World Proved Oil Reserves, Fact or Fiction

The EIA publishes Annually a list of World Proved Reserves of Crude Oil. Though all charts in this post use the EIA data, BP, the IEA and virtually every other reporting agency in the world uses basically the same data. It is my contention that this data is misleading and totally meaningless. This is especially true of OPEC Middle East Reserves. However because this data is taken as gospel by the media and perhaps 90% of energy analysts in the world, this misinformation becomes a serious problem.

But first let’s look at the data. It dates to 2014 in most cases but some data only goes to 2013. All data is billion barrels of reserves.

EIA World Proved Reserves The EIA said we had 1,646 billion barrels of proved reserves in 2013. Other agencies put that figure a bit higher but we will go with this. And just where are these reserves located?

World Oil Reserves by Reigon

Almost half of the world’s proved reserves are supposed to be located in the Middle East. Actually it would be well over 60% if it were not for the recent additions to world reserves by the Venezuela Bitumen and the Canadian Tar sands.

Canada an Venezuela Reserves

This is the proven reserves claimed by Canada and Venezuela. The EIA describes proved reserves as “reserves of crude oil which are with reasonable certainty to be recoverable.” So Canada has 173 billion barrels of reserves and Venezuela 298 billion barrels of reserves that we can believe has “reasonable certainty to be recoverable? What does that mean?

Middle East Reserves

As you can see Middle East proved reserves always increase, they never decrease no matter how much oil is pumped from those reserves every year. And the worlds media accepts this nonsense without question. I once heard a reporter on CNBC point to the increase in world proved reserves in the decade of the 80s as proof that we are finding massive amounts of new oil all the time. No one bothered to point out that all this oil was found in board rooms by bureaucrats who simply “decided” this was how much oil they had.

Russian Proved Reserves

Russia is the world’s largest crude oil producer so we must look at her chart. (Not zero based.) Does this chart look realistic to anyone? This chart should prove to anyone that so-called proved reserves are simply set by bureaucrats with hardly any connection to actual reserves the country possesses.

US Proven Reserves

Even the US has gotten in on the act, adding 11.5 billion barrels of proved reserves since 2009. They did not report US 2014 reserves. Most of this increase is light tight oil reserves but some reserves have been added to the Gulf of Mexico. Notice that this chart is not zero based.

OPEC and Non OPEC Reserves

I have changed the definition here to “claimed reserves” rather than “proved reserves” because everyone should know by now that the vast majority of those claimed reserves are a joke. So how much oil is left in the ground? I mean oil that can reasonably be recovered at a price that economies can afford to pay. I have no idea and I don’t believe anyone else does either. But we can make an educated guess.

We must start by looking at reserves to production ratios. The RP ratio is expressed in “years of production at current production levels”.  An RP ratio of 25 would mean that a has reserves of 25 times its current production. It does not mean that a country could produce at that level for 25 years then suddenly nothing. All reserves decline gradually. There are no hard and fast rules for RP ratios but in general we can say:

1. New fields have a higher RP ratio than old fields.

2. The larger the field the higher the RP ratio. Very large fields tend to produce higher for much longer than small fields.

3. The deeper the field the smaller the RP ratio. Very deep water fields have a very small RP ration.

4. Bitumen and tar sands have a very high RP ratio because their reserves can only be produced at a very slow rate.

4. Light tight oil is a completely different animal. Each well pumps from its own tiny reservoir. It is, or should be, totally independent from all other wells pumping from the formation. Each well would have a very small RP ratio but the RP ratio of the entire field, like the Bakken or Eagle Ford, would have a totally different RP ration from the entire field. Also, more than any other kind of reservoir, the RP ratio of an LTO field would depend on the price of oil.

All that being said we can say that the Middle East, because of its very large fields, should have a higher RP ratio than most other places in the world. But not that much higher. For instance the EIA claims OPEC has reserves of 1,206 billion barrels. OPEC produces about 11.7 billion barrels per year. That would give OPEC an RP ratio o about 103. Non-OPEC, on the other hand, the EIA says has 441 billion barrels of proved reserves. Non-OPEC nations produce about 16.28 billion barrels per year so that gives non-OPEC nations an RP ratio of about 27.

OPEC claims an RP ratio of 103, almost 4 times non-OPEC’s 27. Actually the OPEC Web Site claims non-OPEC nations have only 284 billion barrels of proved reserves. That would give non-OPEC nations an RP ratio of only 17.5.

What can we believe? Well I can only speak for myself but I have always used the reasoning that nations, the vast majority of the time, produce every barrel they possibly can. And also that the more oil one has to produce the more oil they do produce. Therefore OPEC nations should have an RP ratio relatively close to that of non-OPEC, perhaps slightly higher because of their larger fields.

If OPEC has an RP ratio of 35 then that would give them reserves of 410 billion barrels.

If non-OPEC has an RP ratio of 25 then that would give them reserves of 407 billion barrels. And that would give the world about 817 billion barrels of recoverable reserves. I can accept that number. But that is my high pick. I could also accept a slightly smaller number.

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425 thoughts to “World Proved Oil Reserves, Fact or Fiction”

  1. As usual Ron, excellent analysis. I hold a very similar opinion about OPEC reserves. I was born in Baghdad, my father used to work in the ministry of industry and minerals. In the 1980s, he used to joke about how every time Iran raised its reserves, the Iraqi government increased its own reserves in order to stay ahead of “the arch enemy” and if you look at the graphs you notice Iraq always had higher reserves than Iran during the 1980s as a result.

  2. One can do something similar to the R/P ratio for net exports, which would be the ratio of estimated remaining CNE (Cumulative Net Exports) divided by annual net exports (NE), which I guess would be CNE/NE.

    I estimate post-export peak CNE by extrapolating the rate of decline in the ECI Ratio (Ratio of production to consumption). For example, for the Six Country Case History*, which showed a net export peak in 1995, their estimated remaining post-1995 CNE at the end of 2002 were 2.3 Gb, with 2002 annual NE of 0.67 Gb, resulting in an estimated CNE/NE ratio of 3.4 years. Actual remaining post-1995 CNE at the end of 2002 were only 0.6 Gb, so the actual CNE/NE Ratio at the end of 2002 was 11 months.

    A similar exercise for Saudi Arabia puts their estimated CNE/NE Ratio at about 12 years (38 Gb/3.2 Gb per year).

    The following chart shows normalized values for Saudi production, net exports, ECI Ratio (ratio of production to consumption) and remaining estimated post-2005 CNE by year (with 2005 values = 100%). The estimate for post-2005 CNE is based on the rate of decline in the Saudi ECI Ratio (at an ECI Ratio of 1.0, net exports = zero). I estimate that in only eight years, through 2013, Saudi Arabia shipped roughly 40% of their post-2005 CNE.

    http://i1095.photobucket.com/albums/i475/westexas/Slide21_zps74c9ebac.jpg

    A similar chart for the Six Country Case History:

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

    *Major net oil exporters that hit or approached zero net exports from 1980 to 2010

    1. And here are some interesting numbers to contemplate, along the lines of what can’t continue, won’t continue (but so far, through 2013, it has continued). Drudge had a headline today to the effect that China has now surpassed the US was the world’s largest economy.

      Based on latest EIA data (as of September anyway), the Ratio of GNE to CNI* fell from 9.5 in 2005 to 5.0 in 2013 (at a GNE/CNI Ratio of 1.0, Chindia would theoretically consume 100% of GNE).

      Available Net Exports (ANE) = GNE less CNI, and ANE fell from 41 mbpd in 2005 to 34 mbpd in 2013.

      Estimated Available post-2005 CNE (estimated cumulative volume of GNE available to importers other than China & India) were 195 Gb at the end of 2005, with 108 Gb have been consumed from 2006 to 2013 inclusive, leaving remaining estimated remaining Available CNE at about 87b Gb at the end of 2013.

      The estimated Available CNE/ANE Ratio would be 6.4 years at the end of 2013 (87 Gb/13.5 Gb per year).

      *GNE = Combined net exports from Top 33 net exporters in 2005 (EIA data, total petroleum liquids + other liquids)
      CNI = Chindia’s Net Imports

      1. Those are some striking stats Jeff. I have been following your updates since the oil drum days and I admire your persistence in sharing this vital information. As professor Bartlett once said “”The greatest shortcoming of the human race is our inability to understand the exponential function.”

    2. Six Country Case History: Major net oil exporters that hit or approached zero net exports from 1980 to 2010 (Excluding China)

      1. Jeffrey,

        Thanks for wading in over at the WSJ on the “Peak oil is debunked again” article.

        It’s like an ignorance swap-meet over there…doesn’t ever seem worth it to bring facts to a belief festival, but somebody has to do it, so thanks for doing it.

        It all seems so easy to me…it’s just numbers…you have a finite quantity of X (fixed), you use it at rate Y (variable), depending on cost Z (variable).

        But this is well beyond the capabilities of people who have been raised on the idea that facts and beliefs are essentially the same thing. It all leads me to the conclusion that our chance of avoiding an unpleasant date with a Malthusian future is pretty much nil.

        Oh well. Everything happens for a reason, and I guess humans still have a lesson or two to learn in the realm of humility…?

        1. It’s always interesting to read comments from residents of Fantasy Island. What is curious is that no one has, so far at least, responded to my comments. Here is my most recent comment, at the top of the thread (my other comments are down the thread):

          From article: “The world relearns that supply responds to necessity and price”

          If the Peak Oil “Theory” is that the finite sum of discrete sources of oil that peak and decline will also peak and decline, and if this has been “debunked,” what’s the alternative theory? Is it that the finite sum of discrete sources of oil that peak and decline will show a virtually continuous rate of increase in production?

          In any case, North Sea Crude + Condensate (C+C) production peaked at 6 mbpd in 1999, when the annual Brent crude oil price was $18. North Sea C+C production was down to 2.5 mbpd in 2013 (when Brent averaged $109), a 6%/year rate of decline in production versus a 13%/year rate of increase in Brent crude prices.

          If discrete regions peak and decline, despite higher oil prices, doesn’t that mean that it’s when, not if, that the sum of the output from discrete regions shows the same pattern? As noted below, it’s likely that actual global crude oil production effectively peaked in 2005.

          1. It’s kinda complicated. This is one reason why nobody does a good job predicting oil prices. I lean towards segregating liquids, and considering them separately. When I did I derived a total liquids peak in about 20 years. But before we hit such a peak we would see spiking prices. A liquids peak implies either the world economy went to hell or we found a replacement. Or population dropped. Or something radical like that. I’m feeling a little bit grim about what’s coming down the road.

            1. Following are three comments I posted in regard to the WSJ OpEd, among the flood of comments by residents of Fantasy Island. Note that in my opinion, they are taking a counterfactual position, in that the data strongly suggest that actual global crude oil production (45 and lower API gravity crude oil) virtually stopped increasing in 2005, while global natural gas production, and associated liquids (condensate & NGL), have so far continued to increase.

              Two relevant charts:

              http://i1095.photobucket.com/albums/i475/westexas/Slide1_zps45f11d98.jpg

              http://i1095.photobucket.com/albums/i475/westexas/Slide2_zpse294f080.jpg

              WSJ Comments:

              #1:

              From (Debunked) article: “The world relearns that supply responds to necessity and price”

              If the Peak Oil “Theory” is that the finite sum of discrete sources of oil that peak and decline will also peak and decline, and if this has been “debunked,” what’s the alternative theory? Is it that the finite sum of discrete sources of oil that peak and decline will show a virtually continuous rate of increase in production?

              In any case, North Sea Crude + Condensate (C+C) production peaked at 6 mbpd in 1999, when the annual Brent crude oil price was $18. North Sea C+C production was down to 2.5 mbpd in 2013 (when Brent averaged $109), a 6%/year rate of decline in production versus a 13%/year rate of increase in Brent crude prices.

              If discrete regions peak and decline, despite higher oil prices, doesn’t that mean that it’s when, not if, that the sum of the output from discrete regions shows the same pattern? As noted below, it’s likely that actual global crude oil production effectively peaked in 2005.

              #2:

              When we ask for the price of oil, we get the price of 45 or lower API gravity crude oil, but when we ask for volumes, we get some combination of crude oil + condensate + NGL (natural gas liquids) + biofuels. What the EIA calls “Crude oil” is actually crude oil + condensate (C+C), and condensate, like NGL, is a byproduct of natural gas production.

              As annual Brent oil prices rose from $25 in 2002 to $55 in 2005, global C+C production rose from 67 mbpd (million barrels per day) in 2002 to 74 mbpd in 2005. As Brent rose from $55 in 2005 to the $110 range for 2011 to 2013 inclusive, global C+C production only rose by only 3%, up to 76 mbpd in 2013. Note that global dry gas production rose by 22% from 2005 to 2012.

              If we subtract out plausible estimates for global condensate production (from global C+C numbers), it’s very likely that actual global crude oil production effectively peaked in 2005, while global natural gas production and associated liquids, condensate and NGL, have (so far) continued to increase.

              #3:

              In late 2004, Yergin asserted that oil prices would be back down to a long term oil price ceiling of $38 per barrel by late 2005. This caused me to suggests that we price oil in “Yergins,” with One Yergin = $38 per barrel.

              As noted elsewhere, it’s very likely that actual global crude oil production (45 and lower API gravity crude oil) has not materially exceeded the 2005 annual production rate for eight straight years, while global natural gas production and associated liquids, condensate and natural gas liquids, have (so far) continued to increase.

              And note that Global Net Exports of oil (GNE*) have been below the 2005 annual rate for eight straight years, while developing countries, led by China, have so far consumed an increasing share of a post-2005 declining volume of GNE. The supply of GNE available to importers other than China & India fell from 41 mbpd in 2005 to 34 mbpd in 2013.

              *Top 33 net exporters in 2005, total petroleum liquids + other liquids, EIA

    1. Hi Euan,

      You also follow this pretty closely, and are skeptical of reserve numbers. I agree that using 2P reserves makes more sense than 1P (I think that is what you meant by preferring SPE over SEC rules).

      If we use BP reserve data (from Statistical Review of World Energy) and deduct Orinoco belt and Tar sands reserves and also 300 Gb of OPEC “speculative reserves” we get 290 Gb of non-OPEC and 640 of OPEC reserves for a total of 930 GB of World reserves at the end of 2010 for C+C less extra heavy (following Laherrere). The BP data may also include reserves of NGL which might explain the 80 Gb difference between Jean Laherrere’s 850 Gb estimate and the modified BP estimate.

      If we assume that Jean Laherrere’s estimate is correct (or better than the BP estimate), and assume that 8.6% of the BP reserves are NGL, then at year end 2013 there would be about 910 Gb of C+C less extra heavy reserves (2P), with roughly 280 Gb of non-OPEC reserves and 630 Gb of OPEC reserves.

      I see no reason that the R/P ratios (the reciprocal of the depletion rate) must be the same in different regions. In fact the economic behavior of National Oil Companies in OPEC nations and their membership in a cartel will affect the rate that reserves are developed into producing reserves.

      The idea that an oil company will produce all the oil it can from producing reserves is likely to be correct. The assumption that all oil companies will choose to develop reserves at a similar rate throughout the World, may be incorrect.

      1. “I agree that using 2P reserves makes more sense than 1P” Why does this make more sense? Using 2P simply dilutes the confidence level in a reserve estimate. But I do agree that it makes more sense if you want to make things look better. Actually, with respect, I don’t understand how anyone other than a qualified group of Petroleum Engineers who spend most of their time doing actual reserve determinations would be qualified to make a statement like that.

        1. Hi Doug,

          Do you think Jean Laherrere is qualified? I do.

          The stuff below I am pretty sure you already know, but I get a very different sense of whether we should prefer 1P or 2P reserves based on reading Laherrere and the Society of Petroleum Engineers (SPE) material.

          It is a matter of statistics, the mean estimate is considered the best guess using available information, that is what the 2P estimate is, see

          http://www.spe.org/industry/docs/PRMS_Guidelines_Nov2011.pdf

          Under PRMS, therefore, provided that the project satisfies the requirements to have Reserves, there should always be a low (1P) estimate, a best (2P) estimate, and a high (3P) estimate…

          Also,

          Uncertainty in resource estimates is best communicated by reporting a range of potential results. However, if it is required to report a single representative result, the “best estimate” is considered the most realistic assessment of recoverable quantities

          In fact I would argue that using 1P reserves introduces more uncertainty if the goal is an accurate estimate. For example if someone asks how much does that sack of cement weigh? One usually would prefer the best guess, such as 30 kilos, if one is very unsure, they might say around 20 to 40 kilos, but generally if I were going to pick up the sack of cement, I would not want to be told it is 20 kilos, if in fact the best guess should be 30. Maybe you have a stronger back than me. 🙂

          In general I like the best estimate when doing statistics especially if that is the only estimate given, better would be a range of estimates low, best and high (1P,2P, and 3P).

          See Laherrere paper (quote from page 2) at link below:

          http://aspofrance.viabloga.com/files/JL_ComBP2012.pdf

          The comparison of the current proved reserves (EIA) with the remaining backdated 2P technical data is drastic. Current proved reserves follows the financial SEC rules for audited data or the political non-audited OPEC sources. Arithmetic aggregation of proved data is incorrect, leading to an underestimate of the reserves and to future reserve growth.

          2P reserve chart below from p3 of Laherrere’s paper linked above

  3. Let’s say there is 770,000,000,000 barrels left to go, half or less.

    In one sentence, more than half of the reserves are wiped out, gone with some words.

    Fictions every time you turn around, no matter where you are, no matter where you go.

    The EIA makes stuff up, apparently.

    770,000,000,000/77,000,000

    You will have 10,000 days of oil supply to consume. The demand is there, consuming it is the only way to use it.

    10,000/365 is 27 years of oil supply and it could be more, but you can’t count it and can’t count on it if it isn’t there.

    It took about three hours to consume half of all known proven reserves.

    It is better to have twice as much when you make stuff up.

    When you’re making stuff up, might as well inflate the numbers that are high enough to make them believable, even credible. Must be their job to make stuff up.

    The end result is: you can’t make this stuff up.

    1. The EIA makes stuff up, apparently.

      Ronald if you had bothered to read the post you wouldn’t have made such a silly statement. Do you think the EIA, the IEA, BP all made up the same numbers? Now that would be one hell of a coincidence. All the world uses these same numbers and they did not get them from the EIA. They got them from Saudi Arabia, from Iran, from Iraq and from all the other countries. These are the numbers the countries themselves report, that’s where they came from.

      1. Ronald is our resident court jester and comedian.

        The court jester’s job is to spout a lot of nonsense in a way that subtly or not so subtly gores oxes right and left. This goring can take the form of irony or sarcasm or parody or redneck humor or any combination thereof.

        The Jester is the only person in the Royal Court who can make fun of just about anybody without getting his head chopped off or at least getting thrown in the dungeon for his temerity.

        The Jester is the one person who could speak truth to power – the messenger who could by using irony humor sarcasm parody bring the bad news to the attention of the King ( or Queen ) without getting shot.

        At times he would be ”taking a flyer” at the direction of the king or a trusted minister in order to see how the rest of the Court would respond to a certain idea or initiative on the part of the King – who contrary to what popular conceptions mostly had to rule by maintaining a consensus with a variable number of other powerful nobles or royal relatives rather than having absolute power.

        The Jester is also expected to have something to say that makes good sense or demonstrates a valid point occasionally.

        In other words the only way to take the Jester seriously is to not take him seriously. Then you can read between the lines so to speak.

        Now of course a forum such as this one is not well suited to communication by means of humor , parody, irony , sarcasm and other such verbal tools.

        If you have watched Saturday Night or a similar show on tv then you will ” get it ” if you read Ronald as if he were a talking head news caster on that sort of show.

        1. I prefer the William Faulkner theme, to-wit, if Faulkner had been a blogger, Ronald’s (stream-of-consciousness) posts might be an example of what we would see.

          1. Faulkner is one of my very favorite writers- not least because I am old enough that my grandparents and great grandparents and a great many people I knew as a youngster lived lives very much like the lives of Faulkner’ s characters in a society much like his creations. Nobody else has portrayed the Old South more faithfully and accurately- nobody that I know of anyway.An evening with Faulkner is a magical evening out of my childhood.

            Now reading him is not easy when he is in stream of consciousness mode.

            But if you visualize the character and LISTEN to and WATCH that character on a mental stage so that he is gesticulating winking nodding waving his arm or hands in various ways laughing etc THEN all at once you GET IT. Basically what I am saying is that reading Faulkner’s stream of consciousness stuff is like reading a play while visualizing it being performed.

            If you want to GET IT when you read Ronald here then imagine him grinning crookedly winking sideways pretending crocodile tears sneering sniveling belly laughing farting gnashing his teeth pretending he believes the bullshit put out by some particular bullshit artist etc etc and generally putting on a show while delivering his written comments as a monologue.

            Now of course it COULD be that he is shall we say on the iffy side of the fine line between insanity and genius but except for apple trees and coon hounds and milk complexioned freckle faced corn fed farm girls books are my greatest love and I have read as many or more than most English professors.So I guess I can recognize Ronald’s sort of stuff when I see it.

            ( Now my reading total is not as big a brag as it might be considering that I am a lot older than most English professors and have never spent any time obsessively studying any one author or one genre or historical period . I read most authors only once or twice at the most.)

            Faulkner is worth rereading every decade and in my estimation one of the ten or so best all time American authors.

            I wonder if I am sane myself only once or twice most days. 😉

            So far the guys in the white jackets haven’t come for me and the neighbors still talk to me so I guess I am ok. 😉

            1. Ronald is just a smart guy or girl who is having some fun playing the smart alec..

              I strongly suspect that if he were to ”come out of character” his commentary would be pretty much midstream to doomerish in relation to the run of the mill at this particular site.

  4. We’ve all seen the rationale presented for this reserve number or that one. KSA has a rationale for their reserves total being constant for many years. One of the recent posts talked about 1P converting to 2P or whatever. There will always be rationales.

    It Does Not Matter If We Believe Or Not.

    What matters, and probably the only thing that does, is will there be food at the grocery store when you next go there. It’s pretty hard for society to generate passion about it until trucks don’t bring food to shelves.

  5. The ration of reserves to production is not a very useful number since it tends to be a constant value over many decades, regardless of the rate of production. This is simply because total reserves are affected by price, and production/demand sets the price. As production falls relative to demand, price goes up, which thereby increases reserves. If demand falls relative to production, the price of oil declines, which thereby decreases reserves.

    Any realistic estimate of reserves should gradually decline with time, but with periodic variations proportional to the change in price. Those variations should have been quite dramatic in recent years with huge reserve increases following the runup in price during the last decade. We should actually see quite dramatic declines in reserves following the recent price collapse. But production will tend to follow the price down thereby keeping the reserve to production ratio constant.

    Even near the effective end of the oil era we will still have about the same number of years production available as we do now. The price per barrel will be very high and production very low since only the dregs will remain, but the reserve to production ratio will remain the same.

  6. Let us not forget, that some of those reserves can only be recovered at staggering environmental cost. Tar sand mining leaves behind a poisonous wasteland and fracking pollutes water, perhaps with air, the most precious of all of our resources. CAN be and SHOULD be recovered are two different things entirely. If we value clean water and land management with view of passing fertile and habitable land on to future generations, then much of of the proven reserves should be left alone.

    1. Environmental concerns have zero weight.

      No government will ever balk at getting oil to fuel trucks to put food on shelves because it dirties up some remote land. It would be irresponsible for them to do so. How could anyone vote for someone who ranks the well being of caribou above starvation of citizens.

      1. Environmental concerns have zero weight! Mygod, where do you live?

        Around my little neck of the woods people are getting together and SUCCESSFULLY going solar or as near as they can get. My house has not spent a nickel on gasoline, propane or natgas, or kW-hr of coal electricity, for a whole year so far, and we are all totally comfortable, all the time.

        Why? Environmental concerns, that’s why.

        Don’t bother to tell me about the trucks to the food store, presumably from Cal , we are working on food that goes near nowhere but where it came from.

        Sure it will take time and ff’s to get off ff’s altogether, but lots of people these days are publishing heavy thinking to the effect that it can be done.

        People here know all that.

        And lots of people have already published very heavy thinking to the effect that it HAS GOT TO BE DONE- for environmental reasons. People around here believe them.

        That’s why I am a little puzzled by all the talk about proven reserves. Doesn’t everybody realize that stuff has to stay in the ground? If it has to stay there, why talk about how much there is that has to stay there?

        1. okay the whole green thing is so stupid and such a scam. humans cant control the tempature of the earth. the tempature has been going up an down since our Lord created the planet. somehow the liberals think they can now control the tempature, by coordinating all the people on earth to “BUY” into there green mantra. its a big joke. keep buying those overpriced green things if it makes you feel good. but its only helping your mind and does nothing for the environment. oil is clean and natural. not like those bird slicing windmill eye soars or those unsightely bird fryer solarpanels that won’t even produce enough electricity to charge my phone.

          1. eye soars?

            “oil is clean and natural.” It is also organic and gluten free.

          2. So did a robot make this comment, or someone who can’t spell?

            Either way, not very persuasive.

            1. Not if it came from one of those: our Lord created the planet 6000 years ago people anyway.

          3. Funny how a bunch of Africans can charge their cell phones from tiny solar panels….

            http://www.nytimes.com/2010/12/25/science/earth/25fossil.html

            Payback for the $80 panel & charger: at $35/month, a little over 2 months. And that was back in 2010.

            Indians too. Sometime for less than they used to pay for kerosene.
            http://thinkprogress.org/climate/2014/07/10/3457917/india-solar-revolution/

            p.s. Ms. Misinformed – “solar panels” don’t fry birds. A bunch of mirrors at “power tower” type concentrated solar thermal power plants do. Fortunately these are rare, and don’t seem to be as economic as PV panels.

            p.p.s – the 29.7 Terawatt-hours photovoltaics produced in 2013 in Germany did more than charge a few cellphones. It was 5.3% of German total electricity consumption.
            Tera- = 1000 Giga- = 1,000,000 Mega-
            http://www.ise.fraunhofer.de/en/downloads-englisch/pdf-files-englisch/news/electricity-production-from-solar-and-wind-in-germany-in-2013.pdf

          4. Bonnie Girl,

            Forgive me for being an unreconstructed Scots Irish dirty old man but your handle alone makes me want to explain to you all about birds and bees and the facts of life.

            Now be honest with me at the risk of an internet spanking.

            Have you ever seen a strip mine? Have you ever dropped worm in a river than used to be chock full of fish and caught nothing?

            I have some insecticide in storage that we used to spray on our apple trees so powerful a single drop on your tender milky white wrist would put you in the hospital. Using them was legal and fully approved and RECCOMENDED by the federal government and the Commonwealth of Virginia until a few years ago.

            That particular insecticide breaks down in only a few days in sunlight.

            Now I have lead based and benzene based stuff left over that will be hanging around for a thousand years. Once upon a time my Daddy and I used to spread this stuff around by the truckload- a truck load a year on just our one little farm.Some of what I sprayed as a teenager is still in the soil on my place and in the river bottom sediments all the way out in the Gulf of Mexico.

            Some of it is in your bones and fat cells and liver. Hopefully not enough to kill you before your time.It got there because you ate it on or in your bread and beans and veggies and burgers and chicken and fish.

            Some of the DDT my GRANDFATHERS sprayed is in your body. Not enough to harm you -I hope!!

            But there is no way to know that for sure.

            You need not be UNDULY alarmed.

            I am still around and I actually worked in the stuff personally for many years as well as eating about the same diet as everybody else.Farmers believe it or not get almost all their food at supermarkets.I have been getting most of my food at supermarkets for over half a century now but before that my family actually ate mostly what we produced ourselves.

            And anyway you would starve if it were not for farmers like me using all this stuff.

            A possible slow death from liver cancer years from now is much to be preferred to starving next month. 😉

        2. For your small community is works fine. even for Switzerland it works well since citizen vote on every little change, building a bridge, for example, or installing street lights using LEDs. But it will not work for a whole country. Do you think 10 Million New Yorkers will get together and do what a few like-minded people do at your place?

          The US has one of the most bellicose reps in the government (see McCain, or tea party members etc) and give a shit about environment if the American Dream is threatened. These people will do anything to keep the BAU (and hence their jobs).

          1. The US has one of the most bellicose reps in the government (see McCain, or tea party members etc) and give a shit about environment if the American Dream is threatened. These people will do anything to keep the BAU (and hence their jobs).

            Unless things change, I believe money will continue to influence politics. I assume that at some point, the fossil fuel money in politics will decline and the tech money will increase. Hopefully it will be to the advantage of the next generation of very wealthy to advocate for laws more favorable to energy conservation and alternative energy technology. After all, it’s better for them that people spend their money on things other than gasoline in their tanks.

      2. Environmental concerns have zero weight.

        You must live on a very different planet than the one I live on because that statement is some very highly refined yak dung!

        http://www.environmentmagazine.org/Archives/Back%20Issues/2012/July-August%202012/constitutional-rights-full.html
        The Constitutional Right to a Healthy Environment
        by David R. Boyd
        Do people have a right to clean air, safe drinking water, and a healthy environment? Fifty years ago, the concept of a human right to a healthy environment was viewed as a novel, even radical, idea. Today it is widely recognized in international law and endorsed by an overwhelming proportion of countries. Even more importantly, despite their recent vintage, environmental rights are included in more than 90 national constitutions. These provisions are having a remarkable impact, ranging from stronger environmental laws and landmark court decisions to the cleanup of pollution hot spots and the provision of safe drinking water.1

        Emphasis mine. BTW, there are plenty of societies that understand that if the Caribou can’t survive because of irreparable damage to the ecosystem neither can the citizens. There are no longer any remote lands!
        Cheers!

        1. I think you know perfectly well that if citizens are starving in a city, constitutional this or that are not going to stop fueling up trucks to feed them. Nothing would. Nothing should.

          1. That’s still a long way from saying ” Environmental concerns have zero weight.” If you don’t get that at the most fundamental level there isn’t any viable society, government or civilization without a stable and healthy environment then I guess my point is moot. Anyways I’ll just agree to disagree because it seems to me that our world views with regards the environment are too far apart for us to have any meaningful dialogue. You seem to of the school of thought that holds humans and their societies to be separate from and not subject to any natural laws. I look at the world from a physical biological and ecological perspective. Apparently there are 90 countries on this planet, that at least in principle, share my views to the extent that they have re written their constitutions to reflect those views. Who knows maybe one day you will join us. It might be time to make some amendments to the US constitution as well. The US seems to be behind the times and on the wrong side of history. I have strong hopes that a new generation of Americans will soon change that.

            1. Who knows maybe one day you will join us. It might be time to make some amendments to the US constitution as well. The US seems to be behind the times and on the wrong side of history. I have strong hopes that a new generation of Americans will soon change that.

              I have wondered if other countries will unite against the US to force, in some way, the US to do more for the planet. If countries like China become more aggressive in reducing carbon emissions and the US does comparatively little, perhaps some sort of action will be taken.

              I keep hoping that there will be a technology war with China to see who can develop alternative energy fastest. Having the Soviet Union going into space certainly mobilized the US to do the same. And fear of Germany getting the atomic bomb mobilized the US to do develop one.

              If alternative energy becomes an economic advantage and a strategic threat, maybe it will become a US priority.

            2. Well, Boomer, I think we can agree that altenergy already is an economic advantage and a strategic threat, and that China is WAY ahead of us.

              They have a huge advantage we are not likely to overcome any time soon. Their people running the show know something about science, and use it. Our government is hog-tied by a bunch of ideological fact-deniers who proudly deny any knowledge of science.

          2. They will starve in the not so distant future, due to climate change. Let’s control overpopulation today,develop peri-urban agriculture, significantly lower consumption etc. My country emits 10 times less CO2 than US, but we live a decent life.

      3. It is not just the well being of the caribou, it the the well being of our own species. We are fouling our own nest to the point where it is going to bit us.

        1. Doesn’t matter.

          If you can’t eat, you die sooner. No government is ever going prioritize trees if citizens are starving.

          1. No government is ever going prioritize trees if citizens are starving.

            I don’t think that is true. There are many countries where people are starving now, but they aren’t a priority.

            If you ran a country and wanted a pyramid, it doesn’t necessarily matter how many slaves die in the process.

            If you run a country and you want to protect your forest more than you want to protect some of your citizens, you may get your way. There are countries where citizens are killed because they don’t fit into someone’s agenda. (If you were a Jew in Nazi Germany, people weren’t making sure you had something to eat.) People, unfortunately, can be quite expendable at times.

            1. Well, legit point. Let’s phrase it as democracy.

              Prioritizing trees over starving voters isn’t going to win any elections.

            2. Let’s make this explicit.

              A government that prioritizes trees over starving citizens is both irresponsible and immoral and odds are very high that in a democracy they will be booted.

              So if you really think your candidates should advocate trees over starvation, insist they be loud and public about it so we don’t really need to wait for them to be booted out — as they’ll never get in.

            3. Watcher,

              Without the trees we are toast, sometimes governments need to look at the big picture, and let science guide policy, those that do not are doomed to fail.

            4. Dennis is right, without trees we are toast. And Watcher is right, politicians will always put people above trees.

              Conclusion: We are toast.

            5. Dennis is right, Watcher is right, and Ron is right.

              But, given the uncertainty principle, we are toast, maybe.

            6. Hi Ron,

              How does one explain the existence of the EPA? The clean air and water acts?

              Under your assumptions these thinks should just be wishful thinking.

              Is the system perfect? No. Can it be improved? Absolutely. Will it? Maybe, time will tell.

            7. How does one explain the existence of the EPA? The clean air and water acts?

              What the hell are you talking about? Why do I need to explain the existence of the EPA or the clean air and water acts? I don’t and I won’t.

              Every day more trees are cut down in almost every nation in the world. Every day a little more topsoil gets washed away or blown away. Every day the water tables around the world drop a little further. Every day…. well you get the idea. So I guess you think the EPA and similar organizations in other countries are going to change all that?

              Naw… you are way, way too smart to believe such shit as that. But then that begs the question, what the hell did you mean by asking me explain the existence of the EPA?

            8. Hi Ron,

              Sorry for being cryptic, the trees are a symbol of concern for the environment.
              I thought that was obvious, clearly it was not.

              So saying that government needs to look at the big picture and by guided by science on environmental policy was supposed to imply that the government would follow good environmental policy.

              I believed that you were claiming that the government would always put people before the environment, implying that there would be not environmental regulation.

              I disagree that there will be no environmental regulation and I think that concern for the environment will become a majority view before long, you assume people will never come to that view, I have more faith in man’s ability to see the forest.

            9. I would take a slightly more nuanced view of Ron’s position. Those societies who refuse to adapt are running a serious risk of being toast.

              There are clearly differences in the way societies act. For example, if the Dutch had been running New Orleans, Katrina would not have been a catastrophe.

              I think we are approaching the era predicted by Keynes — when humanity solves its economic problems. The problems of the future are ecological.

            10. Hi Ilambiquated,

              I think Ron’s position is clear.

              We are toast.

              I am with Wimbi,

              we are toast, maybe.

              but might add that I hope not, and if others do not give up hope, perhaps thing will improve. Wimbi might agree.

            11. I’m not sure who “we” is.

              The Earth won’t be toast anytime soon.

              Some sort of life on Earth will likely survive no matter what happens.

              Some humans will likely survive unless all habitats on Earth are wiped out.

              I believe we do what we can to lessen the disasters and keep going. Business as usual isn’t really necessary to keep some part of the human population going, so I think we can or will be forced to phase it out. And as we do that, we’ll see what continues on.

            12. Hi Boomer II,

              By “toast”, I mean that things will be very unpleasant, I do not think all of our species will be wiped out, we will survive if we do not cause a catastrophic ecological collapse.

              If you picture the Earth without trees, can you imagine human’s surviving on that planet. I cannot, the biosphere would be unrecognizable and life on earth might be reduced to very simple multicellular life forms. This view is probably too extreme, but at minimum there would the current extinction event would accelerate.

            13. Yes, I am hoping we don’t destroy everything. And that’s why I won’t settle into, “Once the oil is gone, civilization collapses and there’s nothing we can do” thinking. Because there is more to save than just modern civilization. The more we do, hopefully the more life that survives on Earth. Even if people are forced to eek out a living, we enable more species to survive when we lessen our damage.

            14. Democracy is being replaced by oligarchy. The oligarchy can sacrifice some population to save most of it. When we are sick and hungry the body eats part of itself.It is not democratic, but it is better than early death for all the cells. The same with society.

            15. Democracy is being replaced by oligarchy. The oligarchy can sacrifice some population to save most of it.

              I’m not sure it even has to be a stated decision. As global warming happens, populations around the world will not be effected equally. Some people will likely not make it (there is already extreme poverty in many places).

              And if there is income inequality in the places that CAN provide for some parts of the population, politicians may not do anything to correct the situation. Consider the homeless in the US, for example. There are varying efforts to take care of them, depending on the community. But I haven’t seen a national commitment to make sure everyone person in the US has food, housing, health care, and so on.

              It won’t necessarily be that people have to say we’ll have trees and not food. It will be that, we’ll make sure people with money or resources will survive and those without we won’t bother to take care of.

              Look at the drought situation in Southern California. There are wealthy communities that still water their lawns while in other communities people have no water at all. So you see that in some towns “the trees” are taken care of, while in other places farms are dying for lack of water.

    2. As an Oregonian (native), I have to put up with sentiments like this all the time. I simply don’t understand how the state could have fallen into the hands of all you crazies who have the illusion that the “environment” should be our God and the state must go back to how it appeared 200 or more years ago. All the “never do wrong” liberal utopias along the I-5 Corridor are exempt from this thinking of course. Meanwhile no new jobs or letting the free-enterprise system (of which I am a huge fan) work is ever allowed in rural areas because some dumb endangered lizard or something will go extinct. I can’t even tell you how so many of us in rural areas would like to separate from the radical environmental nutjobs in the western part of the state. And the ironic thing is how good new rural jobs would likely take a lot of pressure off of social assistance governmental programs. But I guess according to the Portlanders her holiness “Mother Nature” wishes for folks out here to stay poor and on welfare.

      Sorry for ranting, I just had to get that off my chest.

      1. As oil gets more expensive to get out of the ground, alternative energy technology was going to look better anyway.

        And as communities realize they like to see blue skies, they find there are benefits in not having unregulated coal plants in their communities. (Just look at the smog situation in China if you want to see what coal burning can do to the air.)

        Alternative energy technologies were going to be adopted anyway.

        But now with global warming concerns, there are fears that waiting until the oil runs out might not be soon enough to limit environmental damage. Now increasingly people are viewing this as a matter of global survival.

        We already know that oil is getting harder to get. If there was more of it, people wouldn’t be bothering with fracking and tar sands. These expensive, dirty technologies. So we can either start transitioning to alternative energy in an orderly fashion, or we can wait until it becomes so expensive, few can afford it.

        1. You also have to realize that some of the push back against pollution is coming from citizens who are directly affected. Communities don’t want fracking within their city limits. Farmers don’t want oil pipelines running across their land. First Nation groups in Canada don’t want their land threatened by the oil industry.

          There are a lot of different groups finding pollution coming into their communities and they are speaking out against it.

        2. Boomer II, I grew up in Pittsburgh in the 50’s. Every time my father drove me past a steel mill smoke stack with smoke coming out, he would say, “see that smoke boy, that puts food on our table.”

          In the 80’s the steel mills closed and Pittsburgh lost 100,000 people, because there was no food on their families tables.

          Now we got them blue skies but no jobs. I’d much rather have the jobs and food on the table back. You can keep your “hope and change” fantasies.

          1. yeh, but it also killed people – sometimes rather suddenly, or after long debilitating illness.

            http://en.wikipedia.org/wiki/1948_Donora_smog

            The steel mills closing were mostly to do with unions with inflexible work-rules, mills with obsolete equipment in a market of excess capacity, and hide-bound management vs. nimble non-union mini-mills closer to customers in the booming South and West, along with foreign competition.
            Note the 1981-1982 recession caused a massive layoff.
            http://en.wikipedia.org/wiki/History_of_Pittsburgh#Collapse_of_steel

            Your narrative is comforting to those who paint a false dichotomy of “burn fossil fuels or freeze while starving in the dark” so they can get a hit of that tasty drug “righteousness”.
            But that won’t make the problems of un-sustainable use of our resource base go away.
            It’s also a comforting narrative because it allows one to think things like “when it gets painful enough, enough people will come to their senses so we can beat up on the environmentalists (blame and righteousness again!), open up ANWR …, then we’ll have all the oil we need.”
            It avoids dealing with hard truths about limits in the real world, and taking responsibility.

            N.b. the U.S. passed peak coal in terms of energy in 1998.
            http://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=1&pid=7&aid=1&cid=regions&syid=1980&eyid=2012&unit=QBTU

            What peak fossil fuels looks like – in Appalachia – today!
            http://www.washingtonpost.com/blogs/wonkblog/wp/2013/11/04/heres-why-central-appalachias-coal-industry-is-dying/

            When is North Dakota’s turn?
            Stay tuned to these pages as the story unfolds…

            Everybody’s got a choice – stick to their inflexible “work-rules” and diss the new-fangled “silly renewables”, or be nimble about getting as sustainable as they can while the last echoes of ancient sunlight are still relatively obtainable.

            “Change is inevitable. Progress or learning are optional”

            1. It’s also a comforting narrative because it allows one to think things like “when it gets painful enough, enough people will come to their senses so we can beat up on the environmentalists (blame and righteousness again!), open up ANWR …, then we’ll have all the oil we need.”
              It avoids dealing with hard truths about limits in the real world, and taking responsibility.

              Yes, that’s what worries me. The folks who are making lots of money with business as usual are telling those out of work that it’s because of liberals or environmentalists. That distracts the unemployed or underemployed from the real truths:

              jobs having shifted overseas, automation puts people out of work, oil is getting more expensive to get out of the ground, and so on.

              So people blame the targets they are told to blame, but the problems don’t get corrected.

              Things are likely to get worse. People are likely to get angrier. The wrong people are likely to be blamed for the problems. And there will be more social tension.

          2. Those steel mills are technically obsolete. Creating that smoke costs a lot of money nobody can afford.

            There are no jobs in the steel industry much anymore, but that is also caused by technical progress, as productivity has skyrocketed in labor terms as well as energy terms.

            I remember how the Brits celebrated the Nissan bluebird plant in the 80s. Jobs! Jobs! Since then output keeps going up and employment keeps falling.

            Industrial jobs are disappearing. If it weren’t for cheap Asian labor, it would be happening even faster. Bangladeshi sweatshop workers are the John Henrys of the 21st century. They’ll lay down their hammers pretty soon as well.

          3. ‘JOBS’ are for people who don’t know how to fish! >;-)
            I’ll take clean air and water any day, I don’t need most of the crap that I used to be told I needed to consume just so I could be a part of the herd. I gave up watching TV years ago. When I see people standing in lines in the snow before dawn to buy a large screen TV on the artificial holiday called Black Friday I think things are really FUBAR!

      2. How’s that free enterprise system doing when Mortgage Backed Securities were a part of TRILLIONS of QE, and probably will be again?

        The new normal doesn’t have all that much of a resemblance to capitalism and free enterprise. So what is it one should be a fan of? What’s the role model?

      3. Hi Keith,

        So you are not in favor of clean air or water? There is a reason for the existence of the EPA, I agree that it can be overdone, but would you like to go back just 45 years to where some rivers were so polluted they routinely burned.

      4. Keith,

        Here in BC we have many protesters who are photographed trying to save some ‘old growth’ patch of woods that if logged will slide us all into environmental hell, and if you look at the clips you see the stumps with springboard notches when the previous trees were felled and processed 100 years ago. The same protesters drive home to their sub-division houses and …. you get the point.

        meanwhile, the forestry slowdown officially started:
        http://www.cheknews.ca/the-western-forest-products-mill-in-ladysmith-will-halt-production-on-monday-due-to-weak-export-markets/

      5. Keith,

        The claim that environmental considerations are harming the economy are mostly humbug. you’d be surprised how delusional most companies are, and American companies have become increasingly ideological.

        American companies routinely claim things that simply aren’t true but are politically correct in terms of Republican ideology. For example the company I work for has a strict policy forbidding plants in American offices. This is just repressive, it makes no sense at all. The European offices are overflowing with plants and suffer no harm from it. but it’s politically correct in America to suppress worker rights, so the policy is enforced.

        You’ll find similar irrationality in the complaints about environmental laws from right wing fanatics like the Chamber of Commerce.

  7. Ron,

    Much as I disliked dick cheney, he was at least perceptive once in his life. This is one of those known unknowns that we could really do with knowing.

    I firmly believe that the best policy is made with accurate information. Sadly that’s something we’re sorely lacking, and it’ll make it all that hard to work out how to try to plan for the future. At the moment the best we have is indirect evidence and underfunded public bodies like the eia. If ignorance is bliss then it isn’t all its cracked up to be.

    1. You mean Rumsfeld I think.Admittedly they have been joined at the hip since their days in the Nixon White House when the dictated wages and prices for America.

  8. oh boy….you dang agenda driven celebrities!

    “Part of it is that peak oil is more wish than prediction—a desire to see the end of fossil fuels to serve a larger political agenda. It is also a way of scaring governments into pouring money into alternative energy sources that can’t compete with oil and natural gas without subsidies and mandates. Predicting disaster can also be a profitable business and a path to speech-making celebrity.”

    http://online.wsj.com/articles/peak-oil-debunked-again-1417739810

    1. ezrydermike, Malthus most definitely wasn’t wrong and neither was the Club of Rome. Physical limits are real and this is still a finite planet that can’t and won’t support an infinite growth paradigm ad infinitum. Despite whatever BS the WSJ spouts, they most certainly are not a credible source when it comes to information about peak oil.

      Then again, maybe Ron is raking in the big bucks by hosting this very site…

      1. preaching to the choir Fred.

        I am not very good at blog snark.

        However, I am painfully aware as most here are, that most people outside of here won’t go past a “credible” publication like the WSJ. The disinformation narrative is very strong.

        1. I am not very good at blog snark.

          LOL! I fail at it all time so I’ll just go sit in the corner and eat some humble pie.

    2. Since peak oil is a myth, does that mean there won’t be a push to prop up frackers? If prices going up and down is just business as usual with oil, then we won’t need to worry about companies going out of business or drilling being suspended until prices rise, right?

      Low oil prices are what you get when there is unlimited supply, right?

      1. do you ever try to post comments directly on articles like this?

        do you think it is even worth while?

        1. It depends on the site and how easy it is to post. I haven’t tried to post comments to any Wall Street Journal articles. Or if I have, it has been at least a couple of years.

          Because most of the Wall Street Journal articles are behind a paywall, I don’t have access to some of them anyway.

  9. Ron,

    I don’t see much point in even speaking about reserves. Besides a big part being fake, even if we have good numbers there is no way of knowing how much of that reserves could actually be recovered.

    Upstream costs of oil production have skyrocketed since 2001. This fact alone tells us that we are running out of economical reserves and already getting part of our production from marginal reserves. We can barely afford a price for oil that pays its cost of production at breakeven and that is the definition of marginal reserves. As costs continue to raise, the wall of subeconomical reserves is approaching real fast. Most of those reserves both real an imaginary must be behind that wall and for all practical purposes they could just as well be in the Moon.

    So we don’t have a clue what the real recoverable reserves are, and that is the only important number. Based on current costs, they cannot be very large indeed.

      1. Actually its not quite like that. If I use the term Proven Reserve it’s done within the context of rules laid down by my Professional Engineering association and it will be respected throughout North America by other engineers, banks, etc. If a Russian engineer comes up with a proven reserve number, to be accepted here, that must be confirmed (audited) a “local” engineer. This process works fine and the numbers are essentially real: The Reserves are Economically Recoverable. If Saudi Arabia says its proven reserves are XXXXXX then to be accepted here the number must be audited. Therein lies the rub. We are not permitted to do an audit Saudi Reserves so, after awhile, it becomes the mess we have today. But, its certainly something well worth discussing.

        1. Since 1982, the Saudis have withheld their well data and any detailed data on their reserves, giving outside experts no way to verify Saudi claims regarding the overall size of their reserves and output. This is not unique to the Saudis of course. Personally I have confidence in Russian reserve numbers having helped audit a number of their reserve figures on specific reservoirs. This was a pain in the ass because the Russian methodology is (was?) somewhat different but in the end we came up with almost exactly the same numbers as they had. Of course I’ve never seen any hard data from the Middle East but a lot of their “reserves” appear to be so-called “political reserves”.

          1. It has occurred to me that if KSA were going dry, and knew they were going dry, the last thing they would want to do is inform the world of it.

            Informing the world of it would almost guarantee invasion by whomever was confident that a UN “fair share of what’s left” distribution program was not going to provide what was desired. To avoid invasion, optimal KSA strategy is to keep their mouths shut.

            When they are empty, issue a statement of gratitude to all their customers for years of purchases and inform them all that KSA is going out of business and retiring. That avoids a lot of Saudi deaths during the invasion and “defense of innocents” by those who might try to stop the invasion.

            1. A clue to KSA “going dry” might be The House of Saud checking out real estate prices in Switzerland — or buying Switzerland.

            2. Don’t think you want to be anywhere that has serious distance for spare parts for anything to travel.

              You probably want to buy land near horses. Nothing else really can be predicted, but horses don’t need spare parts.

            3. This (more or less) Arab friend of mine and real live commy is a representative of Polisario and spent years in the Persian Gulf begging for funds. His take on the House of Saud (and I quote) is that most of those princes are too dim witted to figure out if they are marrying their niece or their cousin this week.

              I’m sure there are plenty of wise guys in Arabia that will figure out when the time comes, but I doubt the Saudis themselves will.

          2. Maybe I am all wrong but I would bet my last can of beans that any of the multinational oil companies as well as outfits such as the NSA have the real dope on Middle Eastern oil reserves to the same extent the local folks. If the locals know then so do the industrial spies.

            Now a person who wants a job in an atom bomb factory or a shipyard that builds nuclear submarines has to undergo a security check than involves putting a camera with a high wattage light out of sight up his rectum.That sort of person doesn’t talk shop very often but it does happen often enough that we KNOW it happens.

            Given the number of people that work in the oil industry in OPEC countries there must be hundreds and thousands that have spilled their guts- some voluntarily out of patriotism, some for money or career advancement, and at least a few who have been quietly informed that if they tell what they know they won’t be arrested for various crimes real or imagined.

            There are no secrets that really matter in this world anymore – not secrets as important as the size of oil reserves. Not from multinational oil companies, not from multinational banks, not from national security agencies of major countries.

            I am an orchardist. If you give me a few days and all the data that can be easily harvested about any of my competitors such as how many employees he has, how many and how often trucks come and go from his farm, what the trucks are loaded with, aerial photo spreads of his place, and access to his checking account via the customer and supplier end of his business etc etc I can tell you just about as much about his business as he could tell you himself.

            IT is said among the smarter country folks these days that the government knows where you SHIT Last – and not only where you did it last but also everyplace you have forgotten about that you took a dump ten or twenty years ago.This is not so big an exaggeration as most folks think.

            Give a few real experts in a given industry a few thousand well assorted facts about any company in the industry and time enough and a staff to help them and they will know about as much about it as the people running it.

            1. “Maybe I am all wrong but I would bet my last can of beans that any of the multinational oil companies as well as outfits such as the NSA have the real dope on Middle Eastern oil reserves to the same extent the local folks. If the locals know then so do the industrial spies. ”

              I’d say no.

              Where would they get this information?

              If you work for Saudi Aramco and you do some new measurements and arrive at a number that departs from the official number, and it’s an uncomfortable number, then without question follow up studies (that everyone hopes will disprove yours) will be well funded and done. Odds are pretty good they will disprove yours. More likely, your technique will be challenged, and credibly.

              So then your spies are faced with two numbers from good quality studies. They don’t have any better information than anyone else.

              And, of course, we also have the redefinition possibilities, where the level of intricacy of the liquid requires only small changes to assay numbers and . . . the spies take home the numbers that everyone else has.

            2. I think a few wise guys will figure it out, as mentioned above, but most won’t.

  10. I want to thank Ron and all who contribute here for putting forth the effort to present quality data and it’s meaning on such important subject matters. This site is a high quality tool that I use frequently to cut through the constant fog of bs that seems to be in endless supply.

    I pop in every now and then, but I am more of a lurker. Really do appreciate the work here.

    Mike

  11. The New Economist Cover Says It All

    “For now, my conclusion is that the US oil industry intends to play the Saudis’ game of chicken,” Ed Yardeni wrote on Wednesday.

    “The contest between the shalemen and the sheikhs has tipped the world from a shortage of oil to a surplus,” writes The Economist. “Even if the 3m extra b/d that the United States now pumps out is a tiny fraction of the 90m the world consumes, America’s shale is a genuine rival to Saudi Arabia as the world’s marginal producer. ”

    In other words, it’s US shale versus OPEC.

    And things don’t look like they’re going to calm down any time soon.

      1. To be fair the Economist has been pretty insistent from the start about saudi involvement in the price change.

        However in the beginning they were talking about competing against the Iranians, not the Americans, so the story has changed.

    1. It is interesting to be a witness to all of the many different disinformation and propaganda articles that our media channels are pumping out these days. Who could have guessed ten years ago that we would be getting bombarded with so much propaganda bullshit today? The Sheikhs vs Shale drama lampooned above is a great example of the types of falsehoods that are being pumped out for mass consumption these days, all related to oil. It seems pretty obvious (to me) that the purpose of this disinformation and propaganda “campaign” is to distract from the real issues, to suppress widespread recognition of how dire our energy and financial situation is. Sometimes it seems as if some power or force is really intent on keeping people confused and in the dark about huge issues that really concern them. At least, that’s the impression I sometimes get.

      1. What has unfolded during this price crash has been mind boggling. It’s a bit like how Putin went from friend and partner to Satan incarnate in a period of 12 months. Yes, those who don’t know about Victoria Nuland find justification in it, but nevertheless, from friend and partner to Satan in just 12 months.

        The Saudis have changed their behavior not one iota from Jan to June vs June to now, but they are headed themselves towards their own Great Satan status.

        Media wise, it almost has to be orchestrated, but it’s hard to find the agenda.

        1. I think it is just peachy that we are demonizing the Saudis for low oil prices. Makes me chuckle every time I think about it.

        2. Generally speaking Watcher I believe you are determined to find conspiracies and plots and manipulation by shadowy powers of one sort or another behind just about every bush. IF you were a cowboy in Indian country at night you would assassinate every innocent bush within range of your sixshooter until you ran out of ammo.More power to ya , it takes all kinds and you only need be right once to save the ship when you see a REAL torpedo track in the water.

          BUT

          Sometimes- lots of times, most of the time, really, shit just happens in this big complicated world without any body in particular DELIBERATELY MAKING it happen.

          And SOMETIMES- and most particularly when it comes to the behavior of naked bipedal apes- all you need to know to understand the world is MUCH SIMPLER than all your convoluted theories.

          ALL YOU NEED TO KNOW – MOST OF THE TIME- when it comes to people is the ”us” and the ”them” in respect to any particular question, plus the logical extensions and corollaries of the us and them rule.

          THIS RULE HAS THE FORCE OF NATURAL LAW..Just about any truly up to date researcher in human behavior will tell you so.

          ”US ” always looks after ”us” and in the case of media looking after ”us” means ”Gotta sell magazines”…

          You said it yourself.

          The nature of the media beast is that it FEEDS on gossip, rivalries, and boogermen in the dark that eat little kids for midnight snacks. Adults with children’s minds- meaning about ninety nine percent of humanity – are just as subject to this sort of manipulation as kids.

          WE LOVE IT.

          We are tribal creatures and anything that strokes the tribal ego is going to sell. When we are deprived of a sufficient daily dose of tribalism then we go out and hunt up a new supply and become sports fans addicted to the triumphs and tragedies of a bunch of pro athletes we have never met and never will meet and who wouldn’t ordinarily even say hello to us except as part of their job description.

          There are countless ” US’s” and ”THEM’s” coalitions in this world and the membership in some of each kind is more or less fixed. The membership in the rest is fluid and varies depending on who perceives who as a friend or an ally , real or potential, or an enemy , real or potential.

          The umbrella ”us” group we refer to as the media or the mainstream media ”’Gotta sell magazines.”

          So simple. So beautiful. So UNDENIABLY TRUE..!!!

          And you even said it yourself and then turn around and deny your OWN insight because it is NOT COMPLICATED ENOUGH!!

          There is ninety to ninety five percent of your agenda.The other five or ten percent may actually be orchestrated from the shadows by big banks, big political parties, big organizations known by names such as CIA, the Christian Church, the repuglithan and dimmerrat parties and sky daddy alone knows who else.

          Anybody who thinks a billionaire who owns a few coal mines and a few magazines and newspapers and has a few hundred journalists in his vest pocket but doesn’t pull the puppet strings to some substantial extent from the shadows is a fool.

          There is your part of the truth and the reality. You are most assuredly NOT a fool but rather a very perceptive observer -excepting you WANT to find an explanation involving behind the scenes manipulation for EVERYTHING.You will find it often because it is often there -just not most of the time or all the time because it simply is not always present.

          Now this is not to say that the press is not RELATIVELY free in this and other western countries. The ownership of media both print and electronic is widely dispersed among many various competing interests and anybody who has a brain and is willing to use it can usually easily figure out the broad outlines of the truth if he is willing to read competing points of view and do a little investigating to separate the facts from the talking points and the opinions.

          There are a couple of problems involved in doing so though. ONE is time and the other is access to competing media. Most of us are not willing to take the time or pay for the access needed so we are generally speaking less than truly well informed about most issues.We listen to NPR OR Rush Limburger or CNN OR Fox or we read our local paper.IF we read a paper at all we probably spend more time on the sports section than any other part.

          I am stuck in the house most of the time these days ( family issues) with tons of time, a couple of excellent library cards, and high speed internet. I spend more time right where I am now- in my recliner- than anywhere else and I STILL don’t have time enough to get to be truly well informed about more than a few overarching issues.

          Beyond the issues of time and access lies a more important principle or organizing rule.

          THE RULE

          Most people ARE NOT INTERESTED in THE facts although if confronted with this truth they will hotly deny it and quite a few will get belligerent enough to start a fight if you want one.

          What they ARE interested in is any cherry picked fact, opinion, or talking point that reinforces what they ALREADY BELIEVE AND WANT TO BELIEVE.

          Ya can’t fool all of the people all of the time but you sure can fool some of them enough of the time that they will follow you blindly to hell even if you intend to sacrifice them on altars to the devil at way stations along the way.

          Some showman or another once said nobody ever went broke overestimating the stupidity of the American public. He was dead on.

          People do not need to sit together in a smoky room and come to agreements in order to perceive a common interest and act in UNCONSCIOUS CONCERT to pursue that interest.

          Nearly everybody in the media industries implicitly understands WITHOUT CONSCIOUS THOUGHT that he has an overriding , an overwhelming , personal interest in the continuation of business as usual.

          So he seeks out facts and opinions and talking points that support the continuation of business as usual without even realizing he is doing so. And he repeats these facts and opinions and talking points.. without giving any serious thought to the possibility he might be horribly and tragically mistaken.

          The exceptions to this group think have carved out for themselves a new niche in media and cater to people who for one reason or another see thru some of the smoke and mirrors and want to hear stuff that reinforces their OWN interpretation of the facts.

          Ron has carved out a niche of his own. I hang out here because generally speaking we are in near total agreement about just about everything.

          I am too old now to be afraid of the boogeymen under my bed. I know most of them are imaginary but that enough of them are real that I ain’t getting out of here alive no matter what. Cancer, auto accidents, guns, alcohol, dope, women, money, and just plain old bad luck are real enough boogeymen and they have taken about half of all the people I have known already.

          With a little MORE luck PERSONALLY I will fall victim to the last in line real boogerman-OLD AGE. The GRIM REAPER eventually gets us all because our machinery wears out anyway if we escape famine, pandemic disease, ethnic cleansing, environmental toxins, getting et by a starving black bear or a hungry gator, or shot by a jealous husband.

          I forgot to mention global warming, overshoot,and resource wars. 😉

          Between them they are going to take out the larger part of humanity within the next century..

          1. “Cancer, auto accidents, guns, alcohol, dope, women, money, and just plain old bad luck are real enough boogeymen and they have taken about half of all the people I have known already.”

            Maybe I haven’t lived long enough yet, but “women” seems like a mighty odd thing to include on that list. Shouldn’t “men” be on there too for the other half of our species? Even if only because women are most at risk of being killed by the man in her life?

            That one’s a head- scratcher OFM. I know you’re a conservative and all, but that does seem a bit out of character. Glaringly so I might say. I mean, women have killed (that’s what I understand “taken” to mean) half the people you know (including the women? Huh?)? Of course you have money on the list too, but at least that correlates to bankruptcy or other such money problems. Women though? I suppose there’s bad marriages, crazy spouses and so on, but that goes both ways don’t it?

            Sorry to go all feminist on you, but IT IS a weird item to include on your list in this context.

            1. You probably didn’t live in Hollywood in the 70’s.
              However, good point.

            2. Reminds me of the old song they used to sing in my native East Tennessee

              Corn whiskey done ruined my health good people

              Pretty women done troubled my mind.

            3. Women though? I suppose there’s bad marriages, crazy spouses and so on, but that goes both ways don’t it?

              Ah, what I believe you are discounting and though I can’t speak for OFM, I assume he is referring to, are those basic male biological urges that empower a woman to cause an otherwise perfectly rational man to lose all sense of perspective. Trust me on this one, I myself have found myself traveling half way around the world for a woman. I know of many a man that has lost everything for a woman.

              To be clear, I think you are correct this is indeed a two way street and can certainly work the other way too. Case in point there was a female astronaut in the news a few years back who seriously damaged here career because she stalked another woman who supposedly took a man she was in love with away from her. If I recall the story she donned diapers so she wouldn’t have to stop on her drive to confront her rival…

              I think OFM was just being himself and speaking from his obviously male perspective and perhaps some personal experience >;-)

              I’m 99.999% sure that he meant absolutely no disrespect to any women.

            4. Thank you Fred. You nailed it nicely.This comment was intended as humorous . I was thinking about some guys I have known who died of broken hearts and others who were manipulated into doing unwise things to please the women in their lives- such things as dealing and stealing and buying flashy cars on credit in order to provide one with enough bling to win her affection.Or getting into a totally unnecessary fatal fight in order to save face in front of a woman.

              Of course it is MOSTLY the fault of the men involved in such cases but we men are generally known to think with our peckers rather than our brains.

              I have had heart eaten for a snack by a woman a couple of times but age and experience eventually immunized me against this male existential risk.

              As a matter of fact our real boss lives in the lower brain centers and the thinking part upstairs can only make suggestions that are generally ignored when the subject is sex or status in the male dominance pecking order.

              I personally practice the most deviant form of sexuality of them all -abstinence .. but that is because I am now old and fat and uninterested in any woman I COULD get as a partner.

              So I live on memories when it comes to sex lol.

              I do occasionally point out that lots of people with degrees granted by elite universities believe things that are just as preposterous as anything in the KJB which my folks believe in. Eternal growth on a finite planet for instance.

              IT is the ABSENCE of women that REALLY kills men. Ask any body acquainted with life expectancy statistics and life styles.

              I occasionally point out that every body remembers the song about dancing like Fred Astaire..

              But hardly anybody ever realizes or points out that Ginger Rogers had to do it all backwards in high heels.

              OF course men kill women at a rate several times the rate that women kill men.

              I absolutely fucking refuse to be pc.

              PC has morphed into a religion and a weapon to control the terms of public debate such that the winners are preordained.

              Women are on average the equals of men in the only respect that really matters-the matter between the ears- except physical brawn which does matter at times. The strongest woman I ever met was not as strong as the average guy I worked with on farms and construction jobs when I was young .

              I have not yet met a woman who can hoist a two hundred pound load onto her shoulder and carry it.I was only a little stronger and bigger than an average farm hand but I could do this without any problem back in my younger days.

              This sort of thing MATTERS if the job description is ”FIRE PERSON.”

              Ya not allowed to say fireman anymore.

              You are not allowed to mention women’s physical limitations in a classroom in graduate school these days.

              Being pc means refusing to face up to a lot of obvious truths.

              Sometime back here I related a personal story about being at a party- a long time ago- dominated by pc types and pointing out that a professor was making a fool of herself by exaggerating the second class citizen status of women in this country while in almost the same breath this tenured phd doofus was defending some middle eastern cultures – multiculturalism and pc are fused at the hip of course.

              I called her on this bright as the noonday sun discrepancy.

              She got so mad she was basically incoherent. For my troubles every body there including the host shunned my from that point onward. I was never invited back. They were all afraid of the pc priestess and the hex she could put on their careers.

              Now as a CONSERVATIVE I believe in protecting the environmental commons because I have property rights in it. I believe in government solving problems that free markets can’t or won’t – such as providing a reliable social safety net – because the net is essential to the safety security and prosperity of the country- and if the country goes to hell where does that put me?

              I believe global warming and overshoot and many things most people who describe themselves as liberals believe in but mostly for different reasons.

              I do not believe in victimhood as a religion. Ninety nine percent of the people who get killed by cops need killing and bring it on themselves.

              Nevertheless I line up with the folks who are concerned about killer cops and abusive policing because I believe in precedents. If cops can get away with beating the hell out of Rodney King they can get away with beating the hell out of me.

              IF you have a brain and are willing to use it then the labels liberal and conservative mean almost nothing. I am not a repuglithan and will be voting the dim rat ticket next election based on environmental considerations.

              BUT I was never fool enough to believe that I would be able to keep my insurance policy and my doctor under Ocare .

              I have never been fool enough to believe that communism is superior to capitalism. The state obviously enough never just withers away does it ?

              I have never been fool enough to think that if we Yankees weren’t the big dog in the world that there would not be a big dog at all.

              Or dumb enough to believe that any other dog would be any easier on all the other smaller dogs.

              I am on record as supporting a European style health care system for this country- not because I am sniveling holier than thou elitist but because the system we have is based on the ABUSE of free enterprise rather than ON free enterprise and it has failed us so miserably the only way to fix it is to scrap it and start over with something that works better.

              A license to practice medicine in this country has morphed into a license to rob and extort at will.

              That just ain’t right and it ain’t free enterprise.

              Unfortunately Ocare is a disaster because it combines the very worst attributes of our previous system with the very worst of European style systems.

              Despite this I am on record as saying lots of times that while it had a hell of a lot to do with the repuglithans mopping up last month Ocare is a huge strategic victory for the dimmerats and that later on they will win elections because of it for generations.

              I just might be a (GASP !!) CLOSET LIBERAL in some respects.

              Sort of ac /dc politically.

            5. Mac

              re: PC has morphed into a religion and a weapon to control the terms of public debate such that the winners are preordained.

              Best explanation I have ever read. I plan to use it when needed.

      2. It seems pretty obvious (to me) that the purpose of this disinformation and propaganda “campaign” is to distract from the real issues, to suppress widespread recognition of how dire our energy and financial situation is.

        I really don’t think so. Never attribute to malice that which is adequately explained by stupidity.

        1. ”Never attribute to malice that which is adequately explained by stupidity.”

          This should be carved in stone over everybody’s intellectual door.

          But like all other such general statements it is a little to broad to be taken literally.

          I would rephrase it as ” Never attribute to malice that which is adequately explained by stupidity unless you have evidence in hand that malice is involved.”

          There are certainly plenty of occasions when malice matters.

          1. Generally speaking Watcher I believe you are determined to find conspiracies and plots and manipulation by shadowy powers of one sort or another behind just about every bush.

            “I would rephrase it as ” Never attribute to malice that which is adequately explained by stupidity unless you have evidence in hand that malice is involved.”

            Someone is paying you to conceal their horrid plans.

            1. I wish they would hurry up.. I have yet to find a check in my mailbox.

            2. Congress overturned the law that prevented DC from using propaganda on the U.S. public this past summer.

        2. Ron, you could be right. The massive propaganda that we are seeing related to oil and trying to “explain” the oil prices plunge *could* be nothing more than the combined output of thousands of individual reporters, editors and media owners all deciding independently to create said propaganda with no motivation other than to attract more customers, or perhaps to satisfy the needs of their respective target audiences.

          But I doubt that is the case.

          At the same time, it would be very far fetched to try to argue that some unseen central force hiding behind the curtain is dictating false memes and propaganda text to all the many analysts and reporters and news outlets that are generating said propaganda.

          But, as any professional Public Relations practitioner knows, all you need in order to DRIVE the media narrative for the current news cycle is an event — a well planned and executed PR event — of sufficient magnitude, and the news stories and constant echoing of false memes will take on a life of their own. Add to that a few well-placed propaganda pieces into a few high-distribution media sources — The Economist, for example — and that propaganda will get cloned and copied and echoed repeatedly by other news sources for the given news cycle, even embellished and improved upon by “analysts” who buy into the propaganda and/or see value in passing that propaganda along to their own target audiences.

          Reuters has an article — Inside OPEC room, Naimi declares price war on U.S. shale oil. In that article, we see this quote:

          “Naimi spoke about market share rivalry with the United States. And those who wanted a cut understood that there was no option to achieve it because the Saudis want a market share battle,” said a source who was briefed by a non-Gulf OPEC minister after Thursday’s meeting.

          So, who was that person who claims that “Naimi spoke about market share rivalry with the United States”? We don’t know — that person is “a source” briefed by another unnamed non-Gulf OPEC minister. An unnamed and unknown source quoting an unnamed and unknown source. THERE is your authority for this article. But we as the reading audience are supposed to accept it as fact, and many, perhaps most, do. And this is how a false meme — that Saudi Arabia views American shale production as a threat worthy of rivalry — is born. Then “The Economist” writes a major piece derived from that same basic unnamed source, an artist cooks up a really cool piece of political cartoon work to visually depict what the unnamed and unknown source tells us to believe. And a powerful piece of propaganda is picked up on and echoed repeatedly through thousands of mass media channels achieving full saturation. This is just one example. There are numerous others currently making the rounds, all more or less similar.

          Whether the INTENT of this propaganda saturation is to “distract the masses from the real issues, to suppress widespread recognition of how dire our energy and finacial situation is” — or not — is a question that probably can’t be proven one way or another. But I believe it is demonstrably true that the net effect of the propaganda IS to distract from the real issues and suppress awareness of our dire energy and financial situation –whether that is the intent or not.

          Where there is smoke, there is fire. Where there are concentrated barrages of propaganda that all seem to accomplish the same end goal, there is almost certainly a directing force.

          Ask yourself, IF the masses — Joe Sixpick, Joe 401K owner, Joe small business owner and Joe private investor — all knew for a fact just how dire our financial and energy situaiton is, what would be the effect? My guess is fear, uncertainty, severe drop in confidence in the official power structures, all of which leads to ever more problems holding this fragile economy together. So, whether the propaganda is intended to achieve “keep them in the dark” goals or not, it certainly is doing just that, and the benefit to the official power structures both financial and political is obvious.

          Actually, the benefit is to all of us. A severe loss of confidence in our future stability and economic viability is not in anybody’s best interest. That moment will arrive eventually anyway — they can’t keep the “BAU forever” illusion alive indefinitely, not with the oil, financial and environmental issues we have brewing. When total confidence is lost, there will be hell to pay. But for the time being, this propaganda — purposeful or randomly generated by chance, whichever — is playing a major role in keeping that wolf at bay.

          1. “That moment will arrive eventually anyway — they can’t keep the “BAU forever” illusion alive indefinitely, ”

            Maybe they can, as long as they maintain the media norm of avoiding dirty laundry.

            1. When the gas lines form, when we see delivery trucks stranded along the side of the road due to running out of gas, when the just-in-time deliveries cease coming, THAT is when the propaganda-driven illusion evaporates once and for all, if not before.

            2. NW resi:

              re: When the gas lines form, when we see delivery trucks stranded ……

              That is one reason why I am resurecting my ’79 trail 90 and ’81 ct 110. Google ’em. Terrific little bikes able to go anywhere on a thimble of gas. Being in Canada we will/should have access to fuel when pinch comes to shove. There won’t be exports if we don’t have any for ourselves, NAFTA be damned, or the politicians will be booted first opportunity. By my reckoning at least 1/2 the Oil Sands operations can supply domestic fuel. Maybe the new ones will be shut but there wil be some production, regardless.

              As for delivery trucks…rail could step in by decree if necessary and rationing could alleviate bottlenecks with blackmarket trading as required.

              Just a thought. The immediate reason for the bike use is fishing and fun. When it is too windy to fish the chuck this summer I will head up in the bush and fish beaver ponds for trout.

            3. Hi Paulo,

              Yes, man. Being prepared for what is coming down the pike is what we should all be doing. To the best of our individual abilities. You know that I have long admired and perhaps even been a little envious of your setup there in the Canadian hinterlands. Not a bad place to be when TSHTF, all things considered, and even better if you’ve made preparations to be as nearly self-reliant as possible. Based on this article by Ron, it seems pretty obvious that there is a lot less oil reserves waiting for us to burn than we are being told. And with the high yield bond market going to crap, even less still. I’m afraid that the moment of delivery trucks stranded on the roadside, gas lines and other consequences are approaching faster than most of us want to recognize, or CAN recognize. My hat is off to any and all who can see the nugget of truth through the clouds of lies, misdirection, obfuscation and pure B.S. that are being kicked up to conceal our approaching difficulties.

            4. This will probably be gone with a new Ron Post tomorrow, but I found some interesting information today on bike (MC) mileage. My old little trail bikes actually get pretty shitty mileage compared to new products. My 110 does no better than a new Yamaha XT 250, (a modern enduro). Here I thought I was doing well with it. Furthermore, our Yaris which will haul 4 in comfort at 2X the speed does so at about 5/8 the same mileage. Geeeesh. Gotta figure this out.

              I suppose you have mulched your front yard farm operation and making compost? How did the red wheat harvest go?

            5. Paulo, I ended up with a little over two gallons of red wheat harvested, definitely not enough. I ended up with a little under four gallons of high protein corn. About 20 pounds of potatoes, 15 pounds of onions and 4 pounds of carrots. We ate all the green beans before I could weigh them, but it was a lot. However, none of these results are anywhere near as close as what I will get this next growing season. I learned enough the first time to know how to maximize those same crops next year. Mostly it has to do with proper fertilization and better soil prep, something I am in the process of taking care of. I have about 130 square feet of leaves currently undergoing the composting process, adding a hefty bag of chicken poop and stirring it in every few weeks or so — the piles are starting to warm right up. I spread a thousand deep digging night crawler worms to my planters, so they’re busy helping me with soil prep. And I have a cover crop of rye planted in all my planters now, which I will turn under for green manure in a month or two. I could go on and on about the steps I’m taking to really improve that soil. It is a really fun challenge, lots of hard work but I like that too. Thanks for asking! BTW, I am also considering getting a small (125 cc or so) dirt bike for cheap commuting, or at least being able to still commute via motor powered vehicle when gas goes outrageously expensive, which it might someday.

      3. Not saying they are linked to the Sheik vs Shale drama, but….so would ALEC be considered a malicious organization?

        “Hundreds of state lawmakers, most of them Republican, are ALEC members, but nearly 98 percent of its income comes from dozens of wealthy corporations, trade groups and corporate foundations, according to the Center for Media and Democracy. ALEC brings together state lawmakers, right-wing think tanks and lobbyists for some of the world’s most powerful corporations to vote on model bills to be introduced in state legislatures across the country.”

        http://truth-out.org/news/item/27820-alec-opposes-efforts-to-combat-climate-change-at-all-costs

        1. Not saying they are linked to the Sheik vs Shale drama, but….so would ALEC be considered a malicious organization?

          It’s funded by the Kochs. And the Kochs make lots of money from dirty industries, including various fossil fuel projects.

      4. What’s really going on is even more amazing than propaganda.

        Unless someone has a very strong understanding of entropy and the role energy plays in systems – be it economies, organisms, weather, ecosystems, etc – then I have found they will, without the assistance of any propaganda whatsoever, completely miss the mark on this issue.

        To any journalist, politician, or economist energy is just another commodity, and if it goes up or down in price it has a minimal impact, just like if wood went up in price. Due to their paradigm, the lens through which their world is interpreted, they cannot see that everything humans have built is an artifact of available energy.

        I have found it is literally impossible for most people to understands that we are no different than yeast in a wine vat. We have a seemingly endless access to an energy source, and so we multiply. It’s not even an analogy, it is literally the exact same process – we break a C-H bond in a fossil fuel, and harvest the free energy released. Yeast break C-H bonds in sugar. They release CO2 in (relative to their size) massive amounts, we release CO2 in massive amounts relative to our size.

        The problem is this conflicts with their paradigm that we are in control, that we created computers and airplanes and medicine. In a sense we did, but really all our accumulated intellectual prowess is an artifact of the free energy that allowed us to go from 99% farmers to 2% farmers. Technological progress used to take a long time because the amount of surplus energy existing in an agricultural society allowed only 1% of people to be off the fields. As time went on those spared from the fields invented pottery to store surplus energy (food), inventing writing to label the contents of food storage pots, political organization created aqueducts. With more efficient farming 2% of the population was off the fields, and blacksmiths, carpenters, and formal armies were created.

        With fossil fuels it is as though we sped up time. What would have taken 500,000 years we accomplished in 150. To me it truly is the most remarkable period in Earth’s natural history. I say that with caution because I deplore the fallacy of anthropocentrism.

        Point being, most people can’t possible comprehend that we, and everything we have, are simply a natural consequences of thermodynamic processes. To most people we control the economy and resources, so if energy prices change, or a recession happens or growth happens they search for what political policy or monetary policy caused that change instead of how the laws of physics are changing things.

        Perhaps there is some disinformation, but I’ve discovered, upon close investigation, that even the likes of Daniel Yergin and company aren’t intentionally deceiving anyone, they are deceiving themselves because their paradigm distorts their perception of events and information.

        I listened to a peak oil Podcast about 2 years ago with Noam Chomsky as a guest. I was astonished to listen to what unfolded. Someone as bight as Noam Chomsky was incapable of understanding the most basic concepts behind peak oil and its impact on the economy. To him all things that impact an economy are created by people and their desires and wills. I believe, for all his intellect and knowledge, he would have a hard time truly understanding Collapse by Jared Diamond, or Chris Martenson’s Crash Course series.

        Most people simply aren’t capable of understanding, regardless of propaganda.

        1. People, this comment by Brian Rose is, in my opinion, the most profound comment I have ever read on this blog, or any other blog since the term “peak oil” became pat of our lexicon.

          Perhaps there is some disinformation, but I’ve discovered, upon close investigation, that even the likes of Daniel Yergin and company aren’t intentionally deceiving anyone, they are deceiving themselves because their paradigm distorts their perception of events and information.

          Exactly! Peoples paradigm, or their “world view” not only distorts their perception of events and information, but it also dictates exactly how all incoming information is perceived. Every opinion or argument made by even the the most educated and trained on any subject must fit into their world view without altering it. Arguments that contradict their world view are viewed with distrust and contempt. They believe they are either uninformed opinions, conspiracies or propaganda bought and paid for by corporate or government interest.

          A few people, a very few, have a world view malleable enough to be altered by logical argument. That is why the course of the world can never be changed by logical argument. People never hear arguments for any coming disaster and act, they wait until the disaster is upon them and react.

          1. If I understand you correctly, this would be why you frequently say that we are all merely observers?

            1. Of course. People who actually believe they can change the world, have visions of grandeur. The world consist of 7+ billion people, all with a world view they believe to be correct. And you are going to change their minds? Give me a break.

            2. Thanks Ron. I’ve learned an awful lot from you over the years dating back to the oildrum. I used to go into Drumbeat and do a word searches for Darwinian to pick up on new perspectives.

              (With the exception of your recommendation of the movie The Postman -which I thought was terrible. Why would they put Tom Petty in that movie) 🙂

            3. Actually I thought the idea of “The Postman” trying to deliver the mail and also preforming Shakespeare after the collapse a little silly. But otherwise I thought the view of what the aftermath of the collapse might look like to be pretty realistic. Or at least a pretty realistic guess.

              MRQE gave the movie a 49, pretty low. They did not mention Tom Petty as a cast member.

            4. He played the role of the Bridge City Mayor. He even alluded to the fact that he was somewhat famous before the collapse.

            5. I thought “The Postman” was a very good movie the first time I watched it, which was before I became aware of peak oil and related issues. Now that I am aware of those issues, I consider it an even better movie. I am slightly biased being a Kevin Costner fan, given the fact that Kevin Costner is an alumni of the university I graduated from. The fact that so few people appreciated that movie is I think a reflection on the inability of people to come to terms with the future that we are heading into.

          2. Exactly! Peoples paradigm, or their “world view” not only distorts their perception of events and information, but it also dictates exactly how all incoming information is perceived. Every opinion or argument made by even the the most educated and trained on any subject must fit into their world view without altering it. Arguments that contradict their world view are viewed with distrust and contempt. They believe they are either uninformed opinions, conspiracies or propaganda bought and paid for by corporate or government interest.

            IMHO, The problem is further compounded by the fact that the vast majority of people hold views that are not founded in the hard sciences. Case in point, most economists! This is also why I do not consider economics to be a real science. Because the soft sciences lack a central paradigm that works.

            http://www.thwink.org/sustain/glossary/ParadigmChange.htm

            According to Kuhn, “A paradigm is what members of a scientific community, and they alone, share.” Unlike a normal scientist, Kuhn held, “a student in the humanities has constantly before him a number of competing and incommensurable solutions to these problems, solutions that he must ultimately examine for himself.”

            Once a paradigm shift is complete, a scientist cannot, for example, reject the germ theory of disease to posit the possibility that miasma causes disease or reject modern physics and optics to posit that ether carries light. In contrast, a critic in the Humanities can choose to adopt an array of stances (e.g., Marxist criticism, Freudian criticism, Deconstruction, 19th-century-style literary criticism), which may be more or less fashionable during any given period but which are all regarded as legitimate.

            Why can “a critic in the Humanities” adopt a variety of different paradigms and still be accepted in her profession? Because the soft sciences lack a central paradigm that works. That’s why they’re soft compared to the hard sciences of chemistry, physics, medicine, etc.

            Sustainability is one such soft science. Wouldn’t it be nice if it had a paradigm that worked?

            BTW, I actually disagree profoundly with that last statement… ‘Sustainability’ can only be understood and discussed from a hard sciences perspective, i.e. limits are physical chemical and biological and therefore can not be subject to philosophical interpretations. The problem is that most people don’t like the paradigms of those particular hard sciences. They rather believe in invisible hands, sky daddies, and falsehoods such as: humans are special, and that they are exempt from natural laws. The Universe is the way it is whether someone likes it or not.

            Cheers!

            1. Unfortunately I know a lot of hard science schooled guys not believing in any limits at all. The people I know, that are aware of limits, are people with an education and/or experience in both hard and soft sciences.
              The hard sciences made us building bridges et cetera. The hard sciences made us use fossil fuels. The hard sciences made us take this path to growth.
              As an engineer, I claim to understand limits, entropy, the yeast-analogy, … I claim to have a world view based on reality, physics, chemistry, the whole shebang.
              Still I strongly believe the ‘solution’ to the collapse of the actual paradigm will not come from technology, it will not come from engineers, not from the hard sciences. We will be thrown back to the ultimate first ‘science’ that has ever existed: Philosophy.
              Post collapse people will ask themselves more than ever: “Why? What is good, what is wrong?”
              A new philosophy will give answers. And based on that completely new world view, the remains of knowledge of hard sciences will build a new society.
              We (hard scientists) need to be humble: it’s our fault the world became a mess. We don’t need to blaim economists. Without us, they wouldn’t even exist.

            2. Hey Fred – thanks for that thwink.org link – lots of interesting stuff there.

          3. Thank you Ron. Truly an honor to contribute in whatever way I can. Many here are in awe of you and a few others ability to put in the time and diligence that keep this community alive and growing.

            On the subject of paradigm, the very existence of this site and its polite and rational community not only keeps the discussion of oil supply limits thriving, but perhaps far more importantly gives an outlet for lurkers and commenters alike.

            In a world saturated with people who are permanently blind to this issue this community prevents the socially dislodging feelings of isolation that naturally occur when you look around and find no evidence that even a single person can see what you see.

            I suspect there are numerous lurkers who use this site as a sort of sanity hub. I lurked for years on TheOilDrum and here, even LifeAfterTheOilCrash before that. Resilience.org and PeakProsperity.com are also bastions of sanity more centered on preparing for a changing world.

            Here we are simply asking “According to the data when will the next supply crunch occur?” After anticipating the global financial crisis from the peak oil lens, and then seeing it unfold perfectly as predicted I learned two things:

            1. 99% of people are incapable of understanding this issue. It is extremely easy to see the strong connection between a record run in oil prices to $147, and the ensuing recession. Especially since the world accepts the two worst recessions since the Great Depression were cause by less severe oil prices spikes in the 70s and early 80s. It’s just as easy to see the correlation between slow global growth and $100 oil, but again peoples paradigms don’t allow for this simple and very direct story to be understood.

            2. Everything seems okay until very, very quickly it can come to the brink of complete collapse. Once the next crunch happens we may take a path where something like TARP doesn’t pass, and the gears of our economic system freeze. It would have been chaos; we are truly lucky, in my view, to live in the world we live in today. This is paradise compared to what was possible at the height of the financial crisis. I think we will face a similar crisis next time where it is completely unpredictable whether we’ll pull through in tact. All I know is the more times you flip a coin, the greater your total odds of landing on tails at least once.

        2. Brian, I agree with almost everything you say. And not all notable individuals who stand up in public and dish out incorrect information are necessarily involved in purposeful creation of propaganda. Yes, many people just don’t have a firm grasp of the facts but think they do, for the exact reasons that you state.

          But let’s look at the article by The Economist featured above that began this whole discussion. It is a major front page news piece presenting as absolute fact an explanation for oil prices dropping, based on the word of an unnamed source who is quoting an unnamed non-OPEC oil minister. What are the chances that the editor and CEO of The Economist might suspect that the information they are presenting is something other than absolute truth?

          So why would they do it? One reason only. And that is, it is critical that the general population not know the real reasons behind the rapid drop in oil price, because that would open the door to other questions which those in authority do not want to have to answer. We know what those questions are, and we know what the answers are. But the vast majority do not, and the powers that be need desperately to keep it that way. It is a national security issue.

          Why is it a national security issue? I’ll try to explain. Take me for example.

          Last year around April or May I was totally unaware of Peak Oil or related concepts. At that time, having a good job and earning a good income, I was a happy consumer. I was driving a lot — to the mountains, the beach, renting condos for the weekend. I was regularly dining out. I took a lot of pleasure in spending my money on different activities. I was at the time contemplating buying a new car, not because I needed one, but because I wanted one. And I had several big vacations planned. And I had a rather small but not insignificant 401K that I regularly contributed to.

          But I had a feeling that something was not right with the economy. I couldn’t understand why if we were experiencing a recovery and a growing economy that the government had to do another round of QE. And in my 401K, the mutual bond markets that I had invested in weren’t growing at all, which concerned me. I started investigating and that investigation lead me to Oil Drum archives and to an introduction to Peak Oil. The rest is history.

          How did my behavior change? I cancelled my decision to buy a new car. I cut back severely on my free and easy money spending ways. I cancelled two of my three expensive planned vacations. I cut way back on dining out. I decided to cash in my 401K and take the hit with penalties because I was AFRAID that if I waited to long, it would turn to zero anyway. I completely changed my purchasing and spending activities. I hunkered down. I stopped spending and started saving. I started prepping and continue to do so. I settled in for the long wait, convinced that this current version of civilization cannot continue for much longer.

          Now, just imagine if millions and millions of working Americans suddenly became “aware” — just like me — and they all more or less dramatically changed their purchasing, spending and investment habits in more or less the same way I have done. What would be the result? End of story for the economic recovery? The pool of investing suckers with their money in high yield bonds would tank? Retail, hurting as much as it is now, would probably go belly up? Not only that, but of those people who owed a lot of money for different credit purchases, many might just decide screw it, why should I bother trying to keep my credit score clean when it is all coming to an end anyway.

          I could go on and on. But I’m sure you get the picture. THAT is why the masses MUST be kept in the dark, because if the truth were to leak out as to how dire our energy and financial situation is, well, there would be serious consequences due to consumer spending behavior. That is a national security concern when national security is highly dependent on a vibrant and strong economy and the mutual participation of the masses in that economy.

          1. NorthwestResident,

            Tremendous story! I’m quite glad for you. I used to despair about how most people will face very difficult lives in the future. This led to me trying to awaken them to this issue, so at least those I know could be better off. After nearly 10 years I have not had a single friend, family member, or co-worker make a single change in any way. That is why hearing stories like yours in heartening . At least there are people figuring it out, and improving their future prospects as a consequence.

            I’ve always thought that if “the powers that be” truly had knowledge of this issue they would prevent public understanding BUT ALSO enact policies that would minimize its impact. Even if it is against their best interest (like oil companies) a genuine understanding of peak oil would lead to an incredible investment in PV, wind, batteries, smart grids, more efficient vehicles, slef-driving vehicles, and on and on. There are many, many things that could be done. If any group of people had the power to control the “story” of oil prices and supply to the entire world (this is a global issue), then they would ALSO have the power to do Cap and Trade, invest very, very heavily in renewables, convince Americans that global warming is a thing and actually happens (since the solution to global warming is identical to the solution to oil depletion).

            Basically, if anyone has the kind of power and knowledge you are professing, then they would also do something to deal with the issue. The world we inhabit is, to me, proof that no one is in control of this bus, and that very, very few people with any kind of influence have even a fraction of an inkling of any awareness of limits of any kind.

            Although we may have different IDEAS on that specific area, we are, nonetheless, enacting the same useful ACTIONS, which is all that matters in the end. So congratulations, and welcome to the world after the Red Pill!

            1. What I find, even among people who agree with me, is that a lot of people have different causes which they are most passionate about.

              I have always been interested in environmental issues, and as such, I am concerned about global warming, though I also feel it is not a good motivator for most people.

              Since the Carter days I have been concerned about oil running out and have felt the country should address it.

              I didn’t like coal because of the pollution and environmental damage mining causes, and I worried about oil running out, but now the fact that both are heating up the world to dangerous levels is an additional concern.

              But as I read places like the New York Times and I read stories my friends highlight, I find that some people are most worried about income inequality, some about rights issues, some about health in Africa, some about animal abuse and so on. Everyone seems to be campaigning for attention, resources, and action for their particular cause. There is no collective, “This is the most important problem we should address.” So getting everyone on the same page, even if they support the concepts of peak oil and global warming, is not easy. You almost need a dictator to say, “I am going make reducing CO2 production THE priority for our country. Everything we do will be toward that end.”

              I also sometimes think, for those who believe Jesus will return and save them, “I wish Jesus would come back and give hell to everyone who has spoiled the Earth.”

              I also think that we have become so affluent that we have the luxury to pick and choose our causes. As a society we’ve worked ourselves up the Maslow’s hierarchy so that we are beyond mere survival concerns and can crusade for whatever we believe important. Maybe if we were in more of a survival or war-mobilization mode, it would be easier to get more people focused on one or two issues.

      5. How’s it going NR

        Many years ago I wrote a book titled “Mind of a Predator”. I think that the only people who bought it were Evolutionary Psychologists, and that was like preaching to the choir. Anyway, to make a long story (286 pages) short, the gist of the book was that humans have been able to develop technology (which is our primary survival mechanism) because somewhere along the line we acquired a tremendous capacity to mimic. We not only acquired a capacity to mimic, but that capacity is instinctual. Most of the time we don’t even know that we are doing it. Being that it is an instinct, it takes place in the lower brain functions, and our higher cognitive brain functions are completely unaware as to what is happening.

        Literally we copy everything we see, hear, taste, touch and feel. If he’s wearing red lint in his belly button, pretty soon almost everyone is stuffing their belly button full of red lint. Of course they have no idea why; it is simply just what you do. It is what makes the effects of advertizing, propaganda, and religious doctrine so incredibly powerful. The whole thing takes place far, far away from any cognitive brain function. It has been the driving force behind our species success, and as I argued in the book, it conflicts with our other instincts.

        It is possible that there is a greater conspiracy to hide the truth from the masses. It is more likely that those same masses are just mincing everything that comes their way. It is pretty hard to get around design flaws – especially if you don’t even know that they exist.

        BW Hill
        of
        http://www.thehillsgroup.org/

        1. I start with the premise that public opinion and public perception is without doubt a national security issue. And I ask myself, does broadcast media have an effect on public opinion and public perception. The answer to that question is, undoubtedly yes. Here is just one of many examples that establish that fundamental fact:

          THE IMPACT OF THE MEDIA ON NATIONAL SECURITY POLICY DECISION MAKING

          http://www.au.af.mil/au/awc/awcgate/ssi/media.pdf

          Many more examples can be found simply by searching on the phrase “is public opinion a national security issue”.

          Next question. Would the CIA or other intelligence agencies sometimes, for whatever reasons, attempt to manipulate public opinion? The answer, clearly, is yes. Again, many examples can be found by doing some search engine investigation. Here’s an example:

          CIA influence on public opinion

          At various times, under its own authority or in accordance with directives from the President of the United States or the National Security Council staff, the Central Intelligence Agency has attempted to influence domestic and international public opinion, and sometimes law enforcement.

          http://en.wikipedia.org/wiki/CIA_influence_on_public_opinion

          I totally agree with the opinions expressed on this topic by you and Ron and others that “the masses” by and large are simply mimicking and/or deceiving themselves by filtering out information that doesn’t fit into their world view or that threatens their perception of reality. In fact, these attributes of human psychology are well known to public relations specialists, along with many other human psychology traits that makes it possible to devise clever schemes to influence, indeed CONTROL mass public opinion and perception.

          In this day and age, and for quite some time, every major corporation has recognized the need to maintain a solid and active public relations component. The role of public relations is to do extensive research, to identify potential future threats, to sample attitudes and opinions in the various target markets, to use focus groups and trial balloons and other methods in order to determine how best to manipulate and/or influence the opinions and perceptions of their target markets.

          Governments do the same thing. This, I believe, is a given and doesn’t need to be substantiated. The information that proves this point is widely available, and I believe falls under the category “self-evident”.

          In our world today, given the developing energy, environmental and financial crises, public opinion and perception must be contained, molded and controlled. It would be totally irresponsible for our federal government to just let public perceptions and opinions develop on their own, without making any attempt to influence those perceptions and opinions. This has always been true, but it is more true today due to the many crises that we have developing, and it will be even more true tomorrow.

          Preventing panic, fear, distrust in governmental and corporate institutions is a very high priority.

          The U.S. Military, the CIA and I assume all of the major industry CEOs and all the very wealthy individuals who sit on top of it all are without doubt highly invested in controlling public perception and opinion. Are they above lying to us or creating false memes to distract us from very unpleasant realities on the horizon? Just consider the past. Think “yellow cake”, “weapons of mass destruction” and “nuclear cloud”. Billions of opinions were formed based on those obvious lies, individuals who attempted to expose the lies were subjected to powerful attempts to discredit them. That’s just one small example. Yes, they will lie to us and they will resort to other methods in order to influence our opinions and perceptions.

          Public perception and opinion IS a national security issue, much more so today perhaps than ever before, even thought that basic premise has been very true in past national crises.

          So, I’ll stick to my assertion that there are powerful, consolidated forces actively working to mold, manipulate and control public perception and opinion. Same as they always have. Same as they will always do, until they can’t — if that day ever comes.

          “Modern business must have its finger continuously on the public pulse. It must understand the changes in the public mind and be prepared to interpret itself fairly and eloquently to changing opinion.”
          ― Edward L. Bernays, Propaganda

          “Men (people) are rarely aware of the real reasons which motivate their actions.”
          ― Edward L. Bernays, Propaganda

          But being dependent, every day of the year and for year after year, upon certain politicians for news, the newspaper reporters are obliged to work in harmony with their news sources.”
          ― Edward L. Bernays, Propaganda

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

          1. Seems like if the government was really able to control the media, it wouldn’t be allowing Fox News to have its say. What good does that network do other than to promote fantasies among the opposition?

            1. Keeping Dems versus Repubs divided and at each other’s throats on side ring issues is a great way to keep them distracted from the real issues? That’s not my original thought, one I’ve read in quite a few places, but maybe it is a good answer?

              Speaking about Fox News, I find this article at the top of Yahoo main page: “Saudis Fire Again in Oil War Against U.S. Shale”

              http://www.foxbusiness.com/markets/2014/12/05/saudis-fire-again-in-oil-war-against-us-shale/

              This is the power of propaganda and the power of big lies and obfuscations when presented properly. This is a propaganda piece taking on a life of its own, echoing across the broad spectrum of media outlets, influencing the minds and attitudes of millions.

        2. I thought we were the original inventors of technologies such as throwing stones, using sticks to hit chimps on the head, cooking meat and yams, painting signs on caves, and tying others to a stake to cook them. Where did I get this wrong?

    1. So storage is below a 5 year average, and a 5 year minimum, and it looks like it will get down to 200 billion cubic feet, which is greater than zero so . . . this doesn’t seem like a problem unless consumption is relentlessly climbing.

      If you don’t get to zero, no one is going to care all that much.

      1. Watcher,

        Note that 2014 is around 150-200bcf below the same time in 2013, and that 2014 bottomed out around 200bcf above 0. If the same trends from last winter are followed then storage will be scraping pretty close to 0 next march.

    2. Am I reading this wrong?

      Shouldn’t the start of the following year on the left hand side be equal to the end of the preceding year on the right hand side?

      I.e. 2013 starts at the left at the same level that 2012 ends on the right?

      Or am I missing something (say like the consumption of gas in December which isn’t captured in the graph)?

      1. Just briefly eyeballing it, I guess the problem is that this should be a bar chart. Each month’s data is sampled on a give day, say the Ides. There is no reason to assume the Dec 15 has the same value as Jan 15. But the line chart makes it look continuous.

  12. I know that when I use the numbers and the simple calculations that they are so ridiculous they are preposterous. The oil won’t be burned at a rate of 77 million barrels per day for ten thousand days and on day 10001 it is instantly gone. I do it to somehow get across that oil is not infinite in quantity. It will someday not be there in the quantities there are now. That day of reckoning will arrive. Or, a day of ‘wreckoning’.

    Seeing all of those zeros and then dividing a couple of numbers to come up with another number with a few more zeros even after the division is merely an exercise in foolishness. Pay no attention to them, it is for the nonsense. So Saudi.

    Tough to tolerate the idiocy at times, patience wears thin. All apologies for the half-witted caterwauling.

    As an old friend used to say, “I want patience and I want it NOW.”

    1. That’s some bad business writing.

      Wells that are producing oil or gas are extraordinarily profitable, because most of the costs are sunk.

      If a company is still paying off debt, that business isn’t profitable.

      And the writer doesn’t understand that improving technology isn’t going to get more oil out of places that don’t have more to give.

      It’s interesting how folks want to say, “See, we have this technological miracle, and now those Saudis are trying to undercut us with UNFAIR competition. The free market isn’t supposed to do this.”

      1. I should clarify. If the company is paying off debt at a certain rate, it might be “profitable.” It’s possible that debt maintenance is stretched out of such a long time that the companies can keep up with it at the moment, but the way it is written, it sounds like the companies have covered the expenses upfront and therefore they are profitable companies because some money is still coming in.

        I suppose if you have a huge mortgage and you are staying on top of payments at the moment, your lifestyle is profitable, but I don’t think the article is very clear.

      2. Yeah.

        This goes back to the discussion of marginal costs a few threads ago. Strictly speaking these wells aren’t profitable, but the are cash flow positive. From the point of view of a someone deciding whether to keep them running, it is profitable to do so, because the sunk costs are a done deal.

        So it’s not the total cost of the oil that decides what comes onto the market, but the marginal cost — that is, total costs minus the cost of servicing debt.

        1. If the current owner can’t pay the loan payments then it can sell the property, if it finds a buyer. If the outstanding loan is perceived to be more than the well value I want his bank’s name, please.

  13. You gotta read this one: Natural gas: The fracking fallacy

    All of those investments are based on the expectation that US gas production will climb for decades, in line with the official forecasts by the US Energy Information Administration (EIA). As agency director Adam Sieminski put it last year: “For natural gas, the EIA has no doubt at all that production can continue to grow all the way out to 2040.”

    But a careful examination of the assumptions behind such bullish forecasts suggests that they may be overly optimistic, in part because the government’s predictions rely on coarse-grained studies of major shale formations, or plays. Now, researchers are analysing those formations in much greater detail and are issuing more-conservative forecasts. They calculate that such formations have relatively small ‘sweet spots’ where it will be profitable to extract gas.

    The results are “bad news”, says Tad Patzek, head of the University of Texas at Austin’s department of petroleum and geosystems engineering, and a member of the team that is conducting the in-depth analyses. With companies trying to extract shale gas as fast as possible and export significant quantities, he argues, “we’re setting ourselves up for a major fiasco”.

    All of those investments are based on the expectation that US gas production will climb for decades, in line with the official forecasts by the US Energy Information Administration (EIA). As agency director Adam Sieminski put it last year: “For natural gas, the EIA has no doubt at all that production can continue to grow all the way out to 2040.”

    But a careful examination of the assumptions behind such bullish forecasts suggests that they may be overly optimistic, in part because the government’s predictions rely on coarse-grained studies of major shale formations, or plays. Now, researchers are analysing those formations in much greater detail and are issuing more-conservative forecasts. They calculate that such formations have relatively small ‘sweet spots’ where it will be profitable to extract gas.

    The results are “bad news”, says Tad Patzek, head of the University of Texas at Austin’s department of petroleum and geosystems engineering, and a member of the team that is conducting the in-depth analyses. With companies trying to extract shale gas as fast as possible and export significant quantities, he argues, “we’re setting ourselves up for a major fiasco”.

    1. Mr Patterson: I tend to distrust articles written in publications owned by Nature publishing group (including Scientific American), because they have a heavily political editorial slant to their content. However, this article does have a bit of truth to it. The gas reserves are going to be squeezed hard if the USA starts exporting large volumes to Europe and other overseas customers. On the other hand, if gas prices climb to $10 per MMBTU the resources available for extraction will definitely grow. Nature (the publication) has a very tight focus on eliminating fossil fuel use of ANY type, they are publishing a lot of garbage (did you read their “false hope” by Michael Mann?), and they put out of half truths.

      1. FL,

        Can you describe your disagreements with the False Hope article by Michael Mann?
        I’m curious, not disagreeing.

        Which half truths are you referring to, from Nature publications?

        1. Mann tends to use distorted graphs, swaps data bases in his article. Here’s a critique I wrote about that particular article:

          http://21stcenturysocialcritic.blogspot.com.es/2014/07/false-hope-by-michael-mann.html

          I don’t consider myself a climate expert, but I spent a lot of my career serving as a quality checker or policeman for very complex data assemblies, reservoir models, and of course lots of graphs and tables. I found wise guys like Mann quite often, so I learned to analyze their tricks. Mann isn’t particularly sophisticated. For example he cuts off portions of data which contradict his thesis. He also has a tendency to discuss northern hemisphere trends, then does a “magician’s swap” and discusses worl wide issues. Anyway, read my critique, and if you want toget into it deeper I suggest you discuss it with McIntyre.

          1. Kind of an odd article. Why didn’t you present any counter-evidence?

            1. I guess you don’t get the point. The guy discusses northern hemisphere trends, then presents a graph full of lines, and THEN leaps to make worldwide conclusions. I’m not the one trying to make a point, he is. And what he put together is deceitful. Thus I conclude he is more a political scientist with a focus on propaganda. I’ve never been too focused on the Climategate zingy, but I am subscribed to Scientific American, and as soon as I read it I saw the guy was spinning data. This led me to write a critique. My blog is more about politics, but the climate controversy is very political. And so I like to poke fun at the fake “97 % consensus”.

      2. Mr Leanme, the author of that piece is Mason Inman and I do trust him. He is a peak oiler and is very familiar with all the shale oil plays

        I also trust the publication Nature. I find they are very objective and without any political bias. I have no idea why you think they are have a political bias. It is a scientific publication, not a political publication. Ditto for Scientific American.

        1. Ron, Inman may write high quality pieces…but I don’t trust anything I read in a Nature publishing owned journal. My suggestion to researchers in general is to fight the big publishing monopolies, but Nature has a different (and serious) problem.

          I don’t necessarily disagree with a more cautious approach to shale gas estimates. I have already expressed my opinion that North Dakota should do a much better job regulating gas flaring, and I would discourage gas exports via LNG unless they also serve a strategic geopolitical purpose. But an article called “the fracking fallacy” shows a very poor choice of words. Inman probably lacked the power to dictate the title. But if he chose it then he is playing ball for what I consider to be a carefully orchestrated propaganda campaign Nature has been mounting for years.

  14. Great news, US to keep production increasing by hunkering down in the sweet spots.


    Focus on top spots to boost U.S. oil output even as well permits fall

    U.S. energy firms are swiftly shifting drilling rigs away from less productive areas and hunkering down in sweet spots of North Dakota and Texas shale oil fields as they try to lift output and cut costs in response to the toughest crude market in years.

    Rig deployments or applications for new well permits fell by half in recent months in parts of North Dakota’s Bakken formation and the Eagle Ford and Permian Basin in Texas, but the most prolific areas are holding up, according to officials and data from the two top crude-producing states.

    The numbers show how big companies such as Apache Corp and Continental Resources Inc. are already implementing plans to focus on the juiciest parts of shale fields. They say the strategy will produce double-digit output growth next year even as they trim rigs.

    Overall, new well permits granted nationwide tumbled 40 percent in November according to data firm Drilling Info.

    Investment bank Simmons & Co forecast this week the U.S. onshore rig count would fall by 500 through next year from 1,851 now, a 27 percent slump.

    1. When operators cut back on drilling in the Barnett Shale and Haynesville Shale Plays, and presumably focused on the sweet spots, it didn’t work out so well. Barnett Shale play gas production is declining, and total Louisiana gas production declined by 20% from 2012 to 2013.

      1. Yeah.

        I guess they were deliberately saving the sweet spots for tough times. Sarcasm light is ON……

        ”are already implementing plans to focus on the juiciest parts of shale fields.”

        yuk yuk yuk!!!

      1. A decade of hope, a decade of despair. That’s it. And all will be history.

        1. It’s a function of price. According to what I read USA gas prices made drilling for dryer gas a dicey prospect, but they had condensate and very light oil targets they could drill?

          When I saw the proposed USA EPA CO2 emissions rules I felt Obama had been sold a bill of goods regarding USA gas resources. They seem focused on encouraging the use of gas but fail to realize gas resources are finite and most of what’s left in the ground requires higher prices.

          But I’m pretty sure that if gas prices increase to say $10 per MMBTU the horizon opens and the USA has a few decades’s worth. In the end, it comes down to a lack of alternatives. The USA doesn’t have the technical means to go full tilt for wind and solar, so it seems to me it will use nuclear, pay a higher price for gas, and use coal as much as it has to. But renewable technology just isn’t viable for large scale use. I don’t see more than 20 % penetration, including hydro in the next 20 years, for total USA energy needs.

    2. So the sweet spots will get drilled out even more quickly, then. There’s absolutely nothing bad about this course of action whatsoever.

      1. Sam, no one even hinted that there was something wrong with that course of action. And because you think we were suggesting there was something wrong about it means you missed the point entirely.

        The point is the drillers, that is the oil companies, are saying: “We will now only drill only the sweet spots because all areas outside the sweet spots are no longer profitable.”

        That is exactly what we expected them to do.

        1. Ron,

          I was trying to be a bit sarcastic, but obviously it failed. Someone should develop a font for that or something. Focusing only on the sweet spots will, of course, lead to them getting drilled out faster, and thus will probably ultimately lead to them peaking more quickly (at a higher output rate) and then probably declining faster. Not a good plan, long term.

          1. Sorry I misunderstood Sam. However I don’t think drilling only the sweet spots will cause them to peak at a higher rate. They have already drilled out most of the sweet spots and are now drilling the fringes of the sweet spots. And of course they are downspacing everywhere inside the sweet spots. Downspacing gets them less oil per well but they don’t have to acquire new acreage. But by only drilling the sweet spots growth has to decline… and soon production will start to decline.

        2. If a shale company says it is now going to focus on its sweet spots, in my opinion that is just another feeble attempt at reassuring the public that 60 dollar oil is no problemo. Areas of over pressured, highly oil saturated shale were delineated years ago and shale companies have already been hammering away in those sweet areas, I assure you. That is where their best economics were, even at 100 dollar oil. Look at maps of horizontal laterals in the Bakken; its starting to look like pixie sticks.

          I think we might be seeing that these sweet spots are already becoming overly saturated with well bores; IP’s are coming down, it appears, and water production is definitely increasing from pressure depletion. Regardless of declining well costs, or the need to keep up appearances, at some point it does not make economic sense to drill wells on 30 acre spacing when wells on 60 acre spacing will recover the same amount of oil.

          Mike

          1. Excellent, Michael:

            “If a shale company says it is now going to focus on its sweet spots, in my opinion that is just another feeble attempt at reassuring the public that 60 dollar oil is no problemo. Areas of over pressured, highly oil saturated shale were delineated years ago and shale companies have already been hammering away in those sweet areas, I assure you. ”

            Exactly. Why would they have been drilling anywhere else the last 3 or so years.

            In this same context, the latest parade of analysts marching to the microphones to release their lower and lower estimates of shale breakeven is absurd. 9 months ago these numbers were $80/barrel when trying to assess profitability.

            The array of lies being thrown about is just mind boggling, but utterly normal for Wall Street.

            1. This is a case Watcher when you have plenty of evidence of malice.I totally agree.

          2. just another feeble attempt at reassuring the public that 60 dollar oil is no problemo

            My guess is they are trying to reassure Wall Street.

      2. There’s a subtle issue which may have made forgoing some sweet spots a better option: sometimes we develop knowledge which allows us to improve recovery factors.

        For example, if the west Texas permian basin carbonates were developed using what we know today we could squeeze about 5 % of the oil in place on top of what we will recover.

        The shale production technology is in its infancy, I sense many development teams don’t understand the nature of the target reservoir, and there is a lot of guessing or learning by the seat of the pants going on.

        However, this is a minor point. As of righ now they will go for what they think yield the best returns. And recovery factor gets overruled by cash flow and return on capital employed.

    3. I’ve been mulling over observed net decline rates (net decline is after new wells were added) versus the gross decline rate from existing wells, i.e., the estimated decline rate if drilling stops.

      Following is an excerpt from up the thread:

      North Sea Crude + Condensate (C+C) production peaked at 6 mbpd in 1999, when the annual Brent crude oil price was $18. North Sea C+C production was down to 2.5 mbpd in 2013 (when Brent averaged $109), a 6%/year rate of decline in production versus a 13%/year rate of increase in Brent crude prices.

      The observed 6%/year North Sea decline rate is of course the net decline rate. It seems to me that in order to maintain 6 mbpd, given the observed 6%/year net decline rate, they would have had to add about 360,000 bpd of new production per year, year after year, on top of the new production that they added in order to keep the net decline rate down to 6%/year.

      Or in other words, in order to maintain 6 mbpd, they would have add to add another 5 mbpd of new production in 14 years (0.36 mbpd per year X 14 years), in addition to the contributions from all new wells put on line after 1999.

      1. “(net decline is after new wells were added) ”

        How sad is it that one must be sure to clarify that? Decline rates have been corrupted by media. I’ve heard it before:

        The peak oil crowd is delusional. They talk about decline rates in the Bakken and THERE IS NO DECLINE. Output is steadily increasing. They are clearly insane.

        1. Of course, it’s when, not if, that new production can no longer offset the declines from existing wells, and that’s when we see a net decline rate kick in, which is what happened in the North Sea after 1999. I think that it’s interesting to look at what it would have taken to maintain constant production in some regions that have peaked.

          Another example would be the North Slope of Alaska, where C+C production fell from 2.0 mbpd in 1988 to 0.5 mbpd in 2013, a 5.5%/year rate net decline rate, which is quite similar to the North Sea net decline rate. So, given that decline rate, in order to maintain 2.0 mbpd out to 2013, the industry would have had to put on line on the order of another 2.8 mbpd of production from the North Slope, in addition to all new wells that were actually put on line from 1988 to 2013.

          http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=manfpak1&f=a

          1. Ah yes, but the phrasing will be, what it always is:

            The field has entered a period of decline because of inadequate investment. Tax policy has discouraged the sort of investment that would grow production.

            Scotland was playing this game when they claimed they could raise production and fund themselves separate from the UK. All they needed was more investment.

            Of course in the physical, not fiscal, world investment means drilling more holes, even if they are not economical.

    1. That LNG project was dead the moment new gas pipelines were agreed in Asia few weeks ago. Asians customers just crunched the numbers.

      1. Pipelines will always trump LNG carriers. Always.

        Which is why Russia is going to win in Europe.

        1. Europe knows her fate. The only problem is how to “persuade” the Americans where Europe’s fate lies. 🙂

        2. I agree again with Watcher.

          Russia has in my opinion made the decision to live with low oil prices as painful as they are for the country so as to maintain her reputation as a reliable supplier, a supplier a country can count on- so long as the bills are paid of course.

          Nobody has mentioned it except me so far as I have noticed but Russia could put the monkey wrench in the gears of BAU in a heartbeat by shutting off exports for just a few days.

          AS A MATTER OF FACT – were the Russians to make the decision to do so- they could probably easily raise the price of oil twenty bucks a barrel all by themselves by just withholding a couple of million barrels a day.

          People who are trained in economics can blather along to their hearts content about markets always winning out but in the long run geology trumps markets as Jeff Brown points out so often.

          There just aren’t that many more places to go to find new oil and the places that are left are going to all be high cost and fast depleting..

          1. Mac, maybe i wasn’t clear. EU pop and politicians knows very well with whom they should rationally align with. But they are not sovereign anymore. So it does not matter what Russia does (see South stream) until the times come to pull the last “nuclear” card (stop the gas and oil flow).

            1. They don’t have to. All they have to do is claim the sanctions are hurting the russian oil industry, and cut 1 million BPD gradually over the next six months. That should get the message to Angela Merkel to stop being so aggressive.

            2. Europe doesn’t need Russian oil. There’s plenty of the gunk around, for the time being at any rate. And when it runs out Russia won’t have any either.

              Russia has some leverage in the gas market, but not much in the oil market.

              More importantly, russia is very small economically compared to the EU, and is bonkers to try to start a trade war with them.

            3. Removing 1 Mmbpd from world oil supply should offset the 10 % reduction in cash flow.

              I can’t understand why you think the removal of 1 mmbopd won’t send a message to Merkel. The Russians could easily send a stronger message using sanctions to cut 5 % of their gas exports to Germany. But I don’t think that’s going to be necessary. The Europeans will reach an accommodation with Russia, after all it was their botched move which precipitated the crisis.

    2. Thanks for this Paulo.

      Even with Premier Clark and her Minister of Natural Gas sweetening the pot, at the expense of the citizens of British Columbia, BC LNG just isn’t that enticing.

      From the article…

      B.C.’s net income tax rate will be 3.5 per cent for LNG players — half of what was proposed earlier. The rate will rise to five per cent in 2037 once the industry is established

  15. Hi all,

    Something that is sometimes not understood is that reserves are both depleted through production and they are added to through new discoveries and reserve growth.

    Using EIA data for non-OPEC reserves and deducting Canadian oil sands from 2003 to 2013 where they have been added to Canadian reserves in the EIA data (using estimates from BP data) we find that non-OPEC reserves increased from 240 Gb in 1990 to 273 Gb in 2013 (dipping to 211 Gb in 2001), over that same period non-OPEC countries produced 341 Gb of C+C less extra heavy(XH) oil. The R/P for C+C less XH over this period varied from 13 to 15 and the depletion rate (reciprocal of R/P ratio expressed as a percentage) varied from 5.5% to 6.9%.

    I think Ron may have forgotten to exclude oil sands from the non-OPEC reserves, the 175 Gb of oil sands reserves produce at an R/P of about 250 with a depletion rate of about 0.4%.

    OPEC reserves are approximately 690 Gb in Dec 2013, this is found by subtracting 220 Gb of Orinoco belt reserves, 441 Gb of non OPEC reserves, and 300 Gb of speculative OPEC reserves from the 1650 world total.

    I checked this method against Jean Laherrere’s 2010 World estimate for C+C-XH and it was 25 Gb too high (875 Gb instead of 850 Gb) or high by 3%, so the OPEC estimate should be reduced a bit to 670 Gb. The OPEC R/P is 57 in 2013 and the depletion rate is 1.8%.

    Also note that when we reduce 1990 opec reserves by 300 Gb (speculative reserves) we get 460 Gb, in 2013 reserves have increased to 670 Gb (excluding Orinoco belt and speculative reserves) or about a 210 Gb increase in remaining reserves, over the 1990 to 2013 period about 250 Gb of oil was produced, thus discoveries plus reserve growth was 460 Gb. Thus the discoveries plus reserve growth plus production over the 23 year period was about equal to the remaining reserves in 1990. How does this compare with non-OPEC?

    For non OPEC we started with 240 Gb in 1990 (about half of OPEC reserves) and discovery plus reserve growth plus production was about 370 Gb or 1.5 times the remaining reserves in 1990.

    Bottom line, adjusting OPEC reserves downward by 300 Gb (as suggested by Jean Laherrere ) gives pretty reasonable estimates. The slower growth of reserves plus discoveries in OPEC countries is likely due to the more measured pace of reserve development .

    1. OPEC reserves are approximately 690 Gb in Dec 2013, this is found by subtracting 220 Gb of Orinoco belt reserves, 441 Gb of non OPEC reserves, and 300 Gb of speculative OPEC reserves from the 1650 world total.

      That 300 GB number is so wrong it is silly. OPEC, in 2013 claimed 1,206 billion barrels of reserves. They have about one third that amount.

      1. Hi Ron,

        In Dec 2010 World remaining 2P reserves were about 850 Gb, by Jean Laherrere’s estimate, Non-Opec reserves (excluding oil sands) were 235 Gb (EIA and BP data), this would put OPEC reserves at 615 Gb in Dec 2010 (excluding Orinoco belt reserves).

        That graphic is cute, but wrong. If we exclude Orinoco belt and Canadian tar sands from the calculations, deducting about 325 Gb from EIA OPEC reserves along with 220 Gb for Orinoco reserves in 2013 gives a reasonable estimate for OPEC.

        I think Jean Laherrere’s estimates are correct. You overestimated non-OPEC reserves by about 175 Gb by including tar sands in your estimate.

        1. Hi Ron
          You said,

          That 300 GB number is so wrong it is silly. OPEC, in 2013 claimed 1,206 billion barrels of reserves. They have about one third that amount.

          Lets take 1206 subtract 300 for a “correction factor”, then subtract 220 Gb of Orinoco belt reserves, that would result in 686 Gb of OPEC reserves, we can deduct another 25 Gb or so so it lines up with Laherrere’s estimate, that would be 660 Gb, I estimated 670 Gb.

          Your non-OPEC estimate is wrong.

          The EIA does indeed have non OPEC reserves at 441 Gb, but there are 168 Gb of tar sands included in this total, non-OPEC should be 273 Gb. You estimate 817 Gb for the World and I assume this excludes 388 Gb of extra heavy oil.
          The 817 Gb is too low, but we can go with it for now. OPEC should be 817 minus 273 or 544 Gb. This estimate is roughly 110 Gb too low, there has been some reserve growth and discoveries since 2010. OPEC reserves are about 660Gb.

    2. Dennis, something that is sometimes not understood is that reserves are defined largely in terms of the present and projected price of oil. And, for hydrocarbons to be actually be classified as reserves the decision must be made that the accumulation will be developed and put into production within a reasonable timeframe. One should never forget that Probable Reserves are those unproved reserves which are more likely than not to be commercially recoverable under current or future economic conditions. With the probabilistic methods used in these determinations there should be at least a 50 percent probability that quantities actually recovered will equal or exceed the sum of estimated Proved + Probable Reserves. Remember, 50 percent. My point is that reserve definition is wildly price dependent (and more-or-less meaningless) without oil price assumptions attached. Let me repeat this: MEANINGLESS WITHOUT PRICE ASSUMPTIONS ATTACHED.

      1. Hi Doug,

        Thanks. That is correct. I am aware that the reserves have to be economically recoverable, so included in that 2P estimate is the engineer’s assessment that there is a 50% probability that oil prices will remain at a level that will make the reserves profitable.

        As I am sure you are aware (and correct me if these guesses are incorrect because you know much more about this than me), engineers are a pretty conservative breed, so when assessing reserves they use very conservative oil price assumptions. When oil was at $100/b, they were probably using $50 or $60/b oil as the benchmark for 2P reserves, if they were doing it today they would probably use $40/b.

        1. “I am aware that the reserves have to be economically recoverable, so included in that 2P estimate is the engineer’s assessment that there is a 50% probability that oil prices will remain at a level that will make the reserves profitable”

          Dood, do you even read what you write?

          You just said here’s a number and it’s a coin flip on being in the ballpark. Why even quote it then?

          1. Dood have you ever studied statistics? The definition of the best estimate is that there is a 50% chance that the actual value will be either higher or lower.

            1. Hi Watcher,

              The reserve estimate has a 50% probability of being at least that high, the engineer will assume a price level in his economic assessment that is much lower than the present price level. That is probably why there tends to be reserve growth. The 2P estimate is still very conservative because a relatively “safe” (low) price level is assumed, reality tend to be that actual oil prices are higher and this pushes actual recovery above the 2P estimate. If prices fall to $40/b, we might see some reduction in proved and 2P reserves.

            2. I know something of statistics. 50% is not worth mentioning . . . in any context.

              You don’t even know if it’s 50% btw.

            3. Hi watcher,

              You never really know anything for certain in the oil biz. A best estimate or the most likely value is the engineering estimate that there is a 50% probability that reserves will be at least as much as that estimate.

              Of course nobody knows if the estimate is correct, that is the nature of any estimate. The only time anybody knows how much oil will be produced in a given field is when all the wells are capped and abandoned. In most cases the petroleum engineers and geophysicists do a pretty good job of getting the estimates right, and in many cases even the 2P estimates are a little low, that is part of the reason there is so much reserve growth.

        2. What stands out to me in your statement is not the 50-50 estimate, but rather the fact the price forecast was by an engineer. We often rightly criticise economists for meddling in geology without always fully understanding a topic they have never studied should we not also criticize engineers for doing the same?

          1. BTW guys, as regards monetary influence of reserves estimates.

            All that EUR stuff has a price specified and a presumption of long term up, sideways or down on that price.

            To demonstrate how weak this is, let’s have a scenario. Tomorrow, the US is conquered and there are no more dollars. Period. No FX conversion to another currency. Nothing. Hell, eliminate all the countries, they all got conquered by aliens, who then depart but tell everyone life can resume as it was but they won’t permit money to exist.

            Geology doesn’t care about aliens or governments or money. So what’s the EUR then? For society to feed itself, oil extraction has to resume ASAP, but money isn’t allowed.

            So what’s the EUR?

            1. Hi Watcher,

              Lets assume that we must have oil and money and profits do not matter, in that case the EUR would revert to the technically recoverable resources, which would be higher (if we assume the aliens do not destroy our ability to extract oil, which is a pretty doubtful assumption unless they came to earth for oil resources and want to let the humans do the oil extraction.)

              Pretty far fetched scenario even for me 🙂

            2. Nah, they didn’t come to get oil. They showed up for target practice but the cops arrived and some regulatory something insisted that no money could exist.

              But really beyond that, even if it could exist, if the US is conquered and breaks up into regions then there is no USD anymore and nothing for it to map to.

              The correct answer was technically recoverable, but in a pure technically recoverable question, there should be an equally pure EROEI evaluation, since that would be the only defining limit of “technically recoverable”. Anyone know who did that calculation at USGS?

        3. You’re correct Dennis; oil price projections are conservative in the oil patch, at least on conventionals. And, yeah, fuddy-duddy is programmed into us from the beginning but I was spared a lot of that being in the Engineering Physics camp. Geophysics is (was) a lot like EE, extremely reactionary, and Geology is often more like art than science.

          Speaking of oil definitions, being retired nigh on 10 years I still receive notices from my old Engineering Association on occasion (God knows why). This one came recently without any context so I don’t really know what it’s about. Maybe it means you can’t define reserves for unconventional deposits using criteria you’re used to? Sounds rather like lawyer talk! Someone else will comment on that?

          “Our current definition of “oil and gas producing activities” explicitly excludes sources of oil and gas from “non-traditional” or “unconventional” sources, that is, sources that involve extraction by means other than “traditional” oil and gas wells.”

          1. You wanna see fuddy duddy? Spend time at Johns Hopkins on fluid dynamics of auroral plasma. Can’t even extrapolate ion counts to a mass centroid. Do ’em one by one and doubt your results even then.

            1. We called them Alfvén waves or magnetohydrodynamic waves when we were being fuddy-duddy — eons ago. My souvenir from that time was a Norwegian wife: she was a lab assistant but doing her PhD in those long long ago days.

            2. “Mass Centroid” ? That could be a slight challenge if you were working in three (or more 🙂 ) dimensions.

            3. There was really good data collected from the Johnston Island event. Z-pinch before it was fashionable, sorta.

            4. OK, I looked it up: debris fireball stretching along Earth’s magnetic field with air-glow aurora as seen following high-altitude atomic test. Man, do you come up with some weird stuff. How about sticking to derivatives and other economic mambo-jumbo, stuff that I can ignore with a clear conscience?

            5. That stuff is from time at Wharton. But don’t sweat the artificial aurora reading. Shuttle missions were briefly military, but long after that event. That was back when permeability meant material magnetic propensity, not pore interconnectedness. haha

        4. Hi, I’m a recently retired petroleum engineering consultant. In general we engineers do not estimate future oil prices when calculating reserves. Most companies comply with SEC guidelines (prevailing prices), or use price forecasts prepared by economics/commercial departments when estimating non proved reserves (such as the reserves used to estimate development economics, or the estimates used to determine whether to truck or build a pipeline).

          I have consulted for OPEC members, they don’t use a very strict set of rules. In one case the reserves were estimated using an arbitrary recovery factor based on an analogue from a different country. This factor was approved by a large USA consulting firm, but there was no consideration of oil prices in their work.

          I have been reading this set of comments and you are falling in a swamp when it comes to reserves definitions. This is caused by the different guidelines used by different outfits and regulatory agencies. Or by the distortions introduced by nations trying to inflate their reserves.

          1. In Canada at least securities are regulated provincially (i.e., Alberta Securities Commission). The last time I was involved with reserve calculations (over ten years ago), the ASC required oil reserve price estimates to be based on a current-one-year-average, I think. This was for publicly traded companies. Accountants always looked after these numbers.

            However, on all-important Feasibility Studies (North Sea, China, etc.) there was always a great deal of discussion/argument respecting, future price projections: Not by the engineering departments but accounting-management types. And, every Feasibility Report that I was involved with always had a section (chapter) devoted to future price projections with a lot of footnotes. For the record, most of my input in these things was from a geophysical perspective (I’m not a Petroleum Engineer).

            I hope (expect) you will continue to add your comments to the various discussions on Ron’s Blog?

            1. Sure, it’s a pretty good blog. You know, this oil price forecast issue can be a real distraction. Most oil companies keep their oil prices confidential, and they never seem to agree. So when we have a large project we get partners who may not want to make some investments because they have a really low oil price forecast. I worked a bit on some really large projects and this became a huge issue in one case. I’m an engineer, but I was responsible for the overall project definition in the early phases, and this got me heavily involved with negotiations with partners. It can get extremely stressful.

            2. We have noted here the coincidence of all, repeat, all the majors scaling back exploration projects beginning about 12 months ago. Not 6 months as price was falling. 12 months.

              They may all have different price projections, but they all seemed to agree somewhat a year ago. The CEOs are looking very smart right now.

            3. Exploration looks lousy under most price scenarios. I’m referring to real exploration, not drilling in low risk areas. In 1990 I participated in a study which ceoncluded ALL exploration carried out in the 1980’s had destroyed value. Oil prices increased, technology got a bit better, but it has been a so so investment as far as I could tell. Even slam dunks like Kashagan appear to be losers.

  16. FYI this morning’s favorable US jobs report should have said . . . the economy is strong, so oil consumption is up, and oil’s price should rise. Supply and demand blah blah

    Instead, oil’s price fell to the $65.xxs — because the jobs report elevated the dollar.

    1. Settles sub $66 at $65.84. Has since fallen a bit more, 65.54 as of now.

      The dollar is up strong on the day with the yen now at 121. They wanted this badly for a while. Maybe no longer.

      1. More amusement in reference to that btw. 121 is headed towards cheaper Camrys, as well as cheaper oil, which Camrys burn.

      2. Closes the weak solidly sub $66.

        I got $5 says some analyst is going to claim shale breakeven is $20, by end of year.

        1. HA ha ha ha! Would you take $25 a barrel this afternoon?

          U.S. producers have had years to hone techniques that lower costs and increase output, making major cutbacks less likely than ever. Although the average profitability threshholds in the Big 3 shale zones are about $65 a barrel, some wells can make money at $25, ITG’s Nikhanj said.

          http://www.bloomberg.com/news/2014-12-04/opec-shale-showdown-misses-target-as-u-s-drillers-cap-costs.html

          /facepalm
          //double facepalm
          ///triple bourbon

          1. I suppose you have to say this stuff to keep your investors and creditors from panicking. But are the investors and creditors buying it?

            1. I have heard nothing outside my own self important keyboard suggesting that there are oil price covenants in the bonds, and frankly that is a credible thing to exist in them.

              Almost certainly if such covenants are there, they have triggered. It stops being a matter of believing anything from anyone if it’s in the covenant. You pay immediately or you are in default.

              Law is if one bond from a company defaults, they are all in default and due immediately regardless of covenant. THAT is what unravels the ball of yarn . . . until the Fed is told and they fix it.

    2. The labour market is a lagging indicator. The leading indicators (ECRI weekly indicator) turned negative for the first time in years. If the oil price stays low, the US is slipping into a deep recession. All my indicators point to this.

  17. http://oilprice.com/Energy/Oil-Prices/Could-Falling-Oil-Prices-Spark-A-Financial-Crisis.html

    ” But junk bonds pay high yields because they are high risk, and with oil prices dipping below $70 per barrel, companies that offered junk bonds may not have the revenue to pay back bond holders, potentially leading to steep losses in the coming weeks and months.”

    People are starting to follow the money. Interesting time frame, Weeks or months?
    The next quarterly reports will tell a story, and force some confessions, I believe.

    1. The regional governors of the Fed who are relevant to this would be Richard Fischer and Narayana Kocherlakota. They are the heads of the Dallas and Minneapolis Federal Reserve banks. Fischer is the next in line to chairmanship behind Yellen. He’s a big gun. Kocherlakota is a major dove.

      It is they who will be informed of the disaster first. I heard a quote from another Fed critter the other day that used a shale discussion relevant term and surprised me.

      ZH had a superb article just a day or two ago indicating that shale is a huge part of the US GDP. There has been some reason to suspect this for some time in that Europe has lived in the same world as the US amid US QE and Japan QE and PBoC QE and yet they have done nada in growth . . . and ditto Japan. The only real difference among those logging in with 2+% GDP and those who ain’t is the frantic activity of shale.

      The Fed would seem to already be informed — though I doubt they are deep enough into the details to either know shale is driving the whole country’s economy and employment, or if they are, to want to talk about it.

      1. I live in Europe, there’s a huge difference with the USA in many areas. The price of energy is a lot higher, it’s hard to start a business, environmental regulations are a nightmare, labor law was designed by communist Union winks, taxes are too high, and a portion of the population is pretty lazy (the cushy labor laws help this). These guys are trying to reduce CO2 emissions with crazy renewables subsidies, pick wars with Russia, can’t stop and endless flow of boats with refugees coming out of Africa. It’s a mess. If I were a company I wouldn’t invest here. Peru or Indonesia look like better bets.

  18. Hello,

    Name is C. Ashley McAllen (Ash) MD. I am a South Texas hydrocarbon (what is that these days??). I have been a long time energy investor and believer in Peak Oil since the days of “Twilight in the Desert”. I thought we were all dead or discredited – Simmons, Campbell, Heinberg. It is good to see a tiny corner of rationality and scientific thought left! It looks as though Mr. Patterson is the ringleader here. I have been laid out with a back injury and was going nuts and found this website and felt like I was coming home. You guys are the only ones in the room that are thinking correctly – just the timeframe. I used to bet on 2014-2015. My guess and your calculations put it out to 2017-2018 now with shale. By the way Mr. Patterson – the description of the Peak Oil in the December 2013 (yes, I went back and read everything) post was the finest description of a changing,variable yet vitally important subject. It should become the gold standard. A Homecoming Indeed! Pleasure to meet everyone on this board!

    1. Glad to see this site is populated by a lot of the people who used to post on The Oil Drum.

  19. Something that is important:

    A well that costs $10 million to drill and complete at $100 oil does NOT cost $10 million at $65 oil. That does not mean that all wells are economic forever, but rig and completion prices adjust as price changes.

    1. “……………but rig and completion prices adjust as price changes.” Really. How do they do that? Perhaps you’d make us a chart showing completion prices as a function of oil price.

      1. NoDak does reduce the extraction tax just a bit if the price crosses a threshold downwards, but that’s taxes, not supplies.

        1. Why finding and productions costs go down as product prices go down is actually quite simple: basic supply and demand. Lower prices severely effect well economics. Fewer prospects get drilled; in the case of unconventional shale resources, which is about the only thing anybody can get their arms around these days, flank areas become more marginal and not as many wells are drilled. Rigs go idle. People get laid off. Competition for available services declines. Daily rig rates drop to keep those rigs working, so then do frac costs, water hauling, crushed rock to build pads, well testing services, all services, including supplies. go down. Finding costs then go down and well economics improve.

          The oil and gas industry is cyclic and when product prices are high, everyone reaps the rewards. Its a boom! If you can get 200 dollars a night for a motel room in Carrizo Springs, get it! In the case of the Bakken and Eagle Ford shale plays the level of activity has been nothing but amazing the past 5 years. Everyone has jumped into to these plays to take advantage of the activity, from building locations to man camps to flipping 19 dollar hamburgers in Williston. So much money has been dumped into servicing these shale play that folks will be forced to slash their prices just to stay in business.

          MBP is absolutely correct. It is the nature of the business. If this is your first time going thru a cycle, those of us in the industry understand why you don’t understand.

          Mike

          1. But.

            What happened to economies of scale?

            Volume discounts lost. That sort of thing.

            As for NoDak, you cut the truckers’ pay, why are they going to endure -20 degree January? Why not just go home and make that much money? Home ain’t NoDak.

            That was a solid explanation, but it somewhat undoes the efficiency narrative . . . “we can drill and frack less expensively now BECAUSE we do so many of them . . . 16 per pad etc.”

            1. The market usually offsets economies of scale. I have been observing trends almost 40 years, and in over 20 countries. In general when prices go down we see less activity and the price structure drops.

              In my case I have successfully sat in negotiations with suppliers and contractors, and extracted price drops as high as 20 % ON EXISTING CONTRACTS. Contractors also get breaks from subcontractors, and even unions will relax work rules and reduce the number of hangers on we have to hire (this doesn’t apply in the USA, but in some countries the industry has to work with unionized workforces and they usually pad numbers).

            2. If you are a trucker making seventy five thousand or more in North Dakota and get laid off and can get on at another ND site for sixty that is a hell of a lot better than being back in Virginia unemployed or making maybe thirty five or forty.

              Sleep at home trucking jobs with good wages and benefits are scarce as chicken teeth. When an over the road long haul driver finally lands one he usually takes extraordinarily good care to keep it..

              The constant din for more drivers is for over the road drivers who have to start for chicken feed.

            3. It all depends on what the fixed vs. variable costs of well drilling are, and how much profit is baked in that can be negotiated out.

              As far as I can tell the speed of the slowdown will make some of the variable costs a bit sticky…it’s hard to tell guys earning $XX on well A that they will have to accept $XX-$YY on well B.

              Wages are stickier than a 4 month -47% decline in the well head price for Bakken.

              Further, whatever the fixed costs are for the well and your organizational overhead – piping, drill bits, leasing, SG&A, debt service, etc, – don’t really care one whit about the current price of oil.

              I will note, slightly off to the side, this interesting tidbit buried in an article about CLR:
              ————
              The Oklahoma City-based company plans to spend $4.6 billion next year — unchanged from 2014 levels — to drill 350 new wells across North Dakota and Oklahoma. That budget is 12 percent less than the $5.2 billion Continental had previously signaled it would spend in 2015.
              ————
              Hmmmm…. unless my math is terrible, $4.6 billion divided by 350 comes out to $13.14 million per well.

              That’s a lot higher than what I’ve been reading elsewhere, what with all the drilling improvements and all, as I’ve heard these wells are more in the vicinity of $7 million.

              Either the reporter got it wrong (quite possible) or the difference is between the technical per well drilling cost and the all-in cost of running an organization that can drill 350 wells in a year.

            4. Early in its existence the shale oil industry bought into its own bullshit and could not borrow money fast enough to contract rigs and frac pumping services, etc.; it bought hundreds of thousands of feet of casing from Japan by the ship loads. It even bought its own mines for frac sand. America was going to have 50,000 shale wells drilled and we are going to become energy independent, lets roll! Almost overnight lease bonuses went to 3,4,5 thousand dollars an acre, floor hands on a drilling rigs went from 12 dollars an hour to 24 hour dollars an hour, the cost of tubulars rose, mud, pipe dope, everything went up; in S. Texas signing bonuses were offered to people to come to work at Dairy Queens to make hamburgers to feed the shale oil industry. Since 2005-2007 all costs associated with exploration and production have increased, IMO, at least 40%. Imagine having your casing ready to be cemented and Halliburton is 12 hours late getting to the location, at 6,000 dollars an hour standby time. The shale oil industry jacked costs up for everyone, small, big, conventional, stripper, gas; everybody. In a boom cycle there is an amazing amount of slack in costs associated with servicing the boom. There are no “fixed” costs. Its a feeding frenzy and everyone eats very well.

              The entire time this phenomenal growth was occurring in shale, oil prices were going up, or were sky high and very, very stable. In its self serving glee, the shale oil industry plumb forgot about the possibility that oil prices might decline, or become unstable some day, in spite of 100 years of historical precedence for that very thing.

              Now it’s going to pay the price, big time. Shale oil economics do not work at 70 dollar oil prices. Period. If oil prices stay at that 70 dollar level for any protracted period of time, rig counts will come down and ALL costs associated with exploration and production will come down as well. Men will get laid off, then be hired back at lower hourly wages. The cost of rolling casing in mills might not come down too much but sales costs will, as will transportation costs…everything will come down. I have been thru at least a dozen significant oil price declines in my exploration career, that’s just the way it works. Debate a way, that’s the real deal.

              And its good. That’s one of the benefits of slow downs.

              Mike

            5. Hi Mike,

              All of that makes perfect sense to me.

              Let’s assume for a moment that the average well costs $9 million in the North Dakota Bakken when oil is at $100/b and this price falls for all the reasons you gave when oil is $70/b, would a 15% fall in well cost be reasonable? or maybe 10%?

              You probably won’t want to venture a guess, this would just be to get someone like me on the right track.

              You mentioned that a lot of your costs have increased by 40% since 2005.

              So in total has the cost to drill a conventional well increased by 40% in nominal terms since 2005? Note that inflation alone would cause nominal costs to rise by 30% over 9 years at 3% average annual inflation rates, so in real terms a 40% rise in nominal costs would be about 10% in real dollars.

              So maybe in real terms well costs might fall by 10%?

            6. Dennis,

              An example would be this. Five years ago you could get a rig for a footage rate; that meaning you contracted a price for the rig to drill for a set footage (say to 9,000 ft.) irregardless of how long it took them. Prices were softer and it was an operators market, so if a well tool longer to drill than estimated the driller had to foot the bill. When prices went up, more people wanted to drill wells, so demand for rigs increased. Because of this there was a switch from footage rates to day rated, where there is a set price per day to drill. So if there are problem drilling and it takes longer then expected the extra cost is on the operator. For the past couple of years it has been a drillers market because there is greater demand for rigs then there are available. As the price of oil stays suppressed, the demand for rigs drops, and they will have to revert back to a footage rate.

            7. Dennis, I am anticipating at least a 10-12% reduction in service costs over the next year and am confident enough in that I am deferring as much drilling as I can awaiting those cost reductions. For the shale guys, 10-12% is reasonable over the next year, yes. I don’t need to tell you that a shale well that might cost a million less than it use to is a really big deal to well economics, EUR, URR, the ability to service debt; all kinds of good things happen when the bubble finally busts and ultimately costs come down.

            8. >
              I am deferring as much drilling as I can awaiting those cost reductions
              <
              The more that do this, the more pressure there will be on costs. A feedback loop.

              NAOM

            9. Reporters don’t get numbers wrong beyond the decimal place. They are taught to obsess about that.

              The latest CLR quarterly briefing caused a stir when they announced a per well price rise up north of $10 million, BUT that was because of a presumed stage count increase. Their calculations indicated the increased cost would get paid for from the longer horizontal. BUT (again) that was before the price crash. Maybe that’s no longer true.

              Good catch on the $$/well.

            10. Odds are pretty good you guys are relying rather too much on history of oil boom/bust to form expectations of what happens to shale in the new normal.

              It’s all borrowed money and it’s a LOT of small fry. Look above, CLR is budgeting for 350 wells in the year? Not just in NoDak, also Oklahoma. NoDak does 175 wells a MONTH.

              These are largely specifically formed LLCs that ran up debt, drilled some holes and now the numbers will fail them. This doesn’t generate anything gentle and gradual. It generates defaults. The LLC gets its cash drained and folds. The workers are laid off with zero notice. These are not companies who want to “be in it for the long haul”. They are like house flippers.

              As for what this does for costs of the Mike-like conventional operators in Texas, we don’t care from a national oil production perspective. Mike cares haha, but it doesn’t define increased oil imports that are about to replace the 1.5 mbpd coming off the top.

            11. I am relying on historical precedence and a lot of experience when I speculate about the turn down in shale oil, yes. I assure you, Watcher, whatever you “think” is going to happen in the shale business its still the oil business and it has already happened many times over the course of the past 100 years; we have, for instance, been relying on outside capital to drill wells and develop oil fields since the beginning. Do you think the oil business has never been strung out before on debt before when prices fell? Good grief.

              In the Eagle Ford in Texas I would guess that fewer than 20% of the shale wells being drilled are by LLC’s, the rest are by public companies, some rather large public companies like Statoil, Marathon, Devon, CHK, BHP, EOG, to name a few. LLC’s will not bring down the shale oil industry in a cloud of dust, as you imply. Besides, I don’t think anybody starts out in business with the intent to fail and default on loans, certainly not to fire people with zero notice.

              I adhere to the belief that 70 dollar oil prices will not support the high cost/low return of shale oil development. Again, that does not mean it is going to default itself into oblivion overnight because of a 38% decline in product prices. Lower finding and producing costs will actually benefit the shale industry.

              Last time I looked, over 65% of the domestic production in the United States still comes for conventional resources. If drilling and production costs will come down because of lower oil prices, which they will, that is good for America. Anything the conventional oil and natural gas business can do to drill more wells, initiate more EOR projects, build more downstream infrastructure to move oil and refined products around the country, to stem the tide of rising imports, the better. You’d have to be as dumb as a ball peen hammer to think otherwise, right?

              Mike

            12. But conventional was dying. Is dying. The ramp up in conventional didn’t life US production. Shale did.

              If you slash shale, the boom narrative ends and a lot of unpredictable, touchy feely crap evolves from people arriving in NoDak and being told they can have huge salaries for the next 30 yrs. The day their buddy gets fired, and then the next guy gets fired, is the day they realize it was all a lie and wonder why they are enduring -20 degrees when it’s 70 in Florida and the pay suddenly is not much lower.

              As for not going into business with the intent to fire people with no notice, spend a bit of time and look at what Wall Street norms are for M&A. You merge two companies together, you are essentially GUARANTEED to be planning to fire one of those companies’ admin staff. You know that’s how you’re going to fund the whole process when you make the first overture to the board. Planning business around firing people is an outright tradition in the new normal.

              But again . . . you can be 100% right. You can be 200% right . . . if the Fed or government intervenes. And to some extent you are likely to be right because if a severe effect unfolds, government WILL intervene. Big negative events aren’t allowed anymore in America.

        2. I don’t know how much rig rental or lease rates and wages will fall if drilling falls way off but you can bet the farm that folks who have rigs just sitting around rusting – with payments to be made on them more than likely – will cut their rates. So will a substantial number of skilled and semiskilled workers. So will landlords.

          I am not an oil man but I have been in business long enough to understand that there is often a big difference between what you can get next week and what you got last year when business was better.

          Unless I am badly mistaken there was a big glut of ocean going shipping capacity not that long ago and you could hire a humongous cargo ship for about what it cost to pay the crew and maybe put fuel in it.In other words basically for nothing except the variable expense of running it versus letting it sit.I am thinking the rates got down to a fifth or less of the usual rates charged when times were good.

          I have friends who rented dilapidated houses in Loiusa Va thirty or forty years ago for a thousand a month while the nukes at North Anna were under construction. Guys working seven twelves and making serious money want a place CLOSE to the job site and are perfectly willing to pay eye popping rents to get them.

          Drop back to sixty hours – or to forty – and the commute time is not such a big deal. Gasoline and wear and tear on a car hardly matter at all to well paid tradesmen on big jobs. But an hour spent commuting is an hour you can’t get paid overtime or double time or sometimes even triple time.

          You can rent well maintained houses there now after thirty years worth of inflation for seven or eight hundred.

          Cost for a lot of stuff will come down.

          How much I have no idea not being there and not knowing the locality or the industry.

          Stuff like pipe and structural steel and diesel fuel may come down a little bit but only a very little bit. Maybe a nickel on the dollar if that much.The people who supply that sort of thing can just ship it elsewhere.

          1. As mentioned above, volume discounts would be lost.

            But it’s much more catastrophic than these scenarios of gentle adjustment of prices all so activity can continue. This is the beauty of LLCs. You just drain the cash and fold it up. There is no imperative that you keep operating. Walk away.

            And worse, the loans. The banks want their money and they don’t care what the price is and how hard life is since the evil Saudis did whatever.

            Pay up deadbeat.

          2. You are spot on. Our friend with the volume discounts idea doesn’t understand what a company will sacrifice to stay up and running, avoid mass layoffs and mothball rigs or other equipment. I have worked for a very large multinational and we do get volume discounts, but those arent that big when there’s high activity levels. Why should I give a discount when I’m already doing as much as I can and we have to hire greenhorns to satisfy demand? This point seems to escape many.

  20. OT; Something strange is happening in the Maldives:

    http://hisz.rsoe.hu/alertmap/site/index.php?pageid=event_desc&edis_id=UEV-20141205-46228-MDV

    Description
    The Maldives declared a state of emergency after a fire at the capital’s only water sewage treatment plant has led to a shortage of drinking water. About 100,000 people in Male, the capital, have been left without safe water to drink from the tap, according to Mohamed Shareef, a government minister. The Maldivian government has appealed for aid from India, Sri Lanka, the United States and China. India is sending five planes with water and two ships with parts that can help fix the machinery at the plant, according to Syed Akbaruddin, an Indian foreign ministry spokesman. The first plane with water arrived on Friday afternoon. “Last night, the Maldives foreign minister contacted us saying they were facing a grave emergency,” Mr Akbaruddin said. “For the next seven to eight days they are going to face extreme difficulty with water so they requested all assistance.” The Maldivian Red Crescent has deployed 24 staff and 60 volunteers to distribute water. The Maldives, a group of 1,190 coral islands southwest of India, has a population of about 400,000 people.

    1. So they recycle sewage rather than desalinate. Interesting. Must cost less.

      There’s some of this in the Caribbean. Lots of islands there don’t have a good water supply.

  21. “…Such alternative energy sources are often described as ‘renewable’ or ‘sustainable’. This terminology implies to most people that such alternatives can meet our energy demands in perpetuity, without polluting the environment. This is wrong, and will lead to serious errors in policy making.

    Energy generated for human use cannot be ‘green’, ‘clean’, ‘renewable’ or ‘sustainable’. These words are all part of the ‘greenwashing’ or ‘sugar-coating’ vocabulary used for the benefit of corporate or political interests, or simply words of misunderstanding. They have no foundation in rigorous scientific language or thought.

    Put simply the Earth can be considered as an open thermodynamic system in terms of energy but a closed system as far as matter is concerned…

    However, humans increasingly wish to convert solar radiation into different forms of energy such as electricity or fuel, that can do work. This can only be achieved by creating devices or machines to convert one form of energy into another and the resources for those devices come from the Earth’s crust. Those devices have a finite life span and depend on yet further infrastructure (transport, cities, factories, universities, police, etc.) to maintain and operate them, which in turn has a finite life span. Continued mining, refining and manufacturing is required.

    The amount of energy captured from the sun by such devices can never be enough to restore the Earth to its original condition. This is determined by the second law of thermodynamics. So the process of mining, building and manufacturing, to convert and use energy, inexorably depletes and degrades the Earth’s mineral resources. It is irreversible and unsustainable. It makes no difference whether we consider solar, wind, hydro, coal, bio, nuclear or geothermal energy. They are all unsustainable according to the laws of physics.

    The second law of thermodynamics also tells us that we cannot completely recycle resources that have been extracted from the Earth and refined for use (such as metals, helium or phosphate fertiliser). The greater the percentage we try to recycle, so the energy cost increases disproportionately. So whether the resources that we want to use are still in the ground or are in circulation above ground, human industry will inevitably dissipate and lose those resources.

    The more people we have on the planet, and the more energy we use, the faster and more extensive is the degradation of Earth’s resources. Humanity is like a huge organic machine, using energy to mine and deplete minerals. The more energy that is put into the system, the faster the degradation occurs. Nuclear fusion energy, if it comes to be, might be particularly efficient at degrading our resources and environment (one effect of such technology may be to convert our lithium reserves into helium which will escape the Earths atmosphere and be lost forever).

    Energy for human use is as unsustainable and non-renewable as mining. So to talk about ‘renewable energy’ or ‘sustainable energy’ is an oxymoron, as is ‘sustainable mining’ or ‘sustainable development’. The more energy we use, the less sustainable is humanity. The sooner that people realise this, the sooner we can embark on the process of reducing energy consumption, rather than clutching at the straws of alternative energy sources to perpetuate the unsustainable.” ~ Steven Smith

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

    1. You forgot to mention that the Sun will eventually run out of Hydrogen. So therefore, Solar Energy is not sustainable.

      1. Technology with the wisdom to consider the effects and ramifications of such things as scale, time, physics, natural contraints, unintended consequences, etc., and to respond accordingly, may see us surviving long enough to then concern ourselves more with that eventuality as it draws closer.

        Otherwise, our current predicaments will end in the relative geological blink-of-an-eye with our demise– essentially by our own ignorant self-tied hands.

        Monsanto was not where genetic engineering was supposed to go…

        The human paradox may be in its capacity for complexity that frees it at its dawn, only to bind it toward the dusk of its own making.

        You know, I have heard that, apparently, some empires’ largest projects were made toward their decline… Now, whether true or not, this idea was thought about recently with regard to that one way trip to Mars project…

        Perhaps the future base– a kind of metaphoric Egyptian pyramid perhaps– on Mars from that project will be the last, silenced cry of a dead civilization of a strange, wonderful, terrible and tragic species…

        There may be no aliens or future curious entities to study its skeletal remains before the last human frontier and planet, ironically not of its origin, eventually becomes scorched and maybe even swallowed by a swelling, dying sun.

        We are the ghosts, John. Already. Through our death-grips on the complex manifestations of our minds projected outward onto our world, we relinquish much that was beautiful and worth living in, on and about it. The manifestations have become ends in themselves– Nissan Leafs, leaf-blowers, etc..

        Mars may be humans’ last resting place– appropriately and poetically, detached from its origin, Mother Earth.

          1. I’ve worked in software development now for many years and it never ceases to amaze me how even smart people are conned by stuff like this.

            Just like how people see a chess program beat a master and then shoot off into the wild assumption that there is some impending super intelligence on the horizon.

            Oh well, no point wasting time trying to convince you. Have a nice life and all that 😉

            1. I think the reason people take it seriously is that people like Hawking, Musk, and others have talked about the threat of intelligent machines.

            2. yeh, Hawking took a step off the sanity ladder with some of the tripe he’s come out with in recent years. The journo’s lap that nonsense up of course. Gotta have something to write about I guess.

              I remember a few years back one of the ‘prominent’ figures in the industry I specialize in released a video of a product they were working on that was full of hyperbole.

              The press and public seemingly fell for it hook line and sinker. I remember just watching in disbelief at how obvious the tricks were to anyone with an ounce of common sense (especially for those who worked in the industry!).

              Yet all the wide eyed speculation that was spawned from it was utterly pathetic. I’d known how much bullshit was present in tech before then of course.

            3. Not in these neck of the woods. I’m having to turn work down because there’s not enough time in the day!

              In any case, I likely couldn’t beat Watson or any chess program. Yet they are still nothing but mindless chains of code being executed to solve a problem as explicitly designed by the programmer. Nothing more.

              Chess programs beat humans with brute force calculations of move permutations within the rule sets defined by the programmer. Since that’s what computers are good at we shouldn’t be surprised by it.

              In simpler terms, if I want to search a database I’ll use my computer to do it because they are great at bashing through reams of data and pattern matching (well, if it’s serialized data at least). Jeopardy is another perfect example of that and Watson will operate in a similar way. It probably has the added benefit of a net connection to all that lovely data we humans have added. They feed the data in… it processes the database and finds the results. That’s a gross simplification but you get the gist. Then of course people gasp in awe at the supreme intelligence on display :/

              Now, I cannot outrun a car so I’m not sure if that’s a valid metric for intelligence. Bigcat (and Bigdog before it) are locomotion systems and it’s still nothing but a crude superficial “intelligence”. It’s cool work of course 😉

              Part of our job is to design AI systems that appear to do a lot of complex and ‘intelligent’ things. It’s just smoke and mirrors and we take advantage of peoples nature to project their own imagined complexity and ‘presence’ to it. People are gullible after all.

            4. I remember it used to be said that we’d have AI when a computer can play chess as well as a human. Nor Stockfish runs on a tablet and can easily beat any human. furthermore it only analyzes about a ten thousandth of the positions Deep Blue did.

              AI is sort of a red herring. The point is not whether we “really have AI”. The point is whether robots or software can replace humans.

              Modern technology is moving quickly towards being able to replace many more human jobs/functions. Computer technology is playing a major role in that.

    2. The sooner that people realise this, the sooner we can embark on the process of reducing energy consumption, rather than clutching at the straws of alternative energy sources to perpetuate the unsustainable.

      I thought that was part of the conversation. Reducing consumption is part of the process.

      1. I was wining and dining one of our VPs the other day. After a few bottles he got to complaining about his wife.

        He comes from the Midwest and it gets cold in the winter, so they have one of those gas fireplaces to warm the living room a bit. In the summer his wife like to air condition the house down to 65F.

        Sometimes he’ll come home from work in the summer when it’s 90 outside and find his wife wrapped up in woolly sweaters huddled by the fireplace because the house is so cold.

        I think there’s a bit of room for improvements in energy efficiency.

    3. Yeah, we’re consuming our fossil fuels, acidifying the ocean, killing off all the big fish, depleting ground water, covering the planet with people, polluting land, chopping down forests, eliminating species at a vicious rate, filling the atmosphere with carbon dioxide/methane, plus whatever I missed. What the fuck is the use/purpose/sense of bringing thermodynamics into it. When your house is burning down are you going to waste time citing “THE SECOND LAW” or save your family/call the fire department.

      1. Because ‘renewables’ will save us, Doug. Right?
        So if they might not, and some still think they might or will, then maybe something about thermodynamics vis-a-vis renewables seems appropriate.
        Especially when I am prisoner in this fucking burning house full of chimps with full petrol tanks and matches and all exits lead to outer-space.

        1. Sorry Caelan, I just get pissed off when (if) people introduce some high school physics or worse, throw in some questionable calculus to make their arguments sound more impressive. My rant has expired and I’m back to my normal self!

          1. Doug, your previous response didn’t seem to quite follow, at least rationally, from mine, so I thought that maybe I pissed on a sacred cow or two. It’s possible.
            EVs, PVs and even TVs are sacred cows to some people. But if there may be some problems with them, and they seem important?
            Maybe a cow-wash is in order. Better than a green-wash. What do you think?

            But what are ‘non-specialists’ supposed to do but rely on the ‘specialists’ sometimes? That’s one of the fundamental problems, and or as it wrests control from those who are not, or who are specialists in other fields.
            And what happens when the specialists get it wrong or somehow act less than ethically?

            High school physics? Well, the ‘specialist’ I quoted is apparently ‘Winthrop Professor, Plant Energy Biology, ARC Centre of Excellence’. FWIW.

        2. Humans have survived for millions of years using nothing but renewable energy. Fossil fuels, and nuclear power are the new kids on the block, and still account for a very small percentage of the energy that we use today. Those are the facts.

          1. Just a couple of points John, yes a few million people survived for thousands of years, not millions without fossil fuels. The first Homo sapiens appeared about 200,000 years ago. And a few million could still survive without fossil fuel, but not seven billion, not likely even one billion.

            Also fossil fuel accounts for the vast majority of the energy we use today. You are trying to be funny when you say “very small percentage”. You are probably counting the sunshine that makes plants grow. If that is your argument then it just makes you look silly.

            1. I believe you are referring only to “Modern” Humans. The term “Human” applies to ancestral humans as well, that go back several million years. Although there is some debate about exactly how many millions of years.

              http://en.wikipedia.org/wiki/Human_(disambiguation)

              The point to bringing up ambient heat/light/energy to grow crops, etc., is simply to highlight the vast resource that exists. Renewable energy detractors often to point the small percentage of electricity that PV generates as proof that renewables simply don’t have the “horsepower” to replace fossil fuels. When certainly that is not the case.

              The current state of worldwide electricity production by renewables at the end of 2013 is 22.1%, according to the latest REN21 report:

              http://www.ren21.net/Portals/0/documents/Resources/GSR/2014/GSR2014_KeyFindings_low%20res.pdf

            2. In the final analysis, two things:

              1) Stuff breaks, and spare parts come from far away.

              2) It’s so much easier to just kill the enemy than try to feed him.

            3. Who is the enemy? The Chinese and the Russians? Both of those countries have ballistic nuclear submarines. Even if we could wipe out all their population, land based launchers, and bombers in a first strike, we wouldn’t be able to stop their submarine launched nukes. So we would all be dead as well. And the fallout resistant cockroaches would inherit the Earth.

            4. Well, you don’t know much of nuclear weapons, but that’s pretty much the norm.

              There is no nuclear winter scenario. When the term was first coined, the megatonnage available in all existing inventories was insufficient to cause such an effect, and the total megatonnage presently available after the various SALT and START iterations is far lower than it was then.

              There is no reason to believe a nuclear exchange would cause extinction. In fact, given the relentless probabilities of oil scarcity generated starvation via rise in per capita Chinese and Indian consumption, a nuclear exchange would postpone that extinction for some significant period of time.

            5. Well I must say that you have an interesting solution to the Peak Oil problem (Nuclear War). I think I’ll stick with Biofuel, Electric, and Hybrid Electric vehicles.

            6. Who is the enemy?

              Uh, you are, if there’s only enough food for one of us.

              -Lloyd

            7. There is no reason to believe a nuclear exchange would cause extinction.”

              http://www.world-nuclear.org/Nuclear-Basics/Global-number-of-nuclear-reactors/
              “There are currently 435 operable civil nuclear power nuclear reactors around the world, with a further 71 under construction”

              http://www.efmr.org/Xtra/Spent_fuel.pdf

              If a fire were to break out at the millstone Reactor Unit 3 spent fuel pond in Connecticut it could render about 29,000 square miles of land uninhabitable.

              Total Land Size of Earth: 57,308,738
              Total Land affected by loss of all spent fuel pools caused by a global nuclear war: 14,674,000

              http://www.ips-dc.org/spent_nuclear_fuel_pools_in_the_us_reducing_the_deadly_risks_of_storage/

              “U.S. reactors have generated about 65,000 metric tons of spent fuel, of which 75 percent is stored in pools”

              [The world had not yet lost a large spent fuel pool. Survival for all vertebrates after the lost of all of the spent fuel pools is questionable. One must always consider the laws of unconsidered consequences that can amplify problems]

            8. TechGuy, of course, Watcher, and everyone else, can’t possibly watch/think of everything… like nuclear storage pools when nuke bombs hit them.
              Nothing like your stats to make one’s blood both freeze and boil at the same time.

            9. Unless of course your comment was sarc, which I kind of suspect, but one can never be entirely sure. Plus I’m pretty interested in the topic so I’m always happy to learn more.

              Cheers!

            10. Nah, there’s no nuclear winter scenario without far more megatonnage. I can look it up, but before I do I’ll tell you the background. It was from Carl Sagan. He propagated it. He was then castigated and condemned/censured by some group of scientists because he had been shown a planetary model of dust totals likely from purely ground bursts (obviously such an exchange would include airbursts, so even with the total inventory, since shrunk, not all would produce fallout) and that model made clear there would be no nuclear winter — even with the inventory of the time.

              He ignored the data to continue lying with absolutely no studies to support his position and in fact all the evidence available contradicted him. It was not pure scholarly thought and the group in question censured him for it.

              https://en.wikipedia.org/wiki/Nuclear_winter#Criticism_and_debate

              Since those years more studies have unfolded to and fro but if you read the wiki it is pretty clear that the preponderance of evidence is against the concept.

            11. Makes me think of how humans mess some things up only to then study it. Like the effects on pesticides on newborns or something like that.
              Or, say, a food product that is slowly ‘commercially-degraded’ (more of some kind of filler is added for example) while its price increases, and then a proper, and/or the old version of it comes out and promoted as, ‘**Now Organic!!!**’, as if it’s a new-improved totally awesome thing.

            12. Oh and before the left wing wackos go off redefining nuclear winter — it means global cooling and shut off of solar incidence of a magnitude to generate planetary life extinction of humans within 5 yrs.

              If that is not in the cards, there is no validity to nuclear winter.

            13. Watcher said:

              Since those years more studies have unfolded to and fro but if you read the wiki it is pretty clear that the preponderance of evidence is against the concept.

              Well, I did read the Wiki and this excerpt is a part of it:

              Recent modeling[edit]
              Based on new work published in 2007 and 2008 by some of the authors of the original studies, several new hypotheses have been put forth.[101][102] However far from being “new”, the very same “threshold” to nuclear winter effects was similarly regarded in the mid 1980s to have been about a total of 100 or so city firestorms.[103][104]

              A minor nuclear war with each country using 50 Hiroshima-sized atom bombs as airbursts on urban areas could produce climate change unprecedented in recorded human history. A nuclear war between the United States and Russia today could produce nuclear winter, with temperatures plunging below freezing in the summer in major agricultural regions, threatening the food supply for most of the planet. The climatic effects of the smoke from burning cities and industrial areas would last for several years, much longer than previously thought. New climate model simulations, which are said to have the capability of including the entire atmosphere and oceans, show that the smoke would be lofted by solar heating to the upper stratosphere, where it would remain for years.

              Compared to climate change for the past millennium, even the smallest exchange modeled would plunge the planet into temperatures colder than the Little Ice Age (the period of history between approximately A.D. 1600 and A.D. 1850). This would take effect instantly, and agriculture would be severely threatened. Larger amounts of smoke would produce larger climate changes, and for the 150 teragrams (Tg) case produce a true nuclear winter (1 Tg is 1012 grams), making agriculture impossible for years. In both cases, new climate model simulations show that the effects would last for more than a decade.”

              One thing I’m pretty sure of, whether he was right or wrong in his interpretation of the data available at the time, Carl Sagan was no liar!

            14. Fred, climate change is not extinction. Prove extinction or there is no nuclear winter. No redefining words to generate some other reason to wave hands over head.

              BTW, you do realize Hiroshima is still there? Biggest city on the biggest island of Japan. The unluckiest man in the history of the world was associated with Hiroshima. He got nuked twice, and died of old age somewhat recently. Was in Hiroshima on business when it got nuked. Got medical treatment and got on a train to Nagasaki. Got nuked there, too.

              Lived through both of them.

              Nuclear weapons are not that big a deal. A lot cheaper than conventional forces, too.

            15. I personally believe in the possibility of nuclear winter or even just plain old bad luck resulting in curtailed food production to the extent that starvation on the grand scale is a very real but possibility although the odds of either wiping out most of our food supply in any given year are probably very low- on the order of one or two percent would be my guess.

              All the materials and the machinery needed to build a fall out shelter are on hand on my place.But I have nowhere near enough food to fort up and hunker down for months or years.

              If I ever think things are headed to hell in a hand basket within a day or two my plan is to take the big truck and buy everything in sight at the farm supply closest to home- my plan being to get there before other folks figure out the score.

              If I make it back home with the big truck the next step would be to hit the supermarket and drug store and buy everything with a long shelf life from dry beans and rice to vitamins.

              A couple of years is a damned long time to eat out of a pantry.

              But a ton of good quality horse or dairy cattle feed has the calories, protein, and minerals you would have to have to make it a couple of years. Livestock feed keeps and if you boil it with a little salt and sugar or anything else handy it will go down ok if you are really hungry.

              I have sampled several kinds just so I would know. Pick one made mostly out of grains with relatively little fish or animal protein or animal fat in it which may turn rancid.

              It would be very hard to impossible to buy enough non perishable food at a supermarket in a crisis situation to last a year or longer.

              But the loaders at your friendly farm supply think nothing of putting a ton on a pickup truck or in a van.They do it every day. 😉

              Back during the Cold War days the Pentagon figured the odds of WWIII happening were about two percent a year.

              The odds are probably not a lot worse ( or better as you see it ) today.Opinions vary.

              Feed keeps and if the crisis passes you can always sell it and easily get eighty or ninety cents on the dollar back on your purchase money. ;;-)

            16. I thought Carl Sagan got the original idea of nuclear winter from a paper published by a Russian University in the 1970s when the US was having disarmament negotiations with Russia. That It was actually just propaganda to try to scare the US into disarming.

              Also, during the first gulf war scientists studied those huge oil fires to check for any nuclear winter effects – but actually the black smoke absorbed MORE heat and warmed the area up.

            17. Hi John,

              Most people consider humans as the species homo sapiens which appeared between 500 ky and 200 ky BP. Ron is very well versed in this subject.

            18. Again, that’s “Modern” Humans. Not “Humans”. The information in the link is fairly simple to follow.

              Also, “millions of years” should help define the context.

              With regards to “most people”, I doubt they would have any idea how long Humans, or Modern Humans have been around.

            19. The term “humans” is not a scientific term. Homo sapiens is the correct term for modern humans. They first appeared about 200,000 years ago.

              Early Modern Homo sapiens

              All people today are classified as Homo sapiens. Our species of humans first began to evolve nearly 200,000 years ago in association with technologies not unlike those of the early Neandertals. It is now clear that early Homo sapiens, or modern humans, did not come after the Neandertals but were their contemporaries. However, it is likely that both modern humans and Neandertals descended from Homo heidelbergensis.

            20. “Humans” is perhaps not as scientific, but arguably more elegant than “the genus homo”. Which was the intent of my post.

              Neanderthals were humans too. They survived quite well without any great quantity of fossil fuels. Even with their smaller brains.
              http://en.wikipedia.org/wiki/Neanderthal

    4. After one has reduced energy consumption, there is still energy being consumed, so based on your prognosis we are still screwed and defeated by the second law. Eventually we run out of economically extractable fossil fuels. So we are still back to square one. At some point, those who are left, in any, will have to find a way to live off solar energy. Whether or not that is possible after all the degradation, depletion, and effects of global heating is an open question.

      1. Eventually we run out of economically extractable fossil fuels. So we are still back to square one. At some point, those who are left, in any, will have to find a way to live off solar energy.

        Non-human animals have survived without fossil fuels, alternative energy, nuclear power, etc. Unless Earth becomes a lifeless dead zone, something will survive.

        1. I thought we were more or less referring to human survival though.

          Theoretically, something will always be alive somewhere if the universe is some kind of living entity, yes?

    5. This is not actually an argument against renewables, or as you seem to imagine, a claim the renewables aren’t “really” renewable.

      All this guy is really saying is renewables won’t solve all our problems.

      He starts like this:

      This terminology implies to most people [such horsefeathers I just invented]…

      You might as well come straight out and say “Looky here at this nice straw man I built! Now watch me knock it down! Yeeehaw!”

  22. Do you like lettuce? Every day, morning, noon, and night? Do you like cottage cheese? Every day, morning, noon, and night? How about pears? All day long, every meal?

    How about a cottage cheese plate? A bed of lettuce, a scoop of cottage cheese, a canned half pear?

    Sound better than lettuce all day long and nothing else, or cottage cheese all day long, or pears all day long?

    Or maybe milk. Milk all of the time, nothing else. Or crackers. All the time, crackers and nothing else. Milk and crackers together would seem like desert. If they’re good crackers it is better than cake.

    How about some beef? All day long, every day, beef for breakfast, lunch, and supper. Every single day. Or lobster, or dungeness crab all of the time, never ceasing.

    The energy picture is the very same. You need coal, oil, hydro, nuclear, maybe, solar is effete, wind is effete. The old, dependable fossil fuels will wind the race, slowly but surely. Futile attempts to make it look like the energy crises can be solved with renewables is noble, however it is a Pyrrhic victory. It will end in failure.

    The energy picture needs the whole enchilada. Hydro, coal, oil are the base, there is where the capacity to generate energy is, hands down winner. Wind, in its current bird chopping stage, is a loser all the way around. Solar, yes, a good idea.

    Without all of the sources of energy used to their full potential, expect only failure.

    1. “Wind, in its current bird chopping stage, is a loser all the way around.” ~ Ronald Walter

      You can get energy via food by living near the windfarms (wind EROEI recalc. required) and going out after the large-scale centralized crony-capitalist governpimp grid-tied Olduvai™ Sky-Food-Processors do their thing…

      How about a nice neighborhood burgoo at one of its bases? All your base are belong them.

      Birdwise, AFAIK, the Maori hunted the moa to extinction, presumably with rather rudimentary technology. .. You’ve come a long way, baby. High-five (megawatts).

      Make ours a vulture.

      1. The bird thing is a weak argument. It’s not a conspiracy theory that is is being pushed by the coal companies, it’s common knowledge. All the bird conservancy organizations of any stature are pro wind, though they recommend using caution.

        And as Fernando might say

    2. Personally I think solar power on average is going to eventually be a lot cheaper than wind power – at least in a lot of places, any place with good sun but a poor or so so wind resource.

      But there are places where wind power is worthwhile- a lot of places. And unless I am badly mistaken long distance power lines are going to be built to deliver power from a good many places with excellent wind but few people to places with lots of people – and these lines and new wind farms are going to be built at a pretty fast clip.

      But maybe not as fast as new solar.

      The beautiful thing about solar is that it works at a smaller scale.

      But there is no getting around the fact that the wind blows hard at night in some places and during the winter in some places.

      In my estimation this virtually guarantees wind a place at the table well into the future. Maybe someday solar generated energy can be stored economically. And maybe not.

      The same storage capacity that will be built to accommodate surplus solar power can most likely be used to store any surplus wind power just as easily if the necessary transmission lines are in place.

      So – wind will probably still have a place at the table.

      1. A note on all that from a back yard iron banger, for fellow bangers who might be lurking.

        PV is amazing, Just sits there, churning out real watts for nothing but first cost.

        That was way in excess of need. My house was importing about 6kW-hr from the grid, and everything else was propane or wood.

        I bought a 10kW array because i got a good buy. I then took all the ff stuff out of the house and replaced it with all the new, highly superior electric induction cook stoves, heat pump, solar water for summer and woodstove hot water for winter.

        And, a Leaf EV to run on the excess PV power I still had after all that. And I was still putting about 4 times as much back as I took from the grid.

        That was summer, when we get a good dose of solar. Now is winter. The forecast is 100% rain/snow for two weeks. What to do?

        Well, us backyardironbangers know there is always a solution, weird tho it my be. So, first, just take the juice from the grid, and be grateful. But of course, it comes from coal, and that is evil. Gotta go for something better.

        first, is wood, which of course is solar once removed. Can be stored and used on demand. How to get the wood into electricity. Plenty of ways.

        Steam engine, old designs lousy, new ones are ok, need no oil, no crank, no conrod, quiet, real fast response. Have a nasty possibility to explode if some goof somewhere.

        Gasifier-IC engine. Has all the plus/minus of IC, plus those of gasifier. Works, but pretty far away from any ideal.

        pyrolyzer + thermocompressor- Weird one. But whatthhell, give it a try.
        Result, amazing, worked first try, am using the pyrolyzer as shop heater at this moment, will be a short delay while we get that thermocompressor good enough to match it.

        Per Aspera ad Astra.

          1. Simpler, cheaper, the few close fit parts can come overnight from McMaster.

  23. Drought-hit Sao Paulo may ‘get water from mud’: TRFN

    By Adriana Brasileiro, Reuters, Sat Nov 29, 2014 3:41am EST

    RIO DE JANEIRO (Thomson Reuters Foundation) – São Paulo, Brazil’s drought-hit megacity of 20 million, has about two months of guaranteed water supply remaining as it taps into the second of three emergency reserves, officials say.

    The city began using its second so-called “technical reserve” 10 days ago to prevent a water crisis after reservoirs reached critically low levels last month.

    This is the first time the state has resorted to using the reserves, experts say.

    “If we take into account the same pattern of water extraction and rainfall that we’ve seen so far this month – and it’s been raining less than half of the average – we can say the (reserve) will last up to 60 days,” said Marussia Whately, a water resources specialist at environmental NGO Instituto Socioambiental.

    But an expected increase in water usage during the upcoming Christmas and New Year’s holidays could easily reduce the time the reserve will last, she added.

    A third and final technical reserve might be used, but it is difficult to access and mixed with silt that could make pumping it to users difficult, according to Vicente Andreu, the president of the water regulatory agency ANA.

    “I believe that, technically, it would be unviable. But if it doesn’t rain, we won’t have an alternative but to get water from the mud,” Andreu said at a hearing about the water crisis in Brasilia’s Lower House of Congress on Nov. 13.

    “Never let a good crisis go to waste.”

    Brazil Legislator Pastor Isidório liga Blames Pride Parade For Catastrophic São Paulo Drought

    “And how do we know she’s a witch?”

  24. California drought most severe in 1,200 years, study says

    By Matt Stevens, L.A. Times, December 5, 2014

    Californians are living through the most severe three-year drought in the last 1,200 years, according to a new study published this week in an American Geophysical Union journal.

    Although other three-year periods have been drier, 2012-14 stands as perhaps the worst drought in a millennium due in part to “anomalously low” precipitation and “record-high” temperatures, the study said.

    1. If the drought continues the cities will get the irrigation water.

      1. Have a buddy in Cali monitoring the situation. Bottom line, they will just go deeper into the aquifers. They ain’t gonna slow down anything.

        Nothing stops until it is FORCED to stop, and not by legislation because you’ll never get anti population growth population passed.

        1. Population is not increasing everywhere by any means. Are you claiming the Japanese have been forced to stop reproducing?

          1. The Japanese don’t represent much of the population of California, which is all that was being discussed.

  25. Ok esteemed peak oil colleagues, I have a couple of questions for you. This morning I met a gentleman who apparently works in the oil business–he purchases oil. From what I gather he is not an oil trader, he seems to actually be purchasing oil. I did not get all of the details of his job.

    In any event, during our discussion he told me that he buys oil from the Bakken and that it has a “medium” weight, and that plenty of diesel comes from the Bakken. Of course I thought that all shale oil is “light tight oil”. If he is purchasing diesel from the Bakken (which he at least implied), could it be oil mixed with heavier oil coming from Canadian tar sands.

    He also noted that if the Keystone is built it will drop the production cost from the Bakken by $10-12/barrel. Plausible?

    For whatever it is worth, he seemed to be unaware of the high depletion rate in Bakken wells (or at least he did not seem to understand the implication of the high depletion rates.)

    Best,
    Tom

    1. Well medium oil is defined as having API gravity between 22.3 and 31.1°. As far as I know Bakken API gravity ranges between 35-45° (Avg. 42°). By definition, light crude oil is between 32° API and 42° API. Therefore Bakken qualifies as light crude oil. If that’s any help.

      1. Thanks Doug,

        OK, so I found the following regarding diesel:

        So what is a typical API gravity for diesel fuel? The classic book “Petroleum Refinery Engineering” by W.L. Nelson (4th ed., McGraw-Hill, 1958) gives numbers ranging from about 25 to 40 (with “Grade 1-D” around 40 and “Grade 2-D” around 35).

        http://www.madsci.org/posts/archives/1997-08/865616228.Eg.r.html

        So if what I found above is correct there might be quite a bit of diesel that can be refined from Bakken oil. I am a bit surprised at this because there has been a lot of discussion on this site about how “light” shale oil is and how that might cause problems with diesel stocks in America. Perhaps the issue is that there are denser grades of diesel that are important for transportation fuel that would be unavailable from Bakken oil?

        Best,
        Tom

    2. I think what your friend meant is that the oil from the Bakken gets refined into diesel.

    3. You are spot on. Our friend with the volume discounts idea doesn’t understand what a company will sacrifice to stay up and running, avoid mass layoffs and mothball rigs or other equipment. I have worked for a very large multinational and we do get volume discounts, but those arent that big when there’s high activity levels. Why should I give a discount when I’m already doing as much as I can and we have to hire greenhorns to satisfy demand? This point seems to escape many.

      1. I would put the condensate/crude division at more like 45 API gravity, but note the huge decline in distillate yield, just going from 39 to 42 API gravity crude.

    1. Thanks for the link. It’s got Yergin blabbin more of the same etc. 🙂

      There is not a word in there about net energy decline due to the actual increase in energy needed for production, especially in new sources, which I still assume to be the real underlying problem in our system. No word about capex. We need enough surpluss energy from a barrel to be able afford that barrel right?

      From what I read on ZH is that US (jobs) growth, fueled extra bij QE, has mainly come from the E&P gas and oil area. You can imagine a society that -by necessity- is solely focussed on extraction, and that ain’t gonna be a pretty one.

      Plus I’m wondering if a lot of marginal barrels are actually subsidized by higher eroi barrels from conventional sources through the magic of finance? That would be an epic mistake. If you think about it, the only real “growth” in de US is generated by burning fossil fuels to get MOAR of them out.. To do the same!

      I’m pretty sure the US in the long run would not be able to run it’s current society on oil from LTO only, so even -IF- LTO production would rise and deliver all the US needs society would break down to a lower EROI version. Were everybody works for an extraction related company. Little Timmy gotta work in the mines and stuff 🙂

      Peak oil is not about volume of liquids per time unit. But the underlying produced BTU’s neither tell the story. I wish the EIA would make a total produced BTU’s per capita minus used BTU’s in extraction and processing graph. THAT would be clarifying no?

      1. The EIA doesn’t have the data. If state regulatory agencies decide they want to gather it, then oil companies/field operators will have to put their pencil to it. This information is gathered by some companies, but there’s a lot of lumping, mostly because the energy isn’t metered in joules or BTUs.

      2. With the decline in LTO activity in the US, the decline in oil consumption will be interesting to watch.

        1. There won’t be any decline in consumption. Drilling rigs and frac trucks don’t use that much diesel, if that’s where you are aiming. As for the general market…why should people use less when prices drop?

        2. Did a field wide profile of diesel consumption by the zillions of trucks running around in the Bakken. It ain’t much.

          The calculation was oil production divided by typical tanker truck capacity and a presumption of XX miles per trip to pickup and dump the oil. It ain’t much.

          BUT.

          If the computation ZH presented this past week pointing at significant US GDP contribution from frantic shale activity, then in the broader sense of consumption mapping to GDP, there could be decline (which does not bode well for hoped for scarcity induced price rise).

          1. The more I think about it, the more I see the “oil price” on its own does not say a lot and can not be compared to a previous point in time on its own. There is always the link with extraction and refining cost, and buyers paying capacity and credit availability.

            So in theory the price could be droppin’ while still becoming less affordable in the meantime.

            Although I assume, if shale needs to scale back, oil usage in production areas will drop but due to the glut for some time the USA will enjoy low prices and happy motering once more. Then it should go up due to the decreased E&P spending worldwide (which has been a trend for some time now), but I wonder if it will ever go back to its old numerical level…

          2. You can take it to the bank that an eighteen wheeler uses between five and fifteen gallons per hour in use. The lower end is sitting around running but getting loaded and unloaded and waiting at lights and so forth and traveling on roads where the traffic is heavy. The high end is for climbing mountains fully loaded wide open throttle with the biggest and baddest engine you can get.

            Six to ten gallons per hour per shift is in the ball park as an average per truck.

          1. BAU said:

            But your ideas are far from being mainstream in the heads of policymakers.

            We just ran the numbers, and that’s how it came out. Of course not one likes it (can’t say I blame them much, I don’t either), but hiding under the bed doesn’t get you very far. It has been circulating for almost a year now, and we have not yet had one single person point out why its wrong. There’s not much chance that it is!

            But don’t expect MSM to pick it up anytime soon, first of all most of the MSM couldn’t find there ass with both hands, and a full length mirror. Second, it wouldn’t help sell Chinese junk to JoeSix. But when people take a close look at, and compare its predictions of past events to what happened, we get no arguments.

  26. I am very skeptical about the extra heavy oil reserves in Canada and Venezuela. Look at Southern Pacific (http://www.shpacific.com/index.php). For their first oil sands project they didn´t want to take any chances. So they used a proven SAGD technology and of course a site they believed in. Natural gas is used by the oil sands companies for creating steam. So with low natural gas prices and high oil prices one would think it would be perfect for those companies. That project is now producing 1/6 of production capacity. They have tried different techniques to increase production but have failed. So the company is now heading for bankruptcy. Falling oil prices is of course not making things better for them. I have seen claims from oil sands companies that 50% of the oil in place can be extracted using SAGD technology. Perhaps it is technically possible. But how much would the steam to oil ratio be if they would ever try to extract that much? EROEI must be terrible. Right now they seem to be struggling when 100% of the oil is left.

    1. I’m not sure about Canada, but I’m somewhat familiar with the venezuelan oil fields. The Orinoco Oil Belt PROVED oil reserves are about 10 % of the amount booked by PDVSA. I wouldn’t get too concerned over a failure in a single SAGD project elsewhere. The issues are much more complex. You must also consider the sheer size of the trap. This means the reservoir characteristics are quite variable. Given the utter chaos, high crime rate, corruption, and communistoid nature of the Maduro regime, a reserve definition and estimate would have to be highly speculative. If anybody has any questions about this issue I can discuss it to a limited extent.

      By the way, I apologize for the lemur photo, it got added by accident.

      1. PDVSA has a lot of longstanding issues with Chavista fanatics both dictating what the company does as policy, and holding assorted positions inside the company. Complete mess.

        Now the good news there is that Venezuela has been so chronically mismanaged for decades that they have far more oil left than they would otherwise and might actually be capable of achieving a new peak. They’re that messed up. Of course, them being so messed up also means that no one is investing anything for the foreseeable future and the country will be lucky to survive $60 oil.

        1. Anon,

          Much of PDVSA’s skilled workforce, from engineers and geologists on down, has left the country headed for places like Colombia, especially, and Canada. That will make it very difficult to get going again when or if the country begins to get back on its feet.

    2. Hi FreddyW,

      Despite the 50% claim from oil companies, there is roughly 1700 Gb of original oil in place in the oil sands of Canada and about 10% are considered “proven reserves”, so the average recovery factors are expected to be 10%, the Canadian Association of Petroleum Producers (CAPP) forecasts that bitumen production will increase from about 2 Mb/d in 2013 to 5 Mb/d by 2030. Low oil prices may change this.

      1. Actually Dennis, that projection was wiped out before the prices fell. Total and Suncor (THE oil sands company) were set to spend a few billion dollars on a new upgrader. Total yanked the funding early this year as part of the generalized pullback of projects by majors. Suncor shut it down, too, rather than go it alone.

        It takes serious equipment to get flowable oil out of those sands and it’s not cheap. It was declared not cheap even when prices were $120.

        1. I agree that oil sands production is going to grow only slowly under the assumptions generally used to make such forecasts. And while predicting is hard, it seems pretty safe to say there will be very little in the line of larges scale spending in oil sands so long as the price of oil is down.

          But the price will not stay down unless the world economy is in worse shape by a mile than I think it is. Even though times are hard just about everywhere depletion alone will correct the supply over hang within a year or two.

          My own guess is that oil supplies are going to fall off a cliff sometime within the next few years and that the price of oil will shoot way on up there ,creating some extremely serious economic troubles for just about everybody.

          Now if this larger scenario comes to pass then the slow development oil sands scenario is most likely toast.

          Real capital will be scarce but it will not be non existent and governments will be eager to see that as much of it as possible will be poured into any reliable scheme to increase oil supplies.

          The oil sands may well be developed as fast as the Canadian government will ALLOW development.

          Just how fast that might be is something I cannot guess but a possible wartime level effort will result in a huge and sudden surge in development.

          I will hazard a wild ass guess that production could be doubled easily from a technical pov in five years.The industrial capacity to provide the necessary machinery and materials is certainly available and skilled workers are good at sniffing out the money. Living in a barracks and working seven twelves is considered the tall cotton life among skilled tradespeople.More than a few of my acquaintances over the years have paid for a farm or a nice house or saved enough to go into business themselves this way.

          A couple million more barrels won’t be enough to make up for the decline of legacy oil or the peaking of tight oil but two million barrels would be a lifesaver to whoever gets it.

          IF the Keystone gets built we will be in an excellent spot to get a lions share of it.Given the repuglithan take over it is almost for sure going to get built.

      2. Hi Dennis. Yes that´s true. But is it 10% on the whole tar sands area, or 50% on 1/5 of the area? Propably somewhere in between. Anyway, that was supposed to be in one of best areas and they couldn´t get it to work. I just get the impression that they have been too optimistic.

        1. Freddy,

          I’m not an expert on Alberta Tar Sands but one key point is that initial production came from areas that were very shallow and subsequent production is therefore limited to places of ever increasing overburden: so ever increasing cost and effort. Not that an immense effort isn’t being made to exploit this resource and deal with all the problems that accrue.

          1. Depth is only an issue if the oil is deeper than about 1400 meters, or in the intermediate zone between SAGD and mining ranges (that’s it, too deep for surface mining, too shallow for safe steam injection). The parameters which downgrade performance are permeability and porosity, oil saturation, net to gross, thief zones, gas caps, high gas prices, lack of diluent, and things like that.

      3. They also need natural gas condensate to mix with the tar so it will flow down the pipeline. This is currently coming from North Dakota I think. Is the tar sand business dependent on the fracking business?

        1. Ilamb,

          The Montney and Duvernay prospects in western Alberta and NE British Columbia are seeing lots of drilling and are expected to be able to supply all the NG that the oil sands are going to need. I don’t know how long the resource will take to develop but money has been pouring into the region. The oil sands won’t need US NG if these two plays work out (it says here in the investor info).

        2. The extra heavy oil business requires a diluent. But the diluent can other than condensate. Naphta is an excellent choice. If the oil price is higher than $100 per barrel a possible option is to build an upgrader and make syncrude. One of the streams coming from a typical upgrader is naphta. Therefore, a high class upgrader can deliver a hydrogenated/stabilized syncrude as well as additional naphta. I have usually leaned towards a 32 degree API syncrude, which can be used to make a very nice 20 degree API dilbit.

  27. International oil companies are cutting back, when will we see the shale plays? Will their creditors force them to keep drilling or shut them down?

    http://www.reuters.com/article/2014/12/05/statoil-rigs-idAFL6N0TP1DT20141205

    “UPDATE 1-Norway’s Statoil extends rig suspensions as margins squeezed

    Dec 5 (Reuters) – Norwegian energy firm Statoil extended the suspension of three drilling rigs on Friday as it battles to cut costs in the face of shrinking margins, squeezed by a 35 percent drop in crude oil prices since June.

    Statoil, which had suspended more than a third of its exploration fleet this year, is upping its efforts to preserve cash having already been selling assets to pay for investments and dividends even when oil was over $100 per barrel.”

    1. From your link:

      Statoil has also struggled with poor exploration results this year, as key wells in Angola, the Gulf of Mexico and the Norwegian Arctic disappointed.

      That is very interesting. Looks like sweet spots are petering out all over.

      1. That’s my impression as well. I’m getting requests to look over incredibly low quality properties. And I noticed Exxon was playing in the Kara Sea. Either Exxon is betting on big time global warming, or they ran out of places to look for oil.

        1. FL,

          My guess is “both”.

          Western drilling in Russia’s Arctic is being messed up by the sanctions, but I suppose will resume eventually.

          If it looks like desperation and walks like desperation and…

      2. As referenced somewhere above, price relevant EUR and price relevant reserves mean not a helluva lot when you can print money, or conquer nations and eliminate their currency — and VERY EXPLICITLY DITTO when geology is going dry.

      3. The lack of new sweet spots is not that surprising. Every supermajor petroleum geologist the world has produced in the last quarter-century isn’t bad at their job. All the high cost, technically challenging flyers are because that is what there *is*.

        I mean, what’s the last big field anyone found? Cash-All-Gone. For something that we are pretty confident is actually there (sorry Brazil), you can’t get more technically challenging than that.

        The Arctic is the same thing. You would never look for major oil production there if you had any other ideas. Sure it *might* be profitable, but a field with an extraction cost of $20 would be much more so.

        1. The Kara Sea drilling project by Exxon has a problem dicier than capital and operating expenses. They have to take ice breaking tankers through the Kara Gate. Or do they have a trick up their sleeves?

      4. My niece, who is a young Norwegian Petroleum Engineer, informs me Statoil will be concentrating its efforts on Johan Sverdrup for the foreseeable future. Apparently this field comprises a 95 to 5 oil to gas ratio with a “resource” estimate for the entire field of between 1.8 and 2.9 billion barrels (oil equivalent). I’m also told Sverdrup is probably the largest oil discovery ever made on the Norwegian continental shelf and that it will account for 25% of the total oil production in Norway: Production start is scheduled for 2019. Please Note: Resource = reasonable prospects for economic extraction as opposed to Proven-Probable (seeing as we’re being especially picky on this today). If memory serves, Prudhoe Bay Oil Field originally contained approximately 25 billion barrels of oil: I expect this gives Johan Sverdrup size perspective.

  28. If you look at the daily activity reports and read Statoil’s ip results, the ip rates are usually higher than most other producers, anyway, that is what I usually see there. With the price of the stock dropping five dollars in the last two weeks or so, they are taking their lumps in the Bakken because of the drop in the price of oil. If the ip rates are high, a high decline rate would follow.

    Statoil recently reported that they were going to invest more in renewables and move away from oil exploration. Must be happening fast. Moving to renewables, and fast.

    One project they are developing:

    http://www.greeninvestmentbank.com/news-and-insight/2014/uk-green-investment-bank-invests-240m-in-uk-offshore-wind-sector/

    Statoil must be worried about oil exploration and the poor results, much to their chagrin. Taken aback, not that happy about it at all.

    As a result, they move to wind turbines and the investment may prove profitable, less cumbersome, you can have your cake and eat it too. Drilling for oil gets old, especially when you’re spending your cash flow on investment and the returns are miserable, worse than anybody could think.

    1. Offshore wind is going to fail. It seems to be getting peddled by companies which rely on very high subsidies, or lack an understanding of offshore maintenance costs. If you want to debate it, describe how you would go about changing a broken 2 MW wind turbine 20 km offshore Great Britain.

      1. Yes, one problem with offshore wind seems to be a lack of equipment to do it conveniently. Another problem is the infrastructure — the underwater cables for transporting electricity. The Germans have been stuck on this for a while.

      2. Yes the Dutch, among others, seem to have pretty much given up on offshore wind owing mainly to offshore maintenance costs. And, most appear to want onshore to disappear as well (not in my backyard). Perhaps a surprise given Hollands history!

      3. Simple. Pull up the anchors on that great big long stable float the wind turbine is sitting on, tow it in, fix it, Tow it back out, drop anchors and away we go.

        Nobody in right mind would do it any other way. Would they?

        1. Sounds more small scale, less centralized, grid-tied, yes?

          “There is little man has made that approaches anything in nature, but a sailing ship does. There is not much man has made that calls to all the best in him, but a sailing ship does.” ~ Alan Villiers

          Made locally of local materials.

          1. Scale a problem? Why? Just as easy to tow in one out of a thousand as it is to tow in one out of 3.

            Sailing ships, Love ’em, been near killed twice, boats did not survive.

            Wind turbine mission way way simpler than sailing ships’.

            1. You act like they haven’t considered your idea. I’m pretty sure they ran the simulations have and deemed it a bad idea, but maybe you know something that they don’t.

            2. Yeah right, Wimby clearly knows more than a whole host of Dutch Civil Engineers who deemed offshore uneconomical owing to maintenance issues. 🙂

            3. The real problem, as I mention above, is that the infrastructure doesn’t exist to do it. Offshore wind could be done very cheaply if the specialized barges and other equipment were already there, but they aren’t.

              Another issue, especially in Holland, is that there is plenty of wind onshore, so offshore is a solution in search of a problem. It’s like the big idea of covering the Sahara with solar panels to power Europe. Sounds nice but there’s still more than enough real estate in Southern Europe for solar projects, so nobody will bother in the near future.

            4. Any body who ever hung out at TOD or here knows that I am a pedal to the metal advocate of the renewable energy industries.

              My reasoning is that some wasted investments in technologies and built infrastructure that just doesn’t prove itself is a small price to pay for a sustainable future. We seldom hear anybody bitching about the energy and money that are essentially wasted on frivolous undertakings such as new football stadiums which are often supported with tax monies, or about the energy wasted by keeping poorly insulated buildings heated and cooled or anything of that nature..

              The renewables naysayers seldom have anything bad to say about building warships and warplanes and tanks and spending billions to pay men to run them- warships and warplanes and tanks that are truly needed but also truly needed partly because we live in a world where energy is the source of many a fight.

              If we were truly energy independent we would be as safe with a much smaller military establishment- which is paid for entirely with tax monies.

              But having said this much I must also say that the renewables industries and the supporters of renewables have made lots of mistakes that amount to shooting off their own toes.

              It is very easy to find articles and pictures of solar installations for instance that are obviously never going to generate more than a pittance of energy – installations that were built simply because of subsidies and regulations passed to encourage the adoption of the technologies.

              We should be focused on putting such tax money as is spent on renewables into projects that have the best potential returns. This means solar farms in the southwest and south where the sun is best and wind farms in the plains states where the wind blows hard and steady.

              It’s just good sense and good strategy to build first where the performance is closest to being dollar cost competitive with fossil fuels.This will prove to the skeptical public that renewables are a good deal a lot sooner than otherwise.

              There are ways to finagle the budget to make it fair to people who live in places that are not getting the subsidies. A place with no subsidized wind or solar farms could for instance get more earmarked tax money back from the feds to spend on other energy related projects such as upgrading the energy efficiency of local schools and other public buildings.

              Personally I believe the biggest single impediment right now to explosive growth in the renewables industries is the perception on the part of the public that renewables are not cost competitive.

              Once the people on the street understand that the costs are not out of line considering the local tax revenues and the local jobs involved they will get on board.Not before.

              A two million dollar wind turbine well sited in Nebraska will probably produce at around fifty percent more energy than an identical one located just about anyplace in Virginia except a few mountain tops.

              I have no expertise in offshore wind but going by what I read maybe we should be redirecting our support to other technologies with better balance sheets.

              Handing the enemy ammo on a silver platter to use to shoot off your toes is about as bad as shooting them off yourself.

            5. Despite you headline, wind capacity continues to increase in Holland.

            6. Right around the corner from me, on a sloping site, an inholding in a wildlife preserve, at least 10 acres of nice big trees – mainly mixed hardwoods and some pine – have been clearcut. There is to be a “solar farm.” This nonsense is subsidized by the Commonwealth of Massachusetts. The sun hasn’t peeked out for days. Those trees, properly managed, would have warmed a homestead forever. Plus trees are a carbon sink, are they not?
              The energy will be fed into the grid and tax credits will be sold to someone. Insane. WE ARE INSANE

            7. Renewables aren’t competitive. This is why they require subsidies. They also have technical problems caused by intermittency. One has to understand electric power grid operational practices and constraints to get an insight into this problem. And I see too many reports written by consultancies with an agenda. This means one can’t even trust a professional opinion unless their profit motives are understood.

        2. Wimbi, I take it you assumed the offshore turbine is installed on a multipoint anchored spar like structure? So what’s the draft on that spar? What sea state will you need to release the anchors? Does the spar ballast up or down for towing? Who gets aboard and disconnects the cables? How do you assure a safe cross from boat to spar? When you tow, what type (and how many) boats will you use? How much do they charge? When you arrive in port, what’s the required draft? When you have it secure, how do you replace the turbine? What size crane? How much does it cost? Do the same thing backwards until you have your repaired turbine back offshore, hooked up and anchored. And repeat for another turbine (I assume you won’t have equipment on stand by, turbines will be repaired in batches in good weather). So that’s easy compared to doing it onshore? Have you ever worked 20 km offshore Great Britain trying to move a large load with a crane?

          1. Holy Cow, people, no need to drag up the heavy artillery to shoot down a 3 minute thought!

            My assumption, quite wrong, that you would take it for what it was- an idea bullsession, where thoughts are tossed out for comment, and most end up dead on the spot. So what, thoughts are cheap as dirt. Just toss out some more, maybe one or another has an element of ok in it.

            So, here’s another one. Get rid of the turbine. Replace it with a couple of big kites wrapped around a windlass. One kite is up there unwinding its rope and spinning an alternator on the windlass, while the other kite is being pulled back at lowest drag angle to start over,

            All the stuff up in the air where the winds are really energetic is about as massive and replaceable as a sheet.

            Back down under yer rock, quick, wimbi!

            1. Excellent idea! And to make sure the kite can be retrieved when the wind dies we can put a small solid fuel booster on it, have the kite fold using hydraulic drives, fire the booster, and have it land in a designated retrieval sector to be retrieved by specially equipped helicopters.

      4. If you want to debate it, describe how you would go about changing a broken 2 MW wind turbine 20 km offshore Great Britain.

        Disclaimer I have never been involved with off shore wind turbine maintenance so before you made that statement I had absolutely no clue whatsoever!. However in an earlier incarnation of myself, I did work doing underwater maintenance of hydraulic systems on BOPs and such as a deap sea saturation diver on oil rigs. That experience leads me to believe that if there is a will and a necessity then there definitely is a way!

        Then I also Googled: How maintenance is done on off shore wind farms… and lo and behold found a lot of information such as this:

        http://goo.gl/kaHDiU

        Operation and Maintenance Aspects of Large Offshore Windfarms
        G.J.W. van Bussel1
        , Chr. Schöntag2
        1
        Institute for Wind Energy, Faculty of Civil Engineering, Delft University of Technology,
        Stevinweg 1, 2628 CN Delft, The Netherlands, Tel: +31 15 2785178, Fax: +31 15 2785347,
        E-mail: g.van.bussel@ct.tudelft.nl; http: //www.ct.tudelft.nl/windenergy/ivwhome.htm 2
        M. Sc. guest student at Delft University of Technology from the University of Stuttgart, Germany
        ABSTRACT
        An assessment of the O&M process for large offshore windfarms identifies ways to reduce O&M related costs. A modified self propelling jack-up platform offers an promising method to perform maintenance actions requiring cranage as well as major overhaul. Accessing individual turbines by vessel in stead of a helicopter is most
        economical. From a Monte-Carlo simulation a very poor availabilily level with present onshore designs is found.

        Thus a redesign for offshore application aiming at reduced failure rates and taking into account the required O&M effort and offshore O&M equipment is inevitable.

        Well Duh!.this just further underscores my belief that there are economical solution out there.

        Yeah the ocean is one tough environment to work in. And more people need to learn how to sail! If they did they might have a very different perspective on life in general.
        Cheers!

        1. Having a paper reference isn’t enough. You would have to estimate full costs for a jack up vessel fleet with the capability to work in the specified site. When you do, you will see its a lot cheaper to build and maintain onshore.

          If I were in charge I would build several test designs on an exposed onshore environment, where it would get a similar wind and sea spray exposure, and test alternative designs. The idea would be to make a very tough turbine. However, its a heavily subsidized industry, and I bet they tend to use mickey mouse hardware. People make the same mistakes over and over.

  29. Watcher, You’re usually on top of this stuff but just in case……………

    THE NEW NUCLEAR THREAT

    https://ca.news.yahoo.com/the-new-nuclear-threat-220529917.html

    “India and Pakistan are building up their arsenals, and one terror attack could ignite an all-out war. According to the report, Pakistan currently has the world’s fastest-growing nuclear arsenal, with enough fissile material to build 120 bombs and the potential to build at least 80 more by 2020. India has the ability to build 110 nuclear devices, but is also reported to have ramped up its production capacity.”

    1. I suppose if you felt nuclear war could be contained within specific areas, if you felt radiation from those areas wouldn’t threaten areas outside of those war zones, and if you felt the world has too many people already, then watching two heavily populated countries wiping each other out with nuclear weapons might be some sort of economic plan as resources declined.

    2. Those numbers sound quite a bit high on the Pakistani side. They are an obvious conduit to Al Queda so their material totals have always been restrained, or were.

      The Indians don’t have all that much in the way of delivery systems, but they are doing some cruise missile work so that may not be so forever. Their SRBMs only have a range of 300ish miles so they are pretty close to danger if you tried to upgrade their warheads.

      India has always been the scare tactic du jour during multi service budget competition. A few years ago a Red Flag clone was conducted with the Indians and terrified headlines got splashed in military venues that the Indian Air Force had killed a majority of US F-15 aircraft on the test range and lost a minority of their own aircraft. That was good for money to deal with F-22 development problems. After that money was in hand, the conditions of the competition were released — no AWACS involvement permitted, no ECM and AIM-7F missiles only, no AMRAAM. I think those are the details, something like that. And of course the F-15 is not a stealth aircraft.

      The Indian anger is mostly about Pakistan being a terrorist staging area. The guys who drugged themselves up and attacked that hotel a few years ago were said to come from Pakistan.

  30. http://phx.corporate-ir.net/phoenix.zhtml?c=79687&p=irol-reportsother

    Canada seems to be reacting the lower price of oil, down 17 rigs on the week.
    The US rig count actually went up by 3. So is yet to react? Is it due to the creditors that is keeping them drilling? Are we going to wait until the US shale players file for bankruptcies, before cutting back or can they actually make money at this price? I don’t believe so, but I am sure by the time every one has to declare numbers in their quarterlies, we will know for sure.

    1. Most US rig contracts are set well in advance and would have very large penalties for breaking. Canceling equipment for a round of wells might also violate financing terms for the project.

      With cash flow needs, you might as well drill with them.

      Running at a loss for cash flow so as to not have imminent default obviously isn’t sustainable for very long.

      1. Interesting remark. What exactly do you mean by “well in advance”?

      2. Anon,

        I agree they have cancellation penalties, but I am sure the Canadians would have similar conditions. In fact Canada has a distinct season. Very little drilling takes place during spring, due to melting roads and therefore I would have though cancellation conditions would have been stricter.
        From my experience, offshore, 30 day clauses are common. So if an oil company wants to pull out of a contract with a drilling company, the minimum requirements without costing too much, will be give 30 days notice, and have a cased hole.
        I would not expect all drilling to shut down at once, but with over 2000 rigs working many contracts will be ending at any point in time. It does seem strange that Canada has reacted, yet the US has not.

        1. It’s simple: canadian oil men are tea drinking pansies whose main sport is bowling. USA oil men have hair on their chest, love to play chicken and Russian roulette, plus they are backed by stupid yankee bankers who think all oil wells were created equal.

          1. Hello Fernando,

            I love your tongue in cheek reply. I wonder if you will get a bite from some of the American oilfield hands here.
            I feel the US shale plays are in a car driving towards a cliff. They can see what is coming but those drug supplying bankers just won’t allow them to lift off the throttle

  31. Over 2000 nuclear tests conducted between 1945 and 1998 and the earth’s atmosphere didn’t go up in radioactive smoke, although those radioactive clouds made into the atmosphere and air currents, they made it across the globe. Many moons have gone by since Trinity.

    All those gamma rays and the neoplastic effects they’ve had on the somaplasm of humans; gamma rays can do genetic modifications, by golly, causing malignant gliomas, malignant neoplasms. It’s true. When graphed against human diseases such as diphtheria, typhus, mumps, measles, small pox, as those diseases were conquered, a subsequent increase in malignant neoplasms occurred. More survivors of the species, greater the chance of increasing numbers of malignant neoplasms.

    Especially when you are detonating nuclear bombs, testing, by the thousands, a few gamma rays penetrating body tissue might possibly do some damage. Radiation sickness is something you want to avoid at all costs.

    When Three Mile Island got all steamed up, the radioactive cloud wafted across the countryside and into the surrounding area. A woman in the area went outside to see what was going on, stood on her porch to see what was happening, as she watched the cloud in the sky, the warmed air from the accident at the power plant reached her location, she felt it hit her, two weeks later her hair turned white. Radiation is all it is cracked up to be. Now we’re all stuck with four hundred plus nuclear reactors that will have to be maintained for the next 100,000 years. Have to, can’t do anything else, nuclear power demands it. Meltdowns aren’t on the agenda. Nuclear power is a gift that keeps on giving.
    An arsenal of twenty thousand nuclear bombs worldwide is really not much help at all, what you would call a bad way to spend a lot of money. What the hell? As long as it pays, it’s all good. Go to youtube and search Country Joe McDonald and listen to the fixin to die rag. Great song.

    It takes oil to maintain those nuclear plants and nuclear-tipped missiles, let’s hear it for laser gyroscopes, come on, nuclear powered aircraft carriers, submarines, the lollapalooza, so let’s hope the oil lasts at least another 100,000 to 200,000 years. It’s a solid business with a great future, guaranteed jobs program and a bright career to work.

    Three cheers for nuclear power, it’s the bomb.

    1. The only thing that scares me more than the thought of a fleet of a thousand new nukes is the thought of being without them.

      It is a mathematical near certainty that there will eventually be a major nuclear accident that DOES result in thousands or maybe even a million short term deaths and the forced abandonment of a large land area for decades or longer.

      And unless the design of spent fuel storage systems is changed radically for the better then eventually spent fuel is going to be very very real rather than just a potential problem. But the long term future is an academic problem until such time as it arrives.

      If we don’t make it thru the short term we need not worry much about the long term and a fleet of new nukes would be a great comfort in terms of knowing that the water and sewer and refrigerator and electrified trains and street cars and hospital beds all continue to work when the gas and coal deliveries are interrupted by depletion or acts of war.

      In terms of knowing that the food in the supermarket is not rotting due to a power outage.

      In terms of people rioting and worse than rioting by the millions because the power is off.

      In terms of migrating like the animals we actually are. Nobody asks the blue jays who returned last week to my bird feeders as they do every year for a green card or passport.Every once in a while I have seen a great snowy owl far south of its usual haunts during an especially tough winter.

      We haven’t seen anything yet in terms of ”undocumented aliens”.

      About twelve thousand a month make it to Italy alone from Africa. There is a big write up about it in DER SPEIGEL – free access.

      When the power starts going off and staying off in places such as Greece the current trickle will turn into a flash flood.

      Which is actually more dangerous ? Hot energy wars or nukes?

      I believe the odds of hot energy wars are so high we can take them as a foregone conclusion unless we manage to defuse the energy bomb.

      Its a paradox sure enough but the nukes that make the nuclear bomb possible may be our best insurance against the BOMB actually being used.

      1. A political & Leadership failure of potential biblical proportions. As high level waste isolation and security is becoming rapidly more urgent in the age of chaos & terrorism, The US Gov actually passed a law allowing WET on site storage for 100 years. Future generations may lack the Know How to manage the material. Containment, what containment?

        Prudence would mandate transfer of spent rods to dry casks after 5 years of wet cool down , but that means higher electricity rates and/or reduced funds for Pet projects. Much of the funds utilities are required to collect and safeguard for decommissioning were vaporized during the 2008 financial crisis. What’s a more important issue than preserving our biosphere and future life.? Solutions on both sides of the pond:
        http://www.nrc.gov/waste/spent-fuel storage.html
        http://www.skb.se/upload/publications/pdf/Fact-sheet_Spent_Feul_Repository.pdf
        http://www.lucoex.eu

        1. Dry casks are not totally foolproof but they are good enough that a failure is going to be an extremely rare event. I have never worked on them myself but I have worked around them and talked to the welders and engineers who work on them and they are damned near bullet proof. In fact they are pretty much bullet proof against any small easily portable weapon except maybe a rocket propelled grenade or armor piercing missile,etc, of the sort used against armored vehicles.

          Set on concrete pads they are too tough to be damaged even in an extremely violent earthquake and they are simply too big and too heavy to be stolen except by a group of men who must come equipped with cranes to load them and heavy trucks to haul them away.

          A good thick piece of high quality stainless steel such as is used to make the casks I have seen is corrosion resistant to a degree sufficient to last thousands of years.

          Casks are ok and at some point in time the fuel in them may well be retrieved for recycling purposes although I hope this will not be necessary.

          Thick high quality stainless is about as close to forever as technology gets.

      2. “The only thing that scares me more than the thought of a fleet of a thousand new nukes is the thought of being without them.”

        Humanity and civilization can survive without any nuclear plants. I fear a loss of just a single spent fuel pool can trigger a regional chain reaction. Consider if just one spent fuel pool on the East coast of the US catches fire. What happened to the adjacent power planets in the region? When the call to “evacuate” happens it will be mass chaos as millions flee at once. Gasoline and diesel will become unobtainable as everyone rushes to top off and leave at the same time. If other plants are in the “exclusion” zone because its too “hot” who is going to service the these plants and prevent the additional reactors from failing? In the aftermath, it would be difficult to maintain the infrastructure as the chaos unfolded effecting the supply chain and the economy. Again the Law of unconsidered consequences. The risks for nuclear energy are astronomical and the reward is only continuing BAU for as long as possible.

        I fear on the other side of Peak Oil, the economy will crumble. Utilities will see revenue fall and expense increase. They will be forced to cut corners and there will be ever more pressure to “band-aid” problems and keep the nuclear power plants operating. They are already “band-aiding” many plants as every single operating plant is leaking, has cracks in the reactor containment shell, and have serious design flaws. Perhaps it may just be a three or four sigma event at a plant to cause a disaster to unfold.
        Its just a matter of time before a disaster strikes. I do not fear global warming, or even nuclear war. I am absolutely petrified about nuclear power plants, for they are a real “doomsday” machine and have the power make humans and probably all vertebrate life extinct.

        [former NRC chairmen recommends all US nuclear plants to be shutdown]
        http://www.nytimes.com/2013/04/09/us/ex-regulator-says-nuclear-reactors-in-united-states-are-flawed.html?_r=0

  32. I copied this from a short article about street lighting research being done in Dennmark.

    “When you go from a traditional lighting system to an LED lighting system you can save 50 percent,” said Kim Brostrom, chief technical officer of the Danish Lighting Lab. “So you can have a really large amount of energy saving. If you do it in an intelligent way so you manage each light post then you can take the rest of your energy consumption and save 50 percent of that. So you will have 75 or 80 percent saving of energy.”

    Street lights are going be controlled by motion and other sensors in the future-given that the cost of such sensors and the cost of deploying them continues to come down while the cost of energy continues to go up.

    Now how fast can such new applications of existing technologies be ramped up? In the case of new construction there does not appear to be any reason it can’t be done immediately..There is no reason the sensor mechanisms cannot be assembled and installed at the factory that manufactures street light poles.

    Retrofitting existing street lights is going to cost an arm and a leg in labor.But given that we already have substantial numbers of make work programs in operation in various industries it will probably happen.We might as well pay contractors to do something useful as to do otherwise such as building new administrative palaces and hotels to attract more business so as to use even MORE energy.The convention business must be getting pretty close to saturated and with travel growing more expensive and electronic communications less expensive it is going to be in deep doo doo in the not so distant future.

    Owning a piece of it is going to be problematic because it will be spread out in so many ways but efficiency is a hot candidate for THE NEXT BIG THING.

    Consider this- with the load reduced by half on existing lighting systems the load on the grid in a lot of city areas will also be reduced by close to half.So the town or city can install a token or credit or debit card activated plug at just about any light pole and anybody living close by can charge his car there at night.

    There was an article in Wired a couple of days ago where in the author peed and moaned about the difficulty of charging a borrowed Leaf just getting around in either LA or San Francisco due to a lack of charging stations- all the ones he could find were either busted or occupied.

    The Wonderful Wonderful Market will take care of installing charging stations for us though as soon as electric cars become more common. Any merchant who sees an opportunity to keep a customer on his premises for an extra half hour will install one or more for that half hour opportunity to plumb the depths of the customers wallet- not to mention the buck or two to be made selling the juice.

    There will be enough electric cars sold to be charged at home to get the industry past the charging station road block. The apartment dwellers will have to wait but they will eventually have access to plenty of public charging stations.Such stations are indeed somewhat costly depending on how elaborate they are but they will require almost no maintenance and the money can be collected automatically via credit or debit card or tokens or even inserted cash if the location is a safe one.

    And a slow charger need not cost more than a few hundred bucks- all it need consist of is a single underground conductor or conductor in conduit run outside to a weather proofed plug with a mechanism to accept the money. Such mechanisms are cheap enough that candy and soft drink vending machines are common as dirt.

    Such a slow charger installed at a place of business with the parking slot reserved for an employee with an electric car could very easily pay for itself in a year or two by earning a dollar or two a day- or it a single day by earning the enthusiasm of a highly desirable potential new employee who already has or is wants an electric car.

    120 volt outdoor outlets are actually very very common already although most of them are not close to a curb.

    1. As I mentioned recently when I was travelling through Liguria I noticed they were putting LEDs in the numerous tunnels on what looked like a regular bulb replacement schedule.

    2. This Mexican town has converted most of its street-lights to LED except for those where there is not a good LED solution but those have been converted to high efficiency types. WalMart and Soriana have converted to LED in their car parks and I note that one night club has solar powered lighting (not sure if LED or not) in their car park. Another LED roll out is going on in a small town just across the river in the next state. If Mexican towns can do it why the blazes does the USA have such a big burr about it stuck up their…

      NAOM

    3. I live in Europe, we use those LED lights all over. I really like my LED desk lamp, because now when I fumble it and it crashes on my face, I don’t get my forehead burned. Putting electric chargers in an apartment complex here wouldn’t be a big deal.

      But the electric vehicle uses electricity which is, in part, generated using coal. It also has a very short range, and running the heater makes it even shorter. A hybrid is a much better solution. Or a diesel with a five or six speed manual transmission.

  33. It doesn’t matter much how cheap oil is if you are unable to pay for it.

    http://online.wsj.com/articles/an-ailing-venezuela-trims-oil-diplomacy-1417824828

    But it matters a hell of a lot if you have it and have been donating it out of the goodness of your heart or for other equally valid reasons such as political support.

    The only thing I see about Venezuela donating oil is that a lot of Venezuelans themselves are still mired in desperate poverty.In my part of the woods we say charity should begin at home and except for an occasional small donation to a non profit I follow that philosophy myself.

    When I spend an hour or two occasionally helping out somebody who needs it -generally old women alone my choices- the bang for the buck is multiplied by a factor of at least two or three and maybe ten or more compared to donating to an organization with a bureaucracy to support.

    I don’t do any fundraising or any paperwork at all of any sort.I just show up with hand tools and caulking and nails and fix a couple of drafty windows or a leaky faucet or whatever.

    1. The Venezuelan dictatorship’s main parasite is the cuban dictatorship. The cubans haul both oil and cash in huge amounts out of Venezuela. They manage this because in a sense they colonized Venezuela. Interestingly, as the cubans tighten control and direct the Maduro regime to increase human rights abuses, the Obama administration makes cooing noises towards the Castro regime. I’m very disappointed with Obama. The USA sure has had a bad run of presidents this century.

  34. Low oil prices cause traffic congestion in Addis Ababa

    A friend of mine who lives in Addis Ababa, Ethiopia, just told me that traffic there has increased noticeably since gas prices have dropped. Increased congestion has lead to longer trip times. This have become a local talking point.

    May this serve as anecdotal evidence that demand for oil will increase with lower prices even in far flung corners of the planet. At the same time the supply side will reduce as many commentators have already suggested.

  35. WRT this thread

    “If OPEC were an effective cartel sharing the market among its members, there would be a long-run equilibrium relationship between each member’s individual production and total OPEC output. This idea is tested using cointegration analysis and some members’ production levels are found to move together with that of the organization in the long-run… The most interesting result is that seven members coordinated their production during the 1982-93 period…

    One would expect a cartel’s output to affect the market price of its product. OPEC, especially, has been accused of exercising market power by deliberately reducing its output in order to raise prices. This causal relationship is empirically tested…

    Overall, the evidence favors coordination among the members, especially during the output rationing era. Most analysts consider that OPEC’s market power eroded during this period. The price collapse of 1986 is seen as a result of OPEC’s failure to manage the quota system. However, our evidence suggests that another explanation is possible: OPEC started to act as a cartel in the 1980s in order to prevent prices from falling further. It is sometimes argued that the high prices of the 1970’s were not the result of collusive behavior of OPEC countries; that prices were too low before 1973-4 and an adjustment was needed. But prices increased much more than necessary and the oil market stagnated. The demand for OPEC oil kept falling as other energy sources were substituted for oil, especially in the industrialized countries, and non-OPEC production continued to increase. Neither the loss of market share nor the prospect of lower demand for its oil in the future was acceptable to OPEC, especially to those members in the Persian Gulf who own the largest reserves in the world. In response, members started acting as a cartel in order to maintain prices. ~ S. Gürcan Gülen

    This is in the 70’s, 80’s and early 90’s. I imagine they’ve gotten better at the game since then, learned a few things/tricks, and at the same time, the rules of the game have been sufficiently modified (and such as considering my previous post)…

    If you have a few kids in a small town at every block corner selling lemonade and more or less controlling the lemonade market; the town needs lemonade and its economic system is built around lemonade, the kids might get some ideas

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