December US Oil Production Unexpectedly Drops

255 thoughts to “December US Oil Production Unexpectedly Drops”

1. Thanks Ovi, great job as always.

   Note that the drop in conventional output in Texas and New Mexico using LTO report at EIA and PSM data for November and December was nearly equal to the drop in US L48 excluding GOM output from November to December, this is an interesting coincidence. In addition US conventional output had been rising prior to December 2021, it may be that this is data that will be revised in the future.

   1. More on this below

      https://peakoilbarrel.com/december-us-oil-production-unexpectedly-drops/#comment-736099

2. I’m sure some will say this is even more “Fake News” from USA Propaganda, but even Putin Supporters Fox News is showing it.

   https://www.foxnews.com/world/russia-troops-ukraine-nuclear-plant

   Russian troops shelling Ukraine’s largest nuclear power plant sparking fire, officials say

   “We demand that they stop the heavy weapons fire,” Andriy Tuz, spokesperson for the plant in Enerhodar, said in another video posted on Telegram. “There is a real threat of nuclear danger in the biggest atomic energy station in Europe.”

   A government official told The Associated Press that there were elevated levels of radiation detected near the plant, which has six reactors

   1. Augjohnson, you have been watching too much of Fox News. This is all over every network. No one in their right mind would call it “Fake News” from USA Propaganda”. This is nothing but Putin and Russian idiocy. If they cause this plant to meltdown it will turn every nation on earth against them. This just shows how very stupid and dangerous Putin is. The world needs to be rid of this power-hungry idiot as soon as possible.

      1. Ron, I posted it from there to show that EVEN Fox is showing it. It’s on ALL the news sites. You know who would call it FAKE NEWS… You, me and others got chewed out by them on the previous page for believing “western propaganda”.

         1. This “russian propaganda newschannel” is sending news about russian war crimes round the clock at the moment, and statements from the ukrainian president to the world.

            It’s just a right wing news channel, opposed to all the liberal left news channels. Get used to things like this in a democracy – otherwise we would have a Putin newspaper landscape, where only things can be sended that passed the ministerium of truth.

            1. More of Ukraine and Russia

               The first part of this video is quite poor, but after that it is fairly good

               https://www.youtube.com/watch?v=ppD_bhWODDc

3. https://www.dailymail.co.uk/news/article-10575179/Russian-troops-fire-Ukrainian-civilians-protecting-Europes-largest-nuclear-plant.html

   Putin blowing up Nuclear Reactor to make those customers more dependent on Russian Fuels.

   Sinister guy.

   1. Not just the reactors.

      Zaporizhzhya spent-fuel dry storage facility
      Following the breakup of the USSR, spent-fuel could no longer be transported to Russia, and the shortage of free space in the cooling pools demanded a spent-fuel dry storage facility (SFDSF) at the site. The State Nuclear Regulatory Inspectorate of Ukraine issued a license for the development of the first SFDSF at Zaporizhzhya NPP in July 2001. Zaporizhzhya is the first Ukrainian NPP with VVER type reactors to include an SFDSF with a 50-year service life.

      The spent nuclear fuel from the reactors is stored in cooling pools for four to five years until the residual energy and radioactivity decrease. It is then transferred to the SFDSF.

      The storage system can accommodate more than 9,000 spent-fuel assemblies in 380 ventilated storage casks of 144t each. The facility began operations in August 2004 and 167 casks have already been installed on the site.

      https://www.power-technology.com/projects/zaporizhzhya-nuclear-power-plant/

4. Putin’s fantasy is to control politics with energy.

   He is going for it!!!

   He has been thinking about Peak Oil for years

5. How long does it for First Oil after adding a rig. Here is your answer.

   He (Scott D. Sheffield, the chief executive of Pioneer Natural Resources) cautioned, however, that such efforts would take time, noting that the industry was hamstrung by a shortage of labor and the sand needed for the hydraulic fracturing process used to extract gas from hard shales. “When you add a rig, it takes six months to get your first drop of oil out,” he added.

   https://www.nytimes.com/2022/03/03/us/politics/russia-oil-ban-congress-ukraine.html

6. The implications of this war on global oil production and the peak oil situation are interesting, to put things politely.
   On one hand the production ex-Rus will be getting a big stimulus in the form of sustained high pricing and demand unmet. How much response can be mustered?

   If the conflict and Russian isolation lasts long, there will a big incentive to allow and encourage Iranian and Venezuelan production back to market. Questionable if this will amount to much.

   A contrary trend is the decline of Russian production, as materials and partnerships and capital from abroad are restricted. I wonder if eventually Chinese partnership in funding and production will be invited by Russia.

   Lastly, the shift toward electric transport will be hastened by this turmoil, with the high oil costs baked into the cake.

   Overall, I think the URR of global crude production will be knocked down a quite a few notches.

   1. I’m hoping to see Germany accelerate it’s transition to ‘renewables’; I love those Bavarians, so meticulous.

      I recently found this article regarding Russian oil production and quite liked it.

      Russian oil production update Nov 2021
      http://crudeoilpeak.info/russian-oil-production-update-nov-2021

   2. I’d agree URR is likely to fall, not just in Russia but if there’s a rush to bring oil for ward from other countries it may not be optimal and, in the worst case, reservoirs would be permanently damaged.

      I don’t know if China would be able to help much with developing Arctic LNG, for example the cryogenic heat exchangers only come from a few western suppliers. The Chinese probably wouldn’t take much notice of patents but there are only three or four designs for full scale LNG plants, all owned by IOCs (Shell, Equinox, COP) or large EPIC contractors (Bechtel, KBR?) as I remember. China would have had no incentive to develop the expertise as it has never exported LNG although it may have had some direct ownership in some LNG projects if it was involved in the funding and has long term supply contracts.

      1. Alternatively, high oil prices may lead to development of resources that would not have been given the green light (FID) at a lower oil price level which would tend to increase the URR. Eventually the war in Ukraine will be settled and Russian oil will re-enter the World market, perhaps at reduced output levels and with a potential reduction in Russian URR, but this might be offset with increases in URR elsewhere.

         In any case URR is likely to fall due to lack of oil demand as the World moves away from ICE powered land transport.

         1. The cure to high oil prices has always been the same. High oil prices. Interestingly, the same relationship seems to work for low oil prices as well. 🙂

      2. Good points,
         although I do think China could pull off any feat they put their minds and labor to (perhaps no one will commercialize fusion, even the Chinese).
         Patents are no obstacle to the biggest countries or companies, just as borders/treaties are of no concern to those with big weapon systems.

         btw- take a look at the Gazprom [OGZPY] and Lukoil [LUKOY] ADR charts, both down around 90% from the October peaks. At some point capital will flow back hard to these companies. The capital may be from western investors, or perhaps restricted to more trusted partners/political allies to Russia- ex. China.

         1. Hicks , BTFD or who said this ” Buy when their is blood on the floor ” . A bend in the road is not the end of the road .

7. Ovi, thanks . A small issue . The heading is the production fell unexpectedly . There are old fools here who have said the US production will fall since the peak is over . I think if you change it to expectedly would be better . Might also bring an urgency to the lurkers and new viewers etc to accelerate their preparations for the post oil age . 🙂

   1. Hole in head,

      It was unexpected if one believes the EIA data from the official tight oil estimates and the Petroleum Supply Monthly. US conventional output has been rising and so has tight oil output for the past 11 months.

      US L48 excluding GOM decreased bu about 130 kb/d in December 2021, conventional output decreased by 135 kb/d in Texas and New Mexico accunting for all of the L48 onshore decrease in output. The chart below shows this anomoly, note that other moves of this sort are explained by the onset of the covid19 pandemic (April 2020) and the severe winter storm in Texas in Feb 2021. I think this may be what Ovi refers to in his title.

      In addition the STEO was not predicting a fall in December 2021 output and their estimate (11820 kb/d) was too high by 250 kb/d, they usually do better than this for near term estimates. So for some of us this was unexpected.

      

      1. what’s this zigzag in conventional oil in whole 2021?

         I thought conventional oil is more steady, especially in the USA where it is much stripper production. Yes there can be a winter storm (or the lockdown), then it’s down for this month – but otherwise it would be steady.

         Something not correct in the 2021 data – conventional oil should look like in the 2018-2020 part of the graph.

         1. I agree, the 2020 data does not appear to be correct, I expect we may see data revisions in the future.

            1. I meant to say 2021 data does not look correct for conventional US L48 onshore, see chart up thread..

      2. Dennis “It was unexpected if one believes the EIA data from the official tight oil estimates and the Petroleum Supply Monthly. US conventional output has been rising and so has tight oil output for the past 11 months. ”
         Well the old fools here have been lamenting from quite some time that EIA , USGS , IEA data is ” not worth the paper it is written on ” . Yes that is where the conclusion divergence came from .

   2. >>Might also bring an urgency to the lurkers and new viewers etc to accelerate their preparations for the post oil age .

      I find the discourse here a lot less tin foil hatty than other places. Any links or even personal advice you have on real actionable preparations to take? For the amateur lurkers

8. On another war arena: Our IT reported this morning the incoming of infected spam mail raised by large amounts this week. Cyber war in action, trying to create as much commercial damage as possible.

   The sattelite link of thousands of wind energy turbines is already cut here – they can only run on automatic or manually.

   Does somebody here has any reports, too? The wide spread oil infrastructure with all these sensors and remote installations should be relying on the internet, too??

9. Thanks for the work Ovi. Another illuminating post.

   Libyan production continues to struggle:
   https://www.aljazeera.com/economy/2022/3/3/libyas-biggest-oil-field-halts-producing-as-crisis-deepens

10. I just heard on the news that the Russian parliament passed a law that anyone found spreading “fake news” about the Ukraine conflict will be sentenced to 15 years in prison. We have, on this site, two posters that are posting from inside Russia. That means if they post the truth about the Ukraine invasion, they go to prison. Even if they lie, they could accidentally say something that the Russian authorities could regard as the truth and go to prison. Perhaps they should just stop posting because of the risk of going to prison.

    1. Yes-
       “The Russian parliament voted unanimously Friday to approve a draft law criminalizing the intentional spreading of what Russia deems to be “fake” reports…and is now set to be signed into law by President Vladimir Putin to take effect as soon as Saturday.
       Russians could face prison sentences of up to 15 years for spreading information that goes against the government’s position on the war in Ukraine”

       https://abcnews.go.com/International/wireStory/russian-lawmakers-approve-prison-fake-war-reports-83250295

       1. What is the difference ? Instead of 15 years you have 3 years . This is not RT or Sputnik but a Ukie site . I promised I will expose lies , hypocrisy and double standards . This is double standards . A life destroyed is a life destroyed . Sad .
          https://kyivindependent.com/uncategorized/czech-republic-makes-it-illegal-to-openly-support-russias-war-against-ukraine/

          1. A big difference is that Russia is the invader.
             Its own citizens cannot now legally dispute the actions of their dictator and military.

             1. Hicks the Czech decision is even worse . The Russians can claim self defense , what have the Czechs to say in their defense . ? The Czech people cannot now legally dispute their right to free speech . They are not under invasion . They have no skin in the game . If the Czech action is correct then where does it stop . Modi in India , Bolsonaro in Brazil , MBS in Saudi Arabia and Arden in New Zealand who have ” no skin in the game ” can take similar actions just like Czechie . Heck are we going to put the whole world in prison because of this issue or similar . The next question is ” Ok you can justify this someway or another ” . What do you do when this war is over( and it will ) ? How do you unwind this ? Remember there is no thing as temporary when the govt will grab your civil rights . The gold window closure in 1971 was temporary , the vaccine mandates were temporary , the Patriot act was temporary . Politicians love control no exclusions , Russia , Canada , USA , India , Uganda etc absolutely no exclusions . Try to understand the implications of this or do we want the world to be like China where CCP controls the narrative ? Is it creeping autarky ? One brick at a time .

                1. “The Russians can claim self defense”

                   Putin’s lying used by his “Useful Idiot”

                2. Stalin died today 1953.

             2. Hickory,

                Quite True. Interestingly, On April 27, 1861, Lincoln suspended the writ of habeas corpus between Washington, D.C., and Philadelphia to give military authorities the necessary power to silence dissenters and rebels.

                This is just one example. Thus, world history is full of Leaders who have done the same or worse…. whether they are democratically elected Presidents or Dictators.

                GOD SAYS TO HYPOCRITES… I HAVE SENSE A HUMOR

                steve

                1. Big difference Steve between a nation in a civil war and the current situation in Russia.

                   Not even apples to oranges, more like apples to nuclear reactors.

             3. huntington Beach,
                It has been obvious for months that HiH is one of Putin’s psyops assets, railing about the collapse of everything and the glory of Putin, and pushing stories from pro-Putin websites. One of the dangers (for Putin) of the Ukraine strategy is that people like her are having a harder time pretending to be anything other than what they are.

                1. I knew a dude who was a Ukrainian tank commander under the Soviets. He was just the kind of guy that would drink 2 quarts of vodka and then go fuck up a bunch of Russians with pipe bombs and rusty garden tools. Completely not afraid of death, and not uncommon. The overly pro Putin ones have discounted these types.

          2. HinH-
             You can divert the subject raised by Ron
             [Putin suppression of Russia media and citizen speech on the invasion Ukraine]
             which is the typical troll behavior that you so often display.
             Putin no doubt appreciates your efforts.

             Nonetheless, the issue raised is extremely serious and destructive to Russia and the world.

          3. Hole in Head,

             This is an illustration of Ugo Bardi’s post that you linked to below. We are blaming monsters for problems which are in reality linked to peak oil. With each monster we fight, whether it be Ben Laden, Saddam Hussein, Bernie Madoff, subprime loans, Covid 19, or Putin, we lose some humanity. And with it, we lose the ability to understand the real problem. Everything is painted in either black or white. The vaccine skeptics are branded “anti vaxxers” and “conspiracy theorists” and all attempts to understand what brought them to their beliefs are condemned and censored just as all attempts to understand what brought Putin to invade Ukraine are now buried in cries for blood. The truth is much more scary. Our way of life is ending. Our institutions lack resilience and are failing us.

             1. Schinzy , agree with you all the way . The downfall and disintegration of the institutions and the pillars of a civil society have made a bad situation worse .

             2. Peak oil itself is just a symptom. The cause is overshoot (i.e. overpopulation).

          4. You’re right. let me add more clarifications.
             This is not a law, but only an article in the Criminal Code No. 207.3. It is called “Public dissemination of deliberately false information about the use of the Armed Forces of the Russian Federation.” http://publication.pravo.gov.ru/Document/View/0001202203040007?index=0&rangeSize=1
             That is, not for any fake, but only a fake about the army. And not just for a stupid word, but for its public dissemination. This is punishable by a fine of up to $15,000 or up to 3 years in prison.
             Now imagine this situation. Ukrainian soldiers and nationalists are now locked up in cities where there are many civilians. Yesterday, at the talks, representatives of Ukraine and Russia agreed to whitewash safe corridors for people to exit and cease fire. Let’s say there was an evil idiot who mounted a fake video in which Russian troops allegedly fired at civilians leaving. The fake spread on the networks and people were afraid to come out. In the subsequent hostilities, some of them will die. At the same time, more Russian soldiers will die, because they will not be able to use heavy weapons due to the presence of civilians. In such cases, which resulted in the death of people, the fake will be punished by imprisonment for up to 15 years.

    2. Greetings to all at this unkind time. Ron, I understand that Russian propaganda is not welcome here. However, I want to say that the Russian news agencies regarding the shelling of the Zaporozhye nuclear power plant said that the shelling was provoked by the intelligence group of the Ukrainian armed forces, I certainly cannot judge and know exactly what really happened there. Nevertheless, I recommend that you at least occasionally be interested in the statements of the Russian side. Since the beginning of the conflict, I have been constantly listening to the official Ukrainian news channel about the war, and so I know for sure that there are a lot of lies, I understand very well that they do not trust me here. As for the law on fake news, I can say that an information war is going on in Russia today and citizens from Ukraine + Russian and their supporters overwhelm all information channels with untrue news, therefore such a law was adopted, you can be sure that no one who wrote the truth, no matter how unpleasant it is for Russia it wasn’t, it won’t go to jail. We have almost no political prisoners, although there are about 400,000 people in prison. I’m also in the hospital now and don’t have constant access to the Internet, I asked my friend to comment if he considers it necessary to post from your website. His name is Alexander G. Khurshudov, Ph.D., has been working in oil production for 46 years, in recent years as an expert of the Oil and Gas Information Agency. His analytical articles on shale oil and gas are well known. https://www.angi.ru/news/2846506-Размышления%20над%20тонущим%20Баккеном/

       He also participated in international projects. If you are interested, he will probably be able to competently answer industry questions, in Russia, if you are interested, there are not many experts of this level.
       If you have any questions I will contact him and he will be able to answer all …

       1. As far as Russian propaganda, remember that abiotic oil was popularized in Russia

          “Abiogenic hypotheses were revived in the last half of the 20th century by Soviet scientists who had little influence outside the Soviet Union because most of their research was published in Russian. The hypothesis was re-defined and made popular in the West by Thomas Gold, who developed his theories from 1979 to 1998 and published his research in English.”

          Why did they ever think the idea was valid?

          1. The Bach Ho oil field of Vietnam.

          2. An interesting consequence of this fantasy is that they systematically searched for natural hydrogen emissions on the territory of the USSR. Making this territory the richest in natural hydrogen emissions. But, of course, that’s because they made the effort to seek out them.

             1. Actually, I was not aware that there is any such thing as hydrogen emissions.
                There are anthropogenic emissions of H2, the hydrogen molecule, from the snowpack above sea ice but all this H2 is due to the burning of fossil fuels.

                Researchers find 70 percent increase in atmospheric hydrogen over the past 150 years

                But that was all I could find after an extensive Google search for “hydrogen emissions”.

          3. “A country that could endorse “Lysenkoism”, could easily endorse “Abiogenesis”.

             Same goes for the USA-
             “A country that could reject the science of evolution, could easily endorse “Abiogenesis”.
             “A country that could select trump as a president in 2016, could easily endorse “Abiogenesis”.

             -“deliberate distortion of scientific facts or theories for purposes deemed politically , religiously, or socially desirable.”

          4. It is difficult to answer this question. Some oil fields were discovered in the basement rocks where biota was absent. But later it was shown that oil could migrate there from the side or even from above. Already in 1975, the organic theory of the origin of oil in the USSR became dominant.

11. I see that the candidate who sat on top of a pumpjack topless for a campaign add forced a runoff with the incumbent in the Republican primary for Texas Railroad Commissioner.

    He got 47%. She got 16%. So I assume he will win the runoff.

    She actually appears to be a serious candidate who felt forced to do something to get some attention. Looks like it sort of worked.

12. Perhaps some shale company can now drill their “useless” extrem gasy acres and export the stuff?

    https://www.zerohedge.com/energy/european-natgas-surges-new-record-highs-russian-pipeline-flows-stall

    This would help a lot. They can flare the oil ;).

    1. Eulen ,”This would help a lot. They can flare the oil ;). ”
       ROFL

13. This shows how the STEO for GoM has changed since January 2021. It’s not as interesting as I thought it would be. Given it is going to be another La Nina year I think the hurricane dip might be a bit bigger than is being estimated.

    

    1. These are the same results for the lower 48.

       

       1. Hi George, I notice that there are 12 rigs operating in the GOM vs 14 a year ago. Why would rigs decline with such strong oil prices?

          1. Until two weeks ago there were 16 so they may come back. BH only counts rigs actually drilling on Friday so there is some statistical variation. Weekly activity reports from BSEE and data from BOEM give a better picture but they are less convenient and immediate than the BH report. That said the GoM is a mature basin and there aren’t so many opportunities for exploration left. I showed a chart in the previous post indicating that price hasn’t had much impact on number of operating rigs since 2014. Many of the platforms with installed rigs are at end of life and used only for tie-backs, which would be subsea wells needing MODUs. Drilling from platform rigs is much cheaper so tends to be used for interventions etc. whereas hiring a MODU for the same issue would not be considered. There are a number of floating platforms due but the GoM does not seem to favour pre drilling subsea wells, I don’t know why, so as these are installed and drilling continues on each rig numbers are likely to rise by a few. I think exploration activity is likely to stay low until the recently started platforms start coming off plateau and near field tie back opportunities start to be sought.

14. Interesting that Peak Oil Barrel is now showing up in Google News searches

    https://pbs.twimg.com/media/FNB6VAHXEAQzbsV.png

    Kudos

    1. Tks to Ron , Dennis , Ovi , George , SL Geo and all who made this possible . Now back to my single malt .

15. Mr Ugo Bardi . We are all children of oil . No more to say .
    https://thesenecaeffect.blogspot.com/2022/02/back-to-reality-we-are-all-children-of.html
    QED

16. Gasoline prices at some service stations in Vancouver hit CA$2.009/Liter today. This works out to:

    CA$2.009/L x 3.7854 Gallon/L x 0.78506846 US$/CA$ = US$5.97/Gallon.

    Some people are shocked but surprisingly many motorist are lining up to fill their tanks. It’s almost like panic buying is happening

    1. We are over 2 Euros per litre at some stations… not bad, too.

       1. EU2/L x 3.7854 Gallon/L x 1.0931182 US$/EU = US$8.31/Gallon.

          Any noticeable decrease in traffic over there? None over here.

          1. Frugal —
             The price spike hasn’t put a noticeable dent in traffic around this part of Germany anyway. One reason is that commuting is subsidized. The subsidy is €0.30 per km from your place of employment <i<per working day.

             If you burn 7 liter /100km, a common measure, 100 km costs about €14 these days. The subsidy would give you €30 back, but it's only for one way, so you get €15.

             People are spending less on new cars though.

             EDIT: I agree with the general opinion that the huge number of ICE vehicles on the road provide a buffer for the oil industry from the ongoing EV revolution. But if high oil prices postpone new car purchases, this buffer gets thinner as the fleet ages faster.

             1. There’s no commuting subsidy in Canada. I think the main reason for the lack of traffic reduction here (and elsewhere) is because of the speed that oil prices have risen. There a delayed effect before consumers react. And if this price spike is short lived, there will be no reaction at all.

       2. Here in Belgium Euro 1.97 . People at the pump reaction (1) young are annoyed/ irritated (2) mid aged worried as to high it will go (3) old + pensioners are grumpy .

17. The world has purchased Iranian oil , Venezuelan oil so the sanctions were a road bump for Russia . Who bought the cargo . Shell of all the companies . Now that all know it can be done all will scramble for Russian oil .
    https://www.zerohedge.com/markets/buyer-finally-emerges-russian-oil-offered-record-28-discount

    What the Russians should do is lower output just enough so as it does not do damage to their reserviors . Good time for maintenance and push the price higher as compensation for lose of revenue .

18. International rig counts dropped 28 from 841 in February. There were drops in all continents but the bigest relaive drop by far was in Europe so probably risk based. OPEC plus dropped three, continuing January’s fall (BH don’t record Iran or former USSR numbers). There is all sort of stuff going on but this is continuing evidence that oil price rises are really not influencing long term investment decisions at the moment.

    

19. Canada dropped seven rigs last week signalling the start of the ground thaw / frost heave pause. The trend has generally been for this to get earlier each year but this is a couple of weeks later then recently.

    USA added three gas and dropped three oil, but I don’t think these were in the main LTO basins. Monthly completion numbers are a bit more revealing than weekly drilling info.

    

20. ‘Four ways the war in Ukraine might end’
    Simplified version of a huge story.

    https://www.atlanticcouncil.org/blogs/new-atlanticist/four-ways-the-war-in-ukraine-might-end/?mkt_tok=NjU5LVdaWC0wNzUAAAGC-Wi3do0ov-G5eYo07k73Cy29zoEfuCnn3a_4Nar1B59qwL_8QfHGBUBWz-3Y502Su0W1wLmLojtsjfToERDpIY4llPYF40K63JuXs2-b

    1. Thanks Hickory, two years ago we were just a couple of weeks before we got locked down for Covid. Most everyone believed we would be back to normal in a couple of months. I think this is the same mistake most Americans now see this Ukraine invasion. I think this is most unlikely unless Russia COLLAPSES relatively soon. Which I don’t see happening. Currently I see option #2 most likely. As long as Ukraine is willing to fight, this is a opportunity from heaven for the U.S. and NATO to set Russia back 75 years plus nukes. Russia doesn’t have the forces to hold Ukraine as long as the West supplies them with weapons. Russians only option is going to turn into bombing Ukraine back to the stone age. I think the most likely end will be the West rebuilds Ukraine and Russia finds overwhelming missiles along it’s western borders years from now.

       1. I consider that the optimistic scenario, and see it as more likely that Russia will take most of Ukraine [all of the black sea coast including Odessa and the eastern 2/3rds of the country including the entire Dneiper basin which includes Kyiv], or all of it.
          And they’ll do whatever brutal evils it takes to pacify the country (yes it will kill millions- that is an integral part of motherland revival story that Putin dreams of).
          Not all sure they can accomplish this or hold it, but they are on the path to giving it a full shot.

          How the Russian economy can sustain this, and how NATO can stay on the sideline are the big questions.

          And yes- this won’t be ending soon. No good offramps for anyone, especially the Ukrainians.
          The stagflation will bring some nations to their knees.

          Part of my family immigrated to N.America from the Southern Russia/Ukraine area 120 yrs ago.
          It wasn’t pleasant times then either. No trace of the larger extended family who were trapped in place by the chaotic violence of the last century.

          1. Hicks , I don’t have a line to Putin but I have read a lot about him .
             1. His hero is Peter the Great and not Lenin .
             2 . He is 69 and he knows he is not immortal . By 2024 when Russia elects again he will be 73 .
             3 . He wants to put things in order so that the ” embers of dead empires ” that arise from the decline and death of an empire do not burn Russia .
             4 . What are the ” embers of dead empires ” ? They are Palestine and Kashmir . 80 years after the death of the British Empire these embers have the capacity to destroy the planet with 3 fully armed nations with a nuclear arsenal .
             5 . Macron the midget called him about two days ago ( no he did not call Macron and also he did not invite Macron to Kremlin when he visited ) . He clearly told Macron ” you started it , I will finish it ” .
             6. He is resolute and with a 70 % support of the Russian public he is not going to to step back .
             7 . As Alexander Opirtiv said ” I will eat grass ” . Those who forget history are condemned to repeat it . Leningrad and Stalingrad .
             8 . Yes , their are a lot of protests in Europe . I attended one today in my hometown . The protesters did not the difference between NATO and EU , they had know idea where the Black Sea was and they had no idea what are the countries that border Ukraine . They were there because the local brewery gave away free beer and sausages as a symbolic gesture of support and it was good PR .
             9 . 100 countries walked out when Lavrov addressed the UN security council via tele conference . Question ? How many tanks of the RF did that disable ? Stalin was told not to upset the Vatican as it had billions of followers . His question was ” How many battalions does Vatican have ? ”
             My view , a Russian can last on only potatoes for six months , can any of the generation X or M whatsoever initial you give them can ?. The name of the game is not ” strength ” but ” resilience ” .
             This post is to you specific and those who have a ” brain ” between the ears . The dumbkoffs can go back to watching the idiot box .

    2. Yes a good link . I have always appreciated your fairness vis a vis two ignorant dumbkoffs here . See my next post . I have been saying from a long time don’t poke the bear . Pick up a fight and be ready to sleep on an empty stomach ” dumbkoppfs ” .

    3. No matter how it plays out, it will be complicated because the next global crisis will strike before it (or Covid for that matter) has been resolved. We are now well and truly in the age of consequences. Whether from the perspective of LtG, complexity theory, ecological footprints, global boundaries, secular cycles or more traditional approaches to economics and history we have reached or are reaching the end of Pax Americana, of ever increasing supply of cheap energy upon which our civilisation is based, of debt covering all woes, of a climate sufficiently stable to allow adequate agriculture to support the global population, of liberal democracies as the preferred self-interested political systems.

       Up to five million refugees will be destabilising no matter how much they are being welcomed now; there may be no ‘us versus them’ issues but there will certainly be ‘me versus us’. 10% inflation worldwide cannot end well. Food prices at all time highs, and approaching inflation adjusted highs will have global impacts. History may be one thing after the other but it’s as much stochastic as deterministic, probably more so as things go bad. I suspect the accuracy of the prognostications of talking heads are going to fall below that of a monkey and a dartboard as things unwind.

       1. From HFI Research

          Supply and demand balance suggests Q1 2022 to be under-supplied by ~2 mb/d vs. +0.6 mb/d forecast.

          https://seekingalpha.com/article/4492981-oil-prices-well-supported-by-fundamental-data

21. So here goes for the dumbkoffs .
    “In addition to those important points, I will add that Russia, using its abundant natural gas resources, produces over 60% of the worlds ammonium nitrate, the key fertilizer used to grow the great majority of the world’s food.
    If one included Uzbekistan and Kazahkstan (all countries formerly in the sphere of influence of Russia), they produce roughly 85% of the world’s production of ammonium nitrate.
    I’ve heard people correctly claim that Russia’s “economy” is small – comparable to Spain’s (in regards to GDP). And that therefore they are of little concern.
    However, this fact only confirms how useless GDP is for truly understanding geopolitics.
    Also, Russia, despite spending less than a 1/10 on their military as the US, seems to have bypassed the West in both defensive capabilities (S-350, S-400, S-500 & S-550 missile defense systems) and offensive capabilities (hypersonic weapons).
    If one considers 1) Russia’s outsized role in global energy exports, 2) their outsized role in fertilizer exports, and 3) their superior military equipment and training, we in the West may seriously want to reconsider our approach and attitude to their national security concerns.
    What is unfolding in Ukraine is undoubtedly a tragedy, but is at least partly one of our own making.
    It is of no shame to recognize that the people that were invaded by and then repelled both Napoleon’s Grand Army and Hitler’s Wehrmacht have legitimate national security concerns.
    Dumbkoffs go get a shopping cart .
    They called me a useful idiot well you are useless idiots . You wanted to dance with the bear . Wish granted , Don’ t complain when you are mauled .

    1. Leibling’s law of the minimum

       https://nutrien-ekonomics.com/latest-fertilizer-research/liebigs-law-of-the-minimum/

       HIH you can turn a phrase !!

22. Here is Elon the new Moses . He asking the sea to open IMMEDIATELY .
    https://thehill.com/policy/technology/596990-elon-musk-us-needs-to-increase-oil-gas-production-immediately

23. So , you want to repossess the planes . First get 236 pilots who will fly into Moscow and then see how will they get out if they have no aviation fuel . The leasing companies are on a one way road to bankruptcy . Oh , the web we mortals weave .
    https://viewfromthewing.com/the-impossible-task-of-repossessing-236-planes-now-illegally-leased-by-russian-airlines/

24. When push comes to shove .
    https://www.reuters.com/business/energy/exclusive-us-utilities-push-white-house-not-sanction-russian-uranium-2022-03-02/

25. War. Not propaganda.https://www.youtube.com/watch?v=y1dXAs2ybIU

    1. Scott Ritter . Clearing the fog of war . Will Ukraine be Putin’s Afghanistan ?
       https://www.youtube.com/watch?v=C6NnUlhpxR4&t=5s&ab_channel=JustinPodur

26. Interesting comments from CEO of Pioneer on shale production and oil prices in relation to the Russian invasion of Ukraine.
    https://www.ft.com/content/1b517f6d-9056-41ba-9d1e-324e495b5041

    “The only way to stop Putin is to ban oil and gas exports,” Sheffield told the Financial Times in an interview on Friday. “[But] if the western world announced that we’re going to ban Russian oil and gas, oil is going to go to $200 a barrel, probably — $150 to $200 easy.”

27. As I said the banksters and MIC will be the only winners . Rest are all losers .
    https://www.zerohedge.com/markets/wall-street-quietly-trading-return-russia-sparking-liz-warrens-outrage

    1. Are you admitting your a loser ?

28. An Art Berman video from a few days ago when oil was $110 .
    https://www.youtube.com/watch?v=36FBe5KBGn4&ab_channel=GeorgeGammon

    1. Folks:

       Watch the Berman video above.

       It’s old hat, yes. But afterward, you will say: TOLD YA SO.

       1. Sorry boss , there is no link . Check it out and repost .

          1. HIH: I meant the one you posted, above. I’ll change my original posting.

             (I’m still thinking of what Berman said, hours later.)

       2. Oh my yes…the geologist who didn’t know that source rocks are also reservoir rocks and claimed that shales won’t make a difference to US oil production….cherry pick prognostications of previously discredited “experts” at your own peril.

29. “Libya’s oil production has fallen below 1 million barrels a day, according to the energy minister, as the OPEC member plunges deeper into political crisis just as prices surge following Russia’s invasion of Ukraine.

    “Output is down to 920,000 barrels a day, Oil Minister Mohammed Oun said in a response to a query from Bloomberg. It stood at roughly 1.2 million barrels on Wednesday. The drop marks another supply problem for OPEC.” Bloomberg

30. Oil price for Brent future is $118/bo this morning, yikes.

31. So it’s game over , Dumpkoffs . Already planning for evacuation . Go back and watch the idiot box .
    https://www.zerohedge.com/geopolitical/us-has-plans-ukraine-government-exile-contingency-covert-guerrilla-warfare

    1. Contingency covert guerrilla warfare ? Ha , ha . This is not Afghanistan . As Scott says these ” Soy boys ” are softies . They are not the ” Pashtun ” . Join the guerilla warfare and you are dead . Putin turned the term ” enemy combatant ” used by GWB II on it’s head . He has clearly stated if you are not a Ukie soldier then you are an ” enemy combatant ” . No Geneva convention and no POW status , your outlet is only execution . The only choice you will have is the depth of your grave .

       1. but we were all so behind Jack Bauer and rooted for him to do anything to Keep Us Safe!

32. Regarding the Keystone pipeline – are “Capline” and “Line 3” bringing the oil into the US that the Keystone pipeline would have brought?
    Ovi commented on this in his Feb 9 2022 post on Non-Opec oil production,
    thanks

    1. Bob

       Line 3 does not link with capline now but could in the future. Line 3 ends in Superior Wisconsin. Capline ends in Patoka Illinois.

       The reversal of Capline was completed in 2021, with an origin point of Patoka, Illinois to various terminals in St. James, Louisiana.

       Capline has initial capacity of 200,000 b/d. Future growth requires reconfiguring and adding pump stations

       Capline is a 632-mile, 40-inch pipeline system that historically moved crude from the Louisiana Gulf Coast to Midwestern refiners. But, as demand has picked up for crude oil from Canada and the Bakken shale — both for Gulf Coast refiners and export markets — the decision was made to reverse the line and carry crude to the Louisiana Gulf Coast where it has easy access to refineries and LOOP.

       Capline, which is owned by Marathon and Plains All American Pipeline, connects to Canada via Enbridge’s Mainline pipeline system Enbridge’s 300,000 b/d Southern Access Extension pipeline, which Enbridge eventually plans to increase to roughly 400,000 b/d through optimization efforts. TC Energy’s Keystone Pipeline also stretches to Patoka.

       However, Enbridge’s expansion plans may be on hold after its Mainline contracting proposal was recently rejected by Canadian regulators. And how much crude flows into Patoka may limit the available volumes to move through Capline. Enbridge’s contracting negotiations are expected to extend into 2023.

       Marathon and Plains have said that Capline will start out shipping “100% Canadian crude” — as opposed to lighter barrels from the Bakken Shale. Future growth will depend on demand, as well as on Patoka volumes, said Plains Chief Commercial Officer Jeremy Goebel in a November earnings call.

       I have also heard that there is talk of adding a pipeline from where Capline ends in Louisiana to the LOOP.

       https://www.spglobal.com/commodity-insights/en/market-insights/latest-news/oil/010722-capline-pipeline-reversal-fully-online-with-extra-canadian-crude-capacity

       

       1. Thanks for the detailed answer, Ovi.

33. Brent futures at 128.8 per barrel as I write this. Interesting.

    1. And now WTI at $125. I don’t think these prices are going to last for long. Otherwise the World economy is going to crash.

       1. Regardless of the sanctions. Ships can’t get anywhere near where they need to go in order to get oil and wheat and a lot of other stuff out of Russia. The whole northern part of the Black Sea is pretty much cut off to ships.

          Because insurance won’t cover it if something happens to the ship. Only way anything leaves Russia will be on a Russian ship.

          2/3 of Russia oil exports be it by ship or via pipeline will be cut off.

          We should expect economic chaos to ensue. And an eventual forced deleveraging in global economy.

          A forced deleveraging of Eurodollar market.

          Maybe oil goes to $200 right before it crashes to $30

          1. Is this all Bidens fault?

             1. Only a Trumpite could be dumb enough to ask such a stupid question. No, dumbass, it’s Putin’s fault.

                1. George Kennan – In1998, after the senate ratified the NATO expansion, said it is a tragic mistake.

                   Henry Kissinger – in 2014, to Russia, Ukraine can never be a foreign country and added that Ukraine should not join the NATO.

                   John Mearsheimer in June 2015. The West is leading Ukraine down the primrose path and the end result is that Ukraine is going to get wrecked.

                   Jack F. Matlock Jr. US Ambassador to the Soviet Union from 1987-1991warned in 1997 at a senate hearing that the NATO expansion was the most profound strategic blunder.

                   William Perry, Clinton’s defense secretary said in his memoir that NATO enlargement is the cause of the in relations with Russia and in 1996 was so opposed to this that he considered resigning. The opposing argument was made by Al Gore, and he prevailed and thus Clinton agreed for Poland, Hungary and Czech Republic to join the NATO.

                   Noam Chomsky in 2015 said that Ukraine joining the NATO would not protect Ukraine but endanger it.

                   Stephen Cohen warned in 2014 that if we move NATO forces toward Russia
                   Russia will not back off, this is existential

                   Vladimir Pozner in 2018 said that NATO expansion to Ukraine is unacceptable to the Russian. There has to a compromise in which
                   Ukraine guarantees that it will not become member of the NATO.

                   Jeffrey Sachs warned that Nato enlargement is utterly and risky.

                   Bill Burns, a CIA director, in 2008 said Ukrainian entry into NATO is the brightest fo the red line for Russia.

                   Malcom Frazer the prime minister of Australia warned in 2014 that the move east by NATO is provocative, unwise and a very clear signal to Russia and added that that this leads to a difficult and extraordinarily dangerous problem.

                   Paul Keating, former Australian prime minister said in 1997 that expanding NATO is an error which may rank in the end with the strategic miscalculation which prevented Germany from taking its full place in the international system in the early 20th century.

                   US defense secretary Bob Gages. Moving so quickly to expand NATO was a mistake. Trying to bring Georgia and Ukraine was truly overeating and especially monumental provocation.

                   Sir Roderick Lyne, the former British ambassador to Russia, warned a year ago the pushing Ukraine to NATO is stupid on every level. If you want to start a war with Russia, that is the best way to do it.

                   Patric Buchanan in 1999 wrote that by moving NATO to Russia’s front porch, we have scheduled a twenty-first century confrontation.

                   Tim Marshall, a former Sky News foreign affairs editor, said for Russia, a pro-western Ukraine with ambitions to join EU or NATO could not stand and would spark a war.

                   In 1997, 50 prominent foreign policy experts, including senators, military officers, diplomats etc sent an open letter to Clinton outlining their opposition to NATO expansion. These include Paul Nitze, Edward Luttwak, Sam Nunn, Richard Pipes, Stansfield Turner, Paul Warnke, John Holdren, Robert McNamara, Herbert S. Okun, W.K.H. Panofsky, and Susan Eisenhower.

                   George Beebe, for former director of CIA’s Russian analysis said on January 2022 that Russia feels threatened by USA training Ukrainians.

                   Ted Galen Carpenter of the Cato Institute said in 1994 that NATO expansion would constitute a needless provocation of Russia.

                   Frank Blackaby, director of Stockholm International Peace Research Institute (1981-1986) was opposed to NATO expansion. (Issue 26 September/ October 2021)

                2. Seppo, what are you trying to say? Yes, some people made a lot of mistakes in the past. Politics is not an exact science. And nations evolve, occasionally they evolve toward democracy. That is exactly what Ukraine was doing, trying to let the people elect the type of government they wanted. And they decided they wanted democracy.

                   Occasionally, there emerges, at the head of government, a totally incompetent leader. The US had such a leader in Donald Trump. Thank goodness our democracy survived him, but just barely. He almost succeeds in overthrowing our democracy.

                   Occasionally, however, a government is controlled by a mad dictator. A Hitler, Mussolini, or a Stalin. Putin is such a mad dictator. It simply does not matter that past politicians doubted Ukraine’s ability to rule themselves, that was only what they were doing, only what they hoped for.

                   I have always enjoyed your post Seppo, but I am greatly disappointed in your attempt to defend Putin if indeed that is what you are trying to do.

                   Simply posting the opinions of past politicians and their opinions about the ability of Ukraine to govern themselfes does not excuse the actions of this madman in his slaughter of inniocent men, women, and children.

                3. Ron, my post was not to defend Putin, but to point out how the neocons in the USA won the battle in their favor and to the detriment of peace in the world. Please read John Mearsheimer’s book the Great Delusion, Liberal Dreams and International Realities. This book was written in 2018 and it anticipated the present conflict. By liberals he means the politicians of both parties.

                   Ron, I respect your opinion on all matters relating oil depletion and your commitment to inform people about it, is the reason you set up this site. Having said that, you have strong visceral reactions to political questions. The politics in the USA are completely messed up for many reasons, and reflect the end of times, where the financial sector has grown so large that it calls the shots. Similar situation happened in Spain after it became rich from the gold from the western hemisphere, it happened to the Dutch at the end of their power, and then to the Great Britain as it was forced to leave its colonies and now it is happening to USA. There are people who think that China is the next rising power. Perhaps, but I don’t think so, as China’s resources are depleting fast. They are at the peak coal now, and have been the largest importer of oil for a number of years now. If the world leaders would only understand that invading resource rich countries will buy them only perhaps 20 years of breathing space, the cooler heads would prevail. We are heading to the conditions of pre-industrial civilization and what I have seen from your posts, you appear to agree with that. My hope, misplaced I am sure, is that we get there without blowing ourselves up in the meantime.

                4. Thanks, Seppo, but I wish you had just said that. Your post was a reply to my statement: “It’s Putin’s fault.” So how was I supposed to take your reply if anything but a refutation to that statement? But thanks for the clarification. I realize there are a lot of indirect reasons for this damn mess. It might have been avoided if some politicians had acted different in the past. But the direct cause is clearly Putin.

                   On another subject. All your posts seem to wind up in the “pending file” I simply cannot understand this. Usually, after just one approval of a new poster, no further posts need to be approved. I have informed Dennis of this problem and he said he would look into it. But that was a couple of months ago.

                   I check the pending file several times a day so no post there should have to wait more than a couple of hours before being approved. But if one is posted in the evening after I have retired, it must wait until morning before being approved. And I seem to be the only one checking the pending file, so if I am indisposed for several days, you may have to wait a while before your post appears.

                5. Ron, there are some posts that one can reply to, others one cannot. I do not pay much attention to whom I am responding as I try to respond to one thread. Also, I do not know how to look at pending posts. Perhaps you as the old moderator have this privilege.

                   ++++++++++++++++
                   WSJ News Exclusive | Saudi, Emirati Leaders Decline Calls With Biden During Ukraine Crisis
                   The Persian Gulf monarchies have signaled they won’t help ease surging oil prices unless Washington supports them in Yemen, elsewhere.

                6. Seppo,

                   Thanks for this history I had not followed the expansion of NATO closely. In a sense the raison d’etre for NATO disappeared with the dissolution of the Soviet Union and independence of the former earstern boc of nations.

                   It would have made more sense for NATO to have dissolved rather than an expansion.

                   I agree with the foreign policy experts who suggest the expansion of NATO was a colossal blunder. The security concerns of Russia seem legitimate and the west really did force Putin’s hand.

                   Perhaps it is time for the west to rethink their position.

                7. Completely disagree on this Dennis.
                   If Russia didn’t have a history of extreme expansionism and bullying/occupation of a dozen smaller neighbors [including starvation as tool] ,
                   and were merely economic and political foes of democracy and self-determination,
                   then NATO would not be a necessary mechanism.

                   But Russia does indeed have a history of being an evil bully authoritarian neighbor.
                   NATO’s mistake is failing to provide Russia with guarantee of defending post-Soviet Russian territorial integrity [including the 1994 Budapest agreement borders] from any attack.

                8. Oh Dennis, it’s good to see your understanding of geopolitics. Might equals right, even if it’s slavery or totalitarianism. It’s clearly time for the States to start bombing Canada with their socialized medicine. I mean really, jeopardizing American capitalism that way. Forcing Americans to buy and carry over the boarder cheaper prescription drugs. Even worse, challenging the entitled income of our loveable doctors and healthcare insurance companies. That’s just pure evil.

                   BTW once those Canadian cities are rubble, Canada won’t be needing those energy assets. It only seems fair Americans take those off their hands for them making the States bomb them. Now who on this website with a hole in their head says you don’t get it ?

                9. Huntington beach,

                   Don’t be such an ass. I did not say might makes right, don’t put words in my mouth.

                   It seems the west thought the Russian miliary buildup on Ukraine’s border was a bluff by Putin, apparently the west was wrong.

                   There was an agreement in 1991 between the west an Russia that NATO would not expand eastward from Germany, this agreement was broken.

                   See

                   https://euroweeklynews.com/2022/02/20/has-nato-reneged-on-a-1991-agreement-with-russia/

                10. Hickory,

                    Perhaps NATO should not ave been dissolved, but expansion after 1991 was a mistake in my view.

                11. Dennis

                    Here is the last sentence of your link on the secret NATO 2 plus 4 negotiation documents, which is from a tabloid in Spain. That targets English speaking immigrants. Which just happened to show up 4 days before Russia evaded Ukraine. Not exactly a peer review or The New York Times. I’m thinking Daily News.

                    “if the 1991 agreement does exist then it is incumbent on those involved to renegotiate it and not to renege on the commitments made.”

                    Do you see the word “if” at the beginning? Or the word “renegotiate”? It doesn’t say bomb the life out of 40 million people. Because that’s not morally “right” no matter how abused the victim.

                    Actually, for at least a week before Russia evaded Ukraine. Biden was telling the world Russia was planning to evaded and how they were going to do it. I guess your husband and wife Spain tabloid must not have printed that, or you were to busy counting barrels in the desert for your special post on the Permian.

                    “If” Russia had two pigs and the Americans had one. The Americans would try to produce more pigs. If the Americans had two pigs and the Russian had one. The Russians would try to kill one of the American pigs.

                    Dennis Coyne says -“the west really did force Putin’s hand”

                    And you call me an ass

                    Now you can have the last word like always

                12. Huntingtonbeach,

                    Though there was no formal treaty, the history suggests promises were made to Gorbachev by Helmut Kohl that NATO would not expand eastward.

                    See

                    https://www.nytimes.com/2009/11/30/opinion/30sarotte.html?searchResultPosition=1

                    or search on Enlarging NATO, Expanding Confusion

                    Also at LA times there is this piece.

                    https://www.latimes.com/opinion/op-ed/la-oe-shifrinson-russia-us-nato-deal–20160530-snap-story.html

                    See also

                    https://en.wikipedia.org/wiki/Treaty_on_the_Final_Settlement_with_Respect_to_Germany#Eastward_expansion_of_NATO

34. Hi Denis,

    Would be great if you could do a post on implications of war.

    1. Sean,

       I am not a historian, though I know a bit of economic history. This is an area of many unknown unknowns, so any analysis would stretch the limits of credibility.

       A highly simplistic analysis based on an assumption that the invasion of Ukraine remains a conventional (non-nuclear) war is that oil and natural gas prices will rise in the short term. This is likely to lead to more investment which will increase supply from non-Russian sources of both oil and natural gas while also reducing demand for oil and natural gas long term as more heat pumps are installed, more wind and solar projects get developed and more lithium ion batteries are produced to power EVs and plugin hybrids. The fall in demand will take longer, but people will buy smaller vehicles and drive their large vehicles fewer miles in response to higher petrol(gasoline) and gasoil(diesel) prices.

       My guess is the World economy can handle oil at $150/bo(in 2021 US$), not sure about natural gas prices.

       1. “This is likely to lead to more investment which will increase supply from non-Russian sources of both oil and natural gas ”

          Dennis, the part of the story you always leave out is:
          …to the extent geologically and technologically possible.

          The economics are simple and predictable at least in direction, the rest is where the uncertainty lies.

          1. “ANYONE who believes that exponential growth can go on forever in a finite world is either a madman or an economist,” remarked (the economist) Kenneth Boulding.

             1. Hightrekker —

                It’s true that if the economy continued to grow for ever, it would be infinitely big, but it’s also true that it takes an infinitely long time to get to forever.

                It’s a weak statement. The world has finite resources, but it will also exist for a finite period.

                1. It’s a weak statement. The world has finite resources, but it will also exist for a finite period.

                   Oh my goodness, that is not the weakest statement I have ever read, but I think it is one of the silliest. Yes, the world is finite. It will last for only a few billion years more.

                2. Ron —
                   You don’t get it. It is obviously and trivially true that the economy can’t go on growing forever. It is also a useless and meaningless remark.

                   It is commonly used in a strawman attack. If A says “The world economy will grow by 1% next year” B may think he is terribly clever by saying “the economy can’t go on growing forever”.

                   In fact B is contributing nothing to the conversation, for two reasons: First his statement is non sequitor, because A didn’t say anything about what would happen as we approach infinity on the time axis, and second, if we assume the universe is not infinitely large, it is trivially true.

                   If you think there is some hard limit to economic growth, you need to find better arguments than ones about how many angels can dance on the head of a pin.

                   Transfinite math is a difficult technical topic with massive philosophical implications. It confused some of history’s greatest minds. It started to be understood in the late 19th century, but is still far from being perfectly understood.

                   One way or another infinity doesn’t belong anywhere near a discussion of how much oil we can pump out of the Earth’s crust. Even on a galactic scale, that quantity is tiny, and infinity is a lot bigger than the galaxy.

                   But if the topic interests you I recommend poor David Foster Wallace’s book, “Everything and More”.

                3. Alimbiquateed, no, you are obviously the one that doesn’t get it. Your whole post: It’s true that if the economy continued to grow for ever, it would be infinitely big, but it’s also true that it takes an infinitely long time to get to forever.
                   It’s a weak statement. The world has finite resources, but it will also exist for a finite period. is totally meaningless. It makes no sense whatsoever.

                   Exponential growth is something that you obviously don’t understand. You try to minimize the absurdity by using 1% growth instead of the usual 5% or more that economists use. But you, quite obviously, do not understand the exponential function.

                   “The greatest shortcoming of the human race is our inability to understand the exponential function.” Albert Bartlett.

                   I do not have a recommended book for you to read. But I would recommend a remedial math class on the exponential function.

                4. Just watched this gem from Albert Bartlett again

                   https://www.youtube.com/watch?v=sI1C9DyIi_8

                5. Forgot the graph that extends what Barlett says at 55 minute mark,

                   

          2. Pops- “the rest is where the uncertainty”

             yes indeed, as events in Ukraine so clearly illustrate.
             Uncertainty regarding the degree to which the world can replace some of the depleting and stranded in-place fossil fuel is part of the base fabric of the next 5 decades.
             Despite the uncertainty about outcome, the path to establish some stability beyond peak fossil is pretty straightforward. OK, perhaps not so straightforward when a country must choose between funding of the various options, but the options are on table and time is wasting. The answer in one region will be different than another, depending primarily on how much sun or wind a place has, and how quickly they can plan, fund, and build nuclear plants if they choose.

             In regard to “the World economy can handle oil at $150/bo(in 2021 US$),” [Dennis]
             I will add the qualification that some countries cannot handle this and are at risk of the government being replaced in chaotic fashion, such as occurred in Egypt 2010-11. Food prices are directed related to oil prices. Some countries have very little margin or ability to sustain energy and food purchases. Geo- political instability is very hard to predict, and can be contagious.

          3. Pops,

             That is correct, I left that out as I thought that would be understood.

             Oil that is not profitable to produce under prevailing price and cost conditions will not be produced by firms that want to maximize profits.

             Some things are so basic to an an economist that they assume they do not need to be stated.

             I try not to insult the intelligence of the readers here.

       2. Everybody’s food bill is fixing to go through the roof.

          Maybe a few economies could handle $150 oil if that’s all it was. There will be a wide swath of people that will be choosing to eat instead of paying their mortgage or rent or auto loans.

          Those million dollar homes in places like Germany will be worth about $100,000 by the time the dust settles. Average home in US will likely lose 2/3 of its value over next 5 years. As inflation eats away at peoples ability to pay.

          2008 on steroids is dead ahead.

          1. HHH,

             Do the math. Oil at $150/b in 2021 $ is about equal to the $115/b in 2021 $ that the World economy faced in the 2011 to 2014 period when World Real GDP was growing at about 3% per year.

             Perhaps things will be as dire as you guess, I remain a skeptic.

             1. Dennis margin calls are already happening to some very large banks and even some energy producers who hedged wrong.

                And there isn’t a damn thing the FED and other central banks can do to stop the ensuing unwind of Eurodollar debt.

                The entire global economy is based on leveraged dollars and collateral. When there is deleveraging. Dollars increase in value at the expense of everything else.

                Can’t rule out oil going much higher under these circumstances. But it ends in deflationary collapse in price.

                After this deflationary collapse in prices happens. What are the central banks going to do to increase lending? Cut interest rates? QE? 😂

                We are facing a global monetary reset here.

                1. HHH , yes margin calls are on the way big time with commodity prices rising . Tier 1 side effects of economic warfare . Economic warfare is not a game for kids , people can get hurt .
                   https://www.zerohedge.com/commodities/one-chinas-largest-banks-unable-pay-margin-call-after-todays-monster-nickel-squeeze

    2. From an economic perspective you’ve got what’s technically called “a double-shoulder-shit-show”. The Fed was all ready-to-go with their 10,000 rate hikes to battle against the highest inflation in 40 years. And then UH OH!! – along comes an inflationary event (faster than anything in 50 years) that cannot be “rate hiked” out of existence.

       So here are the implications: US economy DOWN, European economy DOWN, Commodities UP, US Dollar UP, Gold UP. So its not even Stagflation, its more like (In-De)flation. Or as Peak Oilers used to say, “Deflation in everything you own, Inflation in everything you want”. I guess unless you own gold mine or an oil field.

       And when the bottom finally falls out of global economic trade, THEN you will see a collapse in commodity prices as trade grinds to a halt. But considering 1) the potential length of Ukrainian crises, 2) the backlog in supply chain, 3) the lack of tools in Fed kit (throw another couple trillion onto the fire and juice inflation even more? Go negative interest rates?), this process might be even more painful than the 2008 crises: ie. oil going above 2008 highs, and then stay lower for longer after 30% of americans lose their jobs. And remember, 2008 crises was only solved with Fed Kit which is now pretty thinly stocked. And unless there is a Keragin (wasn’t that a thing once?) tech that is on the verge of a breakthrough like LTO in 2011…. you get the picture. And on the West coast there isn’t a single patch of grass that isn’t already occupied by a homeless person, so don’t bother looking. How’s that for “implications”.

35. Libya oil production falls after 2 crucial fields shut down

    CAIRO — Libya’s national oil company said Sunday that an armed group has shut down two crucial oil fields, causing the country’s daily production of oil to drop by 330,000 barrels.

    The state-run National Oil Corporation said the group closed pump valves at the Sharara field, Libya’s largest, and el-Feel, effectively stopping production in both areas. Before the shutdown, Libya’s production of oil was at around 1.2 billion barrels per day.

    https://abcnews.go.com/International/wireStory/libya-oil-production-falls-crucial-fields-shut-83283515

36. https://twitter.com/JavierBlas/status/1500753868719804423
    UPDATED: European natural gas prices zoom to a fresh all-time high, rising >75% today. Benchmark TTF is trading above €345 per MWh.

    ** That’s equal to more than $100 per million Btu, or more than to $600 a barrel of oil equivalent ** (I promise you there are not typos there).

    1. The knock on effects of this are going to be catastrophic for Europe. By my calculations, heating my home during an especially cold month in the USA is $250 using natural gas. Had I sourced that natural gas from Dutch TTF, it would’ve cost me $3000. I can’t imagine any industry is even operating at these prices, or are considering remaining in Europe. Since natural gas is not as easily tradeable globally, I wonder how insulated the USA will be from these higher prices.

       1. Philip,
          The US – with the exception of New England – will be largely insulated from the global pricing for natgas.
          Friday’s spot price for Transco Zone 6 – feeding New York – was $3.96/mmbtu.

          The surge of industrial operations into the Appalachian Basin area – especially those that are energy intensive – will likely accelerate as that region holds many, many decades worth of abundant, cheap natgas.

          1. Coffeeguyzz,

             As more and more LNG trains are built, the price of natural gas for the US will move toward the World price as natural gas becomes more of a World market (like the oil market).

             Despite your claims to the contrary the natural gas resource is not unlimited.

       2. Phillip,

          Lots of people would install a heat pump if natural gas prices rose to $3000 per month. They would also get their electricity supply from fuels (and non-fuels) other than natural gas to reduce their electricity costs.

          As this occurs the demand for natural gas would decrease and would tend to reduce the price of natural gas.

          1. We’re in Ireland and use gas to heat our house that was built in 1850s. Not even sure where we’d start..

             1. I don’t know much about heat pumps but this looks interesting from a Brits viewpoint .
                https://notalotofpeopleknowthat.wordpress.com/2022/02/12/running-a-heat-pump-hits-1251-27pc-more-than-a-boiler/

                1. In the meanwhile . Shell limits sale of heating oil in Germany .
                   https://biztoc.com/p/2yfavvz6

                2. Diesel is king . France having trouble and US wants to sanction the flow of oil . The West wants to commit ” harakiri ” .
                   https://www.bnnbloomberg.ca/world-s-biggest-diesel-importer-france-shows-strain-of-russia-ukraine-crisis-1.1733658

          2. When the wind doesn’t blow and there is no sun in Europe (as was the case in December 2021) the wholesale cost of electric power in Europe is determined by nat gas which is the goto marginal producer in that situation. Europe’s planned shift to wind and solar was highly dependent on Russian nat gas. North sea nat gas production is in decline and the Netherlands Groningen production is due to stop this year because of earthquakes. Our masonry wood burners are starting to look very good indeed (see https://en.wikipedia.org/wiki/Masonry_heater).

             In my opinion, Europe will soon switch to agroecology (which does not require fertilizer made from nat gas but does require animal excrement to work) as Cuba was forced to do after the Soviet Union collapsed and subsidized fuel deliveries ceased. This will considerably reduce Europe’s greenhouse gas emissions.

             1. Schinzy,

                The North Sea has ‘new’ gasfields and Groningen will increase production when Russian gasimports stop. Gas availability more important than local damage because of earthquakes.

       3. I insulated my house. Best way to be insulated from higher prices.

37. Relevant to this discussion

    Paraphrased, Bismarck

    Never trust Russians. They don’t even trust themselves.

38. TTF Gas is up 1,485.04% YoY at this point in time.

    1. Them heatpumps seems mighty fine at this point, don´t they?

       1. Laplander,

          I would think this would drive up electricity prices as a lot of European electric power is sourced from natural gas fired power plants.

          1. Dennis

             And would not Electric Vehicles do the same? What am I missing?

             1. Seppo,

                Yes if most of the electricity is produced using natural gas, the increased electricity demand might also drive up electicity prices. Though note that most EV charging is done overnight so not a huge demand on the grid, but the electricity still needs to be produced. This could be from wind, solar, hydro, and nuclear with natural gas as a backup (for low sun and wind periods). The solar resource is good in Southern Europe and the wind resource is good in the North Sea (and perhaps the Atlantic coast and Mediteraneanean once deepwater offshore is more fully developed. A wide area of wind and solar resources with a highly interconnected grid (perhaps with some HVDC would probably work best,

                In the short term EVs do not help with low natural gas supplies, it will reduce oil consumption.

39. Russian-Ukraine War Implications:

    It looks like Putin bit off more than he could chew by attacking Ukraine with the subsequent sanctions and economic cutoffs of various kinds. Thus, this has done more damage to Russia than Putin realized.

    However, the Energy Implications are horrific, not just for Germany & Europe, but this will thunder throughout the Rest of the World and even China. High energy and commodity prices will most certainly destroy the already weakened Chinese Debt-ridden economy.

    Furthermore, with the escalation of the “Economic War” against Russia, there will no doubt be some sort of Major Hacking Events taking place in various parts of the world, thus causing even more volatility in oil, metals and commodities.

    With the world finally trying to get back to some sort of normalcy after the Covid Pandemic, this Russian-Ukraine War has now sped up the process of the coming ENERGY CLIFF at a much faster rate.

    Debt is the only thing propping up the Oil Market. If this war escalates further, then the financial Derivatives that are highly leveraged Credit Default Swaps and Interest Rate Swaps are going to get into serious trouble.

    When the Debt Bubble Pops… then we head over the ENERGY CLIFF in 3D Technicolor Style.

    steve

    1. Might actually be better, in the long run, with a rapid, hard crash, since we were already going there anyway, instead of prolonging the pain.
       I.e, rip the bandaid off and start to think a bit differently…
       Edit, and that would be, in a very broad sense, live within your, and our, means.

       1. Laplander , yes ” rip the bandaid off ” . Collapse early avoid the rush .

40. Nickel + 60 % in one day . Goodbye EV batteries .

    

    1. Sure.

       Electric car revolution tumbling. The rise of the great fossil fuel based national states of Russia and China. The west soon defeated. It’s like a dream come through. Except, if the dream is released; it’s just a destruction on a large scale for both common people and elites almost everywhere.

    2. LiFePO- only the standart range Tesla available 😉. Cheaper anyway.

41. Another Merger of Equals

    Whiting and Oasis to Merge as Bakken M&A Finally Warms Up

    (Bloomberg) — Oasis Petroleum Inc. and Whiting Petroleum Corp. agreed to combine in what they’re calling a “merger of equals,” creating a new oil producer focused on North Dakota’s Bakken shale patch with an enterprise value of about $6 billion.

    The deal comes less than two years after both companies filed for bankruptcy in the aftermath of the pandemic-driven crash in oil prices. Since then, both companies doubled down on the Bakken shale in the Williston Basin. Oasis has bulked up by agreeing last year to buy assets in the region from Diamondback Energy Inc. for $745 million. Whiting last month acquired more Bakken assets for $273 million in cash.

    Amazing how companies reappear after bankruptcy. Who was left holding the bag?

    https://leaderpost.com/pmn/business-pmn/whiting-and-oasis-petroleum-to-merge-in-6-billion-shale-deal

    1. OVI,

       Indeed… we are seeing the “MERGER OF THE BAKKEN UGLIES.” Oasis was such a piece of SHYTE, once it declared bankruptcy at 15 cents a share, it relisted on the NASDAQ and is now trading at $150. Whiting came out of bankruptcy doing a 1:75 Reverse Split.

       Thus, even at the current $86 a share, it’s still nearly a Penny Stock.

       The Bakken is DONE… and at some point, Investors holding Debt or Shares in the Whiting-Oasis Boondoggle will be handsomely rewarded with one hell of an ENERGY ENEMA.

       steve

       1. Srsrocco

          I keep hearing this guy is very shrewd and savvy

          Warren Buffett’s Berkshire Hathaway reveals a $5.1 billion stake in Occidental Petroleum

          https://markets.businessinsider.com/news/stocks/warren-buffett-berkshire-hathaway-occidental-petroleum-oxy-stock-oil-energy-2022-3

          1. OVI,

             Buffet likely realizes Energy, especially Oil, is going to be Key. However, it will be interesting to see how the Shale Industry is able to maintain production with the costs of everything skyrocketing.

             Furthermore, OXY reported in its 2021 10-K that it held 1,114 MMbbl of DEVELOPED Proved Oil Reserves & only 326 MMbbl of UNDEVELOPED Proved Oil Reserves in the United States.

             As we can see, most of OXY Proven Reserves have already been DEVELOPED.

             OXY also reported that it produced 182 MMbbl of oil in 2021. While OXY continues to add more Proved Undeveloped Reserves, I wonder how long they can continue the PONZI until investors realize Reserves are running out.

             steve

             1. Yeah, I’m pretty sure Mr. Buffett bought into a Ponzi scheme.

                Gee, he has a long habit of doing that.

                Seems like it usually pays off.

          2. Buffet has a roughly $6B stake in one of the largest electric car companies in the world [Byddy], which grew from an initial investment of $232 M way back in 2009.

             1. Well here is a genius who lost 40% of his value in a week by putting $ 2 billion in Rivian .
                https://cleantechnica.com/2022/02/14/george-soros-placed-2-billion-loser-bet-on-rivian/

       2. Steve , Energy Enema . Who coined that ? You ? Must add this to my dictionary .

          1. HOLE,

             Yah… I believe the world will soon come to grips with the term… ENERGY ENEMA.

             steve

       3. Hey getting listed on the Nasdaq, that is the scam isn’t it? That’s how Tesla did it. So many Mutual Funds and ETFs that are forced to buy every shitty stock in the index. So much fun! Unless you plan on retiring some day.

    2. Easy to understand
       1. (-1) + (-1)= (-2) and not +2
       2. King (AOL) + Kong (Time Warner) was not KingKong but DingDong . 🙂

42. Posthaste: What $200 oil could do to Canada and the world economy — and it’s not pretty

    What does US$200 a barrel oil look like?

    Unbelievable as it sounds, the world may be about to find out.

    Within in the first few minutes of trade today, Brent and West Texas Intermediate both spiked to the highest since 2008, US$139.13 and US$130.50, respectively.

    The news that drove this eye-popping gain was U.S. Secretary of State Antony Blinken saying Sunday that the United States and European allies are exploring banning imports of Russian oil.

    If that happens there could be a 5 million barrel or larger global shortfall and oil prices could double from US$100 to US$200, said Bank of America global economist Ethan Harris.

43. Item:

    It’s all the rage to embargo Russian oil and gas buys, but it occurs to me these were likely long term purchase contracts. Termination fees will be enormous, and they aren’t going to be paid to the evil enemy.

    I don’t see how this unwinds.

    KSA also can’t help but see the contracts can’t be trusted.

    1. Well, termination fees that Russian can’t collect because they’re out of SWIFT (?)… I don’t think anyone sees how this unwinds…

       1. Well they could contact Hunter Biden . He will fix it with 10% for the “Big Guy ” .

       2. All SWIFT is. Is a messaging system. It doesn’t matter near as much as they make it out to matter.

          All Russia has to do to access dollar funding is pick the phone up instead of using what is basically a text messaging system.

          There are still some banks that will do business with the Russians.

          1. HHH your analysis has crumbled in recent weeks. Are you okay? Candlesticks got you down? I mean, you alone have probably been responsible for 90% of uses of the word “liquidity” on POB. Maybe 98%. And now, all of a sudden, in the midst of an actual economic implosion and complete international isolation… liquidity doesn’t matter. You’ve lost your mind my friend.

    2. I’m thinking just about every such contract has a boiler plate but entirely legit and enforceable condition in favor of one or both parties that if so called acts of god or war etc come to pass, the contract is void.

       1. Yes , correct OFM . The CDS insurers are not paying out on any contract and the margin calls will keep on coming . Time to pay the piper . We will know who is swimming naked when the tide goes down .

          1. War has to involve the paying party. War would prevent payment outright.

             War involving the receiving party won’t fly for Force Majeure. War is not preventing Russia from receiving termination fee payment. And if the paying party is not at war, with delivery of payment obstructed by an artillery barrage that prevented the bytes from moving, then there is no Force Majeure.

             Any Russian court will say pay, and start accumulating interest on the unpaid fee.

             Europe courts will say no need to pay, whatever arguments presented by the defaulting party are legit.

             I don’t see how this ever unwinds.

44. Mike S as usual hits a home run .
    https://www.oilystuffblog.com/single-post/whazzup-with-all-the-whining?postId=a76a6056-c264-48b8-9ce9-d9a09adcd350&utm_campaign=48230d68-28cb-4c3d-8de4-4ac07582fe05&utm_source=so&utm_medium=mail&utm_content=ce1d37e9-93f8-42b4-9b74-dd7aabc7fb45&cid=fa335351-37bb-44a6-9899-f8c34b4a0f81
    Also this comment is good ”
    Mike its such a bizarre world. Many people dont know whether they are coming or going, that much is obvious

    Grant Pierce

    1. HinH, you post a lot of chaff but occasionally you also hit a home run.🤣This link is really a good one. So good I will post it again.

       Whazzup With All the Whining?

       The US tight oil industry wants America to believe it can replace a large portion of 3.5-4.5 MM BOPD of Russian exports and save the world, one $10MM Wolfcamp well at a time. It just needs to be “unleashed,” whatever the hell that means. It has a list of things it needs to be get unleashed, starting with more money, of course, and more “empathy” and understanding from Joe Biden.

       I don’t get the whining about Biden; since when does free enterprise need the consent from Washington DC to drill more wells? After 50 years of being an oil and gas operator I always wanted those sumbitches in Washington OUT of my business, not IN it. I survived nine presidents in my career, not a one of them knew squat about the oil and gas business.

       I am a conservative Republican, by the way; don’t give me any shit about politics. When folks starting bellyachin’ about politics its because they’ve lost control of their own lives and need help. I don’t.

       Okay, there is a lot more to this article. Everyone should read it.

       1. New well productivity of wolfcamp and bonespring wells in lea, eddy, reeves and loving counties courtesy of shaleprofile.

          I do not have access to productivity normalized for lateral length, but well productivity has been increasing.

          https://public.tableau.com/shared/9Z7YY49GJ?:toolbar=n&:display_count=n&:origin=viz_share_link&:embed=y

          1. Not true, naturally; when normalized for lateral length and proppant loading (costs matter), well productivity in both Lea and Eddy Counties are going down, as are EUR’s. Late life terminal decline rates are accelerating, particularly in Eddy County. Everything is getting gassier.

             With a full understanding of well performance and remaining Tier 1 and 2 well locations within the productive limits of the Wolfcamp (capitalized) and Bone Springs in all of the Delaware Basin, exporting over 80% of Permian tight oil overseas, having just whacked more US imports from Russia, is an energy policy blunder of historic perspective.

             

             1. Thanks for the chart Mike, it would be interesting to see all of the Delaware basin counties, rather than just the New Mexico counties. In any case, any decrease in output since 2018 when normalized for lateral length is marginal based on this chart. As to the future terminal decline rates of these wells, I assume it will be similar to past wells at about 12.5% annual decline rates after about 6 years. It is difficult to tell from your chart, is it for all formations in Lea and Eddy or only the Wolfcamp and Bonespring formations?

          2. I noticed this recent chart posted at shaleprofile.com

             see

             https://shaleprofile.com/blog/us/us-update-through-november-2021/

             I do not see a sharp decline in Permian well productivity in this chart, there may be a tiny decrease in output per lateral foot since 2016, but mostly the curve is a horizontal line from 2016 to 2020 for the Permian basin.

             

             1. Dennis, you don’t know what you are looking at, or why it matters even if you understood. If your going to be analyst, get some data, look at ‘unmanipulated operational’ data out 24-36 months, as in EUR’s. What you are focused on is irrelevant bullshit that can have any number of different definitions. I suspect you know that, which is why you focus on it. But “the curve is a horizontal line…” is good, I like it.

                1. Delaware Basin well quality down 18% since 2016

                   

45. US gasoline soars to a record $4.17 per gallon

    The average price for a gallon of gasoline in the U.S. hit a record $4.17 Tuesday as the country prepares to ban Russian oil imports for its invasion of Ukraine.

    The average price rose by 10 cents per gallon in one day, and it’s up 55 cents since last week, according to AAA data. The all-time high for average gasoline prices was previously set on July 17, 2008 at $4.10 per gallon.

    1. Just for laughs.
       “Drink less bottled water because it costs more than gas,” said one driver.

       Another driver said, “Sometimes I buy dessert, but now I don’t, which is good because I can lose weight at same time.”

46. Washington seems to be feeling the heat . They sent a team to meet Maduro who they do not recognise as the legitimate President of the nation and have been trying to topple him since Chavez died .
    https://www.cbsnews.com/news/venezuela-russia-ukraine-biden-team-nicolas-maduro/
    Biden wants to visit KSA to ask for more oil . Forget the Kashoggi murders, Yemen war etc . We need the oil .
    https://www.commondreams.org/news/2022/03/07/omar-says-biden-visit-saudi-arabia-over-oil-would-be-wildly-immoral
    Biden is desperate for the nuclear deal with Iran in spite of the Israeli objections and lobbying .
    More to it then meets the eye .

    1. The Chevron in the town of Mendocino was selling regular gas at $8.45 a gallon on Tuesday.

       1. That’s a bit steep, even for California.

47. Sorry only the headline as the article is behind paywall . Shell acknowledges its peak .
    https://www.nytimes.com/2021/02/11/business/shell-oil-production.html

    1. https://gizmodo.com/shell-says-it-has-reached-peak-oil-production-1846248229

       Here is the summary of the same, but from an open site

       1. Thanks , Seppo .

48. The prior settle for a Brent futures contract for Dec 2025 about $79/b. For Dec quotes in 2022 to 2024 the prior settle was $103/b,$91/b, and $84/b. For May 2022 the prior settle was $123/b.

    Current quota at Oil Price around $130/b for Brent May 2022 future.

49. Biden Says U.S. Will Ban Russian Fuels to Pressure Putin

    https://www.bloomberg.com/news/articles/2022-03-08/biden-says-u-s-will-ban-russian-fuels-to-pressure-putin-on-war?srnd=premium

    U.S. politicians will do what they do best… LOL. As everyone in this blog realizes, the United States imports a pathetically small amount of energy from Russia versus Europe. Even the U.K. and Germany stated recently, that they CANNOT ban energy imports from Russia.

    So, I find it ironic that the U.S. Whitehouse thinks this sort of Policy is helping Europe when the U.S. has been the LEADING POLITICAL DRIVER in getting Ukraine into NATO by sending $2.9 billion in military aid since 2014, the highest of all NATO countries.

    Now, when Europe is going to SELF-DESTRUCT from EXPLODING Natgas & Electricity prices, Biden comes to the RESCUE… LOL

    Lastly, I am not a Putin Supporter and think he has done Russia more harm with this War, but the U.S. has put Europe in serious trouble and it has the LEAST SKIN TO LOSE IN THE GAME.

    GOD HATH A SENSE OF HUMOR.

    steve

    1. The U.S. didn’t put Europe in serious trouble. Europe put Europe in serious trouble. I’m no Trump fan but he warned the EU in 2018 that to put their faith in Putin was folly. The German representatives openly laughed in their booth–go look at the footage, it’s everywhere.

       The U.S. will rescue Europe, just as it has before. This time with a Dunkirk-like flotilla of LNG carriers. Australia and Qatar have helped out. Granted, this time it’s for profit. But still, without those LNG tankers, Europe would be in dire straits, right about now.

       Germany shot itself in the foot by deciding to decommission nuclear, putting their full faith in Vladimir Putin, and turning too quickly to wind and solar, even though wind and sun are not exactly the most abundant German commodities. Since Germany is the electricity purveyor to the rest of northern and central Europe, all of Europe has paid the price. Even Spain, which receives NG from the giant Algerian field–which temporarily closed because Morocco wouldn’t pay for the pipeline maintenance. Spain proved that the Turk Stream is inadequate on its own.

       Spain, the green-grocer to Europe, had to subsidize a fertilizer plant back in the fall, because ammonium nitrate is made from CO2 from FF’s. But wait, there’s more: Putin just shut down exportation of fertilizer–and he controls over half of it. That makes famine even more likely. Crop yields go down roughly 50% without nitrogen fertilizer.

       Putin is the embodiment of evil. He has placed himself squarely in the same box that Stalin found himself in: killing the Ukrainians. This time it’s not the Holodomer, but missiles.

       Don’t go blaming Europe’s woes on the United States. German Chancellor Gerhard Schroeder swung this Nord Stream 2 deal before he left office, then–call it luck, I don’t care–settled into a cushy job as board member on Gazprom and head of the Nord Stream 2 investor’s committee. Angela Merkel endorsed the deal, despite persistent admonition from the United States and others.

       This was doubly worse because Siberian NG is some of the dirtiest pipeline gas in the world. It came from the place where the Siberian Traps were created. When the volcanoes came up they brought palladium and nickel from the deep. LNG trains remove that. Ms. Merkel with a PhD in quantum chemistry chose to ignore that, even though she was espousing the wonders of clean energy. Does that strike you as strange?

       This is a self-inflicted wound. And the U.S. is sending natural gas that it really probably should keep in the ground over to Europe to bail them out. I don’t know where you’re from and really don’t care but you should learn a bit of history before you become a world expert on energy on an energy board. Yes, as you say, “God hath a sense of humor,” and right now he’s probably laughing at you.

50. EIA statement on the factors leading to uncertainty in Short-Term Energy Outlooks

    We believe it is more important to understand all the factors generating the uncertainty around our March STEO forecasts than it is to understand the forecasts themselves. Recent events in the oil market have occurred amid a backdrop of already low inventory levels, which have amplified oil price volatility and contributed to high oil prices. Some of the most consequential factors we are watching include the following possibilities:

    Nations could choose to ban imports of Russian energy
    Additional sanctions against Russia could be announced
    Corporations could take additional independent actions that would affect Russia’s oil output
    Producers of crude oil outside Russia could respond to higher prices by increasing production

    At any rate I have posted below their latest estimate of Russian future oil production, for whatever it’s worth. This is total liquids, not C+C. The arrow marks March, 2022.

    

51. Shortly after Biden announced banning the import of Russian oil, the STEO put out its March US oil production forecast.

    The chart shows both February’s forecast and today’s forecast . Output in December 2023 has been increased by 504 kb/d. December 2022 output has been increased by 345 kb/d.

    Comments from the experts please.

    

    1. OVI,

       The new EIA March STEO Forecast of 13.3 mbd by Dec 2023 makes perfect sense when it was written by those who believe in the ENERGY TOOTH FAIRY.

       By the way, a small TID-BIT on Whiting-Oasis Merger.

       I looked at 6 wells that Whiting completed in the Bakken in Jan 2021. These six wells have already declined 81% in a mere 11 months. I wonder how the Shale Industry is going to increase production by 1.8 mbd in two years with TIER ONE LOCATIONS now in the rear-view mirror and with higher and higher decline rates?

       steve

       

       1. Here is what Oxy president has to say .
          https://www.cnbc.com/2022/03/08/oil-producers-in-a-dire-situation-and-unable-to-ramp-output-says-oxy-ceo.html

    2. Ovi,

       This might be the result of a change in the oil price forecast. Higher expected oil prices may lead to a higher expected supply of oil.

       1. Dennis

          Yes they did. They raised their Dec 23 price from $62/b to $79.

          Is that enough to increase production to the level they are showing. They are projecting production increasing at an average rate of 100 kb/d/mth.

          1. Ovi,

             Difficult to say how shale producers will react to higher oil prices. My model suggests tight oil output might rise by 1200 kb/d over the next 24 months or a monthly rate of increase of about 50 kb/d.

             If we further assume that all of the increase in US output comes from tight oil, it looks like the EIA is too optimistic by a factor of 1.48 for US output.

    3. I am saddened by the world’s events. We have discussed energy poverty and we are here. OPEC would produce more oil in a minute if they could. Globalization has lead us to potential starvation and truly a fight over scarce resources on a crowded planet. We could possibly get to the STEO number but it would take Banks lending and not redlining the industry, woke PE firms and institutional capital flooding back into the industry and at least a 1,000-1,200 rigs running (mostly dedicated to the Permian) and a work force that doesn’t now exist ), a country united and dedicated to fossil fuel development. When I see the Presidents press secretary spouting “just buy EVs” as a solution to high gas prices (as though electricity is grown out of the wall), I just can’t believe what I am hearing. No one truly understands the oil industry and the fact that it doesn’t possess an unlimited supply of resource. Just wait until the shale acreage is all drilled up and the production falls like a rock, the MSM will again blame the oil industry for high prices. If you kick the dog long enough it won’t get up when you call for him/her/they.

52. https://mishtalk.com/economics/oil-irony-us-and-uk-to-ban-russian-oil-russia-threatens-the-same

    Oily Irony! Both Russia and USA threaten to halt russian oil

    1. Don’t underestimate Putin’s Poker Face.

       He knows the world needs his resources.

       He DOES NOT CARE ABOUT anyone but himself….like TRUMP

53. Russian oil production will likely see a collapse that looks like the 1990 collapse. They don’t have the infrastructure to reroute the oil that normally heads to Europe.

    The oil that heads to Asia doesn’t come from same fields as what goes to Europe.

    When they shut them wells in a lot of them will never come back online.

    Russia is utterly dependent on exports as they don’t have the demographics or population to sell their own production to. And will likely be a failed state within 5 years.

    1. But just pick up the phone, and cash in HAND! Understood. It’s a paradox but you make it work!

    2. HHH, I don’t agree with you . Russian production is about 11mbpd . Export is about 6mbpd . So they need the 5 mbpd for domestic . Out of the 6mbpd about 3.5 -4 mbpd is going to Europe .The sanction applies ONLY to US imports . Europe will continue to buy . China will continue to buy . India will continue to buy . US will buy via traders . They need the Ural oil to blend with the WCS to make the blend feasible for refining or else the WCS also gets unused and unneeded. Maximum will be that the Russians will ratchet down production to their MOL ( Minimum Operating Level) so the wells are not damaged . MBS nor GCC are taking the call from Biden . They told him to talk to Putin . Demographic collapse is another entirely matter .
       https://www.wsj.com/articles/saudi-emirati-leaders-decline-calls-with-biden-during-ukraine-crisis-11646779430
       https://oilprice.com/Energy/Crude-Oil/US-Sanctions-Cant-Keep-China-From-Buying-Russian-Oil.html

       1. You think China can afford high priced everything? China has to import massive amounts of everything to keep their exports led economy in motion.

          They are also are utterly dependent on exports as they don’t have the demographics or population to sell their on production of everything to. And when inputs cost goes through the roof they will likely be importing less oil not more from Russia.

          Both Russia and China collapse under their own weight if the US led global order just goes home. Because neither are capable of enforcing an alternative in their own backyards much less globally.

          Globalization is going in reverse. The Americans have already in large part left. Only matter of time before before Russia and China have to attempt to provide their own security on ocean waters. Which neither have the navy to do.

          Another note on China. They culled more pigs than the rest of the world has as total last year. They imported a massive amount of corn, soybeans, and anything they could to try to rebuild the pig herd. Only thing is they didn’t eradicate swine flu 100% that will turn into a whole lot of wasted grains.

          1. HHH , I learnt a lot about the China USD problem from you so I understand where you are going . However the freezing of Russian reserves has changed a lot of thinking on USD reserves . All countries are rethinking their own holdings of USD . Even KSA an ally of the USA . I think a reset is going to take place . How ? When ? Who ? . I have no answers . This is a process in motion . Europe is a key and as you can see by my observation it is in s*** . Globalization is in reverse . I agree . As to a blue water navy advantage of Washington , I disagree . The new hypersonic missiles / tracking abilities etc all aircraft carriers and submarine are sitting ducks .
             P.S : EU will continue to buy it’s 3.5-4mbpd . This is via pipeline so no ships required . That leaves about 1.5 -2 mbpd for the ROW . Russia can ratchet that down . However there will be no need for them to do so . The oil will flow . Here .
             https://www.bloomberg.com/news/articles/2022-03-08/oil-tanker-booked-for-philadelphia-changes-destination-to-france

             1. US government doesn’t have control of the global reserve currency. There is a onshore dollar market that the FED and US government oversee.

                The global reserve currency is actually the Eurodollar system offshore dollars. Which US government can try to influence but in reality have no control or say in what goes on in the Eurodollar market.

                US government will likely in not too distant future say to rest of the world. Your on your own. Good luck.

                US has Canada and Mexico and doesn’t really need Europe or Asia.

                Not saying that it’s right or wrong it’s just how I see globalization going into reverse.

                If you look at the troop deployment drawdown over last 30 years the Americans have pretty much already left.

                1. HHH , “US government will likely in not too distant future say to rest of the world. Your on your own. Good luck. ”
                   More likely the other way round . Sometimes discussed in Europe ” Germany should say goodbye to Euro and EU or the other way round ” .

                2. Germany while a economic powerhouse. That changes as globalization goes into reverse. That is because they don’t have to provide their own security.

                   They are the same as China and Russia. Utterly dependent on exports and utterly dependent on US led global order to provide security for those exports.

    3. HHH , sometime ago you had forecast a collapse of Europe manufacturing industries . Just an update for those who may not be aware of what is happening here .
       1. Paper manufacturing . Full stop . Finland to Italy .
       2. Aluminium . 30 % full stop . The rest operating at minimum operating level
       3. Steel . 30 % full stop . The rest operating at minimum operating level . Besides energy chinks in the supply of chromium, vanadium , nickel etc without which special steels cannot be produced . Since the special steels are short the forging industry is in trouble .
       4. Fertiliser running at 60% capacity . Basically minimum operating level . Yara the biggest producer actually wanted to go ” full stop ” . That would have been a disaster for food . The govt stepped up to share the extra costs of electricity and gas .
       5. All 24/7 continuous process industries are teteering because of high electricity and heating bills .
       6 . Casting industry will function till there is inventory of pig iron , now stopped as it was coming from Ukraine and Russia . Other source is China and we know the bottlenecks there .
       7 . V/W , BMW cut down production , as a matter of fact 2-3 of their facilities are shutdown . Reason , both depended on a single supplier of wiring harnesses based in Ukraine . Second they were procuring some simple semi conducters from Russia . Banned .
       Medium and small scale factories are getting eye watering electricity and heating bills . Difficult situation .
       Tier 1 consequences . How long before the dam breaks ? Europe is now chewing on its inventory and reserves .

54. ‘We need to think about the medium to long-term impact’ of Russian oil ban, says ConocoPhillips CEO

    Ryan Lance, ConocoPhillips chairman and CEO, joins ‘TechCheck’ to discuss reactions to the ban on Russian oil imports, what happens if more countries decide to ban imports on Russian oil and more.

    https://www.cnbc.com/video/2022/03/08/we-need-to-think-about-the-medium-to-long-term-impact-of-russian-oil-ban-says-conocophillips-ceo.html

55. If we ever get some type of ceasefire and diplomatic solution oil prices tank and go other direction.

    No outcome is set in stone here. People betting on $200 oil need a no diplomatic solution outcome. I personally don’t see them reaching an agreement but if it happens the nightmarish economic outcomes aren’t set in stone.

    1. I think they are preparing some peace deal.

       Putin thought it would be a 3 days thing – and I don’t think he can sustain a long and bloody trench war. He hasn’t prepared Russia with patriotic bullshit to endure a long war. Not enough fuel for the tanks, and so on. Now shooting with dumb rockets because special operations and plans are gone.

       So he needs some face keeping deal like non-NATO to end this. Just my opinion. Otherwise his regime is in danger – many dictators have been toppled in history because bad war plans. (“If you cross the Halys you’ll destroy a big empire”).

       1. That’s what happened to the Argentina dictature with the Falkland (Malouine) war. They hoped that it would get them popular support but the failure of the military operation had the result to accelerate the democratic transition.

          1. Eulen and JFF , I can blow both you guys out of the water but I am refraining myself . I need an Ok from both of you then I will post my response . I dislike when I am called a shill for Putin . I have no skin in the game but I wish to avoid needless controversies . If I have your acceptance you will have my response tomorrow . Just about time to hit the sleep button here in Belgium .

             1. I will refrain but here is a documentary”War in Ukraine ” that was banned in the USA and is not on You tube to give everyone a background . This is made by Oliver Stone multi time Oscar winner for movies like Scarface, Platoon , Wall Street, JFK, Born on 4th july etc . Clearing the fog .
                https://www.bitchute.com/video/Dq8WHsXmpJAx/

                1. Here is part two of the documentary it is called ” Revealing Ukraine ” made in 2019 . Here you can see the American actors Nuland , Mccain and Biden . The first documentary was made in 2016 .
                   https://www.bitchute.com/video/reQsxIZYsZVM/

                2. I said I would refrain but this is just too good to let go .
                   “there’s the old joke of two Soviet soldiers sitting in their tanks in the middle of bombed-out Berlin in 1945 commiserating over the fact the Soviet Union lost the information war to Goebbles’ ministry of propaganda. “

56. EIA (wk ending 4 March)
    Crude: -1.863M
    Cushing: -0.585M
    Gasoline: -1.405M
    Distillates: -5.231M

    1. So why is the WTI price tumbling at the moment?

       1. Because it went up a lot

    2. Oil Drops as UAE Calls For OPEC+ to Increase Oil Ouput Faster

       (Bloomberg) — Crude futures dipped lower as the United Arab Emirates called on its fellow OPEC+ members to boost oil output faster.

       1. Frugal , is UAE Moses or Elon musk ? I ask the seas to open . I added a new word to my dictionary it is ” unobtainium ” . What is the price of a tinned can of peas if the shelf is empty ? Your questions are legitimate but we are in a new paradigm . Old tricks work no longer .

       2. I appreciate the thought and your efforts but I’ve read enough financial headlines in my lifetime to know that they can ALWAYS ALWAYS find a way to justify the outcome. But if jack-wad bloomberg writers knew anything they wouldn’t be bloomberg writers. Vix hit the mid-37s on Tuesday. That’s a Gamestop / wallstreetbets level of panic (still not sure why that was such a big deal, but there you have it). I would say Russia invading Ukraine is slightly more significant than Gamestop.

          And if you want a nice analogy for how this is going to work: On 2/28/2020 Vix closed 40.11. On 3/4 it closed at 31.99. Wow, it’s really “taking a hit”. On 3/16 it closed at 82.69.

57. India will likely consume about 900K bpd more than last year. Last year had a massive lockdown. So any US shutoff of crude buys from Russia has an easy, convenient replacement customer. Russia itself has a consumption increase scheduled for this year, so that’s another replacement customer requiring no production increase.

    Tidbit of note. The Russian military gets its officers from 70 civilian universities with attached MTCs (military training centers). This is essentially identical to US procedure of the vast majority being from ROTC vs the Academies. There are a handful of unaffiliated MTCs in Russia, their Academy equivalents. Point being, the Russian generals went to these schools, and so did the Ukrainian generals. They were classmates. They all learned what encirclement did to Germany’s 6th Army at Stalingrad. Both sets of generals know the outcome of all this.

    Stalingrad is now called Volgograd. It is the chokepoint of the Volga river which back then carried oil from the Caspian north to Moscow — And Still Does. Total production of the Caspian from bordering countries Russia, Kazahkstan and Iran (that blends with Russian oil for sanction evading) is approaching 5 mbpd. It goes north on the river and in pipelines along the river. Volgograd is just over 100 miles from the eastern border of Donbas. There was never any way NATO could be allowed that close.

    1. Thanks watcher for somethings I was absolutely unaware of .

58. Crude Oil
    107.80
    -15.90(-12.85%)

    That is quite a hit—-

    1. HT , markets move on sentiment and not on facts . See what I mean . I ignore them .
       https://www.pcgamer.com/facebook-has-lost-dollar500-billion-since-rebranding-to-meta/

       1. Yep—-
          Reality is for losers (sarc)

59. Oh dear.

    

    1. Lightsout thanks . As Ayn Rand said ” You can ignore reality but you can’ t ignore the consequences of reality” . Best of luck . DENILE( Denial ) is the name of a river in Egypt . Repeat , the music is playing but the party is over .

60. The wise comment here a few years ago pointed out that that oil prices should (could) be between 60 dollars – 120 dollars. 60 dollars being what gives sense to the producers, but up to 120 dollars is somewhat acceptable in the west. Much less outside the west. Consumerism dwindle to the point that the economy demands less of everything. And the debt market etc. crumbles.

    Unfortunately, the cost regarding just about everything is going up. So 60 dollars then is maybe 80+ dollars now. The break even to make more things happen in the oil industry is higher right now. And the cost to consumers ever increasing. Not ignorant when it comes to the the Russian – Ukraine conflict; the energy restraints are there and they are not getting better (at least not in Europe).

    1. Maybe it’s time oil company CEOs took a pay cut😅

       1. The best and brightest in any business or any industry cost money.

          1. There’s no single way to stop “gangsters for capitalism”—individuals acting as surrogates for “Big Business, for Wall Street and for the Bankers.”

61. Sneak preview of peak oil days. The early years.
    Millions of people homeless and on the move away from tyranny.
    Not a soul will now be able to say they were unaware, with any credence, but they still will.

    I suspect that Russian oil will still find a path to buyers, no matter how long sanctions and boycotts last.
    India and China are examples of buyers that will purchase oil despite the collapse of Ukraine, or anywhere for that matter.
    Afterall, energy is existence.

    Got coal, got batteries, got wind, got nuclear power? … Still got oil?

62. New normal in Germany:

    https://energy-charts.info/charts/price_spot_market/chart.htm?l=en&c=DE

    We have more wind, so the spot market electricity prices go from up to 70 cents / Kwh to 0.

    ( The 0 stuff would be handy to charge electric cars 😉 ).

    That’s not end consumer price – a lot of taxes come on top of this, and consumer pay a flat tarif fixed for the year. The impact is biggest for the industry.

63. Kurt Cobb , latest and he knows his energy .
    http://resourceinsights.blogspot.com/2022/03/ukraine-conflict-may-portend-end-to.html

    1. I posted this to Kurt Cobb

       Interesting, West seizes Russian luxury yachts and Russia seizes western factories. How is this going to work out?

64. No help from OPEC as UAE tries to exert pressure

    https://www.bnnbloomberg.ca/opec-output-boost-unlikely-to-come-from-uae-pressure-alone-1.1735532

    Also, there is an article about missing barrels behind the paywall

    https://www.bloomberg.com/opinion/articles/2022-02-13/the-world-has-been-using-a-lot-more-oil-than-we-thought

    This article has the same title

    https://www.smh.com.au/business/markets/the-world-has-been-using-a-lot-more-oil-than-we-thought-20220214-p59w46.html

65. New Non-OPEC Post up tonight.

    Latest Hz oil rig count data

    

    1. Red queen in action .

66. Ovi thanks for the advance information . I will withhold my comments .

67. Dennis.

    Although likely not to pass, do you have a US oil production projection if the newly proposed Windfall Profits Tax on big oil becomes law?

    The reference price is the average price of Brent from 2015-19 and the rate is 50%. The average Brent Price was just $57.18 during that time frame. So 1/2 of gross proceeds over that amount would be paid to the Federal government. It’s like an excise tax, comes off the top and bears no relation to CAPEX nor OPEX. Also doesn’t appear to be indexed to inflation, but I just had time to skim. There is a House version and a Senate version.

    Applies to all producers that produce over 300k BOPD. Also applies to refiners processing that amount or more.

    1. Sounds a bit like the Pomperipossa story, re-written by Astrid Lindgren, author of Pippi Longstocking and many more well known stories.
       In short, she, Astrid, got to pay more than 100% tax on her income as a writer, so a bit worse than this though…
       (For her, not the community that depends on fuel)
       Edit, for link:

       https://en.wikipedia.org/wiki/Pomperipossa_in_Monismania

    2. SS , relax . Nothing will happen . As George Galloway said about the Tories ( Reps ) and labor ( Dems ) in UK . ” Different cheeks of the same buttside ” . Grab a drink and popcorn . The circus is in town . Enjoy the show .

       1. I’m not in favor of this but it would likely drive the price of oil sky high as it would put a big tax on US shale.

          The companies would probably have to split apart to try to avoid it.

          Many say this is just for show. Too bad so much legislative time is wasted for show.

          1. When there is an election, or stock offering closing in, you have to say what your electorate/buyers want´s to hear.
             Edit: that´s why democracies will work out poorly in the coming scarcities…

68. A new thread outlining Non-OPEC production has been posted.

    https://peakoilbarrel.com/november-non-opec-oil-production-ticks-up/

    A new Non-Petroleum thread has been posted describing a Future scenario

    https://peakoilbarrel.com/collapse-a-decadal-scenario-2/

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