The OPEC charts below were produced from data published in the OPEC Monthly Oil Market Report.
The OPEC 14 was up 136,000 barrels per day in August.Nothing happening in Algeriaexcept a slow decline.Ditto for Angola.Iran’s sanctions decline seems to be slowing down.Iraq is still producing flat out. They reached a new all-time high in August. According to an article I read last week, this is really pissing Saudi Arabia off.Except for Kuwait’s share of the Neutral Zone, I believe Kuwait is producing flat out.Libya is still having political problems and that is affecting their production level. But I am not sure just how much it is being affected. Saudi Arabia has apparently cut as much as they are going to cut.The UAE made heroic efforts to increase production last October, November, and December in order to get a high quota number. I think they are producing flat out right now.Venezuela has produced relatively steady for the last six months. They may have bottomed out until the government totally collapses, if it does. Iraq and Nigeria are totally ignoring their quota. Also from the MOMR we find this: Non-OPEC oil supply growth for 2019 was revised up by 10 tb/d from last month’s projections to 1.99 mb/d. Upward revisions to oil production from Russia, Kazakhstan, Australia and Canada outpaced a downward revision to the US oil supply forecast.
Interesting, this month, a downward revision in US oil supply forecast.
Russian oil production was up 139,000 barrels per day in August.OPEC + Russia was up 281,000 barrels per day in August.This is the Canadian Energy Board’s projection through December 2019. Canada was pretty well flat in August. However, they are expecting to be up 124,000 barrels per day in September.
506 thoughts to “OPEC August 2019 Oil Production”
Tanker trackers have been following Iran’s oil in ADRIAN DARYA 1 (ex GRACE 1). It’s now sitting offshore Tartous (Russian naval base) in Syria. https://twitter.com/TankerTrackers/
Curious situation in Nigeria. Little bit surprising uptick that’s lasted somewhat long. Have to look into it.
From the previous thread, the Bazhenov shale in Russia was addressed here years ago. The geology is a problem. The rock is pliable. It may bend under pressure rather than fracture.
Nigeria: this may relate to the Akpo and Egina fields, with their super large FPSOs. Preowei to follow at a later date.
Ok, after an attitude adjustment, I created the following high oil price Permian scenario.
Note this is only believable when the appropriate dose has been consumed. 🙂
Just trying to get something similar to Rystad, though I think their peak is about 8 Mb/d for the Permian. The URR for this scenario is 72 Gb, at least 26 Gb higher than is reasonable in my view.
Correction, Rystad is forecasting 10 Mb/d for Permian output in 2030. I’ll need higher a higher dosage to get there. My scenario assumes average well productivity in the Permian basin remains the same from 2018 to April 2023 and then begins to decline. It is possible that Rystad thinks this will never occur, or not until 2030.
There is already evidence that well productivity is declining when normalized for lateral length at about 5 to 6% per year based on data at shale profile. Average well productivity has only remained flat from 2016 to 2018 because average lateral length has been increasing at 500 feet per year.
For this reason my scenario is already optimistic because I have not factored in this decreasing average well productivity (at any assumed fixed lateral length).
An even more aggressive Permian scenario with completion rate rising to 929 completions per month by 2028 (from a recent high of about 500) and then with completion rate falling from 929 in 2032 to zero in 2037. URR is 62 Gb. This does not seem realistic to me, but with higher oil prices might be possible.
Dennis, I would love if you could “freeze” 1-2 of your models of your own choice (eg. Base case and optimistic), and also insert Rystad’s predictions in the same graph + the real production and then recall the graphs say once a year for comparison.
Tom,
I don’t have access to Rystad’s model, it has peak Permian output of 10 Mb/d in 2030. It also has Permian output of 8 Mb/d in 2040. I like to tweek my models as I get better information.
Scenarios below use AEO reference oil price scenario and the F95, mean and F5 USGS TRR estimates for the low, medium, and high ERR scenarios respectively. I did these scenarios in Dec 2018, they have been modified over time as I have gotten better well profile data and in response to criticism. F95 means there is a 95% probability that the TRR will be more than 43 Gb, and F5 means there is a 5% probability that the TRR will be more than 113 Gb, the mean case has a TRR of 74 Gb. The ERR is always less than or equal to the TRR, for the AEO reference case and the economic assumptions I used the low ERR is 35 Gb, the medium ERR is 60 Gb and the high ERR case is 98 Gb. There is about a 90% probability the Permian will fall between the low and high cases shown in the chat below.
Rystad seems to be using the USGS F5 case for their base case.
There is a bell at the top – at least the bell for productivity per well:
This year is the first where well quality is not rising. If they can’t counter this, even more drilling will be needed soon for the same result. Or as discussed before, much more acres / well, speeding up the depletion of tier A acreage.
Red queen on speed soon.
Great article by Scott Lapierre that Mike Shellman posted a link to at shaleprofile.com.
There are now a trend where investors , fonds sees increased risk related to climate change. Equinor have desided to invest huge amoubt in offshore wind farms, deposit wells offshore to store CO2. Shale play together with oil sands are known for the wurst climate emissions. I dont think this trend that will only continue to grow will make it easier to fund a new depth growth in US shale production.. https://www.bloomberg.com/news/articles/2019-09-12/bp-ceo-says-he-ll-sell-oil-projects-to-meet-climate-targets
The average 2017 Permian basin well looks like the chart below. I use a hyperbolic fitted to first 21 months of data for wells with first flow in 2017.
When the annual decline rate reaches 15% per year I assume a terminal exponential decline rate of 15% EUR is 380 kb with an assumed oil price of $85/b at wellhead at the end of the well’s life at 5 b/d at 233 months after first flow. Gas output for the average 2017 well is 295 kboe over the life of the well with these assumptions, total output in barrels of oil equivalent is 675 kboe for combined oil and gas. Only the oil curve is shown in chart below, the gas is modelled separately.
Dennis,
I’m a novice at understanding this, but is seems like Scott Lapierre made a (seemingly) shocking analysis that states total recoverable oil from US shale is less than 50 percent (!) of what we were led to believe by analysts and oil companies. In addition, you knew this and had already incorporated the data in your model(s). In general, is that correct? Thanks, Doug
Doug,
Opinions differ on this point. I have tried to incorporate Lapierre’s analysis. I believe Enno Peters thinks my 15% terminal decline assumption is too optimistic, he thinks it is at least 20%. I used to use a 10% terminal decline and the 15% choice was a compromise between 10% and 20%.
Mike Shellman often points out, correctly in my view, that we do not know what the future output of these wells will be.
Also there is not a single well profile, there are thousands of wells and each is unique. When I have fit various well profiles, the fit has been good, typically we do not have more than 72 months of data so beyond that it is guesswork.
Dennis said:
“Also there is not a single well profile, there are thousands of wells and each is unique.”
But not truly statistically unique, although the statistical parameters such as mean, decline exponent, etc will gradually change over time.
Paul,
Not sure if I agree, the model is merely an approximation of well output, each well profile is likely to be unique, in a statistical sense perhaps this is not the case.
The main point is my models typically represent a 1000 or more(N) different wells (each of which might be modelled with a different Q nought, D nought and b exponent, if using an Arps hyperbolic) by taking the average of those N wells and fitting a hyperbolic to that average. It works well enough, but the tail behavior in the real world may not be well represented.
Dennis, I am agreeing with what you say and was hoping you would clarify your words concerning uniqueness, which is what you did.
Agree also that the tail behavior is one of the factors that is most difficult to model, in that a business decision to shut-in the flow impacts the physical model of the potential remaining flow.
I think I was simply unclear on the meaning of statistically unique.
I note in the comments to the Lapierre article that one has called the public well production data “garbage.”
Seems like there is always someone screaming fake news these days.
If you don’t like the production data, just make up your own. Clearly the E & P’s producing shale have done that for more than a decade with zero ramifications to date.
I like Brooker’s comment, “Where are all the 800,000 BO Eagle Ford wells?”
The there is little difference between the Permian initial expectations and the Eagle Ford and Bakken. In the EF and Bakken, it’s been the adjustments to account for the sweet spots being different than the rest of the formation. Plus expected EUR was way off. The same is proving true with the Permian, with an added factor. Moving oil and gas. They have to adjust to that by increasing well spacing. My guess that it won’t improve, but get worse. Especially, when they have to adjust to the not so sweet spots. As, I understand it, those little molecules like to stick together, and they can travel further and faster in the Permian, than say the EF. While it is more permeable than the EF, it is still not conducive to water. Still, a shale. Ok, that’s a non-technical analysis, because I don’t know shit from shinola about geology.
Shallow
Interesting that you comment on that as I just skimmed through Lapierre’s article and was mulling over responding.
To the point …
If people use Enno’s data – unless it has changed – what is put forth is publicly accessible production figures as compiled on a monthly/quarterly basis.
That is to say, in the month of March, say, well # xyz in the Bakken produced 500 barrels.
Was the well online 5 days? 15? 31?
Knowing the online history is crucial if one is to extrapolate future potentialities.
This was the cause of the blow up between Filoon and Enno a few years back.
I do not know if or how the actual days per month online situation is handled by shaleprofile … but it is most definitely a crucial metric.
Coffeeguyzz,
Anyone can look up that data for individual wells. The interesting thing with shaleprofile is that it aggregates the data so that statistically you get a pretty good picture. For a collection of 1000 or 5000 wells, the exact starting date or number of days online, washes out. This is pretty basic statistics.
Using the well profiles and completion rates can be used for a basic model as in chart below. Seems to work well. Correlation coefficient is 0.999644 for monthly data from Jan 2010 to July 2019.
Dennis.
I do not know how the professionals would account for days wherein wells are shut in because a neighboring well is being fracked.
However, I do recall a lot of discussion in the past about a “halo” effect, where neighboring wells receive a temporary boost in production due to frac hits.
Also, I do have experience with low volume wells being shut in and then returned to production. Almost always a low volume well that pumps 24/7/365 will see a bump in production after being shut in.
We just reactivated a well that had been shut in for about a month because the pumping unit needed a new gear box. The well produces 3/4 barrel per day. The well produced 9 barrels the first day and then tapered off over the week, eventually settling at the 3/4 average again. It made up over half of the 20 some barrels lost while it was shut in.
We observe the same with other low volume wells when we have to shut them in due to cold weather. They don’t make up all that was lost, but usually more than half.
Also, as Mike has mentioned, most of the older shale wells pump part time because they produce such low fluid levels that they pump off. The shale wells are equipped with tech that shuts them off automatically.
We have wells that we run part time also, but given the small nature of our production, we determine how many hours per day they should pump by trial and error, and then equip with a time clock.
We have one well we manually pump every other day. The pumper shuts it off one morning and turns it back on the next. We bought it in 2004. That is the way the previous owner operated it so we went with that.
We have another well that pumps for one hour, four times a day. It is equipped with a time clock that starts and stops it. We sell 270 +/- barrels per year from that well. We have owned it since 2003. It has been pulled once. It makes one 70 barrel tank of water a year and the electricity to run it is less than $50 per month as it pumps at just 4 strokes per minute. It is our “Saudi Arabia PXD” well. Wish they were all so easy, I wouldn’t worry much about the oil price then.
On our “Saudi Arabia PXD” well, should we adjust for downtime? Same with the one every other day? I can’t multiply by 6 or 2 to obtain EUR for those.
I am not a proponent of adjusting for downtime without being sure the adjustment factor is accurate.
Gutting an energy ‘induced’ well, without regard for pressure maintenance, only for the sake of cash flow, is one of the stupidest things the LTO industry does in a long list of stupid things. Shutting wells in to facilitate the frac’ing of another nearby child well is fraught with risks regarding overburden closure, etc. and is another stupid thing the shale oil industry does. What is the net gain from any sort “halo” thing? Not much, if any. Risk that and its worse. None of this Coffee bullshit has anything whatsoever to do with Lapierre’s effort to explain how rising GOR appears to correlate to abrupt downturns in decline. What we’re trying to find out is why EEUR’s (estimated exaggerated ultimate recovery) are falling significantly short of anticipations. Down days are meaningless in the big picture. So is EOR; that costs more money and in spite of all the dung heap about EOR, nobody has yet proven it will be economical.
If assets are grossly exaggerated how “liquid” are these companies, really? How many of them are basically underwater with lenders and insolvent, even the best ones?
The real issue, however, is what EEUR’s do to PDP, PUD and TRR resource estimates based on type curves and drillable locations per square mile, as the USGS, and others, like to do to make America feel comfortable, and secure, about their long term hydrocarbon future. My personal beef with EEUR’s is how adversely they appear to be influencing current energy policies.
Mr. Shellman,
Wondering if the EUR for the well profile below looks like an EEUR. Data for the average 2016 Permian basin well from shaleprofile.com.
I assume terminal decline is 15% starting at month 70, with an Arps Hyperbolic used from month 31 to 69 and actual data used from month 1 to month 30. I assume shut in occurs when the output of the well falls to 8 b/d or less (depends on price which is not known). Thanks in advance for any comments on obvious errors.
Sorry for small chart, click on chart for larger view.
shallow sand and Mike shellman,
The well profile for the 2016 Permian well has a cumulative output of 220 kb0 at 36 months 247 kbo at 48 months and 269 kb at 60 months, at 70 months terminal decline at an annual rate of 15% per year starts at cumulative output of 284 kbo and daily output of 47 bo/d. At 15 b/d (at 154 months from first flow) cumulative output is 356 kb0, and at 10 b/d cumulative output is 367 kbo (at 184 months), at 8 bo/d cumulative output is 372 kb0.
Does this estimate seem exaggerated?
shallow sand,
The key metric is output per month, regardless of how many days or hours (or minutes 🙂 ) an individual well is pumping.
What I am interested in is the average monthly output of all wells that started producing in 2010, 2011, … , 2016, 2017, … When we are talking about 1000 to 3000 wells that might stat producing in any given year, the details of how many seconds a given well has been online is of little significance. The basic method, which I first saw at the Oil Drum many years ago (and later found that the method had been used by others such as Paul Pukite and James Mason and others who prefer not to be named.)
I wonder if comparing vertical Spraberry wells to horizontal ones after year 5 might be worthwhile?
I had a couple posts Nony responded to on SA recently.
I guessed that PXD’s current hz wells would in aggregate average around 10 BOPD each in 2029.
Somewhat WAG by me, made in part by looking at the almost 6,000 vertical Spraberry wells PXD operates.
Shallow
I have no idea about that, but the hugely heterogeneous nature of this unconventional stuff has been stated over and over again by industry professionals doing the actual work going back to the early Bakken/Eagle Ford days of 2011/2012.
The degree of natural permeability in the formation seems to play a big role in production in all sorts of ways.
Historically, high permeability allows hydrocarbon flow to the wellbore (duh).
But, when completions strive to maintain 2,000 + psi expanding pressure bubbles underground, the inherent permeability inhibits that pressure build up. (Too much breakthrough).
This is why what is going on in the Bakken these past 2 years may be so significant.
Operators are making big advances in completions.
The Permian, with its vast size, multiple horizons, relatively recent (compared to Bakken/EF) completion history may not have effectively cracked the code in optimal fracturing.
I do not know as I do not closely track Texas activities.
And the operators are fairly close mouthed about latest techniques.
Bakken: A little bit improvement of well quality last year, no significant this year when you look at Ennos site.
Perhaps they are improving, but the rock is getting worse, so it evens out.
Oh, and EOG isn’t improving, too.
Their best year was 2017, regarding to well quality.
Eulenspeigel
(and shallow, Dennis, anyone using shaleprofile data …)
Your comment about EOG’s 2017 output prompted me to start some digging. (This could be HIGHLY informative to people who use Enno’s calendar based production numbers versus ONLINE days of production for projections/depictions of just how these wells are doing).
Using the “quarterly” metric for 2017 EOG wells, there is only one well from 3rd quarter (skinny pink line).
Last point shows 54 bbld.
Using NDIC publicly accessible data, this well would be the Round Prairie 27-1523H, File #33705, API #33-105-04468.
This well was only online for 22 days in June versus 31 days in May.
Hence, the dramatic, OMG dropoff line on the chart.
Wanna see something – ahead of time – that should be even MORE OMG next shaleprofile presentation?
July’s numbers are actually already published for subscribers.
July output for this well is only 870 barrels (versus the 1,652 barrels for June).
More hand wringing, the shalesters are doomed hyperbole?
Not when you see that this well was ONLINE for only 11 days in July.
Again, the data that Enno produces can be exceptionally informative for a whole array of reasons.
I refer to it all the time.
Absence of context, however, (MOST crucially the fact that well production is NOT depicted on an online basis) can be fertile grounds for wildly skewed projections.
This particular EOG well has May/June/July monthly production of 3,530/1,652/870 produced barrels while being online 31/22/11 days respectively.
Coffee.
So it is either being pumped part time due to low volume, or there is a down hole failure. Or there was a nearby frac.
Look at Parshall. Tons of wells either less than full month on. Many shut in.
To me, that isn’t good. Parshall is believed to be the best of the best in the Bakken and it’s already played out absent some EOR breakthrough.
Parshall is barely 10 years old.
Shallow, you know this:
All operators with an inventory of producing wells, big or small, will typically have 10-12% of its well inventory down during a given month awaiting intervention or surface repair. The reasons can be parted rods to rat’s eating up the wiring in an electric motor, bearings going out in a unit, to being behind with WO rigs and lease crews; whatever.
As induced energy dissipates from a frac’ed well and gas expansion, or in the case of Lapierre’s theory, oil expansion, poops out many, many wells go on pump off controls to ensure the down hole pump intake is below fluid. That’s the nature of the well. Wishing to remove it from a data set, as though it does not represent a well in a sweet spot, county or basin…is sort of stupid. Operators don’t do that.
Shutting a well in during a proximity based frac is stupid also; I make no comment on that other that to say if an operator is having to do that he needs to drop what else is going on and upspace immediately. You point out if the halo bullshit is right, which its not; what’s the difference? It all comes out in the wash.
None of Coffee’s bullshit has anything to do with Lapierre’s theories regarding the role GOR and bubble point might have in flow regimes over a well life. What we’re looking at are wells that have already been thru DCA using really bad methodology that are now not living up to the hype. I don’t give a rats ass about one well on one unit in one county; do you? I’m worried about whether this entire shale oil phenomena is going to get us home or not. Exaggerated EUR’s is a really bad, serious issue.
I think Coffee is trying to prove he and/or his buddy (the fella with the health care background) is right, that we can’t use Enno’s data correctly without asterisks, and all this overwhelming data coming forth about exaggerated EUR’s, accelerating declines, terminal declines once a well approaches 40 BOPD, etc. is a bunch of crap…the American shale oil industry is doing fine. I’d bring up failed economics and financial demise but that never meant anything to Coffee anyway.
People can decide for themselves if the shale oil industry is doing fine. Personally, I think now it’s falling apart at the seams. Some of knew 6-7 years ago none of it was sewn together very well anyway, yourself included.
Shallow/Mr. Roughneck
If you spend about 3 or 4 minutes looking at the actual wells in the Parshall field on the ND DMR Gis map, you can readily see that there is quite a bit of room to put way more wells in this area, even taking into account that the Nesson anticline tapers off sharply to the east with virtually no hydrocarbons present.
The Sanish and Alger fields just to the west offer a comparison for even higher density drilling.
This does not take into account the fact that the lower benches of the Three Forks have been minimally developed in this area.
Regarding the single well that I profiled in my above comment, it would be easy and quick to figure the entire 27 well cohort from 1st qtr 2017 from EOG if one could identify those wells. (Dennis?)
Thinking that these 27 wells – 28 months average production history – are currently producing at a rate of 37 barrels per day is, frankly, preposterous.
Calendar month, sure, if Enno’s data shows that, I would believe it.
Calculated by actual days online?
Way higher.
Simply scanning the production history from the NDIC would provide the days online data from each well.
I will re-subscribe to the basic service next week, but there is NO way I will go over the 300 page monthly reports to identify new wells.
Someone steer me to those 27 API #s or File #s and we could get a much broader scope of wells in this context.
To me, this is not in any way shortchanging Enno’s work.
Rather, putting a specific perspective (calendar versus days online) might prompt a different (more accurate?) view of these wells’ potential.
Regarding shutting wells in when nearby fracturing is occurring, that has been standard operating procedure for years.
In fact, minimizing the offset wells’ downtime is one of the big issues Toby Rice had with EQT in efforts to limit production curtailment.
Mike.
There is no point in discussing this further here. I am sure you agree.
Shallow, I do agree, and I am done.
Coffeeguyzz,
What matters is output per month, regardless of days online. Nobody cares about individual well results except the land owner collecting royalties. Days online is just not an important metric, especially when we are looking at 100s or 1000s of wells.
Enno Peters data at shaleprofile.com is impeccable.
shallow sands and Mr. Shellman are correct as usual.
Dennis
No, you are not only clearly 1,000% wrong, you MUST KNOW you are wrong.
This entire narrative of “poorly” producing wells is grounded in the misperception of what these wells are capable of putting out.
YOU may claim till the cows come home that “days online is just not an important metric”, but try telling Lapierre that.
Try to tell ANYONE following this so called Shale Revolution that equating output on a 10-day-a-month basis is the same as full 30 day production.
Sheesh.
If (statistically) the wells that produce each day for a month are the same as the wells that are curtailed in their product then there is no point in separating them.
On the other hand, if they are statistically different on such as depletion rate then they should be separated.
Which case is it?
Coffeeguyzz,
Oil wells do not produce 100% of the time, that is just a basic fact in the real world.
Have you ever taken a university level course in statistics? You seem to lack some very basic understanding. We are looking at a population of wells, if the population produces on average for 25 days per month or 15 days per month is of little significance, whatever it is, the monthly output is the only number that matters, days online does not matter.
I will repeat, read very carefully, the output of a single well is of no significance in this analysis. The well profiles I present are based on the average output of 2000 to 5000 wells (2016 Permian well profile based on 2275 wells, 2015 based on 2699 wells, 2017 based on 3543 wells, and 2018 average Permian well profile based on data from 5077 wells.)
I have shown elsewhere the R squared between my Permian model based on data presented at shaleprofile matches the EIA’s “tight oil production estimates by play” from Jan 2010 to July 2017 is greater than 0.999. So claims that the data does not reflect reality are spurious at best.
Coffeeguyzz, Dennis is correct here. Oil seeps very slowly into the wellbore, much slower than you can pump it out. Imagine a water well where you wanted to pump continuously. But you could very easily pump it dry. Then you would have to turn your pump off and wait for the well to replenish from the surrounding water table.
The same principle holds true for an oil well.
Mr. Patterson
Your comments are not only accurate regarding the slow ‘seepage’ into the wellbore, as per David Demshur’s observations just before he retired as CEO from Core Labs, this prolonged, glacially-paced process might greatly expand in scope in the coming years of unconventional development.
Biggest factors are the vastly enlarged volumes of rock now being fractured coincident with the even smaller sized pathways through which the hydrocarbons are flowing.
The distances that some of the molecules must now travel are MUCH farther than previously due to the enhanced “spider webby” configurations of modern fracs.
Demshur felt the production tail was apt to be greatly extended, time-wise, for these reasons.
After somewhst clumsily using the ND DMR Gis map to identify the locations of about 20 of EOG’s started-in-2017 wells, I am more convinced than ever that many (most?) of these Van Hook, Fertile, and Parshall wells were offline for lengthy periods NOT primarily for the reasons you posted.
Rather the crowded neighborhood along with the fact thst most of these wells are on just a few pads lends strong credence to believing they were taken offline as nearby wells were frac’d.
I will have production histories accessible shortly and will be able to verify (or disprove) it then.
Hope you are enjoying the Land of Enchantment.
Shallow sand,
I would think you could look at the performance of PXD’s horizontal wells and estimate based on that.
Did you see the post below linked at shale profile?
This post seems to indicate that perhaps the bubble point of death is less of a problem than Mr. Lapierre seems too think. Or at least there are different opinions.
Get around the problem by plotting rate versus cumulative. If the well is helped (or hurt) by a shut in, you will se a blip in the curve.
Fernando
I only consider average profile for 1000s of wells. Doing 1000s of hyperbolic profile estimates for individual wells is not necessary for an industry wide analysis in my opinion.
Any comment on my well profile for 2016 Permian well? Does it seem reaonable based on data presented?
For an average well profile based on 2300 wells. The blips get washed out.
Shallow
… quick follow up regarding comments to LaPierre’s article.
Did you read the one by George Grinestaff?
He claims that there are currently 266 Eagle Ford wells undergoing huff n puff with expected 80/100 percent bump in EUR.
Report coming out next week.
That’s all EOG’s efforts, I expect they will be an addition to EUR for my wells, eventually, but I’m not ready to write home to momma about it, yet. I’m just guessing, but they drilled four more child wells on my first well drilled about five years ago. The first well prior to completions was producing about 1500 barrels a month. After they drilled them, it has produced on an average 3000 barrels a month. Just guessing, but they tried, but too late. I think it is time dependent, you have to catch it early in production to get any meaningful results. As it costs around one million to do, I’m sure they lost effort on a five year old well.
Secondary/Tertiary recovery is something that will make a big difference for shale, if the operators figure it out and figure out how to do it economically.
Seems like it is a tough one to solve, and maybe needs much higher oil prices, just like shale in general needs.
Shallow
There is a 17 page, graphic heavy pdf from Liberty Resources describing their EOR project in the Bakken.
Pretty impressive.
The NETL folks have a 1 page update on this project as of June 1, 2019 as they (NETL) are collaborating with Liberty.
The NETL description is brief but filled with specifics like injection volumes, rates, soak times, etc.
Preliminary evaluation seems to claim over 25% boost in EUR.
Guy
Regarding “time dependent” in gas re injection …
I have heard of that several times over the years, including from that tiny outfit Granite Oil up in Canada.
Seems like maintaining a somewhat high formation pressure in the early going may produce the best long term results.
As per that Grinestaff guy’s comment, I’ll be on the lookout for this upcoming EOR report.
It’s different, depending on the shale. EF is the best example , as they have to containing shales, and a tight shale. Like no other. My guess, is that it has to happen in the first two years to make a measurable difference.
Wow.
Sounds like the bubble is about to pop.
Not only that: the article is a HOOT:
It is difficult for the author to pinpoint any technical explanation for why such statistically significant and seemingly universal trends have yet to be discussed in technical papers, corporate conference calls, or at conferences within the industry.
“It is difficult for the author to pinpoint any technical explanation for why such statistically significant and seemingly universal trends have yet to be discussed in technical papers, corporate conference calls, or at conferences within the industry.”
You are right. This is deadpan humor at its best! It needs to be the first line of the bailout bill.
The Potential Gas Committee just released its biennial report with assessments up to December, 2018.
Press release contains some highlights … main ones being about 120+ year of technically recoverable resource using current US consumption rates.
Combining with EIA’s reserve numbers gives about 140 years’ US supply at current rates.
The most salient point, perhaps, that the press release contains is that the huge increase from the 2016 assessment is largely derived from improvements in finding and extracting the hydrocarbons.
While this finding would also apply to the liquids, the sheer size of this gaseous energy resource will continue to shift enormous resources – most particularly in the downstream realm – to more comprehensively, more effectively utilize this energy known as natgas.
Coffeeguyzz,
Typically about 50% to 60% of technically recoverable resource is profitable to produce unless energy prices rise quite a bit. Not a lot of info in that press release, the number may include a lot of speculative resources, not clear from the press release what is included. It is also unlikely that present levels of consumption will remain fixed. At some point the Marcellus and Utica will need higher natural gas prices to be viable, the gas coming from tight oil is likely to cease as tight oil output winds down after 2030.
Most Misleading article of the year. Net crude oil imports are still about 3.6 million bpd, four-week average.
I am at a loss to understand sometimes(?).
I recently chastened a news program for both the newsperson and the guest both saying the USA was “Energy Independent”. So I went to the EIA web site and found data that the USA consumes about 20 million barrels per day of liquids and produces about 12 million barrels per day. My calculation of those figures gives a need to import about 8 million barrels per day. Is the variance between my calculation and the figure you quoted the production of biofuels? Any help you can give me in understanding this would be appreciated.
Not energy independent but it will be in 2021 and that will last for a few short years, but long enough to act recklessly in foreign policy issues.
Hugo,
A more important figure is crude input to refineries, that is about 16 to 17 Mb/d, the NGL is not really useful for producing gasoline, diesel, jet fuel, or residual fuel, the main components of liquid fuel consumption in the US. So unless US fuel consumption decreases, we need roughly 16.5 Mb/d of crude output, we might reach that level of output, by 2025, but we are unlikely to maintain that level for more than 5 years and my guess is that we may not even reach that level, it is more likely that fuel consumption will decrease as liquid fuel prices rise as the peak in output is approached.
Trump seems to mouth off a lot, but is more cautious than his predecessors when it comes to actually getting the US involved in war. I got the feeling the deep state, neocons, etc are having hissy fits and will continue to try to undermine him.
Given Trump’s facility for lying about EVERYTHING, no matter how trivial, you have to wonder about people that back him so facilely.
When will they realize that it undermines their own credibility?
Two things.
First, definitions change.
Second, believe nothing. No one has any incentive to provide accurate information.
USA through June 2019.
Yeah, that kinda looks flat, don’t it? That does not count the hurricane for July, or the two that are coming. But the experts predict it will increase the next quarter and the next year with completions going down. Glad I’m not considered an “expert”. You can consider my guesses as equivalent to Guy Garp. The world according to Garp.
GuyM,
It is far from clear that completion rate has changed significantly, perhaps this is the case for conventional wells. Permian doesn’t look so flat.
Damn dude, US is flat through June. Down July. What’s it take? You and your tight oil estimates, will be proven to be wrong. Eyes only on the 914’s.
The data from the two links seem to be identical. Why the delay for the second link data?
Thanks, Tony
They are basically the same I’ve never noticed a difference. The monthlies are the 914. They can be adjusted in following months, but I have never noted any significant difference. I don’t know why there was a delay. They are usually at the same time, within hours. And my guess is that monthlies will be reduced downwards going forwards, but not significantly.
GuyM
Take a good look at the graph.
Some people were saying US oil peaked in 2015, it did not.
Some people were saying US oil peaked in Oct 2018, it did not.
It is low oil prices constraining production at the moment not geology.
I don’t argue that. WTI at below $60 will eventually cause decrease, $70 will maybe lift it a little, and $80 will grow it, for sure. My wag. My estimate was that world production was lower in 2019 than 2018. It is. Can it get higher? Sure if the price is right.
Price has little to do with it. Fracking doesn’t make money from operations regardless of price, that’s not driving the production decisions.
I don’t know how anyone can apply an economic model to US LTO with a straight face. The operators don’t.
Propoly.
Shale can make money. There are different price points for different companies and basins.
$90 WTI would do wonders for shale. Heck even $75 WTI would get many out of trouble, if that price was sustained.
I think our policy maker Trump somehow thinks $75 WTI, $4.25 corn and $10 soybeans would be bad for the USA.
I don’t agree. Moderation is best.
And Exxon’s View to 2040 shows rising crude oil supply until around 2040.
To me, it’s like investing in the S&P 500, not many can do better especially over the long term. In the short term, you get wiggles where some other funds have done better.
I look at these Exxon charts and wonder where Exxon might have gone wrong in their estimates? Not enough Permian? Venezuela bitumen ramps up big time? Not enough capital? EV production explodes tubing the need for oil? Lots of questions!!
The biofuel projection projection [growth by more than 70% by 2040], is either Kool-aid drinking or a catastophe.
If all of the growth it was limited to the USA, it would take something like all of the corn acreage and half the soybean acreage,
to come up with that fuel growth.
At least we know the IPCC pulled a fast one when they posted a “Business as Usual” case with oil production rising to 165 mmbopd. It’s a pretty good trick to exaggerate CO2 emissions, exaggerate temperature increases and put poor Greta Thunberg in a complete state of panic.
The 914 has no tight oil data. Conventional output is down, that is the reason for the flat US output.
Perhaps the EIA’s tight oil data will be proven wrong, they get it from drilling info, who in turn gets their data from state agencies.
@Dennis Coyne
Thanks for the source. I realized I had an old file from this dataset (from November 2017). So I made a little comparison with current data, and I found that the accuracy of the last two months of this dataset is actually awful. At that time, there was a strong underestimation in the order of 100-200 kb/d for the permian.
So, I would be cautious with the estimations of June and July. We won’t really know the course of permian production this year until November.
Tita,
Yes the data is not perfect, sometimes there is an underestimate and other times there is an over estimate.
I am always cautious with estimates, the most recent few months often get revised higher or lower by 200 kb/d.
When I get a new estimate I revise. Data from various estimates in chart below, the month indicated is the final month of the estimate.
As always clicking on chart will increase the size.
GuyM,
We don’t have July output estimates yet.
GuyM,
From Dec 2018 to June 2019 tight oil output rose by 321 kb/d while L48 onshore conventional C+C fell by 239 kb/d, leaving an increase in L48 onshore output of 82 kb/d over the first 6 months of 2019. The fall in conventional output is likely to moderate soon.
You get conventional from subtracting your unconventional info from the total. Tell me, does this look like normal ups and downs of conventional?
GuyM,
Conventional completion rate is affected by oil prices. Went up in 2018 when prices were higher and went down in late 2018 and 2019 due to lower oil prices.
I expect it will level off as was the case from Jan 2017 to August 2018 after a steep drop from March 2015 to Dec 2016.
Longer term chart below.
S&P says that Haynesville Shale gas production month to date is just under 11.6 Bcf/d which is down from 12.1 Bcf/d in early August. A nearly 24% decline in rig count since Jan is partly responsible.
In addition, S&P says: “Sample production receipts from the Haynesville show that declines, concentrated in Louisiana, have been widespread at processing and gathering locations on multiple pipelines, suggesting that the recent drop in production is real and not the result of maintenance or temporary flow constraints.”
“A post-hurricane rebound in the US raised global oil supply by 530 kb/d in August to 100.7 mb/d. US expansion, plus big gains from Norway and Brazil, is set to boost non-OPEC growth from 1.9 mb/d this year to 2.3 mb/d in 2020.”
IEA is hoping that US, Norway and Brazil will boost non-OPEC growth in 2020. If not then global supply could be below demand in 2020, which contradicts the IEA forecast below.
In Norway most field is in decline and most field are now gaz producers. In October the New giant start production https://lundin-norway.no/2018/05/25/lundins-production-set-to-double-with-johan-sverdrup/?lang=en and exspect to produce 440 000 bpd in phase 1 before it increase to 660 000 bpd. Guess this will add some in additional to anual decline from old field. Additional resourses since 2014 have been very limited but some additional barrels from satelites connected to exsisting infra structure will happen. Exsploration wells they exspect should add significant resourses have so far been disapointed. I believe Brazil will be importabt but if US shale start decline or lost growth there will be a significant higher demand than will be possible to supply if not Saudi have millions of barrels in spare capacity…
Hi Freddy. I can tell you are interested in offshore oil. The Johan Sverdrup field is set to increase to 440 000 b/d with ramp up to mid summer next year 2020. However there is a 150k b/d of decline from mature fields in Norway and something similar (in %) UK to take into account each year.
Brazil is set to increase as well (just read the IEA monthly report). So, the main thing here is that the great offshore boom in 2011-2014 was created by a mixture of North Sea, Gulf of Mexico and North Sea expansion due to high oil prices. I believe both Petrobras and Equinor are holding their horses to expand output quickly, and just wait for higher oil prices. Natural decline rates are 8-15% percent depending on if fields are deepwater or not. It also depends on field age and size. Throwing numbers out there could be misguiding withouth further investigation. The oil services industry offshore is crumbling right now. Nothing else than higher oil prices can make things happen offshore most likely. The low oil price media brainwashing mantra going on now is sure to fail. And companies offshore are not stupid enough to expand at low oil prices I would guess.
The one thing that has saved offshore from becoming really crucially hit is the strong dollar. The cost price for completing offshore projects has gone down so drastically that it has held the offshore market from drowning. Applies for most places except GOM. A part of cost reduction is ofcourse also lower oil service prices (regardless of dollar exchange rate).
kolbeinh,
“The Johan Sverdrup field is set to increase to 440 000 b/d with ramp up to mid summer next year 2020”
That is what i originally expected also, but im not so sure anymore. It now looks like 11 cargoes might be booked already for lifting in Oktober, that would give an average of a little over 200.000 boepd already in Oktober.
I guess we will find out pretty soon if new schedule holds up or not.
The World through May 2019.
This is total liquids which includes NGLs.
World production, Average 2018 and 2019 5 Month Avg, Jan through May. Total liquids.
Eurasia is mostly Russia.
Thanks, Ron.
It would be interesting to see if there is a predator-prey relationship between total liquids and price. An example of one is in the linked article at the third graph “Number of Wolves vs Rabbits” which would translate into Price vs Total Liquids.
Oilprice text is based on Bloomberg article, which seems to be an original source. The article talks a lot about ‘crude sailing to unknown destinations’. It is a bit strange, this secrecy, isn’t it?
Where does Bloomberg get its data? It says a lot about ‘observed shipments’, so some kind of business intelligence service.
Only speculating, but I guess Iran exports are being rebranded and maybe reported in UAE, Iraq, Oman and even maybe Kuwait exports. Iran has built up excess refinery capacity and is exporting a lot of products too. Some exports can reach Africa and be rebranded from there. India and Burma pipeline to China are destinations that can be reached by tankers without AIS transponders turned on. Oil can be leaked through the Kurdistan region and north through Azerbaijan. But it is not cheap to rely on tanker trucks. Sell me a bridge if Iran is not exporting its oil while keeping oil production at a steady state. And on top of it all; the Trump administration don’t even want to sanction Iran’s oil. They want to keep oil prices low. If waivers to Iran sanctions are given I guess the right thing to do is to buy oil related if it falls. It’s all an illusion – or, so is my thinking.
World C+C through May 2019.
This chart looks entirely different from the total liquids. Does anyone have an explanation for that?
Ron the obvious explanation is that NGL, biofuels and other non-crude liquids have increased.
Dennis, after a second look the data looks all screwed up and, in some places, contradictory.
I remember reading somewhere that Iraq was specifically invaded to SHIFT peak oil in time, in other words, to create a long plateau.
I think it was ‘The last oil shock’ by David Strahan.
Iraq was identified rightly as a especially oil rich country in resources not even close to being utilised due to the Saddam Hussain regime. It is today still not exploited fully in the oil rich north, while closing in to plateau phase in southern Iraq. Much is spoken about the possible multi billion dollar project to bring treated salt water from the gulf to enhance water injection to the southern fields. But nothing concrete so far.
EU is in a precarious situation being forced to import more and more fosil based energy each year. But that is nothing new – it has been like that for quite a while.
But we are not very close to a situation where it is becoming very destructive yet. First high energy prices must occur (or put in other words – energy must take a larger portion of the economic “cake”). There are more countries out there with great potential but with a fragile political situation. Oil resources can economically be exploited at a higher price level than now. Natural gas has a bigger potential than oil going forward. But the ridiculous investor unfriendly oil & gas policy especially not at least through artifically low prices got to stop. It indirectly affects renewable energy as well.
The way things are going now, we are approaching the great energy crisis with lightning speed. Lower oil prices resulting in lower shale oil output and OPEC cuts. Hence, lower inventories with no sight to the end. Let it come, while ordering some popcorn. We need some sane people to lead the energy transition coming soon. And also let’s not forget that to keep the majority of people in a country at a realistic high enough standard of living should be a very high goal. This is very much linked to cheap energy and could infact be pushed to the front of priorities while discussing matters related to energy. It is not at the moment.
“….oil & gas policy especially not at least through artifically low prices got to stop. It indirectly affects renewable energy as well.”
Artificially low ? Without cuts oil prices would be even lower. The cuts will make the production plateau last longer or delay PO.
And like OneofEU writes: oilprice must be kept down. The majority of world inhabitants, that already are spending most of their income on food and other basic life necessities, otherwise have (almost) nothing left to buy other stuff. I don’t agree with the opinion that the world economy how it is now could easily bear oilprices of $ 100/b or more.
You have to have a boom in prices after bust for oil & gas investments to happen. That is how it has always been. If not high prices, a great supply crises will come. In my view at least. If people don’t agree or tolerate that, it is understandable. The so called “fair price” is very hard to calculate due to currency rates, oil service prices and subsidies. The energy piece of the economy “cake” was much higher in the 70’s for instance. Maybe it should be less now, I don’t know. I agree that the great debt bubble makes 100 dollar/b currently not affordable. But the nature of peak oil, if one believes in it, recession is unavoidable. It can be more soft or hard, planned or not, but unavoidable. We are approaching that point.
“You have to have a boom in prices after bust for oil & gas investments to happen.
If not high prices, a great supply crises will come.“
Kolbeinh,
Yes. Especially last decade and this one and the next decades, because EOR projects are extremely expensive. For the boom in oilprices to happen OPEC has to cut much more, so much that the increase in oilprices and the resulting increase in shale oil production still results in a relative shortage in crude oil. So then you get artificially high oilprices. On the other hand, I don’t believe that the current world economy can handle high oilprices for many years. Maybe one or two years.
Better not trying to follow Trump’s tweets.
And, the only way oil can stay low is if the supply exceeds demand. Not enough supply? The opposite happens. It’s coming soon at your gas pump. The world can sustain 75 oil, that could stave off the pending spike in prices. But, the market is not reasonable. Hence, panic is due 2020 by the second half. The increase in production for 2019 and 2020 to keep prices in line WILL NOT happen. Because, the Trumpet and massive misinformation has kept it down. It’s a spring being pulled.
Right now, we are selling about 3 million barrels. But, we are still a net importer. I think if big oil takes over, we eventually be a net importer (just like the rest of the EU), but exporting far less. It’s self preservation time. Remember, Exxon and Chevron are US based, and they are getting to be the biggest in US shale, for a reason. BP and Shell will continue to export. But, they are not the most interested buyers of the very sick independents.
“It’s a spring being pulled.” That is the way I see it too. It is very difficult for Trump or anyone else to dive under the surface and open oil wells when the damage is already done. I am very sure inventory draws are forced in some way due to undersupply going forward, and hopefully reported as such too. I don’t see how this US administration can bring anything good to the table. I am so tired trying to follow Trump tweets that I really hope it only lasts the prescripted 4 years.
It’s all rather stupid, you have Trump trying to keep oil prices down, which will backfire on him well before Nov 2020. In turn, the Dems are trying their best to eliminate oil. It’s a comedy of errors for the economy. Come on, we still need oil for awhile. The Dems who have aligned themselves with anti oil by next Nov, will not fare so well. Let’s hope Biden or Beto will get the primary. I see Beto as the Dark Horse. I’d vote for him, even if I lean Republican. Stupid views, but probably not as much of an idiot as Trump. He’s younger, and more attractive to females. Circa Kennedy. And Biden is far from being as stupid as Trump, but I think Beto is marginally more intelligent. I lean Republican, but if he is on the ballot, I’d either vote for Biden or Beto, or just not vote. Like last time. Ok, in reality, I’m of the majority, an independent. If the American pubic does not give me a choice I can live with, then they can go in hell with a hand basket.
“The world can sustain 75 oil, that could stave off the pending spike in prices”
Not so sure consider the enormous levels of debt. Central banks are dropping rates even though we haven’t hit into a recession yet. I see lots of articles of retail Armageddon as thousands of retail stores are closing, Subprime is back with Auto\Home mortgages. Student loans are through the roof, as most Big companies debt is on the verge of being downgraded to Junk due to a decade of stock buybacks and virtually no growth. Then States & local gov’t are raising taxes to prop up unfunded pensions systems. Debt levels have peaked the 2008 crisis and credit card debt is soaring. None of this points to an economy that can sustain higher energy prices.
“I remember reading somewhere”…
Doesn’t make it true.
The oil price must be kept DOWN because food prices are already going up due to the second year of bad crops (I heard only in Argentina crops will be good this year), and that with the greater areal, in Europe at least. Greater areal means more fuel consumption too.
Biofuels at this moment are madness. But in Europe canola prices are rising faster than grains prices, a sign that fuel stress is still higher than the food stress and EVs have not changed yet anything here. It is interesting to observe whether canola rising prices will change fuel prices (EU has mandatory 10-15% quotas of so-called fuel bioadditives).
If bad weather continues through next years – and it seems it is that what we can expect – at some point raising food prices may meet rising oil prices, and oil could be traded for grain. Barter may replace dollar.
On the other hand, if there is hunger, people may die and thus oil stress will diminish.
In this case, too, oil prices may not rise too much. So it is possible that the Grand Solar Minimum and magnetic field changes will mitigate peak oil by reducing number of consumers. Nature’s way.
Maybe time to move to Argentina, at least for a time being. But it seems IMF is already cruising over the country, recently seen a few articles in the European press how bad situation there is bla bla bla something needs to be done bla bla bla again.
Does USA still believe in the Monroe Doctrine?!
Europe is recently getting aggressive on Latin America (Brasil, Argentina) but accomodating towards Iran and China at the same time. It seems the reverse of USA politics.
It is easy to see blocs by recognizing their different imperial STYLES. Europe and accidentally China, both paternalistic civilizations, tend to use the ethical stick of responsibility (green lungs of Amazon, irresponsible Argentina), a style which is rooted in the feeling of indignation, whereas USA prefers to wield the stick of national security (terrorists wielding weapons of mass destruction everywhere).
After Macron overplayed his cards with Bolsonaro, Trump can have it easy now. Anyway, France is a falling country, and the French seem to have lost the art of building containment vessels for their nuclear power plants. New EDF blocs in France, Finland, and UK (EDF subsidiary operated) have already long delays due to this problem. It seems that the Russians are the only relatively compentent in nuclear arts yet left.
Just a thought: it is interesting to notice that not one EURO country is an oil producer. All main EU oil producers (UK 1 mb, Denmark 150 kb, Romania 100 kb, Poland 50 kb) have their own currencies, and all of them are US friends…. such a lucky coincidence for USD, isn’t it?
EU oil import dependency is 92%, more than USA, more than China. Only a bit above Japan. Not good at all.
Baker Hughes rig count. Oil down by 5, Permian down by 8. Explanation is horizontal drop is bigger than vertical additions in other areas. 13% decrease in a year. 15% decrease in oil for the year for the US.
How about that rig productivity?
GuyM,
land oil rigs
horizontal rigs decreased 11% in the past 12 months
vertical rigs decreased by 43% in the past 12 months (Sept 14, 2018 to Sept 13, 2019)
Possibly this reflects the recent decline in conventional output as most tight oil production is currently horizontal wells.
Has anyone heard of this new fracking technology called e-frack
Fracking is a multistage process of blowing holes in the pipe and formation, forcing sand into cracks to keep them open, and using chemicals to loosen it up, along with a heck of a lot of water and pressure to mix. The article explains nothing, so I have no idea how it fits in with the process.
There are reports robots are being tested by Haliburton in Aug 2018. The results must not have been fantastic, as it is now a year later. And, I read amazing reports from Russia on new fracking technology two years ago, but nothing since. When it is put into production with a capital P, I’ll pay more attention.
Ovi
The Reuters article from the other day (Sept 12) by a Liz Hampton titled “Low cost fracking (sic) offers boon …” is a surprisingly accurate, informative piece on using field gas to power turbines which then power the pumps.
Saves about $350,000/well, but the hardware is about double the cost of existing diesel fueled pumps.
This actually started in West Virginia in 2014 by Antero.
EOG seems to be going with it more and more.
Thanks
As I read some place e – fracking have huge investment as the diesel pumps need to be exchanged , beside that jet turbines are used to produce enough electricity. They are exspensive and high maintenance cost. Baker Hughes and some other have tried this but as they told it will take time and higher oil price is needed. Regarding emission gaz turbines pollut CO2, NOx. In Norway new oil platforms are powered from land by green energy ( waterfalls) or offshore windmills…
Sounds good if you can get the natural gas supply. I can see a large operator signing a long term contract to have pumping equipment driven by a gas fueled instead of a diesel fueled engine. I tried to get something like this for two plattform rigs about 40 years ago, but management turned me down due to safety issues (diesel was safer).
How Shale Is Destroying ExxonMobil’s Financial Balance Sheet
While the shale industry is now placing its hope on the Oil Majors to keep the Great U.S. Shale Oil Ponzi going for several more years before peak, the financial data suggests the situation may indeed disintegrate faster than the market realizes.
I looked at ExxonMobil’s financial situation BEFORE & AFTER SHALE. And the best way to do that is to go back before shale took off in the United States and then select a year when the oil price was similar as it is today. It turns out that 2005 is a perfect year as the oil price is very close to the average for the first half of 2019.
If we look at the attached chart, we can see that EXXON’s U.S. Upstream Earnings & CAPEX per barrel are seriously heading in the wrong direction. Not only have earnings per barrel plummeted to only $3.77 1H 2019 versus $35.63 in 2005, but the CAPEX per barrel has exploded to $50.81 compared to $12.31 in 2005.
While there are some different factors to consider, as the natural gas price was much higher in the $8 range in 2005, natural gas production was nearly 1,000 mcf/d more in 1H 2019 and oil liquids were also 154,000 bd more than in 2005. So, this sort of balances out some of the differences.
If ExxonMobil continues to ramp up Shale production in the Permian, with weak or even weaker oil prices, it may have to borrow even more money besides the $7 billion it borrowed on August 13th, not published in an investor press release, but rather only in its SEC filings:
Exxon Mobil Corporation
$750,000,000 Floating Rate Notes due 2022
$750,000,000 1.902% Notes due 2022
$1,000,000,000 2.019% Notes due 2024
$1,000,000,000 2.275% Notes due 2026
$1,250,000,000 2.440% Notes due 2029
$750,000,000 2.995% Notes due 2039
$1,500,000,000 3.095% Notes due 2049
And, then there was the $6.5 billion of short-term commercial paper that was borrowed in the 1H 2019. So, why would ExxonMobil need to borrow $7 billion in August?? Could it be that Exxon’s Free Cash Flow of $2.9 billion wasn’t enough to cover the $7.2 billion in dividends for the first six months? That turns out to be a $4.3 billion HOLE.
So, ExxonMobil now has $26 billion in Long-term debt and $26 billion in Short-term debt. It will be interesting to see how the situation plays out over the next year.
If oil prices remain weaker or fall lower to the $40s due to increasing recessionary economic forces, then I wouldn’t be surprised to see ExxonMobil’s major shareholders come at management with PITCHFORKS forcing them to exit shale before it destroys the company.
Steve
Steve.
Apparently you and I are some of the only people who have been following this XOM debacle.
Most seem to think the Permian Basin is going to be wonderful for XOM.
What are we missing?
Maybe we aren’t missing anything. The share price hasn’t been too good.
shallow,
Good question. I had presented the same type of information at the peakoil.com site, and it seems many of the “armchair energy analysts” there believe the Periman is going to be all ROSES and SUNSHINE for Exxon. So, it’s hard to say where that fine line between ignorance and stupidity has destroyed the ability of the majority of individuals to think CLEARLY.
Hell, even Art Berman has blocked me on Twitter… LOL.
Go figure. I presented a similar graph on Exxon in response to one of his tweets, and instead of debating the information in the graph, he chooses to go on a tirade why I should respect his “sophisticated” investors and not post stuff pushing my agenda. I thought there was pretty clear evidence in that chart.
Anyhow… it won’t take long for the market to realize something is seriously wrong at Exxon, especially if oil prices continue to remain weak.
Steve
Let’s just say that no company’s shares are permanently safe.
I see what happened with GE. No reason it can’t happen with ExxonMobil. It’s all about dollars and cents in the end.
As for agenda, I don’t understand what anyone’s agend has to do with looking at XOM 10-K and 10-Q and seeing there is a real problem.
I am also seeing major risk if there is a 2020 Dem Sweep. No one seems to think that will matter to shale in the least, it’s all political talk.
Tell that to the mineral owners in places like NY, CA, IL etc.
Another reason for you to fear Democratic election- they will probably work to re-enter the international effort to halt Iranian nuclear weapon development, which trump decided was not a worthy effort.
And when the agreement is re-started, Iranian oil sanction will be largely rescinded = more crude supply on the market.
Shallow sand,
What happened to US oil output from 2008 to 2016? Should Biden be elected, it will be the same policies. The Senate is unlikely to turn over to the Democrats as the rural states get to be over represented in the Senate.
Essentially rural states can keep much progress from occurring in the US, any changes are likely to be an exceedingly slow rate in the US.
shallow sand,
No oil is produced in Illinois?
Question: Has Exxon invested much of that $26B in Permian yet, or are they building up cash for a fire-sale, presuming using that cash to buy the assets of bankrupt shale drillers for peanuts?
Tech Guy,
Why would someone buy up bankrupt Shale companies for peanuts if they continue to lose money??? This seems to be a RED-HERRING.
Would Warren Buffet buy a bankrupt company for 5 cents on the dollar if the company continues to lose money???
Only an idiot would consider that sort of investment.
Steve
Generally Assets of bankrupt company have more value than the company. Example you by a $250K home in foreclosure for $50K, Then flip. A lot of bankrupt companies were bought for their assets which are resold for profit.
Presuming here that some one at some point will snap up Shale wells that pump out Oil below purchase & Opex when Shale companies liquidate. It’s likely that during Liquidation Shale wells will be sold below value as investors usually just expect to recovery any capital as quickly as possible.
Steve,
Perhaps comparing 2018 with 2005 would be better as real oil prices were about the same those two years. Also we would expect costs would be higher today and profits lower at the same price due to depletion making oil more expensive to produce. I imagine XOM has looked at opportunities available and chosen to invest where they think the opportunities for long term profit is best.
Dennis,
Exxon may have indeed looked where opportunities would profit them the best.
So, do you actually believe the CEO and management of BHP Billiton, who invested heavily into shale, did so because they wanted to lose $20+ billion??
Maybe you might follow my train of thought here…
Steve
Steve,
CEOs can make mistakes, perhaps XOM is making a mistake. Depends in part on future oil prices. If they remain low, it is a mistake, if they rise to $90/b, things will work just fine.
For some reason, I couldn’t post that graph. Let me try again here.
Steve
This chart seems to be a straightforward example of how expensive US shale is.
Maybe the shale bulls can explain why Steve is wrong.
I wish XOM would separate the shale from the rest of US too. I think things would only look worse.
shallow,
Agreed. Furthermore, if it wasn’t for Exxon’s non-U.S. or International Upstream Sector, the company’s free cash flow would likely be a negative $2-4 billion than a positive $2.9 billion 1H 2019.
The best way to gauge how the situation plays out at Exxon is to watch their results for 2H 2019 and 1H 2020. That should wrap things up nicely.
steve
shallow sand,
what were your costs per barrel in 2005 vs 2019? Steve is forgetting to adjust oil prices for inflation. In 2005 the real price of oil in 2018$ was $70/b, in 2018 it was $71/b, the price of oil in real terms was much lower in 2019 so far than it was in 2005. So one would expect that profits would be lower as well.
Dennis,
You bring up a valid point that if we figure inflation over the past 14 years, then the oil price should be higher today to deal with higher costs. Okay, that is an issue. However, Exxon is producing 1,000 mcf/d more natural gas and 154,000 bd more oil than it was in 2005.
Lastly, does 14 years work of cost inflation push ExxonMobil’s CAPEX per barrel up from $12 to $50 a barrel??
Steve
Steve,
Depletion has resulted in higher CAPEX per barrel for all the majors, just a fact of life.
“This chart seems to be a straightforward example of how expensive US shale is. ”
The total investment in the Permian in 2018 was over 30 billions of dollars. And the nice trick with LTO is that you need to reinvest the same sum each year just to keep production steady. Production of LTO oil in the Permian reached 3.5 Mb/d
In 2018, Exxon Capex was at 25 billions dollars, and Exxon produced an average of 3.9 Mboe/d. They have the same need to invest to keep the production steady.
LTO is expensive, but so are other oil plays around the world.
Exxon has its own reasons to invest in the Permian.
Tita,
Not necessarily true that same amount needs to be invested each year to keep production steady.
For example, say a company invested $3B and output increased by 50 kb/d in 2018. It is possible capital spending could decrease to $2 B and keep output steady, one would expect if capital spending remained at $3B that output would continue to increase.
Silly, simple me. I look at this chart and say, “This can’t continue.” I certainly couldn’t run my life like this.
So what am I missing? Are they simply waiting for the price to rise so they can make a “killing”?
But if prices rise, won’t people cut back, thus crashing demand and price at the same time?
Maybe this is just another signal of the bedrock principle of modern society, The Rich Do What They Want, because they know they’ll be bailed out.
Signed,
Confused.
Micheal B,
Sometimes stupidity or as I like to joke, BRAIN DAMAGE, can go right up to the top level of the CEO’s. They are not immune to being quite stupid. We saw this in flying colors when the CEO of BHP Billiton jumped in with both feet in the U.S. Shale Biz and eventually lost more than $20 billion in the process.
If we look at Exxon’s March 5th 2019 Press Release about the WONDERS of Shale:
ExxonMobil’s investments in the Permian Basin are expected to produce double-digit returns, even at low oil prices. At a $35 per barrel oil price, for example, Permian production will have an average return of more than 10 percent.
We can clearly see that someone at EXXON seriously overestimated the returns they were going to make on shale. If a paltry $431 million in U.S. upstream earnings 1H 2019 at $55 a barrel, $20 more than they claimed in that press release, is any indication of the reality of the situation… HOLD ON TO YOUR HATS.
Steve
Hi Steve,
Interesting stuff, a few questions if i may.
When did exxon enter shale and have you observed the same stuff for other years since they entered even though this is the best comparable one?
Are they building any new refineries to handle their own production of the light tight oil and if so is that included in those capex/barrel?
Yes, the are, a lot. And, it would be included in their downstream capex. Not upstream. And, most of it hasn’t been spent, yet.
Thanks Guym,
So this capex is only spent on putting new shale wells online then and considering their fast and short lifecycle i then agree it looks really bad.
Yep, that one hurt.
This is getting interesting.
The drones are unstoppable, and a range of about 1000 miles.
Yes interesting indeed. Apparently these drones can be made for as little as $15K. No suicide bombers need apply. The short term damage may be limited, but every ten cent terrorist organization in the ME is scouring the internet as we speak to figure out how to build their own. All bombing locations conveniently available via Google Earth… ah the unintended consequences of new technology.
It will be very interesting to follow with the monthlies EIA data and what the majours like Exxon will do as normaly they need to deliver profit in line with other oportuneties the funds could be used. Espesialy in a time with very limited funds to oil and gaz where most are focusing on green projects. Beside this I noted that Exxon have bought more blocks in Brazil, Guyana project is increasing . My best guess is as they normaly do, stop investing unthil oilprice have increased significant from todays level. As we see US oil production in June was down 32 000 bpd from May. What would it be in July with still decline in rig activity..? In beginning of 2019 EIA exspect US would reach 13 mbpd in 4th quartile 2019 … now it is 12.4.
Yeah, the monthlies are the one to follow. Although, the total is likely to be lower in the GOM due to hurricane.
I’m hearing stories of half of Saudi production just got taken out by drones.
Fallout from that will be massive if true. Funny how stuff like that happens when markets are closed.
Guess we are going to find out which economies can handle $100+ oil in short order.
Wonder who’s oil shipments have just been canceled.
(A continuation of this strategy) Today Saudi Arabia finally lost the war on Yemen. It has no defenses against the new weapons the Houthis in Yemen acquired. These weapons threaten the Saudis’ economic lifelines.
“no defenses against the new weapons the Houthis in Yemen acquired”…
from who?
Its an easier way for the theocracy in Tehran to get revenge on oil export sanctions than going after shipping.
They get deniability of responsibility, similar to the excuse the USA uses when the bombs supplied to the Saudis kill civilians in Yemen.
Perhaps today the Houthis have just bailed out he US Shale Oil industry?
I doubt we will see $100 oil on the KSA loss. Russia was preparing for $25/bbl due to the global economic cooling. Perhaps it will increase some, but probably not by $40/bbl.
Unless KSA\Israel start a hot war with Iran shutting down the Gulf for oil exports. With a Nuclear armed Iran & Israel. If it escalates into a hot war, it could go to $200+ bbl.
FWIW: Russia shutout Israel from any more air strikes in Syria threatening to shoot down any Israeli fighter that bombs targets in Syria
$100+ oil depends a lot on how long that production will be offline. How much damage was actually done.
My guess price will go up a little, only. And, eventually, close to the WTI 55 range, absent any more developments. Prices won’t move substantially until next year.
Guided weapon, only needs warhead.
This is a small taste of what Iran could do to them in an all-or- war. Giant soft target full of things that burn is a good target.
Saudi oil production cut of 5 MM barrels/day can take out 150 MM barrels of crude per month if the facility is not restored. I hope the facility can be restarted quicker but fire and flood generally result in much longer shutdowns.
This is going to take a while—-
And it can be destroyed in seconds again.
Saudis just got the perfect excuse for a production cut.
Peak Oil chances have got better thanks to geopolitics.
Perhaps the solution is to lift Iran sanctions. A double whammy for KSA. I guess the idea of waging war to a neighbor doesn’t look so bright now.
Well, just a guess, but I’m guessing the strike started from a lot closer within SA. Predominate religion close to oilfields is Shiite. US, in Bahrain, would not track it in time. A religious war, like this, could make 15 millions of barrels a day go bye bye. Yet, according to the trading genius, demand is the frightening piece of the puzzle. Holy smokes.
Saudi claim they can make up sales from reserves. How long will they last?
A 50% hit to income plus repair costs could destabilise the Saudi government. Worrying times at the palace.
Estimate of US inventory drops by year end. Below 380 million. The very lower end of the five year average. Gonna get scary by July next year. In the meantime IEA will be using old EIA data, while EIA will be constantly lowering their projections, but no one will notice that. It’s the magnitude of inventory drops which will wake traders up, finally. Who knows when. This crop and their computerized programs are mostly clueless.
HFIR seems to have it together. Lot better than I am. But, they note that they are using EIA data, which is for sure wrong to the high side, I won’t call a WTI pice, because I would be wrong. My guess is that it will be bigger than a breadbox by Dec 2020. Even with OPEC exit from cuts. Just how dumb can you get than putting most of your production in one place. Which is penetrable, and starting wars with the next country to you?
Big drone attack on SA refinery, video showing raging fires. Cuts in production estimated at 50%
The Houthi’s the new UAV-X drone has a reported range of up to 1,500 kilometers. This attack appears to support that.
Pipeline attack in May- from report of that incident-
“However, the UAV-X is a likely culprit.
The drone, with a wingspan of 4.5 meters (14.7 feet), has a V-shaped tail fin. It’s powered by a rear-mounted engine and has been found with what appears to be extra fuel tanks welded it to, a U.N. panel of experts found. It carries a 18-kilogram (40-pound) warhead.
The drone is likely programmed to strike a specific latitude and longitude and cannot be controlled once out of radio range, Michetti said. In the case of Tuesday’s attack, the latitude and longitude of the pumping stations could be easily found online.
The U.N. put the drone’s maximum range at 1,500 kilometers.”
For ‘drone’, read ‘autonomous unmanned vehicle’. Sound familiar? Anyone who believes driverless delivery EVs are part of a utopian future needs their head examined.
Scares me.
We just witnessed that biggest escalation between SA, Israel, and the Shiite( primarily Iran) against the Sunni (Saudi Arabia, and the vast majority of the Islam religion. More to come. My odds don’t go with the Shiiites. The Sunnis have no love for Israel, and wish them gone. But, for now, they are a bad ass nation, and will swing their advantage, and Israel only needs an excuse, and minimal backing. History, remember history, OK most of you are too young. This ain’t over yet.
The Iranian response to Israeli air strikes will likely be a strategy which aims to break Israel’s strategic Lines of Control on oil imports – the tanker lines to Ashkelon, from Ceyhan Turkey and from Yanbu/Jeddah in KSA.
Saudis alleged to have 0 deaths from attack. What does this mean, if so? Why claim it if not so? Zero deaths suggest KSA set off the explosions.
The loss of Bolton told KSA that war on their most hated enemy, the Shiites, was far less likely. That would be justification.
It’s difficult for KSA to open a dialog with the Yemeni’s, who laugh at their moral high ground posture when they are run entirely by not just a single faction, but rather, a single family. How could they not laugh?
Iran supplied drone weapons . . . Iran presence in Syria . . . Iran presence in Iraq. They sure do seem to have money to fund a lot of military adventures while allegedly constrained by inability to sell oil. Maybe the sanctions are worthless and reported flow stoppage is bogus. Wouldn’t be the first time. Remember those pictures from space showing N. Korea is dark? Ask a Seoul resident some time how many radio stations in N Korea are broadcasting propaganda into the city. 10? 20?
Shouldn’t be too very long before Russia is blamed, to elevate oil price, which has slipped about what, 8-10% with Bolton gone?
Just believe nothing.
Except the idiot General from Yemen, who accepted responsibility. watcher, get real. This was the BIGGEST blunder of Iran, yet. Fits going to hit the Shan. And, Yemen claims the drones manufacturer was all in Yemen. Which, nobody with an ounce of intelligence would believe. I don’t know if this is Israel’s decisive moment to enter, but they will, soon. And, Israel will be the decider when fits going to hit the Shan, not Saudi Arabia, or US. Israel did ok, without US support before, they can do it better, now. Though, I imagine that support can be obtained.
If you could compare Russian and US combatants, I think they are close to equivalent. But, Iranians against Israeli. Give me a break. Add in the rest of the Sunni,(which is at least 5 times bigger than Shiite) and US support? Either way, we would destroy oil in the Middle East for decades.
But, I would not be surprised if Israel did not react sooner than SA. Wars outcome are largely dependent on motivation. Israel has prevailed against massive differences in military. And do you think the US will not get involved? Then you ain’t so smart.
Respectfully Guy M, none of what you say matters, because regardless of the response it could be a tremendous interruption of free flowing oil exports from the region, and that might very well be the end of the World economy for the forseeable future.
Iran will not simply be ground into the sand, sanction after sanction. Iraq will support Iran and will ask/demand the US to leave their Country. Oil exports from the Straits will slow if just a few tankers are hit, Meanwhile, Saudi production is cut by 1/2.
I would think the memory of Viet Nam and Afghanistan, the debacles of Iraq and Libya, would emphasize that insurgency wars are never won; can never be won, by any country. Iran has the s-300 now, (courtesy Russia) and I could see them providing Iran with S-400s, just like they have with Syria. Israel was told to quit bombing Syria by Putin, and they have. They have also been warned off Lebenon and are so far complying. I don’t think Israel will take on Russia interests in any serious way. Plus, China has just struck a deal for discounted Iranian oil for future investment funds.
I don’t know about US Shale prospects, but Suncor’s looking pretty good these days.
“Israel did ok, without US support before, they can do it better, now. Though, I imagine that support can be obtained.”
Israel’s goal is to drag the US into conflict with its enemies. So far the US has taken out Iraq, and was in the process of taking out Syria before the Russians block them in Syria. Israel knows that if something goes wrong they can get the US to step in to finish it for them.
There was a drone attack on an Saudi Airport in July, which was also attributed to the Houthis and subsequently to Iran. Perhaps this was done to imprint a certain logic in our minds: Houthi rebels have drones… the next attack will also be carried out by the Houthi rebels.
Would the world accept a Saudi production cut of 50% without this spectacular drone attack?
Might soon start seeing some drone attacks against KSA from Iraqi territory. Brinkmanship is a harsh mistress.
>Israel’s goal is to drag the US into conflict with its enemies.
Actually Israel doesn’t have any goals any more. The country is a toy programmed to think it is living in an American fantasy land.
Put another way, crazy Americans are using Israel to drag America into imagined enemies of Israel.
Israel didn’t do so shit-hot in the 2006 Israel–Hezbollah War. Hezbollah is likely the best light infantry in the Middle East. I don’t share Guy’s confidence in Israeli military preeminence.
Yes, Hezbollah front line troops are pretty good. I would say that their best troops, those manning Israeli border, follow military order (or samurai, or Sparta) lifestyle, leaving their families behind in care of Hezbollah civil structures. The 2006 war showed that they, unlike Israelis, are prepared to die where they stand, manning their weapons to the end. Who would think that martyrdom may be an useful evolutionary strategy….
Should Israel still think about taking Lebanon, they better be preparing for a Stalingrad experience.
“Houthis Rebels bail out U.S. Shale industry”
I worked in KSA from 2010-2014 and I could retire only because of the savings from KSA. Each year of working there was equivalent to 6 years of working in US because of SS and taxes implications. Plus living there was free of rent, utilities etc. I tried to take care of as many Indians that were laborers. When I sit in the front seat with my driver, that astounded my driver. He said I was a different ilk and I told him that is basic decency that US taught me.
What happened to KSA is inexcusable. I do not think the ARAMCO IPO will go well. I think US will be forced to take on Iran despite Bolton firing.
“I think US will be forced to take on Iran despite Bolton firing.”
Seems very convenient that KSA lost half of its production the day after Bolton was fired. Issue is that Iran has a few nukes and will almost certainly use them if their homeland is attacked by the US, Israel or KSA. Even a limited nuclear war in the Middle east would be devastating beyond imagination. Suppose 20 to 25 mbpd of ME oil production is off-line for a year or more. Not sure how the industrialized world could cope with a sudden and dramatic loss. Also the odds favor that it will spread into a global war.
Tech Guy,
You’ve said a few times that Iran has nukes. What evidence is there for that? I’m genuinely curious.
its an open secret that Iran managed to acquire a few Russia Nukes when Soviet Weapons were sold on the black market shortly after the collapse of the Soviet union. More recently a Iran minister claimed it could take out an entire carrier group with one missile. Something only a Nuke would be capable of.
Tech Guy,
Thanks.
Translation: You have no evidence.
“What happened to KSA is inexcusable.”
What do you mean? KSA started the war and has been bombing the civilian population of Yemen killing thousands. They just got what they deserved.
My only worry with this counterattack is that it affects us all, but it is clear to me that the responsible one is that asshole Saudi prince.
The same asshole Saudi prince that dismembered a journalist at their embassy in Turkey because he didn’t like what he wrote. Some ally of the US.
I hope the next drones hit the saudi royal palace.
You reap what you sow.
“What happened to KSA is inexcusable.”
Saudi bombed a Yemeni school bus last year killing 40 children. That’s much worse than halting oil production. Yemen may have just given the world the wake up call it needs, assuming it was Yemeni…
Does anybody know what an oil processing plant is? What does it do that can be taken offline by some low mass explosives? Why can’t the pipelines be routed differently and still flow?
If it’s pipeline nodes, okay, maybe that takes a few days to reconnect. But what does this place do that threatens a month or two or three?
It would seem like the real fundamental issue is that regardless of what it does, it has been proven to be vulnerable to relatively low tech attack. These things were very unlikely to have been remotely piloted and that means they were probably GPS-guided to a particular latitude and longitude. So somebody went to the site with maybe a handheld GPS receiver, or their phone, and jotted down the coordinates. That’s going to be a real difficult scenario to prevent in the future. The Saudis are going to have to find a way to get along with pretty much everybody, if they want their oil to flow.
I think they are referred to as GOSPs, Gas oil separation plants. Also, Lots of water mixed in with oil from Ghawar.
Remote piloted drone is much cheaper and less sophisticated than cruise missiles getting this accuracy.
Your point stands about this being cheap and easy for how much damage it did, though.
The most sophisticated of US stuff seems to have a 400 mile range for remote piloting. Makes perfect sense re line of sight signals, bidirectional. There are probably some variants with satellite links for video from the drone for the pilots elsewhere. Neither Yemen nor Iran have the satellites.
Fuel doesn’t look like a limit. Typical seems to be 40 hours at 70 knots or 2800 nautical miles. So . . . if remotely piloted the range limit will be signal link.
Bottom line here, it’s out of range from Yemen for remote piloting. It’s not from Iran. But a pretty obvious countermeasure for the Saudis would be jamming. That would be true even if the drone is “handed off” to a Houthi ground facility inside KSA. They don’t require much. Couple of guys with a box on a rooftop.
Therefore, pre-programming lat/long into the drone solves the problem. GPS is accurate down to a few 10s of meters and that should be entirely sufficient for guidance. GPS can be jammed but it’s a lot more difficult. And an inertial nav system could pretty easily be aboard and become primary if GPS is jammed. This approach of not being remotely piloted hugely increases success odds.
Payload amount is another question. US equipment can carry conventional 500 pound bombs, but that seems unlikely for what these would be doing. Maybe a few 10s of pounds of explosives.
Apparently the facilities separate out H2S from the oil. The wiki talks about addressing vapor pressure to make it safe to ship, much like the early Bakken days blowing up railcars. It still doesn’t seem all that complex a task that would require months to repair. I’m gonna say the Saudis are up and running to 80% flow within 48 hrs and will not admit it if they think that will increase price.
The Houthi drones are delivering warheads up to 100 pounds
“Fuel doesn’t look like a limit. Typical seems to be 40 hours at 70 knots or 2800 nautical miles. So . . . if remotely piloted the range limit will be signal link.”
Likely the launch much closer to the target. most of KSA is empty desert, and a small group could transport drones or short range missiles a few miles away from the target.
” It still doesn’t seem all that complex a task that would require months to repair.”
Depends on if any of the components are custom for the processing plant. Which could require new components to be made and shipped to KSA, which could take a month or more. Probably by the end of the week the extent of the damaged will be fully determined and we have a better idea of how long it will take. KSA (Sunday Sept 15) claims they can get about 1/3 of the production back on line by the end of Monday.
Pompeo: “There is no evidence that Yemen did it. So it must be Iran”.
Not exactly his words but close. WTF? The US is going down south with its war mongering rethorics. We all know who supplied KSA with enormous amounts of weapons, intelligence, logistics support and it was KSA attacking Yemen, not the opposite. https://en.wikipedia.org/wiki/Saudi_Arabian-led_intervention_in_Yemen
Saudi officials confirmed earlier today that two oil facilities, the Buqaiq oil processing plant and the Khurais oil field, which sit in the country’s Eastern Province, were hit by several drone strikes.
“Since 2014 Saudi Arabian authorities have reported over one hundred Houthi missile interceptions… The Houthis are known to be in possession of the Scud-B and -C missiles, the North Korean Hwasong variants, the Tochka missile, the Qaher-1 missile, the Zelzal-3 ballistic missile and the C-802 anti-ship cruise missile”
Most interesting to me is the decline Kuwait is seeing over the last few months. Could this confirm they are in terminal decline? (Other than neutral zone as noted)
I believe this suxsessful attack will take months to repeared , and the risk is high that there will be more attack. EIA / Rystad need to re estimate the supply and consumption ballance for oil in 2019 – 2020 . Guess Saudi have lots off contracts now they not are able to fulfill in short term , oil.storage in US is already below 5 year average. If WTI reach 75 usd bsrrel more Ducs might be compleated and set in production but 5 million barrels a day is a lot of oil…
Dr Strangelove—-
“Mr. President, I’m not saying we wouldn’t get our hair mussed. But I do say no more than ten to twenty million killed, tops. Uh, depending on the breaks.”
– Gen. ‘Buck’ Turgidson
There is a satellite photo of the smoke billowing from the Abqaiq Plant posted this morning on an article at CNBC.
If you look at the photo and go to google earth to compare, you can see what part of the facility is involved.
I have no training in processing plant design/layout, but it looks to me like area separate from the core of the facility.
Any feedback from those familiar with these type of facilities would be of interest.
Article this morning casts doubt that the drones came from Yemen- saying that both Iraq and Iran territorial launch origin as more likely/feasible from a technical standpoint.
No definitive facts presented.
Hint: https://www.moonofalabama.org/images8/houthidrones.jpg
These are not that complicated.
“The war on Yemen, launched by the Saudi clown prince Mohammad bin Salman in 2015, cost Saudi Arabia several billion dollar per month. The Saudi budget deficit again increased this year and is expected to reach 7% of its GDP. The country needs fresh money or much higher oil prices.”
About the drones…. see the comment I posted in the other thread about how hard it would be to build them, NOW, since computers and such are so powerful and need only be programmed to do any particular job.
US deficit is 5% of GDP.
Just seems odd, that the US installations in Bahrain did not pick it up. Unless, it originated from inside SA, then it would be too late. Or, some poor PO, is fixing to get a DD.
A combination of distance and low radar cross section means that US installations in Bahrain won’t be detecting many Houthi drones coming in from the south. KSA has patriot missile defense systems set up against Yemen for that purpose, but they’re being attacked, by drones, and circumvented.
Saudi Arabia has nothing that could stop mass attacks by these drones. It would require hundreds of Russian made Pantsyr-S1 and BUK air defense systems to protect Saudi oil installations. There would still be no guarantee that they could not be overwhelmed.
My guess is they launched inside of KSA. It would not be too hard to drive a truck or two, close the facilities and launch the drones\missiles.
Why bother?
Your targets are within easy range from Yemen.
At a short range you can remote pilot the drones for a precision attack. From the damage it appears the steered the drones to hit tanks that would cause the most damage. Also the Drones would need to store a lot of fuel to reach there target & are also at risk of getting detected (RADAR) and shot down before reaching there target.
Look at the precision of the hits where each vessel was hit in the same place.
At a short range you can remote pilot the drones for a precision attack.
At a long-range, you can remote pilot the drones for a precision attack. Of course, the drones have to be launched from only a few hundred miles at most by a ground crew. But drones piloted from the US have been used in Iraq.
Iran also possesses the Hoot supercavitation torpedo, copied from Russia’s VA-111 Shkval. It travels at a very respectable 220mph (sic) underwater, with a range of about 5 miles. Payload, conventional or (Russian version) nuclear, is 210kg. Hard to counter and very damaging to a tanker.
Something is fishy about this satellite image from the Abqaiq Plant, that has been posted on multiple major media outlets.
Take a look at Google earth and carefully match them up. At site where the smoke is billowing up, there is very little in the way of buildings, piping, tanks, etc.
The SE corner of the plant complex with closest clustering of industrial facilities is about 2300 ft away.
Here is a direct link to a larger image of smoke plume satellite image from Reuters- https://www.reuters.com/article/us-saudi-aramco-attacks/attack-on-saudi-oil-facility-came-from-direction-of-iran-not-yemen-u-s-official-idUSKBN1W00SA
Whos got a legit explanation for this?
Great catch. That makes zero sense.
One possibility: the whole thing was a false flag. The Saudi’s torched off a lot of oil way south-east of the plant in a dump pit and then punched a few easily fixed holes in the separator tanks.
Idea was to drag the US into attacking Iran.
There is a pipeline headed to the dump pit, so it may have been an overflow area that had to be used during an emergency shutdown? If so, who lit it on fire and why?
Otherwise, I got nothing. There’s nothing in that patch of ground….
Don’t over analyse. Attack, yes; Iranian drones, yes; fire pit burning, yes. Motives and actors, no.
NAOM
Fire pits are a normal emergeny thing – here at the huge BASF chemical plant they have the so called steam cracker.
This huge torch burns when something has gotten very bottom up and some product hast to be disposed – fast. Happens every one or two years and can look very impressive.
So oil seperator exploding from drones, but production pipelines running full speed. So redirect everything to a fire pit, than phone a lot to close down all the wells. So less burn damage to the plant than pumping product into a holed burning plant. It’s a last call emergeny installation, as the safety vent from an old steam boat.
This is a clip from Google Earth locating that fire source in relation to the refinery site. The fire is about 2.2 km south-east of the damaged facilities. (North is ‘up’ in all images) https://justpaste.it/img/c025faf11beae5f5b116fdf67fb31772.png
The pit has a product line running towards(?) it, so presumably they can pump some product there.
So, this smoke plume is not directly from damage, tho the release to the pit may have been a consequence of storage lost from the ‘attack’? Folks with better knowledge of refinery ops may be able to clarify.
To beat a dead horse, I believe I may have stumbled across an explanation for the puzzling ‘billowing smoke’ satellite photo.
The smoke is centered on an empty square about 1/2 mile SSE of the plant, with a pipeline connecting the two. This square is about 32 acres and the bottom is 25 feet deeper than the surrounding terrain [courtesy of google earth satellite].
I’m guessing it is an overflow reservoir, into which oil was shunted and burned off as an emergency response to the attack.
[I have placed arrows at the corners of the ‘overflow reservoir’]
Seems the drone each can carry 18 kg high exsplosive , in such plant volumes of energy is very high. Some Areas might be liquids other part gazes. When design exsplosion loads related to fire is normaly implemented as well as earth quake. This might be walls designed to take up energy from exsplosion. Since such simple GPS tecnology hace limited accurancy I guess the drones not could hit spesial items to maximaze dammages. Normaly there is also Area with gaz in atm from venting and Areas where this should not happened. I believe since several drones might hit same processing plant dammages could be huge Normaly components , pipes , module structures might be dammaged and should be exchanged. Same with valves, cables and some component might be hard to get so called long lead items . Guess foreign exsperts will go there after the fire is ended and make a status report. Than I believe to build up again this will not be done as the rebels will destroy it again. If possible it should ve rrbuilt under ground , even pipe lines…
Underground is not necessary. Stand-off enclosures will stop UAVs. Wrap it in metal fencing, with a bit of distance. Look at old pics of OPs in Northern Ireland to get an idea. The Brits used the idea to stop RPG rounds from hitting their bunkers. The Brits started off with what looked like scaffold frames draped in metal fencing built around their checkpoints. It eventually evolved into something more engineered. Works good on vehicles too.
But I suppose that since a drone can’t fly very fast, it would be fairly easy to shoot one down, if you have either automated anti aircraft weapons or FULLY ALERT manned weapons near the perimeter fence. Get the drone as it necessarily flies higher to clear the fence, instead of hugging the ground.
Build it a little higher than the structure that needs protecting, then put a top on it. It’s an enclosure. Ordnance detonates on it, the enclosure, away from the target. Or bet 100% on intercepting it, and get hit from time to time. Your choice. I’m just saying what works.
There are no fully alert manned weapon systems in KSA; worst troops in the world.
This is only a small watch tower and will be much easier to protect than one of the words biggest processing plant. Guess the exsplosives is with very high impact if 18 kg goes off the structures need to be quite solid . If the first are able to destroy the fence the next drones will still be able to destroy the plant. Think this will not be easy if they not have possibilities to shoot down the drones ..
War ain’t easy. You can bury it, or harden it, or lose it; or stay out of wars. Take your pick. Ditching the MIM-104 Patriot and getting an S-400 Triumph might be a good idea too.
Saudis do not need Triumphs, which are long range anti-missile and anti-aircraft defences. What they need are hundreds of short range systems like Pantsyr, cruising the area every day, manned by alert crews. The last will be probably the most difficult to achieve – air defence systems are this kind of weaponry, where competent crews really decide about success or failure, as was proved by “overtrained” Serbs who shoot down F-117 with SA-3; they did it because they knew their weapon!
Additionally Saudis could buy Russian thermobaric missiles sets, which the Russians put around their military airport in Syria as a defence against any massed suicide charge (well, Russians did learn something from Afghanistan: ‘ First combat tests took place in 1988–1989 in the Panjshir Valley during the Soviet–Afghan War.’ ), and which were later used in Aleppo to break stalemate at heavily fortified points.
‘TOS-1 was designed for defeating enemy personnel in fortifications, in open country, and in lightly armoured vehicles and transport. ‘
Slight complication – drones fly. Besides shooting them down you can forget protecting something like a refinery from them.
Check out pics of the Finnish Embassy in DC and Berlin. They’re covered in slat armor. As is the US embassy in Baghdad and London. It works great.
This is what they need.
Raytheon Co. Missile Systems, Tucson, Arizona, was awarded a $205,205,445 cost-plus-fixed-fee contract to provide the land-based Phalanx weapon system to the U.S. Army. According to the company, the system is meant to counter rocket, artillery and mortar system and other close-in threats, with a rapid-fire, computer-controlled, radar-guided gun. The Phalanx also can provide early warning of attacks. Work locations and funding will be determined with each order, with an estimated completion date of December 27, 2023. U.S. Army Contracting Command, Redstone Arsenal, Alabama, is the contracting activity (W31P4Q-19-D-0015). Bids were solicited via the internet with one received.
This system is currently deployed on ships.
End of 2023?
“The World is a hellish place, and bad writing is destroying the quality of our suffering.” –Tom Waits.
The drones showed quite remarkable accuracy and precision in targeting. They can obviously hit small critical targets like line booster stations and power substations with impunity if they choose. With that ability they can/will strike anywhere on the entire production and storage system. So point protection of this vast expansive system will be futile. KSA needs to start negotiating fast, or its income and government is toast.
This shows they have been steered manually. At least the last miles after flying automatic near to the plant.
Nothing complicated about this, when there is no jamming.
2018 as peak world oil production looks more likely now.
I worked at a refinery for a while. If you have even small drones blowing up at various places in the refinery, you are bound to get a lot of big explosions with huge damage. Now that KSA’s enemy’s have this capability there are bound to be additional attacks. We will see how long it will take for KSA to develop a defense, but the blood is in the water and the sharks are aware.
Probably, not too long to set up a defense. Trump is motivated to remain buddies. The Patriot missiles that the Saudis have are US. They are screwed, right now, because they had their radar arrays attacked. You park a couple of ships with missile defense systems of the coast, and tie into their Patriot system. My guess. Then you have a dual defense system. After this, they will get a lot more patriot systems. Our systems in Bahrain probably picked up on this, but were in the wrong place at the wrong time. Oh, yeah. It’s not the last time. There is no end of the hatred between Sunni and Shiite. It’s just getting started. My odds are on the Sunni, along with Israel, who knows both hate them, but are in survival mode siding with the Sunni. Right now, Egypt and Turkey are somewhat in the middle, with Turkey leaning towards Iran, due to current leaders. But, both countries are mostly Sunni. https://www.worldatlas.com/articles/religious-beliefs-in-turkey.html
How that plays out if Iran pushes it, is the question. Both, are the power houses in Middle East military. Russia? They want the trade. They’d be pretty stupid not to realize there is a four to one disadvantage for the Shiite.
Egypt? We just took away a lot of their free money. It can be given back. How’s their population going to vote? Sunni, or Shiite? https://www.worldatlas.com/articles/religious-beliefs-in-egypt.html
It’s all coming down the the religion, again. Who was the leader after Mohammed?
Support. Russia has made token sales to Iran with equipment. Nothing in comparison to US sales to Saudis, Israel or Egypt. Russia is not on any body’s side, except Russia.
The advanced military capability of Iran, is far below Israel, Saudis, and Egypt. Turkey is the big boy. Which way will it go? Stay tuned. But, it still is primarily Sunni, or close to it. Odds are, this will not end well for Iran. Globally, only 10 to 15% of Muslims are Shiite (Iran), the rest are Sunni (Saudi).
Wars are still being fought all over the world due to minor differences. Fucking amazing. Can we all not believe in Allah, God, or a Devine Being or principle, without killing each other over definitions?
It’s gonna take a lot of anti aircraft kit to protect Saudi oil infrastructure. And a lot of alert troops.
For those interested; the M1097 Avenger is the next level options for augmenting the patriot system. The navy has some good close in anti air/anti missile kit that could likely be adapted, such as 20 mm phalanx, 30 mm goalkeeper, and SM-3’s. M6 Linebackers (M2 Bradleys with Stinger missiles instead of the standard TOW anti-tank guided missiles) have been phased out, as have M163’s. The US army is in a bit of a pinch as it has drastically downsized its SHORADS (short-range air defense systems) force from 26 battalions in 2004 to just nine, only two of them active-duty.
KSA is gonna need to do some serious shopping if they want to keep at this fight.
Re Guy’s question about which way will Turkey go. Turkey will oppose Saudi Arabia. It’s not all a big Sunni vs Shia thing like Guy suggests. There’s a reason the Turks once ran the Middle East from the mountains of Anatolia, and not instead the Arabs from the deserts of the Arabian Peninsula. KSA and Turkey are in opposition in Qatar, Sudan, Libyan and Syrian conflicts. It’s pretty clear that Turkey will happily stand by while Iran kicks their ass around a bit. FWIW I don’t think Egypt will be fighting Iran on Israel and KSA’s behalf either.
Who’s willing to post a guess as to how much gasoline will go up as a result of this attack and how long it will stay up?
Probably 25 cents for a short time. Eventually, next year it will sell for over 3 dollars. These traders don’t have shit for brains. It’s gonna really spike by 2021, because they think oil should be selling at $55 to $58. Nuts
It’s a little more complicated than just a Saudi refinery loss and prices spiking. Also gasoline does not seem to move directly with crude prices.
While analysts agree that prices will spike initially, the duration of the outage is key. Saudi Arabia has millions of barrels stored in locations around the world, which they can draw down to replace the lost production. A rally could also be tempered if the U.S. and other countries release oil from their strategic reserves to ease the shortfall. https://www.worldoil.com/news/2019/9/15/oil-may-jump-as-much-as-10-a-barrel-after-saudi-arabia-attack
Yes, that is their inventory. They have to take it from inventory, because it can’t be produced yet. So? You start digging into inventories, the current “supply” is short. You keep eating up the inventories and the bidding goes to high bidder. What’s new, or complicated about that?
I know most people want to take oil price to equal want they want, or what is “fair” to the public. But, that is not reality. Get ready for reality.
We have zero for growth out of the US, and will have at least for the next year, because traders thought $55 a barrel was a “fair price”. Now, the independents are dying fast, mostly due to their own stupidity. Majors are taking over, but they only want to increase production to what they can expand to in the US. Dude, the world has NO growth. And even is demand is zero next year. We will be short of oil.
I agree, could be some short supply and price rises but in the longer run (5 years and more) even Exxon is predicting a fall in oil demand. I guess this will help force the issue.
What will force the issue is that demand can never be higher than supply, after inventories run out.
I remember an oil ad on tv when I was a kid back in the early sixties. “If you don’t have your own oil well, get one!”
Shoot! If you think the current price of WTI of going over $5 a barrel is extreme. Your probably right, for now. Ignore it, and check back in about Sept of 2020. That’s when it gets really scary. Because, by then traders will have realized, they don’t have any idea what the price of oil should be at. And it’s going all over the place, Spot trading rules the day. Not traders. It’s far far too late for traders to adjust. They fell into the same trap as the independents, who won’t survive. Oil needs to be trading at about $80, to keep from weird fluctuations, but its far too late to go back. So, we gotta pay the price. My advices to traders is to play out. Six months. Buy, over. Your going to make a killing. Yet, before you make that decision take note,, I don’t know jack shit about investing.
There is still a lot of unknowns. That situation will take time to play out. Near term, like really near term as in Wed. Fed will likely cut rates by 0.25% and their rhetoric will likely disappoint markets broadly. Oil price will likely tank even if it’s just for a few day or just this week. But it wouldn’t surprise me if price fell back to $55-56 WTI before some of the unknowns become known surrounding the situation.
Price might spike down on FED news and get bought at a lower price.
It’s all possible. But, if supply can not come close to demand, prices will rise, despite your rhetoric.
What I have wondered is where is the pain threshold now (in 2019) for higher oil prices?
In August 2019 Brent spot traded around $60/bo (Brent spot) and in some parts of the world (like India) that previously subsidised petroleum products this lead to protests (ref link below).
One of the resaons is the much stronger US dollar since 2014…as the Fed ended tapering.
Maybe thats because he hasn’t sold even a cup.
But he did apparently pick 804 millions tomatoes, mostly at night I guess.
He did just authorize use of the strategic petroleum reserve,
since we are now apparently desperately short of crude oil.
I guess we ran out of oil in just 36 hours.
1/ Those holes seem pretty well lined up and centered for a long range hit from a drone.
2/ Those holes are on the West/West of South West side. ISTR Iran is to the North East.
NAOM
I wonder when the foreign workers, who actually get things done in KSA, will start leaving? Wouldn’t you? After one more attack? Or, after a US retaliation as threatened tonight by Mr Lock and Load? People have their families over there. This is way past troubling, imho. When the Saudis cower down will they beg the US to send troops? More importantly, will any be sent? Another war in the ME with an election looming? Ouch. Pre-market trading at 7:30 pacific is dropping fast, and oil up 20%. Tomorrow will be interesting to say the least.
regards
This seems like significant dammages and thoose elements have huge size even look small at the pictures. If drones where use with GPS tecnology it clearly shows this is a effective weapon.
It would be commercial GPS not military, accuracy would not be all that good and this is far too accurate work, I would expect the holes to be more random. More targets than drones would lend creed to Adams suggestion of C4 on a string but why not just place it under the tank. Maybe RPG but where from. Attack helicopter could well do this which would suggest a false flag operation to blame the Iranians that would be reinforced by the direction of the attack which was the wrong side for a strike from Iran. Looking at the site on Google Maps the attack would have had to pass over most of the town. Yep, nobody showing of remains of drones, yet.
BTW any of our oil guys have an estimate of the size of those holes from the size of the tanks and what hey likely contained?
NAOM
I highly doubt those are true images of an attack. There is no impact splatter/scorching, the location is too uniform, there is no debri below.
No cleanup equipment or service vehicles.
I believe everyone who just swallows this info without it passing a taste test is being extremely naive. This includes all the major media outlets.
I’m still waiting to see someone with eyes open challenge the info in the media.
After the Cheney Bush fiasco with Iraq ‘intelligence’. we should have learned to be very suspicious of the information released by our government (not to mention Gulf of Tonkin).
Okay, Hickory, what’s your conspiracy theory here? Who did this and why? Was it Trump? Or did the Saudis do it to themselves in order to get the US into war?
I haven’t heard a good conspiracy theory in almost a week. I need my conspiracy theory fix and I need it now. So please give it to me.
Hi Ron,
I don’t have one, and generally am not very sympathetic to conspiracy theories, since I’m pretty pretty big on facts when I can get them.
But I don’t like being presented with weak or conflicting evidence as if its a done deal.
These images, and that overhead satellite image with the smoke billowing are just weak evidence, in my eyes.
Maybe there is a good explanation.
I’m all ears.
Until then, I feel as if I’m being presented with old images trying to make a point. Its been done before.
I’m concerned about incompetence as much as anything.
Did the USA bomb the Chinese embassy in Belgrade on purpose, or by way of incompetence. I still haven’t heard the final word on that one.
btw- the movie ‘Fair Game’ regards the background story on your new state senator to be- V. Plame, is a good one, I believe you’d find it interesting.
Until then, I feel as if I’m being presented with old images trying to make a point. Its been done before.
All of them were old images? There were dozens of them. Some lighting up the night sky. Others from satellites in space. From space, the US had to be the perpetrator of this conspiracy. And CNN and dozens of other news networks had to be part of it too. Perhaps a thousand people or more had to be in on this conspiracy to show dozens of old photos and pass them off as new stuff.
Sorry Hickory, but I just ain’t buying this conspiracy theory stuff.
btw- the movie ‘Fair Game’ regards the background story on your new state senator to be- V. Plame, is a good one, I believe you’d find it interesting.
I haven’t a clue as to what the hell you are talking about. V. Plame is definitely not my new state senator to be….. or not to be. 😉
OK Ron,
Tell me why the satellite photo of the smoke billowing from the Abqaiq Plant, that all the news agencies have been posting, is centered about 1/2 mile SSE of the SE corner of the facility.
Did you bother to compare to the images on Google Earth. Its not too hard, and its pretty damn straight forward. Something here does not match up.
I have no conspiracy for you, sorry.
.. why the satellite photo of the smoke billowing from the Abqaiq Plant, that all the news agencies have been posting, is centered about 1/2 mile SSE of the SE corner of the facility. Did you bother to compare to the images on Google Earth. Its not too hard, and its pretty damn straight forward. Something here does not match up.
Okay, here it comes… Are you ready?
I have no conspiracy for you, sorry.
Yes, you do! That is a conspiracy theory if one ever existed. Hickory, please don’t try to claim that your conspiracy theory is not a conspiracy theory when it is obvious that a conspiracy theory is exactly what it is. You lose all credibility when you do that.
And on that very obvious note, I will end it there.
Thats bullshit Ron,
If you didn’t know why the satellite image billowing smoke didn’t correspond to the location of the plant facilities you could have just said so (or nothing), rather than trying to lay some conspiracy crap at my feet.
I was hoping someone here had simple explanation for the incongruity, but no one has offered one. Wrong crowd for this simple map analysis I suppose.
If you are looking for a conspiracy theory, I am sorry to disappoint you.
Maybe someone else can satisfy that urge.
I won’t say conspiracy theory but this stinks like a dead camel in the desert. There are 2 things in image 2 that do not add up. The holes are the opposite side to Iran so unlikely to be due to a weapon coming from Iran. Second, you can put a ruler through that line of holes (try it), that would require some high precision. I will just say that we should be careful swallowing the stories being put out about the attack.
NAOM
There are 2 things in image 2 that do not add up. The holes are the opposite side to Iran so unlikely to be due to a weapon coming from Iran.
Are you shitting me? Because the holes are on the opposite side from Iran means they did not come from Iran? They traveled hundreds of miles but because they were a couple of hundred yards further east that??? Oh fuck! Give me a break.
Second, you can put a ruler through that line of holes (try it), that would require some high precision.
Oh good gravy! It was obviously not the intention that they lined up, there was no reason for that whatsoever. That’t just the final outcome. It means nothing.
Is there no depth to how deep a conspiracy theorist will go to make their case?
Why so hung up on conspiracy theories? I am just highlighting 2 discrepancies between the ‘official’ account and the BDA images. I am not making any interpretations and theories.
An incoming strike from the east would impact the east side of the tank whereas the damage is on the west. That is a pretty strong indication of direction of fire. To come from the east the hittile would need to do a u-turn or Immelmann turn.
As for the holes lining up so perfectly, that would be extremely unlikely after flying for some distance due to the CEP of a UAV. It just doesn’t add up and I am not taking it further into who, why etc I just hope that common sense prevails in this matter.
NAOM
Doesn’t matter anyway, because, as we all know, the good old US of A is 100% energy independent, thanks to fracking.
Can’t imagine why the Republicans are banging on the war drums about such faraway events that have no implications here.
Where is the splash of the drone around the hole? Where are the wings etc at the ground around the tank? Careful hand placement of charges is more likely or was it a tank standing off firing AP??
It was an ICBM
Are you under the impression that military drones… divebomb… their targets?
Lots of good targeting precision on the attack (I’ve seen other pics too). Could have been a Kia high-precision drone with a shaped charge warhead. Whatever it was, it had a shaped charge warhead. Bits of the drone end up pretty far away after detonation, might need to zoom out to see them. Drone bits won’t be lying on the ground underneath the hole that the warhead made.
True NAOM. A very nice line indeed. Frightfully well done. Quite remarkable, if you believe that this was done by wobbly winged independently-targeting drones just kinda drifting in on the desert breeze. Are we being asked to believe something which may not quite be true? Again?
“wobbly winged independently-targeting drones just kinda drifting in on the desert breeze.”
You’ve clearly never even seen a picture of a military drone. This is embarrassing.
I was making the point that four drones far from home are unlikely to arrive with exactly the same heading and angle of descent to hit the same facet of the tanks.
It is common for the motors of drones to be blown back along the track on impact. No sign of such debris.
Al Jazeera’s early reports say that, at the time of the ‘attack’ that the people on the site said that ‘fires broke out’. No mention of explosions or of the roar of passing drones, just ‘fires broke out’. That’s (apparently) from the horses’ mouths on the ground. Even World Trade had a few people on the ground to front cameras mentioning happenings which aligned with the official story. Not here.
Others here have noted that the origin of the smoke plume is remote from the damaged locations. A few smoke pots to provide some ambience?
Its just too neat, tidy, timely and convenient.
Will be interesting to see what ‘evidence’ they put on the table. Some scraps of old drones from previous attacks maybe? How about some radar tracks, and radio chatter – ask Ukraine, they are good at creating those, with help from the Netherlands air crash ‘investigation’ team.
They are very clever drones too. https://tinyurl.com/yxh6bd5h
The Houthi claim they sent 10 drones. The photo shows 17 points of impact. Very majik bullets, these!
It just smells bad.
They have been steered manually – otherwise they would have missed even the tanks without being a most sophicated US-Drone.
Manual steering can be done by an agent team in broadcast range at the facility – you need the transmitter, a monitor and the joystick.
Or when the site has at least UMTS mobile standard, you can use a smartphone. And then it’s a video game.
I think in future there is no more watching sex.com for the night watch personal since mobile will get jammed.
That’s my conspiration theory – the drones have been steered by mobile phones.
“Others here have noted that the origin of the smoke plume is remote from the damaged locations. A few smoke pots to provide some ambience?”
Use Google Maps to take a look. There is a square pond at that location that has a single pipeline to it from the refinery. You can see part of it in the smoke images with fires inside. I will make no inferences from that but maybe some of the oil guys here can suggest what it is for.
NAOM
That hole looks like it could have been done by a Soumar Cruise missile which can be launched from the ground. Maybe it was launched from Iraq or Qatar or maybe from within Saudi Arabia, nobody knows the launch location yet. https://missilethreat.csis.org/missile/soumar/
1. Remarkable precision with the shots all in such a neat a line.
2. Those hits on the tanks look more like number 1 eyeball and finger on the trigger from an attack heli parked over the site firing missiles than random incoming drones. If drones, then the target seeking ability and consistency is quite amazing for four hits in a row after a flight of 100s of km. One, yes, two, yeah maybe. Four? Nah! Call me skeptical?
It could be easy done with remote controlled drones.
Fly them automatic into the near of the installation, and have some agents with a remote control near there – they can sit in a simple car or van or house or even hotel room. They take over and steer them into some critical place. Job done.
I think Israel can sell many Iron Dome systems the next time – they’re shooting down attacks like this with this system
Drones can be used like loiter attack choppers. It’s how the US kills ISIS with them. Loiter is one of the main reasons to use them at all.
Occam’s Razor says no to that. A lump of C4 dangled off the top platform, with a timer. Simple, and just as effective as any WMD. No mess either. KSA has not showcased any wreckage of the drones. No bits of wings, no motors. Nothing to be found. Didn’t happen.
Maybe Rystad needs to tell ExxonMobil that who is now spending $50 a barrel on CAPEX vs $12 a barrel back in 2005.
I guess debt doesn’t matter anymore to anyone.
Steve
That’s a pretty telling graphic and puts a spotlight on EROI. How do the other producers stack up in comparison?
NAOM
Hint:
Any direct attack on Iran would result in swarms of missiles hitting U.S. military installations in the United Arab Emirates and Qatar. Saudi water desalination plants, refineries and ports would also be targets.
It is doubtful that Trump or the Saudis are ready to risk such a response.
As Iran’s President Rouhani said:
“If one day they want to prevent the export of Iran’s oil, then no oil will be exported from the Persian Gulf”
Pompeo (and other hawks) must recognize that Iran means what it says and has the tools to fulfill that promise.
Any direct attack on Iran and they finish the job.
This was most likely done by whoever has the greatest motivation to prevent any talks between Iran and Trump from happening. Just look at the timeline.
“This was most likely done by whoever has the greatest motivation to prevent any talks between Iran and Trump…”
Now, now- lets not start blaming the Texans prematurely.
Iran, and even Trump, know the rules—-
There is not going to be an attack on Iran– the consequences are too great.
The issue is, restrictions on Iranian oil.
True Hightrekker,
and the Iranians know full well that they could have all restrictions on export removed rapidly if they would agree to refrain from operating outside their borders (that means stop attempting to exert their control and theocratic influence over- Iraq, Syria, Lebanon, Israel, Jordan, Palestine, Yemen, and SA), and stick to the nuclear deal.
That would be a very difficult pill for them to swallow, given that their government built its whole identity around expansion of their version of the United Islamic State.
Maybe they could get all restless over Kashmir instead.
Well, as Mao pointed out:
“Religion is poison”
It is really hard (well, KSA’s destruction of Yemen may be an exception) to have much sympathy for our Mideastern Friends who live by violent religious standards from the 11th Century.
But, hey, the US is immersed in fundamentalism currently.
Late stage capitalism was never going to be fun, but this is pushing the edge.
I would suspect that it is a lot more local than Texas.
Agree SW, but just pointing out that many different people could have motivation to keep Irans oil of the market,
for example SA or Russia.
Hickory,
Good one.
July Director’s Cut released, as well as July Pennsylvania gas.
New record for North Dakota at 1,442,459 bbld.
New gas record also … closing in on 3 Bcfd.
Pennsylvania produced 18,545,643 Bcfd … new record.
For context, the energy output from July’s Pennsylvania is well over 3 million barrels of oil … per … day.
Dennis, FWIW, I’ve tracked down the ~50 EOG wells that came online in 2017 in the Bakken. Will examine production histories in detail in coming days.
Quick, preliminary glance is … interesting.
Coffe-
” the energy output from July’s Pennsylvania is well over 3 million barrels of oil … per … day”
Do you mean the gas output energy content in terms of barrels of oil equivalent?
Thanks.
Hickory
Yes.
The energy equivalence across several materials can be achieved/compared by using British Thermal Units (Btus) which measures the amount of heat needed to raise one pound of water 1 degree Farenheit (simplified explanation).
As a single cubic foot of natgas contains 1,015 btus (100% methane), the common 1,000 cubic foot measure of natgas equates to one million btus (mmbtu).
A single barrel of standard grade crude oil is considered to have the same heat energy as 5,800 cubic feet of natgas (usually a factor of 6 is used for comparative purposes).
Long explanation for why that 18 and a half billion cubic feet gas per day from PA has same amount of energy found in over 3 million barrels oil.
Real world economics – as of this post – indicate that gas-sourced heat energy is 4 times cheaper than oil-sourced.
Huge ramifications from that.
Yeh, I get that, just trying to confirm you had been indicating equivalence.
Its a huge amount of energy.
Hickory
It sure is a lot of energy … all the moreso when one realizes that it is Pennsylvania only.
Throw in Ohio and West Virgina, the Appalachian Basin is currently producing the heat energy equivalent of over 5 and 1/2 million barrels of oil every day.
4 wells only – Chesapeake’s Joeguswa 4 and 5, and Nikolyn 6 and 7 have – in just 8 months’ time – produced just under 30 Billion cubic feet of gas … enough to satisfy the entire year’s residential gas consumption for the cities of Cleveland, Pittsburgh, St. Louis, and Cincinnati COMBINED. From just four wells in just a few months’ production.
Coffeeguyzz
Have fun with that. 50 wells is a pretty small sample. Is there something special about EOG? Perhaps looking at top 5 or 10 companies or just looking at all wells in 2017 from Bakken makes more sense.
Days online not really significant for a large sample. Reality dictates that wells go down for maintanence.
Do you have a car? Does it ever get repaired?
Coffee,
I for one is looking forward to reading about your findings for those EOG wells of 2017 vintage (You better deliver now!).
On average those EOG wells is amongst the poorest of all the 2017 vintage population for Bakken.
And here is the kicker, no need to run the numbers for profitability for those wells.
They will in aggregate NOT be profitable.
Even hardcore communists care about profitability, but a few completely velcroed to LTO tout some explanation about the number of days offline as the explanation for the poor performance of some (poorly) selected well population.
Profitability is about flow, both physical and cash.
/sarc.
If some management team has not understood that, the investors should politely invite such management teams for a 3 weeks luxurious tour to the Great Barrier Reef, where the second day would be spent shark fishing….. with the said management team as bait.
That would surely help motivation and improve morale.
sarc./
Dennis/Rune
The targeting of EOG’s 2017 wells was just a somewhat serendipitous consequence of Eulenspeigel’s noting their poor performance. (Blame ol’ Euly for everything that ensued).
When I saw the dramatic profiles, I realized that the shut in times must be playing a role.
Identifying the single 3rd qtr well confirmed this.
To be clear … Enno puts an enormous amount of time into his work and I have no reason to question the accuracy of his numbers.
However, framing future potentials without accurately incorporating operational motivations along with the geological realities can easily lead to mistaken projections.
Broken record from me, this.
Although Dennis has already somewhat blithely dismissed the significance of new wells being offline perhaps 35% of the calendar time, I will dig in and relay the actual “goings on” with these ~50 2017 EOG wells.
Coffee,
Try for once and behave like a grown-up! (Blaming others is childish and a known hard left libtard tactic!)
Present some facts/statistics instead of guessing.
And while you are at it, compare that to the average and other operators’ performance (time offline).
And again a high time offline affects both the top and bottom line (economics) for the companies and if an operator on average has 35% of the time offline for all its wells of any vintage, it is primarily a management problem.
(Mentioning profitability for shales in some circles has the same effect as garlic and silver on Dracula!)
Enno compiles the numbers from the state agencies, so any inaccuracies are not Enno’s fault. He is just presenting the numbers as NDIC presents them. Only a low life would try to create doubts about Enno’s integrity.
Yes, I have observed over the years some revisions to the aggregate monthly numbers from NDIC and for Bakken these have been small/tiny (that is less than 0,1% on aggregate).
Coffe, we are waiting…this is very simple and for someone as smart as you this is done in less than 2 hours.
(Blaming others is childish and a known hard left libtard tactic!)
Err… Yes Rune, that occasionally happens. But the exact opposite is, by far, the most frequent. Trump continually blames the Democrats for his obvious and very stupid mistakes. So we can say that, far more often than not, blaming others for one’s very stupid and obvious mistakes is a childish and well-known hard-right * tactic.
*I don’t know of a right-wing, or opposite term for the word “libtard”, but if I did I would use it here. If there is not, one should coin such a term now. 😉
Ron,
Let me try to expand a bit.
What I have observed during the recent years (and I am not claiming to be right) is that increasingly control of the narrative have taken precedence over civil discourse based on evidence, facts, logic and data. Propaganda rules.
Trying to adhere to science (or the scientific method) has increasingly been drowned out by the need for control of the narrative.
No doubt there are sinners in the north, east, south and west camps and increasingly they are yelling at each other (or coercing) instead of communicating (polarization). So, we likely face several challenges and without communication how will these challenges be met?
And no, I do not now have a good proposal for the opposite of a libtard, but I hold it likely as soon comes up with one that sticks, no one will be able to either spell it or pronounce it right. That is likely a communication thing.
a pretty loaded term, and not particularly scientific, in my view.
When I used the term I knew that it was loaded and that it was not very scientific.
Might i suggest something without ‘tard’. Tard as we know is short for retard, which historically was used to refer to someone with Downs syndrome, etc. There are few things mor despicable than to laugh at someone because they are a cripple, have intellectual disabilities, etc.
I think something to with excrement would be most suitable as there is a strong correlation between someone using the word libtard and excrement.
Perhaps, repturd, neoturd might work. Better yet, use a preexisting word asshole. Why not just call them assholes?
Why not just call them assholes?
Yeah, that’s the word for them. Why try to come up with some stupid word when you already have the perfect word?
You should establish a set of ground rules for your blog, Ron. If you only want liberal assholes contributing here, and no conservative assholes, just say so.
Mike
All are welcome. I would prefer there be less name calling.
Though in many cases I join in the stupidity of name calling.
Creates only heat, very little light.
Mike, it’s not my blog anymore. I gave it to Dennis. If he wishes to ban me for calling assholes, assholes, then he is free to do so.
But Trump is trying to send deathly ill children, children, that are alive only because the are getting medical care in the USA, back to their country of birth. There they will die.
That makes Trump an asshole. And all who support this murder of children are assholes also.
3. This will be a death sentence for sick immigrant children, who face poor, or no, treatment for their conditions in their home countries.
If concern for children is the big deal then why not demand the President send them to Cuba.
Cuba has substantially lower infant mortality and deaths before age 5 than the US.
US 5.8 deaths per 1000 live births. Cuba 4.5.
US 56th place globally. Mexico is 99th out of 223, not all that bad. Above China at 101.
It occurs to me that assholes exist on the left, right, and center, no correlation with religion, politics, race, gender, or sexual preference.
All are welcome. Right, left, center, believers, non-believers, and even assholes.
It occurs to me that assholes exist on the left, right, and center, no correlation with religion, politics, race, gender, or sexual preference.
Of course they do. There are assholes in every race, religion, or national origin. But…
It rains in Florida, where I just moved from. It also rains in New Mexico where I just moved to. But it rains one hell of a lot more in Florida than it does in New Mexico.
Likewise, there are far, far, more assholes in league with Donald Trump, and the party of Trump, than there in league with the Democratic party or others on the left of the political spectrum.
That’s a point that cannot be denied.
Empathy is the word. Do you feel for your fellow man? Or do you just say: “Fuck him, it’s his own fault that he is broke, or homeless, unemployed, or suffering from a disease of which he cannot afford the cost of his treatment?
That Dennis, is the difference between the party of empathy and the party with a majority of assholes.
Dennis, Dennis, you do not want to get into a debate with me on this subject. All the evidence is on my side and the other side, the side of assholes, is entirely unarmesd.
Ron
We have different perspectives.
There is nothing to be debated.
Who is or is not an asshole is a matter of opinion as there is no fixed definition. A bit like debating which piece of art is more impressive.
Debating opinions is a waste of time imo.
Mr. Likvern
My tongue in cheek reference to Eulenspeigel apparently went completely over your head.
Let me try one final time to be both clear and understandable…
That 35% offline figure was what Mike Filloon researched when referring to new wells in northeast Mackenzie county after he and Enno got into a cyber spat on Seeking Alpha about new well production.
Enno certainly derives his North Dakota figures from public, official sources … and PRESENTS them in MONTHLY framed format. The effects of which can be graphically seen with the 22 days online in June of the Round Prairie well, even more so as its July online status was 11 days. (This is yet to be presented on shaleprofile).
You are correct about one thing, Mr. Likvern, that it should take only a couple of hours to scan and compile the days online status of these ~50 EOG wells.
I had a brief, courteous, yet fruitless conversation with the ND DMR folks today in an attempt to expedite my re-subscribing to their Basic subscription.
But, hey, just a thought here … since you are such a widely acclaimed authority in these matters … could YOU spend the brief time scanning the DMR data and enlighten us to your findings?
I am certain that you keep abreast of these matters as you seem to have a reputation for being knowledgeable in this realm of unconventional hydrocarbon development … amirite?
TIA.
35% offline does not translate into 35% “lost”/deferred production. This depends on where the well is in its lifecycle.
There are always time offline (just the nature of things), question is what regularity should be expected? in other words what is the baseline regularity?
Using monthly format will reveal “bumps” on several plots that may suggest/identify time offline.
Why this wish to have production listed by calendar days and adjusted for time offline?
Coffee, I understood from above that you were well into doing such a research from effects of time offline.
FWIW
While awaiting access to the ND DMR database, I got a “head start” using Enno’s site to identify the wells started in 2017 by EOG in the Bakken.
The 46 wells’ history (2 Shut In excluded) are freely available on the Monthly Production Reports and anyone can access/verify the data.
June’s report has the pertinent well info on pages #s 2,68, 185-7-8.
The total online production days for the 46 wells was 961 days … 70% of the calendar month.
The roughly dozen wells that were online 30 days produced between 75 to 150 bbld with 120 bbld being the approximate average.
8 of the wells were online less than half the month, about 20 were offline a week or more in June.
This is all publicly viewable data.
I am done.
Coffeeguyzz,
Can you find me a well that has remained online 100% of the time from first flow for about 60 months?
I believe you will be hard pressed to find such a well.
Bottom line, days online are of little significance for a large sample of wells. This is the reason small samples of 50 wells may not always represent the population of wells.
Perhaps 70% online is a bit low, but as Rune correctly pointed out, that is the company’s fault for poorly run operations and it will affect their bottom line, which despite what you seem to believe, is the point of the oil industry, not to produce energy, but to produce a profit.
Talking about shale roses when the mighty Saudi forest is ablaze…
First, why only pick June 2019?
All EOG’s 2017 vintage 48 wells had then a minimum of 19 months of flow/operation.
Why not look at all the 19 months and compare to the average for all Bakken?
The point here is that without establishing a reference/baseline this (Coffee’s) exercise has very little value.
EOG’s 48 wells of 2017 vintage time offline for June-19 was about 30% (regularity for June-19 about 70%) for the 46 wells with reported flow, 2 wells SI (time offline about 33% if the 2 SI wells are included).
Let us do some simple math here.
Assuming 100% regularity these wells on average would have had a flow of: 119 bo/d / 0,7 = 170 bo/d which means monthly flow for the average well for June-19 would have been (170 bo/d – 119 bo/d) *30 = 1 530 bo higher.
In June-19 EOG’s average 2017 vintage (48 wells with a minimum 19 months of flow) had a cumulative of 162,8 kbo.
Adjusting with an estimate for deferred production, EOG’s wells in June could have had a cumulative of 164,3 kbo.
Potential (“loss”) deferral of gross revenue for June-19 about $3,5M.
The cumulative could as of end of June-19 have been ((164,3 – 162,8)/162,8) * 100% = 0,9% higher.
The average for all Bakken of 2017 vintage (971 wells, all with a minimum 19 months of flow) had a cumulative of 202,9 kbo per June-19.
The average 2017 vintage EOG well had per June-19 a cumulative of about 80% of the average of all Bakken wells of 2017 vintage.
As of now, it is projected that EOG will nominally lose about $1M on average for each of the 48 wells of 2017 vintage.
Well done, Rune. I am sitting a drilling rig at the moment or I would have tried to find a way to a URL on EOG’s Bakken efforts from Enno; they have had their day in the sun in North Dakota and should high tail it back to Texas, pronto. Since 2013 their wells up there suck, badly.
This was a really dumb debate, a way to take away from important work by others as to what is actually causing decline rates to take a sudden turn towards exponential decline. On a personal level I can think of NOTHING more important at the moment than exaggerated EUR’s. Lies about EUR’s are giving Americans a false sense of energy security and are leading to some terrible, terrible policy decisions about our future.
Thanks Rune and Mike
Do either of you have an estimate of average EUR of 2017 Permian basin wells.
My estimate is roughly 380 kbo, but when I ask if this seems reasonable from experts, I get no comment.
For the Permian, I (so far) have not done any in-depth analysis to the same extent as for Bakken.
The templates used for Bakken are applicable for the Permian (and other LTO plays), it just takes a few hours to load the data. This approach deploys several methodologies for amongst other things to make estimates on EUR based on actual data. This exercise/project has multiple objectives amongst these to make good estimates on the composite R/P ratio (index) for all vintages and for the play. The R/P is a good indicator to identify unreasonably high reserves estimates thus assets and equity for companies.
R/P; Reserves over Production
In private forums last winter, the results were discussed and some also proposed to turn it into an article for WSJ.
I put any publication of the results on HOLD (awaiting the results from longer time-series) as I found that several of the younger vintages (that is 2014 and younger) likely had a too high EUR thus producing too high R/Ps, about 10% (which is big).
With time it was documented that the difference between the cumulative for the average well for sequential younger vintages reached an apex after about 30-36 months, for some companies after 15-20 months.
In other words, post apex the younger vintages showed steeper declines and the differences in cumulative started to decline (the cumulative started to converge) which so far led me to question the present EURs for the younger vintages used for R/P estimates.
Another output from this is YoY decline rates by vintage and composite decline rates using the end of each year as T0. The older vintages carry some “noise” from refracking (a filter may be developed to handle this).
What is clear now for vintage 2013 and older is that these appear to enter something that is best modeled as a YOY decline of 12% (exponential) after 60 months (keep in mind the T0 definition).
EURs for the younger vintages are too early to conclude about now, but if historical data provides any guide it is now expected these may have higher declines. (This may be observed on semilog plots (daily/monthly vs cumulative) if the line(s) get a steeper slope (starts to “bend” inwards) after about 20 – 30 months in operation.)
Perhaps not much of help for what was asked.
Thank you Mr Likvern.
Below is an old estimate for 2016 ND Bakken/Three Forks well from Sept 2018 (only 20 months of data at that point in time). I assume a 15% exponential terminal decline starting at 80 months from first flow.
Least squares fit of an Arps hyperbolic to 20 months of data used from 21 months to 80 months. If we assume well is shut in at 8 b/d, the EUR of the average 2016 North Dakota Bakken/Three Forks well would be 357 kb at 193 months from first flow. Permian basin estimate uses more up to date data as I do not follow the Bakken as closely as the Permian basin.
Note that the model predicts 210 kb of output at 32 months, currently shaleprofile shows the average cumulative output of the 719 wells that started producing in 2017 is 206.949 kb at 32 months.
At 20 months the average 2016 vintage (Bakken) cumulative was about 169 kbo.
12 months (at 32 months) later it was at 207 kbo.
The delta becomes about 38 kbo.
Your model comes out at 210 kbo (at month 32), in other words about 8-9 % higher for the delta from month 20 to month 32, which may not sound like a lot but as it moves the starting point for future projections higher it becomes additive.
It was such observations that made me put any publication of Bakken (and companies) R/P index on HOLD. Something was going on for the younger vintages (2014 and later) which influences the EUR estimates, the R/P index etc. and thus projections of future (aggregate) flows.
Thank you Mr Likvern.
Mike,
What would your guess be as to the exponential rate of decline. Rune uses 12% for older Bakken wells (2013 and earlier), in the past I used 10% and adjusted this to 15% based on Enno Peters work. Enno thinks 20% (or higher) is the likely rate.
Your thoughts would be appreciated (and thought of shallow sand, Fernando, or any petroleum engineer).
Thank you.
Dennis, Enno just gave a class on terminal decline rates that I missed because of work. His analytical portals included terminal decline rates for wells<50 BOPD, I think, and I have used that portal.
I would not argue with Rune about anything in the Bakken; if he says 12, 12 it is. In the Eagle Ford it can be as high as 18-20, in the DJ, higher. I can't say in the Permian; there is no much data and it clutters the big picture; also there are significant changes in AF schemes that occur in the Permian that cause production profiles to be different; more water means more total fluid can be produced even when OWR is declining. It looks like it could be as high as 12-13% itself, at least in the Midland. Decline rates are different for different sweet spots, different benches, different operators; can be dependent on how the well was managed during flowback and the first 18 months, operational goals, monetary needs…and decline rates can, and do change over time.
I think in some areas I like to look at decline rates are accelerating and there could be several reasons for that, including Lapierre’s theory of oil expansion, bubble point, etc., etc. Shale is just mudstone; things I predicted might happen six years ago with regard to proppant embedment and fracture closure are leading to low fluid entry wells that require pump off controls and time clocks; they produce 4 hours a day and thats that. At <$50 lots of shale oil wells in America, LOTS, are headed for economic limits.
Mike
Great stuff thanks for sharing your wisdom based on 40 to 50 years of real world experience.
I agree Rune is the expert on the Bakken.
I appreciate that he has shared his wisdom here as well.
As I figured, the price moved up some. Now trending back down. The only thing that will move these traders is, there is no more oil. The hit on US oil supply from their stupid pricing is five times the hit on SA, and SA is only temporary (currently). 2020 before substantial movement. These guys are absolute idiots.
GuyM
They buy into the false narrative of Saudi America. The true believer in the SA fairy tale thinks we are nuts.
Time will tell.
EXXON BORROWS MONEY TO PAY DIVIDENDS
It’s quite amazing how closely the shortfall of Free Cash Flow to Dividends was made up by net debt issuance.
Here is Exxonmobil’s combined financial data for 2015-1H 2019
So, with Exxonmobil now ramping up shale, it has been forced to borrow money to pay dividends. While the Saudi Drone strike may help Exxon’s financial situation briefly, I wouldn’t count on it over the longer run.
Steve
Steve
Oil will deplete and oil prices are likely to rise. Exxon understands this, even though it is left out of investor presentations.
Dennis,
Yes… Yes… Yes… the old supply and demand mantra. Well, Dennis, it seems as if that way of thinking will become increasingly meaningless.
I gather you don’t pay much attention to the Thermodynamics of oil depletion which states the net energy in a barrel of oil that makes it to the market continues to decline.
Furthermore, how do you think the market BIDS UP THE OIL PRICE?? Where does that money come from to BID UP THE PRICE OF OIL????
It comes from the Net Energy in that barrel of oil that makes it to the market, if we deduct inflation, as you have pointed out from time to time.
So… at some point, individuals who continue to believe that falling oil supply will push oil prices higher due to the OUTDATED Supply & Demand forces, need to start reformulating their analysis.
Steve
Steve
Net energy only important when considering all energy sources used.
For a single product it is of zero significance. Lots of different energy sources are used in the production refining and distribution of oil including coal natural gas nuclear wind solar and geothermal energy. One needs to look at all of these and the energy needs of society for a proper analysis.
Short on oil falls well short in this regard. Those who understand thermodynamics and statistical physics mostly agree on this point.
Oil is a terrible source of energy. It’s much too expensive. It got booted out of the electricity business decades ago except for a few niches.
The idea that the oil business is the energy business is only something people inside the business believe.
Funny story — Rick Perry wanted to abolish the energy department before he got to be energy secretary. During the hearings for his nomination he learned for the first time that the Energy Department is mostly about nukes.
I repeat: Oil is not important as a source of energy. It is useful as a way of storing energy in a moving vehicle, but it adds too little to the net energy mix for that to be where its value is.
When a Company like Exxon need to borrow money to pay dividend with oilprice ranging 50-60 USD they have invested in wrong assets. Most big oil Company now are earning money, pay down depth, buy back shears and invest in exploration drilling that hopefully add resourses. When oil price was 30 usd each barrel they might sell some assets and borrow money to increase cash. Exxon is also selling assets in the North Sea and other places. The compressors trains and tanks in Saudi will be repair within 2 months than all are back to normal WTI 50 -55 USD each barrel…
DUC count decreasing in almost every basin, exept Haynesville.
Let me see if I get this right.
The incident in KSA took out about 5 Mbo/d (processing capacities) and according to several sources KSA has a total capacity of about 12,5 Mbo/d and according to Ron’s charts in this post, KSA in Aug-19 was at about 9,8 Mbo/d.
So simple arithmetic suggests KSA still has some 2,5 Mbo/d of spare capacity, provided this spare capacity is not dependent on the same processing facilities affected by the recent incident.
It may take some time to bring in this spare capacity, max 90 days.
Some (preliminary) reports said that about one third (1,5 – 1,8 Mbo/d) of this capacity could be restored in a few days.
OPEC (- KSA) allegedly also has some potential to increase supplies (ref the agreement to keep back supplies).
Then add (increased) stock draws (incl. SPR).
So is this such a big problem for global oil supplies?
“So is this such a big deal for global supplies”
I’d say one strike that removes a couple million bpd in seconds is a big deal. Now imagine another one.
Another such strike (magnitude of oil supplies affected) would undoubtedly have more lasting effects and raises the probabilities of some escalaction that could involve several more parties.
IMO the world economy is now very vulnerable to both lasting supplyshortfalls (say 4-5 Mbo/d) of oil as this could set off secondary effects in a market with tight US dollar liquidity.
Add to that what the socalled global creditimpulse now is signalling.
(Anyone wanting to know more about the creditimpulse should Google it.)
Hi Rune,
Russia is giving assurance that Saudi oil shortfall can be covered by other countries. Russia stands to benefit financially from the higher oil price. Maybe Russia sold missile technology to Iran who passed it on to Yemen Houthis?
Original article is Russia, below are first three translated paragraphs.
MOSCOW, Sep 16 – RIA Novosti. The deficit, which may arise in the oil market due to the situation in Saudi Arabia, can be covered from the world’s commercial oil reserves, Russian Energy Minister Alexander Novak told reporters.
In particular, when asked whether Russia should increase production against the background of falling oil production in the kingdom, the minister replied: “It all depends on the early assessment of the consequences, which is carried out by Saudi colleagues, hence it will be possible to understand the scale of influence production, supplies.”
“But there are currently enough commercial reserves in the world to ensure that in the medium term the lack of oil that we see is covered by supplies from commercial reserves. But, I repeat, in many respects everything will depend on the period for which the consequences of the disruption of infrastructure will be affected,” Novak added.
If you think of the attack as a hurricane, it only seems fitting. No big deal, right ?
Well, (putting aside the curious fact that this particular hurricane’s target selection was very odd – given the rich selection of complex expensive hard to repair machinery in buildings around the site – why just blow a hole in a dozen (empty?) gas tanks?), what this particular hurricane is saying is: “Do as we want, or we will send another hurricane tomorrow, and another the day after, and we will continue to cripple you until you bow down to us”.
An Atlantic hurricane is a one shot affair, this is different, and the market knows it and KSA knows it is a very big deal
Rhetoric question? Uncertainty just increased and hence volatility and price.
Not many know just how much (medium term) spare capacity is available. Most of it is in KSA and perhaps some in UAE. We might find out soon just how much.
The affected production is 5% of the global but more than 10% of net export (assuming KSA reduce exports first and domestic consumption second).
The market is in deficit as indicated from stock drawdowns and LTO slowing down. KSA started drawing down their oil stockpiles several years ago.
Another issue is what happens next: an Iran-US deal just got less likely. Will somebody try to block all of Iran’s oil export and how will Iran respond? Will there be more attacks on KSA’s oil facilities?
Lower production capacity in KSA also makes supply less responsive to other disruptions, e.g. hurricane in GoM.
My comment was from a purely supply perspective.
(I am aware there are lots of other elements baked into this incident.)
Rune
Probably Saudia spare capacity is less than 2.5 Mb/d. Strategic reserves could be used but if there is some other supply problem the World would be in a vulnerable position in regard to liquid fuel supply imo.
KSA’s spare capacity (oil) has been subject to many god debates.
The recent incident may shed some light on its true nature.
Rune,
I agree.
Hi All,
Thought I’d run down and visit ‘ol Darwinian’s (Ron Patterson’s) site and see what was brewing regarding the Saudi refiner attacks.
However, I believe there’s no better light resource discussing Iran’s military capability than an old article on the erstwhile resource – The Oil Drum – http://theoildrum.com/node/8956
What I find to be more interesting than the article are the comments – a sudden fountain of real smart people showed up in particular to comment – offering great insight into Iranian economy and capability, and more importantly, their resilience.
One take-off I recall suggested was how Iran, being unable to offload their oil reserves due to the sanctions will have the effect of leaving them as the last man standing with oil depletion rapidly eating away at the reserves of every ELM nation. Overall, a backfire on American/Trump policy – one with an eventuality leaving Iran’s the world’s remaining superpower! As I mentioned, Iran is more resilient than most are aware, something lost on the Anglo public focusing on crushing their pension base by fomenting social media unrest.
With that, I’ll point you to peakoilbob’s insightful posting in that article’s comment section, here.
The refusal of international investigation pretty much means…. that this time Saudis hit themselves (or hired some Jemeni group to hit them). The upside of this is that in such a case we can expect fast repair. Saudis need to gain from higher oil price, right? Unless it was of course an attempt to hide some terminal decline of unexpected magnitude…
The downside is that this attack will probably set patterns for future: oil production will be increasedly ransomed by different military/terrorists groups. Everybody there is researching oil production; the public knowledge is close to null, with everyone on the news speaking about “refineries”. If that were refineries, a big fire there should RELEASE a lot of more oil, right?
Russia will probably be selling Pantsyrs right and left soon, since they offer a good combo of guns and missiles: the big problem with missiles is that you easily run out of them, so in saturation attack only guns will do. How it was that US MIC did not think about short range deffences for their Patriot radar arrays? Just because missiles cost more?
Typical imperial hybris; “we only deal in big stuff”.
Another hypothesis: this was all about power struggle in Arabia. The anti-MbS people, people who believe oil is the only resource Saudis have, want to save something for future, and so they decided to slow down production by such extreme means. All those princes hanged upside down in a luxury hotel few years ago surely became mortal enemies of MbS. No one forgets such humiliations. It is even possible that some of them are now helping Yemenis, which may be one of the reasons why this rebellion is so unexpectedly resistant to Saudi firepower, and even slowly encroaching on Saudi kingdom…
Since everyone is speculating I think it is part of Netenyahu’s re-election campaign.
‘Riyadh’s approach was not exactly friendly. Words including “strong arm”, “coerce” and “bully” were used to describe the way Saudi Arabia’s government was trying to secure the anchor investors for what many see as the deal of the century in oil and the largest IPO ever.
One of the wealthy Saudis targeted by Riyadh as Anchor investors was Alwaleed bin Talal—a celebrity billionaire who was held at the Ritz-Carlton for three months and who, like the others detained at the hotel, was only freed after he agreed to transfer substantial financial assets to the government. To date, many of his remaining assets in the Kingdom remain frozen but, according to the FT sources, he was offered access to them if only to use them to buy into Aramco. ‘
I’ll post this to the non petrol thread with more comment.
But people here who are invested in oil long term might want to read it and THINK about it.
Electric cars may go mainstream a LOT faster than anybody except Tony Seba fans think they will.
USA gets 63.5% of it’s electricity from fossil fuel. 1.6% from solar. 6.6% from wind. 7% from hydro.
Electric cars use electricity.
Still along way to go before the fossil fuel crowd is spooked by electric cars. https://www.eia.gov/tools/faqs/faq.php?id=427&t=3
“GM announced the closure of that plant, in Lordstown, late last year, along with job cuts and the elimination of many sedan and compact models. It has balanced that withdrawal with plans to introduce 20 new, all-electric models by 2023, its first big step in an $8 billion bid to (someday) stop building gas- and diesel-powered rides altogether.”
“a moderate shift to electric propulsion could leave 75,000 Germans out of work—even accounting for the creation of 25,000 new jobs. That’s because batteries and motors are far simpler machines than internal combustion engines, and require a few hundred parts instead of a few thousand. That’s the same reason maintenance costs for EVs are so low—a problem for dealerships that rely on servicing cars for profits. Fewer parts mean fewer people.”
“In 2017, Ford CEO Jim Hackett, discussing his company’s plans to invest big in electrics, told investors that Ford could reduce time spent building EVs by 30 percent, compared with conventional vehicles, according to Reuters. When industry supplier Continental announced a shift away from building internal combustion engine powertrains, it also predicted job cuts. Hyundai’s auto union chief, Ha Bu-young, told Reuters that “electric cars are disasters. They are evil. We are very nervous.”
“The UAW itself has found that American automakers’ move away from exploding petrol could do away with 35,000 jobs in the next several years. “EV powertrains are simple compared to internal combustion engines. The simplicity could reduce the amount of labor, and thus jobs, associated with vehicle production,” the union’s research chief, Jennifer Kelly, said in March.”
Anybody who is invested in the oil industry, as an owner, operator or employee needs to understand that electric cars and light trucks aren’t hoaxes dreamed up by libtards , as Trump fans describe them, along with forced climate change.
They’re real, and they are going to sell like ice water in hell the next time there’s an oil supply crisis that results in people having to stand in line to buy gasoline.
The very large majority of new car buyers have never yet even SEEN an electric car, close up and personal, never mind DRIVEN one. That’s about to CHANGE.
“WIMMEN ” are are taking over, and making more money than men these days, because the MEN are the ones being left behind in the new economy, and women making enough that they can afford a new car every four or five years are going to buy electric cars, knowing they are MUCH cheaper to run, and will be under warranty anyway for as long as they own them. Electric cars fit in MUCH better with their “IN” group, namely well educated people who mostly vote D and support “green” political positions.
Driving a noiser nastier conventional car will mark them as an OUTSIDER, which is something everybody, left or right avoids like the plague.
Women don’t care much about the roar of a big engine winding up.
But I still think oil prices will go up a lot, due to depletion, before enough electric cars and light trucks are sold to cut into oil demand enough to result in the price staying low.
“the roar of a big engine winding up”
What is much more exciting to most who have experienced it is the incredible torque/acceleration you get with an electric motor, silently. Feels very powerful.
“WIMMEN ” are are taking over, and making more money than men these days, because the MEN are the ones being left behind in the new economy
Girls are doing a little better than men in school. But…they’re not making more money once they graduate. The idea that they are sounds like a part of the misinformation which the conservative media is using to poison the minds of conservative viewers, especially men. It suggests that efforts to allow women to earn equal pay are in fact evil plots by women and liberals to hurt men, plots which have made men poor and lonely.
In fact, men are victims, but not of women and liberals. They’re victims of the whole society, the whole culture, taught by fathers and mothers, by school, by the media, etc.
How are men victims? They’re sent to war, and come back dead or injured. They’re taught that as warriors, taking care of themselves is unmanly – smoking, drinking, driving dangerously, working too much, doing dangerous jobs, being anti-intellectual (and avoiding education!), eating too much, suppressing emotions, being solitary and grumpy, not going to the doctor – all these are signs of manliness.
Of course, women are victimized as well: they’re forced to have children they don’t want, and then to take care of them without help. If they work, they’re paid less, especially if they take time out to have children, or work in jobs that are traditional female jobs, like childcare, food industry, teaching, etc. They’re also taught that taking care of themselves is unmotherly – they have to exhaust themselves to put their children and family first.
Anyway – let’s not buy into this “men are the new victims” meme – it’s just a wedge issue, designed to divide men and women and get men to vote against their own interests.
Gizmos called linear accelerometers exist. They are in airbags in your car. You get 3 of them mounted in all 3 axis configuration XYZ and their output feeds a computer. If one of them feels an acceleration, the computer times it and knows the velocity in that direction. And can project that from its clock to a new position XYZ, from that velocity.
Before you start all this you point the vehicle in a carefully known direction and put 3 gyros aboard to measure change in rotation on a 3 axis config, and with this information, feeding the same computer you can transition the XYZ vehicle coordinate system to North East Vertical, and now the computer’s calculation of position is no longer XYZ, it is lat long altitude. Your vehicle then proceeds with the computer commanding the flying algorithm to go . . . wherever.
The gizmo that contains all these sensors is called an IMU for Inertial Measurement Unit. You can fit it in your hand and it consumes very little electricity. What was just described is called Inertial Guidance. Submarines do it.
This is how you navigate a drone. You feed the navigation solution in your computer to a filter and it will combine with GPS and get you a very nice flight without any remote piloting (and even if GPS is jammed).
This stuff is really easy to do. The hardware AND software is off the shelf. It will happen again. It’s cheap, you can probably have 50 vehicles at one time if you like, and defense is going to be pretty difficult to achieve.
KSA need not be the only target. Range easily hundreds and hundreds of miles of fuel. (A helluva lot more than an EV)
Oooh now there’s a conspiracy theory. Or how about some Green nazis. High tech tree spiking.
BTW how do we feel about casualty count = 0 on this event?
Hi Watcher,
Beat you to it, in the other thread. Posted that I could buy all the stuff, hire a programmer and build an armed drone myself.
That’s a little disingenuous. Hiring a programmer is easy; hiring one that can do what you’re saying is difficult. Now, if one could piggyback onto an existing program available off-the-shelf – and get a limited payback (i.e. drones flying no-return scenarios – makes things easy like suicide bombers) – maybe.
But not likely. It’s said Firmware is the Most Expensive Thing in the Universe – here’s one guy’s take on the cost of firmware …
Ex-Lockheed CEO Norman Augustine, in his wonderful book “Augustine’s Laws” (1997, American Institute of Aeronautics; ISBN: 1563472406) wrote about how defense contractors were in a bind in the late 70s. They found themselves unable to add anything to fighter aircraft, because increasing a plane’s weight means decreasing performance. Business requirements – more profits – meant that regardless of the physics of flight they had to add features. Desperate for something hideously expensive yet weightless, they found. firmware! Today firmware in high performance aircraft consumes about half the total price of the plane. A success by any standard, except perhaps for the taxpayers. Indeed, retired USAF Colonel Everest Riccioni has suggested firmware-stuffed fighter airplanes and smart missiles are now so expensive that the US is unilaterally disarming (http://www.pogo.org/p/defense/do-010801-unilateraldisarm.html).
Yeah, I told ya. We are going to have to almost run out of oil, before these idiots adjust their programs. Because, “shale will keep increasing, forever”. Barf!
Or until 2025.
“Donald Trump turned to the weekend attack on Saudi Arabia’s oil facilities and assured his audience the United States had become such a big producer it no longer needed oil from the Middle East https://twitter.com/realDonaldTrump/status/1173560246863876096.” http://news.trust.org/item/20190916211739-95p77
Such dishonesty + Exploitation of Public ignorance from those in Office should be criminal.
Also: from the same Article.
“As an example, the biggest U.S. refinery – Motiva Enterprises LLC in Port Arthur, Texas – is half-owned by Saudi Arabia’s state energy company, Saudi Aramco, and is set up for Saudi grades.”
IIRC, Didn’t Shell Bail on this part of Motiva? SA owns much more than 51% of Port Arthur Complex now??
Yeah, it’s Saudi now.
Made a quick thousand bucks on the Jan 2021 options before it tanked today. Sold only 30% of holdings. Needed cash.
Witn BS ike this, you don’t have to be really sharp in n investments, it’s a lock.
The attack can probably soon be redone. It came from NW SA or Iraq. Everyone is looking the wrong way. I would expect it soon, before they can regroup.
The Saudis, plus Israel and the rest of the Sunnis, have decided air power superiority. Matter of a short period of time.
Ok, I’ll call it. The fits going to hit the Shan, very soon. I have Iranian friends, and hate what’s going to happen, but this was massively stupid.
Saudis are slow to respond, of course. You have to build your coalition, which should not be hard, at this point. Damn, that was really stupid.
But, not entirely unexpected.
The Saudis are burnt, finally. Took a while though eh? They won’t be getting a coalition together anytime soon. Likely nor will Turkey and Egypt be fighting their battles, not without serious concessions in Syria, Sudan, Qatar, Libya and Egypt (Turkey likes the Brotherhood not the dictator).
‘Talk loudly and carry a small stick’ seems to be Trumps mantra. There might be a few cruise missile strikes, but it’s a two way firing range now.
We used to have a saying where I once worked- there’s nothing you can do about a bullet with your name on it, it’s the one’s addressed “to whom it may concern” that you should guard against.
Shoot, dude. It’s no longer about Iran vs US and Saudi. It has escalated far, far further than that. We have fallen back, many centuries.
My guess is Trump will start walking it back, stop causing shit, then claim a big victory, then forget about it. Sorta like his North Korea game.
Season 3, episode 156, same story line. To busy robbing the bank.
This attack isn’t even headline news at this point. Didn’t even hold a 48hr news cycle. We are on to Lewandowski and GM strike. If the US executes an attack directly against Iran that’s an act of war and would give clear justification for a significant response on Iran’s part. If the Saudis attack Iran, same problem.
I’m not seeing a lot of popular support, outside of the war-hawks, for an open response like Trump did in Syria. It’s gonna be hard for Trump to do anything. How much leverage does SA (and Israel) really have over US? We are about to find out.
Sorry to prattle on about it, but I thought this headline said it best:
The Saudi drone attack took out a known weak spot in the oil supply chain with a cheap, low-tech weapon that billions’ worth of air defenses are powerless to stop
Let’s hope they stay away from the Houston Shipping Channel
Yeah, let’s hope for everyone. It’s already getting scary. And, yeah, as a member of the Sons of the Republic of Texas, I would say that is not a bright idea. I’d hate to sign back at seventy, but I would.
And, needless to say, the traders buying and selling oil and t $59 WTI are the dumbest assholes
You have no idea what you are talking about. We have too little information about what really happened, and who was responsible for what, to extract any conclusion. And by now the US should have learned a lesson about starting wars in Asia. KSA’s war in Yemen provides the latest example. Even when you are clearly superior things never go as planned.
US not going to start it. They will be in “advisory” status, again.
That’s even sillier. Israel doesn’t start wars, and KSA is tied up to the neck in the Yemen war. Who’s gonna start it, Kuwait? You really don’t know what you talk about.
Israeli security is manpower limited. There are only so many people that they can throw at a problem before they deem the problem overwhelming. That is my understanding as to why they have to be so aggressive with their options. They can’t afford to let something grow and then have a problem down the road that exceeds their human resource limitations. By and large today, IMHO, the average Israeli suffers from severe war/threat fatigue. With a wide spectrum of threats and with a lot of high tech solutions, it is still a struggle to keep up with the threat load. Too many threats and too few people to assess/understand, classify with appropriate priority levels and then counter them. Hence the characteristic of aggressive behavior.
However, aggressive behavior has perhaps hit the point of diminishing returns.
The Israel-Hezbollah war of 2006 demonstrated that the Israel no longer enjoys military preeminence in the Levant. Israel will likely have it’s hands very full very quickly with Hezbollah threats in any altercations with Iran.
Here is a link to an image of a Kawasaki KDX 250 coupled with a RPG-7 on display at Mleeta’s resistance museum in Lebanon. Such bikes have proved useful in warfare for their agility and their off-road capacity. The bike/RPG combo (sticker price- ‘cheap’) was reportedly used by Hezbollah’s fighters in a number of operations during the 2006 war, to rather good effect I understand.
The Houthi arsenal is likely sufficient to conduct the alleged operation against KSA. If not, Iran getting more advanced drones to them is not hard- Iran likely launches drones from boats and they fly into Houthi controlled area to be collected, armed, programmed, and deployed against targets.
The main Israeli problem is not even the manpower, but the dangerous lack of any strategic depth, plus the fact that the majority of population is concentrated in the narrow strip between Haifa and Tel Aviv.
This is why Israelis constantly want to enlarge their state. But somehow they constantly lose (ultimately, at least).
Diffcult area to operate, MENA.
The GOP portion of the Deep State pushed a substantial contingent of warmongers onto this president. To date, he’s managed to resist most of their pushes. It’s useful to remember that the “moderate” John McCain was quite the hawk on most of these matters, particularly Syria.
In general, war has to have a purpose. The administration’s warmongers are a little bit like Madeleine Albright was for Bill Clinton. Her famous quote re Serbia was “we have this magnificent military we spent all this money on and now you don’t want to use it.” There needs to be a goal in mind for its use.
The McCain faction defines things like this — the Iranians were largely in compliance with the agreement to cease enriching uranium, but there was also in the agreement an understanding (if not explicit text) committing Iran to end its causing upheaval all over the Middle East. They have not done that, and that’s why the agreement needed to be terminated. Largely, the desire is that Iran, or North Korea, will submit any foreign policy activities contemplated to Washington for approval. This is of course not going to happen.
The president will back off from this. He’ll probably get a deal as a result. KSA would then start funding Democrats.
Perhaps more important than any of this is what’s going on in Israel right now. I encourage folks to keep an eye on that because the government there is going to decide what happens with that enormous gas field offshore.
That Israeli gas field is big for them, but small potatoes on the bigger scene.
The adjacent Egyptian field is considerably larger.
But who gets elected there is a big deal, indeed.
It’s looking more and more to me like this event at the Saudi oil facility was just smokescreen and Mirrors.
# The big fire was lit outside of the key parts of the facility.
# The holes in the tanks are far to precise to have been made by kamikaze drones and the damage way to
small for missiles from Iran.
# The Saudi blame Houthi with help from Iran, The US instead claims the attacks came from Iran.
# They now expect to be back up and running in a couple weeks.
# And once again loads and loads of evidence is being withheld from us.
# And just like the oil tankers that got hit this will soon be all but forgotten and another event takes the
spotlight to make the algos loose their senses once again.
# in the meantime the worlds real economy continues to contract and the price of oil stays too low causing more and more drops in oil produced but the news makes it look like these events are totally unrelated to each other.
# And in the end this wasteful energy dependent civilization, comparable to a tumor must eventually get wiped out.
In conclusion I tend to think it was an inside job either by some rival princes, a false flag to sell some oil at a better price, or most likely to mask the depletion that’s overtaking the additions in crude production.
Too much conspiracy. Too many people knowing about it. At some point one of them doesn’t get the rewards he expected and makes a phone call to a media outlet.
However, it is not just curious, but utterly bizarre, that there were no casualties.
I’ve been looking at various cases of refinery damage and comparing pics.
BP Texas in 2005 was caused by “a spark”, or so I understand.
The KSA damage doesn’t seem too bad when compared to other cases of refinery fire and explosion.
“The Quds-1, on the other hand, could have a penetration-type warhead like an RPG, but maybe without the explosive. Take note that the satellite photos we have show no fire on the tanks that were hit. Why not? Maybe because the idea was to blow some holes in the tanks to show what could happen – a demonstration aimed as much at the United States as at Saudi Arabia. ”
My feeling is that it is the end of Abqaiq facility, and at least 2,5 mbd is not coming back online. What was struck was essentially processing the northern Ghawar output, and as we know from Simmons, the northern Ghawar has been on its last ropes for a long time already. Well, at least we now know how the Saudis decline will end – not with a whisper, like Alaska, but with a BANG!
Somehow – but very conveniently too – the still running Saudi oil production is just enough to secure the KSA internal consumption. But if I were an Iranian strategists, I would surely try to destabilize internal consumption as well; my primary aim would be to destabilize KSA and not the international oil markets. What may have been achieved is the reverse. Ergo: it wasn’t Iran. Probably a power group in KSA, maybe in connection with some Yemen group, and maybe China in the background. It is important to remember that Yemen has not only connections to Iran, but to Saudi Arabia too. By cui bono principle: Saudis save some oil (too often we see Arabs as just greedy oil dispensers, whereas they want to have a secure future too) and war in Yemen may end. However, the attackers surely are not USA friends; the end of KSA exports is a clear danger for petrodollar (therefore China). Isn’t KSA the anchor of petrodollar…?
After considerations, the money motive I would dismiss: Saudis have already got a lot of money from Aramco bonds (IPO will now obviously not follow). And let’s remember that they were undershooting their OPEC quota over last months by 0,5mbd. Who knows how much they really did produce, and how much was taken out of storage. If that 0,5mbd was a real cut, and not a cover for decline, then they could just cut more if they really wanted higher oil prices, and not be blowing things up. You put things on fire if you want to hide something. Maybe it will end with intervention in KSA, not in Iran…
By the way, EU gets circa 10% of its oil imports from Saudi Arabia.
My feeling is that it is the end of Abqaiq facility, and at least 2,5 mbd is not coming back online. What was struck was essentially processing the northern Ghawar output,
All of Ghawar as well as Abqaiq and Khurais comes through the Abqaiq processing plant. (That’s pronounced Abb kay.) Well over half of all Saudi oil comes through the Abqaiq facility. That’s why it was targeted.
Yes, but they will now have an excuse why Ghawar is not performing. When I wrote ‘2,5 mbd is not coming back online’ I was meaning Ghawar only.
It is strange that Shaybah oil goes through Abqaiq plant, since this field is bordering UAE.
Funny that nobody says anything about the Abqaiq field itself – it must have been totally dead by now.
Just wondering: would WWII-style flak be enough to shoot down the drones? Drones are actually quite fragile, especially their motors…
The peculiarity of modern warfare is it’s mixture of many generations of weapons, from Kalashnikov to S400….
No.
These are low altitude approaches. WWII flak was shooting at 20,000 ft altitude targets.
If there are 50 cheap devices attacking, maybe programmed for flight profiles arriving from different directions, and only 3 of which need to hit for success, there will be no defense.
And psssst, KSA doesn’t have to be the only target.
Russians claim to have successfully repelled swarm drone attacks in Syria. It is interesting with what weapons actually…?
Based on what happened and what we know of the incident in the Saudi Ambassey in Tyrkey we dont know if all the evidence shown are fake , it might be some old crap.
Referring to the older post on Saudis, this Khurais field has been recently the second Saudi workhorse after Ghawar, with 1,2mbd. On the other hand, the field is missing from the 2004 depletion graph.
It looks like the attacker wanted to maximize outages.
While not usually my favorite writer on oilprice, I think, in this instance, she has it nailed. I don’t think this problem will sale into the sunset. Keep in mind, that Trump has cut back on Egypt support. Now, Egypt is firmly with SA., just calling for temperance. If, we restore and load up Egypt’s money from the US, and they are primarily Sunni???
I wonder what the comment “who did it” really means. Was this done with the blessing of both Rouhani and Khamenei or just K. There are two competing factions in Iran. There is the Supreme leader Khamenei and the Quds who have more power than the military. On the other side is elected president Rouhani and cohorts who negotiated the nuclear deal. While Khamenei agreed to the deal, the Quds were upset. I am wondering if the Quds convinced K to let them Lauch the attack so that there would be no meeting between trump and Rouhani at the U.N. K may be regretting the deal because it gave Trump the pretext to scrap the deal and impose sanctions.
The response to the attack may depend on fully understanding what is happening in Iran.
Doesn’t matter who did it. Does matter what we believe in.
USA is trapped now – some serious intervention is a matter of its credibility to Saudi Arabia.
Either war or farewell to petrodollar.
Well, goodbye petrodollar anyway, war or not war: this is the essence of this trap.
I am feeling as if we were in August 1914. We may be plunged into a war by domino of alliances again – this time, Saudi Arabia to USA, USA to Europe etc.
With luck we might see Trump, EU and hopefully others come up with a joint sanctions package. I just hope T’s advisors can convince him to put together a coalition.
Coalition means a war.
Have a bad feeling. WWI – from the European perspective – was essentially TEOTWAWKI. Now maybe the time come for America…
Yes I have the same bad gut feel.
Nations being “trapped” into a war nobody wants but just “has to happen”.
Damn shame but looks like all the players are being boxed in.
Exactly how WW1 slowly and grudgingly started…
I guess by now deep storage bunkers are being opened up and ordnance is being hot-staged all over this planet.
Does no one read history?
The best course for the US on this is to play a very distant backup role to SA.
If they want to escalate and retaliate against ‘who done it’, its their prerogative.
Depending on how that goes, the US may or may not choose to help or hinder,
but no need to play any kind of lead role.
For that matter, same applies to Korea. We should let/insist that S.Korea take the leading role in working it out with N.Korea, and serve as the backup to them. Its not our country at stake there.
IMO.
US shale oil well productivity y-o-y declined for the first time since 2016.
US shale is still completing a record number of wells, but the growth rates have massively decelerated.
September US oil production is flat versus August signaling further more disappointments into year-end.
Well productivity disappointment means that in order to keep the same level of growth, US shale needs to complete ever more wells.
If US shale does not complete more wells, then exit growth between 2019 and 2020 will be ~500k b/d.
There is a lot more to this article including lots of charts. Suggest you take a look.
Yeah, that too. But, my response, for me, is you’re preaching to the choir. Trump is mainly concerned about getting US troops involved in War. This, is not over.
Is Dennis a member of this choir?
Yeah, he is a tenor, not an alto. Come on, man, he’s trying to adjust. Nobody has perfect pitch. That’s why I am trying to keep my voice low. I am am lousy. But, he is mathematically more adept than I am. I just watch the monthlies now. As, I am quite sure they are close to correct, and he agrees. But, do disagree on 2025 being the high. Ain’t going to happen. No matter what prices go to in the next two years.
He has a strong faith.
A weak tenor at best, you know the joke, people prefer if I sing tenor, that is ten or fifteen miles away. 🙂
No, of course it isn’t over. You don’t put Ghawar on fire just so, simply everyday.
Seems US oil production remains at 12.4 Mbpd for third week. Will be interesting to see the weekly data for Baker Huges rigg count.
It’s not at 12.4. It’s closer to 12.1. The questionable amount is ALWAYS Texas. Because, on the monthlies EIA has to estimate them. They question about 90% of the production to producers, what their production is for that month they are reporting. For over two years, I received from Texas RRC, the missing piece of the puzzle. The Pending Lease Data. Adding the two, it always came close within two months. And, always close to EIA monthlies. Always. Due to completion drops and Rig counts, it is doubtfully higher than June monthlies. Every thing else is absolute bullshit. Including, the rest of the EIA bullshit.
But, you have to take note of other brilliant posters here, that I don’t know what I am talking about?
Heck, I don’t care about arguing. I just care about being one of the last ones standing. And, I just made a thousand bucks on my options early Tuesday. So, you can bitch about my inadequacies, it don’t matter. How much did you make?
But, you have to take note of other brilliant posters here, that I don’t know what I am talking about.
Guy, I for one, believe you know what you are talking about.
Thank you. That means a lot to me.
Hi Guy,
I’m as much in the dark as anybody , when it comes to Sand Country politics these days.
Hell, keeping up with what’s what with so many countries, with so many factions in each of them, would be impossible even for a reporter getting paid to do so.
But I pay close attention to what you have to say about the oil biz here and elsewhere, and I’m sure many others do likewise, although most readers don’t post comments.
I’m with Ron, I believe you know what you are talking about, when it comes to oil, and as far as politics are concerned…. you seem to be as well informed as anybody else and a damned sight better informed than most.
Thanks, OFM. But, politics is really not my forte.
Ron: I have a specific question for you. You and I worked in KSA, What is the production loss that you can venture to guess from these attacks? I have a number in mind but would like to heat from you.
Krishnan, I really have no idea. I left Saudi in the winter on 84-85. That was almost 35 years ago. At that time in my life, I had no idea that the concept of peak oil even existed. Of course, I was well aware of the conflict in the Middle East. I lived in Ras Tanura. And the tar balls washed up on the beach every day. The Indian and Philipino laborers would rake them up, dig a big hole in the beach sand, and bury them…. every day.
But beyond that, my concerns were totally somewhere else. Saudi oil production levels never entered my mind. I was a hardware computer man, not an oilman.
So to answer your question, I haven’t a clue.
Ron, why did you take no interests in oil production, living in Saudi Arabia? You were working for ARAMCO, simulating reservoirs, weren’t you? It should be interesting, oil production is a great mechanism, just like a computer, you know. Today young people participate in some “EXTINCTION Rebellion”, like cannon fodder, thinking that “extinction” is just a rhetorical advertisement, because years ago you did not get interested in oil production! In a few years today’s protesters will learn that it all wasn’t really about climate. Their leaders should be afraid of their future anger, but they probably think they all be dead by then.
And it all because boomers had forsaken their duty of democratic vigilance… so the young will be scattered by the winds of war. Speaking as a 30+ guy.
Yestreday TEPCO managment was acquitted of any wrongdoing in Fukushima case (and Japan has the lowest rate of acquittals in the world!). Besides KSA, Japan is another strange country full of untouchables, just hiding under the mask of politeness and cuteness. I am felling like an angry Japanese! I listend on news to some protesters in Japan, and they did sound really angry and rebellious…. Maybe they will awake their Banzai spirit 😉
USA made a great mistake not even trying to stage a Japanese Nürnberg trial… the Japanese learnt that they will always get the pass, and do not really have to try to change anything in their hierarchic culture, regardless of how many people have died.
Ron, why did you take no interests in oil production, living in Saudi Arabia? You were working for ARAMCO, simulating reservoirs, weren’t you?
No, I was not simulating reservoirs. I was in computer hardware! I worked on giant mainframes, dinosaurs that mostly no longer exist. I fixed the goddamn things when they broke. I was a computer repairman.
I had a wife and one child living with me. I had one child back in the states in college and two already married. My interests were my family, and adjusting to the strangest culture you could ever imagine. My friends were all interested in politics, religion and the technical problems associated with their job.
There were problems in Iran. The embassy was invaded and all the employees were taken prisoner while I was there. The term “peak oil” had never been heard of when I was there. No one had ever heard of climate change or global warming either. Everyone simply assumed fossil fuel would last forever.
Also, Aramco was in the process or had just completed the buyout of the four American partners. Things were happening. But peak oil was not one of them.
Yes, I was interested in the collapse of the environment, even back then. But no one else was.
Anyway, I hope this answers your question.
Ron
The DPR is a model that is not very good. We only have real data through July.
I agree. And the data through July looks pretty bad.
Ron,
Not at all clear to me the data is bad, perhaps June and July, but through May it is pretty solid in my view. Often the most recent 2 months get revised, sometimes lower and other times higher.
Made zero.
Not a gambler.
I would say we don’t really know I focus on tight oil estimates by play. Well productivity may be decreasing on a per acre basis.
Guy I agree with Ron, you know as well as any what’s happening. Problem is we don’t have a lot of data. The models suggest even a fall in completion rate could still result in flat tight oil output.
Did you see the comparison of my Permian model and data? R squared is 0.999 from Jan 2010 to June 2019.
The model is fairly good.
I can’t argue your models. I think your assumptions are based on sound reasoning, at the time made. Much more reasonable than EIA, but they are slowly adjusting too. There is a two to three month window that is blacked out with data. That we are all stuck with guessing at. No one is responsible for bad guesses?
359 completions in the Permian, which include verticals, that are normally over a 100. Again, it’s very far from hard data. Trends? The real trend is in the permits. These won’t be completed until 2020. It will, no doubt, resume to 500 completions starting January or February. In between, is the question.
GuyM,
I completely agree that we don’t really know what the completion rate will be. Consider the following scenario which uses the 2018 average completion rate for Permian horizontal wells (including New Mexico) of 427 wells per month. We assume this rate is held constant from Jan 2019 to Dec 2045.
The scenario is exceedingly conservative, perhaps one might even suggest it is a bit on the low side?
Freddy
Ignore weekly c+c estimates and DPR both are crap.
Ron
My models also suggest about a 500 kb/d increase in output with a flat completion rate. If the completion rate decreases output might be flat. For the Permian basin the completion rate would need to decrease by 30% from 500 new wells per month to 350 new wells per month for output to decrease long term in the Permian basin.
I doubt we will see that big a decrease. Most of US tight oil growth in 2019 has been due to Permian basin increases.
Dennis, the link I posted discusses production per well. It is dropping. Therefore a constant well completion rate would result in a drop in production. Did you overlook that point the article made?
Ron,
I assume production per well (estimated ultimate recovery or EUR) drops over time in my models, the author is wrong. It depends on the completion rate, in the Permian basin recent completion rates have been roughly 500 horizontal oil wells completed per month, at that rate, output will increase even with a fall in EUR. The scenario below has constant completion rate in Permian basin from June 2019 to Dec 2040, EUR starts to decrease in Jan 2019 and falls from 382 kbo in Dec 2018 to 269 kbo by Dec 2040 at the assumed completion rate.
The scenario assumes that Brent oil prices rise to $90/b by late 2020 (in 2017$) and remain at that level until 2050 and then decrease to $40/b by 2065. URR is about 59 Gb for Permian basin for this oil price and completion scenario.
The scenario is quite pessimistic as it is unlikely the completion rate will remain constant long term at an oil price of $90/b, a more likely scenario has the completion rate rising to 730 completions per month by 2023 and then gradually declining after 2025. The scenario below uses the USGS mean TRR estimate as a starting point (74 Gb TRR for Permian basin), then applies economic assumptions to fine the ERR (economically recoverable resources.)
Ron,
You assume a constant completion rate results in a fixed level of output.
That is an incorrect assumption.
Consider that at an average completion rate of 427 new wells per month in the Permian basin output increased by over 1000 kb/d, let’s assume 427 new wells were completed on average in 2019, would you expect no increase in output?
You would be surprised. Output increases by about 414 kb/d in 2019 under an assumed completion rate in 2019 equal to the 2018 average, even with assumed falling well productivity.
Dennis, I assume a legacy decline in excess of 6% per month. I assume that the sweet spots will play out and therefore production per well will decline.
I do not question your model. But it is obvious that Eagle Ford’s best days are behind her. And I believe the Bakken will soon follow. And the Permian may be a year or even two years behind those two. But not more than that. That is all I assume.
Ron,
The Bakken, Eagle Ford, Niobrara, and other US plays can maintain flat output until 2023 with constant completion rate, I assume all except “other plays” start to have decreasing EUR for new wells starting in Jan 2019 due to sweet spots playing out. I use USGS mean TRR estimates where they are available (Bakken Eagle Ford, and Permian). Legacy decline rate will decrease if completion rate is constant. Note that my estimate of legacy decline is about 8.5% in June 2019 and for a constant completion rate scenario the rate falls to 7.2% by 2024 (when this scenario has a peak for tight oil output).
The scenario is highly conservative, higher oil prices after 2019 are likely to lead to an increase in the completion rate imo.
Higher oil prices? yeah, it should be. But, I really don’t see it, until we drain inventories late 2020. Because, the average IQ is less than 90, when you factor in Computer programming. Huge spike by Nov 2020. Just in time before re-election. Damn, he’s stupid.
eventually oil prices will rise, date unknown. Probably before 2022.
Beginning of this thread. Talk of Nigeria.
Some official inside the country announced they would make a goal of 3 mbpd by 2023. And it looks like they’re spending fairly big money on a new security methodology for their pipe lines. This is going to get investment to arrive in magnitudes required to achieve that goal.
Oil ministers everywhere tend to make insane claims and these folks seem to be no different. He is claiming cost per barrel of $23, and expects that to be $15 before 2023, all while drilling more wells with the investment.
But this will help the oil guys a little, while putting a hurting on the corn growers and associated businesses, and the tax payers.
All out war on climate and renewables – nothing less. Expect more over the next year.
NAOM
Oil depletion will be very hard to adapt to.
But we will have to try.
I ordered 7 pieces of equipment/items from Amazon this week, and instead of driving all around to find them, they deliver them all right to me.
Today Amazon announced they will deploy 100,000 vans over the next 5 years-
Rivian Electric Delivery Vans.
Yes thats 100,000.
Amazon is an investor in Rivian.
I hope to be someday too.
I think Rivian, once in full production, will completely seal the demise of the ICE vehicle. EV pickups and SUV’s as their first products will cut the heart out of the remaining big margin ICE vehicles.
I just want an EV pickup. Tesla has one in the works also, but the Rivian one already is in field testing. Tesla seems to be doing alright at the moment. Give it awhile.
I do still have room, though, for another tattoo. I think the Rivian logo would look great right next to my Tesla one. You know us Fan Bois 😉
You are at the wrong end . Let me correct you . First where are the batteries going to come from ? The big boys have them all locked down lock stock and barrel . For your info Amazon is not investing in Revian ,it is Amazon + GM . The amount is between $ 1-2 billion . Mind you this is a PROPOSED amount , nothing CONFIRMED . For Amazon 50 % of the proposed amount is $ 1 billion max . Chicken feed for a company valued at $ 1 Trillion . As far as GM is concerned ,they are in an existential crisis with the current strike . You can forget them . Nothing is going to happen . Talk is cheap .Yes they say they are going to use a new technology using Sodium and not Lithium . They intend to get the sodium by electrolysis of sea water . Good luck with that . Remember the hydrogen story several years ago ,same stuff . Too high energy intensive and too high cost . They will break the NACL in water to form NA and CL ,but what are they going to with the chlorine ? Maybe give it to the swimming pools or just let people choke on it . They have till this date not a prototype or a patent on this tech . If it was so good ,Mr Musk would be standing at the doorsteps . He has the demand and the money .
Check out the past of the guy at the top . Indicted for fraud in CA and then purchased a dead factory of Mitsubishi in Detroit to get help from the city .
I have an opinion why this was done . Bezos wants to come across as a greenie because he thinks that a Dem is going to be the next president . Of course it is well known that WaPo is anti Trump but why not buttress your credentials before the new boss comes in , then you can milk more from the ^ New Green Deal ^ . Like I said it is my opinion .
P.S : Hickory ,you want to invest in Revian then you might as well buy Tesla ,Uber, We Work ,Lyft .You can sure make a ton 🙂
Songster : They have a target date for 2022 to get the first pieces out . Stop smoking Hopium . I have visited the place where it is to be assembled several years ago in Bangalore when another company was experimenting with electric cars . Car assembly is a complex project and Mr Musk with all his resources has failed at it , how do you expect this piece of chicken s””” to succeed is beyond comprehension .
hole in head- try cork to keep the grey stuff in.
anyway, we’ll see.
lets talk on again in seven yrs, see where things stand
best luck
Hi Hole in Head,
A few things, Rivian has a 500 million investment from Ford, not GM. And Ford will build at least one Ford vehicle on a Rivian chassis. Amazon has a 700 million dollar investment in Rivian and now has ordered 100K of their vehicles. It don’t know why you think it is relevant the investment is a minor part of Amazon’s net worth. Cox Automotive also has a 350 million dollar investment in Rivian.
I can’t find any criminal/fraud issues with their founder and CEO R.J. Scaringe. But I haven’t dug too deeply on that. Perhaps you have links?
They are field testing theirs vehicles as we speak and I see no delays that make me think they are going to miss their 2020 announced production date. Certainly not 2022.
As to batteries, I don’t know where you are finding they will launch with anything other than lithium batteries. Of course, everyone is working on finding better battery chemistries, but again maybe you could give me a link about what you are saying.
As to Elon Musk failing at building EV’s….well no that isn’t even remotely true. I won’t bother going into it with you. Losing money while building the necessary infrastructure is not surprising Regardless, I believe that if you look into Rivian you will find a company that looks like it will be a fierce competitor in the EV space.
Sorry to upset you, but ICE is dead. Have you not noticed that every vehicle manufacturer is going EV? Some are going slower than others…but they are all going that way.
They may not save the planet, but they are a damn site more fun to drive, cheaper to operate, and eventually cheaper to build.
Ok. Closed out the 2021 options of $9 grand for a net $200 loss. But, I’m not finished yet. Will be eyeing 2022, when they pop up.
You will have to hit the “translate” button to translate from Russian to English.
Big Snip.
Officially, the so-called “proven” oil reserves in Saudi Arabia are 268 billion barrels. But this is on paper. On paper, this oil is distributed over more than a hundred fields, but in reality 90% of the oil located in Saudi Arabia is extracted from only 5 fields, and 60% is produced at the only super-rich Gavar field. All the rest is painted bullshit (insignificant oil inclusions, on which the “reserves” are overestimated by orders of magnitude).
As a result of the so-called “Leak of Diplomatic Telegrams” in 2011, it turned out that Saddad al-Husseini, a former vice president of Saudi Aramco, had warned the United States that Saudi oil reserves could be 40% lower than declared. And this is just a miserable piece of truth – in reality the situation is much worse. Therefore, generally speaking, it is possible that the Saudi plant blew themselves up by the Saudis.
I’ll tell you more – it’s as if this scheme of actions of the Saudis was described by an American oilman who began to write books in the genre of alternative fiction. As you can see, everything comes true.
Thanks for the link Ron.
For those interested, this guy is tweeting pics and info about KSA air defense near Abquaq.
That’s why I said above to GuyM:
“We have too little information about what really happened, and who was responsible for what, to extract any conclusion.”
There is very little information that can be trusted related to oil, and once we get into Peak Oil even less. What we do know is that we shouldn’t trust any information coming from a government, any government. They are the biggest producers of fake news, continuously and without remorse.
“The Saudis could have done it themselves.”
So I guess you were very hungry for conspiracy theory after all.
My suspicion is that if KSA did it themselves then they’d make the approach look more like it was from the east north east, as that’s where Iran kinda is from them.
It’s worth noting that drones and cruise missiles can be programmed to fly circuitous routes- i.e. a drone fired from the south, in Yemen, can do a buttonhook to the left and come in from the north west for its final approach. Typically this is done to evade detection and interception once the defensive radars are mapped.
Well, well, well …
I think the theories are flawed by the fact that the biggest enemy of the saudis, Houthi military leader claimed the attacks by themselves shortly after, even stating the number of drones which were used – also the Iran does not blame the Saudis or US … because they heavily try to sell the more plausible Houthi story (with absolutely NO involment of Iran, of course 😉 …
So the Saudis US was it by themselves – it’s in the same category of theories, like Saddam, Osama and even the IS – all were CIA agents.
A good (russian -sic! ) writer could spin any good looking story with some know rumors/facts – just like he maybe can write a good episode of Game of Thrones, but it may never have happend …
I am disappointed in your reply Hickory. I expected better.
And, what difference does it make to BS prices ? 2018 peak vs 2025 peak what the hell is the big diff? It’s over, done with. Prices should be though the roof. But, we are basically idiots. By 2025, the demand should be 6m higher, so how the hell or we going to cover it? It ain’t there. We are done. Though, 200 from being profitable, this stuff is getting interesting.
I don’t mind conspiracy theories, as long as there not stupid. You ever meet a bipartisan conspiracy theorist; a Birther and a Truther all in one? It’ll blow your mind!
People with power and wealth have always gotten together and conspired re: wanting to have more of it. Also consider that every nation in the world has a foreign intelligence service, which is for the most part all just basically behaving like organized crime, i.e. Epstein- seriously, 2 years of #metoo and 3 years off Russian peepee tape kompramat ops, and America lets Epstein’s “gal pal” et al skate like its a joke. I call it the Late Capitalism of Mossad’s Pedophilic Honeytraps, but I digress.
Personally I don’t see KSA needing to go as far as blowing up valuable oil producing kit to frame Iran, unless they’re doing it to hide decreased production. They’d just blow up a hotel or something if KSA wants to frame Iran. FWIW I think Houthis did it with cruise missiles and drones that Iran flies in from boats and Hezbollah helps them assemble. Houthis have been attacking KSA radar with drones and firing scuds for years. The Houthis claimed responsibility and thanked people inside KSA for helping them. Prob some kinda signals recon mapped the radar sites (it’s not hard, they emit) and the Houthis got around it with a flight pattern. Perhaps also the targets were lit up with laser designators by peeps on the ground, and the drones had an appropriate terminal guidance feature. That would help explain the outstanding precision.
“Personally I don’t see KSA needing to go as far as blowing up valuable oil producing kit to frame Iran, unless they’re doing it to hide decreased production. “
If the information in the article that Ron posted is true, the oil that comes from the wells there is not so valuable anymore, because it’s more sand and water than oil. After separating the oil from the water and sand still you get valuable oil of course, but if the problems there really started in 2004 already…
Interesting way to start a decommission job lol
I recall reading, maybe 10 or so yrs ago, that in Ghawar they were pumping 6.9 Mb/d of water into it and were recovering 4.6 Mb/d of oil.
Well, I apologize Ron.
Felt the attack earlier was unwarranted, and my vindictive self surfaced. I’ll stuff it back in the box as best I can.
Apologies accepted. I believe the jury is still out. I am not convinced it was a conspiracy by the Saudis, but I will accept it is a possibility.
This article states that Saudi oil production peaked in 2004, and today they’re mostly producing a gooey mixture of water, oil, and sand, which is separated at the Abqaiq plant. Is this is reality …..
Well, remember the posts on theoildrum on how the sophisticated (also in the meaning of ‘unnatural’) EOR methods deplete oil reserves faster than they normally would deplete, so nobody who have read regularly on theoildrum should be too surprised when one day oilproduction of giant and supergiant oil fields starts dropping like a rock.
But USA plays offense, primarily. Their defense tech is not so good.
And missile tech and cheap but sophisticated drone tech spreading all around the region requires defense over anything else.
Russian S300 and S400 seem the best defensive complex – honed by western engineered sophisticated small drones provided to terrorists in Syria to attack the Russian airbase. (A HUGE mistake by the West – placing this cheap tech in the hand of terrorists who will flee Syria into Europe as North west Syria is finally liberated. Unbelievable risk to Europe – and I suppose even USA homeland security).
Syria has the S300, Iran too (plus numerous home grown ‘versions’, some of which might be sold to Syria for defence, Turkey just acquired the S400. And Houthis, of course.
Russia semi-jokingly recommended Saudi acquire the S300 or S400 in light of the Houthi attack, because, again, these are defense configured systems, and now it is all about missiles and drones.
The Russian point is that once all Gulf countries have effective missile defense systems it is stalemate in the Gulf. No Gulf country can do anything to another, and Israel and USA missile and air attacks are stymied.
(The S400, at least, is said to ‘see’ F35.)
Russia is also promoting a UN sponsored Gulf peace treaty between ALL Gulf countries, no exceptions.
If it is taken up, peace will descend on the region – so long as USA gives up on its attempts to block all Iranian oil exports.Why? Because Iran has maintained consistently that if it cannot export oil, no one else in the Gulf will be allowed to. And if Gulf exports are prevented, the consequences for Western economy (and 2020 election) are obvious.
So I see peace breaking out, and USA Congress coming to its senses.
Then maybe issues of oil supply will start to become clearer as due diligence on the 400 billion Aramco float proceeds.
The twitter stuff above is mildly interesting and conclusions are mostly incorrect.
Here’s how that world works. Radar looks for an RCS (radar cross sectional area) and the radar pulses return from an RCS, if sufficient in magnitude, to the transmitter/receiver antenna and the processing will display it. You then have a problem with illumination. If a defensive missile is fired at an incoming target, the missile seeker will be either infrared or radar, and if it’s radar then you need to dwell the transmitting antenna on the target so there is something for the seeker to see. Track-while-scan is the norm for modern stuff, but it’s hard to be modern if missiles are from other sources than the radar. They may not be looking for the right frequency within the PRF of the radar transmitting.
Largely gobbledygook for . . . defensive radar at the site is going to have a lot of problem with the RCS of wingspans of only 20 feet and radar tracking seekers on the defensive missile itself will have even more of a problem. The ground antenna can be much larger than one in the nose of a missile. Radar controlled guns, okie doke, but the targets are very low and moderately fast so the slew rate on the gun gimbals is going to be challenged or overwhelmed. They are for higher up targets, which challenge the gimbals far less. Oh and those track-while-scan features . . . that’s what you need to find multiple targets and lock onto them for defensive fire, one by one. Operative phrase one by one, which is rather hard if the attacker routed the vehicles for time-on-target simultaneous arrival.
You can attack anywhere like this. From hundreds of miles away. The Saudis need to find a way to accept overtures to the Iranians from the President, and the war mongers in Congress, ditto.
Just some things are not adding up .
Total Saudi production 9.7 million
Production now offline 5.7 million
Balance available 4.0 million
Local consumption 2.5 million
Available for Export 1.5 million
The Saudi’s have reserve of 75 million which is 15 days total coverage @5 million barrels per day . Actually 12 days considering they are not going to absolutely dry . The amount offline is between 15-18% of the total world exports . The question I beg is (the same as GUY M) why have prices not sky rocketed ? What are the traders thinking ?
The attack happened on 14th Saturday and the Saudi^s announced that they would have 1/3 production
moving by Tuesday . How did they make the statement when fires were still in the complex ?
Now they say they will be fully operational by the end of the month . The holes in the tanks ? How big are they ? Definitely not pinholes . As big as manhole covers or even bigger ?If yes then what are they going to do about this ?Put a patch ? I am not an engineer ,but will a patch work if these are pressure tanks ? In case they have to replace them then are they an ^off the shelf^ item ? I don’t think so . What other equipment was damaged which is special ^one off^ and is not ^off the shelf ^ item ?
In my opinion the facility is going to take a long time to come back online . In such a scenario the Saudi^s can pump oil but cannot process it and so cannot export it . Will they sell some securities or treasuries from the SWF to meet the shortage ? Too much muddy water ,perhaps some can make it clearer .
Agee on one point, the story does not add up. The damage was not as severe as indicated from the photos, SA is bluffing or underestimating the repairs that need to be done – it should take a lot longer to restore the processing facility.
However, before the attack they pumped slightly less than 10mmbd but claimed they had capacity to produce close to 12.5, i.e. they could have had about 2.5MMpd excess production capacity of which some was not affected. Excess capacity at the Abqaiq processing facility could be higher than this.
Concerning the stocks, where do you get the 75mb figure from? From the top of my head, they claim approx. 180mb in stocks (JODI-data) and satellite data confirms about half of this.
75 mb data . I read it on another forum or website . Of course this is from memory and I could be wrong , but even if it was more it would give them another 10/12 days . So max out practically would be 20 days . And then ? But I am still looking for the answer on why the price did not spike higher . Even today when their are reports that KSA will import diesel and jet fuel no uptick . Further as I said we do not know how long will this last . The SWF is about $ 320 billion . They are loosing 6mx$60= $ 360 m per day(let us say $350m for ease in calculation) in revenue . So even at the best they could last another 60 days with the liquidation of the fund presuming they will not go to zero and stop at 80% which is $250 billion . And then ?
Mr. President Donald have assured there will be enough oil unthil the dammages is repaired. Oil will flow from US strategical reserves…
I was going to ask a question but you jumped me . My question is ^The US SPR is available to the world market or only for the US market ^ . Who decides ? After all the military is the biggest consumer , do they have a say ?
The US SPR belongs to the US Government. The US does not trade oil on the world market, only oil companies do. Oil from the SPR is sold to oil companies to do the refining. They then sell it to the military or the US public. Where else they might sell it, I have no idea.
“The crisis is over and we are back to waiting for the next round. A few days or weeks from now we will see another round of attacks on oil assets on the western side of the Persian Gulf. Iran, with the help of its friends, can play this game again and again and it will do so until the U.S. gives up and lifts the sanctions against that country.
The Houthi will continue to attack the Saudis until they end their war on Yemen and pay reparations.”
We shall see—–
“They informed us (of the delay) but every day it’s revised,” he said.
“I’m afraid the situation is more serious than we assumed but still information is limited.”
No worries … 99% will be back on -line by noon Tuesday ;).
“Saudi always destocks oil in July and August. So the current inventory level would be around 170 million to 175 million barrels,” the analyst said.
“This could last 25 days in theory. In practice, it may be even less.”
Saw this fairly detailed article on the Aramco drone attack, and thought I’d post it down here, since there are multiple speculative threads up above. It leans towards Watcher’s argument.
This article is particularly interesting because it has a closeup of the hole in one of the spherical LNG tanks. The caption reads “The damage inflicted by the Iranian suicide drone on the LNG tank indicates a small warhead and low speed.”
That had been my suspicion when I saw the holes. My thought is that they were short range vehicles (probably multi-rotor helicopters) launched within 5 or 10 miles of the plant…I don’t know how difficult that is tactically, though.
And…you would get the same deformation if you duct-taped an explosive charge to the tank and set it off with a detonator.
FYI: Recovered materials of the weapons used were of NATO orig, not Iran. Perhaps Iran or the houthis stole them. The NATO weapons had a max range of about 350 miles so investigates speculate they were launched from Iraq. There was no radar tracking data to determine where they were launch from.Its possible these were transported by truck, close to the target. Much of KSA is just endless desert that is complete unpopulated by anyone. Someone would need within visual sight to the target in order for any reasonable precision and the images appear that the weapons were precision hits.
That said, I have my doubts that Iran attacked KSA. They have little to gain & a lot to lose since it provides the excuse for the US to go to war with Iran.
Anybody know if storage is pre or post processing?
I think it should be post processing because storing unprocessed crude with all the H2S and other gases would be dangerous . Just some raw wisdom or linear thinking ,but not very sure . Could be wrong .If it is pre processing then Mbs goose is cooked .
Storage is unrefined crude oil. The water and sand are removed immedialy after it is pumped from the ground. Some gasses are removed immediately because they bubble out. Others are removed in the GOSP. If storage is something else, NGLs for instance, that is specified. Otherwise, it is crude.
Note: I an not an oilman. My opinion is just from many years of reading and observation. So if anyone sees an error in my opinion, please correct me.
I gotta hunt down similar questions for the US SPR.
You could not really read news nowadays and get the whole picture. I am very much anti-Trump, as were 90% of the European population before he was voted in. And so biased in that regard. But he started it with lies and backstabbing being the standard. And with arabs and their history; this is what they are used to too. So in the oil market we get a spider web of lies and nobody really can do much more than to speculate. Who is behind the attacks in SA? The Saudis themselves or the pressured Iranians most likely. Who knows? (and the ones who know are not writing anything on this blog). The Houthis in the Yemen are paid actors the way I see it.
So OPEC with Saudi Arabia in the spearhead are reducing production/exports (is that the same thing?). Shale oil is approaching its limitation with regards to productivity, which is not really a surprise either. And then there is no plan I suppose.
We are obviously approaching the economically comfortable peak oil and the failure to appreciate this and not work to enhance further goals is dysfunctional. With regards to offshore Johan Sverdrup, Egina (Nigeria) and the new Guyana fields are enough to keep the steem going, not upwards but mitigating declines, for 5-10 years going forward offshore. Add to that, what intensity the Brazilians bother to bring to the table in this low oil price environment. And then no more due to lack of investments. Same story with shale oil I guess. If not to embrace it, a big crisis, a shift of leadership, and then back to reality would lie ahead IMHO.
https://rigcount.bhge.com/na-rig-count
Seems active riggs in US continue to decline. Thonk the montlies from EIA will show higher decline in July than the 32000 bpd decline in June.
Guess now there is enough pipeline capacity…
The US oil and gas rig count fell again, decreasing by 18 for the week, according to Baker Hughes, but US oil companies are still pumping oil at record rates.
The total oil and gas rig count now stands at 868, or 185 down from this time last year.
The total number of active oil rigs in the United States decreased by 14 according to the report, reaching 719. The number of active gas rigs decreased by 5 to reach 148.
Oil rigs have seen a loss of 147 rigs year on year, with gas rigs down 38 since this time last year, compared to 858 and 187 active rigs, respectively, at the beginning of the year.
Still, in the United States, weekly oil production is still near an all-time high. So while the number of oil rigs have declined by 158 this year alone, production has grown from 11.7 million bpd at the beginning of the year, to 12.4 million bpd for week ending September 13.
Oil prices were trading slightly up on Friday ahead of the data, with the huge spikes seen earlier in the week in the wake of the attacks on Aramco’s infrastructure now somewhat subdued.
Ron:
In support of your argument that global oil production has peaked, we now have confirmation from the WSJ today:
“We’re getting closer to peak (US shale) production and we are reaching the peak of the general physics of these wells,” said James West, a managing director at Investment bank Evercore ISI.”
US shale is peaking. Global oil production already peaked:
Tanker trackers have been following Iran’s oil in ADRIAN DARYA 1 (ex GRACE 1). It’s now sitting offshore Tartous (Russian naval base) in Syria.
https://twitter.com/TankerTrackers/
My latest research, using BP Statistical Review:
10/9/2019
Peak oil in Asia: where will the oil come from for the Asian Century?
http://crudeoilpeak.info/peak-oil-in-asia-where-will-the-oil-come-from-for-the-asian-century
Curious situation in Nigeria. Little bit surprising uptick that’s lasted somewhat long. Have to look into it.
From the previous thread, the Bazhenov shale in Russia was addressed here years ago. The geology is a problem. The rock is pliable. It may bend under pressure rather than fracture.
Nigeria: this may relate to the Akpo and Egina fields, with their super large FPSOs. Preowei to follow at a later date.
Who said they don’t ring a bell at the top …
https://oilprice.com/Energy/Energy-General/Rystad-US-Shale-Production-To-Peak-At-145-Million-Bpd.html
That must be good shit they are smokin at Rystad.
Ok, after an attitude adjustment, I created the following high oil price Permian scenario.
Note this is only believable when the appropriate dose has been consumed. 🙂
Just trying to get something similar to Rystad, though I think their peak is about 8 Mb/d for the Permian. The URR for this scenario is 72 Gb, at least 26 Gb higher than is reasonable in my view.
Correction, Rystad is forecasting 10 Mb/d for Permian output in 2030. I’ll need higher a higher dosage to get there. My scenario assumes average well productivity in the Permian basin remains the same from 2018 to April 2023 and then begins to decline. It is possible that Rystad thinks this will never occur, or not until 2030.
There is already evidence that well productivity is declining when normalized for lateral length at about 5 to 6% per year based on data at shale profile. Average well productivity has only remained flat from 2016 to 2018 because average lateral length has been increasing at 500 feet per year.
For this reason my scenario is already optimistic because I have not factored in this decreasing average well productivity (at any assumed fixed lateral length).
An even more aggressive Permian scenario with completion rate rising to 929 completions per month by 2028 (from a recent high of about 500) and then with completion rate falling from 929 in 2032 to zero in 2037. URR is 62 Gb. This does not seem realistic to me, but with higher oil prices might be possible.
Dennis, I would love if you could “freeze” 1-2 of your models of your own choice (eg. Base case and optimistic), and also insert Rystad’s predictions in the same graph + the real production and then recall the graphs say once a year for comparison.
Tom,
I don’t have access to Rystad’s model, it has peak Permian output of 10 Mb/d in 2030. It also has Permian output of 8 Mb/d in 2040. I like to tweek my models as I get better information.
Scenarios below use AEO reference oil price scenario and the F95, mean and F5 USGS TRR estimates for the low, medium, and high ERR scenarios respectively. I did these scenarios in Dec 2018, they have been modified over time as I have gotten better well profile data and in response to criticism. F95 means there is a 95% probability that the TRR will be more than 43 Gb, and F5 means there is a 5% probability that the TRR will be more than 113 Gb, the mean case has a TRR of 74 Gb. The ERR is always less than or equal to the TRR, for the AEO reference case and the economic assumptions I used the low ERR is 35 Gb, the medium ERR is 60 Gb and the high ERR case is 98 Gb. There is about a 90% probability the Permian will fall between the low and high cases shown in the chat below.
Rystad seems to be using the USGS F5 case for their base case.
There is a bell at the top – at least the bell for productivity per well:
https://shaleprofile.com/2019/09/10/us-update-through-may-2019/
This year is the first where well quality is not rising. If they can’t counter this, even more drilling will be needed soon for the same result. Or as discussed before, much more acres / well, speeding up the depletion of tier A acreage.
Red queen on speed soon.
Great article by Scott Lapierre that Mike Shellman posted a link to at shaleprofile.com.
https://www.linkedin.com/pulse/nature-character-widespread-oil-production-shortfalls-scott-lapierre/?trackingId=sEyIdyUMR7mqgGM7Vxg1%2Fg%3D%3D
Thank you Mr. Shellman.
There are now a trend where investors , fonds sees increased risk related to climate change. Equinor have desided to invest huge amoubt in offshore wind farms, deposit wells offshore to store CO2. Shale play together with oil sands are known for the wurst climate emissions. I dont think this trend that will only continue to grow will make it easier to fund a new depth growth in US shale production..
https://www.bloomberg.com/news/articles/2019-09-12/bp-ceo-says-he-ll-sell-oil-projects-to-meet-climate-targets
The average 2017 Permian basin well looks like the chart below. I use a hyperbolic fitted to first 21 months of data for wells with first flow in 2017.
When the annual decline rate reaches 15% per year I assume a terminal exponential decline rate of 15% EUR is 380 kb with an assumed oil price of $85/b at wellhead at the end of the well’s life at 5 b/d at 233 months after first flow. Gas output for the average 2017 well is 295 kboe over the life of the well with these assumptions, total output in barrels of oil equivalent is 675 kboe for combined oil and gas. Only the oil curve is shown in chart below, the gas is modelled separately.
Dennis,
I’m a novice at understanding this, but is seems like Scott Lapierre made a (seemingly) shocking analysis that states total recoverable oil from US shale is less than 50 percent (!) of what we were led to believe by analysts and oil companies. In addition, you knew this and had already incorporated the data in your model(s). In general, is that correct? Thanks, Doug
Doug,
Opinions differ on this point. I have tried to incorporate Lapierre’s analysis. I believe Enno Peters thinks my 15% terminal decline assumption is too optimistic, he thinks it is at least 20%. I used to use a 10% terminal decline and the 15% choice was a compromise between 10% and 20%.
Mike Shellman often points out, correctly in my view, that we do not know what the future output of these wells will be.
Also there is not a single well profile, there are thousands of wells and each is unique. When I have fit various well profiles, the fit has been good, typically we do not have more than 72 months of data so beyond that it is guesswork.
Dennis said:
But not truly statistically unique, although the statistical parameters such as mean, decline exponent, etc will gradually change over time.
Paul,
Not sure if I agree, the model is merely an approximation of well output, each well profile is likely to be unique, in a statistical sense perhaps this is not the case.
The main point is my models typically represent a 1000 or more(N) different wells (each of which might be modelled with a different Q nought, D nought and b exponent, if using an Arps hyperbolic) by taking the average of those N wells and fitting a hyperbolic to that average. It works well enough, but the tail behavior in the real world may not be well represented.
Dennis, I am agreeing with what you say and was hoping you would clarify your words concerning uniqueness, which is what you did.
Agree also that the tail behavior is one of the factors that is most difficult to model, in that a business decision to shut-in the flow impacts the physical model of the potential remaining flow.
I think I was simply unclear on the meaning of statistically unique.
I note in the comments to the Lapierre article that one has called the public well production data “garbage.”
Seems like there is always someone screaming fake news these days.
If you don’t like the production data, just make up your own. Clearly the E & P’s producing shale have done that for more than a decade with zero ramifications to date.
I like Brooker’s comment, “Where are all the 800,000 BO Eagle Ford wells?”
The there is little difference between the Permian initial expectations and the Eagle Ford and Bakken. In the EF and Bakken, it’s been the adjustments to account for the sweet spots being different than the rest of the formation. Plus expected EUR was way off. The same is proving true with the Permian, with an added factor. Moving oil and gas. They have to adjust to that by increasing well spacing. My guess that it won’t improve, but get worse. Especially, when they have to adjust to the not so sweet spots. As, I understand it, those little molecules like to stick together, and they can travel further and faster in the Permian, than say the EF. While it is more permeable than the EF, it is still not conducive to water. Still, a shale. Ok, that’s a non-technical analysis, because I don’t know shit from shinola about geology.
Shallow
Interesting that you comment on that as I just skimmed through Lapierre’s article and was mulling over responding.
To the point …
If people use Enno’s data – unless it has changed – what is put forth is publicly accessible production figures as compiled on a monthly/quarterly basis.
That is to say, in the month of March, say, well # xyz in the Bakken produced 500 barrels.
Was the well online 5 days? 15? 31?
Knowing the online history is crucial if one is to extrapolate future potentialities.
This was the cause of the blow up between Filoon and Enno a few years back.
I do not know if or how the actual days per month online situation is handled by shaleprofile … but it is most definitely a crucial metric.
Coffeeguyzz,
Anyone can look up that data for individual wells. The interesting thing with shaleprofile is that it aggregates the data so that statistically you get a pretty good picture. For a collection of 1000 or 5000 wells, the exact starting date or number of days online, washes out. This is pretty basic statistics.
Using the well profiles and completion rates can be used for a basic model as in chart below. Seems to work well. Correlation coefficient is 0.999644 for monthly data from Jan 2010 to July 2019.
Dennis.
I do not know how the professionals would account for days wherein wells are shut in because a neighboring well is being fracked.
However, I do recall a lot of discussion in the past about a “halo” effect, where neighboring wells receive a temporary boost in production due to frac hits.
Also, I do have experience with low volume wells being shut in and then returned to production. Almost always a low volume well that pumps 24/7/365 will see a bump in production after being shut in.
We just reactivated a well that had been shut in for about a month because the pumping unit needed a new gear box. The well produces 3/4 barrel per day. The well produced 9 barrels the first day and then tapered off over the week, eventually settling at the 3/4 average again. It made up over half of the 20 some barrels lost while it was shut in.
We observe the same with other low volume wells when we have to shut them in due to cold weather. They don’t make up all that was lost, but usually more than half.
Also, as Mike has mentioned, most of the older shale wells pump part time because they produce such low fluid levels that they pump off. The shale wells are equipped with tech that shuts them off automatically.
We have wells that we run part time also, but given the small nature of our production, we determine how many hours per day they should pump by trial and error, and then equip with a time clock.
We have one well we manually pump every other day. The pumper shuts it off one morning and turns it back on the next. We bought it in 2004. That is the way the previous owner operated it so we went with that.
We have another well that pumps for one hour, four times a day. It is equipped with a time clock that starts and stops it. We sell 270 +/- barrels per year from that well. We have owned it since 2003. It has been pulled once. It makes one 70 barrel tank of water a year and the electricity to run it is less than $50 per month as it pumps at just 4 strokes per minute. It is our “Saudi Arabia PXD” well. Wish they were all so easy, I wouldn’t worry much about the oil price then.
On our “Saudi Arabia PXD” well, should we adjust for downtime? Same with the one every other day? I can’t multiply by 6 or 2 to obtain EUR for those.
I am not a proponent of adjusting for downtime without being sure the adjustment factor is accurate.
Gutting an energy ‘induced’ well, without regard for pressure maintenance, only for the sake of cash flow, is one of the stupidest things the LTO industry does in a long list of stupid things. Shutting wells in to facilitate the frac’ing of another nearby child well is fraught with risks regarding overburden closure, etc. and is another stupid thing the shale oil industry does. What is the net gain from any sort “halo” thing? Not much, if any. Risk that and its worse. None of this Coffee bullshit has anything whatsoever to do with Lapierre’s effort to explain how rising GOR appears to correlate to abrupt downturns in decline. What we’re trying to find out is why EEUR’s (estimated exaggerated ultimate recovery) are falling significantly short of anticipations. Down days are meaningless in the big picture. So is EOR; that costs more money and in spite of all the dung heap about EOR, nobody has yet proven it will be economical.
If assets are grossly exaggerated how “liquid” are these companies, really? How many of them are basically underwater with lenders and insolvent, even the best ones?
The real issue, however, is what EEUR’s do to PDP, PUD and TRR resource estimates based on type curves and drillable locations per square mile, as the USGS, and others, like to do to make America feel comfortable, and secure, about their long term hydrocarbon future. My personal beef with EEUR’s is how adversely they appear to be influencing current energy policies.
Mr. Shellman,
Wondering if the EUR for the well profile below looks like an EEUR. Data for the average 2016 Permian basin well from shaleprofile.com.
I assume terminal decline is 15% starting at month 70, with an Arps Hyperbolic used from month 31 to 69 and actual data used from month 1 to month 30. I assume shut in occurs when the output of the well falls to 8 b/d or less (depends on price which is not known). Thanks in advance for any comments on obvious errors.
Sorry for small chart, click on chart for larger view.
shallow sand and Mike shellman,
The well profile for the 2016 Permian well has a cumulative output of 220 kb0 at 36 months 247 kbo at 48 months and 269 kb at 60 months, at 70 months terminal decline at an annual rate of 15% per year starts at cumulative output of 284 kbo and daily output of 47 bo/d. At 15 b/d (at 154 months from first flow) cumulative output is 356 kb0, and at 10 b/d cumulative output is 367 kbo (at 184 months), at 8 bo/d cumulative output is 372 kb0.
Does this estimate seem exaggerated?
shallow sand,
The key metric is output per month, regardless of how many days or hours (or minutes 🙂 ) an individual well is pumping.
What I am interested in is the average monthly output of all wells that started producing in 2010, 2011, … , 2016, 2017, … When we are talking about 1000 to 3000 wells that might stat producing in any given year, the details of how many seconds a given well has been online is of little significance. The basic method, which I first saw at the Oil Drum many years ago (and later found that the method had been used by others such as Paul Pukite and James Mason and others who prefer not to be named.)
A blog post by me from 2012 is linked below
https://oilpeakclimate.blogspot.com/2012/10/using-dispersive-diffusion-model-for.html
Coffee.
I wonder if comparing vertical Spraberry wells to horizontal ones after year 5 might be worthwhile?
I had a couple posts Nony responded to on SA recently.
I guessed that PXD’s current hz wells would in aggregate average around 10 BOPD each in 2029.
Somewhat WAG by me, made in part by looking at the almost 6,000 vertical Spraberry wells PXD operates.
Shallow
I have no idea about that, but the hugely heterogeneous nature of this unconventional stuff has been stated over and over again by industry professionals doing the actual work going back to the early Bakken/Eagle Ford days of 2011/2012.
The degree of natural permeability in the formation seems to play a big role in production in all sorts of ways.
Historically, high permeability allows hydrocarbon flow to the wellbore (duh).
But, when completions strive to maintain 2,000 + psi expanding pressure bubbles underground, the inherent permeability inhibits that pressure build up. (Too much breakthrough).
This is why what is going on in the Bakken these past 2 years may be so significant.
Operators are making big advances in completions.
The Permian, with its vast size, multiple horizons, relatively recent (compared to Bakken/EF) completion history may not have effectively cracked the code in optimal fracturing.
I do not know as I do not closely track Texas activities.
And the operators are fairly close mouthed about latest techniques.
Bakken: A little bit improvement of well quality last year, no significant this year when you look at Ennos site.
Perhaps they are improving, but the rock is getting worse, so it evens out.
Oh, and EOG isn’t improving, too.
Their best year was 2017, regarding to well quality.
Eulenspeigel
(and shallow, Dennis, anyone using shaleprofile data …)
Your comment about EOG’s 2017 output prompted me to start some digging. (This could be HIGHLY informative to people who use Enno’s calendar based production numbers versus ONLINE days of production for projections/depictions of just how these wells are doing).
Using the “quarterly” metric for 2017 EOG wells, there is only one well from 3rd quarter (skinny pink line).
Last point shows 54 bbld.
Using NDIC publicly accessible data, this well would be the Round Prairie 27-1523H, File #33705, API #33-105-04468.
This well was only online for 22 days in June versus 31 days in May.
Hence, the dramatic, OMG dropoff line on the chart.
Wanna see something – ahead of time – that should be even MORE OMG next shaleprofile presentation?
July’s numbers are actually already published for subscribers.
July output for this well is only 870 barrels (versus the 1,652 barrels for June).
More hand wringing, the shalesters are doomed hyperbole?
Not when you see that this well was ONLINE for only 11 days in July.
Again, the data that Enno produces can be exceptionally informative for a whole array of reasons.
I refer to it all the time.
Absence of context, however, (MOST crucially the fact that well production is NOT depicted on an online basis) can be fertile grounds for wildly skewed projections.
This particular EOG well has May/June/July monthly production of 3,530/1,652/870 produced barrels while being online 31/22/11 days respectively.
Coffee.
So it is either being pumped part time due to low volume, or there is a down hole failure. Or there was a nearby frac.
Look at Parshall. Tons of wells either less than full month on. Many shut in.
To me, that isn’t good. Parshall is believed to be the best of the best in the Bakken and it’s already played out absent some EOR breakthrough.
Parshall is barely 10 years old.
Shallow, you know this:
All operators with an inventory of producing wells, big or small, will typically have 10-12% of its well inventory down during a given month awaiting intervention or surface repair. The reasons can be parted rods to rat’s eating up the wiring in an electric motor, bearings going out in a unit, to being behind with WO rigs and lease crews; whatever.
As induced energy dissipates from a frac’ed well and gas expansion, or in the case of Lapierre’s theory, oil expansion, poops out many, many wells go on pump off controls to ensure the down hole pump intake is below fluid. That’s the nature of the well. Wishing to remove it from a data set, as though it does not represent a well in a sweet spot, county or basin…is sort of stupid. Operators don’t do that.
Shutting a well in during a proximity based frac is stupid also; I make no comment on that other that to say if an operator is having to do that he needs to drop what else is going on and upspace immediately. You point out if the halo bullshit is right, which its not; what’s the difference? It all comes out in the wash.
None of Coffee’s bullshit has anything to do with Lapierre’s theories regarding the role GOR and bubble point might have in flow regimes over a well life. What we’re looking at are wells that have already been thru DCA using really bad methodology that are now not living up to the hype. I don’t give a rats ass about one well on one unit in one county; do you? I’m worried about whether this entire shale oil phenomena is going to get us home or not. Exaggerated EUR’s is a really bad, serious issue.
I think Coffee is trying to prove he and/or his buddy (the fella with the health care background) is right, that we can’t use Enno’s data correctly without asterisks, and all this overwhelming data coming forth about exaggerated EUR’s, accelerating declines, terminal declines once a well approaches 40 BOPD, etc. is a bunch of crap…the American shale oil industry is doing fine. I’d bring up failed economics and financial demise but that never meant anything to Coffee anyway.
People can decide for themselves if the shale oil industry is doing fine. Personally, I think now it’s falling apart at the seams. Some of knew 6-7 years ago none of it was sewn together very well anyway, yourself included.
Shallow/Mr. Roughneck
If you spend about 3 or 4 minutes looking at the actual wells in the Parshall field on the ND DMR Gis map, you can readily see that there is quite a bit of room to put way more wells in this area, even taking into account that the Nesson anticline tapers off sharply to the east with virtually no hydrocarbons present.
The Sanish and Alger fields just to the west offer a comparison for even higher density drilling.
This does not take into account the fact that the lower benches of the Three Forks have been minimally developed in this area.
Regarding the single well that I profiled in my above comment, it would be easy and quick to figure the entire 27 well cohort from 1st qtr 2017 from EOG if one could identify those wells. (Dennis?)
Thinking that these 27 wells – 28 months average production history – are currently producing at a rate of 37 barrels per day is, frankly, preposterous.
Calendar month, sure, if Enno’s data shows that, I would believe it.
Calculated by actual days online?
Way higher.
Simply scanning the production history from the NDIC would provide the days online data from each well.
I will re-subscribe to the basic service next week, but there is NO way I will go over the 300 page monthly reports to identify new wells.
Someone steer me to those 27 API #s or File #s and we could get a much broader scope of wells in this context.
To me, this is not in any way shortchanging Enno’s work.
Rather, putting a specific perspective (calendar versus days online) might prompt a different (more accurate?) view of these wells’ potential.
Regarding shutting wells in when nearby fracturing is occurring, that has been standard operating procedure for years.
In fact, minimizing the offset wells’ downtime is one of the big issues Toby Rice had with EQT in efforts to limit production curtailment.
Mike.
There is no point in discussing this further here. I am sure you agree.
Shallow, I do agree, and I am done.
Coffeeguyzz,
What matters is output per month, regardless of days online. Nobody cares about individual well results except the land owner collecting royalties. Days online is just not an important metric, especially when we are looking at 100s or 1000s of wells.
Enno Peters data at shaleprofile.com is impeccable.
shallow sands and Mr. Shellman are correct as usual.
Dennis
No, you are not only clearly 1,000% wrong, you MUST KNOW you are wrong.
This entire narrative of “poorly” producing wells is grounded in the misperception of what these wells are capable of putting out.
YOU may claim till the cows come home that “days online is just not an important metric”, but try telling Lapierre that.
Try to tell ANYONE following this so called Shale Revolution that equating output on a 10-day-a-month basis is the same as full 30 day production.
Sheesh.
If (statistically) the wells that produce each day for a month are the same as the wells that are curtailed in their product then there is no point in separating them.
On the other hand, if they are statistically different on such as depletion rate then they should be separated.
Which case is it?
Coffeeguyzz,
Oil wells do not produce 100% of the time, that is just a basic fact in the real world.
Have you ever taken a university level course in statistics? You seem to lack some very basic understanding. We are looking at a population of wells, if the population produces on average for 25 days per month or 15 days per month is of little significance, whatever it is, the monthly output is the only number that matters, days online does not matter.
I will repeat, read very carefully, the output of a single well is of no significance in this analysis. The well profiles I present are based on the average output of 2000 to 5000 wells (2016 Permian well profile based on 2275 wells, 2015 based on 2699 wells, 2017 based on 3543 wells, and 2018 average Permian well profile based on data from 5077 wells.)
I have shown elsewhere the R squared between my Permian model based on data presented at shaleprofile matches the EIA’s “tight oil production estimates by play” from Jan 2010 to July 2017 is greater than 0.999. So claims that the data does not reflect reality are spurious at best.
Coffeeguyzz, Dennis is correct here. Oil seeps very slowly into the wellbore, much slower than you can pump it out. Imagine a water well where you wanted to pump continuously. But you could very easily pump it dry. Then you would have to turn your pump off and wait for the well to replenish from the surrounding water table.
The same principle holds true for an oil well.
Mr. Patterson
Your comments are not only accurate regarding the slow ‘seepage’ into the wellbore, as per David Demshur’s observations just before he retired as CEO from Core Labs, this prolonged, glacially-paced process might greatly expand in scope in the coming years of unconventional development.
Biggest factors are the vastly enlarged volumes of rock now being fractured coincident with the even smaller sized pathways through which the hydrocarbons are flowing.
The distances that some of the molecules must now travel are MUCH farther than previously due to the enhanced “spider webby” configurations of modern fracs.
Demshur felt the production tail was apt to be greatly extended, time-wise, for these reasons.
After somewhst clumsily using the ND DMR Gis map to identify the locations of about 20 of EOG’s started-in-2017 wells, I am more convinced than ever that many (most?) of these Van Hook, Fertile, and Parshall wells were offline for lengthy periods NOT primarily for the reasons you posted.
Rather the crowded neighborhood along with the fact thst most of these wells are on just a few pads lends strong credence to believing they were taken offline as nearby wells were frac’d.
I will have production histories accessible shortly and will be able to verify (or disprove) it then.
Hope you are enjoying the Land of Enchantment.
Shallow sand,
I would think you could look at the performance of PXD’s horizontal wells and estimate based on that.
Did you see the post below linked at shale profile?
https://www.linkedin.com/pulse/state-tight-oil-production-decline-i-sheng-wu/?published=t
This post seems to indicate that perhaps the bubble point of death is less of a problem than Mr. Lapierre seems too think. Or at least there are different opinions.
Get around the problem by plotting rate versus cumulative. If the well is helped (or hurt) by a shut in, you will se a blip in the curve.
Fernando
I only consider average profile for 1000s of wells. Doing 1000s of hyperbolic profile estimates for individual wells is not necessary for an industry wide analysis in my opinion.
Any comment on my well profile for 2016 Permian well? Does it seem reaonable based on data presented?
For an average well profile based on 2300 wells. The blips get washed out.
Shallow
… quick follow up regarding comments to LaPierre’s article.
Did you read the one by George Grinestaff?
He claims that there are currently 266 Eagle Ford wells undergoing huff n puff with expected 80/100 percent bump in EUR.
Report coming out next week.
That’s all EOG’s efforts, I expect they will be an addition to EUR for my wells, eventually, but I’m not ready to write home to momma about it, yet. I’m just guessing, but they drilled four more child wells on my first well drilled about five years ago. The first well prior to completions was producing about 1500 barrels a month. After they drilled them, it has produced on an average 3000 barrels a month. Just guessing, but they tried, but too late. I think it is time dependent, you have to catch it early in production to get any meaningful results. As it costs around one million to do, I’m sure they lost effort on a five year old well.
Secondary/Tertiary recovery is something that will make a big difference for shale, if the operators figure it out and figure out how to do it economically.
Seems like it is a tough one to solve, and maybe needs much higher oil prices, just like shale in general needs.
Shallow
There is a 17 page, graphic heavy pdf from Liberty Resources describing their EOR project in the Bakken.
Pretty impressive.
The NETL folks have a 1 page update on this project as of June 1, 2019 as they (NETL) are collaborating with Liberty.
The NETL description is brief but filled with specifics like injection volumes, rates, soak times, etc.
Preliminary evaluation seems to claim over 25% boost in EUR.
Guy
Regarding “time dependent” in gas re injection …
I have heard of that several times over the years, including from that tiny outfit Granite Oil up in Canada.
Seems like maintaining a somewhat high formation pressure in the early going may produce the best long term results.
As per that Grinestaff guy’s comment, I’ll be on the lookout for this upcoming EOR report.
It’s different, depending on the shale. EF is the best example , as they have to containing shales, and a tight shale. Like no other. My guess, is that it has to happen in the first two years to make a measurable difference.
Wow.
Sounds like the bubble is about to pop.
Not only that: the article is a HOOT:
It is difficult for the author to pinpoint any technical explanation for why such statistically significant and seemingly universal trends have yet to be discussed in technical papers, corporate conference calls, or at conferences within the industry.
“It is difficult for the author to pinpoint any technical explanation for why such statistically significant and seemingly universal trends have yet to be discussed in technical papers, corporate conference calls, or at conferences within the industry.”
You are right. This is deadpan humor at its best! It needs to be the first line of the bailout bill.
The Potential Gas Committee just released its biennial report with assessments up to December, 2018.
Press release contains some highlights … main ones being about 120+ year of technically recoverable resource using current US consumption rates.
Combining with EIA’s reserve numbers gives about 140 years’ US supply at current rates.
The most salient point, perhaps, that the press release contains is that the huge increase from the 2016 assessment is largely derived from improvements in finding and extracting the hydrocarbons.
While this finding would also apply to the liquids, the sheer size of this gaseous energy resource will continue to shift enormous resources – most particularly in the downstream realm – to more comprehensively, more effectively utilize this energy known as natgas.
Coffeeguyzz,
Typically about 50% to 60% of technically recoverable resource is profitable to produce unless energy prices rise quite a bit. Not a lot of info in that press release, the number may include a lot of speculative resources, not clear from the press release what is included. It is also unlikely that present levels of consumption will remain fixed. At some point the Marcellus and Utica will need higher natural gas prices to be viable, the gas coming from tight oil is likely to cease as tight oil output winds down after 2030.
U.S. beats Saudi Arabia to become top oil exporter on shale boom
Most Misleading article of the year. Net crude oil imports are still about 3.6 million bpd, four-week average.
I am at a loss to understand sometimes(?).
I recently chastened a news program for both the newsperson and the guest both saying the USA was “Energy Independent”. So I went to the EIA web site and found data that the USA consumes about 20 million barrels per day of liquids and produces about 12 million barrels per day. My calculation of those figures gives a need to import about 8 million barrels per day. Is the variance between my calculation and the figure you quoted the production of biofuels? Any help you can give me in understanding this would be appreciated.
https://www.eia.gov/outlooks/steo/report/us_oil.php
Jon
US total liquids production is 12.2 oil, 5 NGPL and 1 Ethanol
https://www.eia.gov/outlooks/steo/report/us_oil.php
Which is 18 million barrels per day
Not energy independent but it will be in 2021 and that will last for a few short years, but long enough to act recklessly in foreign policy issues.
Hugo,
A more important figure is crude input to refineries, that is about 16 to 17 Mb/d, the NGL is not really useful for producing gasoline, diesel, jet fuel, or residual fuel, the main components of liquid fuel consumption in the US. So unless US fuel consumption decreases, we need roughly 16.5 Mb/d of crude output, we might reach that level of output, by 2025, but we are unlikely to maintain that level for more than 5 years and my guess is that we may not even reach that level, it is more likely that fuel consumption will decrease as liquid fuel prices rise as the peak in output is approached.
Trump seems to mouth off a lot, but is more cautious than his predecessors when it comes to actually getting the US involved in war. I got the feeling the deep state, neocons, etc are having hissy fits and will continue to try to undermine him.
Given Trump’s facility for lying about EVERYTHING, no matter how trivial, you have to wonder about people that back him so facilely.
When will they realize that it undermines their own credibility?
Two things.
First, definitions change.
Second, believe nothing. No one has any incentive to provide accurate information.
USA through June 2019.
Yeah, that kinda looks flat, don’t it? That does not count the hurricane for July, or the two that are coming. But the experts predict it will increase the next quarter and the next year with completions going down. Glad I’m not considered an “expert”. You can consider my guesses as equivalent to Guy Garp. The world according to Garp.
GuyM,
It is far from clear that completion rate has changed significantly, perhaps this is the case for conventional wells. Permian doesn’t look so flat.
Damn dude, US is flat through June. Down July. What’s it take? You and your tight oil estimates, will be proven to be wrong. Eyes only on the 914’s.
GuyM,
The EIA 914 was released on 30 Aug.
https://www.eia.gov/petroleum/production/
This EIA data, also monthly, to June, was released on 12 Sep.
https://www.eia.gov/dnav/pet/pet_crd_crpdn_adc_mbblpd_m.htm
The data from the two links seem to be identical. Why the delay for the second link data?
Thanks, Tony
They are basically the same I’ve never noticed a difference. The monthlies are the 914. They can be adjusted in following months, but I have never noted any significant difference. I don’t know why there was a delay. They are usually at the same time, within hours. And my guess is that monthlies will be reduced downwards going forwards, but not significantly.
GuyM
Take a good look at the graph.
Some people were saying US oil peaked in 2015, it did not.
Some people were saying US oil peaked in Oct 2018, it did not.
It is low oil prices constraining production at the moment not geology.
I don’t argue that. WTI at below $60 will eventually cause decrease, $70 will maybe lift it a little, and $80 will grow it, for sure. My wag. My estimate was that world production was lower in 2019 than 2018. It is. Can it get higher? Sure if the price is right.
Price has little to do with it. Fracking doesn’t make money from operations regardless of price, that’s not driving the production decisions.
I don’t know how anyone can apply an economic model to US LTO with a straight face. The operators don’t.
Propoly.
Shale can make money. There are different price points for different companies and basins.
$90 WTI would do wonders for shale. Heck even $75 WTI would get many out of trouble, if that price was sustained.
I think our policy maker Trump somehow thinks $75 WTI, $4.25 corn and $10 soybeans would be bad for the USA.
I don’t agree. Moderation is best.
And Exxon’s View to 2040 shows rising crude oil supply until around 2040.
To me, it’s like investing in the S&P 500, not many can do better especially over the long term. In the short term, you get wiggles where some other funds have done better.
I look at these Exxon charts and wonder where Exxon might have gone wrong in their estimates? Not enough Permian? Venezuela bitumen ramps up big time? Not enough capital? EV production explodes tubing the need for oil? Lots of questions!!
The biofuel projection projection [growth by more than 70% by 2040], is either Kool-aid drinking or a catastophe.
If all of the growth it was limited to the USA, it would take something like all of the corn acreage and half the soybean acreage,
to come up with that fuel growth.
At least we know the IPCC pulled a fast one when they posted a “Business as Usual” case with oil production rising to 165 mmbopd. It’s a pretty good trick to exaggerate CO2 emissions, exaggerate temperature increases and put poor Greta Thunberg in a complete state of panic.
GuyM,
That is from the EIA,
https://www.eia.gov/energyexplained/oil-and-petroleum-products/data/US-tight-oil-production.xlsx
The 914 has no tight oil data. Conventional output is down, that is the reason for the flat US output.
Perhaps the EIA’s tight oil data will be proven wrong, they get it from drilling info, who in turn gets their data from state agencies.
@Dennis Coyne
Thanks for the source. I realized I had an old file from this dataset (from November 2017). So I made a little comparison with current data, and I found that the accuracy of the last two months of this dataset is actually awful. At that time, there was a strong underestimation in the order of 100-200 kb/d for the permian.
So, I would be cautious with the estimations of June and July. We won’t really know the course of permian production this year until November.
Tita,
Yes the data is not perfect, sometimes there is an underestimate and other times there is an over estimate.
I am always cautious with estimates, the most recent few months often get revised higher or lower by 200 kb/d.
When I get a new estimate I revise. Data from various estimates in chart below, the month indicated is the final month of the estimate.
As always clicking on chart will increase the size.
GuyM,
We don’t have July output estimates yet.
GuyM,
From Dec 2018 to June 2019 tight oil output rose by 321 kb/d while L48 onshore conventional C+C fell by 239 kb/d, leaving an increase in L48 onshore output of 82 kb/d over the first 6 months of 2019. The fall in conventional output is likely to moderate soon.
You get conventional from subtracting your unconventional info from the total. Tell me, does this look like normal ups and downs of conventional?
GuyM,
Conventional completion rate is affected by oil prices. Went up in 2018 when prices were higher and went down in late 2018 and 2019 due to lower oil prices.
I expect it will level off as was the case from Jan 2017 to August 2018 after a steep drop from March 2015 to Dec 2016.
Longer term chart below.
S&P says that Haynesville Shale gas production month to date is just under 11.6 Bcf/d which is down from 12.1 Bcf/d in early August. A nearly 24% decline in rig count since Jan is partly responsible.
In addition, S&P says: “Sample production receipts from the Haynesville show that declines, concentrated in Louisiana, have been widespread at processing and gathering locations on multiple pipelines, suggesting that the recent drop in production is real and not the result of maintenance or temporary flow constraints.”
https://www.spglobal.com/platts/en/market-insights/latest-news/oil/091219-us-oil-and-gas-rig-count-hits-29-month-low-at-949-enverus-drillinginfo
In contrast, the EIA DPR for Haynesville says that Aug gas was 11.2 Bcf/d and should increase to 11.3 Bcf/d.
https://www.eia.gov/petroleum/drilling/pdf/haynesville.pdf
EIA says Haynesville gas trend is up and S&P, down. They can’t both be right.
My point, exactly. Shaleprofile will catch up with it it, eventually, but it’s an accurate site, limited by our bullshit.
If yo want a completely wild ass guess, production will decline a little, until about Feb 2020, and after that, it’s dependent on WTI price.
Tony,
The DPR estimates are not very good, I ignore those.
IEA OMR Sep 12 just released.
https://www.iea.org/oilmarketreport/
“A post-hurricane rebound in the US raised global oil supply by 530 kb/d in August to 100.7 mb/d. US expansion, plus big gains from Norway and Brazil, is set to boost non-OPEC growth from 1.9 mb/d this year to 2.3 mb/d in 2020.”
IEA is hoping that US, Norway and Brazil will boost non-OPEC growth in 2020. If not then global supply could be below demand in 2020, which contradicts the IEA forecast below.
In Norway most field is in decline and most field are now gaz producers. In October the New giant start production https://lundin-norway.no/2018/05/25/lundins-production-set-to-double-with-johan-sverdrup/?lang=en and exspect to produce 440 000 bpd in phase 1 before it increase to 660 000 bpd. Guess this will add some in additional to anual decline from old field. Additional resourses since 2014 have been very limited but some additional barrels from satelites connected to exsisting infra structure will happen. Exsploration wells they exspect should add significant resourses have so far been disapointed. I believe Brazil will be importabt but if US shale start decline or lost growth there will be a significant higher demand than will be possible to supply if not Saudi have millions of barrels in spare capacity…
Hi Freddy. I can tell you are interested in offshore oil. The Johan Sverdrup field is set to increase to 440 000 b/d with ramp up to mid summer next year 2020. However there is a 150k b/d of decline from mature fields in Norway and something similar (in %) UK to take into account each year.
Brazil is set to increase as well (just read the IEA monthly report). So, the main thing here is that the great offshore boom in 2011-2014 was created by a mixture of North Sea, Gulf of Mexico and North Sea expansion due to high oil prices. I believe both Petrobras and Equinor are holding their horses to expand output quickly, and just wait for higher oil prices. Natural decline rates are 8-15% percent depending on if fields are deepwater or not. It also depends on field age and size. Throwing numbers out there could be misguiding withouth further investigation. The oil services industry offshore is crumbling right now. Nothing else than higher oil prices can make things happen offshore most likely. The low oil price media brainwashing mantra going on now is sure to fail. And companies offshore are not stupid enough to expand at low oil prices I would guess.
The one thing that has saved offshore from becoming really crucially hit is the strong dollar. The cost price for completing offshore projects has gone down so drastically that it has held the offshore market from drowning. Applies for most places except GOM. A part of cost reduction is ofcourse also lower oil service prices (regardless of dollar exchange rate).
kolbeinh,
“The Johan Sverdrup field is set to increase to 440 000 b/d with ramp up to mid summer next year 2020”
That is what i originally expected also, but im not so sure anymore. It now looks like 11 cargoes might be booked already for lifting in Oktober, that would give an average of a little over 200.000 boepd already in Oktober.
I guess we will find out pretty soon if new schedule holds up or not.
The World through May 2019.
This is total liquids which includes NGLs.
World production, Average 2018 and 2019 5 Month Avg, Jan through May. Total liquids.
Eurasia is mostly Russia.
Thanks, Ron.
It would be interesting to see if there is a predator-prey relationship between total liquids and price. An example of one is in the linked article at the third graph “Number of Wolves vs Rabbits” which would translate into Price vs Total Liquids.
http://www2.nau.edu/lrm22/lessons/predator_prey/predator_prey.html
If there is a relationship, the curve will circle over time.
Hey Ron, could you add the oil exports curve for your OPEC graph?
UAE did not produce more in August, but exported 300 kbd more.
Sorry but I am unable to find those numbers on the EIA web site. Provide a link and I will see what I can do.
Well, I was referring to the following article I quoted here: http://peakoilbarrel.com/usa-oil-production/#comment-687139
https://oilprice.com/Latest-Energy-News/World-News/OPEC-Not-Only-Produced-More-Oil-In-August-But-Shipped-More-Too.html
Oilprice text is based on Bloomberg article, which seems to be an original source. The article talks a lot about ‘crude sailing to unknown destinations’. It is a bit strange, this secrecy, isn’t it?
https://www.bnnbloomberg.ca/opec-big-guns-ship-more-oil-even-as-they-fret-over-prices-1.1310451
Where does Bloomberg get its data? It says a lot about ‘observed shipments’, so some kind of business intelligence service.
Only speculating, but I guess Iran exports are being rebranded and maybe reported in UAE, Iraq, Oman and even maybe Kuwait exports. Iran has built up excess refinery capacity and is exporting a lot of products too. Some exports can reach Africa and be rebranded from there. India and Burma pipeline to China are destinations that can be reached by tankers without AIS transponders turned on. Oil can be leaked through the Kurdistan region and north through Azerbaijan. But it is not cheap to rely on tanker trucks. Sell me a bridge if Iran is not exporting its oil while keeping oil production at a steady state. And on top of it all; the Trump administration don’t even want to sanction Iran’s oil. They want to keep oil prices low. If waivers to Iran sanctions are given I guess the right thing to do is to buy oil related if it falls. It’s all an illusion – or, so is my thinking.
World C+C through May 2019.
This chart looks entirely different from the total liquids. Does anyone have an explanation for that?
Ron the obvious explanation is that NGL, biofuels and other non-crude liquids have increased.
Dennis, after a second look the data looks all screwed up and, in some places, contradictory.
I remember reading somewhere that Iraq was specifically invaded to SHIFT peak oil in time, in other words, to create a long plateau.
I think it was ‘The last oil shock’ by David Strahan.
Iraq was identified rightly as a especially oil rich country in resources not even close to being utilised due to the Saddam Hussain regime. It is today still not exploited fully in the oil rich north, while closing in to plateau phase in southern Iraq. Much is spoken about the possible multi billion dollar project to bring treated salt water from the gulf to enhance water injection to the southern fields. But nothing concrete so far.
EU is in a precarious situation being forced to import more and more fosil based energy each year. But that is nothing new – it has been like that for quite a while.
But we are not very close to a situation where it is becoming very destructive yet. First high energy prices must occur (or put in other words – energy must take a larger portion of the economic “cake”). There are more countries out there with great potential but with a fragile political situation. Oil resources can economically be exploited at a higher price level than now. Natural gas has a bigger potential than oil going forward. But the ridiculous investor unfriendly oil & gas policy especially not at least through artifically low prices got to stop. It indirectly affects renewable energy as well.
The way things are going now, we are approaching the great energy crisis with lightning speed. Lower oil prices resulting in lower shale oil output and OPEC cuts. Hence, lower inventories with no sight to the end. Let it come, while ordering some popcorn. We need some sane people to lead the energy transition coming soon. And also let’s not forget that to keep the majority of people in a country at a realistic high enough standard of living should be a very high goal. This is very much linked to cheap energy and could infact be pushed to the front of priorities while discussing matters related to energy. It is not at the moment.
“….oil & gas policy especially not at least through artifically low prices got to stop. It indirectly affects renewable energy as well.”
Artificially low ? Without cuts oil prices would be even lower. The cuts will make the production plateau last longer or delay PO.
And like OneofEU writes: oilprice must be kept down. The majority of world inhabitants, that already are spending most of their income on food and other basic life necessities, otherwise have (almost) nothing left to buy other stuff. I don’t agree with the opinion that the world economy how it is now could easily bear oilprices of $ 100/b or more.
You have to have a boom in prices after bust for oil & gas investments to happen. That is how it has always been. If not high prices, a great supply crises will come. In my view at least. If people don’t agree or tolerate that, it is understandable. The so called “fair price” is very hard to calculate due to currency rates, oil service prices and subsidies. The energy piece of the economy “cake” was much higher in the 70’s for instance. Maybe it should be less now, I don’t know. I agree that the great debt bubble makes 100 dollar/b currently not affordable. But the nature of peak oil, if one believes in it, recession is unavoidable. It can be more soft or hard, planned or not, but unavoidable. We are approaching that point.
“You have to have a boom in prices after bust for oil & gas investments to happen.
If not high prices, a great supply crises will come.“
Kolbeinh,
Yes. Especially last decade and this one and the next decades, because EOR projects are extremely expensive. For the boom in oilprices to happen OPEC has to cut much more, so much that the increase in oilprices and the resulting increase in shale oil production still results in a relative shortage in crude oil. So then you get artificially high oilprices. On the other hand, I don’t believe that the current world economy can handle high oilprices for many years. Maybe one or two years.
Better not trying to follow Trump’s tweets.
And, the only way oil can stay low is if the supply exceeds demand. Not enough supply? The opposite happens. It’s coming soon at your gas pump. The world can sustain 75 oil, that could stave off the pending spike in prices. But, the market is not reasonable. Hence, panic is due 2020 by the second half. The increase in production for 2019 and 2020 to keep prices in line WILL NOT happen. Because, the Trumpet and massive misinformation has kept it down. It’s a spring being pulled.
Right now, we are selling about 3 million barrels. But, we are still a net importer. I think if big oil takes over, we eventually be a net importer (just like the rest of the EU), but exporting far less. It’s self preservation time. Remember, Exxon and Chevron are US based, and they are getting to be the biggest in US shale, for a reason. BP and Shell will continue to export. But, they are not the most interested buyers of the very sick independents.
“It’s a spring being pulled.” That is the way I see it too. It is very difficult for Trump or anyone else to dive under the surface and open oil wells when the damage is already done. I am very sure inventory draws are forced in some way due to undersupply going forward, and hopefully reported as such too. I don’t see how this US administration can bring anything good to the table. I am so tired trying to follow Trump tweets that I really hope it only lasts the prescripted 4 years.
It’s all rather stupid, you have Trump trying to keep oil prices down, which will backfire on him well before Nov 2020. In turn, the Dems are trying their best to eliminate oil. It’s a comedy of errors for the economy. Come on, we still need oil for awhile. The Dems who have aligned themselves with anti oil by next Nov, will not fare so well. Let’s hope Biden or Beto will get the primary. I see Beto as the Dark Horse. I’d vote for him, even if I lean Republican. Stupid views, but probably not as much of an idiot as Trump. He’s younger, and more attractive to females. Circa Kennedy. And Biden is far from being as stupid as Trump, but I think Beto is marginally more intelligent. I lean Republican, but if he is on the ballot, I’d either vote for Biden or Beto, or just not vote. Like last time. Ok, in reality, I’m of the majority, an independent. If the American pubic does not give me a choice I can live with, then they can go in hell with a hand basket.
“The world can sustain 75 oil, that could stave off the pending spike in prices”
Not so sure consider the enormous levels of debt. Central banks are dropping rates even though we haven’t hit into a recession yet. I see lots of articles of retail Armageddon as thousands of retail stores are closing, Subprime is back with Auto\Home mortgages. Student loans are through the roof, as most Big companies debt is on the verge of being downgraded to Junk due to a decade of stock buybacks and virtually no growth. Then States & local gov’t are raising taxes to prop up unfunded pensions systems. Debt levels have peaked the 2008 crisis and credit card debt is soaring. None of this points to an economy that can sustain higher energy prices.
“I remember reading somewhere”…
Doesn’t make it true.
The oil price must be kept DOWN because food prices are already going up due to the second year of bad crops (I heard only in Argentina crops will be good this year), and that with the greater areal, in Europe at least. Greater areal means more fuel consumption too.
Biofuels at this moment are madness. But in Europe canola prices are rising faster than grains prices, a sign that fuel stress is still higher than the food stress and EVs have not changed yet anything here. It is interesting to observe whether canola rising prices will change fuel prices (EU has mandatory 10-15% quotas of so-called fuel bioadditives).
If bad weather continues through next years – and it seems it is that what we can expect – at some point raising food prices may meet rising oil prices, and oil could be traded for grain. Barter may replace dollar.
On the other hand, if there is hunger, people may die and thus oil stress will diminish.
In this case, too, oil prices may not rise too much. So it is possible that the Grand Solar Minimum and magnetic field changes will mitigate peak oil by reducing number of consumers. Nature’s way.
Maybe time to move to Argentina, at least for a time being. But it seems IMF is already cruising over the country, recently seen a few articles in the European press how bad situation there is bla bla bla something needs to be done bla bla bla again.
Does USA still believe in the Monroe Doctrine?!
Europe is recently getting aggressive on Latin America (Brasil, Argentina) but accomodating towards Iran and China at the same time. It seems the reverse of USA politics.
It is easy to see blocs by recognizing their different imperial STYLES. Europe and accidentally China, both paternalistic civilizations, tend to use the ethical stick of responsibility (green lungs of Amazon, irresponsible Argentina), a style which is rooted in the feeling of indignation, whereas USA prefers to wield the stick of national security (terrorists wielding weapons of mass destruction everywhere).
After Macron overplayed his cards with Bolsonaro, Trump can have it easy now. Anyway, France is a falling country, and the French seem to have lost the art of building containment vessels for their nuclear power plants. New EDF blocs in France, Finland, and UK (EDF subsidiary operated) have already long delays due to this problem. It seems that the Russians are the only relatively compentent in nuclear arts yet left.
Just a thought: it is interesting to notice that not one EURO country is an oil producer. All main EU oil producers (UK 1 mb, Denmark 150 kb, Romania 100 kb, Poland 50 kb) have their own currencies, and all of them are US friends…. such a lucky coincidence for USD, isn’t it?
EU oil import dependency is 92%, more than USA, more than China. Only a bit above Japan. Not good at all.
https://bakerhughesrigcount.gcs-web.com/static-files/72d78d16-2259-4833-a44c-3c02fea55b34
Baker Hughes rig count. Oil down by 5, Permian down by 8. Explanation is horizontal drop is bigger than vertical additions in other areas. 13% decrease in a year. 15% decrease in oil for the year for the US.
How about that rig productivity?
GuyM,
land oil rigs
horizontal rigs decreased 11% in the past 12 months
vertical rigs decreased by 43% in the past 12 months (Sept 14, 2018 to Sept 13, 2019)
Possibly this reflects the recent decline in conventional output as most tight oil production is currently horizontal wells.
Has anyone heard of this new fracking technology called e-frack
https://uk.reuters.com/video/2019/09/12/e-frack-a-safer-cheaper-fracking-alterna?videoId=599351356
Fracking is a multistage process of blowing holes in the pipe and formation, forcing sand into cracks to keep them open, and using chemicals to loosen it up, along with a heck of a lot of water and pressure to mix. The article explains nothing, so I have no idea how it fits in with the process.
There are reports robots are being tested by Haliburton in Aug 2018. The results must not have been fantastic, as it is now a year later. And, I read amazing reports from Russia on new fracking technology two years ago, but nothing since. When it is put into production with a capital P, I’ll pay more attention.
Ovi
The Reuters article from the other day (Sept 12) by a Liz Hampton titled “Low cost fracking (sic) offers boon …” is a surprisingly accurate, informative piece on using field gas to power turbines which then power the pumps.
Saves about $350,000/well, but the hardware is about double the cost of existing diesel fueled pumps.
This actually started in West Virginia in 2014 by Antero.
EOG seems to be going with it more and more.
Thanks
As I read some place e – fracking have huge investment as the diesel pumps need to be exchanged , beside that jet turbines are used to produce enough electricity. They are exspensive and high maintenance cost. Baker Hughes and some other have tried this but as they told it will take time and higher oil price is needed. Regarding emission gaz turbines pollut CO2, NOx. In Norway new oil platforms are powered from land by green energy ( waterfalls) or offshore windmills…
Sounds good if you can get the natural gas supply. I can see a large operator signing a long term contract to have pumping equipment driven by a gas fueled instead of a diesel fueled engine. I tried to get something like this for two plattform rigs about 40 years ago, but management turned me down due to safety issues (diesel was safer).
How Shale Is Destroying ExxonMobil’s Financial Balance Sheet
While the shale industry is now placing its hope on the Oil Majors to keep the Great U.S. Shale Oil Ponzi going for several more years before peak, the financial data suggests the situation may indeed disintegrate faster than the market realizes.
I looked at ExxonMobil’s financial situation BEFORE & AFTER SHALE. And the best way to do that is to go back before shale took off in the United States and then select a year when the oil price was similar as it is today. It turns out that 2005 is a perfect year as the oil price is very close to the average for the first half of 2019.
If we look at the attached chart, we can see that EXXON’s U.S. Upstream Earnings & CAPEX per barrel are seriously heading in the wrong direction. Not only have earnings per barrel plummeted to only $3.77 1H 2019 versus $35.63 in 2005, but the CAPEX per barrel has exploded to $50.81 compared to $12.31 in 2005.
While there are some different factors to consider, as the natural gas price was much higher in the $8 range in 2005, natural gas production was nearly 1,000 mcf/d more in 1H 2019 and oil liquids were also 154,000 bd more than in 2005. So, this sort of balances out some of the differences.
If ExxonMobil continues to ramp up Shale production in the Permian, with weak or even weaker oil prices, it may have to borrow even more money besides the $7 billion it borrowed on August 13th, not published in an investor press release, but rather only in its SEC filings:
Exxon Mobil Corporation
$750,000,000 Floating Rate Notes due 2022
$750,000,000 1.902% Notes due 2022
$1,000,000,000 2.019% Notes due 2024
$1,000,000,000 2.275% Notes due 2026
$1,250,000,000 2.440% Notes due 2029
$750,000,000 2.995% Notes due 2039
$1,500,000,000 3.095% Notes due 2049
https://www.sec.gov/Archives/edgar/data/34088/000119312519221346/d787937d424b2.htm
And, then there was the $6.5 billion of short-term commercial paper that was borrowed in the 1H 2019. So, why would ExxonMobil need to borrow $7 billion in August?? Could it be that Exxon’s Free Cash Flow of $2.9 billion wasn’t enough to cover the $7.2 billion in dividends for the first six months? That turns out to be a $4.3 billion HOLE.
So, ExxonMobil now has $26 billion in Long-term debt and $26 billion in Short-term debt. It will be interesting to see how the situation plays out over the next year.
If oil prices remain weaker or fall lower to the $40s due to increasing recessionary economic forces, then I wouldn’t be surprised to see ExxonMobil’s major shareholders come at management with PITCHFORKS forcing them to exit shale before it destroys the company.
Steve
Steve.
Apparently you and I are some of the only people who have been following this XOM debacle.
Most seem to think the Permian Basin is going to be wonderful for XOM.
What are we missing?
Maybe we aren’t missing anything. The share price hasn’t been too good.
shallow,
Good question. I had presented the same type of information at the peakoil.com site, and it seems many of the “armchair energy analysts” there believe the Periman is going to be all ROSES and SUNSHINE for Exxon. So, it’s hard to say where that fine line between ignorance and stupidity has destroyed the ability of the majority of individuals to think CLEARLY.
Hell, even Art Berman has blocked me on Twitter… LOL.
Go figure. I presented a similar graph on Exxon in response to one of his tweets, and instead of debating the information in the graph, he chooses to go on a tirade why I should respect his “sophisticated” investors and not post stuff pushing my agenda. I thought there was pretty clear evidence in that chart.
Anyhow… it won’t take long for the market to realize something is seriously wrong at Exxon, especially if oil prices continue to remain weak.
Steve
Let’s just say that no company’s shares are permanently safe.
I see what happened with GE. No reason it can’t happen with ExxonMobil. It’s all about dollars and cents in the end.
As for agenda, I don’t understand what anyone’s agend has to do with looking at XOM 10-K and 10-Q and seeing there is a real problem.
I am also seeing major risk if there is a 2020 Dem Sweep. No one seems to think that will matter to shale in the least, it’s all political talk.
Tell that to the mineral owners in places like NY, CA, IL etc.
Another reason for you to fear Democratic election- they will probably work to re-enter the international effort to halt Iranian nuclear weapon development, which trump decided was not a worthy effort.
And when the agreement is re-started, Iranian oil sanction will be largely rescinded = more crude supply on the market.
Shallow sand,
What happened to US oil output from 2008 to 2016? Should Biden be elected, it will be the same policies. The Senate is unlikely to turn over to the Democrats as the rural states get to be over represented in the Senate.
Essentially rural states can keep much progress from occurring in the US, any changes are likely to be an exceedingly slow rate in the US.
shallow sand,
No oil is produced in Illinois?
Question: Has Exxon invested much of that $26B in Permian yet, or are they building up cash for a fire-sale, presuming using that cash to buy the assets of bankrupt shale drillers for peanuts?
Tech Guy,
Why would someone buy up bankrupt Shale companies for peanuts if they continue to lose money??? This seems to be a RED-HERRING.
Would Warren Buffet buy a bankrupt company for 5 cents on the dollar if the company continues to lose money???
Only an idiot would consider that sort of investment.
Steve
Generally Assets of bankrupt company have more value than the company. Example you by a $250K home in foreclosure for $50K, Then flip. A lot of bankrupt companies were bought for their assets which are resold for profit.
Presuming here that some one at some point will snap up Shale wells that pump out Oil below purchase & Opex when Shale companies liquidate. It’s likely that during Liquidation Shale wells will be sold below value as investors usually just expect to recovery any capital as quickly as possible.
Steve,
Perhaps comparing 2018 with 2005 would be better as real oil prices were about the same those two years. Also we would expect costs would be higher today and profits lower at the same price due to depletion making oil more expensive to produce. I imagine XOM has looked at opportunities available and chosen to invest where they think the opportunities for long term profit is best.
Dennis,
Exxon may have indeed looked where opportunities would profit them the best.
So, do you actually believe the CEO and management of BHP Billiton, who invested heavily into shale, did so because they wanted to lose $20+ billion??
Maybe you might follow my train of thought here…
Steve
Steve,
CEOs can make mistakes, perhaps XOM is making a mistake. Depends in part on future oil prices. If they remain low, it is a mistake, if they rise to $90/b, things will work just fine.
For some reason, I couldn’t post that graph. Let me try again here.
Steve
This chart seems to be a straightforward example of how expensive US shale is.
Maybe the shale bulls can explain why Steve is wrong.
I wish XOM would separate the shale from the rest of US too. I think things would only look worse.
shallow,
Agreed. Furthermore, if it wasn’t for Exxon’s non-U.S. or International Upstream Sector, the company’s free cash flow would likely be a negative $2-4 billion than a positive $2.9 billion 1H 2019.
The best way to gauge how the situation plays out at Exxon is to watch their results for 2H 2019 and 1H 2020. That should wrap things up nicely.
steve
shallow sand,
what were your costs per barrel in 2005 vs 2019? Steve is forgetting to adjust oil prices for inflation. In 2005 the real price of oil in 2018$ was $70/b, in 2018 it was $71/b, the price of oil in real terms was much lower in 2019 so far than it was in 2005. So one would expect that profits would be lower as well.
Dennis,
You bring up a valid point that if we figure inflation over the past 14 years, then the oil price should be higher today to deal with higher costs. Okay, that is an issue. However, Exxon is producing 1,000 mcf/d more natural gas and 154,000 bd more oil than it was in 2005.
Lastly, does 14 years work of cost inflation push ExxonMobil’s CAPEX per barrel up from $12 to $50 a barrel??
Steve
Steve,
Depletion has resulted in higher CAPEX per barrel for all the majors, just a fact of life.
“This chart seems to be a straightforward example of how expensive US shale is. ”
The total investment in the Permian in 2018 was over 30 billions of dollars. And the nice trick with LTO is that you need to reinvest the same sum each year just to keep production steady. Production of LTO oil in the Permian reached 3.5 Mb/d
In 2018, Exxon Capex was at 25 billions dollars, and Exxon produced an average of 3.9 Mboe/d. They have the same need to invest to keep the production steady.
LTO is expensive, but so are other oil plays around the world.
Exxon has its own reasons to invest in the Permian.
Tita,
Not necessarily true that same amount needs to be invested each year to keep production steady.
For example, say a company invested $3B and output increased by 50 kb/d in 2018. It is possible capital spending could decrease to $2 B and keep output steady, one would expect if capital spending remained at $3B that output would continue to increase.
Silly, simple me. I look at this chart and say, “This can’t continue.” I certainly couldn’t run my life like this.
So what am I missing? Are they simply waiting for the price to rise so they can make a “killing”?
But if prices rise, won’t people cut back, thus crashing demand and price at the same time?
Maybe this is just another signal of the bedrock principle of modern society, The Rich Do What They Want, because they know they’ll be bailed out.
Signed,
Confused.
Micheal B,
Sometimes stupidity or as I like to joke, BRAIN DAMAGE, can go right up to the top level of the CEO’s. They are not immune to being quite stupid. We saw this in flying colors when the CEO of BHP Billiton jumped in with both feet in the U.S. Shale Biz and eventually lost more than $20 billion in the process.
If we look at Exxon’s March 5th 2019 Press Release about the WONDERS of Shale:
https://corporate.exxonmobil.com/News/Newsroom/News-releases/2019/0305_ExxonMobil-to-increase-accelerate-Permian-output-to-1-million-barrels-per-day-by-2024
ExxonMobil’s investments in the Permian Basin are expected to produce double-digit returns, even at low oil prices. At a $35 per barrel oil price, for example, Permian production will have an average return of more than 10 percent.
We can clearly see that someone at EXXON seriously overestimated the returns they were going to make on shale. If a paltry $431 million in U.S. upstream earnings 1H 2019 at $55 a barrel, $20 more than they claimed in that press release, is any indication of the reality of the situation… HOLD ON TO YOUR HATS.
Steve
Hi Steve,
Interesting stuff, a few questions if i may.
When did exxon enter shale and have you observed the same stuff for other years since they entered even though this is the best comparable one?
Are they building any new refineries to handle their own production of the light tight oil and if so is that included in those capex/barrel?
Yes, the are, a lot. And, it would be included in their downstream capex. Not upstream. And, most of it hasn’t been spent, yet.
Thanks Guym,
So this capex is only spent on putting new shale wells online then and considering their fast and short lifecycle i then agree it looks really bad.
Drone attack on Saudi fields.
https://www.voanews.com/middle-east/saudi-arabia-drone-attacks-spark-fires-2-oil-facilities
Yep, that one hurt.
This is getting interesting.
The drones are unstoppable, and a range of about 1000 miles.
Yes interesting indeed. Apparently these drones can be made for as little as $15K. No suicide bombers need apply. The short term damage may be limited, but every ten cent terrorist organization in the ME is scouring the internet as we speak to figure out how to build their own. All bombing locations conveniently available via Google Earth… ah the unintended consequences of new technology.
https://seekingalpha.com/amp/article/4291493-eia-forecast-u-s-oil-production-unrealistic-mean-potentially-higher-oil-prices
A ray of light.
It will be very interesting to follow with the monthlies EIA data and what the majours like Exxon will do as normaly they need to deliver profit in line with other oportuneties the funds could be used. Espesialy in a time with very limited funds to oil and gaz where most are focusing on green projects. Beside this I noted that Exxon have bought more blocks in Brazil, Guyana project is increasing . My best guess is as they normaly do, stop investing unthil oilprice have increased significant from todays level. As we see US oil production in June was down 32 000 bpd from May. What would it be in July with still decline in rig activity..? In beginning of 2019 EIA exspect US would reach 13 mbpd in 4th quartile 2019 … now it is 12.4.
Yeah, the monthlies are the one to follow. Although, the total is likely to be lower in the GOM due to hurricane.
I’m hearing stories of half of Saudi production just got taken out by drones.
Fallout from that will be massive if true. Funny how stuff like that happens when markets are closed.
Guess we are going to find out which economies can handle $100+ oil in short order.
Wonder who’s oil shipments have just been canceled.
https://www.wsj.com/amp/articles/drone-strikes-spark-fires-at-saudi-oil-facilities-11568443375
Wall Street journal says half of production out.
This one doesn’t have firewall
https://www.cnbc.com/amp/2019/09/14/saudi-arabia-is-shutting-down-half-of-its-oil-production-after-drone-attack-wsj-says.html
Article with good picture
https://amp.businessinsider.com/saudi-arabia-oil-aramco-drone-strike-2019-9
I see 5 separate fires. 10 drones, some targeted oilfield, which we can’t see. They are getting a lot more accurate.
Long Range Attack On Saudi Oil Field Ends War On Yemen
https://www.moonofalabama.org/2019/08/long-range-attack-on-saudi-oil-field-ends-war-on-yemen.html
(A continuation of this strategy)
Today Saudi Arabia finally lost the war on Yemen. It has no defenses against the new weapons the Houthis in Yemen acquired. These weapons threaten the Saudis’ economic lifelines.
“no defenses against the new weapons the Houthis in Yemen acquired”…
from who?
Its an easier way for the theocracy in Tehran to get revenge on oil export sanctions than going after shipping.
They get deniability of responsibility, similar to the excuse the USA uses when the bombs supplied to the Saudis kill civilians in Yemen.
Perhaps today the Houthis have just bailed out he US Shale Oil industry?
I doubt we will see $100 oil on the KSA loss. Russia was preparing for $25/bbl due to the global economic cooling. Perhaps it will increase some, but probably not by $40/bbl.
Unless KSA\Israel start a hot war with Iran shutting down the Gulf for oil exports. With a Nuclear armed Iran & Israel. If it escalates into a hot war, it could go to $200+ bbl.
FWIW: Russia shutout Israel from any more air strikes in Syria threatening to shoot down any Israeli fighter that bombs targets in Syria
https://www.zerohedge.com/geopolitical/israeli-attacks-syria-halted-after-russia-threatened-shoot-down-jets-report
$100+ oil depends a lot on how long that production will be offline. How much damage was actually done.
My guess price will go up a little, only. And, eventually, close to the WTI 55 range, absent any more developments. Prices won’t move substantially until next year.
Guided weapon, only needs warhead.
This is a small taste of what Iran could do to them in an all-or- war. Giant soft target full of things that burn is a good target.
Saudi oil production cut of 5 MM barrels/day can take out 150 MM barrels of crude per month if the facility is not restored. I hope the facility can be restarted quicker but fire and flood generally result in much longer shutdowns.
This is going to take a while—-
And it can be destroyed in seconds again.
Saudis just got the perfect excuse for a production cut.
Peak Oil chances have got better thanks to geopolitics.
Perhaps the solution is to lift Iran sanctions. A double whammy for KSA. I guess the idea of waging war to a neighbor doesn’t look so bright now.
Well, just a guess, but I’m guessing the strike started from a lot closer within SA. Predominate religion close to oilfields is Shiite. US, in Bahrain, would not track it in time. A religious war, like this, could make 15 millions of barrels a day go bye bye. Yet, according to the trading genius, demand is the frightening piece of the puzzle. Holy smokes.
Saudi claim they can make up sales from reserves. How long will they last?
A 50% hit to income plus repair costs could destabilise the Saudi government. Worrying times at the palace.
https://seekingalpha.com/amp/article/4291472-u-s-crude-storage-draws-hit-estimates
Estimate of US inventory drops by year end. Below 380 million. The very lower end of the five year average. Gonna get scary by July next year. In the meantime IEA will be using old EIA data, while EIA will be constantly lowering their projections, but no one will notice that. It’s the magnitude of inventory drops which will wake traders up, finally. Who knows when. This crop and their computerized programs are mostly clueless.
HFIR seems to have it together. Lot better than I am. But, they note that they are using EIA data, which is for sure wrong to the high side, I won’t call a WTI pice, because I would be wrong. My guess is that it will be bigger than a breadbox by Dec 2020. Even with OPEC exit from cuts. Just how dumb can you get than putting most of your production in one place. Which is penetrable, and starting wars with the next country to you?
Big drone attack on SA refinery, video showing raging fires. Cuts in production estimated at 50%
https://twitter.com/WHUT/status/1172918902583648257
The Houthi’s the new UAV-X drone has a reported range of up to 1,500 kilometers. This attack appears to support that.
Pipeline attack in May- from report of that incident-
“However, the UAV-X is a likely culprit.
The drone, with a wingspan of 4.5 meters (14.7 feet), has a V-shaped tail fin. It’s powered by a rear-mounted engine and has been found with what appears to be extra fuel tanks welded it to, a U.N. panel of experts found. It carries a 18-kilogram (40-pound) warhead.
The drone is likely programmed to strike a specific latitude and longitude and cannot be controlled once out of radio range, Michetti said. In the case of Tuesday’s attack, the latitude and longitude of the pumping stations could be easily found online.
The U.N. put the drone’s maximum range at 1,500 kilometers.”
https://en.radiofarda.com/a/bomb-laden-drones-of-yemen-rebels-threaten-arabian-peninsula/29945912.html
For ‘drone’, read ‘autonomous unmanned vehicle’. Sound familiar? Anyone who believes driverless delivery EVs are part of a utopian future needs their head examined.
Scares me.
We just witnessed that biggest escalation between SA, Israel, and the Shiite( primarily Iran) against the Sunni (Saudi Arabia, and the vast majority of the Islam religion. More to come. My odds don’t go with the Shiiites. The Sunnis have no love for Israel, and wish them gone. But, for now, they are a bad ass nation, and will swing their advantage, and Israel only needs an excuse, and minimal backing. History, remember history, OK most of you are too young. This ain’t over yet.
The Iranian response to Israeli air strikes will likely be a strategy which aims to break Israel’s strategic Lines of Control on oil imports – the tanker lines to Ashkelon, from Ceyhan Turkey and from Yanbu/Jeddah in KSA.
https://www.longwarjournal.org/archives/2019/08/analysis-houthi-naval-attacks-in-the-red-sea.php
Believe nothing.
Saudis alleged to have 0 deaths from attack. What does this mean, if so? Why claim it if not so? Zero deaths suggest KSA set off the explosions.
The loss of Bolton told KSA that war on their most hated enemy, the Shiites, was far less likely. That would be justification.
It’s difficult for KSA to open a dialog with the Yemeni’s, who laugh at their moral high ground posture when they are run entirely by not just a single faction, but rather, a single family. How could they not laugh?
Iran supplied drone weapons . . . Iran presence in Syria . . . Iran presence in Iraq. They sure do seem to have money to fund a lot of military adventures while allegedly constrained by inability to sell oil. Maybe the sanctions are worthless and reported flow stoppage is bogus. Wouldn’t be the first time. Remember those pictures from space showing N. Korea is dark? Ask a Seoul resident some time how many radio stations in N Korea are broadcasting propaganda into the city. 10? 20?
Shouldn’t be too very long before Russia is blamed, to elevate oil price, which has slipped about what, 8-10% with Bolton gone?
Just believe nothing.
Except the idiot General from Yemen, who accepted responsibility. watcher, get real. This was the BIGGEST blunder of Iran, yet. Fits going to hit the Shan. And, Yemen claims the drones manufacturer was all in Yemen. Which, nobody with an ounce of intelligence would believe. I don’t know if this is Israel’s decisive moment to enter, but they will, soon. And, Israel will be the decider when fits going to hit the Shan, not Saudi Arabia, or US. Israel did ok, without US support before, they can do it better, now. Though, I imagine that support can be obtained.
If you could compare Russian and US combatants, I think they are close to equivalent. But, Iranians against Israeli. Give me a break. Add in the rest of the Sunni,(which is at least 5 times bigger than Shiite) and US support? Either way, we would destroy oil in the Middle East for decades.
But, I would not be surprised if Israel did not react sooner than SA. Wars outcome are largely dependent on motivation. Israel has prevailed against massive differences in military. And do you think the US will not get involved? Then you ain’t so smart.
Respectfully Guy M, none of what you say matters, because regardless of the response it could be a tremendous interruption of free flowing oil exports from the region, and that might very well be the end of the World economy for the forseeable future.
Iran will not simply be ground into the sand, sanction after sanction. Iraq will support Iran and will ask/demand the US to leave their Country. Oil exports from the Straits will slow if just a few tankers are hit, Meanwhile, Saudi production is cut by 1/2.
I would think the memory of Viet Nam and Afghanistan, the debacles of Iraq and Libya, would emphasize that insurgency wars are never won; can never be won, by any country. Iran has the s-300 now, (courtesy Russia) and I could see them providing Iran with S-400s, just like they have with Syria. Israel was told to quit bombing Syria by Putin, and they have. They have also been warned off Lebenon and are so far complying. I don’t think Israel will take on Russia interests in any serious way. Plus, China has just struck a deal for discounted Iranian oil for future investment funds.
I don’t know about US Shale prospects, but Suncor’s looking pretty good these days.
“Israel did ok, without US support before, they can do it better, now. Though, I imagine that support can be obtained.”
Israel’s goal is to drag the US into conflict with its enemies. So far the US has taken out Iraq, and was in the process of taking out Syria before the Russians block them in Syria. Israel knows that if something goes wrong they can get the US to step in to finish it for them.
There was a drone attack on an Saudi Airport in July, which was also attributed to the Houthis and subsequently to Iran. Perhaps this was done to imprint a certain logic in our minds: Houthi rebels have drones… the next attack will also be carried out by the Houthi rebels.
Would the world accept a Saudi production cut of 50% without this spectacular drone attack?
Might soon start seeing some drone attacks against KSA from Iraqi territory. Brinkmanship is a harsh mistress.
>Israel’s goal is to drag the US into conflict with its enemies.
Actually Israel doesn’t have any goals any more. The country is a toy programmed to think it is living in an American fantasy land.
Put another way, crazy Americans are using Israel to drag America into imagined enemies of Israel.
Israel didn’t do so shit-hot in the 2006 Israel–Hezbollah War. Hezbollah is likely the best light infantry in the Middle East. I don’t share Guy’s confidence in Israeli military preeminence.
Yes, Hezbollah front line troops are pretty good. I would say that their best troops, those manning Israeli border, follow military order (or samurai, or Sparta) lifestyle, leaving their families behind in care of Hezbollah civil structures. The 2006 war showed that they, unlike Israelis, are prepared to die where they stand, manning their weapons to the end. Who would think that martyrdom may be an useful evolutionary strategy….
Should Israel still think about taking Lebanon, they better be preparing for a Stalingrad experience.
“Houthis Rebels bail out U.S. Shale industry”
I worked in KSA from 2010-2014 and I could retire only because of the savings from KSA. Each year of working there was equivalent to 6 years of working in US because of SS and taxes implications. Plus living there was free of rent, utilities etc. I tried to take care of as many Indians that were laborers. When I sit in the front seat with my driver, that astounded my driver. He said I was a different ilk and I told him that is basic decency that US taught me.
What happened to KSA is inexcusable. I do not think the ARAMCO IPO will go well. I think US will be forced to take on Iran despite Bolton firing.
“I think US will be forced to take on Iran despite Bolton firing.”
Seems very convenient that KSA lost half of its production the day after Bolton was fired. Issue is that Iran has a few nukes and will almost certainly use them if their homeland is attacked by the US, Israel or KSA. Even a limited nuclear war in the Middle east would be devastating beyond imagination. Suppose 20 to 25 mbpd of ME oil production is off-line for a year or more. Not sure how the industrialized world could cope with a sudden and dramatic loss. Also the odds favor that it will spread into a global war.
Tech Guy,
You’ve said a few times that Iran has nukes. What evidence is there for that? I’m genuinely curious.
its an open secret that Iran managed to acquire a few Russia Nukes when Soviet Weapons were sold on the black market shortly after the collapse of the Soviet union. More recently a Iran minister claimed it could take out an entire carrier group with one missile. Something only a Nuke would be capable of.
Tech Guy,
Thanks.
Translation: You have no evidence.
“What happened to KSA is inexcusable.”
What do you mean? KSA started the war and has been bombing the civilian population of Yemen killing thousands. They just got what they deserved.
My only worry with this counterattack is that it affects us all, but it is clear to me that the responsible one is that asshole Saudi prince.
The same asshole Saudi prince that dismembered a journalist at their embassy in Turkey because he didn’t like what he wrote. Some ally of the US.
I hope the next drones hit the saudi royal palace.
You reap what you sow.
“What happened to KSA is inexcusable.”
Saudi bombed a Yemeni school bus last year killing 40 children. That’s much worse than halting oil production. Yemen may have just given the world the wake up call it needs, assuming it was Yemeni…
Does anybody know what an oil processing plant is? What does it do that can be taken offline by some low mass explosives? Why can’t the pipelines be routed differently and still flow?
If it’s pipeline nodes, okay, maybe that takes a few days to reconnect. But what does this place do that threatens a month or two or three?
It would seem like the real fundamental issue is that regardless of what it does, it has been proven to be vulnerable to relatively low tech attack. These things were very unlikely to have been remotely piloted and that means they were probably GPS-guided to a particular latitude and longitude. So somebody went to the site with maybe a handheld GPS receiver, or their phone, and jotted down the coordinates. That’s going to be a real difficult scenario to prevent in the future. The Saudis are going to have to find a way to get along with pretty much everybody, if they want their oil to flow.
I think they are referred to as GOSPs, Gas oil separation plants. Also, Lots of water mixed in with oil from Ghawar.
Remote piloted drone is much cheaper and less sophisticated than cruise missiles getting this accuracy.
Your point stands about this being cheap and easy for how much damage it did, though.
The most sophisticated of US stuff seems to have a 400 mile range for remote piloting. Makes perfect sense re line of sight signals, bidirectional. There are probably some variants with satellite links for video from the drone for the pilots elsewhere. Neither Yemen nor Iran have the satellites.
Fuel doesn’t look like a limit. Typical seems to be 40 hours at 70 knots or 2800 nautical miles. So . . . if remotely piloted the range limit will be signal link.
Bottom line here, it’s out of range from Yemen for remote piloting. It’s not from Iran. But a pretty obvious countermeasure for the Saudis would be jamming. That would be true even if the drone is “handed off” to a Houthi ground facility inside KSA. They don’t require much. Couple of guys with a box on a rooftop.
Therefore, pre-programming lat/long into the drone solves the problem. GPS is accurate down to a few 10s of meters and that should be entirely sufficient for guidance. GPS can be jammed but it’s a lot more difficult. And an inertial nav system could pretty easily be aboard and become primary if GPS is jammed. This approach of not being remotely piloted hugely increases success odds.
Payload amount is another question. US equipment can carry conventional 500 pound bombs, but that seems unlikely for what these would be doing. Maybe a few 10s of pounds of explosives.
Apparently the facilities separate out H2S from the oil. The wiki talks about addressing vapor pressure to make it safe to ship, much like the early Bakken days blowing up railcars. It still doesn’t seem all that complex a task that would require months to repair. I’m gonna say the Saudis are up and running to 80% flow within 48 hrs and will not admit it if they think that will increase price.
The Houthi drones are delivering warheads up to 100 pounds
https://www.defensenews.com/unmanned/2019/05/21/how-yemens-rebels-increasingly-deploy-drones/
It seems that several drones hit the targets.
“Fuel doesn’t look like a limit. Typical seems to be 40 hours at 70 knots or 2800 nautical miles. So . . . if remotely piloted the range limit will be signal link.”
Likely the launch much closer to the target. most of KSA is empty desert, and a small group could transport drones or short range missiles a few miles away from the target.
” It still doesn’t seem all that complex a task that would require months to repair.”
Depends on if any of the components are custom for the processing plant. Which could require new components to be made and shipped to KSA, which could take a month or more. Probably by the end of the week the extent of the damaged will be fully determined and we have a better idea of how long it will take. KSA (Sunday Sept 15) claims they can get about 1/3 of the production back on line by the end of Monday.
Pompeo: “There is no evidence that Yemen did it. So it must be Iran”.
Not exactly his words but close. WTF? The US is going down south with its war mongering rethorics. We all know who supplied KSA with enormous amounts of weapons, intelligence, logistics support and it was KSA attacking Yemen, not the opposite.
https://en.wikipedia.org/wiki/Saudi_Arabian-led_intervention_in_Yemen
Saudi officials confirmed earlier today that two oil facilities, the Buqaiq oil processing plant and the Khurais oil field, which sit in the country’s Eastern Province, were hit by several drone strikes.
https://www.longwarjournal.org/archives/2019/09/saudi-oil-facilities-set-ablaze-by-houthi-drone-strikes.php
Two oil facilities with multiple drone strikes.
A few years ago the primary targets were the radar components of patriot missile defense systems.
https://www.conflictarm.com/perspectives/iranian-technology-transfers-to-yemen/
“Since 2014 Saudi Arabian authorities have reported over one hundred Houthi missile interceptions… The Houthis are known to be in possession of the Scud-B and -C missiles, the North Korean Hwasong variants, the Tochka missile, the Qaher-1 missile, the Zelzal-3 ballistic missile and the C-802 anti-ship cruise missile”
https://missiledefenseadvocacy.org/missile-threat-and-proliferation/todays-missile-threat/non-state-actors/houthis/
Most interesting to me is the decline Kuwait is seeing over the last few months. Could this confirm they are in terminal decline? (Other than neutral zone as noted)
I believe this suxsessful attack will take months to repeared , and the risk is high that there will be more attack. EIA / Rystad need to re estimate the supply and consumption ballance for oil in 2019 – 2020 . Guess Saudi have lots off contracts now they not are able to fulfill in short term , oil.storage in US is already below 5 year average. If WTI reach 75 usd bsrrel more Ducs might be compleated and set in production but 5 million barrels a day is a lot of oil…
Dr Strangelove—-
“Mr. President, I’m not saying we wouldn’t get our hair mussed. But I do say no more than ten to twenty million killed, tops. Uh, depending on the breaks.”
– Gen. ‘Buck’ Turgidson
There is a satellite photo of the smoke billowing from the Abqaiq Plant posted this morning on an article at CNBC.
If you look at the photo and go to google earth to compare, you can see what part of the facility is involved.
I have no training in processing plant design/layout, but it looks to me like area separate from the core of the facility.
Any feedback from those familiar with these type of facilities would be of interest.
Article this morning casts doubt that the drones came from Yemen- saying that both Iraq and Iran territorial launch origin as more likely/feasible from a technical standpoint.
No definitive facts presented.
btw- caption for the satellite photo posted above-
Smoke billows from the Abqaiq, Saudi Arabia crude processing facility after drone strikes Saturday, Sept. 14, 2019
Satellite imagery courtesy of Planet Labs
https://www.cnbc.com/2019/09/15/saudi-stock-market-dives-crude-to-jump-after-attack-on-oil-plants.html
Hint:
https://www.moonofalabama.org/images8/houthidrones.jpg
These are not that complicated.
“The war on Yemen, launched by the Saudi clown prince Mohammad bin Salman in 2015, cost Saudi Arabia several billion dollar per month. The Saudi budget deficit again increased this year and is expected to reach 7% of its GDP. The country needs fresh money or much higher oil prices.”
About the drones…. see the comment I posted in the other thread about how hard it would be to build them, NOW, since computers and such are so powerful and need only be programmed to do any particular job.
US deficit is 5% of GDP.
Just seems odd, that the US installations in Bahrain did not pick it up. Unless, it originated from inside SA, then it would be too late. Or, some poor PO, is fixing to get a DD.
A combination of distance and low radar cross section means that US installations in Bahrain won’t be detecting many Houthi drones coming in from the south. KSA has patriot missile defense systems set up against Yemen for that purpose, but they’re being attacked, by drones, and circumvented.
Saudi Arabia has nothing that could stop mass attacks by these drones. It would require hundreds of Russian made Pantsyr-S1 and BUK air defense systems to protect Saudi oil installations. There would still be no guarantee that they could not be overwhelmed.
My guess is they launched inside of KSA. It would not be too hard to drive a truck or two, close the facilities and launch the drones\missiles.
Why bother?
Your targets are within easy range from Yemen.
At a short range you can remote pilot the drones for a precision attack. From the damage it appears the steered the drones to hit tanks that would cause the most damage. Also the Drones would need to store a lot of fuel to reach there target & are also at risk of getting detected (RADAR) and shot down before reaching there target.
Look at the precision of the hits where each vessel was hit in the same place.
https://www.bbc.com/news/world-middle-east-49712417
At a short range you can remote pilot the drones for a precision attack.
At a long-range, you can remote pilot the drones for a precision attack. Of course, the drones have to be launched from only a few hundred miles at most by a ground crew. But drones piloted from the US have been used in Iraq.
Iran also possesses the Hoot supercavitation torpedo, copied from Russia’s VA-111 Shkval. It travels at a very respectable 220mph (sic) underwater, with a range of about 5 miles. Payload, conventional or (Russian version) nuclear, is 210kg. Hard to counter and very damaging to a tanker.
Something is fishy about this satellite image from the Abqaiq Plant, that has been posted on multiple major media outlets.
Take a look at Google earth and carefully match them up. At site where the smoke is billowing up, there is very little in the way of buildings, piping, tanks, etc.
The SE corner of the plant complex with closest clustering of industrial facilities is about 2300 ft away.
Here is a direct link to a larger image of smoke plume satellite image from Reuters-
https://www.reuters.com/article/us-saudi-aramco-attacks/attack-on-saudi-oil-facility-came-from-direction-of-iran-not-yemen-u-s-official-idUSKBN1W00SA
Whos got a legit explanation for this?
Great catch. That makes zero sense.
One possibility: the whole thing was a false flag. The Saudi’s torched off a lot of oil way south-east of the plant in a dump pit and then punched a few easily fixed holes in the separator tanks.
Idea was to drag the US into attacking Iran.
There is a pipeline headed to the dump pit, so it may have been an overflow area that had to be used during an emergency shutdown? If so, who lit it on fire and why?
Otherwise, I got nothing. There’s nothing in that patch of ground….
Don’t over analyse. Attack, yes; Iranian drones, yes; fire pit burning, yes. Motives and actors, no.
NAOM
Fire pits are a normal emergeny thing – here at the huge BASF chemical plant they have the so called steam cracker.
This huge torch burns when something has gotten very bottom up and some product hast to be disposed – fast. Happens every one or two years and can look very impressive.
So oil seperator exploding from drones, but production pipelines running full speed. So redirect everything to a fire pit, than phone a lot to close down all the wells. So less burn damage to the plant than pumping product into a holed burning plant. It’s a last call emergeny installation, as the safety vent from an old steam boat.
Here is the image from the Guardian showing the smoke plume at Abqaiq refinery. Zoom in to the top (north) of the plume and you can see fire.
https://justpaste.it/img/693c06df35f997cd40edb8899d9a46d8.jpg
This is a clip from Google Earth locating that fire source in relation to the refinery site. The fire is about 2.2 km south-east of the damaged facilities. (North is ‘up’ in all images)
https://justpaste.it/img/c025faf11beae5f5b116fdf67fb31772.png
At: 25.920328N 49.705961E
Here is a detail of the ‘fire pit’ in what looks like either a storm water basin or an evap basin for plant waste.
https://justpaste.it/img/d81467b0cd8f9e4c6eed906ce502b26f.png
The pit has a product line running towards(?) it, so presumably they can pump some product there.
So, this smoke plume is not directly from damage, tho the release to the pit may have been a consequence of storage lost from the ‘attack’? Folks with better knowledge of refinery ops may be able to clarify.
To beat a dead horse, I believe I may have stumbled across an explanation for the puzzling ‘billowing smoke’ satellite photo.
The smoke is centered on an empty square about 1/2 mile SSE of the plant, with a pipeline connecting the two. This square is about 32 acres and the bottom is 25 feet deeper than the surrounding terrain [courtesy of google earth satellite].
I’m guessing it is an overflow reservoir, into which oil was shunted and burned off as an emergency response to the attack.
[I have placed arrows at the corners of the ‘overflow reservoir’]
Looks correct to me. And with that oil burning, a low-angle photo taken across the refinery site then looks like the whole place is ablaze.
https://www.aljazeera.com/news/2019/09/saudi-oil-attacks-latest-updates-190916102800973.html
https://oilprice.com/Energy/Energy-General/Riyadh-Has-No-Intention-To-Repeat-1973-Oil-Embargo.html
Hmmm, 50% cut of oilproduction…
Seems the drone each can carry 18 kg high exsplosive , in such plant volumes of energy is very high. Some Areas might be liquids other part gazes. When design exsplosion loads related to fire is normaly implemented as well as earth quake. This might be walls designed to take up energy from exsplosion. Since such simple GPS tecnology hace limited accurancy I guess the drones not could hit spesial items to maximaze dammages. Normaly there is also Area with gaz in atm from venting and Areas where this should not happened. I believe since several drones might hit same processing plant dammages could be huge Normaly components , pipes , module structures might be dammaged and should be exchanged. Same with valves, cables and some component might be hard to get so called long lead items . Guess foreign exsperts will go there after the fire is ended and make a status report. Than I believe to build up again this will not be done as the rebels will destroy it again. If possible it should ve rrbuilt under ground , even pipe lines…
Underground is not necessary. Stand-off enclosures will stop UAVs. Wrap it in metal fencing, with a bit of distance. Look at old pics of OPs in Northern Ireland to get an idea. The Brits used the idea to stop RPG rounds from hitting their bunkers. The Brits started off with what looked like scaffold frames draped in metal fencing built around their checkpoints. It eventually evolved into something more engineered. Works good on vehicles too.
https://hatfulofhistory.wordpress.com/2016/06/17/policing-the-northern-irish-border-in-the-1970s/
How high ya gonna build that fence?
But I suppose that since a drone can’t fly very fast, it would be fairly easy to shoot one down, if you have either automated anti aircraft weapons or FULLY ALERT manned weapons near the perimeter fence. Get the drone as it necessarily flies higher to clear the fence, instead of hugging the ground.
Build it a little higher than the structure that needs protecting, then put a top on it. It’s an enclosure. Ordnance detonates on it, the enclosure, away from the target. Or bet 100% on intercepting it, and get hit from time to time. Your choice. I’m just saying what works.
There are no fully alert manned weapon systems in KSA; worst troops in the world.
This is only a small watch tower and will be much easier to protect than one of the words biggest processing plant. Guess the exsplosives is with very high impact if 18 kg goes off the structures need to be quite solid . If the first are able to destroy the fence the next drones will still be able to destroy the plant. Think this will not be easy if they not have possibilities to shoot down the drones ..
War ain’t easy. You can bury it, or harden it, or lose it; or stay out of wars. Take your pick. Ditching the MIM-104 Patriot and getting an S-400 Triumph might be a good idea too.
Saudis do not need Triumphs, which are long range anti-missile and anti-aircraft defences. What they need are hundreds of short range systems like Pantsyr, cruising the area every day, manned by alert crews. The last will be probably the most difficult to achieve – air defence systems are this kind of weaponry, where competent crews really decide about success or failure, as was proved by “overtrained” Serbs who shoot down F-117 with SA-3; they did it because they knew their weapon!
Additionally Saudis could buy Russian thermobaric missiles sets, which the Russians put around their military airport in Syria as a defence against any massed suicide charge (well, Russians did learn something from Afghanistan: ‘ First combat tests took place in 1988–1989 in the Panjshir Valley during the Soviet–Afghan War.’ ), and which were later used in Aleppo to break stalemate at heavily fortified points.
‘TOS-1 was designed for defeating enemy personnel in fortifications, in open country, and in lightly armoured vehicles and transport. ‘
https://en.wikipedia.org/wiki/TOS-1
All that will not do if crews be smoking shishas.
Slight complication – drones fly. Besides shooting them down you can forget protecting something like a refinery from them.
Check out pics of the Finnish Embassy in DC and Berlin. They’re covered in slat armor. As is the US embassy in Baghdad and London. It works great.
This is what they need.
Raytheon Co. Missile Systems, Tucson, Arizona, was awarded a $205,205,445 cost-plus-fixed-fee contract to provide the land-based Phalanx weapon system to the U.S. Army. According to the company, the system is meant to counter rocket, artillery and mortar system and other close-in threats, with a rapid-fire, computer-controlled, radar-guided gun. The Phalanx also can provide early warning of attacks. Work locations and funding will be determined with each order, with an estimated completion date of December 27, 2023. U.S. Army Contracting Command, Redstone Arsenal, Alabama, is the contracting activity (W31P4Q-19-D-0015). Bids were solicited via the internet with one received.
This system is currently deployed on ships.
End of 2023?
“The World is a hellish place, and bad writing is destroying the quality of our suffering.” –Tom Waits.
The drones showed quite remarkable accuracy and precision in targeting. They can obviously hit small critical targets like line booster stations and power substations with impunity if they choose. With that ability they can/will strike anywhere on the entire production and storage system. So point protection of this vast expansive system will be futile. KSA needs to start negotiating fast, or its income and government is toast.
This shows they have been steered manually. At least the last miles after flying automatic near to the plant.
Nothing complicated about this, when there is no jamming.
2018 as peak world oil production looks more likely now.
I worked at a refinery for a while. If you have even small drones blowing up at various places in the refinery, you are bound to get a lot of big explosions with huge damage. Now that KSA’s enemy’s have this capability there are bound to be additional attacks. We will see how long it will take for KSA to develop a defense, but the blood is in the water and the sharks are aware.
Probably, not too long to set up a defense. Trump is motivated to remain buddies. The Patriot missiles that the Saudis have are US. They are screwed, right now, because they had their radar arrays attacked. You park a couple of ships with missile defense systems of the coast, and tie into their Patriot system. My guess. Then you have a dual defense system. After this, they will get a lot more patriot systems. Our systems in Bahrain probably picked up on this, but were in the wrong place at the wrong time. Oh, yeah. It’s not the last time. There is no end of the hatred between Sunni and Shiite. It’s just getting started. My odds are on the Sunni, along with Israel, who knows both hate them, but are in survival mode siding with the Sunni. Right now, Egypt and Turkey are somewhat in the middle, with Turkey leaning towards Iran, due to current leaders. But, both countries are mostly Sunni.
https://www.worldatlas.com/articles/religious-beliefs-in-turkey.html
How that plays out if Iran pushes it, is the question. Both, are the power houses in Middle East military. Russia? They want the trade. They’d be pretty stupid not to realize there is a four to one disadvantage for the Shiite.
Egypt? We just took away a lot of their free money. It can be given back. How’s their population going to vote? Sunni, or Shiite?
https://www.worldatlas.com/articles/religious-beliefs-in-egypt.html
It’s all coming down the the religion, again. Who was the leader after Mohammed?
Support. Russia has made token sales to Iran with equipment. Nothing in comparison to US sales to Saudis, Israel or Egypt. Russia is not on any body’s side, except Russia.
The advanced military capability of Iran, is far below Israel, Saudis, and Egypt. Turkey is the big boy. Which way will it go? Stay tuned. But, it still is primarily Sunni, or close to it. Odds are, this will not end well for Iran. Globally, only 10 to 15% of Muslims are Shiite (Iran), the rest are Sunni (Saudi).
Wars are still being fought all over the world due to minor differences. Fucking amazing. Can we all not believe in Allah, God, or a Devine Being or principle, without killing each other over definitions?
It’s gonna take a lot of anti aircraft kit to protect Saudi oil infrastructure. And a lot of alert troops.
For those interested; the M1097 Avenger is the next level options for augmenting the patriot system. The navy has some good close in anti air/anti missile kit that could likely be adapted, such as 20 mm phalanx, 30 mm goalkeeper, and SM-3’s. M6 Linebackers (M2 Bradleys with Stinger missiles instead of the standard TOW anti-tank guided missiles) have been phased out, as have M163’s. The US army is in a bit of a pinch as it has drastically downsized its SHORADS (short-range air defense systems) force from 26 battalions in 2004 to just nine, only two of them active-duty.
KSA is gonna need to do some serious shopping if they want to keep at this fight.
Re Guy’s question about which way will Turkey go. Turkey will oppose Saudi Arabia. It’s not all a big Sunni vs Shia thing like Guy suggests. There’s a reason the Turks once ran the Middle East from the mountains of Anatolia, and not instead the Arabs from the deserts of the Arabian Peninsula. KSA and Turkey are in opposition in Qatar, Sudan, Libyan and Syrian conflicts. It’s pretty clear that Turkey will happily stand by while Iran kicks their ass around a bit. FWIW I don’t think Egypt will be fighting Iran on Israel and KSA’s behalf either.
https://www.futurity.org/turkey-and-saudi-arabia-cold-war-2154772/
Who’s willing to post a guess as to how much gasoline will go up as a result of this attack and how long it will stay up?
Probably 25 cents for a short time. Eventually, next year it will sell for over 3 dollars. These traders don’t have shit for brains. It’s gonna really spike by 2021, because they think oil should be selling at $55 to $58. Nuts
It’s a little more complicated than just a Saudi refinery loss and prices spiking. Also gasoline does not seem to move directly with crude prices.
While analysts agree that prices will spike initially, the duration of the outage is key. Saudi Arabia has millions of barrels stored in locations around the world, which they can draw down to replace the lost production. A rally could also be tempered if the U.S. and other countries release oil from their strategic reserves to ease the shortfall.
https://www.worldoil.com/news/2019/9/15/oil-may-jump-as-much-as-10-a-barrel-after-saudi-arabia-attack
Yes, that is their inventory. They have to take it from inventory, because it can’t be produced yet. So? You start digging into inventories, the current “supply” is short. You keep eating up the inventories and the bidding goes to high bidder. What’s new, or complicated about that?
I know most people want to take oil price to equal want they want, or what is “fair” to the public. But, that is not reality. Get ready for reality.
We have zero for growth out of the US, and will have at least for the next year, because traders thought $55 a barrel was a “fair price”. Now, the independents are dying fast, mostly due to their own stupidity. Majors are taking over, but they only want to increase production to what they can expand to in the US. Dude, the world has NO growth. And even is demand is zero next year. We will be short of oil.
I agree, could be some short supply and price rises but in the longer run (5 years and more) even Exxon is predicting a fall in oil demand. I guess this will help force the issue.
What will force the issue is that demand can never be higher than supply, after inventories run out.
I remember an oil ad on tv when I was a kid back in the early sixties. “If you don’t have your own oil well, get one!”
Shoot! If you think the current price of WTI of going over $5 a barrel is extreme. Your probably right, for now. Ignore it, and check back in about Sept of 2020. That’s when it gets really scary. Because, by then traders will have realized, they don’t have any idea what the price of oil should be at. And it’s going all over the place, Spot trading rules the day. Not traders. It’s far far too late for traders to adjust. They fell into the same trap as the independents, who won’t survive. Oil needs to be trading at about $80, to keep from weird fluctuations, but its far too late to go back. So, we gotta pay the price. My advices to traders is to play out. Six months. Buy, over. Your going to make a killing. Yet, before you make that decision take note,, I don’t know jack shit about investing.
There is still a lot of unknowns. That situation will take time to play out. Near term, like really near term as in Wed. Fed will likely cut rates by 0.25% and their rhetoric will likely disappoint markets broadly. Oil price will likely tank even if it’s just for a few day or just this week. But it wouldn’t surprise me if price fell back to $55-56 WTI before some of the unknowns become known surrounding the situation.
Price might spike down on FED news and get bought at a lower price.
It’s all possible. But, if supply can not come close to demand, prices will rise, despite your rhetoric.
What I have wondered is where is the pain threshold now (in 2019) for higher oil prices?
In August 2019 Brent spot traded around $60/bo (Brent spot) and in some parts of the world (like India) that previously subsidised petroleum products this lead to protests (ref link below).
One of the resaons is the much stronger US dollar since 2014…as the Fed ended tapering.
https://www.nationalheraldindia.com/national/uttar-pradesh-congress-to-hold-statewide-protests-against-fuel-price-hike-tomorrow
Rarely see it discussed, president Trump has sold 50 million barrels since becoming potus.
That’s not insignificant…
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=M_EP00_SAS_NUS_MBBL&f=M
Maybe thats because he hasn’t sold even a cup.
But he did apparently pick 804 millions tomatoes, mostly at night I guess.
He did just authorize use of the strategic petroleum reserve,
since we are now apparently desperately short of crude oil.
I guess we ran out of oil in just 36 hours.
Lol.
You got me, no idea what you’re talking about.
Of Interest,
https://www.zerohedge.com/energy/declassified-satellite-images-reveal-it-would-take-months-fix-saudi-oil-facility
Looking at image 2
1/ Those holes seem pretty well lined up and centered for a long range hit from a drone.
2/ Those holes are on the West/West of South West side. ISTR Iran is to the North East.
NAOM
I wonder when the foreign workers, who actually get things done in KSA, will start leaving? Wouldn’t you? After one more attack? Or, after a US retaliation as threatened tonight by Mr Lock and Load? People have their families over there. This is way past troubling, imho. When the Saudis cower down will they beg the US to send troops? More importantly, will any be sent? Another war in the ME with an election looming? Ouch. Pre-market trading at 7:30 pacific is dropping fast, and oil up 20%. Tomorrow will be interesting to say the least.
regards
This seems like significant dammages and thoose elements have huge size even look small at the pictures. If drones where use with GPS tecnology it clearly shows this is a effective weapon.
It would be commercial GPS not military, accuracy would not be all that good and this is far too accurate work, I would expect the holes to be more random. More targets than drones would lend creed to Adams suggestion of C4 on a string but why not just place it under the tank. Maybe RPG but where from. Attack helicopter could well do this which would suggest a false flag operation to blame the Iranians that would be reinforced by the direction of the attack which was the wrong side for a strike from Iran. Looking at the site on Google Maps the attack would have had to pass over most of the town. Yep, nobody showing of remains of drones, yet.
BTW any of our oil guys have an estimate of the size of those holes from the size of the tanks and what hey likely contained?
NAOM
I highly doubt those are true images of an attack. There is no impact splatter/scorching, the location is too uniform, there is no debri below.
No cleanup equipment or service vehicles.
I believe everyone who just swallows this info without it passing a taste test is being extremely naive. This includes all the major media outlets.
I’m still waiting to see someone with eyes open challenge the info in the media.
After the Cheney Bush fiasco with Iraq ‘intelligence’. we should have learned to be very suspicious of the information released by our government (not to mention Gulf of Tonkin).
Okay, Hickory, what’s your conspiracy theory here? Who did this and why? Was it Trump? Or did the Saudis do it to themselves in order to get the US into war?
I haven’t heard a good conspiracy theory in almost a week. I need my conspiracy theory fix and I need it now. So please give it to me.
Hi Ron,
I don’t have one, and generally am not very sympathetic to conspiracy theories, since I’m pretty pretty big on facts when I can get them.
But I don’t like being presented with weak or conflicting evidence as if its a done deal.
These images, and that overhead satellite image with the smoke billowing are just weak evidence, in my eyes.
Maybe there is a good explanation.
I’m all ears.
Until then, I feel as if I’m being presented with old images trying to make a point. Its been done before.
I’m concerned about incompetence as much as anything.
Did the USA bomb the Chinese embassy in Belgrade on purpose, or by way of incompetence. I still haven’t heard the final word on that one.
btw- the movie ‘Fair Game’ regards the background story on your new state senator to be- V. Plame, is a good one, I believe you’d find it interesting.
Until then, I feel as if I’m being presented with old images trying to make a point. Its been done before.
All of them were old images? There were dozens of them. Some lighting up the night sky. Others from satellites in space. From space, the US had to be the perpetrator of this conspiracy. And CNN and dozens of other news networks had to be part of it too. Perhaps a thousand people or more had to be in on this conspiracy to show dozens of old photos and pass them off as new stuff.
Sorry Hickory, but I just ain’t buying this conspiracy theory stuff.
btw- the movie ‘Fair Game’ regards the background story on your new state senator to be- V. Plame, is a good one, I believe you’d find it interesting.
I haven’t a clue as to what the hell you are talking about. V. Plame is definitely not my new state senator to be….. or not to be. 😉
OK Ron,
Tell me why the satellite photo of the smoke billowing from the Abqaiq Plant, that all the news agencies have been posting, is centered about 1/2 mile SSE of the SE corner of the facility.
Did you bother to compare to the images on Google Earth. Its not too hard, and its pretty damn straight forward. Something here does not match up.
I have no conspiracy for you, sorry.
Valerie Plame- look her up. ex-CIA
https://www.dailykos.com/stories/2019/9/10/1884609/-Exposed-CIA-operative-Valerie-Plame-s-new-campaign-ad-has-everybody-talking
.. why the satellite photo of the smoke billowing from the Abqaiq Plant, that all the news agencies have been posting, is centered about 1/2 mile SSE of the SE corner of the facility. Did you bother to compare to the images on Google Earth. Its not too hard, and its pretty damn straight forward. Something here does not match up.
Okay, here it comes… Are you ready?
I have no conspiracy for you, sorry.
Yes, you do! That is a conspiracy theory if one ever existed. Hickory, please don’t try to claim that your conspiracy theory is not a conspiracy theory when it is obvious that a conspiracy theory is exactly what it is. You lose all credibility when you do that.
And on that very obvious note, I will end it there.
Thats bullshit Ron,
If you didn’t know why the satellite image billowing smoke didn’t correspond to the location of the plant facilities you could have just said so (or nothing), rather than trying to lay some conspiracy crap at my feet.
I was hoping someone here had simple explanation for the incongruity, but no one has offered one. Wrong crowd for this simple map analysis I suppose.
If you are looking for a conspiracy theory, I am sorry to disappoint you.
Maybe someone else can satisfy that urge.
I won’t say conspiracy theory but this stinks like a dead camel in the desert. There are 2 things in image 2 that do not add up. The holes are the opposite side to Iran so unlikely to be due to a weapon coming from Iran. Second, you can put a ruler through that line of holes (try it), that would require some high precision. I will just say that we should be careful swallowing the stories being put out about the attack.
NAOM
There are 2 things in image 2 that do not add up. The holes are the opposite side to Iran so unlikely to be due to a weapon coming from Iran.
Are you shitting me? Because the holes are on the opposite side from Iran means they did not come from Iran? They traveled hundreds of miles but because they were a couple of hundred yards further east that??? Oh fuck! Give me a break.
Second, you can put a ruler through that line of holes (try it), that would require some high precision.
Oh good gravy! It was obviously not the intention that they lined up, there was no reason for that whatsoever. That’t just the final outcome. It means nothing.
Is there no depth to how deep a conspiracy theorist will go to make their case?
Why so hung up on conspiracy theories? I am just highlighting 2 discrepancies between the ‘official’ account and the BDA images. I am not making any interpretations and theories.
An incoming strike from the east would impact the east side of the tank whereas the damage is on the west. That is a pretty strong indication of direction of fire. To come from the east the hittile would need to do a u-turn or Immelmann turn.
As for the holes lining up so perfectly, that would be extremely unlikely after flying for some distance due to the CEP of a UAV. It just doesn’t add up and I am not taking it further into who, why etc I just hope that common sense prevails in this matter.
NAOM
Doesn’t matter anyway, because, as we all know, the good old US of A is 100% energy independent, thanks to fracking.
Can’t imagine why the Republicans are banging on the war drums about such faraway events that have no implications here.
Where is the splash of the drone around the hole? Where are the wings etc at the ground around the tank? Careful hand placement of charges is more likely or was it a tank standing off firing AP??
It was an ICBM
Are you under the impression that military drones… divebomb… their targets?
Lots of good targeting precision on the attack (I’ve seen other pics too). Could have been a Kia high-precision drone with a shaped charge warhead. Whatever it was, it had a shaped charge warhead. Bits of the drone end up pretty far away after detonation, might need to zoom out to see them. Drone bits won’t be lying on the ground underneath the hole that the warhead made.
https://www.militaryaerospace.com/unmanned/article/14039496/drone-iran-uav
True NAOM. A very nice line indeed. Frightfully well done. Quite remarkable, if you believe that this was done by wobbly winged independently-targeting drones just kinda drifting in on the desert breeze. Are we being asked to believe something which may not quite be true? Again?
“wobbly winged independently-targeting drones just kinda drifting in on the desert breeze.”
You’ve clearly never even seen a picture of a military drone. This is embarrassing.
I was making the point that four drones far from home are unlikely to arrive with exactly the same heading and angle of descent to hit the same facet of the tanks.
It is common for the motors of drones to be blown back along the track on impact. No sign of such debris.
Al Jazeera’s early reports say that, at the time of the ‘attack’ that the people on the site said that ‘fires broke out’. No mention of explosions or of the roar of passing drones, just ‘fires broke out’. That’s (apparently) from the horses’ mouths on the ground. Even World Trade had a few people on the ground to front cameras mentioning happenings which aligned with the official story. Not here.
Others here have noted that the origin of the smoke plume is remote from the damaged locations. A few smoke pots to provide some ambience?
Its just too neat, tidy, timely and convenient.
Will be interesting to see what ‘evidence’ they put on the table. Some scraps of old drones from previous attacks maybe? How about some radar tracks, and radio chatter – ask Ukraine, they are good at creating those, with help from the Netherlands air crash ‘investigation’ team.
They are very clever drones too.
https://tinyurl.com/yxh6bd5h
The Houthi claim they sent 10 drones. The photo shows 17 points of impact. Very majik bullets, these!
It just smells bad.
They have been steered manually – otherwise they would have missed even the tanks without being a most sophicated US-Drone.
Manual steering can be done by an agent team in broadcast range at the facility – you need the transmitter, a monitor and the joystick.
Or when the site has at least UMTS mobile standard, you can use a smartphone. And then it’s a video game.
I think in future there is no more watching sex.com for the night watch personal since mobile will get jammed.
That’s my conspiration theory – the drones have been steered by mobile phones.
“Others here have noted that the origin of the smoke plume is remote from the damaged locations. A few smoke pots to provide some ambience?”
Use Google Maps to take a look. There is a square pond at that location that has a single pipeline to it from the refinery. You can see part of it in the smoke images with fires inside. I will make no inferences from that but maybe some of the oil guys here can suggest what it is for.
NAOM
That hole looks like it could have been done by a Soumar Cruise missile which can be launched from the ground. Maybe it was launched from Iraq or Qatar or maybe from within Saudi Arabia, nobody knows the launch location yet.
https://missilethreat.csis.org/missile/soumar/
This article says that cruise missiles could have been used, Soumar or Quds-1.
https://menafn.com/1099007062/Saudi-oil-facility-attacks-may-have-come-from-Iraq
1. Remarkable precision with the shots all in such a neat a line.
2. Those hits on the tanks look more like number 1 eyeball and finger on the trigger from an attack heli parked over the site firing missiles than random incoming drones. If drones, then the target seeking ability and consistency is quite amazing for four hits in a row after a flight of 100s of km. One, yes, two, yeah maybe. Four? Nah! Call me skeptical?
It could be easy done with remote controlled drones.
Fly them automatic into the near of the installation, and have some agents with a remote control near there – they can sit in a simple car or van or house or even hotel room. They take over and steer them into some critical place. Job done.
I think Israel can sell many Iron Dome systems the next time – they’re shooting down attacks like this with this system
Drones can be used like loiter attack choppers. It’s how the US kills ISIS with them. Loiter is one of the main reasons to use them at all.
Occam’s Razor says no to that. A lump of C4 dangled off the top platform, with a timer. Simple, and just as effective as any WMD. No mess either. KSA has not showcased any wreckage of the drones. No bits of wings, no motors. Nothing to be found. Didn’t happen.
“Simple, and just as effective as any WMD.”
WMD? What do you mean?
Seems Rystad exspect growth in US shale will continue unthil 2030 even with oil price WTI in the 50 range. That seems amazing…
https://www.ogj.com/drilling-production/drilling-operations/article/14039788/rystad-us-shale-production-to-reach-145-million-bd-by-2030
Maybe Rystad needs to tell ExxonMobil that who is now spending $50 a barrel on CAPEX vs $12 a barrel back in 2005.
I guess debt doesn’t matter anymore to anyone.
Steve
That’s a pretty telling graphic and puts a spotlight on EROI. How do the other producers stack up in comparison?
NAOM
Hint:
Any direct attack on Iran would result in swarms of missiles hitting U.S. military installations in the United Arab Emirates and Qatar. Saudi water desalination plants, refineries and ports would also be targets.
It is doubtful that Trump or the Saudis are ready to risk such a response.
As Iran’s President Rouhani said:
“If one day they want to prevent the export of Iran’s oil, then no oil will be exported from the Persian Gulf”
Pompeo (and other hawks) must recognize that Iran means what it says and has the tools to fulfill that promise.
Any direct attack on Iran and they finish the job.
This was most likely done by whoever has the greatest motivation to prevent any talks between Iran and Trump from happening. Just look at the timeline.
“This was most likely done by whoever has the greatest motivation to prevent any talks between Iran and Trump…”
Now, now- lets not start blaming the Texans prematurely.
Iran, and even Trump, know the rules—-
There is not going to be an attack on Iran– the consequences are too great.
The issue is, restrictions on Iranian oil.
True Hightrekker,
and the Iranians know full well that they could have all restrictions on export removed rapidly if they would agree to refrain from operating outside their borders (that means stop attempting to exert their control and theocratic influence over- Iraq, Syria, Lebanon, Israel, Jordan, Palestine, Yemen, and SA), and stick to the nuclear deal.
That would be a very difficult pill for them to swallow, given that their government built its whole identity around expansion of their version of the United Islamic State.
Maybe they could get all restless over Kashmir instead.
Well, as Mao pointed out:
“Religion is poison”
It is really hard (well, KSA’s destruction of Yemen may be an exception) to have much sympathy for our Mideastern Friends who live by violent religious standards from the 11th Century.
But, hey, the US is immersed in fundamentalism currently.
Late stage capitalism was never going to be fun, but this is pushing the edge.
I would suspect that it is a lot more local than Texas.
Agree SW, but just pointing out that many different people could have motivation to keep Irans oil of the market,
for example SA or Russia.
Hickory,
Good one.
July Director’s Cut released, as well as July Pennsylvania gas.
New record for North Dakota at 1,442,459 bbld.
New gas record also … closing in on 3 Bcfd.
Pennsylvania produced 18,545,643 Bcfd … new record.
For context, the energy output from July’s Pennsylvania is well over 3 million barrels of oil … per … day.
Dennis, FWIW, I’ve tracked down the ~50 EOG wells that came online in 2017 in the Bakken. Will examine production histories in detail in coming days.
Quick, preliminary glance is … interesting.
Coffe-
” the energy output from July’s Pennsylvania is well over 3 million barrels of oil … per … day”
Do you mean the gas output energy content in terms of barrels of oil equivalent?
Thanks.
Hickory
Yes.
The energy equivalence across several materials can be achieved/compared by using British Thermal Units (Btus) which measures the amount of heat needed to raise one pound of water 1 degree Farenheit (simplified explanation).
As a single cubic foot of natgas contains 1,015 btus (100% methane), the common 1,000 cubic foot measure of natgas equates to one million btus (mmbtu).
A single barrel of standard grade crude oil is considered to have the same heat energy as 5,800 cubic feet of natgas (usually a factor of 6 is used for comparative purposes).
Long explanation for why that 18 and a half billion cubic feet gas per day from PA has same amount of energy found in over 3 million barrels oil.
Real world economics – as of this post – indicate that gas-sourced heat energy is 4 times cheaper than oil-sourced.
Huge ramifications from that.
Yeh, I get that, just trying to confirm you had been indicating equivalence.
Its a huge amount of energy.
Hickory
It sure is a lot of energy … all the moreso when one realizes that it is Pennsylvania only.
Throw in Ohio and West Virgina, the Appalachian Basin is currently producing the heat energy equivalent of over 5 and 1/2 million barrels of oil every day.
4 wells only – Chesapeake’s Joeguswa 4 and 5, and Nikolyn 6 and 7 have – in just 8 months’ time – produced just under 30 Billion cubic feet of gas … enough to satisfy the entire year’s residential gas consumption for the cities of Cleveland, Pittsburgh, St. Louis, and Cincinnati COMBINED. From just four wells in just a few months’ production.
Coffeeguyzz
Have fun with that. 50 wells is a pretty small sample. Is there something special about EOG? Perhaps looking at top 5 or 10 companies or just looking at all wells in 2017 from Bakken makes more sense.
Days online not really significant for a large sample. Reality dictates that wells go down for maintanence.
Do you have a car? Does it ever get repaired?
Coffee,
I for one is looking forward to reading about your findings for those EOG wells of 2017 vintage (You better deliver now!).
On average those EOG wells is amongst the poorest of all the 2017 vintage population for Bakken.
And here is the kicker, no need to run the numbers for profitability for those wells.
They will in aggregate NOT be profitable.
Even hardcore communists care about profitability, but a few completely velcroed to LTO tout some explanation about the number of days offline as the explanation for the poor performance of some (poorly) selected well population.
Profitability is about flow, both physical and cash.
/sarc.
If some management team has not understood that, the investors should politely invite such management teams for a 3 weeks luxurious tour to the Great Barrier Reef, where the second day would be spent shark fishing….. with the said management team as bait.
That would surely help motivation and improve morale.
sarc./
Dennis/Rune
The targeting of EOG’s 2017 wells was just a somewhat serendipitous consequence of Eulenspeigel’s noting their poor performance. (Blame ol’ Euly for everything that ensued).
When I saw the dramatic profiles, I realized that the shut in times must be playing a role.
Identifying the single 3rd qtr well confirmed this.
To be clear … Enno puts an enormous amount of time into his work and I have no reason to question the accuracy of his numbers.
However, framing future potentials without accurately incorporating operational motivations along with the geological realities can easily lead to mistaken projections.
Broken record from me, this.
Although Dennis has already somewhat blithely dismissed the significance of new wells being offline perhaps 35% of the calendar time, I will dig in and relay the actual “goings on” with these ~50 2017 EOG wells.
Coffee,
Try for once and behave like a grown-up! (Blaming others is childish and a known hard left libtard tactic!)
Present some facts/statistics instead of guessing.
And while you are at it, compare that to the average and other operators’ performance (time offline).
And again a high time offline affects both the top and bottom line (economics) for the companies and if an operator on average has 35% of the time offline for all its wells of any vintage, it is primarily a management problem.
(Mentioning profitability for shales in some circles has the same effect as garlic and silver on Dracula!)
Enno compiles the numbers from the state agencies, so any inaccuracies are not Enno’s fault. He is just presenting the numbers as NDIC presents them. Only a low life would try to create doubts about Enno’s integrity.
Yes, I have observed over the years some revisions to the aggregate monthly numbers from NDIC and for Bakken these have been small/tiny (that is less than 0,1% on aggregate).
Coffe, we are waiting…this is very simple and for someone as smart as you this is done in less than 2 hours.
(Blaming others is childish and a known hard left libtard tactic!)
Err… Yes Rune, that occasionally happens. But the exact opposite is, by far, the most frequent. Trump continually blames the Democrats for his obvious and very stupid mistakes. So we can say that, far more often than not, blaming others for one’s very stupid and obvious mistakes is a childish and well-known hard-right * tactic.
*I don’t know of a right-wing, or opposite term for the word “libtard”, but if I did I would use it here. If there is not, one should coin such a term now. 😉
Ron,
Let me try to expand a bit.
What I have observed during the recent years (and I am not claiming to be right) is that increasingly control of the narrative have taken precedence over civil discourse based on evidence, facts, logic and data. Propaganda rules.
Trying to adhere to science (or the scientific method) has increasingly been drowned out by the need for control of the narrative.
No doubt there are sinners in the north, east, south and west camps and increasingly they are yelling at each other (or coercing) instead of communicating (polarization). So, we likely face several challenges and without communication how will these challenges be met?
And no, I do not now have a good proposal for the opposite of a libtard, but I hold it likely as soon comes up with one that sticks, no one will be able to either spell it or pronounce it right. That is likely a communication thing.
Rune,
libtard defined below
https://www.quora.com/What-is-a-libtard
a pretty loaded term, and not particularly scientific, in my view.
When I used the term I knew that it was loaded and that it was not very scientific.
Might i suggest something without ‘tard’. Tard as we know is short for retard, which historically was used to refer to someone with Downs syndrome, etc. There are few things mor despicable than to laugh at someone because they are a cripple, have intellectual disabilities, etc.
I think something to with excrement would be most suitable as there is a strong correlation between someone using the word libtard and excrement.
Perhaps, repturd, neoturd might work. Better yet, use a preexisting word asshole. Why not just call them assholes?
Why not just call them assholes?
Yeah, that’s the word for them. Why try to come up with some stupid word when you already have the perfect word?
You should establish a set of ground rules for your blog, Ron. If you only want liberal assholes contributing here, and no conservative assholes, just say so.
Mike
All are welcome. I would prefer there be less name calling.
Though in many cases I join in the stupidity of name calling.
Creates only heat, very little light.
Mike, it’s not my blog anymore. I gave it to Dennis. If he wishes to ban me for calling assholes, assholes, then he is free to do so.
But Trump is trying to send deathly ill children, children, that are alive only because the are getting medical care in the USA, back to their country of birth. There they will die.
That makes Trump an asshole. And all who support this murder of children are assholes also.
Trump Administration Ending MedicalDeferrals & Deporting Sick ImmigrantKids: What To Know
3. This will be a death sentence for sick immigrant children, who face poor, or no, treatment for their conditions in their home countries.
If concern for children is the big deal then why not demand the President send them to Cuba.
Cuba has substantially lower infant mortality and deaths before age 5 than the US.
US 5.8 deaths per 1000 live births. Cuba 4.5.
US 56th place globally. Mexico is 99th out of 223, not all that bad. Above China at 101.
It occurs to me that assholes exist on the left, right, and center, no correlation with religion, politics, race, gender, or sexual preference.
All are welcome. Right, left, center, believers, non-believers, and even assholes.
It occurs to me that assholes exist on the left, right, and center, no correlation with religion, politics, race, gender, or sexual preference.
Of course they do. There are assholes in every race, religion, or national origin. But…
It rains in Florida, where I just moved from. It also rains in New Mexico where I just moved to. But it rains one hell of a lot more in Florida than it does in New Mexico.
Likewise, there are far, far, more assholes in league with Donald Trump, and the party of Trump, than there in league with the Democratic party or others on the left of the political spectrum.
That’s a point that cannot be denied.
Empathy is the word. Do you feel for your fellow man? Or do you just say: “Fuck him, it’s his own fault that he is broke, or homeless, unemployed, or suffering from a disease of which he cannot afford the cost of his treatment?
That Dennis, is the difference between the party of empathy and the party with a majority of assholes.
Dennis, Dennis, you do not want to get into a debate with me on this subject. All the evidence is on my side and the other side, the side of assholes, is entirely unarmesd.
Ron
We have different perspectives.
There is nothing to be debated.
Who is or is not an asshole is a matter of opinion as there is no fixed definition. A bit like debating which piece of art is more impressive.
Debating opinions is a waste of time imo.
Mr. Likvern
My tongue in cheek reference to Eulenspeigel apparently went completely over your head.
Let me try one final time to be both clear and understandable…
That 35% offline figure was what Mike Filloon researched when referring to new wells in northeast Mackenzie county after he and Enno got into a cyber spat on Seeking Alpha about new well production.
Enno certainly derives his North Dakota figures from public, official sources … and PRESENTS them in MONTHLY framed format. The effects of which can be graphically seen with the 22 days online in June of the Round Prairie well, even more so as its July online status was 11 days. (This is yet to be presented on shaleprofile).
You are correct about one thing, Mr. Likvern, that it should take only a couple of hours to scan and compile the days online status of these ~50 EOG wells.
I had a brief, courteous, yet fruitless conversation with the ND DMR folks today in an attempt to expedite my re-subscribing to their Basic subscription.
But, hey, just a thought here … since you are such a widely acclaimed authority in these matters … could YOU spend the brief time scanning the DMR data and enlighten us to your findings?
I am certain that you keep abreast of these matters as you seem to have a reputation for being knowledgeable in this realm of unconventional hydrocarbon development … amirite?
TIA.
35% offline does not translate into 35% “lost”/deferred production. This depends on where the well is in its lifecycle.
There are always time offline (just the nature of things), question is what regularity should be expected? in other words what is the baseline regularity?
Using monthly format will reveal “bumps” on several plots that may suggest/identify time offline.
Why this wish to have production listed by calendar days and adjusted for time offline?
Coffee, I understood from above that you were well into doing such a research from effects of time offline.
FWIW
While awaiting access to the ND DMR database, I got a “head start” using Enno’s site to identify the wells started in 2017 by EOG in the Bakken.
The 46 wells’ history (2 Shut In excluded) are freely available on the Monthly Production Reports and anyone can access/verify the data.
June’s report has the pertinent well info on pages #s 2,68, 185-7-8.
The total online production days for the 46 wells was 961 days … 70% of the calendar month.
The roughly dozen wells that were online 30 days produced between 75 to 150 bbld with 120 bbld being the approximate average.
8 of the wells were online less than half the month, about 20 were offline a week or more in June.
This is all publicly viewable data.
I am done.
Coffeeguyzz,
Can you find me a well that has remained online 100% of the time from first flow for about 60 months?
I believe you will be hard pressed to find such a well.
Bottom line, days online are of little significance for a large sample of wells. This is the reason small samples of 50 wells may not always represent the population of wells.
Perhaps 70% online is a bit low, but as Rune correctly pointed out, that is the company’s fault for poorly run operations and it will affect their bottom line, which despite what you seem to believe, is the point of the oil industry, not to produce energy, but to produce a profit.
Talking about shale roses when the mighty Saudi forest is ablaze…
First, why only pick June 2019?
All EOG’s 2017 vintage 48 wells had then a minimum of 19 months of flow/operation.
Why not look at all the 19 months and compare to the average for all Bakken?
The point here is that without establishing a reference/baseline this (Coffee’s) exercise has very little value.
EOG’s 48 wells of 2017 vintage time offline for June-19 was about 30% (regularity for June-19 about 70%) for the 46 wells with reported flow, 2 wells SI (time offline about 33% if the 2 SI wells are included).
Let us do some simple math here.
Assuming 100% regularity these wells on average would have had a flow of: 119 bo/d / 0,7 = 170 bo/d which means monthly flow for the average well for June-19 would have been (170 bo/d – 119 bo/d) *30 = 1 530 bo higher.
In June-19 EOG’s average 2017 vintage (48 wells with a minimum 19 months of flow) had a cumulative of 162,8 kbo.
Adjusting with an estimate for deferred production, EOG’s wells in June could have had a cumulative of 164,3 kbo.
Potential (“loss”) deferral of gross revenue for June-19 about $3,5M.
The cumulative could as of end of June-19 have been ((164,3 – 162,8)/162,8) * 100% = 0,9% higher.
The average for all Bakken of 2017 vintage (971 wells, all with a minimum 19 months of flow) had a cumulative of 202,9 kbo per June-19.
The average 2017 vintage EOG well had per June-19 a cumulative of about 80% of the average of all Bakken wells of 2017 vintage.
As of now, it is projected that EOG will nominally lose about $1M on average for each of the 48 wells of 2017 vintage.
Well done, Rune. I am sitting a drilling rig at the moment or I would have tried to find a way to a URL on EOG’s Bakken efforts from Enno; they have had their day in the sun in North Dakota and should high tail it back to Texas, pronto. Since 2013 their wells up there suck, badly.
This was a really dumb debate, a way to take away from important work by others as to what is actually causing decline rates to take a sudden turn towards exponential decline. On a personal level I can think of NOTHING more important at the moment than exaggerated EUR’s. Lies about EUR’s are giving Americans a false sense of energy security and are leading to some terrible, terrible policy decisions about our future.
Thanks Rune and Mike
Do either of you have an estimate of average EUR of 2017 Permian basin wells.
My estimate is roughly 380 kbo, but when I ask if this seems reasonable from experts, I get no comment.
For the Permian, I (so far) have not done any in-depth analysis to the same extent as for Bakken.
The templates used for Bakken are applicable for the Permian (and other LTO plays), it just takes a few hours to load the data. This approach deploys several methodologies for amongst other things to make estimates on EUR based on actual data. This exercise/project has multiple objectives amongst these to make good estimates on the composite R/P ratio (index) for all vintages and for the play. The R/P is a good indicator to identify unreasonably high reserves estimates thus assets and equity for companies.
R/P; Reserves over Production
In private forums last winter, the results were discussed and some also proposed to turn it into an article for WSJ.
I put any publication of the results on HOLD (awaiting the results from longer time-series) as I found that several of the younger vintages (that is 2014 and younger) likely had a too high EUR thus producing too high R/Ps, about 10% (which is big).
With time it was documented that the difference between the cumulative for the average well for sequential younger vintages reached an apex after about 30-36 months, for some companies after 15-20 months.
In other words, post apex the younger vintages showed steeper declines and the differences in cumulative started to decline (the cumulative started to converge) which so far led me to question the present EURs for the younger vintages used for R/P estimates.
Another output from this is YoY decline rates by vintage and composite decline rates using the end of each year as T0. The older vintages carry some “noise” from refracking (a filter may be developed to handle this).
What is clear now for vintage 2013 and older is that these appear to enter something that is best modeled as a YOY decline of 12% (exponential) after 60 months (keep in mind the T0 definition).
EURs for the younger vintages are too early to conclude about now, but if historical data provides any guide it is now expected these may have higher declines. (This may be observed on semilog plots (daily/monthly vs cumulative) if the line(s) get a steeper slope (starts to “bend” inwards) after about 20 – 30 months in operation.)
Perhaps not much of help for what was asked.
Thank you Mr Likvern.
Below is an old estimate for 2016 ND Bakken/Three Forks well from Sept 2018 (only 20 months of data at that point in time). I assume a 15% exponential terminal decline starting at 80 months from first flow.
Least squares fit of an Arps hyperbolic to 20 months of data used from 21 months to 80 months. If we assume well is shut in at 8 b/d, the EUR of the average 2016 North Dakota Bakken/Three Forks well would be 357 kb at 193 months from first flow. Permian basin estimate uses more up to date data as I do not follow the Bakken as closely as the Permian basin.
Note that the model predicts 210 kb of output at 32 months, currently shaleprofile shows the average cumulative output of the 719 wells that started producing in 2017 is 206.949 kb at 32 months.
At 20 months the average 2016 vintage (Bakken) cumulative was about 169 kbo.
12 months (at 32 months) later it was at 207 kbo.
The delta becomes about 38 kbo.
Your model comes out at 210 kbo (at month 32), in other words about 8-9 % higher for the delta from month 20 to month 32, which may not sound like a lot but as it moves the starting point for future projections higher it becomes additive.
It was such observations that made me put any publication of Bakken (and companies) R/P index on HOLD. Something was going on for the younger vintages (2014 and later) which influences the EUR estimates, the R/P index etc. and thus projections of future (aggregate) flows.
Thank you Mr Likvern.
Mike,
What would your guess be as to the exponential rate of decline. Rune uses 12% for older Bakken wells (2013 and earlier), in the past I used 10% and adjusted this to 15% based on Enno Peters work. Enno thinks 20% (or higher) is the likely rate.
Your thoughts would be appreciated (and thought of shallow sand, Fernando, or any petroleum engineer).
Thank you.
Dennis, Enno just gave a class on terminal decline rates that I missed because of work. His analytical portals included terminal decline rates for wells<50 BOPD, I think, and I have used that portal.
I would not argue with Rune about anything in the Bakken; if he says 12, 12 it is. In the Eagle Ford it can be as high as 18-20, in the DJ, higher. I can't say in the Permian; there is no much data and it clutters the big picture; also there are significant changes in AF schemes that occur in the Permian that cause production profiles to be different; more water means more total fluid can be produced even when OWR is declining. It looks like it could be as high as 12-13% itself, at least in the Midland. Decline rates are different for different sweet spots, different benches, different operators; can be dependent on how the well was managed during flowback and the first 18 months, operational goals, monetary needs…and decline rates can, and do change over time.
I think in some areas I like to look at decline rates are accelerating and there could be several reasons for that, including Lapierre’s theory of oil expansion, bubble point, etc., etc. Shale is just mudstone; things I predicted might happen six years ago with regard to proppant embedment and fracture closure are leading to low fluid entry wells that require pump off controls and time clocks; they produce 4 hours a day and thats that. At <$50 lots of shale oil wells in America, LOTS, are headed for economic limits.
Mike
Great stuff thanks for sharing your wisdom based on 40 to 50 years of real world experience.
I agree Rune is the expert on the Bakken.
I appreciate that he has shared his wisdom here as well.
As I figured, the price moved up some. Now trending back down. The only thing that will move these traders is, there is no more oil. The hit on US oil supply from their stupid pricing is five times the hit on SA, and SA is only temporary (currently). 2020 before substantial movement. These guys are absolute idiots.
GuyM
They buy into the false narrative of Saudi America. The true believer in the SA fairy tale thinks we are nuts.
Time will tell.
EXXON BORROWS MONEY TO PAY DIVIDENDS
It’s quite amazing how closely the shortfall of Free Cash Flow to Dividends was made up by net debt issuance.
Here is Exxonmobil’s combined financial data for 2015-1H 2019
2015-1H 2019 Free Cash Flow = $43.7 billion
2015-1H 2019 Dividend Payout = $58.5 billion
2015-1H 2019 FCF – Dividends = $15.1 billion
2015-1H 2019 Net Debt Issuance = $14.9 billion
So, with Exxonmobil now ramping up shale, it has been forced to borrow money to pay dividends. While the Saudi Drone strike may help Exxon’s financial situation briefly, I wouldn’t count on it over the longer run.
Steve
Steve
Oil will deplete and oil prices are likely to rise. Exxon understands this, even though it is left out of investor presentations.
Dennis,
Yes… Yes… Yes… the old supply and demand mantra. Well, Dennis, it seems as if that way of thinking will become increasingly meaningless.
I gather you don’t pay much attention to the Thermodynamics of oil depletion which states the net energy in a barrel of oil that makes it to the market continues to decline.
Furthermore, how do you think the market BIDS UP THE OIL PRICE?? Where does that money come from to BID UP THE PRICE OF OIL????
It comes from the Net Energy in that barrel of oil that makes it to the market, if we deduct inflation, as you have pointed out from time to time.
So… at some point, individuals who continue to believe that falling oil supply will push oil prices higher due to the OUTDATED Supply & Demand forces, need to start reformulating their analysis.
Steve
Steve
Net energy only important when considering all energy sources used.
For a single product it is of zero significance. Lots of different energy sources are used in the production refining and distribution of oil including coal natural gas nuclear wind solar and geothermal energy. One needs to look at all of these and the energy needs of society for a proper analysis.
Short on oil falls well short in this regard. Those who understand thermodynamics and statistical physics mostly agree on this point.
Oil is a terrible source of energy. It’s much too expensive. It got booted out of the electricity business decades ago except for a few niches.
The idea that the oil business is the energy business is only something people inside the business believe.
Funny story — Rick Perry wanted to abolish the energy department before he got to be energy secretary. During the hearings for his nomination he learned for the first time that the Energy Department is mostly about nukes.
I repeat: Oil is not important as a source of energy. It is useful as a way of storing energy in a moving vehicle, but it adds too little to the net energy mix for that to be where its value is.
When a Company like Exxon need to borrow money to pay dividend with oilprice ranging 50-60 USD they have invested in wrong assets. Most big oil Company now are earning money, pay down depth, buy back shears and invest in exploration drilling that hopefully add resourses. When oil price was 30 usd each barrel they might sell some assets and borrow money to increase cash. Exxon is also selling assets in the North Sea and other places. The compressors trains and tanks in Saudi will be repair within 2 months than all are back to normal WTI 50 -55 USD each barrel…
Sep EIA DPR released.
https://www.eia.gov/petroleum/drilling/
Eagle Ford stays on peak plateau as legacy decline of 118 kbd/month just exceeds 112 kbd/month from new wells.
https://www.eia.gov/petroleum/drilling/pdf/eagleford.pdf
Permian oil production continues increasing.
https://www.eia.gov/petroleum/drilling/pdf/permian.pdf
DUC count decreasing in almost every basin, exept Haynesville.
Let me see if I get this right.
The incident in KSA took out about 5 Mbo/d (processing capacities) and according to several sources KSA has a total capacity of about 12,5 Mbo/d and according to Ron’s charts in this post, KSA in Aug-19 was at about 9,8 Mbo/d.
So simple arithmetic suggests KSA still has some 2,5 Mbo/d of spare capacity, provided this spare capacity is not dependent on the same processing facilities affected by the recent incident.
It may take some time to bring in this spare capacity, max 90 days.
Some (preliminary) reports said that about one third (1,5 – 1,8 Mbo/d) of this capacity could be restored in a few days.
OPEC (- KSA) allegedly also has some potential to increase supplies (ref the agreement to keep back supplies).
Then add (increased) stock draws (incl. SPR).
So is this such a big problem for global oil supplies?
“So is this such a big deal for global supplies”
I’d say one strike that removes a couple million bpd in seconds is a big deal. Now imagine another one.
Another such strike (magnitude of oil supplies affected) would undoubtedly have more lasting effects and raises the probabilities of some escalaction that could involve several more parties.
IMO the world economy is now very vulnerable to both lasting supplyshortfalls (say 4-5 Mbo/d) of oil as this could set off secondary effects in a market with tight US dollar liquidity.
Add to that what the socalled global creditimpulse now is signalling.
(Anyone wanting to know more about the creditimpulse should Google it.)
Hi Rune,
Russia is giving assurance that Saudi oil shortfall can be covered by other countries. Russia stands to benefit financially from the higher oil price. Maybe Russia sold missile technology to Iran who passed it on to Yemen Houthis?
Original article is Russia, below are first three translated paragraphs.
MOSCOW, Sep 16 – RIA Novosti. The deficit, which may arise in the oil market due to the situation in Saudi Arabia, can be covered from the world’s commercial oil reserves, Russian Energy Minister Alexander Novak told reporters.
In particular, when asked whether Russia should increase production against the background of falling oil production in the kingdom, the minister replied: “It all depends on the early assessment of the consequences, which is carried out by Saudi colleagues, hence it will be possible to understand the scale of influence production, supplies.”
“But there are currently enough commercial reserves in the world to ensure that in the medium term the lack of oil that we see is covered by supplies from commercial reserves. But, I repeat, in many respects everything will depend on the period for which the consequences of the disruption of infrastructure will be affected,” Novak added.
https://ria.ru/20190916/1558720128.html
If you think of the attack as a hurricane, it only seems fitting. No big deal, right ?
Well, (putting aside the curious fact that this particular hurricane’s target selection was very odd – given the rich selection of complex expensive hard to repair machinery in buildings around the site – why just blow a hole in a dozen (empty?) gas tanks?), what this particular hurricane is saying is: “Do as we want, or we will send another hurricane tomorrow, and another the day after, and we will continue to cripple you until you bow down to us”.
An Atlantic hurricane is a one shot affair, this is different, and the market knows it and KSA knows it is a very big deal
Rhetoric question? Uncertainty just increased and hence volatility and price.
Not many know just how much (medium term) spare capacity is available. Most of it is in KSA and perhaps some in UAE. We might find out soon just how much.
The affected production is 5% of the global but more than 10% of net export (assuming KSA reduce exports first and domestic consumption second).
The market is in deficit as indicated from stock drawdowns and LTO slowing down. KSA started drawing down their oil stockpiles several years ago.
Another issue is what happens next: an Iran-US deal just got less likely. Will somebody try to block all of Iran’s oil export and how will Iran respond? Will there be more attacks on KSA’s oil facilities?
Lower production capacity in KSA also makes supply less responsive to other disruptions, e.g. hurricane in GoM.
My comment was from a purely supply perspective.
(I am aware there are lots of other elements baked into this incident.)
Rune
Probably Saudia spare capacity is less than 2.5 Mb/d. Strategic reserves could be used but if there is some other supply problem the World would be in a vulnerable position in regard to liquid fuel supply imo.
KSA’s spare capacity (oil) has been subject to many god debates.
The recent incident may shed some light on its true nature.
Rune,
I agree.
Hi All,
Thought I’d run down and visit ‘ol Darwinian’s (Ron Patterson’s) site and see what was brewing regarding the Saudi refiner attacks.
However, I believe there’s no better light resource discussing Iran’s military capability than an old article on the erstwhile resource – The Oil Drum – http://theoildrum.com/node/8956
What I find to be more interesting than the article are the comments – a sudden fountain of real smart people showed up in particular to comment – offering great insight into Iranian economy and capability, and more importantly, their resilience.
One take-off I recall suggested was how Iran, being unable to offload their oil reserves due to the sanctions will have the effect of leaving them as the last man standing with oil depletion rapidly eating away at the reserves of every ELM nation. Overall, a backfire on American/Trump policy – one with an eventuality leaving Iran’s the world’s remaining superpower! As I mentioned, Iran is more resilient than most are aware, something lost on the Anglo public focusing on crushing their pension base by fomenting social media unrest.
With that, I’ll point you to peakoilbob’s insightful posting in that article’s comment section, here.
http://theoildrum.com/node/8956#comment-878857
Cheers,
Notes on population from this string. http://theoildrum.com/node/8956#comment-878007
The refusal of international investigation pretty much means…. that this time Saudis hit themselves (or hired some Jemeni group to hit them). The upside of this is that in such a case we can expect fast repair. Saudis need to gain from higher oil price, right? Unless it was of course an attempt to hide some terminal decline of unexpected magnitude…
The downside is that this attack will probably set patterns for future: oil production will be increasedly ransomed by different military/terrorists groups. Everybody there is researching oil production; the public knowledge is close to null, with everyone on the news speaking about “refineries”. If that were refineries, a big fire there should RELEASE a lot of more oil, right?
Russia will probably be selling Pantsyrs right and left soon, since they offer a good combo of guns and missiles: the big problem with missiles is that you easily run out of them, so in saturation attack only guns will do. How it was that US MIC did not think about short range deffences for their Patriot radar arrays? Just because missiles cost more?
Typical imperial hybris; “we only deal in big stuff”.
Another hypothesis: this was all about power struggle in Arabia. The anti-MbS people, people who believe oil is the only resource Saudis have, want to save something for future, and so they decided to slow down production by such extreme means. All those princes hanged upside down in a luxury hotel few years ago surely became mortal enemies of MbS. No one forgets such humiliations. It is even possible that some of them are now helping Yemenis, which may be one of the reasons why this rebellion is so unexpectedly resistant to Saudi firepower, and even slowly encroaching on Saudi kingdom…
Since everyone is speculating I think it is part of Netenyahu’s re-election campaign.
I was kinda right…. It looks like Abqaiq story has roots in KSA.
https://oilprice.com/Energy/Energy-General/Wealthy-Saudis-Are-Being-Bullied-Into-Buying-Aramco.html
It may be the MbS REVENGE for something he thinks they are guilty of, for example, guilty of the attack on Abqaiq facility.
‘Riyadh’s approach was not exactly friendly. Words including “strong arm”, “coerce” and “bully” were used to describe the way Saudi Arabia’s government was trying to secure the anchor investors for what many see as the deal of the century in oil and the largest IPO ever.
One of the wealthy Saudis targeted by Riyadh as Anchor investors was Alwaleed bin Talal—a celebrity billionaire who was held at the Ritz-Carlton for three months and who, like the others detained at the hotel, was only freed after he agreed to transfer substantial financial assets to the government. To date, many of his remaining assets in the Kingdom remain frozen but, according to the FT sources, he was offered access to them if only to use them to buy into Aramco. ‘
I’ll post this to the non petrol thread with more comment.
But people here who are invested in oil long term might want to read it and THINK about it.
Electric cars may go mainstream a LOT faster than anybody except Tony Seba fans think they will.
https://www.wired.com/story/shift-electric-vehicles-strike-gm/
USA gets 63.5% of it’s electricity from fossil fuel. 1.6% from solar. 6.6% from wind. 7% from hydro.
Electric cars use electricity.
Still along way to go before the fossil fuel crowd is spooked by electric cars.
https://www.eia.gov/tools/faqs/faq.php?id=427&t=3
Perhaps due to SF6, electrification doesn’t look like it’s gonna save us from a GHG problem to the extent that the Elon Musk Fan Boi’s perhaps anticipate.
https://www.ecowatch.com/electrical-industry-greenhouse-gases-2640380385.html
From the link I posted:
“GM announced the closure of that plant, in Lordstown, late last year, along with job cuts and the elimination of many sedan and compact models. It has balanced that withdrawal with plans to introduce 20 new, all-electric models by 2023, its first big step in an $8 billion bid to (someday) stop building gas- and diesel-powered rides altogether.”
“a moderate shift to electric propulsion could leave 75,000 Germans out of work—even accounting for the creation of 25,000 new jobs. That’s because batteries and motors are far simpler machines than internal combustion engines, and require a few hundred parts instead of a few thousand. That’s the same reason maintenance costs for EVs are so low—a problem for dealerships that rely on servicing cars for profits. Fewer parts mean fewer people.”
“In 2017, Ford CEO Jim Hackett, discussing his company’s plans to invest big in electrics, told investors that Ford could reduce time spent building EVs by 30 percent, compared with conventional vehicles, according to Reuters. When industry supplier Continental announced a shift away from building internal combustion engine powertrains, it also predicted job cuts. Hyundai’s auto union chief, Ha Bu-young, told Reuters that “electric cars are disasters. They are evil. We are very nervous.”
“The UAW itself has found that American automakers’ move away from exploding petrol could do away with 35,000 jobs in the next several years. “EV powertrains are simple compared to internal combustion engines. The simplicity could reduce the amount of labor, and thus jobs, associated with vehicle production,” the union’s research chief, Jennifer Kelly, said in March.”
Anybody who is invested in the oil industry, as an owner, operator or employee needs to understand that electric cars and light trucks aren’t hoaxes dreamed up by libtards , as Trump fans describe them, along with forced climate change.
They’re real, and they are going to sell like ice water in hell the next time there’s an oil supply crisis that results in people having to stand in line to buy gasoline.
The very large majority of new car buyers have never yet even SEEN an electric car, close up and personal, never mind DRIVEN one. That’s about to CHANGE.
“WIMMEN ” are are taking over, and making more money than men these days, because the MEN are the ones being left behind in the new economy, and women making enough that they can afford a new car every four or five years are going to buy electric cars, knowing they are MUCH cheaper to run, and will be under warranty anyway for as long as they own them. Electric cars fit in MUCH better with their “IN” group, namely well educated people who mostly vote D and support “green” political positions.
Driving a noiser nastier conventional car will mark them as an OUTSIDER, which is something everybody, left or right avoids like the plague.
Women don’t care much about the roar of a big engine winding up.
But I still think oil prices will go up a lot, due to depletion, before enough electric cars and light trucks are sold to cut into oil demand enough to result in the price staying low.
“the roar of a big engine winding up”
What is much more exciting to most who have experienced it is the incredible torque/acceleration you get with an electric motor, silently. Feels very powerful.
“WIMMEN ” are are taking over, and making more money than men these days, because the MEN are the ones being left behind in the new economy
Girls are doing a little better than men in school. But…they’re not making more money once they graduate. The idea that they are sounds like a part of the misinformation which the conservative media is using to poison the minds of conservative viewers, especially men. It suggests that efforts to allow women to earn equal pay are in fact evil plots by women and liberals to hurt men, plots which have made men poor and lonely.
In fact, men are victims, but not of women and liberals. They’re victims of the whole society, the whole culture, taught by fathers and mothers, by school, by the media, etc.
How are men victims? They’re sent to war, and come back dead or injured. They’re taught that as warriors, taking care of themselves is unmanly – smoking, drinking, driving dangerously, working too much, doing dangerous jobs, being anti-intellectual (and avoiding education!), eating too much, suppressing emotions, being solitary and grumpy, not going to the doctor – all these are signs of manliness.
Of course, women are victimized as well: they’re forced to have children they don’t want, and then to take care of them without help. If they work, they’re paid less, especially if they take time out to have children, or work in jobs that are traditional female jobs, like childcare, food industry, teaching, etc. They’re also taught that taking care of themselves is unmotherly – they have to exhaust themselves to put their children and family first.
Anyway – let’s not buy into this “men are the new victims” meme – it’s just a wedge issue, designed to divide men and women and get men to vote against their own interests.
The SF6 problem is a fake problem, getting blown up way out of proportion. Total since the 1950’s is about equal to one month of CO2 output. It’s small potatoes and controllable.
See my earlier comment on that subject:
http://peakoilbarrel.com/open-thread-non-petroleum-sept-12-2019/#comment-687764
I will post some oil stuff in the non oil thread so you dont miss it and get to think about it.
Still probably a new record for this post until first derail attempt.
Peak oil stuff, we hope, for a change of pace.
Today’s Saudi press releases remind one of
Monte Python’s ‘Knight Sketch’.
“It’s only a flesh wound”
https://www.youtube.com/watch?v=ZmInkxbvlCs
It’s probable y’all don’t know how this works.
Gizmos called linear accelerometers exist. They are in airbags in your car. You get 3 of them mounted in all 3 axis configuration XYZ and their output feeds a computer. If one of them feels an acceleration, the computer times it and knows the velocity in that direction. And can project that from its clock to a new position XYZ, from that velocity.
Before you start all this you point the vehicle in a carefully known direction and put 3 gyros aboard to measure change in rotation on a 3 axis config, and with this information, feeding the same computer you can transition the XYZ vehicle coordinate system to North East Vertical, and now the computer’s calculation of position is no longer XYZ, it is lat long altitude. Your vehicle then proceeds with the computer commanding the flying algorithm to go . . . wherever.
The gizmo that contains all these sensors is called an IMU for Inertial Measurement Unit. You can fit it in your hand and it consumes very little electricity. What was just described is called Inertial Guidance. Submarines do it.
This is how you navigate a drone. You feed the navigation solution in your computer to a filter and it will combine with GPS and get you a very nice flight without any remote piloting (and even if GPS is jammed).
This stuff is really easy to do. The hardware AND software is off the shelf. It will happen again. It’s cheap, you can probably have 50 vehicles at one time if you like, and defense is going to be pretty difficult to achieve.
KSA need not be the only target. Range easily hundreds and hundreds of miles of fuel. (A helluva lot more than an EV)
Oooh now there’s a conspiracy theory. Or how about some Green nazis. High tech tree spiking.
BTW how do we feel about casualty count = 0 on this event?
Hi Watcher,
Beat you to it, in the other thread. Posted that I could buy all the stuff, hire a programmer and build an armed drone myself.
That’s a little disingenuous. Hiring a programmer is easy; hiring one that can do what you’re saying is difficult. Now, if one could piggyback onto an existing program available off-the-shelf – and get a limited payback (i.e. drones flying no-return scenarios – makes things easy like suicide bombers) – maybe.
But not likely. It’s said Firmware is the Most Expensive Thing in the Universe – here’s one guy’s take on the cost of firmware …
Ex-Lockheed CEO Norman Augustine, in his wonderful book “Augustine’s Laws” (1997, American Institute of Aeronautics; ISBN: 1563472406) wrote about how defense contractors were in a bind in the late 70s. They found themselves unable to add anything to fighter aircraft, because increasing a plane’s weight means decreasing performance. Business requirements – more profits – meant that regardless of the physics of flight they had to add features. Desperate for something hideously expensive yet weightless, they found. firmware! Today firmware in high performance aircraft consumes about half the total price of the plane. A success by any standard, except perhaps for the taxpayers. Indeed, retired USAF Colonel Everest Riccioni has suggested firmware-stuffed fighter airplanes and smart missiles are now so expensive that the US is unilaterally disarming (http://www.pogo.org/p/defense/do-010801-unilateraldisarm.html).
Than everything remains as before WTI again in the 50 usd range.
https://www.bloomberg.com/energy
Yeah, I told ya. We are going to have to almost run out of oil, before these idiots adjust their programs. Because, “shale will keep increasing, forever”. Barf!
Or until 2025.
“Donald Trump turned to the weekend attack on Saudi Arabia’s oil facilities and assured his audience the United States had become such a big producer it no longer needed oil from the Middle East https://twitter.com/realDonaldTrump/status/1173560246863876096.”
http://news.trust.org/item/20190916211739-95p77
Such dishonesty + Exploitation of Public ignorance from those in Office should be criminal.
Also: from the same Article.
“As an example, the biggest U.S. refinery – Motiva Enterprises LLC in Port Arthur, Texas – is half-owned by Saudi Arabia’s state energy company, Saudi Aramco, and is set up for Saudi grades.”
IIRC, Didn’t Shell Bail on this part of Motiva? SA owns much more than 51% of Port Arthur Complex now??
Yeah, it’s Saudi now.
Made a quick thousand bucks on the Jan 2021 options before it tanked today. Sold only 30% of holdings. Needed cash.
Witn BS ike this, you don’t have to be really sharp in n investments, it’s a lock.
http://news.trust.org/item/20190916211739-95p77
The attack can probably soon be redone. It came from NW SA or Iraq. Everyone is looking the wrong way. I would expect it soon, before they can regroup.
https://www.cnbc.com/amp/2019/09/17/trump-administration-weighing-action-against-iran-after-saudi-oil-attack.html
Ok, the Iranians officially pissed off the rest of the world. They don’t care. It’s absolutely gone to the next level soon. There is no limit to what oil can go to,. Trump, as dumb as he is, may not have wanted a war, but he has little option, now.
https://www.cnbc.com/amp/2019/09/17/trump-administration-weighing-action-against-iran-after-saudi-oil-attack.html
The Saudis, plus Israel and the rest of the Sunnis, have decided air power superiority. Matter of a short period of time.
Ok, I’ll call it. The fits going to hit the Shan, very soon. I have Iranian friends, and hate what’s going to happen, but this was massively stupid.
Saudis are slow to respond, of course. You have to build your coalition, which should not be hard, at this point. Damn, that was really stupid.
But, not entirely unexpected.
The Saudis are burnt, finally. Took a while though eh? They won’t be getting a coalition together anytime soon. Likely nor will Turkey and Egypt be fighting their battles, not without serious concessions in Syria, Sudan, Qatar, Libya and Egypt (Turkey likes the Brotherhood not the dictator).
‘Talk loudly and carry a small stick’ seems to be Trumps mantra. There might be a few cruise missile strikes, but it’s a two way firing range now.
We used to have a saying where I once worked- there’s nothing you can do about a bullet with your name on it, it’s the one’s addressed “to whom it may concern” that you should guard against.
Shoot, dude. It’s no longer about Iran vs US and Saudi. It has escalated far, far further than that. We have fallen back, many centuries.
My guess is Trump will start walking it back, stop causing shit, then claim a big victory, then forget about it. Sorta like his North Korea game.
Season 3, episode 156, same story line. To busy robbing the bank.
This attack isn’t even headline news at this point. Didn’t even hold a 48hr news cycle. We are on to Lewandowski and GM strike. If the US executes an attack directly against Iran that’s an act of war and would give clear justification for a significant response on Iran’s part. If the Saudis attack Iran, same problem.
I’m not seeing a lot of popular support, outside of the war-hawks, for an open response like Trump did in Syria. It’s gonna be hard for Trump to do anything. How much leverage does SA (and Israel) really have over US? We are about to find out.
Sorry to prattle on about it, but I thought this headline said it best:
The Saudi drone attack took out a known weak spot in the oil supply chain with a cheap, low-tech weapon that billions’ worth of air defenses are powerless to stop
https://www.businessinsider.com/saudi-drone-attack-targeted-weak-spot-powerless-2019-9
Let’s hope they stay away from the Houston Shipping Channel
Yeah, let’s hope for everyone. It’s already getting scary. And, yeah, as a member of the Sons of the Republic of Texas, I would say that is not a bright idea. I’d hate to sign back at seventy, but I would.
And, needless to say, the traders buying and selling oil and t $59 WTI are the dumbest assholes
https://amp.cnn.com/cnn/2019/09/17/investing/dow-stock-market-oil-today/index.html
Fun and roses?
https://amp.cnn.com/cnn/2019/09/17/investing/dow-stock-market-oil-today/index.html
Chase your tail.
https://amp.cnn.com/cnn/middleeast/live-news/saudi-oil-attack-iranian-base/index.html
It ain’t finished yet.
They ain’t too smart. I’m locked and loaded,
It’s a foregone conclusion. War is imminent.
https://www.thehindu.com/news/international/irans-khamenei-rules-out-talks-with-us/article29438273.ece/amp/
“It’s a foregone conclusion. War is imminent.”
You have no idea what you are talking about. We have too little information about what really happened, and who was responsible for what, to extract any conclusion. And by now the US should have learned a lesson about starting wars in Asia. KSA’s war in Yemen provides the latest example. Even when you are clearly superior things never go as planned.
US not going to start it. They will be in “advisory” status, again.
That’s even sillier. Israel doesn’t start wars, and KSA is tied up to the neck in the Yemen war. Who’s gonna start it, Kuwait? You really don’t know what you talk about.
Israeli security is manpower limited. There are only so many people that they can throw at a problem before they deem the problem overwhelming. That is my understanding as to why they have to be so aggressive with their options. They can’t afford to let something grow and then have a problem down the road that exceeds their human resource limitations. By and large today, IMHO, the average Israeli suffers from severe war/threat fatigue. With a wide spectrum of threats and with a lot of high tech solutions, it is still a struggle to keep up with the threat load. Too many threats and too few people to assess/understand, classify with appropriate priority levels and then counter them. Hence the characteristic of aggressive behavior.
However, aggressive behavior has perhaps hit the point of diminishing returns.
The Israel-Hezbollah war of 2006 demonstrated that the Israel no longer enjoys military preeminence in the Levant. Israel will likely have it’s hands very full very quickly with Hezbollah threats in any altercations with Iran.
Here is a link to an image of a Kawasaki KDX 250 coupled with a RPG-7 on display at Mleeta’s resistance museum in Lebanon. Such bikes have proved useful in warfare for their agility and their off-road capacity. The bike/RPG combo (sticker price- ‘cheap’) was reportedly used by Hezbollah’s fighters in a number of operations during the 2006 war, to rather good effect I understand.
https://upload.wikimedia.org/wikipedia/commons/7/77/Mleeta_museum_%281%29.jpg
The Houthi arsenal is likely sufficient to conduct the alleged operation against KSA. If not, Iran getting more advanced drones to them is not hard- Iran likely launches drones from boats and they fly into Houthi controlled area to be collected, armed, programmed, and deployed against targets.
https://nationalinterest.org/blog/buzz/houthis-have-arsenal-ballistic-and-cruise-missiles-some-north-korea-81176
The main Israeli problem is not even the manpower, but the dangerous lack of any strategic depth, plus the fact that the majority of population is concentrated in the narrow strip between Haifa and Tel Aviv.
This is why Israelis constantly want to enlarge their state. But somehow they constantly lose (ultimately, at least).
Diffcult area to operate, MENA.
The GOP portion of the Deep State pushed a substantial contingent of warmongers onto this president. To date, he’s managed to resist most of their pushes. It’s useful to remember that the “moderate” John McCain was quite the hawk on most of these matters, particularly Syria.
In general, war has to have a purpose. The administration’s warmongers are a little bit like Madeleine Albright was for Bill Clinton. Her famous quote re Serbia was “we have this magnificent military we spent all this money on and now you don’t want to use it.” There needs to be a goal in mind for its use.
The McCain faction defines things like this — the Iranians were largely in compliance with the agreement to cease enriching uranium, but there was also in the agreement an understanding (if not explicit text) committing Iran to end its causing upheaval all over the Middle East. They have not done that, and that’s why the agreement needed to be terminated. Largely, the desire is that Iran, or North Korea, will submit any foreign policy activities contemplated to Washington for approval. This is of course not going to happen.
The president will back off from this. He’ll probably get a deal as a result. KSA would then start funding Democrats.
Perhaps more important than any of this is what’s going on in Israel right now. I encourage folks to keep an eye on that because the government there is going to decide what happens with that enormous gas field offshore.
That Israeli gas field is big for them, but small potatoes on the bigger scene.
The adjacent Egyptian field is considerably larger.
But who gets elected there is a big deal, indeed.
It’s looking more and more to me like this event at the Saudi oil facility was just smokescreen and Mirrors.
# The big fire was lit outside of the key parts of the facility.
# The holes in the tanks are far to precise to have been made by kamikaze drones and the damage way to
small for missiles from Iran.
# The Saudi blame Houthi with help from Iran, The US instead claims the attacks came from Iran.
# They now expect to be back up and running in a couple weeks.
# And once again loads and loads of evidence is being withheld from us.
# And just like the oil tankers that got hit this will soon be all but forgotten and another event takes the
spotlight to make the algos loose their senses once again.
# in the meantime the worlds real economy continues to contract and the price of oil stays too low causing more and more drops in oil produced but the news makes it look like these events are totally unrelated to each other.
# And in the end this wasteful energy dependent civilization, comparable to a tumor must eventually get wiped out.
In conclusion I tend to think it was an inside job either by some rival princes, a false flag to sell some oil at a better price, or most likely to mask the depletion that’s overtaking the additions in crude production.
Too much conspiracy. Too many people knowing about it. At some point one of them doesn’t get the rewards he expected and makes a phone call to a media outlet.
However, it is not just curious, but utterly bizarre, that there were no casualties.
I’ve been looking at various cases of refinery damage and comparing pics.
BP Texas in 2005 was caused by “a spark”, or so I understand.
The KSA damage doesn’t seem too bad when compared to other cases of refinery fire and explosion.
https://en.m.wikipedia.org/wiki/Texas_City_Refinery_explosion
This is the best interpreation I’ve seen:
“The Quds-1, on the other hand, could have a penetration-type warhead like an RPG, but maybe without the explosive. Take note that the satellite photos we have show no fire on the tanks that were hit. Why not? Maybe because the idea was to blow some holes in the tanks to show what could happen – a demonstration aimed as much at the United States as at Saudi Arabia. ”
https://www.asiatimes.com/2019/09/article/how-iran-precisely-targeted-saudi-oil-facilities/
My feeling is that it is the end of Abqaiq facility, and at least 2,5 mbd is not coming back online. What was struck was essentially processing the northern Ghawar output, and as we know from Simmons, the northern Ghawar has been on its last ropes for a long time already. Well, at least we now know how the Saudis decline will end – not with a whisper, like Alaska, but with a BANG!
Somehow – but very conveniently too – the still running Saudi oil production is just enough to secure the KSA internal consumption. But if I were an Iranian strategists, I would surely try to destabilize internal consumption as well; my primary aim would be to destabilize KSA and not the international oil markets. What may have been achieved is the reverse. Ergo: it wasn’t Iran. Probably a power group in KSA, maybe in connection with some Yemen group, and maybe China in the background. It is important to remember that Yemen has not only connections to Iran, but to Saudi Arabia too. By cui bono principle: Saudis save some oil (too often we see Arabs as just greedy oil dispensers, whereas they want to have a secure future too) and war in Yemen may end. However, the attackers surely are not USA friends; the end of KSA exports is a clear danger for petrodollar (therefore China). Isn’t KSA the anchor of petrodollar…?
After considerations, the money motive I would dismiss: Saudis have already got a lot of money from Aramco bonds (IPO will now obviously not follow). And let’s remember that they were undershooting their OPEC quota over last months by 0,5mbd. Who knows how much they really did produce, and how much was taken out of storage. If that 0,5mbd was a real cut, and not a cover for decline, then they could just cut more if they really wanted higher oil prices, and not be blowing things up. You put things on fire if you want to hide something. Maybe it will end with intervention in KSA, not in Iran…
By the way, EU gets circa 10% of its oil imports from Saudi Arabia.
My feeling is that it is the end of Abqaiq facility, and at least 2,5 mbd is not coming back online. What was struck was essentially processing the northern Ghawar output,
All of Ghawar as well as Abqaiq and Khurais comes through the Abqaiq processing plant. (That’s pronounced Abb kay.) Well over half of all Saudi oil comes through the Abqaiq facility. That’s why it was targeted.
Yes, but they will now have an excuse why Ghawar is not performing. When I wrote ‘2,5 mbd is not coming back online’ I was meaning Ghawar only.
It is strange that Shaybah oil goes through Abqaiq plant, since this field is bordering UAE.
Funny that nobody says anything about the Abqaiq field itself – it must have been totally dead by now.
Just wondering: would WWII-style flak be enough to shoot down the drones? Drones are actually quite fragile, especially their motors…
The peculiarity of modern warfare is it’s mixture of many generations of weapons, from Kalashnikov to S400….
No.
These are low altitude approaches. WWII flak was shooting at 20,000 ft altitude targets.
If there are 50 cheap devices attacking, maybe programmed for flight profiles arriving from different directions, and only 3 of which need to hit for success, there will be no defense.
And psssst, KSA doesn’t have to be the only target.
Russians claim to have successfully repelled swarm drone attacks in Syria. It is interesting with what weapons actually…?
My guess would be Pantsir-SM
https://defense-update.com/20190625_pantsir-2.html
Based on what happened and what we know of the incident in the Saudi Ambassey in Tyrkey we dont know if all the evidence shown are fake , it might be some old crap.
http://peakoilbarrel.com/opec-march-data-and-saudi-report/
Referring to the older post on Saudis, this Khurais field has been recently the second Saudi workhorse after Ghawar, with 1,2mbd. On the other hand, the field is missing from the 2004 depletion graph.
It looks like the attacker wanted to maximize outages.
https://oilprice.com/Latest-Energy-News/World-News/US-Official-Hints-At-Saudi-Drone-Attack-Culprit.html
While not usually my favorite writer on oilprice, I think, in this instance, she has it nailed. I don’t think this problem will sale into the sunset. Keep in mind, that Trump has cut back on Egypt support. Now, Egypt is firmly with SA., just calling for temperance. If, we restore and load up Egypt’s money from the US, and they are primarily Sunni???
I wonder what the comment “who did it” really means. Was this done with the blessing of both Rouhani and Khamenei or just K. There are two competing factions in Iran. There is the Supreme leader Khamenei and the Quds who have more power than the military. On the other side is elected president Rouhani and cohorts who negotiated the nuclear deal. While Khamenei agreed to the deal, the Quds were upset. I am wondering if the Quds convinced K to let them Lauch the attack so that there would be no meeting between trump and Rouhani at the U.N. K may be regretting the deal because it gave Trump the pretext to scrap the deal and impose sanctions.
The response to the attack may depend on fully understanding what is happening in Iran.
Doesn’t matter who did it. Does matter what we believe in.
USA is trapped now – some serious intervention is a matter of its credibility to Saudi Arabia.
Either war or farewell to petrodollar.
Well, goodbye petrodollar anyway, war or not war: this is the essence of this trap.
I am feeling as if we were in August 1914. We may be plunged into a war by domino of alliances again – this time, Saudi Arabia to USA, USA to Europe etc.
With luck we might see Trump, EU and hopefully others come up with a joint sanctions package. I just hope T’s advisors can convince him to put together a coalition.
Coalition means a war.
Have a bad feeling. WWI – from the European perspective – was essentially TEOTWAWKI. Now maybe the time come for America…
Yes I have the same bad gut feel.
Nations being “trapped” into a war nobody wants but just “has to happen”.
Damn shame but looks like all the players are being boxed in.
Exactly how WW1 slowly and grudgingly started…
I guess by now deep storage bunkers are being opened up and ordnance is being hot-staged all over this planet.
Does no one read history?
The best course for the US on this is to play a very distant backup role to SA.
If they want to escalate and retaliate against ‘who done it’, its their prerogative.
Depending on how that goes, the US may or may not choose to help or hinder,
but no need to play any kind of lead role.
For that matter, same applies to Korea. We should let/insist that S.Korea take the leading role in working it out with N.Korea, and serve as the backup to them. Its not our country at stake there.
IMO.
U.S. Shale Well Productivity Turns Negative Y-O-Y
Summary
US shale oil well productivity y-o-y declined for the first time since 2016.
US shale is still completing a record number of wells, but the growth rates have massively decelerated.
September US oil production is flat versus August signaling further more disappointments into year-end.
Well productivity disappointment means that in order to keep the same level of growth, US shale needs to complete ever more wells.
If US shale does not complete more wells, then exit growth between 2019 and 2020 will be ~500k b/d.
There is a lot more to this article including lots of charts. Suggest you take a look.
Yeah, that too. But, my response, for me, is you’re preaching to the choir. Trump is mainly concerned about getting US troops involved in War. This, is not over.
Is Dennis a member of this choir?
Yeah, he is a tenor, not an alto. Come on, man, he’s trying to adjust. Nobody has perfect pitch. That’s why I am trying to keep my voice low. I am am lousy. But, he is mathematically more adept than I am. I just watch the monthlies now. As, I am quite sure they are close to correct, and he agrees. But, do disagree on 2025 being the high. Ain’t going to happen. No matter what prices go to in the next two years.
He has a strong faith.
A weak tenor at best, you know the joke, people prefer if I sing tenor, that is ten or fifteen miles away. 🙂
No, of course it isn’t over. You don’t put Ghawar on fire just so, simply everyday.
Seems US oil production remains at 12.4 Mbpd for third week. Will be interesting to see the weekly data for Baker Huges rigg count.
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W
It’s not at 12.4. It’s closer to 12.1. The questionable amount is ALWAYS Texas. Because, on the monthlies EIA has to estimate them. They question about 90% of the production to producers, what their production is for that month they are reporting. For over two years, I received from Texas RRC, the missing piece of the puzzle. The Pending Lease Data. Adding the two, it always came close within two months. And, always close to EIA monthlies. Always. Due to completion drops and Rig counts, it is doubtfully higher than June monthlies. Every thing else is absolute bullshit. Including, the rest of the EIA bullshit.
But, you have to take note of other brilliant posters here, that I don’t know what I am talking about?
Heck, I don’t care about arguing. I just care about being one of the last ones standing. And, I just made a thousand bucks on my options early Tuesday. So, you can bitch about my inadequacies, it don’t matter. How much did you make?
But, you have to take note of other brilliant posters here, that I don’t know what I am talking about.
Guy, I for one, believe you know what you are talking about.
Thank you. That means a lot to me.
Hi Guy,
I’m as much in the dark as anybody , when it comes to Sand Country politics these days.
Hell, keeping up with what’s what with so many countries, with so many factions in each of them, would be impossible even for a reporter getting paid to do so.
But I pay close attention to what you have to say about the oil biz here and elsewhere, and I’m sure many others do likewise, although most readers don’t post comments.
I’m with Ron, I believe you know what you are talking about, when it comes to oil, and as far as politics are concerned…. you seem to be as well informed as anybody else and a damned sight better informed than most.
Thanks, OFM. But, politics is really not my forte.
Ron: I have a specific question for you. You and I worked in KSA, What is the production loss that you can venture to guess from these attacks? I have a number in mind but would like to heat from you.
Krishnan, I really have no idea. I left Saudi in the winter on 84-85. That was almost 35 years ago. At that time in my life, I had no idea that the concept of peak oil even existed. Of course, I was well aware of the conflict in the Middle East. I lived in Ras Tanura. And the tar balls washed up on the beach every day. The Indian and Philipino laborers would rake them up, dig a big hole in the beach sand, and bury them…. every day.
But beyond that, my concerns were totally somewhere else. Saudi oil production levels never entered my mind. I was a hardware computer man, not an oilman.
So to answer your question, I haven’t a clue.
Ron, why did you take no interests in oil production, living in Saudi Arabia? You were working for ARAMCO, simulating reservoirs, weren’t you? It should be interesting, oil production is a great mechanism, just like a computer, you know. Today young people participate in some “EXTINCTION Rebellion”, like cannon fodder, thinking that “extinction” is just a rhetorical advertisement, because years ago you did not get interested in oil production! In a few years today’s protesters will learn that it all wasn’t really about climate. Their leaders should be afraid of their future anger, but they probably think they all be dead by then.
And it all because boomers had forsaken their duty of democratic vigilance… so the young will be scattered by the winds of war. Speaking as a 30+ guy.
Yestreday TEPCO managment was acquitted of any wrongdoing in Fukushima case (and Japan has the lowest rate of acquittals in the world!). Besides KSA, Japan is another strange country full of untouchables, just hiding under the mask of politeness and cuteness. I am felling like an angry Japanese! I listend on news to some protesters in Japan, and they did sound really angry and rebellious…. Maybe they will awake their Banzai spirit 😉
USA made a great mistake not even trying to stage a Japanese Nürnberg trial… the Japanese learnt that they will always get the pass, and do not really have to try to change anything in their hierarchic culture, regardless of how many people have died.
Ron, why did you take no interests in oil production, living in Saudi Arabia? You were working for ARAMCO, simulating reservoirs, weren’t you?
No, I was not simulating reservoirs. I was in computer hardware! I worked on giant mainframes, dinosaurs that mostly no longer exist. I fixed the goddamn things when they broke. I was a computer repairman.
I had a wife and one child living with me. I had one child back in the states in college and two already married. My interests were my family, and adjusting to the strangest culture you could ever imagine. My friends were all interested in politics, religion and the technical problems associated with their job.
There were problems in Iran. The embassy was invaded and all the employees were taken prisoner while I was there. The term “peak oil” had never been heard of when I was there. No one had ever heard of climate change or global warming either. Everyone simply assumed fossil fuel would last forever.
Also, Aramco was in the process or had just completed the buyout of the four American partners. Things were happening. But peak oil was not one of them.
Yes, I was interested in the collapse of the environment, even back then. But no one else was.
Anyway, I hope this answers your question.
Ron
The DPR is a model that is not very good. We only have real data through July.
I agree. And the data through July looks pretty bad.
Ron,
Not at all clear to me the data is bad, perhaps June and July, but through May it is pretty solid in my view. Often the most recent 2 months get revised, sometimes lower and other times higher.
Made zero.
Not a gambler.
I would say we don’t really know I focus on tight oil estimates by play. Well productivity may be decreasing on a per acre basis.
Guy I agree with Ron, you know as well as any what’s happening. Problem is we don’t have a lot of data. The models suggest even a fall in completion rate could still result in flat tight oil output.
Did you see the comparison of my Permian model and data? R squared is 0.999 from Jan 2010 to June 2019.
The model is fairly good.
I can’t argue your models. I think your assumptions are based on sound reasoning, at the time made. Much more reasonable than EIA, but they are slowly adjusting too. There is a two to three month window that is blacked out with data. That we are all stuck with guessing at. No one is responsible for bad guesses?
We both agree the RRC completion reports are pretty bad, but here is August.
https://www.rrc.state.tx.us/media/53979/copy-of-august-2019-drilling-completion-plugging-stats.pdf
359 completions in the Permian, which include verticals, that are normally over a 100. Again, it’s very far from hard data. Trends? The real trend is in the permits. These won’t be completed until 2020. It will, no doubt, resume to 500 completions starting January or February. In between, is the question.
GuyM,
I completely agree that we don’t really know what the completion rate will be. Consider the following scenario which uses the 2018 average completion rate for Permian horizontal wells (including New Mexico) of 427 wells per month. We assume this rate is held constant from Jan 2019 to Dec 2045.
The scenario is exceedingly conservative, perhaps one might even suggest it is a bit on the low side?
Freddy
Ignore weekly c+c estimates and DPR both are crap.
Ron
My models also suggest about a 500 kb/d increase in output with a flat completion rate. If the completion rate decreases output might be flat. For the Permian basin the completion rate would need to decrease by 30% from 500 new wells per month to 350 new wells per month for output to decrease long term in the Permian basin.
I doubt we will see that big a decrease. Most of US tight oil growth in 2019 has been due to Permian basin increases.
Dennis, the link I posted discusses production per well. It is dropping. Therefore a constant well completion rate would result in a drop in production. Did you overlook that point the article made?
Ron,
I assume production per well (estimated ultimate recovery or EUR) drops over time in my models, the author is wrong. It depends on the completion rate, in the Permian basin recent completion rates have been roughly 500 horizontal oil wells completed per month, at that rate, output will increase even with a fall in EUR. The scenario below has constant completion rate in Permian basin from June 2019 to Dec 2040, EUR starts to decrease in Jan 2019 and falls from 382 kbo in Dec 2018 to 269 kbo by Dec 2040 at the assumed completion rate.
The scenario assumes that Brent oil prices rise to $90/b by late 2020 (in 2017$) and remain at that level until 2050 and then decrease to $40/b by 2065. URR is about 59 Gb for Permian basin for this oil price and completion scenario.
The scenario is quite pessimistic as it is unlikely the completion rate will remain constant long term at an oil price of $90/b, a more likely scenario has the completion rate rising to 730 completions per month by 2023 and then gradually declining after 2025. The scenario below uses the USGS mean TRR estimate as a starting point (74 Gb TRR for Permian basin), then applies economic assumptions to fine the ERR (economically recoverable resources.)
Ron,
You assume a constant completion rate results in a fixed level of output.
That is an incorrect assumption.
Consider that at an average completion rate of 427 new wells per month in the Permian basin output increased by over 1000 kb/d, let’s assume 427 new wells were completed on average in 2019, would you expect no increase in output?
You would be surprised. Output increases by about 414 kb/d in 2019 under an assumed completion rate in 2019 equal to the 2018 average, even with assumed falling well productivity.
See model at comment linked below
http://peakoilbarrel.com/opec-august-2019-oil-production/#comment-688260
Dennis, I assume a legacy decline in excess of 6% per month. I assume that the sweet spots will play out and therefore production per well will decline.
I do not question your model. But it is obvious that Eagle Ford’s best days are behind her. And I believe the Bakken will soon follow. And the Permian may be a year or even two years behind those two. But not more than that. That is all I assume.
Ron,
The Bakken, Eagle Ford, Niobrara, and other US plays can maintain flat output until 2023 with constant completion rate, I assume all except “other plays” start to have decreasing EUR for new wells starting in Jan 2019 due to sweet spots playing out. I use USGS mean TRR estimates where they are available (Bakken Eagle Ford, and Permian). Legacy decline rate will decrease if completion rate is constant. Note that my estimate of legacy decline is about 8.5% in June 2019 and for a constant completion rate scenario the rate falls to 7.2% by 2024 (when this scenario has a peak for tight oil output).
The scenario is highly conservative, higher oil prices after 2019 are likely to lead to an increase in the completion rate imo.
Higher oil prices? yeah, it should be. But, I really don’t see it, until we drain inventories late 2020. Because, the average IQ is less than 90, when you factor in Computer programming. Huge spike by Nov 2020. Just in time before re-election. Damn, he’s stupid.
eventually oil prices will rise, date unknown. Probably before 2022.
Beginning of this thread. Talk of Nigeria.
Some official inside the country announced they would make a goal of 3 mbpd by 2023. And it looks like they’re spending fairly big money on a new security methodology for their pipe lines. This is going to get investment to arrive in magnitudes required to achieve that goal.
Oil ministers everywhere tend to make insane claims and these folks seem to be no different. He is claiming cost per barrel of $23, and expects that to be $15 before 2023, all while drilling more wells with the investment.
Talking about draining the swamp!
https://www.newsweek.com/iowa-farmers-corn-ethanol-trump-rfs-1456470
But this will help the oil guys a little, while putting a hurting on the corn growers and associated businesses, and the tax payers.
All out war on climate and renewables – nothing less. Expect more over the next year.
NAOM
Oil depletion will be very hard to adapt to.
But we will have to try.
I ordered 7 pieces of equipment/items from Amazon this week, and instead of driving all around to find them, they deliver them all right to me.
Today Amazon announced they will deploy 100,000 vans over the next 5 years-
Rivian Electric Delivery Vans.
Yes thats 100,000.
Amazon is an investor in Rivian.
I hope to be someday too.
I think Rivian, once in full production, will completely seal the demise of the ICE vehicle. EV pickups and SUV’s as their first products will cut the heart out of the remaining big margin ICE vehicles.
Perhaps they’ll do better than Tesla?
https://www.macrotrends.net/stocks/charts/TSLA/tesla/pe-ratio
Hi Survivalist,
I just want an EV pickup. Tesla has one in the works also, but the Rivian one already is in field testing. Tesla seems to be doing alright at the moment. Give it awhile.
I do still have room, though, for another tattoo. I think the Rivian logo would look great right next to my Tesla one. You know us Fan Bois 😉
You are at the wrong end . Let me correct you . First where are the batteries going to come from ? The big boys have them all locked down lock stock and barrel . For your info Amazon is not investing in Revian ,it is Amazon + GM . The amount is between $ 1-2 billion . Mind you this is a PROPOSED amount , nothing CONFIRMED . For Amazon 50 % of the proposed amount is $ 1 billion max . Chicken feed for a company valued at $ 1 Trillion . As far as GM is concerned ,they are in an existential crisis with the current strike . You can forget them . Nothing is going to happen . Talk is cheap .Yes they say they are going to use a new technology using Sodium and not Lithium . They intend to get the sodium by electrolysis of sea water . Good luck with that . Remember the hydrogen story several years ago ,same stuff . Too high energy intensive and too high cost . They will break the NACL in water to form NA and CL ,but what are they going to with the chlorine ? Maybe give it to the swimming pools or just let people choke on it . They have till this date not a prototype or a patent on this tech . If it was so good ,Mr Musk would be standing at the doorsteps . He has the demand and the money .
Check out the past of the guy at the top . Indicted for fraud in CA and then purchased a dead factory of Mitsubishi in Detroit to get help from the city .
I have an opinion why this was done . Bezos wants to come across as a greenie because he thinks that a Dem is going to be the next president . Of course it is well known that WaPo is anti Trump but why not buttress your credentials before the new boss comes in , then you can milk more from the ^ New Green Deal ^ . Like I said it is my opinion .
P.S : Hickory ,you want to invest in Revian then you might as well buy Tesla ,Uber, We Work ,Lyft .You can sure make a ton 🙂
Songster : They have a target date for 2022 to get the first pieces out . Stop smoking Hopium . I have visited the place where it is to be assembled several years ago in Bangalore when another company was experimenting with electric cars . Car assembly is a complex project and Mr Musk with all his resources has failed at it , how do you expect this piece of chicken s””” to succeed is beyond comprehension .
hole in head- try cork to keep the grey stuff in.
anyway, we’ll see.
lets talk on again in seven yrs, see where things stand
best luck
Hi Hole in Head,
A few things, Rivian has a 500 million investment from Ford, not GM. And Ford will build at least one Ford vehicle on a Rivian chassis. Amazon has a 700 million dollar investment in Rivian and now has ordered 100K of their vehicles. It don’t know why you think it is relevant the investment is a minor part of Amazon’s net worth. Cox Automotive also has a 350 million dollar investment in Rivian.
I can’t find any criminal/fraud issues with their founder and CEO R.J. Scaringe. But I haven’t dug too deeply on that. Perhaps you have links?
They are field testing theirs vehicles as we speak and I see no delays that make me think they are going to miss their 2020 announced production date. Certainly not 2022.
As to batteries, I don’t know where you are finding they will launch with anything other than lithium batteries. Of course, everyone is working on finding better battery chemistries, but again maybe you could give me a link about what you are saying.
As to Elon Musk failing at building EV’s….well no that isn’t even remotely true. I won’t bother going into it with you. Losing money while building the necessary infrastructure is not surprising Regardless, I believe that if you look into Rivian you will find a company that looks like it will be a fierce competitor in the EV space.
Sorry to upset you, but ICE is dead. Have you not noticed that every vehicle manufacturer is going EV? Some are going slower than others…but they are all going that way.
They may not save the planet, but they are a damn site more fun to drive, cheaper to operate, and eventually cheaper to build.
Ok. Closed out the 2021 options of $9 grand for a net $200 loss. But, I’m not finished yet. Will be eyeing 2022, when they pop up.
I see that Exxon is selling some stakes in GOM , guess they need capital to invest in all the new wells they need to drill and set in production to achieve the growth EIA and Rystad exspect in US shale 2019, 2020 or perhaps is it done to be able to pay dividend to their owners…
https://www.rigzone.com/news/bp_and_exxon_make_green_canyon_deals_with_talos-19-sep-2019-159851-article/
Well, I could have been wrong. And if I was, I will make no excuses, just admit that I was wrong. The Saudis could have done it themselves.
What blew up in Saudi Arabia
You will have to hit the “translate” button to translate from Russian to English.
Big Snip.
Officially, the so-called “proven” oil reserves in Saudi Arabia are 268 billion barrels. But this is on paper. On paper, this oil is distributed over more than a hundred fields, but in reality 90% of the oil located in Saudi Arabia is extracted from only 5 fields, and 60% is produced at the only super-rich Gavar field. All the rest is painted bullshit (insignificant oil inclusions, on which the “reserves” are overestimated by orders of magnitude).
As a result of the so-called “Leak of Diplomatic Telegrams” in 2011, it turned out that Saddad al-Husseini, a former vice president of Saudi Aramco, had warned the United States that Saudi oil reserves could be 40% lower than declared. And this is just a miserable piece of truth – in reality the situation is much worse. Therefore, generally speaking, it is possible that the Saudi plant blew themselves up by the Saudis.
I’ll tell you more – it’s as if this scheme of actions of the Saudis was described by an American oilman who began to write books in the genre of alternative fiction. As you can see, everything comes true.
Thanks for the link Ron.
For those interested, this guy is tweeting pics and info about KSA air defense near Abquaq.
https://twitter.com/DuitsyWasHere/status/1174186756708679681
That’s why I said above to GuyM:
“We have too little information about what really happened, and who was responsible for what, to extract any conclusion.”
There is very little information that can be trusted related to oil, and once we get into Peak Oil even less. What we do know is that we shouldn’t trust any information coming from a government, any government. They are the biggest producers of fake news, continuously and without remorse.
True–
If Trump has his mouth open, he is either eating a BigMac, or lying.
Let’s hope for the BigMac’s?
Donald Trump lies more often than you wash your hands every day
https://www.cnn.com/2019/06/10/politics/donald-trump-lies-fact-check/index.html
The Google translate link to the translated version is:
https://translate.google.com/translate?hl=en&sl=ru&u=http://putc.org/chto-vzorvali-v-saudovskoj-aravii/
“The Saudis could have done it themselves.”
So I guess you were very hungry for conspiracy theory after all.
My suspicion is that if KSA did it themselves then they’d make the approach look more like it was from the east north east, as that’s where Iran kinda is from them.
It’s worth noting that drones and cruise missiles can be programmed to fly circuitous routes- i.e. a drone fired from the south, in Yemen, can do a buttonhook to the left and come in from the north west for its final approach. Typically this is done to evade detection and interception once the defensive radars are mapped.
Well, well, well …
I think the theories are flawed by the fact that the biggest enemy of the saudis, Houthi military leader claimed the attacks by themselves shortly after, even stating the number of drones which were used – also the Iran does not blame the Saudis or US … because they heavily try to sell the more plausible Houthi story (with absolutely NO involment of Iran, of course 😉 …
So the Saudis US was it by themselves – it’s in the same category of theories, like Saddam, Osama and even the IS – all were CIA agents.
A good (russian -sic! ) writer could spin any good looking story with some know rumors/facts – just like he maybe can write a good episode of Game of Thrones, but it may never have happend …
I am disappointed in your reply Hickory. I expected better.
And, what difference does it make to BS prices ? 2018 peak vs 2025 peak what the hell is the big diff? It’s over, done with. Prices should be though the roof. But, we are basically idiots. By 2025, the demand should be 6m higher, so how the hell or we going to cover it? It ain’t there. We are done. Though, 200 from being profitable, this stuff is getting interesting.
I don’t mind conspiracy theories, as long as there not stupid. You ever meet a bipartisan conspiracy theorist; a Birther and a Truther all in one? It’ll blow your mind!
People with power and wealth have always gotten together and conspired re: wanting to have more of it. Also consider that every nation in the world has a foreign intelligence service, which is for the most part all just basically behaving like organized crime, i.e. Epstein- seriously, 2 years of #metoo and 3 years off Russian peepee tape kompramat ops, and America lets Epstein’s “gal pal” et al skate like its a joke. I call it the Late Capitalism of Mossad’s Pedophilic Honeytraps, but I digress.
Personally I don’t see KSA needing to go as far as blowing up valuable oil producing kit to frame Iran, unless they’re doing it to hide decreased production. They’d just blow up a hotel or something if KSA wants to frame Iran. FWIW I think Houthis did it with cruise missiles and drones that Iran flies in from boats and Hezbollah helps them assemble. Houthis have been attacking KSA radar with drones and firing scuds for years. The Houthis claimed responsibility and thanked people inside KSA for helping them. Prob some kinda signals recon mapped the radar sites (it’s not hard, they emit) and the Houthis got around it with a flight pattern. Perhaps also the targets were lit up with laser designators by peeps on the ground, and the drones had an appropriate terminal guidance feature. That would help explain the outstanding precision.
“Personally I don’t see KSA needing to go as far as blowing up valuable oil producing kit to frame Iran, unless they’re doing it to hide decreased production. “
If the information in the article that Ron posted is true, the oil that comes from the wells there is not so valuable anymore, because it’s more sand and water than oil. After separating the oil from the water and sand still you get valuable oil of course, but if the problems there really started in 2004 already…
Interesting way to start a decommission job lol
I recall reading, maybe 10 or so yrs ago, that in Ghawar they were pumping 6.9 Mb/d of water into it and were recovering 4.6 Mb/d of oil.
Well, I apologize Ron.
Felt the attack earlier was unwarranted, and my vindictive self surfaced. I’ll stuff it back in the box as best I can.
Apologies accepted. I believe the jury is still out. I am not convinced it was a conspiracy by the Saudis, but I will accept it is a possibility.
This article states that Saudi oil production peaked in 2004, and today they’re mostly producing a gooey mixture of water, oil, and sand, which is separated at the Abqaiq plant. Is this is reality …..
Well, remember the posts on theoildrum on how the sophisticated (also in the meaning of ‘unnatural’) EOR methods deplete oil reserves faster than they normally would deplete, so nobody who have read regularly on theoildrum should be too surprised when one day oilproduction of giant and supergiant oil fields starts dropping like a rock.
Saudi Arabia requesting to buy oil from Iraq. Really?
https://defence.pk/pdf/threads/saudi-arabia-asks-iraq-for-oil.636154/
https://www.reuters.com/article/us-saudi-iraq-oil/iraqs-oil-marketer-somo-denies-saudi-arabia-requested-crude-state-media-idUSKBN1W42GN
That’s gotta be a joke!
Great Neighborhood.
Also Syria (illegally), Jordan and Israel.
But USA plays offense, primarily. Their defense tech is not so good.
And missile tech and cheap but sophisticated drone tech spreading all around the region requires defense over anything else.
Russian S300 and S400 seem the best defensive complex – honed by western engineered sophisticated small drones provided to terrorists in Syria to attack the Russian airbase. (A HUGE mistake by the West – placing this cheap tech in the hand of terrorists who will flee Syria into Europe as North west Syria is finally liberated. Unbelievable risk to Europe – and I suppose even USA homeland security).
Syria has the S300, Iran too (plus numerous home grown ‘versions’, some of which might be sold to Syria for defence, Turkey just acquired the S400. And Houthis, of course.
Russia semi-jokingly recommended Saudi acquire the S300 or S400 in light of the Houthi attack, because, again, these are defense configured systems, and now it is all about missiles and drones.
The Russian point is that once all Gulf countries have effective missile defense systems it is stalemate in the Gulf. No Gulf country can do anything to another, and Israel and USA missile and air attacks are stymied.
(The S400, at least, is said to ‘see’ F35.)
Russia is also promoting a UN sponsored Gulf peace treaty between ALL Gulf countries, no exceptions.
If it is taken up, peace will descend on the region – so long as USA gives up on its attempts to block all Iranian oil exports.Why? Because Iran has maintained consistently that if it cannot export oil, no one else in the Gulf will be allowed to. And if Gulf exports are prevented, the consequences for Western economy (and 2020 election) are obvious.
So I see peace breaking out, and USA Congress coming to its senses.
Then maybe issues of oil supply will start to become clearer as due diligence on the 400 billion Aramco float proceeds.
The twitter stuff above is mildly interesting and conclusions are mostly incorrect.
Here’s how that world works. Radar looks for an RCS (radar cross sectional area) and the radar pulses return from an RCS, if sufficient in magnitude, to the transmitter/receiver antenna and the processing will display it. You then have a problem with illumination. If a defensive missile is fired at an incoming target, the missile seeker will be either infrared or radar, and if it’s radar then you need to dwell the transmitting antenna on the target so there is something for the seeker to see. Track-while-scan is the norm for modern stuff, but it’s hard to be modern if missiles are from other sources than the radar. They may not be looking for the right frequency within the PRF of the radar transmitting.
Largely gobbledygook for . . . defensive radar at the site is going to have a lot of problem with the RCS of wingspans of only 20 feet and radar tracking seekers on the defensive missile itself will have even more of a problem. The ground antenna can be much larger than one in the nose of a missile. Radar controlled guns, okie doke, but the targets are very low and moderately fast so the slew rate on the gun gimbals is going to be challenged or overwhelmed. They are for higher up targets, which challenge the gimbals far less. Oh and those track-while-scan features . . . that’s what you need to find multiple targets and lock onto them for defensive fire, one by one. Operative phrase one by one, which is rather hard if the attacker routed the vehicles for time-on-target simultaneous arrival.
You can attack anywhere like this. From hundreds of miles away. The Saudis need to find a way to accept overtures to the Iranians from the President, and the war mongers in Congress, ditto.
Not again ?
https://www.zerohedge.com/commodities/catastrophic-flooding-threatens-heart-texas-oil-industry
Just some things are not adding up .
Total Saudi production 9.7 million
Production now offline 5.7 million
Balance available 4.0 million
Local consumption 2.5 million
Available for Export 1.5 million
The Saudi’s have reserve of 75 million which is 15 days total coverage @5 million barrels per day . Actually 12 days considering they are not going to absolutely dry . The amount offline is between 15-18% of the total world exports . The question I beg is (the same as GUY M) why have prices not sky rocketed ? What are the traders thinking ?
The attack happened on 14th Saturday and the Saudi^s announced that they would have 1/3 production
moving by Tuesday . How did they make the statement when fires were still in the complex ?
Now they say they will be fully operational by the end of the month . The holes in the tanks ? How big are they ? Definitely not pinholes . As big as manhole covers or even bigger ?If yes then what are they going to do about this ?Put a patch ? I am not an engineer ,but will a patch work if these are pressure tanks ? In case they have to replace them then are they an ^off the shelf^ item ? I don’t think so . What other equipment was damaged which is special ^one off^ and is not ^off the shelf ^ item ?
In my opinion the facility is going to take a long time to come back online . In such a scenario the Saudi^s can pump oil but cannot process it and so cannot export it . Will they sell some securities or treasuries from the SWF to meet the shortage ? Too much muddy water ,perhaps some can make it clearer .
Agee on one point, the story does not add up. The damage was not as severe as indicated from the photos, SA is bluffing or underestimating the repairs that need to be done – it should take a lot longer to restore the processing facility.
However, before the attack they pumped slightly less than 10mmbd but claimed they had capacity to produce close to 12.5, i.e. they could have had about 2.5MMpd excess production capacity of which some was not affected. Excess capacity at the Abqaiq processing facility could be higher than this.
Concerning the stocks, where do you get the 75mb figure from? From the top of my head, they claim approx. 180mb in stocks (JODI-data) and satellite data confirms about half of this.
75 mb data . I read it on another forum or website . Of course this is from memory and I could be wrong , but even if it was more it would give them another 10/12 days . So max out practically would be 20 days . And then ? But I am still looking for the answer on why the price did not spike higher . Even today when their are reports that KSA will import diesel and jet fuel no uptick . Further as I said we do not know how long will this last . The SWF is about $ 320 billion . They are loosing 6mx$60= $ 360 m per day(let us say $350m for ease in calculation) in revenue . So even at the best they could last another 60 days with the liquidation of the fund presuming they will not go to zero and stop at 80% which is $250 billion . And then ?
Mr. President Donald have assured there will be enough oil unthil the dammages is repaired. Oil will flow from US strategical reserves…
I was going to ask a question but you jumped me . My question is ^The US SPR is available to the world market or only for the US market ^ . Who decides ? After all the military is the biggest consumer , do they have a say ?
The US SPR belongs to the US Government. The US does not trade oil on the world market, only oil companies do. Oil from the SPR is sold to oil companies to do the refining. They then sell it to the military or the US public. Where else they might sell it, I have no idea.
“The crisis is over and we are back to waiting for the next round. A few days or weeks from now we will see another round of attacks on oil assets on the western side of the Persian Gulf. Iran, with the help of its friends, can play this game again and again and it will do so until the U.S. gives up and lifts the sanctions against that country.
The Houthi will continue to attack the Saudis until they end their war on Yemen and pay reparations.”
We shall see—–
Saudi switches crude grades, delays oil supplies to buyers in Asia
https://www.reuters.com/article/saudi-aramco-asia-oil-idUSL3N26B2J6
“They informed us (of the delay) but every day it’s revised,” he said.
“I’m afraid the situation is more serious than we assumed but still information is limited.”
No worries … 99% will be back on -line by noon Tuesday ;).
“Saudi always destocks oil in July and August. So the current inventory level would be around 170 million to 175 million barrels,” the analyst said.
“This could last 25 days in theory. In practice, it may be even less.”
Saw this fairly detailed article on the Aramco drone attack, and thought I’d post it down here, since there are multiple speculative threads up above. It leans towards Watcher’s argument.
Attack on Saudi Oil Refineries Proves the Devastating Potential of Iranian Cruise Missiles
(https://defense-update.com/20190914_aramco_attack.html)
This article is particularly interesting because it has a closeup of the hole in one of the spherical LNG tanks. The caption reads “The damage inflicted by the Iranian suicide drone on the LNG tank indicates a small warhead and low speed.”
That had been my suspicion when I saw the holes. My thought is that they were short range vehicles (probably multi-rotor helicopters) launched within 5 or 10 miles of the plant…I don’t know how difficult that is tactically, though.
And…you would get the same deformation if you duct-taped an explosive charge to the tank and set it off with a detonator.
FYI: Recovered materials of the weapons used were of NATO orig, not Iran. Perhaps Iran or the houthis stole them. The NATO weapons had a max range of about 350 miles so investigates speculate they were launched from Iraq. There was no radar tracking data to determine where they were launch from.Its possible these were transported by truck, close to the target. Much of KSA is just endless desert that is complete unpopulated by anyone. Someone would need within visual sight to the target in order for any reasonable precision and the images appear that the weapons were precision hits.
That said, I have my doubts that Iran attacked KSA. They have little to gain & a lot to lose since it provides the excuse for the US to go to war with Iran.
Anybody know if storage is pre or post processing?
I think it should be post processing because storing unprocessed crude with all the H2S and other gases would be dangerous . Just some raw wisdom or linear thinking ,but not very sure . Could be wrong .If it is pre processing then Mbs goose is cooked .
Storage is unrefined crude oil. The water and sand are removed immedialy after it is pumped from the ground. Some gasses are removed immediately because they bubble out. Others are removed in the GOSP. If storage is something else, NGLs for instance, that is specified. Otherwise, it is crude.
Note: I an not an oilman. My opinion is just from many years of reading and observation. So if anyone sees an error in my opinion, please correct me.
I gotta hunt down similar questions for the US SPR.
1st Detailed images?
https://www.zerohedge.com/energy/first-images-crippling-damage-giant-khurais-oil-field-revealed
You could not really read news nowadays and get the whole picture. I am very much anti-Trump, as were 90% of the European population before he was voted in. And so biased in that regard. But he started it with lies and backstabbing being the standard. And with arabs and their history; this is what they are used to too. So in the oil market we get a spider web of lies and nobody really can do much more than to speculate. Who is behind the attacks in SA? The Saudis themselves or the pressured Iranians most likely. Who knows? (and the ones who know are not writing anything on this blog). The Houthis in the Yemen are paid actors the way I see it.
So OPEC with Saudi Arabia in the spearhead are reducing production/exports (is that the same thing?). Shale oil is approaching its limitation with regards to productivity, which is not really a surprise either. And then there is no plan I suppose.
We are obviously approaching the economically comfortable peak oil and the failure to appreciate this and not work to enhance further goals is dysfunctional. With regards to offshore Johan Sverdrup, Egina (Nigeria) and the new Guyana fields are enough to keep the steem going, not upwards but mitigating declines, for 5-10 years going forward offshore. Add to that, what intensity the Brazilians bother to bring to the table in this low oil price environment. And then no more due to lack of investments. Same story with shale oil I guess. If not to embrace it, a big crisis, a shift of leadership, and then back to reality would lie ahead IMHO.
https://rigcount.bhge.com/na-rig-count
Seems active riggs in US continue to decline. Thonk the montlies from EIA will show higher decline in July than the 32000 bpd decline in June.
Guess now there is enough pipeline capacity…
New lead posts up.
U.S. Oil Rig Count Takes Sharp Turn Downward
The US oil and gas rig count fell again, decreasing by 18 for the week, according to Baker Hughes, but US oil companies are still pumping oil at record rates.
The total oil and gas rig count now stands at 868, or 185 down from this time last year.
The total number of active oil rigs in the United States decreased by 14 according to the report, reaching 719. The number of active gas rigs decreased by 5 to reach 148.
Oil rigs have seen a loss of 147 rigs year on year, with gas rigs down 38 since this time last year, compared to 858 and 187 active rigs, respectively, at the beginning of the year.
Still, in the United States, weekly oil production is still near an all-time high. So while the number of oil rigs have declined by 158 this year alone, production has grown from 11.7 million bpd at the beginning of the year, to 12.4 million bpd for week ending September 13.
Oil prices were trading slightly up on Friday ahead of the data, with the huge spikes seen earlier in the week in the wake of the attacks on Aramco’s infrastructure now somewhat subdued.
Ron:
In support of your argument that global oil production has peaked, we now have confirmation from the WSJ today:
“We’re getting closer to peak (US shale) production and we are reaching the peak of the general physics of these wells,” said James West, a managing director at Investment bank Evercore ISI.”
US shale is peaking. Global oil production already peaked:
http://peakoilbarrel.com/world-oil-production-as-of-march-2019/
Global oil production has now peaked!