The future output from the light tight oil (LTO) sector of the US oil industry is the subject of much speculation. Above I present some possible future output scenarios based on a simple model of US LTO, the scenarios are compared with the EIA’s 2017 Annual Energy Outlook (AEO) reference scenario with cumulative output of 82 Gb from 2001 to 2050. The cumulative output of the model scenarios is for the same period (2001-2050). Read More
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SK is a professor emeritus in the department of Mechanical and Aeronautical Engineering at a Major University in the USA.
Corrections to the first three equations were made on Feb 25, 2017.
The report reviewed here claims to rely on thermodynamics arguments to predict oil’s price-volume trajectory going forward.
Classical Thermodynamic analysis
First a few lines about thermodynamic analysis. The early contributions to thermodynamics by Carnot, a military engineer by training, were based on study of heat engines. The same theme was followed by Clausius, Kelvin, Planck and others. The study of heat engines is still an important aspect of mechanical engineering and as such appears in engineering thermodynamic textbooks with one chapter devoted to the analysis steam power plants, and another on the thermodynamic cycles that model, spark ignition engines, diesel engines, and gas turbine power plants. Similar analysis is next extended to refrigeration cycles and performance of heat pumps. Read More
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This post does not necessarily reflect the views of Dennis Coyne or Ron Patterson.
The carnage continues in the U.S. major oil industry as they sink further and further in the RED. The top three U.S. oil companies, whose profits were once the envy of the energy sector, are now forced to borrow money to pay dividends or capital expenditures. The financial situation at ExxonMobil, Chevron and ConocoPhillips has become so dreadful, their total long-term debt surged 25% in just the past year.
Unfortunately, the majority of financial analysts at CNBC, Bloomberg or Fox Business have no clue just how bad the situation will become for the United States as its energy sector continues to disintegrate. While the Federal Government could step in and bail out BIG OIL with printed money, they cannot print barrels of oil.
Watch closely as the Thermodynamic Oil Collapse will start to pick up speed over the next five years.
According to the most recently released financial reports, the top three U.S. oil companies combined net income was the worst ever. The results can be seen in the chart below:
