New International Energy Statistics.

Ron Patterson Uncategorized

The Eia has finally updated their International Energy Statistics with data through February 2015. All data in the charts below are Crude + Condensate and is in thousand barrels per day with the last data point February 2015.

World

World C+C dropped 477,000 bpd in January and another 65,000 bpd in February for a total decline of 542,000 bpd. World C+C stood at 79,160,000 barrels per day in February.

Non-OPEC

Non OPEC C+C declined 244,000 bpd in January and another 100,000 bpd in February for a total decline of 344,000 since December. Non-OPEC C+C production stood at 46,656,000 bpd in February.

OPEC C+C

OPEC C+C, in February 2015 stood at 32,504,000 bpd, down 1,451,000 bpd from its peak in April 2012. However according to the OPEC MOMR their crude only is up 1,000,000 bpd from February to May.

United States

According to the EIA’s International Energy Statistics US C+C production, in February, stood at 9,238,000 bpd. It was down 14,000 bpd in January but up 24,000 bpd in February for an increase of 10,000 over those two months.

An interesting point here is while US C+C was up 10,000 bpd from December to February, US total liquids were down 297,000 bpd. That was because over that two month period they have NGLs down 20,000 bpd, refinery process gain down 150,000 bpd and other liquids down 136,000 bpd.

Canada

In spite of the huge rig count decline in Canada the EIA says they were up 99,000 bpd in January and up another 22,000 bpd in February. Canada’s C+C production stood at 3,901,000 bpd in February.

China

China, after reaching a new high in December fell 83,000 bpd in January and another 14,000 bpd in February. China’s C+C production, in February, stood at 4,218,000 bpd.

Russia

Russia’s C+C reached 10,220,000 bpd in January, barely topping the 10,209,000 bpd of November 2013. Their C+C production however dropped 70,000 bpd in February and stood, at that point, at 10,150,000 bpd.

The page Non-OPEC Charts has been updated with charts of all non-OPEC producers.

There has been a lot of discussion on this blog lately as to whether US crude production, in the last few months has been up or down. The EIA’s Weekly Petroleum Status Report has us production soaring in 2015, reaching new highs almost every week. However the EIA’s own Drilling Productivity Report has shale oil, the source of almost all US production gains, peaking in April with an increasing decline in May, June and July. And reports from individual states seem to indicate that the decline started even earlier.

Platts has Eagel Ford was down 8,000 bpd in April and down another 6,000 bpd in May. And we know from the NDIC Stats that North Dakota production in April was down almost 22,000 bpd in April and down alomost 60,000 bpd since peaking in December. Platts however says Bakken production was basically flat in May, up a mere 650 bpd. Accurate to 10  bpd? I seriously doubt that.

I am betting that when the June data finally comes in that it will show crude oil production in the US has seriously declined since December 2014. And it is likely Canada has done likewise.

OPEC 12

This chart of OPEC crude only production through May. They have increased production by 1,000,000 bpd since February but they are all pumping flat out to achieve that.

I am now more convinced than ever that 2015 will see the peak in world crude oil production. I have very closely studied the charts of every producing nation and my prognosis is based on that study. I see many nations in steep decline and most every other nation peaking now, or in the last couple of years, or very near their peak today. These include the world’s three largest producers, Russia, Saudi Arabia and the USA.

Many other nations are at or have reached their peak in the last few years. These include other producing giants such as Kuwait, the UAE, Brazil and China. Other non giants are peaking or have recently peaked include Colombia, Oman, and India. Only Canada, and Kazakhstan have any real upside potential and I am not too sure about Kazakhstan.

I know many will point to Venezuela but that is just not going to happen. Venezuela does have vast potential but also have vast political problems and a history of confiscating foreign assets and paying them pennies on the dollar. So don’t expect anything but a slow decline from Venezuela for the next decade or so.

492 thoughts to “New International Energy Statistics.”

  1. I think we will see that the EIA is doing the same thing that other “Deep Captured” government agencies are and that is cooking the books to create the utopia that central planners want us to perceive. The problem for the EIA and other Foxes guarding the Hen House is that long term truth will come out and there will be serious concequences for their misinformation campaign. Depletion, destruction of risk capital and growing demand from artificially low gasoline prices and loss of confidence in fiat money and the central planners (IMF Fed etc) will ensure much higher prices for crude long term.

    1. I think that is pure nonsense. The EIA is doing the best they can at a very difficult job. They disagree among themselves and different groups report different figures. But after a year or two they all agree and report exactly what the states report to the EIA. Except for offshore federal agencies reporting for the Gulf of Mexico and offshore California, the EIA is entirely dependent on the individual states for their data. And they report exactly what the states report to them.

      I don’t believe there is any “Central Planners” as you refer to. And I have no idea what you mean by “Deep Captured” government agencies. Who the hell are they?

      Seeing deep conspiracies in the government seems to be a very popular view among a some people. I am not buying it. The simplest explanation is the most likely explanation. Things are pretty much the way they seem to be. I don’t buy any of those silly conspiracy theories. There was no flying saucer crash near Roswell New Mexico, the moon landing was real, Cheney and Bush did not plan 9/11, the Alaskan antenna farm called HAARP is for observing the aurora borealis and jet contrails are ice crystals, not “chemtrails”. And the US Government is not engaged in some deep conspiracy to hoodwink the American people into believing in what your favorite conspiracy theory says they want us to believe. All stupid conspiracy theories are that, stupid conspiracy theories, and nothing more.

        2. Thanks for sharing this Marcus 6/24/15 oil is getting killed today on a 4.93mm bbl draw today on stocks. This is an example of supply demand not driving price but rather HFT and Central Planning.

          1. All short term swings in the futures market price of oil is driven by market sentiment. All long term trends are driven by world supply and demand.

            Oil is a fungible commodity. (Google it if you don’t know what that word means.) Oil is traded on the world market and the price is not dictated by anything but supply and demand.

            The OPEC Basket Price changes day to day but not during the day. It is driven entirely by supply and demand. So called “Central Planning” in the US would have no effect on the OPEC basket price yet the long term trends of both are the same with the OPEC basket price trading very close to WTI and about three to five dollars, on average, below brent.

      2. Ron, Over 1,800 American architects and engineers say that the government´t version of 911 is pure crap. No theory. Just a group of professionals with technical educations.

        Take the time to look. ae911truth.org

        1. Amvet, take your stupid conspiracy theory crap somewhere else. This is not a conspiracy theory blog.

          Please! Nobody reply to this post. I don’t want to hear any more 9/11 crap.

    2. I concur!

      Check out shadowstats.com for a full directory of US government lying about the US economy!

      1. There are no lies. There can be systemic errors, but no one gets up to go to work each morning with an intent to lie for such a modest salary.

        The systemic errors can be considerable, however, and a few may even have agenda. The agenda likely is bipartisan.

        1. yer funny. no lies. Still hunting for those lost “weapons of mass destruction”, are we. Hilarious!!!!

      2. Shadowstats have been promising hyperinflation for the last 5 years or so, and yet the cost of a membership hasn’t changed once in all that time.

          1. Everyone else measures inflation by looking at the price of goods and services, and where I’m at that hasn’t changed much in recent years.

            The stock market is up because corporate profits are at record highs.

    3. Not likely. Has our government suffered for doinghe 911 attack? ( ae911truth.org )

      1. Ron you should go down the rabbit hole a little further and I promise you will get your eyes open to the misinformation that I speak off. Why do you think banks have been fined billions and billions of dollars (paid to the state) while no one goes to jail Ron? I really don’t care if you believe me or not and appreciate your good work but I have been witness for this for decades and watched it get worse and worse. You should look up “Deep Capture” and check it out for yourself.

        1. Don, I understand where you are coming from. And I agree with a lot of it. There are a lot of crooks on Wall Street and high frequency trading is just another way of stealing. It is basically legalized front running and it should be outlawed.

          The problem with the SEC is under funding, over work and incompetency. They are not crooks in cahoots with the traders. That is the bullshit I am talking about.

          Also the lobbyist write most of the laws passed by congress. They wrote the Medicare law that says the government cannot negotiate the price medicare pays for prescription drugs. They must pay the price the drug companies ask. That is robbery.

          The problem is Congress depend on donations from large companies and powerful company men like the Koch Brothers. Congressional elections are an auction an the candidate with the most campaign money is usually the one that gets elected.

          But that does not mean career, unelected, workers at the EIA, or anywhere else in government are in cahoots with Wall Street crooks or anyone else to fudge the data. That is the bullshit I am talking about.

          The problem is Don, that you see how lobbyist are buying congress and you assume that means every government employee, even people at the EIA who have no connection to lobbyist, are crooks cooking the books. That is bullshit.

          1. I don’t have all the answers Ron and would love to believe that the SEC was just underfunded but I don’t. But i do know that if you work for a government agency and buck the system you are out, period. I agree with many things that you are saying about lobbyist, front running etc. But now things are unraveling so that their only choice is to let them unravel or cook the books. 93 million Americans out of the work force and unemployment continues to drop (Please). Gibson’s Paradox (Larry Summers & Bob Rubin) is the game plan of the elites and it says that if you can keep interest rates at close to zero (HFT) and keep gold suppressed (HFT) that you can then print as money as you like (and therefore be like God). They know that Gibson’s Paradox (zero interest rates) is choking the US economy but are putting the elites and the banks ahead of the American people.

          2. Ron, Did you consider that the reports written by honest employees are often edited by political appointees ???

        2. The US gov’t works the the big banksters promoting their short oil position. Their propaganda outlets include Bloomberg and others. They never challenge the EIA production data. Anyone can compare Texas RRC and North Dakota data to see the data disparity between the EIA and the original source information. The EIA has promulgated their US oil production growth for 6 months now. Will they admit they are lying, ever?

            1. “The path to growth is gradual but the road to ruin is rapid.” – Lucius Seneca, Roman philosopher

          2. Good God, has it come to this. Everyone in the government is lying and on the take? They are all a bunch of crooks? Well let me make my position very clear right now. I don’t believe a damn word of that.

            The EIA are just people. They are often wrong… and some of them are incompetent. But that does not make them crooks.

            1. Hi Ron,

              Again I agree 100%, the EIA does the best it can with the limited (as in incomplete) data it gets from the states (for the most recent 12 to 24 months).

            2. I take that back, I agree they are not crooks, but I do not think the people working at the EIA are incompetent.

            3. Get real Dennis, I did not say “the people working at the EIA are incompetent”. Read my statement again and quote me correctly the next time you quote me. I said:

              and some of them are incompetent.

              13,814 people work for the Department of Energy. I could not find out how many of them work for the EIA but I would guess about a thousand. Out of that many you are bound to have a few incompetent souls. It could not possibly be otherwise.

              And I could give you examples Dennis. Remember I have been tracking EIA data for well over 10 years now. Just one example, the EIAhas been giving Venezuela’s C+C’s production at exactly 2,300,000 barrels per day for 33 straight months now. Platts, and several other agencies, gives a far more accurate estimate of Venezuela’s production. They could easily check them all and make an educated guess instead of saying their production has not varied one barrel per day for almost 3 years now.

              Now Dennis, tell me again that some of them are not incompetent.

            4. I think that different groups in the EIA responsible for statistics and forecasts on US oil production should have better communication and coordination between themselves.

              The whole system of reporting by oil companies and gathering and processing of information by state agencies should also be improved.

              As regards EIA international oil statistics,
              they are indeed quite poor. Better to use other sources

            5. My personal contact w/ EIA is very small. Occasionally I email a technical question. They come across as being pleasant, reasonably competent.

              I observe the EIA tends to offer a ‘positive’ message. They often ‘stretch’ their analysis (such as reporting refinery volume gains as ‘new fuel’). Their databases have become harder to use. They tend to follow the implicit directions/meet the public relations desires of the fuel industry, to cater to them, much like other reporting agencies such as BLS. This makes sense b/c the agency must deal with the fuel types every day = Stockholm syndrome.

              Because the EIA is not regulatory there is no backscratching/deal making as are found in other US agencies such as DoD, DoJ, SEC, etc. These agencies have become outright criminal: creatures do not get jobs at these agencies unless they are on the take.

              In a perfect world, fully half of the Pentagon would do serious time in penitentiary for accepting bribes/offering kickbacks; the other half would be fired for incompetence. 50/50 crook/incompetence ratio is typical for Federal operational/regulatory bodies.

              My dear ol’ was a government lifer (CIA, FBI, DoJ) and I live in DC metro area … a government company town. There are no real secrets … the corruption is far worse than Dr. Don suggests. Far, far worse.

            6. I observe the EIA tends to offer a ‘positive’ message. They often ‘stretch’ their analysis (such as reporting refinery volume gains as ‘new fuel’). Their databases have become harder to use. They tend to follow the implicit directions/meet the public relations desires of the fuel industry, to cater to them, much like other reporting agencies such as BLS. This makes sense b/c the agency must deal with the fuel types every day = Stockholm syndrome.

              But look what happens when government agencies offer a negative message (e.g., climate data, EPA, OSHA). If a government agency says what some people don’t want to hear, politicians threaten to shut it down.

            7. There can be a ” Read between the line message ” extracted from such apparent errors as Venezuelan production being listed as dead constant.

              That message could be that the agency has to publish SOMETHING to meet it’s own rules but that the data is no good and should be ignored. Think wink wink.

              I have seen this sort of thing happen in jobs I have been on. If something essential is unavailable because somebody dropped the ball, the boss figures out a way to substitute something else he can put his hands on and everybody just overlooks the discrepancy.

              I have seen gravel used to make up a shortage of fill dirt when there was a stockpile of paid for gravel handy even though fill dirt costs a lot less. All the bosses managed to overlook a few loads of gravel being dumped in a place that called for fill dirt.

              This sort of subterfuge can more easily managed than changing the rules or strictly complying with them.

              Printing nothing, leaving a blank spot, would upset too many anally retentive bean counters upstairs someplace in the energy department. The computers would spit out error messages due to a lack of an entry in that cell in the spread sheets etc.

              I am not saying this IS the correct explanation but rather that it MIGHT be.

              There is plenty of ”wink wink ” to go around these days.

            8. At the risk of posting this on my iPhone and no idea where in thread we are at….I’ll chime in.

              People who can write complex mathematical models, use very complex software and have decades of domain experience in areas like oil production are either extremely expensive consultants or they will be working in the money making part of the business. They are extremely rare and will not work for peanuts.

              Forecasting in many industries is a regulatory requirement not something businesses or governments want or care to spend money on.

              They do it because they have to. They will get fined if they don’t produce something.

              The kid that just graduated college may be the only person that understands the software to create the model. And that kid might be the only person with the time to produce the results.

              Seen it with my own eyes.

            9. Friend, somewhere in storage I keep a booklet showing a ten year forecast of Iran’s oil production, released in September 1979. I used it to educate my bosses about what I call discontinuities.

              However, I will add that we do have very complex models which try to predict future performance for up to 30 years. When I was supervising the engineers running the models I didn’t bother with the details (I didn’t know the pull down menus), but I knew more about the model’s guts than most people. And I didn’t allow new engineers to start learning the forecast model until they had at least two years’ exposure to our reservoir models.

              I made one exception to this rule, with a young man who wanted to prepare a basic model for his thesis. But he was number two in his class and I wanted to give him unique skills to help him move out of Venezuela.

              I don’t know about all other companies, but I’ve observed that the better candidates to become forecast modelers are engineers with field, reservoir engineering, and facilities projects backgrounds. Teaching them the commercial side is fairly simple. But a commercial type can’t grasp the oilfield or a large project.

              Another data point: I believe the people running long term forecasts for Exxon are all experienced engineers who receive commercial training on the job (I worked with them in joint projects several times).

            10. Hi Ron,

              I stand by my statement that I do not think that some of the people at the EIA are incompetent. You can say that, we do not always agree.

              Edit: To be clear I am saying that I do not think that any of the people at the EIA are incompetent. I think their resources are limited and they are doing the best they can.

              The data from Venezuela is not very good, but for 2011 to 2014 (annual data) the C+C+NGL estimate by the EIA matches BP’s estimate fairly well (the EIA average for those 4 years is 1.3% lower than the BP estimate.)

              There is no perfect data, maybe there are conflicting estimates from different sources on Venezuelan output and the average over 2011 to 2014 is 2500 +/- 200 kb so the 2500 kb C+C estimate simply reflects this uncertainty.

            11. And I stand by my statement that no outfit in the world can have more than 100 employees and not have even one incompetent person on their payroll. And there are far more incompetent people at the top of the ladder than at the bottom. I think that may have become a serious problem at the EIA. That is the Peter Principle. I think it should be renamed “Peter’s Law” because it always happens.

              I would bet that you have never heard of The Peter Principle

            12. Underfunding of agencies that provide statistics seems to be a pretty deliberate strategy on the part of some industries. They want to cripple the power of government agencies to regulate them. So, they fund elected representatives, and induce them to reduce funding for both statistical and regulatory agencies.

              Those agencies therefore don’t have the manpower to collect the data needed to develop good regulatory policies, or the manpower to actually enforce them.

            13. Hi Ron,

              No I had heard jokes about the crap floats to the top. My reading of the webpage you linked to would suggest that nearly every employee that has remained in their position for 4 years or more is incompetent because they would have been promoted if they were competent. So basically only recently hired or recently promoted people in any organzation are competent according to my reading of the Peter Principle. Do you really buy that?

            14. Dennis, when The Peter Principle first came out in 1969, it stayed on the New York Times nonfiction top ten list for many weeks. I cannot do it justice in one paragraph so I won’t try. But yes I buy it.

              The link is to the book, not the article. The book is still in print and a new edition comes out every few years. It explain a lot about why things are so screwed up. No, not all top positions are filled by incompetent people but enough of them are as to explain why things always go wrong.

              Dennis, if you just think for a minute about all the companies that have gone out of business because of stupid mistakes by their CEO, you will understand The Peter Principle. I worked for one such company for 10 years, Digital Equipment Corporation. The CEO thought mini computers would never replace large mainframes and refused to even consider making them.

              But I can name others, Circuit City did not even start selling computers until Best Buy had overtaken them and they were near bankrupt. Then they tried the same thing as Best Buy but way too late. And I could name others. Think of K Mart, Big K, W.T. Grants. They did not even see Sam Walton coming until it was way too late. They could have done the same thing Sam did but were just too incompetent to see what was working until it was too late.

            15. Hi AlexS,

              Where do you think the best “free information” is available on International C+C output? BP is good, but is only annual data and includes NGL in oil production data.

              If one uses EIA NGL data (the only such data available for free that I know of) to get an estimate of C+C output from the BP data, it agrees pretty well with EIA data.

              All other agencies that offer free data such as the IEA and OPEC follow only total liquids for World output.

              The JODI data is incomplete and pretty painful to work with to get an estimate of World output.

              The EIA data for C+C World output is the best we have available. If you want to follow total liquids, you could use other sources, but I have no reason to assume those sources are any better.

            16. Dennis,

              Yes, the EIA is the only source of data on C+C, NGL and other liquids production for all countries. And you get this data in excel format. But, unfortunately, in some cases this information is not accurate.
              So if you can get the numbers for a particular country from other sources (national agencies, JODI, etc.), I would prefer those alternative sources. The IEA data is also useful, as most countries do not produce large volumes of NGLs, and the share of NGLs in their total liquids output is fairly stable.

            17. Hi AlexS,

              Too much work for me, how do we know how much NGL various countries produce (from the EIA? and can you believe those numbers).

              How do we know which numbers are correct?

              The EIA data is fine, there is no perfect data.

        3. Dr. Don: The banks “lost” about a trillion dollars in home loans. But, who got the money that the banks lost? Your neighbors who borrowed more than there home was worth and then who were unable to pay it back, got most of the money. But, the bankers did not get up and go to work saying “how can I bankrupt my bank and lose my job? I know, I will just give away money to homeowners who will not pay it back.”
          No, they got caught up in the idea that in a couple of years that the house would be worth more than the loan, so there was no problem in their delusional eyes. In the meantime, the commission income from the loans helped them personally. And the US government asked JP Morgan to buy Washington Mutual and bail them out. So they did and then the US government fined the JP Morgan bankers for the excessive loans that Washington Mutual made. And, Bank of America bought out Countrywide Financial, and then B of A bankers got fined for the bad lending practices of Countrywide. If you married someone and it turned out that they had committed a crime before the marriage, do you think that you should go to jail for their crime?
          But the key thing to remember is that most of the money that the banks lost, was money that went directly into the pockets of homeowners.

          1. Clueless ,

            Sometimes you flat out nail an important point that everybody else seems to miss entirely.

            It would be immensely helpful if every body who chatters on endlessly about debt would try to think of it in the same way a chemist or physicist thinks of a physical process…

            Money or assets are NOT ACTUALLY lost -except in a nominal sense – when a debt goes unpaid. In reality what happens is that the OWNERSHIP of the assets or money involved is defacto transferred to the debtor by the creditor.The debtor gains. The creditor loses. The number of chips on the table remains the same.

            This is painting very fast with a very broad brush of course. The loss is real enough to the creditor and the gain is apt to be fleeting for the debtor- but when a debtor lives high on the hog and goes broke, the courts cannot retrieve the good times. They are gone as surely as the fishing trip took last year, as surely as the fine meals charged up at nice restaurants with the gold card.

            When an entire segment of a society lives on excessive debt, the people on the receiving end get richer, the people on the tax paying end get poorer. I know many people who get government pensions and bennies who have done easier, less stressful jobs for less hours than the people who pay those pensions – out of true productive work.

            I have a good friend who has been paid a couple of million bucks over the years to serve as a ”housing advocate” for poor people in the city of Richmond. In that entire time he has never created or contributed to the creation of a single square foot of decent affordable housing- whereas I myself at different times for short periods worked for less than half the money on a per day basis without benefits– actually renovating run down houses.

            My personal attorney is a good friend and usually charges me peanuts in the form of beer and steaks for dealing with minor stuff such as a real estate closing. But his typical client pays thru the nose for the same service. There is not really any justification for his being able to charge so much- his gofers do just about all the work involved in routine cases.

            My dentist apparently nets about four hundred bucks a day for supervising three hygienists who do nothing except clean patients teeth -EACH. This is on top of what he earns himself of course doing actual dental work.

            It’s a darwinian world folks. Some of us are winners. Some of us are losers.

            The people who get away with not paying debts are winning, at least temporarily.

            Of course some assets do remain in the case of bad debts. The house can be foreclosed, the car can be repossessed. But the fast broad brush tells the true story as surely as the wheels of justice grinding slow but exceeding fine.

            1. Most people don’t understand money creation and destruction. Just to summarise. 95% of money out there is just a set of numbers stored on some leger somewhere on a computer nowadays. Money is created whenever a bank makes a loan, buys an asset, pays for goods and services etc. Money is destroyed (deleted) when loans get repaid and interest payments are paid. Banks try to balance their books unless the money supply needs expanding or contracting. The government usually does this through the setting of base interest rates.

              If a debtor cannot pay back a loan, they go bust, then the creditor has to take the hit. If that creditor can’t pay it, they go bust and their creditor takes the hit etc. all the way down the line to the lender of last resort – the central bank. Ultimately central banks can engineer inflation whereby the currency gets devalued along with debts and savings. Eventually debt/GDP comes into line. PS I’m with Ron with this; all these conspiracy theories are doing my head in. Sloppy and lazy thinking in my view.

            2. Ed, If you have not read “The Creature from Jekyll Island” about how John D. Rockefeller and J. P. Morgan founded the private Federal Reserve to control our economy for the benefit of the banking cartel, I can recommend it.

          2. Clueless – That response was truely clueless.

            The banks didn’t go bankrupt and few to none lost their jobs over the mortgage bust. Where did the money go? back to where it came from…thin air. And guess what the banks got the house and the home owner, your neighbors, got kicked out and their credit rating trashed.

            Yes they knew full well when they woke up an went to work in the morning that it would eventually crash but they also knew that they would not get hurt and would in fact make money either way it went and that is exactly what happened.

            1. few to none lost their jobs over the mortgage bust.

              FWIW, a lot of people lost their jobs in the financial industry, after the credit crunch.

          3. I’m not sure if the money always went to the borrower. Who does mortgage money go to, if you buy a house? The seller, not the borrower.

            I’d say it often went to the developer who built the house on spec, and sold it to someone who couldn’t afford it.

            1. The buyer who could not really afford the house nevertheless enjoyed living beyond his means for some period of time – So in a very real sense he consumed some of the money.

              AND when a foreclosed house is eventually sold, if it sells for much less than is owed on it, then the buyer gets the difference in real concrete goods- assuming he can afford the house.

              Mother Nature really does not give a flying you know what about efficiency and conservation.

              It helps to think about business in the same way to a certain extent.

              Business is usually thought of as a win win proposition, both buyer and seller gaining but this is not necessarily true at all times.

              A hell of a lot of business is conducted on a win lose zero sum basis. The goods and services simply change ownership rather than DISAPPEARING into some unknown dimension. Of course consumable services and goods do disappear – but into the known dimension of history.

              Nick is dead on. The SELLER gets the money when a mortgage is created. It matters not a whit to the seller what happens to the house or the housing market five minutes after closing. The seller has the money.

              The lender is on the risk hook and assumes the risk on the basis of hoped for future profits.

              Bad debts in very large part simply mean the defacto change in ownership of physical assets or fiat money.

              Anybody who understands the conservation of energy and mass in basic chemistry should have no problem understanding what I am getting at. Every thing winds up SOMEWHERE, nothing is DESTROYED.

            2. Anybody who understands the conservation of energy and mass in basic chemistry should have no problem understanding what I am getting at. Every thing winds up SOMEWHERE, nothing is DESTROYED.

              In terms of the very wealthy, I don’t think it matters if they can’t collect on some debts or if some of their assets decline in value a bit. If they have more wealth than they can spend and, even after some declines, they still have more wealth than they can spend, what their net worth is on paper doesn’t matter much.

            3. The buyer who could not really afford the house nevertheless enjoyed living beyond his means for some period of time – So in a very real sense he consumed some of the money.

              Perhaps. But, I don’t think I’d say the buyer “enjoyed” this living. It was usually a disaster, involving misery, foreclosure, ruined credit, loss of investments in the house (downpayment, decorating, moving costs, etc).

              AND when a foreclosed house is eventually sold, if it sells for much less than is owed on it, then the buyer gets the difference in real concrete goods- assuming he can afford the house.

              The buyer pays the market price. They don’t get anything for free. Of course, that market price may be below the market price for a similar looking home because the buyer is taking the risk of buying something that probably has been trashed.

            4. Over half of the borrowers in the housing bust were people who lived in a house for several years that increased in value. Then they “refinanced” and took all of the equity out of the house. Took the money and bought new cars, boats, vacation trips etc. Then, when the bust arrived, their new refinanced mortgage exceeded the value of the house. But, they had spent all of the money that they took out. In many cases, they had no money invested in the house at all after the refinancing.

            5. Thank you Clueless for saving me the trouble of replying to Nick.I was about to get out a smaller brush but you saved me the trouble.I have known many people over the years who have done exactly as you have just explained.

              My attorney told me just a couple of months ago he borrowed MORE on his house – so far he has borrowed about four or five times the original purchase price. The key to this is that he bought it thirty or forty years ago and has been borrowing in a rising market ever since.

              There are PLENTY of people who live well beyond their means on easy credit, with driveways full of new cars and boats and the house full of new stuff to the point just about every dime coming in is due in payments the day it arrives.

              They manage to hang on, mostly,so long as they don’t lose their jobs or get sick but every year I hear about one or another losing control.

              What this boils down to is people with substantial incomes having no more FREE CASH FLOW than Walmart clerks living on beans and cheap coffee.

              Sometimes this sort of person has assets which are protected from creditors and the courts by various means. One that works pretty well in this state is to have some property not pledged as collateral in the husband’s or wife’s name with that spouse not cosigning.

              Now as to a person buying a foreclosed house paying market price – sometimes yes, in principle yes , but nobody I ever knew who bought such a house thought he was paying as much as he would have paid for a similar house in a similar location.

              In the sense I meant, if the buyer gets a house that cost a hundred grand to build say ten years ago, for only say eighty thousand , with labor and materials up in price since then, he captures the embodied value of that labor and material.

              He gets to LIVE in the house and CONSUME the value of the time element involved even though he might never realize a cash profit. Value can be measured in more ways than one.

            6. Sure. I was talking about the other half of the borrowers: the ones who bought at inflated prices, or bought something they couldn’t afford. In those cases, it was the seller who got the money, and the buyer was left holding the bag.

              It’s worth also remembering that many people who were left “underwater” stuck with the loans (both purchase and HELOC) instead of walking away. They may have consumed based on assumptions that were wrong, but they were and still are paying for that consumption.

      2. PS Ron I don’t believer in any of the crap you mentioned so sorry not to fit your stereotype.

          1. If I understand the Guardian piece says reserves were inflated (which I would say was designed to keep oil prices low if anything) but the latest figures seem to indicate we are hitting a peak which has been interpreted as a conspiracy to inflate prices in the long run (have I got that right). They seem to be completely opposite strategies, and I can’t see EIA have the competency to carry through either of them. Who actually benefits from either position – inside traders?

            1. A price direction desired would be agenda.

              A very good example is what is happening with Greece right now. All this morning there was talk of encouraging progress and Greece capitulating. Then the Euro markets closed. And out came German statements that the Greek proposals were insufficient.

              Oil price direction is an uncertain agenda. There is a mixture of opinion on which direction is desired. This yields conflicting data.

      3. “That analysis is bullshit!”

        You seem upset. If it’s bullshit, why would you respond in a way that makes you seem upset about it?

        1. The analysis is nothing but conspiracy theory bullshit. Dr. Don is saying that the US Government has a central planning agency that dictates to the EIA. And they are demanding that they must cook the books. Implying that everything the EIA publishes is lies dictated by the central planners. That is pure conspiracy theory bullshit.

          Conspiracy theory bullshit always upsets me. I really cannot explain why. Perhaps you can psychoanalyze me and tell me why conspiracy theory bullshit upsets me so.

          1. Mr. Patterson
            You have always struck me as one with impeccable integrity.
            For a host of reasons, I refrain from engaging in anything other than oil/energy related issues on this site.
            However, the fact that two individuals carrying current, valid “Company” IDs, driving a “Company” registered vehicle, were apprehended a few weeks back crossing the border in El Paso with over a thousand pounds of cocaine – due to the vigilance of the local Minutemen, might prompt one to ponder ‘stuff’.

            Haven’t heard of this? Mmmm …. Mebbe it’s just a tin foil hat kinda thing.
            (Journalist Gary Webb – who committed suicide by firing two bullets into his head, must be spinning in his grave).

            1. Coffee, what in the hell are you talking about? We were discussing silly idea that there some “central planning agency dictates everything the EIA does or publishes”. And you bring up an incident where two men driving a company vehicle, were caught with crossing the border with a thousand pounds of cocaine.

              I don’t really see the connection there? But I am sure there is one and I am just too blind to see it. But whatever it is I agree with you. I would be afraid not to. 😉

          2. Ron I think the truth is in the middle. I understand your rejection of what I will call the grand conspiracy: you know, the trilateral commission, the council on foreign relations as guiding hand for the world, and on and on. You read this stuff when you’re a teenager and it is appealing, but later on it doesn’t hold up. Like trying to go back and read Siddhartha after a certain age.

            And yet there are larger forces than affect us all. Corporate, political, the power of the media in the public arena. A few examples of things that raise the eyebrows, some echoed upthread:

            inflation – what is counted and how. John Williams has some of this right. I have tracked a number of personal inflation statistics for many years – from the cost of a newspaper to a movie ticket, six pack of beer, electricity, insurance – my own personal inflation basket, if you will. Most items going up by between 5-10% per year, year after year, while the official stat was 2% and below.

            oil and gas – the decision to start reporting the oil sands in world reserves; the decision to start reporting total liquids instead of crude.

            The changing calculation of GDP.

            Unemployment – the way not-in-labor-force is used. The way people (millions) were shunted onto disability rolls and out of the unemployment stat. Just look at the way the telephone survey is done. Calls go out one week of the month. If you’ve worked one day in that week, you are counted as employed for the month. If you worked (unpaid) in a family business, you are counted as employed. Everything possible is skewed to count people as employed instead of the opposite, to where if you are a poor couple on the bones of your ass, and you decide you have a lawnmower, you’re going to start a landscaping business, you print up some flyers at Kinko’s and you get a few gigs at $25/lawn that month you’re employed. And you’re wife who went to the Kroger and put flyers under windshield wipers, she’s employed too.

            financial reporting – just like a decision on what oil to record as reserves, comes a change in reporting on the national debt. Henceforth we will only report the “public debt” and hence it can still be recorded as less than 100% of GDP. Hell, we don’t even have to update the debt figures any more. For the second extended period the DTS doesn’t even have to get updated (because we’ve hit the limit and are practicing “extraordinary measures”), until some point down the track when another trillion or so $$ will pop onto the radar.

            Any of these are complex topics, but the nut of it is that you’re right. If you’re some mid-level functionary in the BLS, or the DOE, or the Treasury, or the CBO, you’re just doing your job with the framework you’ve been given. Not reporting the national debt this month, okay, mate, we’ll turn ‘er loose when congress reauthorizes the limit. Oil sands are now reserves, okey dokey, let’s remake this table and get it recalculated in time for the next IEO.

            Maybe that first year, a few of us raise our eyebrows. Oil sands, really? But then we accept it and it becomes the status quo. Working one day in the month = employed. Really? Hedonic adjustments to recalculate inflation. Really?

            Since it’s an energy blog I’ll wind up on that. If you heard tomorrow that kerogen was going to be counted as proven reserves you’d probably choke on your coffee. But why not? It’s just a bit of a leap, and we’re already counting bitumen… Why shouldn’t we just count coal for that matter. It’s oil too.

            Decisions get made that defy close inspection. And it makes people clamour over conspiracy. But most people are just doing their jobs the best way they know how.

  3. Hi Ron

    The monthly energy review has US c+c at 9.4 Mb/d in April. Can you define what you mean by a serious decline by June?

    What output level do you expect in June?

    1. Dennis, the Monthly Energy Review has US production up, February to March, by 163,000 barrels per day. That is beyond all reason. I would consider it a serious decline if it is down by 200,000 bpd, in June, from from its December high. But if it is down by a single barrel from December then that will mean the EIA’s Weekly Petroleum Status Report is almost 400,000 bpd too high. And it will mean my guess is twice as close to the actual number as the EIA Weekly Status Report.

      1. Hi Ron, I ignore the weekly status report, those numbers are often bad and never revised. So if I am understanding you correctly, you think 9227 kb/d in December(from Monthly Energy Review) will be the high point and that production will fall to 9030 kb/d by June 2015, is that right? Or do you think that currently US C+C declined to 9100 kb/d in April(since December) and will fall another 200 kb/d to 8900 kb/d by June?

        I will be surprised if we see output below 9300 kb/d in June, but maybe it will be between 9000 and 9300, say 9150 kb/d, if so that is a pretty small decline over 6 months (about a 1.6% annual decline rate). If output declines as you predict, oil prices will rise followed by US C+C output.

        On the near term World C+C peak, I think we will see a temporary peak in 2015 at around 79 or 80 Mb/d (for the 12 month average) by Sept 2015 as you have predicted. If oil prices recover as monthly World C+C output continues to decline in 2015, then a plateau or possibly even a slight rise in output is possible. I think the plateau scenario is more plausible for a year or two with a slow decline through 2020 ( to about 78.5 Mb/d).

        It depends on oil prices and how the World economy responds to the recognition of peak oil (which the mainstream media is unlikely to accept until 2025, even if my scenario is not too pessimistic, and most here will think it far too optimistic.)

        1. Dennis, I meant 200,000 bpd below the December numbers. However I am not all that confident of those it will be 200 k below December. I do believe the numbers will be below December however.

          I don’t see a plateau after the peak in 2015. And that applies even if prices do recover. Remember I called 2015 the peak well before the price collapse. And I am sticking by that prediction. I see only a slight decline in 2016 but increasing by more than 2% in 2017.

          1. Hi Ron,

            You might be right about the peak, but unless oil prices stay low and/or the economy falls apart very quickly, I am confident that the decline will not be as rapid as you predict. We will get to a 2% annual decline (or higher) when the World depression (or worse) arrives in 2030+/-5 years.

            Prior to that annual decline will be under 1% until 2020 and under 2% until 2030 (unless the depression has arrived by 2025), when the depression hits annual decline rates will rise due to low oil prices and a lack of aggregate demand for all goods and services.

            1. We will get to a 2% annual decline (or higher) when the World depression (or worse) arrives in 2030+/-5 years.

              Really now? You are predicting a World depression in 15 years, + or – 5 years. I wouldn’t make such a prediction. Oh I think there will be a World depression, likely in just a few years. But the seeds of that depression are happening right now. 25 to 30 nations are already “failed states” and that number will rise. But my point is the recession will gradually increase intensity and it will be difficult to point to the exact date it began.

              But the decline rate, I think by the mid 20s it will be above 3% average. There will be some years it will be less and some more but it will, by then, be greater than 3%.

            2. Hi Ron,

              If your predictions about the economy are correct, your predictions about oil decline may be correct as well.

              If the World economy continues to grow at 2 to 3% in real terms on average until 2025 (as it has on average for the past 10 years or so), would you still expect an average rate of C+C decline of 3% by 2025?

              There are all kinds of potential scenarios for an oil shock which could cause a sharp decline in oil output, such as a major war in the Middle East or the start of World War 3, I don’t think those are predictable.

              Another possibility is a spike in oil prices (a rapid increase in prices such as a 100% price increase or more in one year) which could lead to a severe recession which is also difficult to predict.

              Once peak oil is reached we both see the economy slowing down and oil output falling, you see it happening more quickly, I think the process will unfold more slowly. The economy will attempt to adjust to higher oil prices and growth will be reduced by the resulting economic disruption, eventually there will be a financial crisis which will cause a depression.

              Hopefully the lessons that J.M. Keynes taught us will be relearned.

            3. Hi Ron,

              You said,

              Really now? You are predicting a World depression in 15 years, + or – 5 years. I wouldn’t make such a prediction. Oh I think there will be a World depression, likely in just a few years. But the seeds of that depression are happening right now. 25 to 30 nations are already “failed states” and that number will rise. But my point is the recession will gradually increase intensity and it will be difficult to point to the exact date it began.

              You say you wouldn’t make such a prediction, and then you predict that there will be a depression in a few years.

              I guess your main point is you think things will gradually get worse and worse, that may be what happens. I think things will get worse without most people recognizing it (much like the lead up to the financial crisis), then there will be a “Minsky moment” where a financial crisis occurs which is likely to lead to a depression. I like the symmetry of a 100 year cycle so maybe a stock market crash in the third quarter of 2029, followed by a 10 year depression (assuming that we choose austerity as the proper course of action).

              If economists relearn Keynesian economics, perhaps the depression will be shortened to 5 years. These WAGS could be wrong by at least +/-5 years for the start date as well as by +/- 5 years for the duration of the depression.

              Hopefully I am wrong and there will be no depression, but at minimum a recession will follow peak oil within 10 years.

            4. Dennis, what I mean is it will not be something that just happens one day that was not there the day before. Something is gradually happening, and I am not sure I would describe it as a depression.

              It is, and will be, monetary problems but a lot of other things also. I believe the next ten to fifteen years will be a lot different than the past ten or fifteen years. But it will not come suddenly, or at least I hope not.

              It is a little like the weather we are having right now. We have never had weather like we are having right now. So dry in California, flooding in Texas and the middle of the country, and droughts all over the world.

              Reservoirs, both above and below ground are going dry, not just in the West but in a lot of other places in the world. The world is slowly losing its ability to feed its people. But it is happening so slowly no one is noticing.

              Thousands of immigrants are streaming out of North Africa every day. They are trying to escape the failed states of Africa. Places like Italy are trying to absorb all they can but now they, and other European nations, are turning them away. There will soon be starving hoards on the beaches of Southern Europe.

              That is what is happening right now Dennis. And it is ramping up so slow few seems to notice. But to borrow a phrase from Robert Kaplan, it is the coming anarchy. And there is no way to stop it.

            5. It may, or will, be anarchy turned inside-out; from the innards of the state back to the outside. Anarchy doesn’t equal chaos. Only by State-anarchists does it. Of course it does if you lose your internal anarchy against the external, the majority. But that’s what happens when the forced stasis of the State im/ex/plodes.

              Failed State seems almost a tautology, and the way some speak, it is as if the State is desired/necessary; the crowning glory of civilization. Well, ‘crowning’ (oligarchy/monarchy) sure…

              There is some distinction made between the State and civilization, but in any case, I suspect a difference in kind where BAU EV’s, renewables, roadways, skyscrapers and whatnot become bizarre, out-of-place ‘stranded assets/ghosts/abandonments’ in an exergy world that changed from a grape to a raisin.

              (Behold, a thought experiment where someone tries to build out something relatively small-scale, like, say for their home and surrounds, and each time they build an element of it, they disable a part of their body, so their buildout becomes increasingly harder until they are completely disabled or dead [‘raisined’] and so their buildout becomes useless as their little world changes from a grape to a raisin.)

              This system that some of us are looking to smooth transition to, again, is unethical: BAU/crony-capitalist plutarchy. Roll that around in your mind. Hold it close to your heart. It is not the kind of system you look to for that kind of thing, but you are doing it anyway and talking about it on here. And you are (suggesting) playing Russian Roulette with the rest of your– and my– world and planet to boot. You know who you are.

              So there are not only problems from various technical/technological, strategic, financial, political, ecological, etc., standpoints, but also from ethical ones. As you sleep soundly at night, with a clear conscience. Clear, but corrupt.

            6. 25 to 30 nations are already “failed states” and that number will rise.

              Do we know whether that number is higher than it was 20 or 40 years ago? I’d be really curious to see a real analysis over time.

            9. not to mention the US of A

              but then again I guess you think everything is hunky dory still.

            11. Ron,

              Two thoughts:

              That list is just a ranking of countries from best to worst. There’s not clear dividing line that says a country is “failed”. Some of those are just poor.

              Which leads to the bigger point: how do we know things are getting worse? Many of those countries were even poorer 25 or 50 years ago. Most of them are in Africa, and Africa as a whole is growing economically, and has been for decades.

            12. Nick, just poor is not a definition of a failed state.

              Failed States

              Failed states can no longer perform basic functions such as education, security, or governance, usually due to fractious violence or extreme poverty. Within this power vacuum, people fall victim to competing factions and crime, and sometimes the United Nations or neighboring states intervene to prevent a humanitarian disaster. However, states fail not only because of internal factors. Foreign governments can also knowingly destabilize a state by fueling ethnic warfare or supporting rebel forces, causing it to collapse.

              How do we know things are getting worse? Are you kidding? Where was ISIS 10 years ago. What about Syria? Or Libya? Or Ethiopia? Or Eritrea? And what shape was Greece in just a few years ago. Is the world debt increasing, both public and private? Will that debt ever be paid. If private debt cannot be paid people go bankrupt. And private debt is increasing exponentially.

              And that is just the economics. What about ecologically. Well, let’s not get into that. I would have to write a book and tell you how that has gotten worse in the last few years… and last few decades.

            13. That definition is too broad. A civil war doesn’t mean much unless neither side wins. In Somalia, one side has been about to win (twice) and the USA intervened (twice). So that’s a failed state sustained in a failed state by USA foreign policy. I think Syria may be similar.

              On the other hand, I’d say Haiti is a failed state.

            14. If Somalia is not a failed state then there is no such thing as a failed state and never will be.

              There is no one or two sides in Somalia. Somalia is ruled by warlords, each with their own territory.

              That being said, there is the Global Policy Foruf definition of a failed state, then Wiki has a similar definition, then we have the Fernando definition. I have no idea what that is but I think I will stick to the Wiki or the GPF definition.

            15. Ron, Somalia is a failed state because on two occasions the side that was about to win was rolled back by USA interference. These civil wars can have pretty nasty actors, but the eventual end point isn’t necessarily “failed state” unless outside interference stops one side’s victory. In Somalia’s case the two would be winners were the Habr Gidr led by Mohamed Farah Aidid (of black hawk down fame), and the other case was the Al Shabab Muslim militias.

              http://www.bbc.com/news/world-africa-15336689

              One could argue Al Shabab is a Bush creation. In 2006 the Islamic Courts had taken control of Mogadishu, and the USA financed an Ethiopian invasion.

              This Muslim courts were eliminated and a tougher, nastier and much more radical offshoot emerged in southern Somalia. And they won’t go away as long as the USA is financing an invasion force of African Christians which props up a puppet government.

            16. Fernando, Somalia is a failed state regardless of the cause. Your assessment that it was “caused by the USA” questionable, but regardless that is beside the point.

              And your assessment that Somalia would be a successful state if one warlord had just been allowed to annihilate the other is laughable.

            17. That’s how states have been built. You call them warlords, they call themselves clan leaders.

              Try reading a detailed Spanish history to see how Spain came to be. It was built by warlords who called themselves “King”.

            18. Every state is a failed state.

              Saying which states are failures is just splitting hairs.

    1. I made this point myself weeks ago here in this forum.- that the mass media are swallowing a phony definition of oil hook line and sinker..

      I suppose we shouldn’t expect any better. Advertising supports the msm and the editors and reporters can’t afford to piss off their advertisers to too great an extent. And they can’t afford to piss off their OWNERS to any real extent at all.

      There is hardly any such thing as an INDEPENDENT newspaper or magazine anymore. Just about all of them belong to some sort of corporate conglomerate or institutional fund of one sort or another.

      The small number of people and organizations that are publishing the truth are drowned out.

      1. I want to add to my 12:15 comment that I agree with Ron that the official statistics are off in the short term by significant amounts but that the long term statistics are very reliable.

        So I am not buying into the conspiracy theories being debated here so far today- not to any substantial extent at least.

        There need be no ACTUAL conspiracy for the msm media to just gradually change the definition of oil from what used to be more or less universally accepted by both industry AND media to a new ” don’t worry , be happy” definition that supports the business as usual scenario which in turn keeps the advertisers and owners happy. It keeps Joe and Suzy Sixpack happy too.

        I am still hoping to invent the new word or phrase that will make me famous which describes this sort of thing. It LOOKS like a conspiracy and it has all the outer hallmarks of a conspiracy- but it lacks the main ingredient- the players involved getting together secretly and forming and executing a plan.

        I do believe that the larger central banks have far more power than most people realize and that they are far more under the influence of the big corporate banks than is generally recognized by the public.

        The fact that the managers of the large banks all escaped going to jail and even getting fired when caught cheating on the grand scale tells us all we need to know about how powerful bankers are.

        Furthermore anybody who bothers to investigate will quickly discover that the regulatory agencies which supposedly regulate the banks are staffed almost exclusively at the top levels with former and to be again big bank executives and or megarich folks.

        Incidentally I forgot to mention earlier that after hanging out in this forum and the old TOD etc so long I can’t even remember who to credit with first pointing out the discrepancy of the definition of oil. Jeffrey Brown for sure wrote about it earlier than most others but he may not have been the first one .

      2. Mac,

        I think most people and businesses not directly involved in the production, refinement, or sale of crude oil just aren’t that interested in just what counts as oil.

        Most people are concerned about price – the price at the pump, the price to fuel a fleet of trucks, the price to manufacture petroleum-based products.

        I agree with you on your other points. The era of local muckrackers, well-funded investigative journalists, and truly independent news is at an end. The major media conglomerates control most of them. There are still a few independent magazines and newspapers, or freedom enough that they might as well be independent. The rise of the internet has replaced analysis and journalism with a flood of confusing, often contradictory information; information that is more likely to confuse and demoralize than inform and empower.

          1. If you use half the cargo space to mount a pressurized fuel tank and rearrange the route so as to have half a day to fill the tank I suppose you could run a tractor trailer cross country on ethane. 😉

            Hopefully we won’t be running trucks long distances very often in the future. The trailers will be loaded on flat cars and pulled from city to city by fully electrified locomotives powered by wind ,sun, coal, and maybe some new nukes.

            Long distance trucking is a dieing industry barring the invention of a miracle battery or a miracle biofuel. I am now comfortable with the idea that battery electric cars can and will mostly displace the ice car and that they will do so over the next decade or two barring a fast collapse of business as usual.Cheaper batteries and more expensive gasoline virtually guarantee this transition.

            ICE cars built twenty years from today will most likely be downsized and lightened, and the engines and drive lines sufficiently improved, so as to get close to double the miles per gallon of current day cars. If engineering smaller, lighter and sufficiently fuel efficient cars to keep the wheels of BAU turning proves impossible then Leviathan will step in to solve the fuel shortage problem in other ways.

            One way might be to impose a universal much lowered speed limit. Dropping down fifteen or twenty mph does WONDERS for fuel economy in a modern car.This would of course have the additional effect of encouraging less sprawl and more localization of jobs and shopping etc.

            1. Long distance trucking is a dieing industry

              Yeah, I think trains are the future of land freight.

              barring the invention of a miracle battery or a miracle biofuel.

              Don’t forget, there’s a difference between “optimal” and “viable”. You could certainly put an affordable 6 ton battery in a 40 ton truck. It would reduce capacity by 15%, but it would give you a good 750 mile range. You’d have to swap batteries at “gas” stations, but for a fleet application like this, that wouldn’t be a big deal.

              Similarly, there’s little doubt that we could produce synthetic fuels from renewable electricity for less than $10/gallon. That’s probably not competitive with electric trains, but it would work if desired for reasons of route and scheduling flexibility.

            3. Hi Fernando, If you mean how it would work in the sense of manufacturing the fuel, I don’t have any real idea. But maybe wind and solar power will get to be cheap enough – eventually – that it could be done for ten bucks.

              Doubling or tripling the cost of fuel to run a truck can be a killer or a minor problem , depending on what you are hauling and how far. Paying an two or three hundred bucks a day to deliver small high markup items by the thousands to convenience stores would mean the delivered cost of a candy bar would go up only a penny or less .

              The price of a load of gravel delivered a good way from the quarry would go up substantially.

              I really do believe in peak oil myself and believe that I have a good shot at living to see well off people driving super small plug in hybrid cars that get two hundred or more miles per gallon equivalent between a small but powerful battery and a lawn mower sized diesel engine.

              A two seater fore and aft arrangement is going to be the hot seller in a couple of decades.Most of the buyers will run most of the time on the battery.

              IIRC somebody has a Volt with twenty thousand miles on it already that has used well under a hundred gallons of gasoline so far, given that the car is used for local deliveries and is plugged up whenever he parks it at the store.

            4. Seems to me it’s more practical to make hydrogen and leave it as it is to feed a fuel cell? airplanes can be fueled with biofuels.

              I think we got too many weird ideas being floated around which represent rather inefficient steps.

            5. In the very long term it will make sense to produce *some* liquids – maybe 15% of what we produce now, for aviation, long distance water freight, seasonal agriculture, a little personal transportation.

              These people claim 70% efficiency, which is pretty good. Might make it a little more widely useful than otherwise.

              A pilot plant in Dresden has started production of the synthetic fuel Audi e-diesel using water, CO2 and green power—i.e., power-to-liquid (PtL). After a commissioning phase of just four months, the research facility in Dresden started producing its first batches of high‑quality diesel fuel a few days ago. (Earlier post.)

              http://www.greencarcongress.com/2015/04/20150421-audi.html

              http://bravenewclimate.com/2013/01/16/zero-emission-synfuel-from-seawater/

            6. I think pretty near everybody here is missing two dominant facts re future.

              1) Biggest. Fossil fuels are poison, and soon something is gonna jam that bad tasting but inescapable fact down our collective throats so hard we won’t be able to spit it out. Then, big changes in pricing, and ff’s are history.

              2) There are HUGE opportunities in efficiency and sustainable energy sources that we are ignoring because we don’t have to look at them–yet.

              When we do have to look, we will see. Then, ff’s are history.

              And, personal guess. All of above will happen far faster than anyone here thinks– but me, of course.

              And, I am starting to think, the Chinese.

              And over there, Amory Lovins and offspring. BTW, his bunch are in a conspiracy with the Chinese.

            7. I think demographics and a shift in money/power will hit a tipping point and renewables, distributed generation, and energy conservation technology will be the hot trends in DC.

              Fossil fuels and everything tied to them is last century. These are not growth industries.

            8. Mac, I think ethane would be loaded and stored in the liquid phase at a very low temperature. But I’m not proposing ethane. I meant that one does have to worry about what kind of molecules are coming out of a well.

            9. I got it and that is why I put on a smiley face.

              Now as to whether you can build an affordable low temperature fuel storage system that will withstand the vibration and shocks and so forth and still last a good many years mounted on a truck – that is a tough one. Maybe it can be done.

              Most of what I read indicates that simpler large pressure tanks are more apt to be practical- and there is plenty of room on trucks for them if the intended cargo is dense or heavy. Think steel , concrete, lumber.

              A very large fuel tank or tanks would be a big problem if the truck is needed to haul potato chips or other light high volume cargo.

              Such tanks could be standardized and switched out pretty fast at truck stops using fork lifts or dedicated lanes with automated switching machinery. This would eliminate the time lag involved in filling one on the truck and also eliminate the need for very large storage tanks on the truck stop premises.Small interchangeable tanks could be efficiently filled on a steady basis.

            10. Don’t forget batteries: they’re already cheaper than oil. Charging time is the problem for trucks, but this kind of swapping would fix that.

            11. Well, I was thinking of an 8000 psi working pressure tank kept at 35 degrees F. That keeps ethane as a liquid. Like I wrote, it isn’t very practical.

    1. Sorry – I messed something up there and I don’t have an edit option.

      1. Not for the first post I don’t I do for the second- I got a message saying I’d posted twice which might have done something to the edit function. Can you delete the string please?

  6. Ron,

    Yes, there is a great deal of fraud taking place in the top banks… mostly U.S. banks. Seems as if the United States ranks number one in the world for the amount of fraud, corruption and crime taking place in the largest banks in the world. I recently wrote an article on this: http://srsroccoreport.com/must-see-chart-major-bank-fraud-adds-up-to-a-lot-of-silver/must-see-chart-major-bank-fraud-adds-up-to-a-lot-of-silver/

    Turns out that the top banks paid more than $128 billion in fines and settlements since 2008. Thus, the fines just paid by these banks could pay for total cumulative world silver mine supply from 2008-2014.

    BLANK OF AMERICA (that’s correct, its BLANK of America), was awarded first place by paying $61 billion in fines, while JP Morgue’n came in second, by coughing up $31 billion and CitiCorpse, dead third with $10 billion.

    The amount of leverage in the U.S. and Global financial system is way beyond anything sustainable. I imagine when the FAN FINALLY HITS THE SH*T, there will be no plan B like there was in 2008.

    steve

    1. The trust horizon with the current system based on accounting fraud is almost gone.

      Even the bewildered herd knows something is wrong.

      1. Dave,

        This is true, indeed. My wife and I sold our business back in 2006 and moved out west in 2007 to a small ranching community as I knew the system was going to fall apart. And fall apart it did. What I and most in the precious metal community didn’t realize, is how long they could prop up the markets with Trillions of Dollars in currency swaps and monetary liquidity.

        What will be an even more surprise is the rapid speed in which the system implodes. Who knows how it unfolds, but it won’t be pretty.

        I go to the local truck stop to grab a bite where the farmers and ranchers meet for coffee. I sit in a table next to them and listen. One old guy said, “There’s no more gold left in Fort Knox, the damn Chinese got it all.” I almost cracked a laugh when I heard that. Then went on to say just how screwed up everything was and the Dollar was going to be in real trouble.

        Again… Farmers and Rancher….LOL.

        steve

        1. I was a intellectual, but I’ve come to realize I’m actually a very well educated farmer.

          Just returned from a trip to Montana.
          It was a eye opener. Fat, well armed people, watching Fox news and eating off the industrial food system.
          Even the boys riding fence had a belly hanging over the belt buckle.
          But the fishing was good, the people friendly, and they all have a story as to what is wrong– even if the myths needed a bit of critical thought.

          1. Fat, well armed people, watching Fox news and eating off the industrial food system.

            I think government has done far more good than bad, so I fall to the left of center.

            But I have grown so tired of the complaints that I have been making a dare while Obama has been in office (since to some people he is the anti-Christ).

            I dare the anti-government folks to end all Federal government contracts, all Federal government jobs, and all Federal entitlement programs.

            It will never happen. The economy would collapse and no politician would ever push for it. The politicians who say they want to cut the government money are generally just doing so as political theater. They say it, but don’t really mean it. But I dare them to actually do it.

            People generally seem to want the money going to other people to stop, but they don’t want the money they receive to stop.

            And if you want to save the Earth, then killing the American economy is one way to do it. Take away everyone’s money and the big houses and the big cars and the industrial farms and most everything else goes away. In other words, the “kill the government” types (and there aren’t any, really) are closet environmentalists.

  7. But if there are conspiracies, you might want to at least coordinate them.

    On the one hand, we have people saying the amount of available oil has been inflated. So therefore we don’t need to worry about running out of it.

    On the other hand, we have people saying climate data is wrong to convince us to use less carbon energy sources.

    Now, since this is a peak oil forum, I’d say most people here believe oil will become scarce pretty soon and therefore there is no particular reason to commit fraud to get us to use less because the reality will hit us soon enough as it is.

    Inflating oil reserves so that we’ll continue to use more of it doesn’t seem to make much sense. But perhaps the powers-that-be know we’re running out and they are amassing their wealth so they can protect themselves from the masses when society falls apart.

    I’m not given to conspiracy theories because I think it takes too much coordination on a huge scale to pull them off. And I rarely see the logic in why there would be a conspiracy to do something in the first place. I think we get enough bad policies just from the nature of politics-for-sale. No need for the extra step of a conspiracy.

  8. Reference Venezuela: Investment are very negative, oil production is likely to drop. The black market rate is close to 460 bolivars per USD. Bloomberg’s announced they think there’s a 40 %+ probability of bond default in 2016. Inflation is running at over 100 %. Foreign reserves are down to $12 billion USD. The government owes over $15 billion in unpaid bills (not bonds, bills such as the money they owe to food and spare parts suppliers). They are trying to sell refineries and whatever they can move to cover the shortfall.

    Airlines are canceling service to Venezuela. Food shortages continue, medicine shortages are acute. Corruption seems to prevail, crime has escalated, education is a disaster (now they are excluding high school students with straight As from entering university, if they come from the wrong family background (meaning from families opposed to the regime)).

    They seem to be losing some friends, but latinamerican governments have demonstrated they are not worried about human rights abuses or the destruction of democracy. The international left seems to be a little less prompt to support the Maduro regime, but quite a few continue to show pretty good moral flexibility.

  9. I voted for Obama. My vote was dictated by McCain when he started singing “Bomb Iran” and picked Sarah Palin for VP. I had consulted in Alaska and heard first hand about her record. As for other elections, after seeing the way Bush blundered with full GOP support I decided I couldn’t vote GOP. And I’m probably going to hold my nose and vote for Hillary (yuck). But I’m willing to vote for Rand Paul, I suppose.

      2. Be honest now, is this why messages that explain the conservative viewpoint on certain matters don’t go through? I wouldn’t hold it against you, it’s your blog and you can have a leftward bias on it if you want.

        1. But I’m not leftist. I just dislike the GOP. They are terrible. By the way, my comment appeared in the wrong place. I was answering a comment somebody made about Obama. I don’t think Obama does a good job, but McCain would have been worse.

        2. Russell, Bullshit! Yes I do delete some comments, about one every two or three months. I delete people who say things like: Global warming is a communist plot and everyone who says it is real is a communist or other shit like that. If something sounds like it is from an absolute idiot then I delete it. The last post I deleted, before today, was about three or four months ago.

          Then today I deleted a post from some idiot who said: anyone who voted for Obama should have it tattooed on his head so we would know who fundamentally transform America into a socialist place I can’t recognize anymore.

          I do not suffer fools gladly.

          Edit: And that’s why Fernando’s post appeared in the wrong place. I deleted it just as he was responding to it.

          1. Relax, I was just pointing out I don’t usually jump in explaining my voting record. I answered the guys comment because I thought it was pretty extreme.

          2. “Then today I deleted a post from some idiot who said: anyone who voted for Obama should have it tattooed on his head so we would know who fundamentally transform America into a socialist place I can’t recognize anymore.”

            LOL!!! He forgot to add “rentier” to the “socialist” description, as the overwhelming share of policies implemented since the increasing deindustrialization and financialization of the US economy since the 1970s-80s has benefited the top 0.001-1%, and indirectly the next 5-9% professional middle class, most of whom today are employed in gov’t, “illth” care, “education” (?), and financial (dis-)services, sectors that now make up an equivalent of 54% of GDP and are now a net cost to the rest of the economy.

            But the process started lo-o-o-o-o-ong before Obama/Obomba/Obummer, as well as before Dumbya and Slick Willy. They were all the Rockefeller-Rothschild int’l banking syndicate’s star chamber-chosen and -vetted “candidates” who merely presided over the process as CEO of the emergent, and now firmly entrenched, militarist-imperialist, Anglo-American-Zionist, rentier-socialist corporate-state (I use that to be descriptive rather than disparaging).

            It is what it is.

            For the record, I have not voted for CEO of the Anglo-American-Zionist corporate-state since the 1980 “selection” when the US electorate–my dear friends and yours–“elected” a former Hollyweird actor, FBI informant, unemployed corporate pitchman, and Gov. of Californification.

            I am persuaded by the logic of the late, great George Carlin not to delude myself for a moment that my vote matters to the top 0.001-1% owners of the corporate-state:

            https://www.youtube.com/watch?v=qxsQ7jJJcEA

            If you vote and elect dishonest, incompetent people,
            and they get into office and screw everything up, then
            you are responsible for everything they have done. YOU
            caused the problem. YOU voted them in. YOU have no
            right to complain.

            I, on the other hand, who did not vote, who did not vote,
            who, in fact, did not even leave the house on election day,
            am in no way responsible for what these people have done;
            and I have every right to complain as loudly as I want about
            the mess YOU created and that I had nothing to do with.

            Furthermore, the Cold War-era, British TV mini-series with another late, great performer, Patrick McGoohan, from the late 1960s captures as well as any the mass-social delusion associated with “elections” in the episode entitled “Free for All”:

            https://www.youtube.com/watch?v=XP_WWjD7P5o

            Where am I?
            In the Village.
            Whose side are you on?
            That would be telling?
            What do you want?
            Information . . . information . . . information!
            You won’t get it.
            By hook or by crook, we will.

            Who are you?
            The new Number Two.
            Who is Number One?
            You are Number Six.
            I am not a number! I’m a free man!
            HA HA HA HA HA HA HA HA HA . . . !!!

            “Be seeing you.” 🙂

            Pat L. Paulsen 2016!!!

            https://www.youtube.com/playlist?list=PLA6623E0ED7DC1B1C

            https://www.youtube.com/watch?v=jHYQ0XiMB34

            https://www.youtube.com/watch?v=F9do8A15AWU

            Voting for the candidates “selected” by the top 0.001-1% for the CEO of the corporate-state in 2016 is to “say this about that”: you didn’t vote for Pat Paulsen!!! 😀

            4. Sanders intentionally chose to run as a Democrat in order not to have a Nader situation. I believe his goal is to expand the political discussions rather than play spoiler.

            1. You are saying that it is a common conservative viewpoint that global warming is a communist plot? And that everyone who believes it is a fact is a communist… is a common conservative viewpoint?

              If you really believe that then I know a lot of conservatives that would call you an idiot.

            2. Very common, just google “global warming is a communist plot”, browse conservative news websites, listen to talk radio. I always assumed one of the reasons Republicans reject climate change is to satisfy the part of the base that has this opinion since based on my own experience these are some of the people most likely to vote in the Republican primaries/nominating contests.

            3. It is a matter of definition. The term conservative which has a proud tradition in this country that just as the term implies should be a natural counter-balance to the liberal impulse has been co-oped by a cult called ‘movement conservatism’ that is populated primarily by lunatics. You are correct that in this asylum called movement conservatism absolute moon bat crazy bullshit like the notion that Global Warming is a communist conspiracy is quite common currency. And this state of affairs is at its heart a tragedy for true conservatives who believe in things like financial responsibility, conserving natural resources, slowing down the pace of social change in favor of tradition etc. Our political dialogue would be much healthier with a not crazy conservatism. But right now we don’t have that. Right now if you don’t embrace the entire crazy train of whacked out fruit loop fever dreams you are excommunicated from the tribe. It is really a sorry spectacle.

            4. And this state of affairs is at its heart a tragedy for true conservatives who believe in things like financial responsibility, conserving natural resources, slowing down the pace of social change in favor of tradition etc.

              I’ve always been in favor of that.

              The person who posted that she is waiting for the conservative majority to take over again has to realize that if the Republicans keep promoting the crazy types rather than someone like Eisenhower, then they aren’t offering a decent option.

            5. Ron,

              Climate denialism is much more popular among Republican voters and self-identified (American) conservatives than it is among Democrats and liberals.

              Such denialism can take many froms, from the more sophisticated (the models aren’t correct, so what’s up?) to the conspiratorial (it’s all big gubmint trying to get more powerful and control our lives and give money to renewable companies like Solyndra) to the nihilistic (who cares? I’ll be dead) to the absolute fringe (it’s a plot by NWO or it isn’t happening at all).

              It’s not a surprise that when you have the leaders and talking heads casting doubt that the rank-and-file will come up with all sorts of crazy shit that sometimes seeps into the mainstream.

            6. The dumber we are collectively as an electorate/polity, the easier it is for the Outer Party technocrats, corporate managers, and public intellectuals to “manage” beliefs, expectations, narrow the spectrum of issues to “debate”, and achieve the outcomes that serve the 0.001-1% Inner Party.

              The larger the society and the more “free” it is, the more the elites and their surrogates must be diligent in devising evermore sophisticated means by which to manage the conditions under which we are said to be “free”.

              TV, films, “news”, “education”, advertising, PR, “selections”, “corrections”, war propaganda, and now “social mania” are all part of the highly effective means of social control and managing the conditions that “allow us” to be “free”.

              Add up the number of people in prison (too many for drug “crimes” to keep them off the streets and off the unemployment rolls), serving in the imperial military (largely for economic reasons to avoid unemployment/underemployment and poverty), and on the many gov’t transfer/income-support programs in the US.

              “Free” ain’t “free”.

          4. Ron, why do you seem so upset in almost every post you make? Chill out, dude. When you post angry, it makes people think you’re hiding something or not being honest.

            1. When you post angry, it makes people think you’re hiding something or not being honest.

              Ian, now you are being totally dishonest. Over a year I post thousands of posts and only a tiny few of them do I get upset. But accusing me of not being honest does upset me. Where am I not being honest? What might it be that I am trying to hide?

              And why are you attacking me instead of my arguments? That is the question Ian, why do you attack the man instead of his argument? That makes people think you have no argument and must revert to ad hominem attacks.

              I delete three or four posts per year. Russel accused me of deleting messages that reflect a conservative viewpoint. That is a goddamn lie. I delete three or four posts per year and only because they are obviously posted by an idiot with no reason.

              Now you attack me instead of my argument. Telling people on this blog that I am hiding something or not being honest. What does that say about you Ian? It tells me that you are incapable of making a logical argument and must revert to ad-hominem attacks.

            2. Hi Ian,

              Ron calls it like he see’s it. I find it refreshing.

              The implication that Ron hides anything is ridiculous.

              Note that your comment is still here.

              As far as I have seen very few comments get deleted, and I read this blog a lot.

  10. Question for those who have more information/knowledge about Bakken production.

    While trying to to get sleep over the weekend, I looked at the raw well data a little while. I found that the “pool” with the most wells is Sanish, with 570 as of 4/15, followed by Parshall, with 382. Only two others had more than 200, Alger with 292 and Murphy Creek with 201.

    Interesting to me is that none of those four averaged 122 barrels of oil per day in April, which is the statewide Bakken average. I show Sanish at 98.38, Parshall at 118.08, Alger at 111.21 and Murphy Creek at 67.52 bopd per well.

    I found another 16 Bakken “pools” with 100 or more wells as of 4/15. 9 of those 14 were below 122 bopd per well. 3 were less than 10 bopd per well above. The remaining 4 were quite a bit above, Grail at 255.41 bopd, Antelope 194.65, Blue Buttes 179.04 and Reunion Bay 169.38 bopd per well.

    Maybe cutting things off at 100 or more wells is an error, but by then I was tired and went right to sleep.

    Nothing scientific here, but it appears to me the “core” is starting to peter out? There did not seem to be many confidential wells in the fields well below 122 bopd per well.

    Also, I counted up the rigs per operator in the Bakken. Three have 9 each, XTO, Hess and Continental. Whiting has 8, Statoil 6, SM Energy, Burlington and Oasis 4, EOG 3 the rest 2 or 1, which includes Marathon with 1 and QEP with 2.

    QEP is the operator in Grail and Marathon is a major operator in Reunion Bay.

    1. Hi Shallow Sands,

      Often the confidential wells are the higher producers (newer wells) and we don’t usually know where those wells are located until they are 6 months old. This may be skewing your results.

      What you would need to do is find a statewide average for all non-confidential wells and then compare to that. Looking at 3 month cumulative output it looks like the sweet spots may be petering out, but I think it is too early to draw firm conclusions, we will know more by December (more data).

      1. I think the term pool is fairly irrelevant. Might as well call it sector. The lower production is probably caused by a larger fraction of older wells.

    2. Caught a mistake I made. April average per well was 116 and not 122.

      How is a pool defined in the Bakken?

      1. Parshall and Sanish are often called fields.
        They were developed in the very beginning of the shale boom in North Dakota, so I agree with Fernando that they may have a larger fraction of older wells
        Can you check how many new wells have been drilled in those two during the past month?

      2. NDIC in their monthly reporting refers to pools. (Sometimes called fields and perhaps other designations).
        Wrt to the extent (boundaries) of these pools, these can be found in the GIS Map Server (click on link on the menu on the left).

        1. Yes, Rune, but don’t you think an over pressured mishmash of lousy rocks found in a stratigraphic trap is very hard to segregate into “fields”? I think they might as well have used a grid.

          1. Its more a resource play than a strat play and some of the lousy rocks are better than other lousy rocks. Sweet spots are sweet for a reason, contain different oil saturations, gravity, GOR; if folks want to name those sweet areas, what the hell difference does it make? We call them “field” designations in Texas, which makes more sense to me than “pools” in dense shale like an asphalt parking lot.

            I’ve named new field designations after kids, landowners, nearby surface features like creeks, hills and wide spots in the road. Shell discovered Notrees Field, near Notrees in Ector County. W. Texas many years ago, because there ain’t none. My favorite field designation was in New Mexico called Many Gates (Devonian?) Field. It was on a big ranch and 9 gates had to be opened (and closed) to get back to the discovery well.

            Folks needing to change the way the oil and gas industry has done things for over a hundred years, so they can gather data easier for making predictions about the future, are going to be disappointed.

            Mike

            1. Mike. I just was wondering where they came up with the term “pool”. It looks like there are “pools” butting up against each other.

              Is it a group of leases that are pooled?

              The other context I have seen that term is a group of leases producing out of a formation that has well definined boundaries. In other words, drill a well outside of the pool, the formation is not productive.

              Have a group of leases producing out of a sand Basically can draw a circle around the wells. Any hole poked outside of the circle will find some oil, but not in that sand.

              Just trying to learn some more. Definitely regional differences, which I like. Don’t want anyone to change anything that’s not broken.

            2. This may not be applicable but according to my Engineer’s Manual: “Pooling is the consolidation and combining of leased land with adjoining leased tracts. The area is called a pool or a unit. Pooling has the benefit to the production company of uniting all landowners’ leases into a common pool under one drilling production company and utilizing one common underground geological reservoir.”

            3. All good questions, Shallow. An oil pool is an old term, from the old days, and is another way of describing an oil field. Structural fields can be easily defined (by the structure itself); stratigraphic fields or resource plays (shale) not so much easily defined. Field delineations can be confusing, for instance a well can be filed in the Shallow (Atoka 2) Field when 1000 feet away all the wells are in Mikey (Atoka 2) Field. There might be 6 different horizons in the Shallow Field, each requiring a subname for the formation it produces from, ie. Shallow (Conglmerate), Shallow (Strawn), etc. The Eagle Ford resource play has a number of different field designations; Eagleville (Eagle Ford 2) Field, Hawk, Red Hawk, Sugarkane, etc.

              There are often no real surface boundaries that delineate fields other than those in an operator’s head. Field rules (spacing and density rules) often play a role in what field the well is going to be filed.

              Individual leases can be “pooled,” joined together into a drilling unit (for the sake of a horizontal lateral) and each lease will be paid its proportionate share of the total royalty. You know that. Large blocks of leases can be “unitized,” or combined, for instance to initiate an EOR effort, you also know that. Pool is just another word for field, in this case, and has nothing to do with the legal definition of “pooling” or “unitization,” not in my opinion anyway, but I avoid cold weather whenever I can.

              Here ya go, Shallow:

              http://www.oilandgasinvestor.com/japans-itochu-returns-stake-samson-resources-804026:

              Mike

            4. The named pools in North Dakota originated with conventional production in the early 1950’s.
              On the Gis map, the solid circles with little lines through them are conventional wells.
              The NDIC folks did did some reorientation a decade or so back when it appeared horizontal drilling targeting the Bakken was about to take off.

            5. coffee. It doesn’t surprise me that the term “pool” as used in ND has its origins back in time.

              When I have seen areas referred to as a pool, for example, the “John Doe Pool” the name originated generations ago.

              I was pretty sure they were not using it in the legal sense.

              Just seems kind of odd to me to use it in a resource play, but it’s is really no big deal.

              Apparently we have only scratched the surface on the number of wells to be drilled in the North Dakota Bakken. However, does seem not much room left in some spots.

              Wonder if EFS is the same. Wouldn’t surprise me if it is.

              Old fields all over the US have wells drilled in them for 100+ years, but to hit the best spots the first time usually just takes a few years. I guess many organizations say by 2020 these two well be on the downslope, so not very far off really.

              I like regional differences. Makes our country the diverse nation it is.

    3. Dennis Coyne wrote,
      “……we don’t usually know where those wells are located until they are 6 months old. This may be skewing your results.

      The data compiled in Enno’s spreadsheet comes from:
      https://www.dmr.nd.gov/oilgas/mprindex.asp
      These monthly reports include well name, business owner, county and pool of the confidential wells (to name some).
      For confidential wells, runs are used as a proxy for monthly production as long these are on the confidential list and by totaling these and comparing versus the data of total production by well and formation, one will find that the deviation in totals over some months normally are less than 1,000 bbls or some barrels per day (totaling for companies, pools) this introduces an underreporting that normally is well below 1% of total production for fields/pools companies with several wells.
      https://www.dmr.nd.gov/oilgas/bakkenwells.asp

      Dennis, how many more wells do you estimate remains to be drilled in the “sweet” spots (like Alger, Parshall, Reunion Bay, Van Hook) in Mountrail?

      In January I presented an analysis of Mountrail’s sweet spots with data as per October 2014.
      http://fractionalflow.com/2015/01/09/are-mountrails-sweet-spots-past-their-prime/

      For shallow,
      As time allows I will do (it is on the list) a similar presentation/analysis for some pools (in some counties) as I did (and presented) for some companies.
      In this analysis I will include how the flow of the average well develops by vintage.
      So far and FWIIW I have seen a wide spread amongst companies, but these usually have wells in several pools.

      1. Shallow

        The EOG wells are all/mostly 5,000’+ laterals as the DSU back then was one sq. mile (640acre). (Gis map shows this).

        Dennis, on that monthly production list, the confidential wells are listed … their location and production.
        That list is alphabetized by pool. Parshall is about page 150, Sanish 179. The confidential wells are the first ones listed in each pool.

        1. I went back and looked at confidential wells in the 100+ well pools.

          EOG had 19 in Parshall.

          Many others had 0, including Sanish.

          QEP had 5 in Grail.

          The rest, I believe were in the 1-4 range.

          Just have a hunch, nothing more than that. Think many of the big pools in Bakken are hitting their limit. No confidential wells at Alger and Sanish with per well falling below average. These are two of the more prolific pools.

        2. Also, nothing scientific, but look at the GIS. Except for EOG’s signature field, the rest appear to have been drilled up on what I call 10 acre spacing, 8 wells across a mile.

          Now I know there are several Three Forks benches, etc.

          Still, things look crowded to me. We drill our shallow wells eight to a mile across, just like I see these have been drilled, for crying out loud.

          We are talking 800′-2500′ vertical holes versus 10,000 verticals w two mile laterals.

          Wow, I feel dumb. Should have looked at the map awhile ago.

      2. Shallow, for Parshall (updated with data as per April 2015) the well productivity has continued to decline since my post linked to in another comment. That post also shows Sanish and Reunion Bay and Parshall has the best wells by a wide margin.

        Parshall still brings in some of the best wells and measured by first year totals these are on average around 160 – 180 kb.

        1. Rune. Have you looked at Grail? That seems to be another very strong “pool”.

          It looks like several areas have 8 wells per unit, which to me would seem to be the maximum per producing formation. I guess there are two producing formations, Middle Bakken and one Three Forks bench? So could have 16 well bores?

          I understand there is a large area. However, just wondering if the best has been fully developed.

          Have Sanish and Alger been fully developed? If not, what is left to do outside of refrack or EOR?

          1. I have noted Grail (good wells!) as one to watch and will include it and others I find interesting, that is pools which have good wells and a certain amount of producing wells (above 50 or so as this gives a population of wells that makes it possible to discern trends).
            Last time I checked Alger was in a downward trend for well productivity.

            Sanish (had a high in well productivity in 2010) was wobbling around 90 – 100 kb of first year flow for newer wells (analysis from last fall). Reunion Bay had an improvement in well productivity and last fall these were good wells.
            The GIS also has a measuring tool that makes it possible to get a reasonable estimate of the area the pool covers.

            Number of producing wells in each pool is available, and an estimate of the pool area and it is possible to get an estimate of well density. The number of wells in each formation, well density (acres/well) makes possible a “guesstimate” of how many more wells is likely to be added.

            Identifying productive pools and well densities may give some idea about where companies will prefer to continue to manufacture wells and for those pools that appear to be close to saturation, an estimate of how many more wells could be added.

      3. Hi Rune,

        You are correct as usual, we do know the pools for the confidential wells and the average age of the wells in the various pools may be a large part of the explanation for lower than average well output in the Sanish and Parshall pools.

        I have never tried to map out how many wells have been drilled in the sweet spots and how much room there is for more wells in those areas. I have simply looked at the average output of all new wells which have been put in production.

        As you know well, this does not always change in a consistent manner, looking at the 6 month cumulative output over time (at your suggestion), the average cumulative 6 month output for Bakken/Three Forks wells through Nov 2014 seems to have levelled off. So althiugh I do not have a numerical estimate for the number of wells left to be drilled in the sweet spots I think we will see the average new well estimated ultimate recovery (EUR) start to fall by Nov 2015 and we will see this in the data in about a year, what do you think? Chart below.

        1. I have also looked at the 3 month average cumulative output by month for the North Dakota Bakken/Three Forks. The correlation coefficient between 12 month cumulative output and 3 month cumulative output is about 85% (so not as good a correlation as the 6 and 12 month cumulative at 95%) from Jan 2010 to May 2014. I fit a 3rd order polynomial trendline to the average 3 month cumulative by month time series and the trend levels off by February 2015 (the month the wells started producing for the latest data with a 3 month cumulative total).

    1. Richard, the article is about census takers who were caught fudging the data, likely to get out of actually collecting the data. When confronted with their fraud they blamed it on “higher ups”. Really Richard, I hardly think that is an indictment of the whole government.

      1. “Really Richard, I hardly think that is an indictment of the whole government.” ~ Ron Patterson

        Well then you might like my recent (and older on TOD) comments/quotes.

  12. Ron, Imperial Esso just started their Kearl lake production so it may take a little longer for Canadian production to drop.

    Take note of the following statement below:
    “Diluted bitumen produced from Kearl will have about the same life-cycle greenhouse-gas emissions as many other crude oils refined in the United States as a result of technologies which significantly enhance environmental performance.”

    Imperial Oil Announces First Production From Kearl Oil Sands Project
    – Technology innovations signal next generation of oil-sands mining
    – Kearl key step in Imperial’s plan to double production to 600,000 barrels per day by 2020
    – First of three froth trains producing bitumen

    Calgary, April 27, 2013 – Imperial Oil Limited today announced the start-up of the initial development of the Kearl oil sands project, which incorporates next-generation technology innovations that significantly enhance environmental performance.
    “Kearl is a historic development for Imperial,” said Rich Kruger, Imperial Oil chairman and CEO. “Kearl is the largest project we’ve ever undertaken and the beginning of a period of substantial growth for the company that will see us double production to more than 600,000 barrels per day by about 2020.”
    Production of mined diluted bitumen from the first of three froth treatment trains has begun. Start-up of two additional bitumen froth trains will proceed in sequence as planned, bringing production from the initial development to an expected 110,000 barrels per day later in 2013.
    Diluted bitumen produced from Kearl will have about the same life-cycle greenhouse-gas emissions as many other crude oils refined in the United States as a result of technologies which significantly enhance environmental performance. Energy needs have been reduced by using a proprietary froth treatment process that eliminates the need to build an upgrader; and through installation of energy-saving cogeneration capabilities.
    Other environmental innovations include on-site water storage to eliminate river withdrawals in low-flow periods, progressive land reclamation, earlier tailings reclamation than other oilsands operations and a state-of-the-art waterfowl deterrent system.
    “Our goal with Kearl is to approach development differently to better address environmental challenges and more closely meet the expectations of stakeholders in developing a critical resource,” Kruger said. “I believe we have achieved this.”
    An expansion phase at Kearl will add another 110,000 barrels per day by late 2015 and future debottlenecking will increase output to reach the regulatory capacity of 345,000 barrels per day by about 2020.
    The Kearl project, located about 75 kilometres northeast of Fort McMurray, Alberta, is expected to recover approximately 4.6 billion barrels of bitumen over an estimated project life of more than 40 years.
    Construction of the initial development entailed 45 million person hours of work and employed a peak workforce of more than 5,000 people. Of the project’s total cost, more than $1 billion was directed to local suppliers and contractors in the Wood Buffalo region, of which more than 25 percent are Aboriginal-owned and operated.
    “Our project team and our construction workforce achieved industry-leading safety performance, and our environmental performance will be enhanced through new technologies and innovation that make Kearl a next-generation oil-sands mining development,” Kruger said.

    Imperial Oil is one of Canada’s largest corporations and a leading member of the country’s petroleum industry. The company is a major producer of crude oil and natural gas, Canada’s largest petroleum refiner, a key petrochemical producer and a leading marketer with coast-to-coast supply and service station networks.

    1. They are using paraffins to dilute the extra heavy oil (bitumen), this helps separate solids and water. It also precipitates the asphalt. My guess is they get about 7 % shrinkage and a 16 to 17 API product (just guessing). This can be diluted with 10 % nafta (another guess) and sent to a refinery. The Exxon guys are pretty smart. But you know, this is what I did using a test tube when I was testing heavy oil wells 30 years ago. They scaled up a simple procedure and optimized energy requirements.

      By the way, there are methods to reduce energy consumption in the SAGD process, such as adding a small amount of butane to the steam. And I’ve seen some pretty far out technology in computer models I can’t discuss.

  13. Ron,
    Regarding the Census information, I was not saying it was the Whole Government but that there is an awful lot of manipulation going on everywhere, both Government statistics and private organizations. You can’t believe the financial statements of many companies and unemployment data in most countries is not recorded or reported accurately. One of the reasons many people are coming to your blog is to get the facts, especially about oil production

    1. Hi Fernando,

      The uncertainty is what worries me. Maybe more fossil fuel will be recovered than I predict, maybe the models are under predicting radiative forcing, and maybe 2.5 C above pre-industrial global average temperatures will be more difficult to adapt to than many believe. For all of these reasons we should reduce our dependence on fossil fuels as quickly as is feasible. If the fossil fuels become very expensive to extract it will make sense to do this on economic grounds anyway. If the models over predict eventual surface temperatures, and we become concerned about the temperature becoming too cool (I doubt this will be a concern in the next 25,000 years), we can always burn the fossil fuels later.

      1. Dennis, It is impossible to argue with these people. They want to burn all fossil fuels as fast as possible because there will always be impoverished people that are burning dung inside some shanty somewhere in the world. So the argument goes, if the rich don’t burn the FF, then the poor should be entitled to burn it. Pointless to debate given how they stack the deck and portray themselves as saints.

        1. Hi Fernando,

          Yes I did, but quickly. On slide 20, it indicates warming of approximately 2.5C+/-o.5 C in 2500 for a scenario between RCP4.5 and RCP 6.0, my scenario has CO2 only at about 520 PPM, when other greenhouse gases are added the CO2 equivalent would be about 570 ppm. (See slide 20)

          As I said, it is the uncertainty about the URR of fossil fuels (which is unknown), the climate sensitivity (also unknown), and our ability to adapt to 3 C of warming (if we end up towards the high end of the likely range).

          In my view, given the uncertainty, it is better to err on the side of caution.

          Maybe my estimates of fossil fuel is too low (so that RCP 6.0 is more appropriate) and ECS is 4.5 C and it will be more difficult to adapt to 2 C of warming than many believe. If that is the case, it would be safer to aim for RCP4.5 in my view, we can always burn the fossil fuel later if it turns out that your view is correct.

          1. I didn’t necessarily want you to become a climate denier like me. I only wanted to show you what the NASA model shows when its inputs are closer to reality.

            Today I read a paper about ultraviolet radiation from the sun dropping extremely fast in recent months.

            http://www.nature.com/ncomms/2015/150623/ncomms8535/full/ncomms8535.html#author-information

            The study used RCP 8.5. This means I can’t really use the results because the input data was screwy. This study should have been run with something sensible, but it’s always the same old story.

            What I sure wish for is to have the IPCC cases thrown out the window and have the models use three resource spreads.

            1. Hi Fernando,

              I would not call you a “denier”, you just don’t agree with the mainsteam estimate of climate sensitivity, you believe it is lower, more like 2C for a doubling of atmospheric CO2 to 560 PPM.

              I agree that the RCP 8.5 scenario is not reasonable, but I am not a cornucopian (though many here would disagree with that assessment). The RCP 6.0 is about as high as it might go, in my opinion.

            2. I have no reason to doubt climate scientists, so I accept their research and their concerns about the future of life on Earth.

              However, GW is not my prime motivator for wanting us weaned from fossil fuels.

              Here are my concerns:

              1. Pollution.

              2. Environmental damage. There are places in the world that have been destroyed in pursuit of fossil fuels, and I’d rather that not continue to be the case. And I don’t like the damage done from oil spills.

              3. Economics. Because I think peak oil will be a problem, I think we should have been making plans to deal with it decades ago.

              4. Wars. I don’t think we would be involved at all in the Middle East if it weren’t for oil.

            3. Yes Dennis. The difference is a 2 degree versus 3 degree climate sensitivity. I know of 8 papers written in the last 4 years which average 2 degrees C.

              The Lazarenko slides are a slightly different data point. That NASA E2R model has a very low climate sensitivity (caused by the Russel ocean model). The results were presented and discussed, but there was no NASA paper written in Nature describing what the model shows (it doesn’t back the party line).

              What would I get if I take the NASA E2R model, support it with similar ECS estimates provided by other, independent researchers, and feed it your estimate of fossil fuel resources? I think I would have a very well supported case for an alternate answer to the “party line”.

              Would global warming exist? Sure. But the panic condition we see nowadays would be replaced by a much more subdued emphasis on emissions controls while emphasizing energy security as a looming problem.

              When we see two large problems, which we can start solving with a swingle robust plan, we sure get a lot more political traction. Alas, what we have is a panic mongering bunch of amateurs disturbing the peace.

            4. Hi Fernando,

              Most of the mainstream climate scientists are quite conservative in their assessments. I think the NASA presentation pretty much has an ECS of 3 C.

              For every paper that has a low ECS(2C), there is another with a high ECS (4C).

              I do not dispute that there is uncertainty, it is the reason I think we should be cautious.

              Generally it is safer to assume the worst. It is the reason why bridges are built with a factor of safety of 2 to 3.

            6. Hi Marblezepplin,

              If we are wrong about 3 C and it turns out to be 4 C, then we will be too hot, more sea level rise and so forth. I think 3 C is probably close to correct, but would rather err on the side of caution, we need to get off fossil fuels as they deplete any way, so developing renewables, storage, and increasing energy efficiency all make sense, no matter what the climate sensitivity is.

              I suppose one could even argue that if climate sensitivity is 2 C (or less) we should save fossil fuels so that they can be burned later to raise CO2 levels and stave off the coming ice age. 🙂

            7. If we chose 3C then strong action will be taken. Don’t worry about another major glaciation, already off the books. Which is terrible, since much of the fertility and climate is due to the glaciation. Better than a planet with the possibility of a major methane discharge.

            8. Yes, Dennis, but the 2 ECS is matching the data much better. And the E2R has an ECS that’s slightly lower than 2. I’m not supporting actions suggested by science teams which use RCP8.5 and a high ECS. It seems to be a number they pulled out of their behinds, and now they are so deep into the politics they can’t find a way to back off.

            9. Hi Fernando,

              The coupled atmosphere ocean Model has a climate sensitivity of 2.3C for the E2-R model.

              See section 5 of link below:

              http://onlinelibrary.wiley.com/doi/10.1002/2013MS000265/full

              Scaling the long-term response to 4×CO2 to the 2×CO2 forcing, the estimated sensitivities are 2.3°C, 2.3°C, and 2.4°C and 2.5°C, 2.4°C, and 2.5°C, respectively for the three physics-versions and the two ocean models (R and H).

  15. My latest incremental crude oil production graph covering the period Feb 2014 – Feb 2015 is here:

    http://crudeoilpeak.info/latest-graphs

    It shows that outside the US and Canada, crude oil production in Feb 2015 is exactly where it was in Feb 2014, eliminating seasonal production changes e.g in the North Sea

    I did some analysis of the recently published BP Statistical Review:

    23/6/2015
    Asia’s oil consumption at record high while production peaked in 2010
    http://crudeoilpeak.info/?p=7177

  16. Ron,

    • Do you really believe that a study of charts showing past oil production gives sufficient information for making forecasts for the future?
    • Do you think that all the peaks in oil production that we see on those charts are ultimate peaks, not local peaks?

    In my view, any forecast of global oil production should be based on bottom-up analysis of at least several hundreds of new projects and decline rates of different categories of fields. It should include assumptions on oil prices, cost structures, changes in taxation and regulatory regimes, political and geopolitical factors, etc.

    You say that the world’s three largest producers, Russia, Saudi Arabia and the USA are peaking now, or are very near their peak. I do agree that Russia has probably reached its post-Soviet peak. Or plateau, as I think that Russian oil production will remain close to current levels over the next several years. This does not exclude that production in certain months or years could be slightly higher than in the past.
    As regards Saudi Arabia, there are doubts that its sustainable production capacity is really 12.5 mbd. But I am sure that it can produce at least 11 mbd.
    I am also sure that the peak in the U.S. oil production this May or June is a local peak and will be surpassed after oil prices recover to $75-80 levels.

    You also say that “Many other nations are at or have reached their peak in the last few years. These include other producing giants such as Kuwait, the UAE, Brazil and China.” While I agree that China may have reached a plateau, three other countries clearly have potential to increase oil production. Thus, Abu Dhabi plans to boost capacity from about 3 million to 3.5 million barrels a day in 2017 (
    http://www.bloomberg.com/news/articles/2015-04-20/adnoc-says-still-in-talks-with-cos-for-onshore-oil-concessions)
    Kuwait plans to increase capacity from 3.2mbd to 4.0mbd (incl. half of Neutral Zone) by 2020.
    The pre-salt projects in Brazil are expected to produce 3.2 mbd by 2025, up from 0.7mbd last month, and Brazilian authorities aim to double total national oil production by 2025 (http://www.woodmac.com/public/views/upstream-mega-projects, http://uk.reuters.com/article/2015/06/02/brazil-oil-bids-idUKL5N0YO34X20150602 )
    These plans most likely will not be realized in time and in full, but it is clear that these 3 countries have not peaked.

    Finally, you forgot about Iraq, Iran and Libya. Despite all those internal and geopolitical conflicts and sanctions, their resource potential is huge and we cannot say that these countries’ oil production has peaked. Iraq could increase its production at least to 6 mbd (and theoretically to 9mbd) from 3.2-3.3 currently. Iran could reach 4.5-5mbd, and Libya 2mbd.

    So the picture of global oil supplies is more complex than you paint it

    1. • Do you really believe that a study of charts showing past oil production gives sufficient information for making forecasts for the future?

      Okay, I will need the quote where I said that. I don’t remember ever saying any such thing. And I know you just wouldn’t make shit up so it must be something I wrote many months ago that gave you that belief. So please find it and give me the link so I can try to figure out where you got such a very silly opinion.

      • Do you think that all the peaks in oil production that we see on those charts are ultimate peaks, not local peaks?

      Alex, do you take me for some kind of goddamn idiot. I have been looking at charts for more years than most people have been alive. I was once a stockbroker and studied “technical analysis”. Technical analysis is pure bullshit. Peaks, double peaks, head and shoulders, double bottoms and all that bullshit is just that, pure bullshit. I was a fundamentalist when I was a broker. I laughed at the technicians because they were always wrong.

      So if you would write me a post that don’t assume I am some kind of an idiot then I will be glad to answer it.

      1. My apologies, Ron, I didn’t mean to insult you or anybody else.
        I may have misinterpreted these words from your post: “I am now more convinced than ever that 2015 will see the peak in world crude oil production. I have very closely studied the charts of every producing nation and my prognosis is based on that study.”
        You also wrote: “Many other nations are at or have reached their peak in the last few years. These include other producing giants such as Kuwait, the UAE, Brazil and China. ….. Only Canada, and Kazakhstan have any real upside potential and I am not too sure about Kazakhstan.” I think that some other important producers, including the USA, Saudi Arabia, Kuwait, the UAE, Brazil, Iraq, Iran and Libya also have upside potential from current production levels. Of these, Iraq and Brazil have a very significant upside potential.

        1. Apologies accepted Alex. It was just that your words seem to imply that all I was doing was looking at charts and concluding that if a chart was peaking that implied that the country was peaking and only basing my analysis on that. I have been following every country that the EIA tracks for many years and I know their history and I think I can make a fair assumption of what their future prospects are.

          Concerning your countries with “significant upside potential”. I have dealt with each of those countries in previous posts and comments, especially Brazil and Iraq. But concerning Brazil, you have apparently not being following the news:

          With Downgrade, No One Excited About Petrobras’ Oil Finds Anymore

          Once the pride of Brazilian ingenuity, the government owned oil firm is now the Brazilian Enron.

          Who cares how much oil this company has sitting under the Atlantic Ocean? The fact is it doesn’t have the money to dig it out. That oil is some of the most expensive to reach, packed thousands of meters below the ocean floor in what is called pre-salt. Petrobras boasts how it’s been breaking records of hydrocarbon production this year. It doesn’t matter. What matters now to investors is that the company’s debt-to-equity ratio is over 1.5. That wouldn’t be so alarming if the company wasn’t watching its market cap erode by the week.

          I have been reading such stories about Brazil for some time now.

          As far as Iraq goes, those oil companies that were supposed to allow Iraq to reach 10 million barrels per day, or was it 12, are pulling out. Some are gone already. Iraq will reach 4 million bpd but not much above that. They don’t have any capital, they are depending on foreign oil companies to spend all their money for a cut of a couple of bucks a barrel. Most have decided it is not worth the risk.

          I have given my opinion, on each of the countries you mentioned, here on this blog and on TOD, many times. And I picked 2015 as the peak year long before the price crash ever happened. In my many years of posting on the net, that is the first time I have ever picked the peak.I could be wrong and if I am I will admit it. But right now I am more confident than ever of my choice.

          Just what is your opinion of the future of world oil production? Where do you see things heading?

        2. And concerning Iran’s upside potential:

          Iran’s oil output goals likely unrealistic because of risk, report says

          Iran’s ambitions to produce 4 million barrels a day of oil and 1 million b/d of condensate by 2018 are likely unrealistic because US and European banks and companies are reluctant to take on high-risk investments, according to a report a Washington-based think tank will release Tuesday.

          It all depends on European banks. I would think European banks had enough to worry about without sinking money into Iran’s old oil fields.

          1. Ron,

            I am not saying that those countries’ oil production plans will be realized in time, in full and with no cost overruns. What I am saying is that their production has not peaked and has significant growth potential.
            WoodMac published today a report on Iran’s oil, with reasonably conservative assumptions. Still, they expect Iran’s crude+condensate production to reach 4.3mb/d by 2025 (very close to what I said above: 4.5mb/d).
            http://www.woodmac.com/public/views/Iran-nuclear-deal-and-the-oil-and-gas-industry

            1. Alex, you are saying Iran could increase production by 1.45 million barrels per day over the next 10 years, 2.85 to 4.3. And you see that as a real game changer?

              Of course not all nations will reach their peak in 2015. All I am saying as that the world production will likely peak this year. Some nations will still increase production after this year. But more will see a decline in production. More than half saw their peak some time ago. But their decline has been offset by the US and Canada massively increasing production during the last 4 years.

              But those good old days are over. The USA and Canada, in the future, will not be able to offset the decline that is already happening in most of the world.

            2. In fact, if oil prices rise to new highs in the next decade, as many experts expect, and if sanctions are removed, Iran, with its fourth-largest proven oil reserves, would attract many international companies, including European majors, Asian and Russian NOCs, and eventually US oil companies.

              From Bloomberg:

              “Royal Dutch Shell Plc executives have visited Tehran to discuss possible partnerships, the latest sign that the largest oil companies are serious about returning to Iran once a deal on the country’s nuclear program is done.
              Shell has previously indicated its desire to re-enter Iran, holder of the world’s fourth-largest oil reserves. Chief Executive Officer Ben van Beurden and his counterparts at France’s Total SA and Italy’s Eni SpA met Iranian oil minister Bijan Zanganeh in Vienna earlier this month. The fact talks have also taken place in Tehran shows a deepening engagement by The Hague-based company.
              Seeking billions of dollars to revitalize its ailing oil industry, Iran plans to offer significantly better commercial terms to companies prepared to invest than offered during the last market opening almost two decades ago. Iran sees the return of foreign firms as a key goal from a potential nuclear deal that would remove sanctions. Talks on a final deal are scheduled to conclude at the end of this month.
              The Shell executives are the second from a major Western oil company to acknowledge a trip to Tehran this year. In May Claudio Descalzi, CEO of Italy’s Eni SpA, revealed he had recently visited Iran and held meetings with senior officials.”

              From EIA’s Iran country energy data and analysis, June 19, 2015

              “There were a number of new exploration and development blocks announced over the past several years that could provide Iran with an increase in its crude oil production capacity, but sanctions have negatively affected the Iranian oil industry. Virtually all western companies have halted their activities in Iran, although some Chinese and Russian companies are still participating. ..Nonetheless, development of a few projects continues, albeit at a much slower pace than originally planned.”
              Combined plateau output from 960

              Given the potential ramp-up of production from the producing fields, development of new projects, and relatively low decline rates, in the longer-term, Iran’s C+C production could increase above WoodMac’s projections

              Status of new upstream crude oil projects
              (source: EIA Iran country report, June 19, 2015)

            3. The Iranian contracts are pretty sucky, which means large oil companies will knock on the door, but I don’t think we’ll see that much action until the Ayatollah regime gets a bit nicer.

            4. Iran Said to Plan Better Terms to Lure Foreign Oil Groups Back

              June 2, 2015
              http://www.bloomberg.com/news/articles/2015-06-01/iran-said-to-plan-better-terms-to-lure-foreign-oil-groups-back

              Iran, seeking billions of dollars to revitalize its ailing oil industry, plans to offer significantly better commercial terms to companies prepared to invest than offered during the last market opening nearly two decades ago.
              Foreign oil executives who have reviewed partial drafts of the new terms, called the Iranian Petroleum Contract, said they’re more generous than the types of deals used in the 1990s and 2000s. Unlike those contracts, which merely paid a set fee for the delivery of a project, the new agreements could give investors some share of a field’s production and allow companies to book more reserves on their balance sheet.
              Such arrangements would probably make Iran commercially more attractive than regional competitors for international investment including Iraq and Algeria.
              “In simple terms, the message from Iran is that if the sanctions are lifted, in return Iran will offer improved contractual terms to make it easier for international oil companies to tap into its lucrative oil and gas reserves,” said Amir Kordvani, a Dubai-based lawyer at Clyde & Co., a firm specializing in the natural resources industry.
              Tehran has yet to complete the new contract but oil executives said that Iranian officials have shared several draft versions of the terms, probably to test both the reaction of the foreign oil companies as well as domestic political factions. The executives said some of the drafts contain contradictory language but they share a common theme: the conditions are much better than in the late 1990s.
              The biggest novelty is that Iran is offering agreements that resemble production-sharing contracts, or PSCs, the terms favored by international oil companies. Iran’s constitution bans foreign ownership of oil, making traditional PSCs impossible.
              The production-sharing model gives international companies a share in the output of an oilfield as payment for their investment. They also allow foreign groups to book the reserves in their books, boosting their balance sheets. When Iraq opened to foreign investors six years ago, it offered service contracts rather than production-sharing agreements.
              Fereidun Fesharaki, chairman of consultants Facts Global Energy, said Iran will likely offer better terms than neighbors like Iraq in order to entice companies back after a decade of sanctions that effectively froze investment in the country.
              “I think by year-end Tehran could propose a new type of contract, more similar to international standards and less penalizing for operators,” Eni Chief Executive Officer Claudio Descalzi told Italian newspaper La Repubblica in May.
              In private, the message from other companies is similar, with executives saying they are interested in playing a role in developing Iran’s energy potential. The message is far less guarded than in the past, when oil majors largely said they were going to stay away from Iran.

            5. We will have to wait and see if the new contracts are really offered. As you know, this is a delicate matter for both sides. They’ll be a lot of posturing and using the media to go back and forth.

              The Mexicans have taken forever to come around, and even now their contracts have unacceptable terms (as far as I’m concerned).

            6. Fernando, we will see.
              I remember that before the sanctions, Total, ENI and others were ready to work in Iran even under service contracts.

    2. Great post Alex. I agree with you that a thorough bottom-up analysis is the only way to make a reasonable prediction. The leap from the data presented to Ron’s conclusion on the year of peak oil is also too large for me. But then again, I think peak production/consumption per capita is more important, and this is already in the rear window.

      Ron, I don’t see why his post called for your somewhat edgy response. I have seen worse comments…

      1. Hi Enno,

        As far as primary energy per capita, that may not have peaked (but it looks to be soon).

        On oil you are absolutely correct (the peak was in 1978), it has had very little effect on the world economy so far ( we have been on a plateau since 1985 or so).

        I used BP oil consumption and primary energy data in tonnes of oil equivalent and converted to barrels of oil equivalent (boe) using 7.33 b per tonne and UN population data to create the chart below. My guess for the C+C peak is 2015 to 2020.

          1. Hi Enno,

            Thanks for bringing up the question, I wondered, how much has oil consumption per capita declined? And while I had the BP spreadsheet open I wondered about primary energy (maybe there had been some substitution). So I thought I would share what I had learned from your insightful comment.

    3. Alex, I use a combination of bottom up (based on having worked or consulted in a country), and charts. Take Azerbaijan as an example. It’s very unlikely it will ever return to produce its peak.

      Another example? Colombia. Exploration prospects are slim, and the major contributor is Rubiales, a heavy oil field discovered in the 1980s which started producing this century, and is already showing a very mature look (lots of water), with very poor EOR possibilities. Colombia is barely holding at 1 mm bopd, but I expect it’ll start declining at any time. It just lacks the resource to keep producing 365 mm barrels per year.

      If you want to discuss a particular country feel free to ask. Sometimes I gave the information, sometimes I don’t. But what I know tells me Ron, in general, is right.

      1. Fernando,
        I agree with you on these two countries
        In Azerbaijan, the Azeri-Chirag-Guneshli project has already achieved its peak and is declining, which could be only partially offset by condensate from the Shah Deniz 2 expansion project.

    4. Alex,

      Those are good points, but bottom up is only half the story. Lots of the supply-side predictions of peaking back in the last decade were wrong because they ignored any potential demand response, which is why they (and everyone else, to be fair) missed shale. You need to try to factor both responses in to try and get a realistic handle on what the future might look like. One needs also to look at the economy to try to work out just how high an oil price it can support, as the price cannot go arbitrarily high before demand destruction kicks in. This is an area where the models aren’t particularly well fleshed out, as most of the economic models don’t seem to factor in the possibility that oils contribution to the economy is larger than its cost share and the income and price elasticities aren’t well understood. There’s also the question of whether or not there’s going to be serious regulatory actions to limit carbon emissions, which could theoretically put a lid on oil production.

      Looking at the state of the industry at the moment, I think that another global peak of some sort (similar to 2005) is likely before 2020 barring some sort of miracle, and this could certainly be the year it manifests. You simply can’t have investment cuts of the magnitude we’re currently seeing without feeling it, especially when you add in a rapid response component such as shale. Whether or not it’s the ultimate peak I guess we’ll know a decade or so hence.

      1. ” Lots of the supply-side predictions of peaking back in the last decade were wrong because they ignored any potential demand response, which is why they (and everyone else, to be fair) missed shale.”

        I don’t think that is correct way to put. Shale was missed because nobody thought that financial markets disregarded what they preach. Let the shale pay their bills first and then we will see what the potential demand for oil is.

    5. AlexS. I know little about fields throughout the world and not much more than that in the US.

      Is $75-80 enough to kickstart another US drilling boom? If it is, I assume it would take that price sustained for at least 3-4 months before significant rigs were added. It would then probably take 2-3 years to fully ramp back up to 1,500 oil rigs. So we would be in 2018 maybe?

      My opinion is that it will take more time to restart the large production increases in US than some think.

      I could be missing something though.

  17. Hi Ron and All.

    I have a question that I struggle to answer regarding ‘Peak Oil’.

    I have followed this subject for many years and was a regular reader of TOD. (as I am of Ron’s work now – thank you Ron).

    As ‘cheap oil’ is replaced by ‘expensive oil’, would not production continue to increase for quite some time as we ‘give up other things'( / exploit weaker players in the global economy and make them give up things).

    For example, oil goes to $70-90 – the economy stumbles – but adjusts (kinda) – but now people don’t go out to dinner as much or take as many vacations / whatever. And this could go on for a decade and the economy grinds down.

    At $70-$90 unconventional production is viable (correct?), and so peak production is delayed for some time as long as we continue to give up ‘things’ and direct that wealth towards oil production.

    My understanding is that there a LOT of $70-$90 oil (correct?) – it is just a question of where the line is that the ‘economy breaks’ in terms of price. Perhaps at $90 the economy will break over a 10 or 20 year period? But if $110 oil happens it breaks in a 2 year period. (I understand that EROEI means game over at some point)

    The issues that we are having now with unconventional oil might just be part of the ‘transitional pain’ as unconventional production combined with some cheap money/credit early on in the transition and increased supply as demand increase dipped. But that will sort itself out and unconventional production will resume its new role and the prices will go back to $70-90 and the snake will continue to eat its tail for another 1o years…?

    I hope this is a sensible question, and thank you in advance for any thoughts on this question.

    Ryan

    1. Ryan, that was a very sensible question. And I don’t really have the answer but can only give you my “best guess” opinion.

      I don’t see as “giving up things” has a lot to do with it. I suppose that’s your way of saying “what the economy can afford”. But the economy is the wild card in this whole game. If the economy continues to collapse, as I think that collapse has already started, then that will do two things. It will make those in those collapsed or collapsing countries consume less oil. That should drive prices down. But if those collapsing economies are oil producing nations, like Libya, then they will produce less, sometimes a lot less, and that should drive prices down.

      But right now only two of about 27 failing nations are big oil producers, Libya and Iraq and Iraq is still producing as much oil as they ever have. But I don’t know how long they can keep that up. Also virtually all of the failed nations are developing nations and don’t consume a lot of oil.

      I have no idea how much $70 to $90 oil there is out there but I don’t think it is as much as you seem to believe. Of course there is Russia’s Bazhenov shale and if you count that there is a lot of shale oil out there. But recovering that is a long way down the road and I doubt it could be recovered at that price. However I am not a Bazhenov shale expert so I will leave that to someone else.

      Shale oil, tar sands and ultra deep water oil, sometimes under a mile of salt, is what you call “scraping the bottom of the barrel”. It is very expensive and companies can lose their shirt in the gamble of going after it. But all this can be expected as we near peak oil. If we were not near the peak we would not be scraping the bottom of the barrel.

      However conventional crude fields are declining at from 4 to 6 percent per year and would be declining a lot faster were it not for massive infill drilling. What they are doing is skimming the cream right off the top of a lot of tired old giant and super giant fields. I believe it is a just a matter of time, perhaps a short time, before some of them hit the backside of their shark fin curve.

      That’s all I have time for right now but I am sure others will add to this conversation.

      1. If we were not near the peak we would not be scraping the bottom of the barrel.

        A point I was making over the last few years as comments on some of the “there’s no peak oil” articles in some of the business publications.

        If we had cheaper, easier options, we’d be using them.

        1. I agree completely, but I am grappling with ‘how long can we scrape the bottom of the barrel?’.

          I think at the core of my question are two ideas;

          1. how well can the global economy ‘rebalance’ and redistribute resources to permit the required increased allocation of capital to oil production? and

          2. once capital is reallocated and a new price point is discovered; what are the relative ‘break points’ where things change? (eg at $20 the economy grow ~3.5%, at $70 it contracts at 2% such that a depression results after X years)

          I think Ron’s point about skimming the cream with the infilling is probably the linchpin though. A dramatic drop in supply such as a super giant ‘stopping’ without warning (declining dramatically in a short period time) could conceivably act like a black swan event that does not permit rebalancing and things just break before a ‘$90 per barrel solution’ can be implemented.

          1. Capital is created out of thin air every time a loan is made from a bank. Whenever you go take out a mortgage or business loan or any kind of loan they create the money right there on the spot. They don’t actually have it in a vault somewhere. So capital can be created at will. Not to be confused with the money created at the Fed.

            Once upon a time capital was all the available money leftover after all expenses and taxes where accounted for. Now days capital is just borrowed money.

            Capital can be created in this fashion as long as there is sufficient fuel to burn in order to repay the loan plus interest.

            Fractional reserve banking will not work too well in a post peakoil world.

            Try imagining a world where everyone has to live within their means and can’t spend money they don’t really have. Try imagining a world where money can’t be created at will or by decree of government and you’ll understand what kind of world it will be post peakoil.

            Monetary system doesn’t continue to work cause they can simply create as much of it as they wish. It continues to work only when there is sufficient fuel to burn.

            1. Hi SAWDUST,

              I am pretty comfortable with issues of currency/capital/fractional reserve banking, and understanding the implications of energy and interest.

              I think you are talking about the effect of loss of confidence in fiat currency.

              Certainly in a post-peak world these things must unravel – or change in a way that would likely be unrecognisable by 20th century standards.

              My question suggests that we might not yet have peaked because the existing ‘wealth’ within the economy may/will? continue to search for equilibrium and as oil is the master resource it will do so by attempting to eject lower priority production. The freed productive capacity is then directed to continued oil production and the game continues for a bit longer.

              One of my concerns/further questions was that maybe because oil is THE key resource in everything it essentially IS the economy, and maybe nothing can be ejected, because anything ejected from production reduces demand, then price drops and the higher price needed for the ‘expensive oil’ is never attained, and without the price signal, the capital is never allocated.

            2. Everything that can be conceived of will be done to kick the can for as long as it can be kick down the road or push the peak down the road i should say. But eventually we do peak.

              I think we live in a world where price is not that big of an issue. Capital will be allocated regardless of price as long as funding is made available. If banks can create money on the spot an make it available i don’t see any oil company running out of available funds. As long as there is oil in the ground to go get. I’m not sure making a profit even matters anymore. All that really matters is that oil is coming out of the ground.

              If one oil company goes bankrupt no big deal. The money used to fiance it was created out of nothing anyway. They can just make more loans to the next company.

            3. SAWDUST,

              Well said.

              Regarding financial capital, we have been living under historically unique conditions since 2008, namely, that total annual net flows to the financial sector now claim all nominal GDP output.

              Similarly, the imputed cumulative compounding interest to total credit market debt outstanding to average term is equivalent to 100% of GDP in perpetuity.

              That is to say, total debt/assets to wages, profits, and GDP now requires a “rentier tax” on the economy that is so comparatively large that no growth of real GDP per capita is possible hereafter after debt service or the net flows to the financial sector and to the owners of financial assets.

              And since 2008-09, the central banks of the world have been charged with printing no-cost reserves and crediting TBTE banks’ balance sheets to prevent insolvency and to indirectly fund unprecedented deficit spending as a share of GDP to prevent persistent price deflation and the contraction of nominal GDP along the way.

              This multi-decade process of financialization of the advanced economies has left us with extreme wealth and income inequality, unprecedented public and private debt to wages, profits, and GDP, and the persistent risk of any number of shocks that precipitate the bursting of the many bubbles the process has created, requiring still more reserve printing to restore the bubbles.

              These conditions reflect the best conditions conceivable for the top 0.001-1% and a Catch-22 and perpetual risk of systemic crises for everyone else.

            4. These conditions reflect the best conditions conceivable for the top 0.001-1% and a Catch-22 and perpetual risk of systemic crises for everyone else.

              Yes, I totally agree.

              I tend to take it a step further when folks on this forum start to talk about doomsday scenarios. If you wanted to rapidly decrease the world’s population in hopes of preserving the resources and what non-human life we have left, then what the .0001-1% is doing makes ecological sense — at least to them and non-human life. You make it much harder for anyone but the wealthy to have access to enough resources to survive.

              I don’t think the .0001-1% are intentionally conspiring to make life nearly impossible for the rest of the world in hopes of preserving a few humans and non-human life, but their actions and worldwide resource depletion may be where we’re headed.

              Gross income inequality is better for the environment than trying to lift everyone to middle class status because a few very wealthy people can’t consume as much as billions of middle class.

              Now, I don’t think this is fair at all. But I am looking for the silver lining in having the system rigged so much against everyone but the extremely wealthy.

            5. What amasses me the most is how many people in the US continue to vote for politicians who will make it easier for the 0.001-1% to accumulate even more wealth.

            6. “Gross income inequality is better for the environment than trying to lift everyone to middle class status because a few very wealthy people can’t consume as much as billions of middle class.”

              On the other hand, lifting more people to middle class slows down population growth considerably. I doubt that we would see the population growth slowdown which we currently see in western countries if everyone was dirt poor.

            7. I doubt that we would see the population growth slowdown which we currently see in western countries if everyone was dirt poor.

              That’s true. And a small population living well is better than an excess population living poorly.

              But right now we’ve got a mishmash of trends: income inequality, rising population in poor countries, more per capita consumption in Asia. None of it really working together to improve the Earth and mankind.

            8. Boomer II, if I understand you correctly, didn’t the process, whereby the 0%-1% got to where they are, degrade their own planet? If so, how does the logic of doing so, of knocking out species, etc. to save what remains, follow (as you say, ‘make ecological sense’)?

            9. Oh, I agree that there was environmental damage to get the .0001-1% to where they are now.

              I’m just saying that if they impoverish the rest of the world, that stops the growth of the middle class, and the middle class consumes more than the poor, per capita. Sure, the .0001-1% consume more per capita than the middle class, but if the very wealthy manage to kill off the rest of us, they won’t consume much relative to what is happening now.

              Again, I am not saying this is fair, and it isn’t the outcome I’d like, but it is the one silver lining I can come up with to mentally deal with the system as it operates now.

            10. SAWDUST
              The thing I wonder about is the consumer side of the equation.
              Will also they get money from “thin air” to pay for the costlier to extract oil?
              If the consumers cannot pay for the costlier oil, how will the oil companies be able to retire their debt(s)?

            11. No, consumers must burn energy in order to pay for energy.
              No free lunch for the consumer.

              Oil companies will retire debts in bankruptcy court. When they are unable to keep the treadmill they are on going any longer.

              When things really start to fall apart you will see it first at the consumer level. The Fed and large banks can print all they want too. They can make funds available. But debts aren’t going to be serviced big time. Private debt is where it’s going to all start to unravel. Public debts can be covered by the Fed. Private debts can’t be.

              The banks are backstopped by the Fed as long as Fed can maintain it’s credibility. So when people start to default in masses on their private debt banks can be reliquified. But that doesn’t stop the carnage for everyone besides the banks. It also doesn’t change the fact debt is money no longer works.

              We will get a new monetary system. It wont be anything like the one we have now that seems to have no limits. Tax revenue will have to cover all liabilities. Borrowing money to keep the lights on so to speak or keep BAU going will become a thing of the past. Thats sound crazy like it can never happen but the current system will no longer work so there will be no alternative.

            12. I see your point now, I think.

              The economy’s wealth (capital as currency) is easily stolen and reallocated at will with a fiat currency and fractional reserve banking.

              So… oil production continues at $90/whatever… because the funding is supplied, but nobody is buying at ‘$90’, but they can continue to make it…. and do…just funding each new venture after the last one goes bankrupt.. until it all pops…/financing stops and everyone goes bankrupt ?

              As this is happening the consumer parts of the economy – which cannot pay ‘$90’ – die. And so the illusion of price is maintained…

              My head is spinning…. hopefully I am close 🙂

            13. oil is THE key resource in everything it essentially IS the economy

              Uhhmmm….what?

              Coal, natural gas, nuclear, wind power, solar power aren’t important?

              Oxygen, water, steel, food…aren’t important?

              The economy didn’t exist before oil hit large production levels?

              People can’t get to work with EVs, or move freight with trains (or even electric trucks, if you really, really like trucks)?

            14. I think Ryan is alluding to the fact that 97% of transportation fuels are petroleum products from the last figures I can remember. Plus, depending on where in the world you are, it could even be used for electricity generation. Middle East and many islands for example.

              So, yeah, in some places more so than others, the economy is inextricably tied to oil.

            15. the economy is inextricably tied to oil.

              I know you know this, but for the benefit of others: That’s temporary. If all oil disappeared overnight, the economy would crash. But any individual can buy an EV and eliminate their oil consumption instantly. Over time the economy can kick the oil habit: freight can move to rail. Jamaican oil generation can move to NG or coal or wind or solar.

            16. Apologies for being unclear in my brevity.

              You are correct. Substantially, I was referring to transportation fuels and the key role they play in supply chains.

              At the moment, and not how things might be in 10 or 20 years, essentially, if ‘trucks stop’, the world stops.

            17. Hi Ryan,

              Remember that it will take time for oil production to go to zero. In the mean time oil prices rise and people use less and substitute other forms of energy. Oil consumption per capita (using total liquids) has been roughly on a plateau at the World level since 1983. So far, the World has not noticed (except Enno Peters and a few others).

            18. As Dennis notes, oil won’t disappear overnight.

              Trucks can reduce fuel consumption instantly just by slowing down.

              They can reduce by 50% with redesign.

              “Daimler Trucks North America’s (DTNA) SuperTruck program has achieved 115% freight efficiency improvement (gallons of fuel consumed per ton of goods moved per mile traveled)—surpassing the Department of Energy (DOE) program’s goal of 50% improvement and exhibiting the best results of all reporting OEMs. (Earlier post.) DTNA unveiled its SuperTruck at the 2015 Mid-America Trucking Show (MATS) in the Freightliner Trucks booth….

              The final SuperTruck demonstrator ran a five-day, 312-mile (502-kilometer) roundtrip route on Texas Interstate 35 between San Antonio and Dallas, at a weight of 65,000 lbs (29,484 kg) GVWR at a speed of 65 mph (105 km/h), where it achieved an average result of 12.2 mpg (19.26 l/100 km).”

              http://www.greencarcongress.com/2015/03/20150327-dtna.html

            19. I have a feeling that things such as coal, gas, wind, etc wouldn’t be able to provide power along their whole supply and manufacturing chain if they were each the pure means of power. Maybe they could, but the amount of capital and labor an economy would have to dedicate to powering itself would limit growth in other industries; a large opportunity cost. For example, a coal-based economy using coal-powered or coal-to-gas fueled vehicles would be economically stunted as compared to our recent petroleum-based one. Oil seems to be the common denominator subsidizing all of humanities recent industrial pursuits. Before that, it was coal, but the global economy was smaller then, and it was by using high quality virgin coal reserves which have been burnt off.

            20. Actually, EVs are cheaper than oil-powered vehicles. The economy would be better off if we transitioned away from ICE vehicles. We’d have more money left over for other things.

            22. Yes, CTL could be done for less than 100/bbl.

              CTL plants are very large and capex intensive, and investors don’t want to risk carbon taxes or regulations.

              Several serious US proposals died for that reason.

              Not to mention oil price volatility: it might take longer to build a CTL plant than your hedges would last.

            23. Nick, large oil companies don’t start projects based on hedges. If the project is very large they get partners, form a consortium, do the engineering and basic legal work, and get project financing if required. I’ve seen projects with 60 % project financing and 40 % equity used by companies holding 80 % of the project, with the remaining 20 % provided by an investor using 100 % equity. Those project bonds don’t require the issuers to hedge.

            24. “The economy didn’t exist before oil hit large production levels?”

              No, on an even remotely comparable scale, it didn’t.

            26. The date most often given for the start of the Industrial Revolution is 1760. It was, at first, driven primarily by coal. But water power also played a very large part in the early days.

          2. Ryan, that’s the question. There’s also the time it takes to respond to a price signal. The industry, other than the USA and Canadian independents, doesn’t turn that fast. Companies use their own internal oil price forecasts, and they may not proceed with an investment even if prices are high because their internal forecast isnt high enough.

            When I was consulting I did a job for a small company which had a plan to buy a property using the cash from a new stock issue. I was asked to get on a plane and go kick the tires, which I did. Two weeks later I told them what I thought the deal was worth, using $80 and $95 as the price boundaries.

            The company CEO nearly died because he had used $110 to prepare a presentation to their board. Lucky for them the seller, who thought he was a genius, didn’t agree to sell. Today, that genius is probably ready to jump out the window. But he was running a small independent.

            Large companies tend to have forecasts which on the conservative side, and they don’t react very fast. I bet many of them were using 80, and are still using 80 to 100 for most investments. Shell Chukchi must be using $120 climbing to $150.

          3. ” how well can the global economy ‘rebalance’ and redistribute resources to permit the required increased allocation of capital to oil production?”

            Reading this got me wondering. What happens when the price of oil rise to the point where alternatives are more attractive? Assuming that the alternatives can scale, won’t the increased allocation of capital go towards the alternatives instead.

            Case in point is the fact that a large percentage of oil is used for transport. What if the price of EVs and their associated batteries drops to a level that oil above $90 a barrel makes purchasing an EV a no brainer? Will increased capital allocation not go towards increasing the supply of EVs rather than ever more expensive oil? In other words isn’t it possible that EVs might disrupt the oil business to a point?

            1. The problem is as I said before that we don’t live in localized and closed economy in regarding the oil consumption. So for example if Europeans use a car just for 2 weeks in a year just to go on vacation that $90 a barrel cannot influence their purchasing habit. Wasn’t somebody from India posted here and said something like “my standard of living improved 50% because my oil consumption increased 5%” They can outbid that high price on the global market because per capita they don’t use a lot.

            2. So the question remains, if the consumer in Europe India or China can make more efficient/better use of the available oil and outbid the typical US consumer as a result, wouldn’t less expensive, more capable EVs effectively destroy demand in th US, making investments in production of higher cost oil questionable. (Bear in mind the heavy use of oil in transportation in the US)

              In that case would it not be possible that investment capital might be directed at increasing the supply of EVs rather than increasing the production of very expensive oil?

            3. Your question is the essence of the problem. But the life is always irrational. It could be lots of things why it is not possible at this moment. It could be inertia; maybe system is too complex to modify it while we have this transition period when oil price oscillate a lot, interest or conflict of interest from entrenched monopolies,. and it does not need to go straight to reinventing flying EV’s, there are things already invented 200 years ago (trains, subways, trolleys, stores on every corner – aka localization 🙂

            4. No. Electric vehicles consume energy. As long as renewables can’t compete (and today they can’t do the heavy lifting), and battery technology is wimpy the better solution is a plug in hybrid.

            5. I am not talking about today. I am talking about some point in the future. Please take another look at my original comment. Should I have written, “What if the price of EVs and their associated batteries” at some time in the distant future “drops to a level that oil above $90 a barrel makes purchasing an EV a no brainer?” to make it more clear that I was speculating about a future, hypothetical scenario.

            6. renewables can’t compete (and today they can’t do the heavy lifting),

              Of course, they can. And EVs help buffer their variance.

              the better solution is a plug in hybrid.

              For many people that’s true. Still, I’m very puzzled by predictions that PO will kill the suburbs: pure EVs will get people to work, if needed.

            7. It’s true that Europeans use only 18% as much fuel per capita for personal transportation. But..that’s because they pay higher prices for fuel. They’re a demonstration of the fact that prices matter, and that there are better, cheaper alternatives to our current forms of oil consumption.

              The Indians in your example also use EVs, mostly in the form of electric scooters, and e-bikes will be a very attractive alternative if prices rise.

            8. ”e-bikes will be a very attractive alternative if prices rise”

              If I were a young guy looking to get into a business that could be started with a modest initial investment I would try to get a dealer franchise for which ever Japanese motorcycle company markets the first line of electric scooters and small motorcycles in the US.

              Tens of millions of people are going to have to give up driving altogether or at least cut back to one car instead of two or three when the inevitable long term oil supply crisis eventually arrives.

              These companies already manufacture the best gasoline powered scooters dollar for dollar and in my opinion the best by any standard. With gasoline powered and electric scooters and small motorcycles in a single location business is going to be VERY good.

            9. We also live in much more densely packed countries, so don’t really have as far to go most of the time, compared to the USA with it’s big old open spaces. I could quite easily run to my workplace if I had to (and indeed I do sometimes). When I was in Texas most of the people I knew lived quite a long drive away, and used their car to get basically everywhere due to the shocking lack of public transport. Fuel prices can’t really undo any of these factors in a hurry.

            10. Hi Sam,

              You are correct for large parts of the United States. A fairly large proportion of the population lives in fairly densely populated areas (Boston to Washington corridor), sections of California, and several large cities.

              The public transportation (rail and light rail) can be built and buses and bus schedules can easily be changed by training more bus drivers and making more buses.

              If oil prices were the same in the US as they are in the UK, there would be more demand from US citizens for decent public transportation.

            12. Hi Nick,
              EV’s, electric scooters are in their infancy here. I see a few, but not a lot. The reason is that it doesn’t provide bang for the buck.

              Suppose I pay a bomb for the EV and then a situation comes where I have to drop someone to the airport (30km away) in the middle of the night with 20% charge in my car. What do I do then ? After all what good is a car that does not allow me to drop a relative to the airport in an emergency or cruise the highways (interstate). People think like that and it’s only reasonable.

              Oddly EV’s here (they would look like golf carts to someone from US) are bought by people as their second car where it’s used to drop kids to the school or go shopping nearby, never as their first car.

              I will give another example. A few years ago an Indian company called Tata launched the ‘Nano’. It was a car that cost Rs 1 lakh or roughly 2000 USD in those days. It gave a mileage of 50mpg and could carry 4 people and travel at 50kmph.

              Experts proclaimed it as a disaster, everyone thought that the streets would be clogged with it. But the funny thing….no one bought it. It sold a measly 10k units in a year, most of the buyers were users who already had a car. The reason ? If you were spending money for the first time to buy something like a car you better get some value for your money and the 2000 USD car didn’t offer that.
              They recently revamped the car, made it trendy, added a lot of accessories and raised the price to 4000 USD, and guess what, it’s selling a lot more now, mostly among the youngsters and single working ladies. It’s selling point is no longer that it’s cheap, the USP is that it’s easy to drive and park.

              I don’t see EV’s taking off here anytime in the future here unless battery tech becomes super cheap and super efficient. Even oil at $150 is preferable to the current crop of EV’s here.

            13. We really need to get beyond early 90’s Japanese lithium ion battery technology for storage to become more efficient.
              It has been a while——

            14. Yeah, adoption of new things takes a while. You have to make them attractive, not sell them as econo-boxes. You have to make a variety of models.

              Plug-in hybrids may be the best bet for most people.

            15. We really need to get beyond early 90’s Japanese lithium ion battery technology

              Li-ion is efficient. Price is the question, and prices are dropping fast.

              Of course, EVs are already cheaper to buy and own than ICE’s.

            16. In the USA most families own two or three cars per household . So a pure electric is no problem at all with a conventional car in the driveway if if a car is needed on short notice or for a long trip.

              And when you get right down to it, very few people need to take somebody to the airport or anywhere else on very short notice except maybe to a hospital.Here we have taxis and ambulances in most communities. I presume taxis are common just about any place automobiles are common.

              It is true though that most people seem to be fixated on buying a car as much or more for a status symbol as for transportation. The local Chevrolet dealer does not allow a new car on his lot unless it has all the basic bells and whistles such as automatic transmission , air conditioning, power steering and brakes, electric windows, music , carpet , etc etc.

              Even so I believe pure electric cars will be enough cheaper than conventional ice cars within five to ten years that pure electrics are going to gain market share two or three or times or even faster than most people expect.

              So far the average person is simply unwilling to even consider a pure electric. A few years ago just about every body was afraid to consider buying a Toyota Prius. Now just about every body even here in the backwoods is ready to think about buying one – given that they have proven to be very reliable and extremely fuel efficient.

              My personal opinion is that Chevy Volt and Nissan Leaf cars are going to sell used for very HIGH prices as soon as people get better acquainted with them – and oil spikes again.

              Lets consider a bit of reality. Gasoline may be six bucks even here in the USA a few years down the road. A person who has an older Volt that will still go twenty miles on the ” worn out ” battery could still make a daily twenty mile round trip commute without buying gasoline. That could add up to a eight hundred or maybe a thousand bucks a year saved on gas.

              I personally know a dozen poor people who would be glad to buy a dirt cheap ragged out old Leaf that will still go thirty miles – given that they live within ten miles of work. Poor people drive because they have to and drive as little as possible. Range to them means to the job and back and stopping on the way at the supermarket.

              If gasoline is rationed he will be able to save almost his entire ration for the occasional longer trip or sell it on the market , black or white.

            18. I don’t think EV’s belong here, I mean theoretically they do but we drive so little that per km savings don’t mean that much here.

              It actually belongs in a car country like US. I do hope to buy one someday though if they become cheaper. Currently the best one we have looks like a tin can and costs more than a 1.2 liter hatch.

            19. Wiseindian,

              How many kilometers would you estimate the average car is driven per year in India?

              Am I correct in my understanding that India has eliminated gasoline price caps and subsidies? How much do you pay per liter?

              If no one cares about the cost of fuel, why was eliminating price controls such a big problem?

            20. There are two sides to the oil consumption here…
              1. Petrol : Used in most personal cars and all scooters and motorcycles. Km’s are not much, I don’t have a number but average commute distance in the city isn’t more than 20km a day (one way) and that is extreme (Anything longer and people take the bus/train or a shared cab).
              Most of the time it’s around 10 km (one way). On an average I’d say 4000 km per year inside the city, most do not drive even that much, most of my co-workers for example hardly take out their car, they take the bus because it’s convenient.

              The majority of the miles are racked up on the interstate where it’s difficult to ride the current crop of EV’s.

              2. Diesel : This is where most of the subsidy used to go, in fact petrol was de-regulated much before Diesel. All buses, trucks and taxis run on this and most of the miles are clocked here. It also directly impacts everyday inflation. When you hear about protests regarding subsidies, they are mostly talking about diesel.

              Right now petrol costs the equivalent of $4.1/gallon here, Diesel around $3.6.

            23. There are so many intelligent responses it is going to take me a week/s to contemplate them.

              But this is something that I had not given sufficient consideration.

              ‘$90’ would trigger increased oil production, but it also triggers other solutions (technical and lifestyle) to this ‘price problem’ that will reduce demand, or at least reduce demand growth.

              … perhaps this means that the ‘oil price’ is tied to alternative solutions… if ‘EV’s suck’/(available alternative inadequate), nobody buys them, oil price stays ‘high’… if ‘EV’s are awesome’ people buy them, oil demand is reduced, price is reduced – AS LONG AS – the advancement of solutions/changes is not greatly exceeded by the decline of available oil, things can balance…

              but I think this was the crux of Robert Hirsh’s concerns – that it will take 20 years to migrate/implement these alternatives and once oil declines it will do so faster than we can adjust (and with the receding horizon of available energy – it will be harder to do)

            24. That’s it. It works on a combination of real economic drivers plus perceptions of the future market prices as well as politics. Politics drive actions such as subsidies and energy security measures, and can cause sudden shortfalls due to wars and sanctions. It’s very hard to model because it includes lots of actors and they can be misinformed or behave irrationally.

      2. “But if those collapsing economies are oil producing nations, like Libya, then they will produce less, sometimes a lot less, and that should drive prices down.”

        Up instead of down.

  19. On this topic of money in payment for oil or in funding exploration, a big turning point will be when the value of the currency being received for the oil is no longer deemed value. So, if continued counterfeiting of the dollar, euro, yen and other currencies is seen not to be fair value for a valuable and finite resource like oil, then gold, higher value currencies or other forms of valuable traded goods will be demanded in return.

    Then the currency wars will really start and oil will only be traded for real value whatever the two parties an agree upon.

    1. And from the same article:

      Citigroup Inc. predicts the kingdom will push toward its maximum daily capacity, which the bank estimates at about 11 million barrels, in the second half of 2015.

      So Citygroup doesn’t believe the Saudi claim of being able to produce 12.5 million barrels/day. And I don’t believe that they can produce 11 million barrels/day — maybe for a few days as they drain their storage tanks.

      1. Citi doesn’t have a clue of KSA capacity beyond someone’s opinion formed in a cubicle with no special Citigroup deployed personnel walking the fields of KSA counting anything. Nobody from Citi went to KSA to measure capacity.

        They look at some data someone else reported and then they pretended to have some equation the data went into and used that to report to their boss, so they don’t have to say “well, this number is close to other numbers we’ve seen for KSA capacity so reporting that as the official Citi prediction won’t scare away any clients”.

        Of course, the equation used was designed to be close to other estimates.

        1. Watcher, this is all very true but wouldn’t that be true for everyone who posts here as well? We are all making a guess, and hopefully it is an educated guess.

          Citi has gotten a lot of things wrong in the past, but so have I. I hope we have both learned from our mistakes.

          1. The difference is, Ron, you are not a sociopath from my observation.
            Citi, by being a corporation, is required to be a sociopath.

          2. No.

            Citigroup is CITIGROUP. Not some guy named Ron.

            There is an implication that they spent money to send people to collect special data and produce some magnificent, proprietary data derived estimate of capacity.

            They didn’t. It’s deceptive. It’s essentially lying.

            1. Don’t KSA royals own a big chunk of Citi stock?

              I thought it was interesting that about the time KSA said they would not cut if oil went to $20, Citi was also calling for $20.

  21. This was posted by Rockman over on Peakoil.com. I thought it worth re-posting here.

    Rockman on Tue, 23rd Jun 2015 8:34 am

    The absolute numbers from the TRRC may correct over time but look at the trend: the rise in Texas oil production didn’t begin to level off in early 2015…it began in Sept 2014. And as always remember that the production from shale wells that came on last fall was from wells that were initially spudded 3 to 6 months earlier given the lag time between spudding, frac’ng and initial production. Thus the reduction in production increase was the result of the slow up in drilling that began in the early summer of 2014…about 1 year ago. And now they are reporting a significant decrease in April production which, again due to lag time, would correlate very well with the rig count drop in 1Q 2015.

    Cornies can rationalize it anyway they want. But by the end of 2015, if oil prices stay at the current level, there will be little argument that the shale boom is over IMHO.

    1. I don’t think the American people understand Russians, and one reason is the lack of communication. The Pew survey didn’t ask them how far are they willing to go to defend their territory. The answer is extremely far. Farther than Americans are willing to have a nuclear war.

      1. I doubt Putin would start a nuclear war. He’s a bully and a thief but not entirely irrational.

        1. Good question. I used to live in Russia in the 1990’s. When the USA and Britain invaded Kosovo they marched from Macedonia towards Pristina, their objective was to take the Serbian base at Slatina. Meanwhile Russian forces serving in Bosnia packed and made a fast move towards Slatina, and arrived there first. The Russians were on BMPs, and placed a couple at the base entrance.

          The NATO column was led by a British General, when they arrived at the Slatina entrance they found their way blocked by the Russians. The Russians denied them access. At this point the NATO commander went nuts and ordered the British General to fire a tank round at the Russians, but the general refused orders. He called Blair and explained the American was nuts and he wasn’t about to start wwIII.

          The NATO communications were being monitored by the Russians. At that point, when the orders were issued and refused, the Russians met and the discussion they held included a proposal to re target an ICBM to air burst a nuclear warhead over an American fleet sitting in the Adriatic as a response to NATO firing on the Russian soldiers.

          The use of a limited response using one or two nuclear devices has been war gamed, and it’s a feasible option. The idea is to show a sharp claw and let the opponent’s leading elites know they have pushed to the limit. The question is whether the single air bursts will be limited in scope.

          I think Putin has started showing Russia’s teeth. The neocons who run USA foreign policy are a bunch of nuts. And this is why I can’t vote republican. Obama is behaving like a mentally retarded child holding a high powered rifle, but the republicans are even worse.

          1. “At that point, when the orders were issued and refused, the Russians met and the discussion they held included a proposal to re target an ICBM to air burst a nuclear warhead over an American fleet sitting in the Adriatic as a response to NATO firing on the Russian soldiers. ”
            Sounds like a Hollywood movie. The Russians can’t be that stupid.

            1. I have confirmation from two sources that a British General refused orders and called Tony Blair to explain he wasn’t about to start WWIII.

              I have information from one source that a Russian general suggested the re targeting to poke the U.S. Fleet in the Adriatic with an air burst. Maybe he wanted the CIA to hear the proposal? After all, I was told and I’m not remotely CIA. I know it scared the hell out of me at the time.

              In any case, I think Obama is being pretty stupid. This is common for Harvard graduates with a Nobel Peace Prize.

            2. You do realize that a nuclear weapon detonated in the air above the fleet would destroy it?

            3. Depends on the burst height and the energy. My guess is a U.S. Carrier fleet would get singed but not destroyed by a 50 kiloton air burst at 20 km. I wouldn’t want to be on a plane in the area.

            4. That would be a small one, and no burn or blast effects should be felt at sea level.
              Too much at stake to play pot shots with nuclear weapons. The other guy might just shoot back for real.

          2. BTW, this incident happened when Russia’s president was Boris Yeltsin

        2. Russia has military doctrine that prescribes when to use nuclear weapons. This has nothing to do with Putin. Putin is perfectly rational, by the way. Russia will not use armed forces at Putin’s whim. A certain level of threat to national security would prompt an appropriate action though. Staff generals work out these issues and advise the president whichever his name is.

  23. Resilience is picking up a lot or maybe all of Matt Mushalick blog posts.

    The only real problem with Resilience is that they run so many different articles on so many different topics that there is never a core of regular visitors who maintain a conversation going deeply into the subject and discussing the implications. We have that here in Ron’s blog.

    Matt has done a hell of a job showing why Asia is or soon will be in deep in the peak oil DOO DOO, which of course means that peak oil is just that much closer to kicking the rest of the worlds butt as well.

    http://crudeoilpeak.info/asias-oil-consumption-at-record-high-while-production-peaked-in-2010

  24. One more time, so this is understood.

    In the days of normalcy, as good a term as any, the role of central banks was to adjust interest rates to lower the cost of borrowing and thus stimulate borrowing by borrowers wanting to grow their business. And the CBs would raise the cost of borrowing if demand for those loans had surged, creating more money and diluting it, aka creating inflation. A guy above noted how borrowing money creates it. Ya, that’s what fractional reserve does.

    Then rates went low. They’ve been falling since the 1980s. They had to get to zero eventually. They did. And along comes a need to stimulate borrowing, aka 2009. Can’t drop rates lower, rationally, since they were near zero. And even worse, there didn’t seem to be any demand for private borrowing at any level of interest, but the imperative to get money injected (an imperative in Bernanke’s mind, not everyone’s) still was there. And so QE was born. The government was trying to do fiscal stimulus (running a bigger deficit) and Bernanke decided the way to make magic was to be the lender for the government’s borrowing. Presto, demand for borrowing was discovered (by the govt) and Bernanke became lender of . . . first resort. That’s a play on words. The Fed’s role is supposed to be lender of last resort.

    And this, in the US, went on for just under 25% of GDP, so far. Japan . . . oh nevermind, their magnitudes are eyes glaze over territory. Others did their own QE and the ECB began theirs a few months ago. It will add to about 1 trillion Euros and is scheduled to end September next year.

    Hmmm? Yes. 23.x% of GDP printed from thin air since 2009. This is prosperity.

    When do oil producers say we don’t want any more of those printed pieces of paper? When there is nothing to buy with them they can’t make internally. Clearly this focuses more on Russia than KSA. No real effort in KSA to develop a semiconductor manufacturing industry.

    1. “When do oil producers say we don’t want any more of those printed pieces of paper?”

      The only thing to look is if Shale & Tar keep financial freeloading by end of the year.

  25. Fernando is probably the best person posting here these days to answer these questions but if anybody else knows or has an opinion please don’t be shy.

    Given that we have more very light crude from tight oil fields than we really want since the distillate yield of these crudes is low, it seems likely to me that these crudes may eventually be refined in such a way as to remake them into heavier molecules suitable as liquid fuel – jet fuel, diesel, gasoline.

    Is this apt to be cheaper or less energy intensive than manufacturing synthetic liquid fuel from coal?

    Is it likely these ultralight crudes can be used as feedstocks in combination with coal to produce practical synthetic liquid fuels?

    1. Mac, I think the market will self adjust by having vehicles consume LPG. Ethane is s really good chemical feedstock, I don’t think we will vehicles use ethane. And as long as the bureaucracy allows gasoline exports they will export gasoline and keep the diesel. There are ways to reform ethane to make liquid fuels, but I don’t think that’s going to happen.

  26. China’s May coal extraction rate dropped by 8.1% yoy. That’s equivalent of about 3 mb of oil per day. I can’t provide a link to this news, bacause it’s for registered users only.

  27. The comments section started with Dr. Don suggesting that “central planners” were instructing the EIA to “cook the books”. Like many others I don’t believe this to be the case. On the other hand I do believe that nobody at the EIA wants to get the reputation of being a killjoy or a doomer or a bearer of bad news and that it shows up in their tendency towards optimism.

    My focus is not so much on the reporting of production data, which I consider just a matter of collecting all the data from the different states/regions and making it all available to the public in one place. What I have a hard time understanding, from as far back as my early days following TOD, is the basis for the optimism of their oil production forecasts through 2030. This is especially difficult when juxtaposed against their pessimism with regard to renewables. Electricity production from solar has gone up one hundredfold since 2006. Did they nail that?

    If they want to present a rosy picture and Peak Oil is making that difficult, why not present rapid exponential growth of renewables as being able to take up the slack? In this instance, I am not suggesting that they can but, in my opinion it would be more plausible than their presentation of tepid growth in renewables and robust growth in oil production. What gives?

    1. Google in about 2007 started a renewable energy project, stating that they would spend tens of millions of $’s to discover the best way forward to reduce carbon dioxide. However, after spending that money, they cancelled the project. They cancelled it about 5 years later. They cancelled the project because under their very very very most optimistic scenarios [e.g., eliminating all coal by 2050] carbon dioxide emissions keep rising every year. You still have to manufacture windmills, solar panels, etc. So, if you believe that carbon dioxide has anything to do with the climate [I do not], then you are screwed with any current scenario using currently known renewables. Google recommends that every smart person spend 10% of their time dreaming up new ideas, so that some new and now unknown process can produce energy. We would need something like cold fusion [just an illustration term].
      Therefore, I am not obsessing about renewables. Something else is needed. Google “google’s clean energy project”
      [A much ridiculed point: Termites produce more green house gases than all human activities.]

      1. They cancelled the project because under their very very very most optimistic scenarios [e.g., eliminating all coal by 2050] carbon dioxide emissions keep rising every year. You still have to manufacture windmills, solar panels, etc. So, if you believe that carbon dioxide has anything to do with the climate [I do not], then you are screwed with any current scenario using currently known renewables.

        Based on what I read, they couldn’t find a way to maintain business as usual with renewables.

        It’s got to be a combination of new energy sources plus energy efficiency plus less overall consumption.

        There are a lot of people here who feel we ARE screwed as soon as oil becomes too scarce and too expensive.

        I’m someone who wants to see more renewables as a way to be not completely screwed when oil and then coal and natural gas run out.

        The CO2 discussion is of value if you believe that it adds to the urgency of finding solutions. But even if you disregard the CO2 issue, you’ve still got to face declining resources and increasing populations.

        I consider the CO2 discussion something of a political distraction here. We’ve got enough to talk about just with peak oil.

        1. The Google project simply decided that they didn’t see a clear way to make renewables a lot cheaper than Fossil Fuel.

          That’s all. They didn’t decide renewables wouldn’t work. They didn’t decide that CO2 emissions couldn’t be reduced. They just didn’t see a magical, absolutely free way to reduce CO2 compared to BAU/FF.

          1. Nict – Thats not true at all. They explicitly layed out how a big push for renewables doesn’t solve for carbon emission reduction.

            I keep asking you what you think you are solving for with all your EV/renewable energy tecnocopian future crap and you still have not answered.

            1. That’s not correct. Their goal was to develop renewable energy that was cheaper than dirty fossil fuels. They decided the chances of success weretoo low to make it worth their while.

              There’s no question that replacing fossil fuels with wind solar and nuclear would dramatically reduce CO2 emissions.

            2. Jef,

              It seems pretty obvious to me that you will never believe it, but one thing that is being solved for is straight up no subsidy PROFITS. Renewables are getting cheaper. Fossil fuels on average are getting more expensive as they deplete and it costs more per unit to bring them to market.

              I am not an engineer but I have been around and worked on machinery for half a century plus and it is perfectly obvious to me that electric vehicles are going to own most of the automobile market within a couple of decades.

              And speaking as an armchair historian I can say without any doubt that many wars have been fought in the past for the possession of natural resources such as farmland, water, timber, metal ores, coal, and crude oil.

              In times to come the countries that have no fossil fuels of their own are going to be at the mercy of those that do , the few that have enough left to sell some.

              I can remember when a bushel of wheat was worth about the same as a barrel of oil. It takes ten bushels or more to buy a barrel of crude these days.

              Home grown renewable energy is worth as much as aircraft carriers and armored divisions in terms of national security.

      2. So, if you believe that carbon dioxide has anything to do with the climate [I do not]

        Belief has nothing to do with science… and that is a profoundly ignorant statement. As for termites your ignorance is compounded still further.

        [A much ridiculed point: Termites produce more green house gases than all human activities.]

        Yeah and it should be made clear that while termites have been common since the cretaceous (about 140 mya) it is still human activity with the advent of agriculture that has had the largest impact on the biosphere during the last ten thousand years or so. With impacts increasing exponentially since the industrial revolution and the use of fossil fuels. Termites contribute a negligible amount of greenhouse gases to the atmosphere. They contribute less than 5% of global CH4 emissions

        http://www.ajol.info/index.php/ajest/article/download/71907/60865

        Green house gas emissions from termite ecosystem
        Gomati Velu1*, Ramasamy K.1, Kumar K.1, Sivaramaiah Nallapeta2 and Ramanjaneya V. R. Mula3
        1Centre for Plant Molecular Biology, Tamilnadu Agricultural University, Coimbatore, 641003, India.
        2ONAN Centre for Molecular Investigations, Secunderabad, 500047, India.
        3Torrey Pines Institute for Molecular Studies, Port St Lucie, Florida, 34987, USA.
        Accepted 9 August 2010

        Methanogenic archaea (methanogens) that inhabit the gut of termites generate enormous amount of methane that adds to the global atmospheric methane (CH4). Methane is an important trace gas in the atmosphere, contributing significantly to long wave absorption and bringing in variations into the chemistries of both the troposphere and the stratosphere. In the troposphere, methane acts as a sink
        for hydroxide (OH) and as a source for carbon monoxide (CO). While in the stratosphere, methane is a sink for chlorine (Cl) molecules and a source of water vapor, which is a dominant greenhouse gas. Analysis has shown that atmospheric concentrations of methane have increased by about 30% over the last 40 years. Such an increase may greatly affect future levels of stratospheric ozone and hence, the climate of the earth. Recent estimates of the total annual source strength of CH4 vary from 400 to 1200 Tg. Activities such as rice cultivation, cattle production, mining, use of fossil fuels and biomass burning is believed to be the cause of increasing methane levels in the atmosphere. To add to this list is the source from termites, which contributes measurable quantities of CH4 ranging from 2 to 150 Tg per
        year. However, data indicate that while there are large variations in the amount of CH4 produced by different species, the total methane addition due to termites is probably less than 15 Tg per year, thus making a contribution of less than 5% to global CH4 emissions. Furthermore, the review addresses questions related to the biological aspects of termite harboring groups of bacteria that participate in methanogenesis and various other biotechnological potential of unique microbiota as well as possible strategies to mitigate methanogenesis by termite.

        1. Maybe we should discuss the meaning/definition of science – personally, my thought is it`s where theories and the ”so called facts as we currently understand them” are always open for challenge and debate. I mean, if you really truly believe there`s “manmade global weather change” then you should be comfortable enough to go ahead and follow the normal Scientific Process of allowing widespread opinions on the subject with all the data being so confusing anyway.

          1. Indeed. The subject has become quite political. As far as I can see the debate is valid, and ought to focus on the attribution of greenhouse gases to the ongoing energy imbalance (the energy imbalance which leads to increasing temperatures). There’s also a need to debate the proposed solutions.

            But the attitude I see is quite medieval, with enormous efforts being made to silence deviate, insults, and the mixing of political causes with the global warming problem.

            On the other hand, there are many who do refuse to consider simple facts, such as 1. It’s getting warmer and 2. Greenhouse gases cause warming.

            1. The subject has become quite political. As far as I can see the debate is valid, and ought to focus on the attribution of greenhouse gases to the ongoing energy imbalance (the energy imbalance which leads to increasing temperatures). There’s also a need to debate the proposed solutions.

              I think the climate data skeptics will end up falling on the wrong side of the discussions for several reasons:

              1. If we are on a course for more extreme weather events, those are going to happen no matter. They don’t obey any political whims.

              2. The economics ultimately favor getting along with less fossil fuels.

              3. The new wealth in the US comes from industries not interested in the energy status quo. They want to experiment with renewable energy, better monitoring and conservation systems, and distributed generation.

              The only real matters I see with the climate change discussions are the degree of urgency. If you believe we must do something, we can do something, and we can’t wait until economics play themselves out, then you will urge more action than wait-and-see.

            2. ”The economics ultimately favor getting along with less fossil fuels.”

              The understatement of the day for sure.

              PHYSICAL REALITY dictates that we will ultimately get along with hardly any fossil fuels at all.

            3. PHYSICAL REALITY dictates that we will ultimately get along with hardly any fossil fuels at all.

              I guess that’s what I mean. Fossil fuels will become scarcer and will cost more.

            4. Yes, I don’t see the urgency. I support paced rational and well thought out measures. These include geoengineering research, as well as more research on things such as energy storage.

              As far as help for poor nations we can lay high voltage cables to sell electricity to Caribbean nations.

              Or build hydropower dams in Africa provided the lucky governments getting the deal allow us to monitor human rights abuses and corruption, and impose automatic sanctions if they get out of line.

            5. Hi Fernando,

              I strongly disagree on the geoengineering.

              You have heard of Murphy’s Law? I would prefer not to experiment with the planet (any more than we already are.)

            6. Yes Dennis, but Murphy´s law also applies to what you want to do. In other words, there´s significant economic risk in following the path suggested by Christiana Figueres, Ban Ki Moon, and our dear friends at 350.org.

              If you weren´t proposing radical moves with what i see is such poor analysis of the risk factors involved, then I would support it. As it is, I´m afraid we got a set of lousy drivers wearing fogged glasses trying to pick the route as they chant “trust 97 % of scientists”. Sorry, but I´m used to being the adult who checks the facts before we jump. And in this case I say jumping is out of the question.

            7. Yes Dennis, but Murphy´s law also applies to what you want to do. In other words, there´s significant economic risk in following the path suggested by Christiana Figueres, Ban Ki Moon, and our dear friends at 350.org.

              Reducing the use of carbon-based fuels will likely cause less to go wrong than geo-engineering the atmosphere or something similar.

              If we want to limit population growth and the consumption that goes with it, that in itself will reduce the use of carbon-based fuels. Are you saying to do so would be create an unacceptable risk? Are you also suggesting that if people drive less or use smaller vehicles, that would create an unacceptable risk?

            8. Hi Fernando,

              There are always risks. You think transitioning to renewables and other non-fossil fuel energy,using energy more efficiently, and reducing population growth in order to reduce the risks associated with global warming and fossil fuel depletion is risky. I think there is a greater risk of damage to the planet by attempting to use geoengineering.

              You really think we have enough of an understanding of the Earth’s complex systems to start experimenting with the planet?

              I suppose you could argue that the experiments have already begun, I think it would be better for humans to try to reduce their impact on the Earth system. I guess when it comes to the planet I am a conservative (in the true definition of that word).

            9. Dennis, I think actions such as forcing the Netherlands to cut emissions 25 % in 5 years are extremely harmful. I can think of a ton of actions being proposed or enforced by your buddies, all of which are causing economic harm or can be total disasters unless we oppose them. Get the point?

            10. Dennis, I think actions such as forcing the Netherlands to cut emissions 25 % in 5 years are extremely harmful.

              But that seems to suggest that business as usual is worth preserving. What if proposed economic changes are better for people (e.g., less pollution)?

            11. Hi Fernando,

              My proposals are very similar to yours minus the geoengineering. My position does not coincide with that of 350.org. I thought the Netherlands was doing pretty well economically and Germany is as well. Moving to renewable energy will be a net positive as we approach peak fossil fuels, it cannot happen overnight and developed nations are where the ideas need to be tested, using the most cost effective methods to move away from fossil fuels (efficiency, wind, solar, geothermal, tidal, wave, hydro, biofuels, nuclear, and whatever I left out).

          2. I mean, if you really truly believe there`s “manmade global weather change” then you should be comfortable enough to go ahead and follow the normal Scientific Process of allowing widespread opinions on the subject with all the data being so confusing anyway.

            Man made ‘Global Weather Change’ ?! Really now…

            Everyone’s opinion is definitely NOT equal!

            https://goo.gl/ZxzVsZ

            But there’s kind of a notion that everyone’s opinion is equally valid.
            “My arse! Bloke who’s a professor of dentistry for 40 years, does not have a debate with some idiot who removes his teeth with string and a door!”

            Dara O’Briain

            1. I value my opinion more than anybody else’s. In the end, I have to decide if I trust others’ opinions.

              Thus far, I’m not very impressed by Obama’s opinions about climate change. I think most climatoligists can’t grasp the issues (for example, they use a dumb set of fossil fuel reserves).

            2. I’m sorry but climate science really is a scientific discipline. You are entitled to have an opinion about any subject on the face of the Earth but no one should take your opinion about the climate any more seriously than they should take a country veterinarian’s opinions regarding cutting edge brain surgery. Its hubris. I have never really experienced this phenomena where there are so many armchair self styled experts with the stones to critique an entire field as though you can simply read a bunch of crack pot shit on the web and become an expert in this area. What’s next Chemistry? “Oh those damn chemists all they want is that cushy NSF chemistry money!” Jesus Harry Christ!

            3. Climate Science has only existed for about 25 years. Due to that it remains merely a hodge-podge of elements of established sciences, without any established reference for the relative importance on various individual disciplines. So the term “climate scientist” carries little weight, at present, because it is so poorly defined against the long established core scientific disciplines.

              Indeed, the only “core scientific value” of climate science is first and foremost the strict and unwavering approval of anthropogenic climate change. Anyone who isn’t accepting of it is denounced as a blasphemer and cast out. The peer review process arising out of publicly-funded research has been totally corrupted by refusal to consider either contributions or reviews by those who don’t accept the orthodoxy.

              Of course, no discussion of this nature would be complete without also noting that, compared to just about any other scientific discipline around, climate science is highly politically motivated. In order to advance their own agendas through the avenues of power available to them, many politicians closely monitor the outcomes of research and experimentation in climate science.

            4. Bullshit. Ideologues have politicized climate science because the only way to respond to an issue that affects the climate (which is global) is through global collective action which is antithetical to a certain segment of the polity. Therefore these people would rather attack the messengers than address the real issues. The fact that it is a multi-disciplinary subject and is relatively new simply reflects the fact that it is a complex problem and we are drawing from existing disciplines. Its a slick line of crap designed to throw sand in the umpire’s face but it just doesn’t fly.

            5. “Climate Science has only existed for about 25 years.”

              “Jane, you ignorant slut”
              Dan Aykroyd

              Atmospheric chemestry, aka climate science, has been around since the 1800’s. The effects of carbon build up in the atmosphere has been understood and we have been warned about its effects for over a 100 years.

            7. That’s the thing about weather changes. They don’t obey politics.

              We could be talking about how to prepare for more extreme weather and natural disasters (and some places are starting to do so), but seems like some groups want to keep focusing on conspiracies instead.

            8. A heat wave in Pakistan doesn’t mean much. It’s a weather event. One reason why this global warming issue is so controversial is the lack of trust inspired by the attribution of weather events to global warming. What’s the record temperature for Karachi? On what date wad it measured? What was the urban heat island effect at the time compared to today’s effect?

            9. One reason why this global warming issue is so controversial is the lack of trust inspired by the attribution of weather events to global warming.

              I’ve gotten the impression that it’s been the opposite. Climate scientists have been reluctant to attribute weather events to global warming even as some of us wonder if there has been a connection.

              It’s only been in the last six months or so that I have been reading some climate scientists linking the two.

              But what does happen is that whenever there are unusual weather events, some of us wonder if there is a link, even when no one says there is a link. If you have record breaking weather events and record breaking natural disasters, some average citizens like myself do wonder if there is a connection. (Of course, there are others who are convinced such events are caused by gays.)

            10. Here. I went and got the Hadley Center grid temperature anomalies for two sectors, one has Karachi and extends offshore, the other is an inland rectangle starting north of Karachi (the coordinates as in the graphs).

              The plots show very little temperature changes.

            11. SW, you don´t have to take my opinion for anything. I´m simply stating I´m the one who decides whether I can trust something or somebody. And for what it´s worth, since Ron allows me to write it in this blog, I´ll state I don´t think the work done to support a radical move to renewables is ready for prime time. As a matter of fact, I´m not sure the solution to global warming is renewables. The better solution may be simply to use geoengineering.

              The future end of fossil fuels tells me geoengineering isn´t a complete answer, but I dont think the bs I hear about renewables has a sound basis (and this is why I think it´s bs). And when it comes to judging whether renewables can replace fossil fuels effectively AT THIS TIME, I´m much more qualified than most scientists. After all, they tend to be highly specialized ivory tower types.

            13. Hi Fernando,

              Not all scientists are “ivory tower types”, though they do tend to be the people that have more peer reviewed publications. You are not the only engineer in the World, and perhaps you are not the best engineer in the World.

              I agree with Ron that geoengineering is the worst possible path, much too risky.

              I disagree with Ron that there is no solution to global warming, and I disagree with you that renewables will not help reduce our dependence on fossil fuels. A fall in Total fertility ratio, more efficient use of energy resources, and a rapid transition to renewable energy will help with both global warming and peak fossil fuels.

        1. Investing in a clean
          energy future

          At Google, we believe in a clean energy future where anyone can choose renewable energy because it’s sustainable, economical and available. To help make this a reality, we invest in innovative, large-scale energy projects. To date, we’ve made agreements to fund over $2 billion in clean energy wind and solar projects.

          http://www.google.com/green/energy/investments/

          1. Of course solar power, wind power, electric cars, insulation, conservation are superior to fossil fuels and much cheaper. Fossil fuels need to be taxed for their pollution and environmental destruction which would make them over a magnitude more expensive than solar and wind based renewables. Non-polluting energy generation could also have no taxes to promote the change-over.
            The problem is not economic it’s the accounting in the economics itself. Why thinking people believe the numbers they are presented is beyond me.

        2. “The twin peaks of oil and government are causally linked: central government’s great era of expansion has been fueled by abundant, cheap liquid fuels.” ~ Charles Hugh Smith

          “Consider them accumulation crisis of the seventies. Most people in the rich countries had a car, refrigerator, television, and the like. An overproduction crisis. How did globalization solve this? Economies of scale – niche products for affluent consumers across the globe. Computer assisted manufacturing to reduce costs. Relocating factories to poor countries.
          Containerization. Casualising work. Reducing waste in production. Branding to expand markets. Outsourcing production to cheap supplier companies. The common thread was that the same tasks could be done much more cheaply (Castells 1997; Hoogvelt 2001; Martin &
          Shumann 1997; Shutt 1998). Even the boom following the second world war follows this pattern. The immense destruction preceded a re-tooling to a higher level of productivity.

          There is nothing about the switch to green energy that remotely resembles this. It is all about substituting cheap ways of producing useful energy with more expensive ways of producing the same energy. It is re-tooling to a lower level of productivity and to a permanent cap on energy production. It is this simple fact that explains why the capitalist class is dragging its heels on this issue in a way that threatens our future survival.” ~ Terry Leahy, ‘Checkmate: Why Capitalism Cannot Survive Global Warming’

          “Ah, the glass ceiling of greed of the royal dynasties… Finally.
          !!Bonk!! LOL” ~ CM

          Part of my point is that it seems the ‘capitalist class’ and ‘government’ are hitting a rock and a hard place in terms of coming up with responses to peak oil/climate change/etc. that shoot themselves in the feet (and higher up the body).

          IOW, ‘renewables’ may prove to kill or seriously-maim both industry and government, while doing nothing and maintaining BAU will do the same thing.

          Say Uncle?

    2. It helps to remember that the EIA sees it’s role as one of advising governmental policy makers.

      Their mid-line projection is a baseline for change: it’s based on NO new policies – absolute, literal status quo.

      1. I have posted an excerpt from the EIA’s mission statement a couple of times at TOD. Here it is again for the benefit of those who have not yet seen it (bold mine):

        “The U.S. Energy Information Administration (EIA) is the statistical and analytical agency within the U.S. Department of Energy. EIA collects, analyzes, and disseminates independent and impartial energy information to promote sound policymaking, efficient markets, and public understanding of energy and its interaction with the economy and the environment. EIA is the nation’s premier source of energy information and, by law, its data, analyses, and forecasts are independent of approval by any other officer or employee of the U.S. government.”

        1. islandboy,

          I have been watching the EIA now for over 20 years. Twenty years ago the EIA predicted in virtually all of its report that oil prices will stay around 20 USD per barrel basically forever as a low oil price has been in the interest of the US. However with the advent of shale this focus has considerably changed within the last ten years and a high oil price is now in the interest of the US. As an US agency it has to do what is in the interest of the US, which is in some cases not consistent with reality.

          1. What I wanted to highlight was that regardless of the rational put forward for the failures of the EIA, they have failed and are failing dismally to fulfill the part of their mission highlighted in bold. They were not set up to be cheerleaders for any particular country, sector or technology but, what you are saying is, that is how it has turned out!

          2. EIA Oil price projection in 2004:
            EIA Oil price & supply forecasts are consistently and heavily biased to the optimistic side:
            http://www.worldoil.com/August-2007-Systematic-bias-in-EIA-oil-price-forecasts-Concerns-and-consequences.html
            “..Crude oil prices are determined largely in an international marketplace by the balance between production in OPEC and non-OPEC nations and demand. In the reference case, the average lower 48 crude oil price is projected to be $23.61 per barrel in 2010 and $26.72 per barrel in 2025 (Figure 93). In the high world oil price case, the lower 48 crude oil price increases to $32.80 per barrel in 2010 and $34.90 per barrel in 2025. In the low world oil price case, the lower 48 price generally declines to $16.36 per barrel in 2010, then rises to $16.49 per barrel in 2025…”

            Unbelievable, down the the last Cent prediction 21 years out.

  29. Doug,
    Everyone of the tankers in the article in your link are sitting high in the water with what looks like very little oil cargo in them. Note the article is by someone from Business Insider – enough said. That’s not to say there may be oil stored in tankers but recent reports state China was refused further requests for oil by Saudi Arabia in April and May and 500 kb of capacity has gone off line in the Neutral Zone probably for good.

    1. Good eye. Maybe it’s just a stock file photo of some tankers (a possibility you suggest)?

    2. Maybe they are loaded with the fuel of the future, Hydrogen… GRIN!

    3. RJK Richard Kleemann,

      China wants to pay in renmibi, which in my view Saudi Arabia is not yet ready to do. There are several stand offs in the oil market now.

  31. Do We Ever Really Get out of Anarchy?

    “A closer look at these earthly ‘governments’ reveals that they do not get us out of anarchy at all. They simply replace one form of anarchy by another and hence do not give us real Government.

    The rulers still remain in a state of anarchy vis-a-vis each other. They settle disputes among themselves, without regard for a Government (an entity outside themselves).
    Anarchy still exists. Only whereas without government it was market or natural anarchy, it is now a political anarchy, an anarchy inside power.

    Take, for example, the rulers of our own Federal government. It is a group composed of congressmen, judges, a president and a vice-president, top level bureaucrats in civilian and military agencies, and their armies of assistants who together oversee the work of the millions of public employees who man the several Federal bureaucracies. These individuals together make and enforce laws, edicts, regulations and vast arrays of orders of all kinds by which all members of society must abide. Yet, in their relations among each other, they remain largely ‘lawless’. Nobody external to the group writes and enforces rules governing the relations among them.

    …In short, society is always in anarchy. A government only abolishes anarchy among what are called ‘subjects’ or ‘citizens’, but among those who rule, anarchy prevails.

    …It’s as if government took God’s place on earth to keep evil humans in line. That governments are themselves made up of ordinary human beings who remain in a state of anarchy among themselves seems to have escaped those who adhere to this view.

    …Around the edges of government, many private individuals live in a state of anarchy vis-a-vis government officials…

    Also living in anarchy vis-a-vis government officials are all those members of underground criminal organizations which supply consumers with a vast array of illegal goods and services. That the CIA made deals with top gangsters to carry out some of its missions should not come as a surprise. Most police departments probably have similar relations with local crime chiefs.” ~ Alfred G. Cuzan

  32. For The First Time In 40 Years, Economic Growth Did Not Lead To More Carbon Emissions In 2014

    The 10th annual edition of REN21’s Renewables Global Status Report found that, despite 3 percent growth last year in the global Gross Domestic Product and a 1.5 percent increase in energy consumption, CO2 emissions levels held steady at 32.3 billion metric tons, the same as in 2013

    http://www.desmogblog.com/2015/06/23/first-time-40-years-economic-growth-did-not-lead-more-carbon-emissions-2014

    2. The Chinese cut coal consumption as new hydro came on line and steel manufacturing slowed down. It may also be fake figures to influence the Paris talks. Or both.

      1. “It may also be fake figures to influence the Paris talks. Or both.”

        It may be you are in denial.

  33. TransCanada cuts 185 jobs as it restructures

    TransCanada is working to move forward on a number of projects, including the Keystone XL Pipeline and the Energy East pipeline.

    Both projects have faced delays and regulatory hurdles. The company has about 6,000 employees across North America.

      1. As a matter of simple curiosity, how long could or might it be possible to keep the finding of a fairly large new field a secret?

        I am thinking about this in terms of the people involved in the discovery being able to keep it quiet as long as possible so as to make the most money for themselves.

        1. You could Google “Confidential Treatment Requests” a SEC process but you might need a lawyer to interpret the language. In my experience people make more money NOT keeping stuff confidential, at least after you’ve secured your land position.

          1. Then there is the question of: “a secret from whom”. Larger oil companies have “Scouting” departments whose job is knowing what the competition is up to. There is no way that a significant oil discovery remains a secret for very long from a “neighboring” oil company. What do you imaging drillers talk about in bars (other than women) and there is always a “Scout” sitting there taking in all the tidbits.

            1. Of course geologists tend to talk as well and even geophysicists have thoughts beyond the local bar maid from time to time though sensible folk tend to roll their eyes when conversation wanders to Fourier transforms and deconvolution parameters. Anyway, you can be damn sure that guys like Fernando will be aware of any significant new reservoir discoveries, on our planet anyway.

            2. I got the ones on other planets covered. This solar system, anyway. Waiting for budget to expand that.

            3. Yeah, but what’s going to happen to my dear friend who is a vet in Chicago for two weeks then flies to Cancun Mexico where she lives for another two weeks out of the month and works with dolphins there… They use Fourier transform analysis on the sounds dolphins make when communicating with each other. BTW her name really is Elizabeth and I just haven’t had the heart to even tell her about the consequences of Peak Oil. Some days I really get depressed… And I’m flying to Sao Paulo in three weeks to start a business there. LOL! Are we all just plain nuts?!

              XKCD has a good one!

            4. Fast fourier transforms are only about 40 yrs old, and there’s nothing particularly to be learned from them on human speech, so why would there be anything in dolphin sonar pings?

            5. Because dolphins may be (probably are) a lot smarter than humans. I actually was involved helping some dolphin researchers with their communication research for awhile. Totally fascinating subject. I’d love to talk to Fred’s friend Elizabeth.

            6. Um, what a profoundly unimaginative comment! Comparing human speech to dolphin vocalizations (not sonar pings, BTW) is like comparing apples and dried orange peels…
              You have obviously never spent any time with cetaceans, have you?!

              As for answering the question as to whether or not Dolphins are smarter than humans I”ll just suggest that we have very different kinds of intelligence. But there is no doubt that dolphins and other toothed whales are highly intelligent social creatures. At the very least Dolphins haven’t fucked up the planet.

              Fourier Transform Analysis is just one of many tools applied to the study of dolphin communication.

              http://goo.gl/cOkxpS

              Conference Paper
              Time–frequency analysis of dolphin vocalizations using a novel computational package

              Irma Cascão
              Irma Cascão
              António Figueiredo
              António Figueiredo
              Conference: Poster: European Research on Cetaceans – 20. Proceedings of the 20th Annual Conference of the European Cetacean Society, At Gdynia, Poland

              ABSTRACT Dolphin acoustic communication strongly relies on whistles, particularly on their instantaneous frequencies, which are commonly referred to as contours. The time–frequency visualization of whistles using commercially available software allows their contours to be manually extracted, for instance by sampling some of their points or retrieving their basic characteristics. However, more complete and accurate contour extraction methods, which correctly identify contours amidst noise, clicks, etc., require access to the data plotted in the time–frequency image. Here, a computational package for the time–frequency analysis of dolphin vocalizations is presented that calculates the short-time Fourier transform spectrogram of the vocalizations, thereby making it available for whistle contour extraction algorithms to be merged with the package. The package tools have been entirely developed in MATLAB. This allows full control of the source code for future upgrades and customization, which is particularly important since the package will eventually be available as open-source software. To assess its effectiveness, the package is applied to data from a population of bottlenose dolphins, Tursiops truncatus, resident in the Sado estuary, Portugal.

            7. I can see two really good reasons for the people who are the first to know about a new discovery to keep it as quiet as possible. One, buying up mineral rights nearby.

              Two, quietly buying stock in the company that makes the discovery. If it is a fair-sized find and a fairly small company the stock should go up sharply.

              Lesser opportunities might be buying up any nearby rental property or hotel that can be had cheap if there is not much housing nearby.

            8. “Fourier transforms and deconvolution parameters”

              This is beginning to get worryingly close to the day job!

        2. Most of the smaller speculative oil companies here in the UK would announce a big find the second they had an idea it was there. Most of them just want to find a load of oil and then get bought out by a bigger company so that the owners can take a fat paycheck and retire. Hell, some of the time they even announce finds that aren’t big at all, like the recent idiocy with the “oil under gatwick” story.

        3. Mac, sometimes exploration wells are drilled and the results are kept secret. But that’s usually done when there’s open acreage or it’s a well being drilled under the table.

          Many years ago a large western company drilled a well in open acreage in Russia. I figured out what the well was doing by having a satellite take photographs of the well site. The oil industry can be pretty competitive.

            1. It was the Hubble Space Telescope.

              That’s why WebHubTelescope
              and Fernando get along so well. /sarc

            2. Ron, I suspect it was SPOT, but I’m not sure. Let me give you a little background:

              The outfit I worked for had a remote sensing group, which we used for exploration as well as enviromental monitoring and data acquisition. An example of enviromental monitoring could be satellite data acquisition to take shots around our offshore platforms, or photographs of remote areas we wanted to enter (this documents conditions before we start cutting trees and moving dirt).

              As it turns out, when we started working with the Russians we found them reluctant to give us accurate maps and allow us to visit certain areas. This led to the assignment of an individual (with enviromental data acquisition expertise) to our group.

              Eventually we started doing a study to see how we could develop oil fields in the Russian Arctic, and we got us some Metocean types who were heavy users of satellite data, which included both visible wave lengths as well as radarsats.

              So when I found out the competition was trying to move a rig to drill on OPEN ACREAGE before a bid round I asked our remote sensing experts if they thought we could use satellites to see what they were doing. When they answered yes, I told them to write a short memo, explain the cost, what type of data we would get, and signed off on it. I told my boss what I was up to but I had the budget to approve the data acquisition.

              As far as I know our guys went to the company which delivered the service, and they set up a shooting schedule. Eventually one of them showed up with a very nice photograph of the rig site. And we just kept taking shots on a periodic basis. I don’t think I can discuss what happened afterwards. But a year later I visited my counterpart who was leading the work for the other company and gave him a framed photograph of his rig site. I couldn’t help myself.

    1. That 76 kb/d jump in the Lower 48 is a bit difficult to believe, considering that the weekly number for the last week in February is already about 80 kb/d too high in comparison to the final EIA numbers for February.

    2. Ron, you may have looked at US production in this manner, but thought I would just point out:
      (all production is C+C barrels per day)

      EIA week ending 9/26/14: 8,837,000
      EIA week ending 4/24/15: 9,373,000
      Gain from 9/26/14 to 4/24/15: 536,000
      EIA week ending 6/19/15: 9,604,000
      Gain from week ending 9/26/14 to 6/19/15: 767,000

      North Dakota Bakken production 9/14: 1,119,596
      North Dakota Bakken wells producing 9/14: 8,500
      North Dakota Bakken production 4/15: 1,108,572
      North Dakota Bakken wells producing 4/15:9,525

      (Loss) in North Dakota Bakken 9/14 to 4/15: (11,204)
      Gain in North Dakota Bakken wells 9/14 to 4/15: 1,025

      So Texas (and other states) have increased production over 500K bopd from 9/14 to 4/15, and unless ND Bakken suddenly reverses course, almost 800K bopd from 9/14 to 6/15?

      What am I missing? Does the Texas production reported to date support this? Are there any other state’s that could make much of a difference besides Texas?

      Dennis, you are the “optimist” here. Is Texas up 800K bopd from 9/14 to 6/15 in your opinion, or somewhere close to that?

      Dean, how much do you think TX production is up from 9/14 to 4/15? It looks to me that your best case model shows 9/14 TX to be just 100K bopd or so less than 4/15. Also, if you have a guess, also to 6/15?

      Could EIA now be off up to 500K bopd, or more?

      Also, how is frack log in ND Bakken going increase production? 1025 wells added in 7 months shows a small net loss. Didn’t ND Bakken hit a wall before the price crash just from a review of the basic data on the ND Bakken pdf?

      Ron, I hope I am not just rehashing all of your data and comments. I apologize if I am. I just think looking at ND Bakken down from 9/14 to 4/15 highlights the most that something is off somewhere with EIA. How does EIA explain this?

      1. Based on the BH rig count, Texas has been dropping rigs faster than ND over the last year.

        1. Enno: That is what I thought, that rig count drop had been at least fairly uniform. I do think possibly more vertical on a percentage basis dropped in TX than horizontal in TX.

          Still, something is really not making sense to me. But I am all for anyone pointing out where I have missed the boat.

          1. Hi Shallow sands,

            Ignore the weekly numbers (they are a very rough estimate and they are not revised) use the monthly energy review to assess US output.

            One way to do it would be to assume that all changes in output are due to North Dakota and Texas. We have good data for North Dakota, I will assume your estimate for North Dakota is correct (-11 kb/d) from Sept to April. Using this method, Texas should be up by 440 kb/d from Sept to April.

            1. Dennis. I took the September, 2014 and April 2015 Bakken numbers directly from the ND PDF. I assume they are not likely to be revised much.

              Just seems odd to me that one state would be flat and the other would be growing at a rapid pace given rig count drops have been similar and each experienced the same oil price crash.

              I am going to examine production for Q4 2014 and Q1 2015 in some heavily TX weighted public companies. Maybe that will give us some ideas?

            2. My guess is that, until recently, the EIA has been underestimating Texas production data. Then they changed their methodology used to recalculate preliminary TRRC data into EIA monthly data. And now they are overestimating Texas oil production

      2. Shallow, I have no idea what is going on. But I just flat don’t believe those EIA weekly numbers. Apparently Dennis is the only one here that is buying into those weekly numbers, especially since the 4 week average is now right up there with the latest weekly numbers.

        The Monthly Energy Review actually has US production down by 26,000 bpd from March to April. 

        Sep-14	8,909
Oct-14	9,063
Nov-14	9,029
Dec-14	9,228
Jan-15	9,214
Feb-15	9,238
Mar-15	9,401
Apr-15	9,375

        The May numbers are due out tomorrow. I wonder what they will show. And will they revise any numbers for the past few months.

        1. Ron, you can actually count me (in addition to Dennis) who thinks the weekly number is of some value.

          The week to week error could be large. But over the long run, the weekly avrages track the published monthly production levels reasonably well.

          2. Hi Political economist,

            I think the 4 week averages of the weekly estimates are somewhat useful, but I would not put a lot of faith in them (they are a snapshot or very rough guess as to what is happening right now).

            I will repeat again, the best EIA estimates are in the most recent Monthly Energy review. This estimate gets revised monthly.

            The May report has US C+C at 9375 kb/d in April 2015 (up about 150 kb/d since December.) North Dakota is down 59 kb/d from Dec 2014 to April 2015. If we assume the sum of changes in output in all states besides TX and ND is zero, then Texas C+C output would be up by 210 kb/d over the Dec 31, 2014 to April 30, 2015 period. Most of this is probably from the Permian basin where there has been a big move to horizontal rigs during this down turn (vertical rigs have been reduced by a factor of 4 and horizontal rigs by only a factor of 2 in the Texas Permian basin.)

            1. Hi all,

              The Monthly Energy Review for June 25, 2015 has the same numbers as the Petroleum Supply Monthly that came out at the end of May (data through March 2015), the April and May estimates are similar to the 4 week average estimate from the end of April and the end of May. If we assume North Dakota output is unchanged in May and all states besides Alaska, ND, and TX have no change in output from Dec 31, 2014 to May 31, 2015, then TX C+C rose by 170 kb/d over that period based on the latest Monthly Energy Review(MER) and the assumptions above (basically the assumption that all changes in lower 48 output are from TX and ND and that MER estimates are correct.

              This would be an average 34 kb/d per month rise in TX output for the first 5 months of the year.

              At the following page we have oil completions for Texas

              http://www.rrc.state.tx.us/media/28965/ogdc0515.pdf

              There were about 55% more oil well completions in the first 5 months of 2014 vs 2015. If the oil output is proportional to wells completed then output should have increased by 24 kb/d in the first 5 months of 2015 (if we assume 2% monthly legacy decline).

              If a higher proportion of completed wells in 2015 were horizontal wells (with higher output than vertical wells), then the 24 kb/d estimate for the output increase may be too low. The rise in Texas output over the Jan to May period may be between 24 and 170 kb/d, possibly about 100 kb/d.

              So AlexS’s guess that the EIA is overestimating Texas output is correct in my view (they are roughly 2% too high in May 2015 in the June MER).

      3. Here is some information I found in quarterly reports on company websites.
        I am pretty sure these companies, or their subsidiaries, are among the largest liquids producers in the State of Texas. Unfortunately, most do not break down to Texas liquids only. However, maybe we can get a feel for production in Texas for the third quarter of 2014 and the first quarter of 2015 from a review of these numbers?

        Occidental Petroleum (OXY). In the third quarter of 2014 Texas liquids production was 197,000 barrels per day. In the first quarter of 2015 Texas liquids production was 215,000 barrels per day.

        Chevron US third quarter 2014 liquids production was 464,000 barrels per day. First quarter 2015 US liquids production was 489,000 barrels per day.

        EOG US third quarter 2014 liquids production was 293,200 barrels per day. First quarter 2015 US liquids production was 298,600 barrels per day.

        ConocoPhillips US lower 48 third quarter BOE was 543,000. First quarter US lower 48 2015 BOE was 542,000.

        Pioneer (PXD) third quarter 2014 BOE was 186,000. First quarter 2015 BOE was 194,000.

        Exxon US liquids third quarter 2014 442,000. US first quarter 2015 liquids 472,000

        Apache Permian and EFS third quarter 2014 BOE 190,900. First quarter 2015 Permian and EFS BOE 170,200.

        Anadarko US lower 48 liquids third quarter 2014 283,000 barrels per day. US lower 48 liquids first quarter 2015 298,000 barrels per day.

        Far from perfect information on Texas production. Does this information support skyrocketing Texas liquids production from 9/14 to 4/15?

        1. Hi Shallow Sands,

          The problem with using BOE is that natural gas is folded in. Texas natural gas production has been decreasing, so we would want to look at oil rather than BOE.

          200 kb/d over 4 months is hardly “skyrocketing output”, it is 50 kb/d per month or a 1.5% increase in production.

          AlexS may be correct that the EIA is overestimating, typically they are 1 to 2% too high for the most recent months (for Texas). My guess would be that they are no more than 100 kb/d too high. If so, US output has been relatively flat since Dec 2014. A new Monthly energy review will be out today, maybe there will be revised estimates.

          2. Dennis. I realize the information I posted regarding large TX producers is not consistent, that very few break down production by state, and that some contains BOE. Each company breaks down production differently, unfortunately.

            I think the only way we will know for sure about production from January, 2015 through June 2015 will be sometime in 2016 or 2017.

            I think US production has flat lined from last fall till now. The EIA thinks US production is up 700-800K bopd since last fall. A year or two from now we will know.

            I agree that BOE can be very misleading. For example, the various unconventional plays in OK. All of those are stated by the producers in BOE terms, but per a recent Wood Mac article, approximately 22% is oil and per information regarding a densely drilled SCOOP Woodford unit operated by CLR, the “oil” is 60 gravity.

            1. Hi Shallow Sands,

              I think US output rose through Dec and has probably flat-lined since then. Based on the Monthly Energy Review from June 25, 2015 C+C Output for the lower 48 has only increased by 110 kb/d since the end of 2014. (From 8875 to 8987 kb/d.)

              I also agree we won’t really know what 2015 output is until April 2018. Though we will probably have a pretty good estimate in 2017.

  36. Things are getting serious in Greece, oil-wise.

    The IMF is taking a hardline and demanding pension cuts rather than Greece’s promised non enforceable tax increases. All the markets of the world are yawning and telling themselves this has all happened again and again and in the end there is a bailout and BAU continues in fake form.

    But the boy who cried wolf eventually was right. If there was ever a time that Greece would default — err, stop paying the debt service — it would be with the far left Syriza running things.

    Now then, 350ishK bpd burned. They are still a semi capitalist society so private buyers have to send Euros out of the country to get that oil. 139 million barrels/year X $65 = $9 billion. That’s significant drainage leaving the borders for a country that owes 320 billion bux at maybe 4%/yr interest. Soooo maybe nationalize the oil distribution (it’s far left Syriza, after all) and ask Russia for a discount in return for leaving NATO and building that pipeline.

    The overarching configuration of things is Syriza must be crushed or the Syriza clone in Spain may win in September and start making noises about not servicing their debt and sportsfans, that’s north of $1 trillion.

    http://www.bloomberg.com/news/articles/2014-09-30/spain-to-borrow-305-billion-in-2015-as-debt-reaches-100-of-gdp

    100% of GDP. As if that’s a big deal. The US is at that.

    1. The Spanish Syriza has been losing steam. One reason is the mess Syriza is making. The other is the people’s acquaintance with these ultra left thugs.

      They have been very active in the past few years leaving their comments in YouTube and Twitter, Facebook, etc. One of them made comments so anti Semitic I can’t repeat them here in Europe. Their leader has a large YouTube collection which was condensed into a really revealing video. And the economy is improving.

      I think the socialist party will win, but the chavista/communist Podemos will likely be limited to say 10 % by the time elections roll around. However, it’s true that communist think is way too prevalent in Spain. It’s due to a poor educational system crawling with communist professors.

      1. Shrug. If Syriza refuses to yield, stops servicing the debt, and no one starves or dies in Greece, despite all the news reporters there looking for starvation, then why wouldn’t Spain do the same?

        1. “then why wouldn’t Spain do the same?”

          because Spain is “fixed” 🙂

        2. Because the Spanish aspire to something beyond poverty. The country needs additional reforms, but the economy is growing at 3% per year, and there’s a surge in tourism as the North Africa and Greece bound tourists shift destinations.

          I live in a touristy area on the eastern coast, and the tourist influx is noticeably higher. The key is to keep the communists from ruining things.

      2. Also, the bitter taste of Fascism is still in the mouths of a large segment of the population.
        Catalonia has a anarchist tradition that is still vibrant.
        Both the Communists and the Fascists combined to squash that.

        1. I suppose the anarchists could all get together and hold a conference to organize the Anarchist Party with bylaws, a Party President, a party song, party tattoo symbols, party nose piercings, party Mohawks, party flag …the whole works, and they will get lots of votes in Barcelona.

          1. They already have done it in the past:
            https://en.wikipedia.org/wiki/Revolutionary_Catalonia

            With enough success, the Fascists and the Communists needed to collaborate to bring it down.

            During the military uprising of July 1936, anarchist and socialist militias, along with Republican forces including the Assault and Civil Guards, defeated the forces controlled by Nationalist army officers in Catalonia and parts of eastern Aragon. The CNT-FAI now came to the forefront as the most powerful organization in Barcelona, seizing many arms and strategic buildings such as the telephone exchange and post offices. Through the various factory and transport committees, they dominated the economy of Catalonia.[2] In spite of their militant anti-statism, they decided not to overthrow the Catalan government. The president of the Generalitat of Catalonia and head of the Republican Left of Catalonia (ERC), Luis Companys, was generally accommodating with the CNT but was wary of their appropriation of the means of production.[3] The CNT and Companys worked together to set up the Central Anti-Fascist Militia Committee, which became the main governing body in the region.

            And this was the organization:

            Throughout Catalonia many sectors of the economy fell under the control of the anarchist CNT and the socialist UGT trade unions, where worker’s self management was implemented. These included Railways, streetcars, buses, taxicabs, shipping, electric light and power companies, gasworks and waterworks, engineering and automobile assembly plants, mines, mills, factories, food-processing plants, theaters, newspapers, bars, hotels, restaurants, department stores, and thousands of dwellings previously owned by the upper classes.[16] While the CNT was the leading organization in Catalonia, it often shared power with the UGT. For example, control of the Spanish National telephone company, was put under a joint CNT-UGT committee.[17]

            CNT poster promoting collectivized Textiles
            George Orwell in Homage to Catalonia describes the scene as he arrived in Barcelona.

            “It was the first time I had ever been in a town where the working class was in the saddle. Practically every building of any size had been seized by the workers and was draped with red flags or with the red and black flag of the Anarchists; every wall was scrawled with the hammer and sickle and with the initials of the revolutionary parties; almost every church had been gutted and its images burnt. Churches here and there were being systematically demolished by gangs of workmen. Every shop and café had an inscription saying that it had been collectivised; even the bootblacks had been collectivised and their boxes painted red and black. Waiters and shop-walkers looked you in the face and treated you as an equal.”
            — George Orwell, ‘Homage to Catalonia

    2. The IMF is essentially a loan shark enforcement unit.

      That Greece is not (and can’t) going to cover bad bets by elite’s has them freaked.

      1. I don’t know if this particular idea will succeed, but the idea of renting out stuff (e.g., rooms in your house, your car) is catching on. We’ve got people who don’t want to own stuff if they only use it occasionally, and we’ve got people who already own stuff who don’t use it all the time and want to make some money from it.

        The trends are moving in the direction of the shareable movement and it looks like Ford wants to get involved rather than miss out.

        2. Boomer,
          What are you describing that is “catching on” is delusion. Pure delusion. Pure hanging on BAU by the thread. If you need a car there is a cheaper solution than this program and that is to buy a “used” car. What is wrong with that? But the smell of plastic-vinyl in the new car interior for the first 6 months must be priceless. 🙂

          BTW, this Ford so called “program” is about NEW purchasing of Ford car, NOT already sold Ford cars. Ford does not care about your previously purchased car.

          1. If you need a car there is a cheaper solution than this program and that is to buy a “used” car.

            It’s even better to avoid buying a car altogether and either walk, bike, use public transportation, or share one as needed.

            The spin Ford is putting on this — that it will help people buy new cars — is a marketing ploy. But the fact that Ford is doing this at all is a recognition that people may get by using cars less and some of them think renting out cars is a good idea.

            1. Of course marketing ploy, but in this case desperate one. 🙂 Playing on human emotions of owning something “NEW”. Easy job for marketers.

            2. I’m still not sure I understand you.

              Are you saying Ford is desperate? And if so, more desperate than other car companies?
              Or car sharing as a concept is a desperate attempt at something?
              Or that car culture is desperate?

            3. “Are you saying Ford is desperate? And if so, more desperate than other car companies?”
              Yes. No more than others.

              “Or car sharing as a concept is a desperate attempt at something?”

              If you call Hertz and asked them to rent you a car for 5 years do you think you will get better deal than buying? No you will not, because it is not profitable for Hertz to rent you a car for that long term. So why do you think it would be profitable for individual consumer to buy and than rent a car?

          2. From the link I posted :

            ”The program covers all late-model Ford-brand vehicles beginning with the 2005 model year that have fewer than 125,000 miles.”

            This can be good advertising for Ford. A lot of people have never driven one and might be inclined to look at new Fords after renting one.

        3. I and most of my neighbors own tons of stuff we use only occasionally due to reluctance to share.

          Loan out your log splitter and if it breaks it probably going to come back broken unless you are VERY careful about who you loan it to.

          The people prone to borrow are seldom willing in my estimation to loan anything to you that is equally valuable. The net result is that I restrict borrowing and loaning to an extremely small circle of people who are really cooperative about such things.

          But if you loan your stuff out via a rental agreement operated by a third party you should come out just fine considering everything except maybe the hassle.

          In my area for instance a typical homeowner will not use his log splitter more than forty or fifty hours a year. That means having fifteen hundred bucks or so tied up for thirty years or forty years to even think about wearing out such a machine , assuming you take good care of it. They rent for sixty bucks a day plus pickup and delivery here.

          If you could rent it for thirty a day net without it coming back broken, the first forty five days rental use would recover your investment, freeing the money up to use for some other purpose. More than likely the splitter would still give a decade or more of reliable service.

          These machines ordinarily have a thirty day warranty when used commercially for unlimited hours. Very few of them will need repairs within the first four or five hundred hours of use unless abused or neglected by leaving them out in the weather etc.

          1. OFM – Not that anyone cares, but I know exactly what you mean [re: log splitter]. Twenty years ago, I lent a neighbor my almost new $400 lawn mower. It had the kind of engine that you mixed oil with the fuel. He brought it back a few hours later and said thanks. A couple of days later I fueled it up and tried to start it. It would not start. Took it to a repair shop – lawnmower is ruined. Diagnosis: “Engine had seized up, must not have had oil/gas mix. Neighbor: “I used oil/gas mix and it was working fine when I brought it back.” My bad for not explicitly telling him, but it had a very readable label on the fuel cap. Since then, friends can borrow a hammer or a screwdriver, but that is about it.

          2. I wouldn’t rent out my home or my tools or my car, because I’d worry about those things being damaged.

            But I follow the shareable movement closely; more and more people are doing this. Uber and Air B2B are working well enough that they are now considered disruptive companies.

            Personally I’d be more inclined to be the renter than the owner. There could be a day when I give up my car altogether. There’s a rent-by-the-hour car parked about two blocks from my place so it is very convenient if I only need car transportation occasionally.

      2. The idea screams of the fact that car sales per capita are probably falling already and if not soon will be. Cars are too expensive for a lot of people to own one anymore.

        Beyond that they really do last a lot longer than they used to so you need buy one less often – good for the consumer but bad news for the manufacturers.

  38. Hello,
    i got a question about two short EIA articles.
    http://www.eia.gov/todayinenergy/detail.cfm?id=21512#
    http://www.eia.gov/todayinenergy/detail.cfm?id=21752

    They say clearly, that the US is producing a lot of light crude oil. So API 35 and upwards. So there is less need to import that kind of oil.

    So it got me thinking if it could be possible, that at some point the USA must export any additional oil, or the consumption of API 35+ must grow with the production.
    Otherwise it would let to a price collapse of API 35+ oil.

    Just wondering, is there any indication for such a tipping point, and if it exists, is it moving?
    Do all shale oil fields produce light oil (Permian)?

    1. I’m seeing a move to increase “API 35+” consumption and reduce distillate consumption. Built into that lighter oil (and in a lot of the natural gas production, too) is a lot of propane. I’ve done quite a few #2 (diesel) oil-to-propane heating boiler plant conversions the past few years for rural schools outside the NG distribution system. Even though some of the LPG heads to Canada for bitumen dilutent, much of it comes back here when removed from the bitumen at the refinery. There is a “glut” in LPG, which is selling for about a $1/gallon in bulk as compared to $2.50 and up for #2 (diesel). Also, all the high efficiency heating boiler technologies have been focused on NG/LPG as opposed to oil, so the new boilers are more efficient and less expensive than oil. Yes, LPG has 30% less BTU/gallon than #2, but it burns cleaner, is easier to pipe, the equipment is less expensive and 12% more efficient. It’s really a no-brainer to switch now.

      1. HVAC

        I just read a couple of articles on the high volumes of wet gas coming out of the Utica formation in the next three years as the infrastructure continues to be built out.
        Heating, as you pointed out, may continue to be fueled more and more by gas rather than #2.
        Electricity generating is switching over to gas -powered.
        As the cost of transportation fuel continues to favor natgas, the vehicles as well as the fueling stations will increase in tandem. The acceptance of hybrid diesel/CNG engines is growing in many industrial applications.

  39. How come there no discussion on EIA report today? Crude inventory down, gasoline up. That’s second week in a row. What does that mean, if anything?

    1. Doesn’t mean a lot. Inventories are dependent also on imports, maybe quite some people think only on production.

        1. Exactly, the stockpile is built before the demand peaks. Otherwise shortages can occur, standard procedure.

          1. However, they expected a drop.

            “U.S. gasoline stocks climbed 680,000 barrels to 218.49 million in the week to June 19, compared with a Reuters poll which expected a 304,000-barrel drop, even though U.S. gasoline demand was the highest for the period since 1991, the EIA data showed.”

            So they are refining crude at full speed it seems.

            2. Fernando,

              Off topic question: Did the PDVSA refinery at Matanzas ever get built?

            3. Matanzas bay, Cuba? I don’t think so. They refurbished the old Soviet refinery at Cienfuegos. That’s the refinery receiving the Venezuelan give away crude.

              By the way, I heard PDVSA is so short on medium gravity crude to blend they signed a contract with Rosneft to purchase Russian Urals blend. I think PDVSA is also buying Urals to give to the Castro family dictatorship.

            4. Here in Curacao PDVSA has a refinery
              also. I heard the contract will end in 2019, but could continue afterwards, I suppose.

            5. Apparently Reuters polled sources that have no real connection with the industry. More noise in the media, no wonder they are not taken seriously.

  41. Lancet Commission on Health and Climate Change

    The 2015 UCL-Lancet Commission on Health and Climate Change was formed to map out a comprehensive response to climate change, in order to ensure the highest attainable standards of health for populations worldwide. This Commission is multidisciplinary and international in nature, with strong collaboration between academic centres in Europe and China.

    Four central findings arise from the Commission’s work:

    1) The effects of climate change threaten to undermine the last half-century of gains in development and global health. The impacts are being felt today, and future projections represent an unacceptably high and potentially catastrophic risk to human health.

    2) Tackling climate change could be the greatest global health opportunity of the 21st century.

    3) Achieving a decarbonised global economy and securing the public health benefits it offers is no longer primarily a technological or economic question – it is now a political one.

    4) Climate change is fundamentally an issue of human health, and health professionals have a vital role to play in accelerating progress on mitigation and adaptation policies.

    http://climatehealthcommission.org/

  42. ZH is splashing that for the first time as of May, Russia has become China’s number 1 source of crude, surpassing KSA.

      1. well this is currency decoupling. Saudis better have lot’s of oil storage space.

      2. Watcher, Alex S,

        Similar thing in India: Indian refineries are shifting to the spot market and buying West African oil, mostly Nigerian and Angolan. They save money over buying from the Saudis.

  43. Peak Oil in 2015 is totally scary.
    I would only confirm a peak, when oil has fallen to 5 – 6 million bbl/day lower than the peak.
    There is talk of a stock market collapse in Sept. 2015.

    rockman on Tue, 23rd Jun 2015 7:16 pm at http://www.peakoil.com

    Dredd – “The exact year is irrelevant to whether it happens or not.” I agree as you probably already know. That’s why it will be so dang interesting if in the rearview mirror some years down the road we see that the global peak oil occurred at the time oil prices were the same low level (inflation adjusted) as it was 10 years ago and at only 60% of what it was 7 years ago but also at the same price it was 6 years ago.

    It contradicts the simplistic idea that oil prices would start surging at the same time the global oil rate would peak and begin it’s perpetual decline. And it becomes even more disconcerting for many if oil prices stay low for an extended period of time.

    Thus the reason I’ve been pushing the POD for a long time as a far more important reality then the date of GPO.

  44. The Saudis are evidently going to move ahead soon on their long ago announced intentions of building out some serious solar capacity so as to save on burning oil domestically.

    This article goes into a great deal more depth than most you can find in the msm.

    http://www.theatlantic.com/magazine/archive/2015/07/saudis-solar-energy/395315/#disqus_thread

    Politics and political inertia are apparently the big problem. The Saudis certainly have the money and can hire any professional and trades expertise needed.

    1. This seems to be a repeating story. The entrenched politicals and businessmen define the word inertia when it comes to making needed changes. Although the fact that the government is hamstrung because it has essentially been serving up a free lunch to the rich is a nice twist.

    1. Interesting. What’s the definition of “new” production?

      1. They don’t give definition, but I suppose this is combined output from the wells that started production in a particular month

        1. I wonder if its the same distinction as EIA uses for “new” v “legacy”?

          1. I read the definition drilling info gives. It is the predicted peak production for each new well drilled for the month. They select analog wells to make these predictions.

            EOG leads every month. Their well decline rate must be tremendous, as their production is not growing much. Or, like they have stated, they are drilling, but not completing a lot of wells. Go look at 10Q for Q3 2014 and Q1 2015. I posted C+C they reported above. NGLs dropped from Q3 to Q1.

            Also, given the large drop in these numbers, how has the US increased production 700K bopd since October with what is claimed to be a growing fraclog ? These figures would support the exact opposite in that new well capabilities are shrinking fast since the first of the year, yet production is still growing? Am I missing something or do these numbers refute fracklog?

          2. shallow sand,

            yes, I think it’s the same as “new” production in EIA DPR

    2. I find it amazing that EOG is adding 3 times as much as oil production as Exxon and more than in any other period I can see in the archives.

    3. (as a reply to the Drilling info numbers)
      Thanks Alex.

      If we attempt to do a quick estimation of the legacy decline of oil production in the US, using the monthly EIA numbers, and the numbers you gave above from drilling info (assuming that they cover most of the oil production in the US), I come to the following picture.

      This would indicate roughly a 2% legacy decline in oil production per month, not far from what I expected (I have mentioned a guess of close to 20% annually before). The legacy decline numbers for Feb and March are remarkably low, compared with the months before. Combined with the model from Dean, and the EIA admission of possible flaws in their model, I see it indeed as a possibility that the EIA has projected Texas output for the last few months somewhat too high. In that case, it will be really interesting how the correction will look like.

      1. As I have mentioned once or twice or thrice . . .

        The observed net exponential rate of decline in Louisiana’s marketed natural gas production was 20%/year from 2012 to 2014, primarily due to the decline in drilling and completions in the Haynesville Shale Gas Play. In any case, the gross underlying (legacy) rate of decline from existing wells in 2012 and 2013 would be even higher than 20%/year.

  46. GM and BMW are launching car share programs of their own. It looks as if the they have little choice once their competition started doing it.

    http://seekingalpha.com/news/2599005-more-carmakers-launch-vehicle-sharing-service?uprof=45&dr=1#email_link

    Hardly anybody who buys a new car drives it into the ground anymore , keeping it for a couple of decades until in really is getting to be worn out. Getting back half the payment or more maybe by renting a car when you don’t need it means being able to buy a much nicer car or buying new versus used. The extra miles on the odometer when it is traded in are not going to wipe out too large a portion of the rental income.

    1. As I said yesterday it is the race to the bottom because they are all desperate. They see the writing on the wall. But this is desperate move that does not work.

      Mac said:” The extra miles on the odometer when it is traded in are not going to wipe out too large a portion of the rental income.”

      Mac, after 2-3 years since the car is sold the ONLY thing that you sell and buy in the car business are MILES on the car. You don’t buy used car because has a vase for the flower as Beetle does. On the used car your primary concern are miles. Rent a car companies are in business of selling MILES on the SHORT term. They cannot make money on the long term. So buying a Beemer and then renting to some yahoos for a weekend is not reality. Because somebody else is clocking the miles on your investment. The idea that car companies are proposing this is just hilarious. It just shows the level of desperation.

      1. Rent a car companies are in business of selling MILES on the SHORT term. They cannot make money on the long term.

        Rental car companies have been in business for a long time. They do make money or they wouldn’t exist.

        Similarly, taxi companies have been business for a long time.

        Having people rent out their cars when they are not using them is a variation on both of those concepts.

        1. Boomer,
          I don’t think you understand concept of renting a car for 2-3-15 day (short term) and renting a car for 5 years (long term). Can you provide a link of a rent-a car company that rents for 5 years? No, you can not because that does not exist, because it does not make money.

          Taxi!!!! Are you serious . That is even shorter than rent- a car business. 15 minutes ride.

          1. Boomer,
            I don’t think you understand concept of renting a car for 2-3-15 day (short term) and renting a car for 5 years (long term). Can you provide a link of a rent-a car company that rents for 5 years? No, you can not because that does not exist, because it does not make money.

            I have no idea what you are talking about.

            Companies like Avis and Hertz rent cars by the day and make money.

            All the car manufacturers lease cars for several years and those make money.

            Taxi!!!! Are you serious . That is even shorter than rent- a car business. 15 minutes ride.

            You do realize that companies like Yellow Cab have been in business for years.

            Again, I have no idea what you are talking about.

        1. That is not the same at all.

          1) How can individual user compete with the price for a new car from car manufacturer with economies of scale of Zip Car? No way.
          2) How can individual user compete in maintenance and repair with retail level pricing of repairs with companies that have in-house or preferential contracts for repairs & maintenance? No way.
          3) How can individual user renting a single car compete with price of car insurance for third party with companies that have 10’000 of contracts? No way.
          No way.

          1. Have you done any research on this subject?

            Find a rental car or make money renting your car – RelayRides

            Car Sharing: An Alternative to Car Rental with Zipcar

            Getaround – Peer-to-peer car sharing and local car rental

            Enterprise CarShare – Hourly Car Rental and Car Sharing

            JustShareIt | Car Sharing Marketplace

            This not a complete list by any means. But I’m getting tired posting links.

            Here’s an article that just came out.

            Ford Car-Sharing Program Shows Demand for Zipcar, Uber – US News: Ford Motor Co. is accelerating its efforts to match evolving consumer demands by testing a car-sharing program in six U.S. cities, reflecting similar moves by other large automakers in response to the rise of ride-sharing services like Lyft and Uber.

            1. I understand what car sharing is. It is clinging to the concept of car culture by the thread. But in very near future the option in the city will be only: public transportation or walking on the 10 lane highway. So that car sharing is pure capital dislocation.

            2. I understand what car sharing is. It is clinging to the concept of car culture by the thread. But in very near future the option in the city will be only: public transportation or walking on the 10 lane highway. So that car sharing is pure capital dislocation.

              I would have gotten what you were saying a lot sooner if you had just said from the beginning that you think the days of car transportation are numbered.

              I don’t think car sharing is a sign of desperation because I would expect desperate people to act “desperate.” Car sharing doesn’t strike me as that.

            3. If memory serves, the Zip Car folks claim that users on average save several hundred dollars per month, versus owning a car, because they tend to consolidate their errands into one short term rental period, because there is a specific hourly rate for using the car.

              Most people tend to underestimate the actual total cost of owning and driving a vehicle.

            4. Where I live, I can do all of my errands on foot.

              I’ve got an old car, paid for long again, and the only insurance I have for it is liability.

              If possible, I’d like this to be the last car I ever own.

              I’ve thought about going carless, but there are still times when I need to get about 10 miles out of town at unpredictable times. So I have a car for that, but I try to minimize its use.

    2. Maybe they’ve been reading Tony Seba’s “Clean Disruption” or watching his videos! He talks about “car as a service”, making car ownership obsolete and reducing the amount of cars needed by 80%. Scary stuff if you’re in the business of making and selling cars!

  47. The new Monthly Energy Review is out. There were some drastic revisions in the past months data. Every month, November through March was revised up by more than 100,000 barrels per day. February was revised up by 167,000 barrels per day. April was not revised at all. That means April fell by 156,000 bpd but May increase by 88,000 bpd. May is still 68,000 bpd below March.

    I just realized that The Monthly Energy Review now matches the Petroleum Supply Monthly almost to the barrel. It matches the Weekly Petroleum Status Report only for April and May but is now way off for every other month.

    1. The June revisions make production really look like it is flattening out and then a downturn. Have these revisions over multiple months occurred in the past?

      1. There are always revisions but I don’t recall seeing this many months revised by this great amount before. But I look for the revisions to continue.

        1. Hi Ron,

          These revisions to the Monthly Energy Review simply match the revisions to the Petroleum Supply Monthly that were made from April to May. The EIA seems to do a major revision to the Petroleum supply monthly once per year and this year it was in May (perhaps they do this a couple of times each year.)

  49. In fact, the EIA in new Monthly Energy Review has revised down its numbers for April and May, compared with forecast in the June STEO

    1. Data for U.S. ex Alaska. Detailed numbers by state for April will be published in the next few days.
      Note that April numbers are preliminary estimates, May numbers are a forecast

      1. AlexS. The numbers for 3/15 and prior can still be revised? How many months back are revised? EIA forced to revise for two years back due to TX?

        1. shallow sand,

          In the past, there were only minor revisions to EIA monthly data. But last month the EIA has revised (mostly upward) all numbers from January 2014, with particularly big changes for November 2014 -March 2015. Most of the changes were for Texas

  51. Re: Buying a Used Leaf

    After reviewing another rather expensive repair bill on one of our somewhat elderly cars (10 years old), I’m once again considering replacing one of them with a used Leaf. Any recommendation on best year model to get? I’m leaning toward 2013.

    1. I’ve been following the Leaf from before it was available (I was introduced to Peak Oil by a car site, either autobloggreen.com or evworld.com) if you can get the newer so called “lizard battery”, I think you’ll be better off. I found this:

      Buying a used Nissan LEAF? Read this first

      “Basically, the 2013 and newer cars are a significant upgrade from the early cars. Open the hood on a newer car and on an older car and what you see looks entirely different. From 2013 on, the battery is much improved. Heat pumps, DC fast charging and a 6.6 kW on board charger became standard on some models and optional on others. A heated steering wheel was added and the size of the battery was reduced, freeing up valuable storage space at the rear of the vehicle.”

    3. Avg car age is 10 yrs. If you buy newer you lose money to depreciation. If you buy older, you lose money to maintenance.

      10 yrs . . . depending on miles . . . isn’t that bad. Just keep driving it, if the issue is purely what is best money wise.

      Otherwise go get a small engine car. They don’t labor if there are no big hills.

    4. Hi Jeffrey,

      I think the 2013 is a good choice, but read up on the battery, the Volt might be a better option, I believe they have had fewer battery problems (and you would eliminate range anxiety).

  52. I can’t recommend a year model as superior, but do get a Leaf. You will enjoy the lack of maintenance and low cost. My wife considers the Leaf a luxury car.

    1. The Leaf is just yet another example of big bloated govt throwing more of MY hard earned tax $$$ down a big rat hole just so a few libs can feel better about themselves even though they are still using fossil fuels since where do they think electricity to power there cars come from? Pixie dust? One more reason why we need conservative leadership in the White house in 2016, stop promoting selling overprice electric cars that only go 30 miles before you have to stop. I don’t care how expensive gas gets I love my Dodge HEMI pick up. Love blowing cars away off the line and people get the heck out of my way when they are too stupid to realize driving in the left lane is for passing only. Driving the wife’s Kia I don’t get near the same reaction anytime.

      1. I tried to do some research because I wasn’t aware of tax money going into these cars built by private companies. Wow…very stunning to see the feds supported the Leaf to the tune of over 1.4 BILLION dollars. Again, I thought these were supposed to be cars built by private companies, not the government. But how can that be the case here where the government is trying to decide choices for consumers by favoring the ‘green’ part of the auto industry over the traditional part? Not very pretty to see for anybody old enough to remember the cold war days and how the communist nations operated, but then again us ordinary folks don’t get a say anymore into where our taxes go even though we just have to keep on paying more and more thanks to all the ‘pet’ programs the politicians keep coming up with. And you know these politicians know the system is rigged to their advantage, so nothing will change unless we the people decide we’ve had enough. I still have to hold out hope that my grandkids’ generation will be the one to make the change someday.

        1. I guess we could encourage everyone to drive gas guzzlers, so that we use up oil that much faster and drive the price of gasoline and diesel higher. It’s going to happen anyway, so let’s get it over with now.

          Let’s get rid of all of those fuel efficient cars and all of us drive big trucks.

      2. I love my Dodge HEMI pick up. Love blowing cars away off the line and people get the heck out of my way when they are too stupid to realize driving in the left lane is for passing only.

        Wait till you have to pay a really hefty CO2 tax on your fossil fuel use… And it will be put in place by the most conservative republican administration that you could possibly ever hope for! Don’t worry it’s coming your way soon. You’ll almost wish for the way things were under those so called libruls. BTW it really doesn’t matter who will be running things physics is beyond the left vs right wing politics.

        BTW your wimpy little HEMI can’t hold a candle to a Tesla model S… 0 to 60 in 3.1 secs, no CO2 an no noise.

      3. I meant to post this as a reply to the HEMI comment.

        ______

        I guess we could encourage everyone to drive gas guzzlers, so that we use up oil that much faster and drive the price of gasoline and diesel higher. It’s going to happen anyway, so let’s get it over with now.

        Let’s get rid of all of those fuel efficient cars and all of us drive big trucks.

  53. Article about crime in Venezuela’s oil industry:

    http://www.reuters.com/article/2015/06/25/us-venezuela-oil-crime-insight-idUSKBN0P51G020150625

    “When night falls over western Venezuela, armed gangs known as “pirates” sometimes ride boats into muggy Lake Maracaibo to steal equipment from oil wells.

    In the country’s Paraguana peninsula, opposite the Caribbean island of Aruba, slum dwellers at times break through a perimeter wall into Venezuela’s biggest refinery and rob machinery, construction tools, and cables to sell as scrap.

    On the other side of the OPEC country in Monagas state, around 26,000 potential barrels were lost in March during a shutdown after state oil company employees and contractors stole copper cables and caused a tank to overflow.

    Venezuela’s national crime pandemic – the United Nations says the country has the world’s second-highest murder rate after Honduras – is a growing headache for the oil industry, which accounts for nearly all of the country’s export revenues.

    Hold-ups and thefts in the sector are on the rise, taking a toll on output, according to interviews with around 40 people, including oil workers, union leaders, foreign executives, opposition politicians, scrap dealers, and people who live near oil installations.”

  54. An interesting article that also comes back to the model EIA uses:

    The Marcellus is close to Peak Production and why this is so Important

    “What most investors forget is that the EIA monthly production model uses data that is 2 years old and even publishes the caveat along with its monthly report that modeling errors occur at time of rapid changes in drilling activity.

    The EIA even cites the ramp up in production in the Haynesville as an example of where its model was unable to produce accurate estimates due to its inability to incorporate recent production data.

    Problems with the EIA’s production estimates have been around for more than a decade though they are not widely recognized. I even dedicated an entire chapter of my 2013 book discussing the many problems with EIA production estimates since it is one of the biggest sources of misunderstanding today’s gas market.”

  55. I would be very surprised if Saudi Arabia falls much next year.

    Production is certainly at a plateau at the moment growing 1% last year and falling 1% the year before.

    http://i.imgur.com/zhDq0ah.png

    2015 is on track the same as the previous 3 years with some record months this year. If shale gets hurt badly this year the Saudis have more room to pump next year.

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