrote “they’ll fight their way in”. And my response was simply that I expect there will be shooting back if they start trying to fight their way in. I’m really amazed to see how patient the border agents are here. Today I saw a scene on TV, dozens of Arabs and Africans trying to force their way into Melilla. They three stones, and the Spanish border guards just sat there dodging. Apparently Brussels thinks the idea is to let them get violent and then let them in. Eventually this will lead to UKIP and similar parties doing extremely well. And this will cause a split. The socialist types will whine and complain, say it’s just an excellent idea to allow uncontrolled entry. The other parties will harden their stance. I suspect that five years from now the attitude towards these illegals will be a lot tougher.

              • Nick G says:

                If anyone really cares about helping these immigrants, they’ll do something serious about helping their mother country.

                No one wants to leave if they can help it.

                • Caelan MacIntyre says:

                  They’ll get rid of all their so-called leaders and dissolve these asinine borders. Mother country? How quaint. Africa got carved up into states like everywhere else.

                  The ‘pressure-cooker’ state is a construct that’s fundamentally alien to the human. When its structural violence and constraints start to shake, quake and break apart, then other, older forms will manifest in the implosion until things shake out and a new equilibrium and simpler world comes about.

                  But, yes, no one, or at least not as many, want to leave if they can help it.

          • Jimmy says:

            A quick look at population and demographics clearly shows which population has the most individuals of ‘fighting age’. It will be a war of attrition. Technology will be quickly overwhelmed. I won’t bet betting on Europe when the unregulated mass migration crisis turns into a wider fight for survival. “Hard countries breed hard men”. So do hard times. This is how collapse proceeds. Throughout history unregulated mass migration has been a key feature of collapse. I’d also like to add that once the migration crisis sees the eurotunnel closed/sealed UK will then be having a bit of a harder time moving food onto the Island. But hey, I’m a hard-crash collapser. I’m not happy about it. Just calling it as I see it.

            • Technology isn’t overwhelmed in modern conflicts such as you propose. Europe won’t be invaded. It may, however, be betrayed by Europeans who open the gates. Time will tell.

              • Jimmy says:

                Europe is already being invaded. There are two elements to war. Men and equipment. Technology falls under equipment. Men, to wit the number of them and their level of motivation, is the deciding factor. Not technology.

  60. Here’s a link to a professional review of Arctic ice conditions in late July

    http://vencoreweather.com/2015/07/28/1030-am-arctic-sea-ice-showing-great-resiliency/

    Vencore is a government contractor

    ” About Vencore
    Vencore is a proven information solutions, engineering and analytics company that helps our customers across Government solve their most complex challenges. For more than 40 years, we have designed, developed and delivered mission-critical solutions as our customers’ trusted partner. Our innovations in cyber security, data analysis and technology, and our focus on research, ensure Vencore remains ahead of the ever-changing demands in the market.

    Vencore has 4,800 employees and is based in Chantilly, VA. As a remote-sensing industry leader, Vencore has provided systems engineering solutions for state-of-the-art sensor technology and end-to-end imagery analysis and has been heavily involved with weather-related activities throughout its history. Vencore has provided daily, nationwide weather forecasts to emergency operations centers and worked with the U.S. Air Force Weather Agency on requirements for remote sensing and the verification of weather products. Vencore has also played a key role in the Air Force Research Laboratory’s efforts to improve its atmospheric model called MODTRAN. Vencore has supported multiple worldwide ground truth data collects with customized weather forecasts and developed requirements and design for civilian and military weather satellites, including NPOESS, DMSP, Landsat and GOES. In addition to the Air Force, Vencore has worked closely with a number of government agencies on weather-related projects, including NASA, NOAA, Naval Meteorological and Oceanographic Command, Naval Postgraduate School and the Intelligence Community.”

    • Ron Short says:

      Arctic sea ice in an upward trend since (cherry picked) 2012 is a dead cat bounce.

      • Probably. I wanted to show you what a professional site looks like. They are a government contractor. When I was working in Arctic projects I had climate experts and Arctic logistics types working with me, and they taught me some about the Arctic trends. The overall trend seems to be to have reduced ice cover, but it’s not linear, and right now it seems to be bouncing back.

        I also saw a report that indicates a subtle trend towards more snow fall in Siberia. This increases fresh water flow into the Arctic in the summer. If the snow is coming from the Arctic Ocean then we have a closed cycle. If it comes from the pacific then the Arctic is getting fresher. Interesting, isn’t it? It has a feedback loop.

    • Fred Magyar says:

      Fernando, please stop with this denialist crap and these ridiculous attempts at trying to make what is pure black look white! The link to Vencore is beyond outrageous! ‘VENCORE WEATHER‘ really now?! Oh, they’re a government contractor, well, whoop dee doo! One look at this graph should tell you they are either in deep denial of reality, they have some ideological agenda, or they are a bunch of absolute morons! Enough of this shit already! These people are NOT climate scientists!

  61. Jimmy says:

    Russian oil production is down.

    “Russian oil output fell to 10.65
    million barrels per day (bpd) in July, down from 10.71 million
    bpd in June, falling from post-Soviet highs maintained since
    March, Energy Ministry data showed on Sunday.
    The fall was mostly due to lower condensate production at
    Gazprom, included in the oil figures, the data showed.”

    http://www.reuters.com/article/2015/08/02/russia-energy-production-idUSL5N10D09E20150802

    • AlexS says:

      Thanks for the link, Jimmy.

      Using the 7.3 barrel/ton conversion rate (rather than 7.33 used by Reuters), production in July was 10.61mb/d (preliminary) vs. 10.68mb/d (revised up) in June. The average production in January-June was 10.65mb/d, +1.4% year-on-year.
      According to the most recent forecast by the Energy ministry, full-year production in Russia will be 530.5 million tons (http://ogjrussia.com/news/view/news-1698), or 10.61mb/d, up 0.7% from 2014. This implies average production in August-December at 10.56 mb/d, 90kb/d lower than in the first 7 months of the year.
      Note that the Energy ministry’s oil production forecasts are generally conservative. Thus, the initial forecast for 2015 (as of January) was 523.5 million tons (10.47 mb/d) and has been several times revised since then.

  62. Enno says:

    A very interesting article about driverless cars, and the resulting impact on several industries:

    http://worldif.economist.com/article/11/what-if-autonomous-vehicles-rule-the-world-from-horseless-to-driverless?fsrc=rss

    • coffeeguyzz says:

      Enno

      Absolutely brilliant article. Thanks for the link.
      On the streets of San Francisco these past 12/18 months, the Ubers, Lyfts, and their clones have simply taken over. And the rest of the Bay Area seems to be following suit.
      Passengers are lined up throughout the day staring at their smart phones, step into an arriving Goober – as I call them – and are whisked away.
      Combine that ease and monetary savings with driverless vehicles and you have a major paradigm shift.
      The safety factor is also substantial as the texting while driving is now the norm, with the accompanying accidents continuing to rise.

      • Boomer II says:

        Among certain groups of people, owning a car is no longer the status symbol that it once was. In fact, owning anything is no longer the status symbol it once was.

        I think one way to beat the Peak Oil and CO2 issues is reduce consumption. The poor may reduce consumption because they can’t afford to consume. The rich may reduce consumption because it no longer impresses people.

      • Texting while driving ought to be punished the same way as driving drunk.It kills people.

        • Fred Magyar says:

          Actually any use of a cell phone with or without the us of headset should be given the same punishment as well. I read a study published in JAMA a few years back that showed that the consequences of concentrating on a cell phone conversation while driving was equivalent to driving while intoxicated!

          I couldn’t find the JAMA link but this article says the same thing.

          https://www.sciencenews.org/article/impactful-distraction

          It turns out that hands don’t matter. It’s the conversation that can be lethal. Cell phone conversations impede what a driver sees and processes, a number of studies have shown. That, in turn, slows reactions and other faculties.

          This distracted state should be familiar to everyone. “That’s why you can drive home and not remember having driven home,” says Daniel Simons, a psychologist at the University of Illinois at Urbana-Champaign. “Just because you look at something doesn’t mean you see it.”

          • Superman says:

            Humans are too stupid to drive cars. That’s why horses should be used instead of automobiles, a lot of lives will be saved and highway deaths will do Seneca cliff. Horses have eyes and ears, they will come to a halt if there is a need to stop.

            Two heads are better than one, especially one with enough horse sense, fully functioning horse sense in real time. Humans don’t have horse sense nor do they have a lick of sense. The only reason humans exist is because dogs would die of loneliness if dumb humans weren’t around doing really stupid things, no other reason.

            Drivers forced to ride horses should reduce traffic accidents by 95 percent. The horse will know the way too, insurance costs will be driven down by horses. It’s a win win.

            If the rider wants to be on a cellphone and not see the tree limb right in front of him, well then, he or she receives a well-deserved Darwin Award.

    • MarbleZeppelin says:

      Assuming that autonomous vehicles can be made to drive in city traffic, it will have an impact on carmakers. However it will not necessarily reduce their production of vehicles by very much. Consider that an autonomous vehicle will not be used for just a short time each day, but will be used for much of each day. That implies that the car’s lifespan will be shortened considerably, possibly down to two years. Auto makers would be replacing a fleet every two years instead of every 12 years.

      There will still be a need for private vehicles, especially in rural areas. There will also be a demand for rentals or short term leases for people touring, unless the tourist industry reduces or changes dramatically. Vacationers and day tourists live out of their cars, convenience and a place to keep all their stuff is important.

      Work vehicles and company cars will still exist.

      I can see autonomous cars and buses making deep inroads into city areas. I can also see them making a big dent in congested town areas, less so in the less densely populated regions.

      • Boomer II says:

        That implies that the car’s lifespan will be shortened considerably, possibly down to two years. Auto makers would be replacing a fleet every two years instead of every 12 years.

        But total miles driven per fleet shouldn’t change. In other words, few cars being driven more miles. So you may need to replace those cars more often, but you’ll need fewer total cars, so it would seem that it would balance out.

        In other words, sell lots of cars that are driven relatively few miles and therefore can stay on the road for 10-20 years. Or sell relatively few cars that need to be replaced more frequently.

      • I doubt if anybody really knows how many miles an autonomous car will travel in comparison to a conventional car but it is likely that once the public accepts such cars they will pile the miles on fast.

        A machine that is used heavily can be and generally IS built to a much higher standard of durability and quality than one used lightly. This is a matter of straight up practical economics.

        A heavy duty truck intended for constant all day use year in and year out often still looks and runs just about like new with five hundred thousand miles on the odometer. Building that sort of quality in a car that will be driven fifteen or twenty thousand miles a year costs too much- the extra money is tied up too many years.

        Furthermore autonomous cars used by the general public – as opposed to a car used exclusively by an individual- will be the property of car rental companies.

        This aspect of ownership will result in the cars being built to a far higher standard of quality and overall durability and ease of repair and maintenance.

        A layman is apt to think that if it takes four hours to replace the air conditioning compressor on his car then it would take much longer on a big truck. In actuality this job on a commercial truck takes less than a quarter as long as on a car. Ditto just about all other repairs. It takes less time to swap the engine in a road tractor than it does a typical passenger car- because the truck is DESIGNED to be easily repairable whereas ease of maintenance is an AFTERTHOUGHT to the designers of ordinary automobiles – and pickup trucks too for that matter.

        If they are used heavily then autonomous cars will be built to last half a million miles or more.If it turns out they are used lightly, they will probably be built to about the same standards as ordinary cars.

        I doubt there will be very many autonomous cars on the road for at least a decade or two. It may take another decade for them to achieve legal status alone.

        • SAWDUST says:

          I was reading something somewhere maybe a week or so ago. If i can find it again i’ll post the link but. Autonomous trucks have be tested and are found to be 7% more fuel efficient than human drivers.

          If you are a large company that ships all across the country. Becoming 7% more fuel efficient is a big deal. Then when you think about no driver labor cost. It can’t be ignored. It will happen sooner than most think.

          Drivers also have to sleep. Less down time if you get rid of the driver.

          • Sawdust is dead on about the potential savings especially in the case of commercial trucks.

            Drivers on average don’t make nearly as much as most people think they do but some make a lot and not many make less than thirty five thousand or so if they are full time.

            If you can get rid of the driver then you can also get rid of the sleeper cab, the air suspension seat, the air conditioned cab etc saving close to a ton that can be added to the cargo without the truck being overweight.

            Four fully autonomous trucks would be sufficient to replace five driver operated trucks – unless the driver has to interact with customers.

            Somebody or something has to open the cargo bay, sign on and sign off for the cargo, help load and unload it in many cases , act as the company sales rep etc. The truck itself will not be able to perform such functions very well if at all.

            My own belief is that the technology will take a few more years to mature and then it will take some years after that for the issue to work its way thru the courts and various legislatures.

            • coffeeguyzz says:

              OFM

              There has been extensive testing of ‘driverless’ truck convoys wherein a lead, human-driving truck is closely followed by a convoy of three/four driverless trucks. The following vehicles are equipped with sensors so as to mimic the lead truck’s movements.
              In the next few years, intrastate implementation may start, with Utah and Nevada possibly in the forefront.

              • Boomer II says:

                There are already sections of some highways (or entire highways) set aside for toll paying users. Those same lanes could be set aside for driverless trucks instead. It would pretty easy to give driverless truck transport their own lanes so that very little would need to be done to change the transportation system to accommodate them.

        • MarbleZeppelin says:

          Knowing the rate at which computer systems evolve, the fully autonomous car will be ready in three to five years. Convincing the public will take a year or two. The media will be jumping on every accident involving autonomous cars for a while but that will fade.
          Cities will push to have autonomous fleets within their borders. The advantages of less traffic is a no-brainer.
          Attacks on autonomous cars will be the interesting news for a while. Hacking of their systems will be another area to watch. More meat for the media.

  63. A question for the hands on guys :

    Enhanced oil recovery is obviously profitable under some circumstances. If CO2 is available at low enough cost CO2 injection obviously works.But CO2 is not always available and it costs quite a bit to capture it and transport it long distances. My guess is that in most cases any CO2 available via capture at fossil fuel fired power plants is a considerable distance from an oil field where it could be used and getting it there would require laying a new pipeline.

    Now the question.

    Is it generally cheaper to use CO2 injection in old tired fields – when it CAN be captured and delivered- than it is to simply move on to a new virgin field nearby? -This is assuming such an untapped virgin field IS nearby of course.

    If the Saudis can develop a new field cheaper than they can install equipment at power plants to capture CO2 and lay pipelines to UNDEVELOPED oil fields then that is what they will likely do .I am presuming that they would be able to come back to their old tired CO2 injection candidate fields later on when the price of oil is higher.

    In a few cases the CO2 might be very cheap due to it being available as a byproduct of natural gas production.It has to be stripped out anyway to sell the gas and if the gas field is close to the oil field then delivering it would not cost very much at all.

    The answer may throw some light on the true state of Saudi reserves.

    • Longtimber says:

      This may be sign the water is hitting many of the straws. It’s just a matter of time. Any one wanna guess what the current flow rate is out of Ghawar now and 2 years hence.

    • Doug Leighton says:

      Mac,

      You might find the following of interest. But please note: I know nothing about this stuff, I’m simply cutting and pasting.

      OVERVIEW OF THE USE OF CO2 AS APPLIED TO ENHANCED OIL RECOVERY (EOR) PROJECTS

      http://www.unece.org/fileadmin/DAM/energy/se/pp/unfc_egrc/egrc6_apr2015/30_April/10_Ritter.CO2.EOR.pdf

      UTHMANIYAH FACT SHEET: PILOT EOR USING ANTHROPOGENIC CARBON DIOXIDE

      https://sequestration.mit.edu/tools/projects/uthmaniyah.html

      “The objectives of the project are determination of incremental oil recovery (beyond water flooding), estimation of sequestered CO2, addressing the risks and uncertainties involved (including migration of CO2 within the reservoir), and identifying operational concerns. Specific CO2 monitoring objectives include developing a clear assessment of the CO2 potential (for both EOR and overall storage) and testing new technologies for CO2 monitoring.

      Approximately 60–65% of all Saudi oil produced between 1948 and 2000 came from Ghawar. Cumulative production until April 2010 has exceeded 65 billion barrels. It was estimated that Ghawar produced about 5 million barrels of oil a day (6.25% of global production) in 2009. Ghawar also produces approximately 2 billion cubic feet of natural gas per day.

      After 60 years of production, the field is depleted and Saudi Aramco is going to start CO2-EOR. The project will consist of 4 injection wells, 2 observation wells and 4 productions wells.”

      • Thanks Doug,

        It seems very likely to me that the Saudis DO NOT have any virgin fields adequate to take the place of the Ghawar which is THE super giant of all the super giant fields in the world.

        So- If they maintain production at current levels very much longer they are going to be FORCED into using EOR techniques of one sort or another. As best I can remember they have been using water flood extensively for a very long time.

        When it comes to science I trust institutions like MIT with hardly a second thought. But when it comes to OPINIONS you never know. Whoever wrote that summary describes Ghawar as exhausted, or perhaps approaching exhaustion – which I believe is the actual case.

        Such a summary from MIT is a good additional indication that Ghawar is on its last legs- unless EOR works there in a big way.

        I suppose that since most of the Ghawar infrastructure has been in place for decades and paid for long ago that the Saudis will still make very good profits from the field using the CO2 EOR technique- if they can apply them successfully.

        Does anybody have a good idea how long they might be able to maintain production from Ghawar at or near present levels using CO2 injection?

        • Jimmy says:

          How CO2-EOR Works
          How does CO2-EOR work? CO2-EOR works most commonly by injecting CO2 into already developed oil fields where it mixes with and “releases” the oil from the formation, thereby freeing it to move to production wells. CO2 that emerges with the oil is separated in above-ground facilities and re-injected into the formation. CO2-EOR projects resemble a closed-loop system where the CO2 is injected, produces oil, is stored in the formation, or is recycled back into the injection well.
          Today, most of the CO2 used in EOR operations is from natural underground ‘domes’ of CO2. With the natural supply of CO2 limited, man-made CO2 from the captured CO2 emissions of power plants and industrial facilities (e.g., fertilizer production,ethanol production, cement and steel plants) can be used to boost oil production through EOR. Once CO2 is captured from these facilities, it is compressed and transported by pipeline to oil fields.
          Primary Production refers to a new oil field discovery where production wells are drilled into a geological formation and oil or gas is produced using the pent-up energy of the fluids in the reservoir.
          At the end of primary production a considerable amount of the oil remains in place, with sometimes as much as 80-90 percent still “trapped” in the pore spaces of the reservoir. (Melzer, 2012)
          If an oil field is not abandoned after primary production, it moves into a secondary production phase wherein a substance (usually water) is injected to repressurize the formation. New injection wells are drilled or converted from producing wells, and the injected fluid sweeps oil to the remaining producing wells. Secondary production could yield up to an equal or greater amount of oil from primary production. But this has the potential to ultimately leave 50-70 percent of the original oil remaining in the reservoir since much of the oil is bypassed by the water that does not mix with the oil. (Melzer, 2012)
          Primary and secondary production are sometimes referred to as “conventional” oil production practices.
          During tertiary production, oil field operators use an injectant (usually CO2) to react with the oil to change its properties and allow it to flow more freely within the reservoir. Almost pure CO2 (>95 percent of the overall composition) has the property of mixing with oil to swell it, make it lighter, detach it from the rock surfaces, and cause the oil to flow more freely within the reservoir to producer wells. In a closed loop system, CO2 mixed with recovered oil is separated in above-ground equipment for reinjection. CO2-EOR typically produces between 4-15 percent of the original oil in place. (ARI, 2010)

          http://neori.org/resources-on-co2-eor/how-co2-eor-works/

          Ghawar began primary production in 1951.
          Ghawar began water injection in 1964 or 1965
          Ghawar are began tertiary production with CO2 in 2015

          From 1951 to 2010 Ghawar , according to some, produced 65 billion barrels.
          For the sake of argument lets say they did a really good job with water flooding and that the 65 billion they got was 50% of the resource in place.
          That would make the original resource in place to be 130 billion.
          Tertiary recovery will get them another 4 to 15% of the oil in place.
          4 to 15% of 130 billion is 5.2 to 19.5 billion barrels.

          Not a guess I’d bet my farm on on but just throwing some numbers around based on the above article on CO2 injection and percentages.

          • Thanks Jimmy,

            With consumption running at roughly ninety million barrels a day that is about eleven days per billion barrels on a world wide basis.

            So- the high end of your ”back of the envelope” estimate is that the Saudis might recover enough oil using CO2 injection to run the world around eight months or so.

            Time to buy a Volt or a Leaf if you plan on wearing out new car.

            • Jimmy says:

              Here’s a previous post by Ron that discusses KSA and CO2

              http://peakoilbarrel.com/closer-look-saudi-arabia/

              • Toolpush says:

                CO2, injection has been going on in Ghawar for awhile now, or 2011 at least.

                http://www.hydrocarbons-technology.com/projects/ghawar-oil-field/

                Saudi Aramco has been developing a carbon capture and storage (CCS) project at Ghawar since 2011 with an aim to demonstrate enhanced oil recovery (EOR) at the field through carbon dioxide (CO2) injection. Approximately 40million cubic feet of gas is planned to be pumped from the Hawiyah and Uthmaniyah gas processing plants a day as part of this project, which is expected to be completed by the end of 2014. The project, also known as the Uthmaniyah CO2-EOR Demonstration Project, involves an 800,000t/y CCS facility and a 70km onshore pipeline to transport CO2 to the injection site.

                Another interesting bit in this piece,

                Saudi Aramco also plans to award Front End Engineering and Development (FEED) contract for the development of three shale gas fields including one in the southern part of the Ghawar field.

                The Saudi’s are currently manning up for this project.
                If the Saudi’s have to turn to shale oil development, instead of elephant sized highly productive oil fields, then the bottom of the barrel is in sight, I don’t care what they say!

                • Jimmy says:

                  Your point is well taken, and perhaps I’m being pedantic, yes- I’m sure I am, but the way I read that is that they have been DEVELOPING since 2011. Now they claim to be IMPLEMENTING i.e. they started doing it.

                  http://www.epmag.com/saudi-aramco-starts-co2-tests-ghawar-field-812516

                  Uthmaniyah Fact Sheet: Commercial EOR using Anthropogenic Carbon Dioxide
                  Company/Alliance: Saudi Aramco
                  Location: Saudi Arabia
                  Start Date: 2013/2014
                  Size: 0.8 Mt/yr
                  CO2 Source: Hawiyah gas plant
                  Transportation: 70 Km onshore pipeline
                  Oil Field EOR Storage Site: Ghawar field
                  Reservoir Type: Jurassic Carbonate limestones

                  http://sequestration.mit.edu/tools/projects/uthmaniyah.html

                  If they had anticipated a start date of 2013/2014 perhaps they have delayed the announcement or perhaps they were behind schedule.

                  2011 or 2015 is a detail to trifle over I suppose but it’s the first time I’ve heard that they started putting CO2 into Ghawar.

                  When KSA starts fracking it’s the beginning of the end!! Thanks for the info.

                  Tertiary recovery in Ghawar and fracking…. oh my!

                • Synapsid says:

                  Toolpush,

                  Saudi Aramco has been running recruiting ads on Rigzone specifying experience with shales. They’re looking to take advantage of all the cutbacks, I guess.

                  Seems nuts to me: “What, learn from the shale debacle? No no–we’re going to repeat it, with much more money.”

      • Caelan MacIntyre says:

        Hey guys, I have a question, and perhaps it has already been answered somewhere, but if the low price of oil is causing shutdowns of the unconventional plays around the world, (which apparently delayed peak oil), what is happening to the conventional plays as a result?

        • It depends. The marginal developments are deferred, the better ones continue.

        • AlexS says:

          WoodMac estimate below:

          Pre-FID project deferrals: 20 billion boe and counting

          24th July 2015
          http://blogs.woodmac.com/pre-fid-project-deferrals-20-billion-boe-and-counting/

          By year-end we may be able to count the number of major upstream projects that reached a Final Investment Decision (FID) during 2015 on one hand. The dramatic fall in oil prices in 2014 and subsequent dismantling of 2015 company budgets has, by mid-year, already resulted in over 45 major project FID deferrals.
          As a result, we estimate 20 billion boe of reserves has been pushed back from a diverse range of onshore, shallow-water and deepwater projects. Together, this creates a US$200 billion hole in the industry’s investment pipeline.

          Deferred project reserves by resource theme (bn boe:
          • Deep/Ultradeep 10.6 bn boe
          • Oil sands 5.6 bn boe
          • Shallow-water 2.6 bn boe
          • Onshore 1.1 bn boe

          Why these projects, and why now?
          Projects that are technically challenging, have significant upfront costs and/or low returns have proved vulnerable – over 50% of the 20 billion boe is located in deepwater projects, and nearly 30% in the Canadian oil sands.
          From a corporate perspective, there are two main drivers for deferring projects:
          • Releasing capital in response to the fall in oil prices
          • Giving more time to develop enhanced designs, cost optimisation and other measures to improve overall economics. In essence, rebuilding projects for a lower price environment.
          Trying to breakeven
          Inflationary pressures have pushed many projects into economically marginal territory and operators are now reworking costs and development solutions to achieve their hurdle rates. But it won’t be easy. We estimate that half of the new greenfield developments still produce sub-15% development IRRs, which is below most companies’ economic hurdle rate.
          For most operators, hoping a 10% reduction in capex is sufficient to reach FID won’t be enough, as only a handful have an NPV10 breakeven below US$50/bbl. Given where we are in the corporate capex cycle, only those assets with the most robust economics can expect to make the grade.
          We estimate the majority of these projects are now targeting start-up between 2019 and 2023. However, if the major IOCs continue to focus on cutting future capital commitments – to the detriment of future production growth – then these dates will be pushed back further.
          For some, aggressive re-phasing of capital spend and savings from cost deflation will enable them to have another run at FID over the next six to 12 months. But in a world of greater financial discipline and lower oil prices, others will require more radical changes to make them attractive investments.

  64. Boomer II says:

    Since the topic of electrical grids comes up here periodically, this might be of interest.

    New Laws Explain Why Fast-Growing Networks Break | WIRED: In power grids, utility companies lose money every time a line goes down, so ideally one should try to prevent any downtime. Yet acting to avoid any outage whatsoever can inadvertently lead to very large outages that are far more costly. Thus, encouraging small cascading “failures” can dissipate energy imbalances that would otherwise have caused massive failures later on, a potentially smart strategy even though it eats into profit margins. “If you frequently trigger small cascades, you never get really massive events, but you [sacrifice] all that short-term profit,” D’Souza explained. “If you prevent cascades at all costs, you might make a lot of profit, but eventually a cascade is going to happen, and it will be so massive it [could] wipe out your entire profit.”

  65. AlexS says:

    Bakken oil production forecast by John Auers, Turner Mason executive vice president.

    He expects this year’s production in the Bakken to surpass last years, but to decline to 950,000 to 900,000 barrels per day in the next two years. The question yet to be resolved is the equilibrium price needed to meet the world demand.
    “I’m thinking right now, it’s $70,” Auers said. “It could be $60, but at this point, I don’t think it is.”
    Ultimately, Auers expects production in the Bakken to rebound and increase to between 1.5 million and 1.6 million barrels per day by 2025.
    “The Bakken has a lot of long-term staying power,” he noted.
    http://www.thebakken.com/articles/1217/analysts-u-s-is-winning-the-oil-battle-with-opec

    • shallow sand says:

      AlexS. I do not think $70 WTI works in the Bakken for most of the companies operating there at the present time.

      Take a look at Leonard Bracken’s most recent article on oil price.com. He publishes free cash flow analysis charts of many US independents. On one chart is historical data and the other is projections.

      At $50 oil and $3 gas WLL hopes to be cash flow neutral spending one billion in CAPEX and hold production at 147K BOEPD. I don’t think they can, but note that is down from 170K BOEPD in Q2. To get to that production level they spent $1.6 billion CAPEX in the first HALF of 2015.

      Also, I took a look at Roseneft’s most recent quarterly financials, which were for Q1. Shows them to be cash flow positive, but down 35% from previous quarter.

      If you have the ability, you should create a chart which compares free cash flow of US shale companies with Russian and other foreign upstream companies.

      I am clearly in the middle of the USA and clearly pro American. I would not live in any other country (maybe spend winter in the Carribean Lol!!).

      However, when it comes to financial matters, I want the facts. I think the facts show that US production is about the most expensive in the world. Contrary to the claims, US producers will be financially crushed if WTI stays below $50, $60 or even $70 for an extended period. Some cannot survive long term $80 or higher.

      Numbers always are the proof. I’m not in a position to dig out number from Russian up streams, Statoil, or other foreign oil producers. If you are, would be very worthwhile if you could post a comparison of those to US shale for maybe 2013, 2014 and first half of 2015. The facts need to be broadcast, not a bunch of talk about US being able to take market share away from OPEC, etc in a price war.

      BTW, are Russian oil companies laying off employees like US oil companies are?? Or OPEC nationals laying off personnel?

      Goldman says WTI at $50 in 2020? That is either US propaganda or they want to see the end of the US domestic oil industry. $50 or below from now to 2020 will be a death sentence.

      • AlexS says:

        shallow sand,

        Russian oil companies are not cutting jobs yet, but I do not exclude that they might lay off part of non-core employees in central offices. I do not know about OPEC NOCs, but the majors, including Shell, Chevron, BP, Conoco and ENI have announced job cuts.
        The biggest cuts, however, were in the oil services sector.
        “Job cuts at exploration and production companies have accounted for roughly 10 percent of the more than 150,000 layoffs globally throughout the industry, according Graves. That compares with more than 100,000 eliminated from service providers and drilling contractors.” (http://www.bloomberg.com/news/articles/2015-07-28/oil-industry-starts-new-round-of-cost-cutting-as-prices-languish).
        I’m not sure, however, if they have a full picture of lay-offs in the shale sector.

      • Anon says:

        Concur with this. US shale companies have been spinning like mad that they’re cutting production costs and whatever but it’s really been just hoping for the oil downturn to end. They only had hedges for so long and they can only hold back on drilling so long. Both of those clocks are going to run out in this next quarter as existing production decline accelerates.

        Mind, none of the small US operators have EVER told the truth about anything re: their profitability from operations.

        • AlexS says:

          “none of the small US operators have EVER told the truth about anything re: their profitability from operations”

          Do you mean that we should not trust their SEC fillings?

    • shallow sand says:

      AlexS. I had time to finally read the above piece you linked. It is just more fluff from the shale industry.

      Also, hate to do this, but until the racist cartoon BS is removed, I am done with this site. Do not know why it has not been deleted, but I do not want to be associated with that crap.

      • Fred Magyar says:

        Umm, just curious has anyone tried to contact Ron directly about this via an email?
        he seems to be MIA.

      • AlexS says:

        shallow sand,

        I completely agree with you, but I think that, for some reasons, Ron is currently not able to delete this trash.
        Do not let some idiots to destroy this site.
        Your contribution is very important

      • Synapsid says:

        shallow sand,

        We don’t know why Ron said a week or so ago that he’d be out of touch, and we don’t know why he hasn’t responded. That’s no reason to dump the site. He’s done too much for all of us not to be given whatever time he needs.

        • shallow sand says:

          I see Ron’s post below and assuming the remaining cartoon is deleted soon I am good. I did not think Ron was behind any of it. No way I thought that.

          It has to be tough running something like this, especially with all Ron has going on in his life.

          Don’t want to see an end to this site. About the only place where the true economics are discussed regarding oil production. Also a lot of other interesting topics that I read but feel too uniformed to comment on, but I am learning a lot.

  66. Boomer II says:

    We’ve gotten various doomsday scenarios here and this topic has also been touched upon, but this is a very recent article.

    Hawking, Musk Warn Of ‘Virtually Inevitable’ AI Arms Race | TechCrunch: In addition to being signed by professor Stephen Hawking and Tesla/SpaceX CEO Elon Musk, signatories of the letter also included Apple co-founder Steve Wozniak, Google DeepMind CEO Demis Hassabis, professor Noam Chomsky and Google Director of Research Peter Norvig.

  67. Boomer II says:

    I don’t get into the climate discussions here other than to express skepticism at some of the conspiracy theories.

    The most severe consequences of climate change are projected to happen in the future, and I think that’s beyond the average person’s ability to focus upon.

    However, if natural disasters (e.g, flooding, fires, extreme weather events) increase in frequency and intensity, those events will have immediate economic and psychological impacts on the affected areas.

    Dry Days Bring Ferocious Start to Fire Season – The New York Times: Scientists have spoken of “climatological extremes” as the new normal, a trend underlined by this year’s El Nino pattern, which brought extraordinary rainfall to the Southwest, causing deadly floods in Texas while wiping out short-term drought conditions in eastern New Mexico.

    • Yes. I noticed they started talking about weather extremes when the surface temperature wouldn’t increase as they predicted. Now I’m noticing an effort to estimate huge fossil fuel resources. Seems to be a response to critiques made about their RCP8.5.

      Most of the weather extreme commentary is baloney. Same with the drowning Pacific islands, and the slew of hysteria and fear mongering stories. This really does remind me of the bs about the Iraq WMD.

      • Boomer II says:

        Yes. I noticed they started talking about weather extremes when the surface temperature wouldn’t increase as they predicted.

        I think you may have missed my point. You don’t have to talk about weather extremes. People experience them. So if there are more floods, more fires, more extreme weather incidents, the people who are inconvenienced by them are quite aware of them.

  68. Jeffrey J. Brown says:

    Brent spot price approaching $50 this morning

    So far, the monthly low Brent price for the current oil price decline was January, 2015, when Brent averaged $48. So far, the monthly high, after January, was May, when Brent averaged $64.

    Anyone think that we are headed for a monthly price below $48?

    Monthly Brent prices through June:

    http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RBRTE&f=M

    • Futilitist says:

      “Anyone think that we are headed for a monthly price below $48?”

      I do.

      Oil breaking lower—
      Brent spot $49.51
      WTI spot $45.10

      Speaking of lower oil prices, the Etp model forecasts ever lower oil prices going forward until oil reaches the zero state as an energy source, around 2021. You have yet to comment on the Etp model. I would love to know what you think of it. So, what do you think of the Etp model?

      • SAWDUST says:

        The mistake those charts make is to assume price has anything to do with oil fundamentals or global economic fundamental. Or supply and demand. Price is nothing but a metric of accounting. And that metric can be change at any given moment by changing the value of one’s currency and by changing the amount and availability of credit. $200 oil could be the same as $20 oil if you change the metrics of accounting to make it so. To put it another way they could create a $200 dollar bill with the same purchasing power as the $20 bill has now. Price is just a metric of accounting.

        The price of everything not just oil is a reflection of how many dollars are chasing whatever the given asset or commodity or however you want to classify whatever it is you might be talking about.

        Having said all that. Price doesn’t matter. Only thing that matters is, is there oil there or not and how much longer we can produce the same amount of flow regardless of price. Price will not be an issue. When supply shrinks no matter the price or cost is when we have issues. Which might not be too far into the future from now.

        Price is nothing but a metric of accounting. I see oil hitting $200 before it ever hits Zero. Do you really believe oil will no longer be used beyond 2021 or 6 years from now?

        • Futilitist says:

          So what you are saying is that the price of oil is just an arbitrary made up number and it can be whatever we decide we want it to be? And the physics of energy has nothing to do with anything? And the perfect price prediction performance of the Etp model is just a coincidence?

          • Nick G says:

            Pretty much.

            100-150 years from now children will be astonished to hear about the oil industry.

            “Really, Grandad? We pumped this dirty stuff, and actually used it??”

    • I expect $70 per barrel by December 2015. But I’m guessing, of course.

  69. MarbleZeppelin says:

    German carmakers buy Nokia’s digital mapping company to use in autonomous vehicles.
    That is a 2.8 billion euro investment, sounds like they are serious about autonomous vehicles.

    http://www.bbc.com/news/business-33756603

  70. SAWDUST says:

    A look at futures this morning. Price dipped below 46 earlier. But it’s still in a descending wedge. It’s a bullish reversal pattern. It’s just got to find the bottom of the wedge before it bounces. Not much room left down there for it to go lower without having a technical bounce here.

    It will break the top trendline of the wedge. It could prove to be a false break and head lower. But if support holds after the break of the wedge this is the low here and prices will rebound here after.

    • Enno Peters says:

      Sawdust, I strongly recommend the book “Security Analysis” from Benjamin Graham to you. In one of the later chapters he carefully explains why “technical analysis”, as you do with your charts, cannot be worthwhile doing in the long run. He wrote the book over 60 years ago, and all his arguments are still as valid as ever. It may save you time, money and disappointment.

      • SAWDUST says:

        Enno,

        I don’t even trade oil. I trade and make a good living doing it in a niche of the world of trading that only 5% of all traders actually make money doing. Currencies.

        I trade by technicals only and i’ve been doing it for over 15 years. Anyone or any book that tells you otherwise is because they were in the 95% of people that just can’t do it.

      • SAWDUST says:

        FXCM is one of the worst places to get charts from. They are always wrong and that top wedge on that chart isn’t really there. Their Trading platform is terrible and their charts don’t match reality. I’ve compared numerous charts they’ve posted to what is actually happening on a real trading platform and they don’t ever match up to what i’m seeing in real time.

        Their charts don’t even match what their own trading platform is saying. FXCM is pushing their books with them false charts.

        Hell I have a trading account with FXCM but use a different trading platform to make decisions and still make money with my FXCM account. One thing i know for sure is when i stopped paying any attention long ago to what the so called expert technical analysis and teams like FXCM i started making 10’s for 1,000’s of $ on all my trades. There is a lot of miss information posted daily in charts everywhere. It’s a zero sum game why would they represent the truth.

        • Futilitist says:

          “FXCM is one of the worst places to get charts from. They are always wrong…”

          FXCM is free and this chart seems to be accurate.

          “…and that top wedge on that chart isn’t really there.”

          And neither is the bottom one. They are both arbitrary.

          If not, please explain your exact method for deciding what constitutes a true bullish descending wedge pattern.

          • SAWDUST says:

            Had a post here but i guess something was wrong with what i said cause it’s no longer here.

            CL actually dropped to 45.08. But it’s still in a descending wedge you only go long after the break of resistance. That so called first wedge never broke resistance. It just fell out the bottom cause there was actually no wedge there. This current an actual wedge has yet to find the bottom. We would have to get a new low here under 42 in next few days in order for this to not be a true descending wedge.

            So soon oil will either be making a turn an move back into the 50’s or we will have sub 40 oil

  71. Watcher says:

    Which would be easier? A central bank entering the oil markets to raise the price? Or central banks subsidizing the lenders funding shale?

    Gotta be the 2nd one. The first risks loss of independence in an election year if a candidate decides to shine a light on “our Central Bank is making your monthly gasoline bill higher”.

    The second won’t elevate above page 5 of newspapers.

  72. dmg555 says:

    Does anyone have a rough estimate of the total dollar amount of the bonds used to finance the tight oil development in the US?

  73. Watcher says:

    count the wells drilled since 2009, multiply by 10 million, then by 0.90.

  74. I have removed Roger’s post and blacklisted him.

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