The OPEC Monthly Oil Market Report (MOMR) for June 2022 was published last week. The last month reported in most of the charts that follow is May 2022 and output reported for OPEC nations is crude oil output in thousands of barrels per day (kb/d). In most of the charts that follow the blue line is monthly output and the red line is the centered twelve month average (CTMA) output.
OPEC output decreased by 176 kb/d according to secondary souces in May 2022. March 2022 output was revised down by 20 kb/d from what was reported last month and April 2022 output was revised higher by 36 kb/d compared to the May 2022 MOMR. All of the decrease in OPEC output was from Libya(-186 kb/d) and for the other OPEC nations increases more than offset decreases by 10 kb/d. Six OPEC nations had higher output and 7 had lower output with Libya’s decrease about four times the next biggest decrease (Nigeria at -45 kb/d).
In the chart below we have Russian C + C and OPEC crude oil output. It is doubtful that any OPEC increase in the future (mostly from Libya if they recover from the recent decrease in output plus a small increase from Iraq and UAE of perhaps 200 kb/d combined, with most of this from Iraq) will offset future decline from Russia. I expect OPEC plus Russian output to continue to decrease by as much as 750 kb/d from the May 2022 level over the near term (next 18 months) or to approximately 37,090 kb/d. It is doubtful that this 2500 kb/d decrease in World output can be replaced by increases in the US, Canada, Brazil, China, Norway, and Guyana over the near term which suggests high oil prices unless the coming World recession is severe (1% annual real World GDP growth rates or less.)
Global liquids output decreased about 150 kb/d in May, note that Libyan output decreased by 186 kb/d in May.
Based on OPEC’s estimate for the balance of World supply and demand, World oil stocks would have decreased by 617 million barrels in 2021 (1.69 Mb/d times 365 days). The forecast in Figure 5 above for non-OPEC liquids output looks very optimistic and it is doubtful that the demand forecast is correct (high oil prices and a World recession are likely to lead to lower oil demand than this forecast.) If the forecast were correct, it is highly unlikely that OPEC would be able to meet the call on OPEC crude for 3Q22 and 4Q22 and we could see World oil stocks fall by another 300 million barrels in the second half of 2022. For 2021 and 2022 we would see a decrease in World oil stocks of about 900 million barrels (this includes non-OECD oil stocks).
The chart above shows quarterly OECD total oil stocks (both commercial and SPR) from 1Q2009 to 1Q2022 and also the trailing 5 year average for OECD total oil stocks. The low point for the 5 year average was 4Q2013 at 4201 million barrels, 1Q2022 OECD total stocks were 4065 million barrels about 136 million barrels lower than the lowest 5 year average of the last 9 years. Also note that OECD total oil stocks fell by 449 Mb in 2021 out of an OPEC World estimate of 617 Mb, about 73% of the total stock decrease. Unfortunately we do not have very good data for non-OECD oil stocks. Typically the low level of OECD stocks that we currently see, results in very high oil prices in the absence of an economic crisis (similar to 2008/2009 or worse). Based what I see now, I would expect oil prices in the range of $100 to $150/bo for Brent crude over the next 12 months, but the odds are very low that this guess is correct.
As you can see from Dennis’ top graph, OPEC 13 is almost equal to their pre-covid level. The OPEC big 5, Saudi, UAE, Iran, Iraq, and Kuwait are almost one million barrels above their pre-covid level. The other 8 however, are over one million barrels below their pre-pre covid level… and falling. The non-OPEC part of OPEC+ is not helping. They are declining as well… big time.
Prices are high but a recession is almost definitely coming. But production and demand will likely fall. Things just don’t look good for the world economy.
Ron,
I agree the World economy does not look good, how severe the recession will be is unknown. A combination of higher output due to high oil prices and lower demand due to high prices and the coming recession may cause World output to continue to fall over the near term, difficult to predict when economic recovery begins, but my expectation is a short mild recession with recovery starting in 4Q2022 or 1Q2023.
“Bot production … will likely fall.”
I wish! Great typo!
Ron,
From Jan 2008 to May 2022 the average annual decline rate of the “other 8” OPEC producers is about 340 kb/d per year. Most of this decline comes from Venezuela and Libya over that period (2008 to the present). The other 8 minus Venezuela and Libya has an average annual decline rate of about 141 kb/d per year over the period starting at Jan 2008. Venezuela and Libya are likely to stabilize at around their current combined output level (current annual average level) over the next 7 or 8 years, and future decline for the other 8 OPEC nations may be about 140 kb/d, if I am correct.
Libya will not likely ever stabilize, I don’t know about Venezuela. Anyway, these are bit players in the big picture and any significant increase, if there is any, will still have to come from the big 5. I think all the big 5 are producing at their limits and have far more downside potential than upside potential.
I ran across this article, a wondered if people here agree or disagree with it and why. Any comments are appreciated.
“Eric Nuttall: OPEC running out of spare capacity confirms our multi-year bull case for oil
We have for more than a year argued the world was hurtling into an energy crisis of epic proportions that would result in a multi-year bull market for oil. Our bullish thesis had four basic tenets: persistent demand growth for at least the next 10 years, the end of shale hyper-growth in the United States, defined as shale production growth rates that no longer exceed global demand growth, stagnant production growth from the global super-majors resulting from eight years of insufficient investment and, finally, the exhaustion of OPEC’s spare capacity.
The hardest of these four core assumptions to prove by far was the last one. U.S. shale growth rates could be forecasted by talking with oil executives and modelling corporate cash flows. One could easily see that spending by the super-majors had peaked in 2014, falling to half of those levels today, while also being burdened by increasing pressures to decarbonize, so we could predict and model stagnant growth for years to come. And demand growth was boosted in the short term by the emergence from global lockdown, and is supported over the medium-to-long term by the realities that limit alternatives from reaching enough critical mass to meaningfully displace oil in the next several decades.
OPEC’s spare capacity, however, was the tricky one. Monthly data released by several different sources can vary wildly. Given the strategic importance of oil revenue to many Gulf States, hard data on productive capacity has at times been viewed as state secrets and either difficult to get or taken with some skepticism. How then can we be so confident that OPEC’s spare capacity is nearing exhaustion? Because they just told us so.
In his keynote speech, Barkindo warned that “OPEC is running out of capacity,” and that “with the exception of two or three members, all are maxed out.” Further, “the world needs to come to terms with this brutal fact” and that it is a “global challenge.”
Full article here:
https://financialpost.com/commodities/energy/oil-gas/opec-exhausting-spare-capacity-confirms-oil-bull-case
CB,
I think the part you quoted looks right, didn’t read full article.
Thanks for posting this CB. It is a fantastic article. I did read the whole thing. In fact, I found it hard to stop reading. And the article is only four days old. Here is one paragraph I found especially interesting, bold mine.
OPEC’s spare capacity, however, was the tricky one. Monthly data released by several different sources can vary wildly. Given the strategic importance of oil revenue to many Gulf States, hard data on productive capacity has at times been viewed as state secrets and either difficult to get or taken with some skepticism. How then can we be so confident that OPEC’s spare capacity is nearing exhaustion? Because they just told us so.
Last week, the Royal Bank of Canada hosted a spectacular energy conference in New York with the highlight being a keynote speech by Mohammed Barkindo, the secretary general of OPEC. That same night, I had the good fortune to have dinner with him, which to an energy enthusiast was the equivalent of a tech investor getting to hang out with Elon Musk. I found him to be a warm, insightful, soft-spoken and, surprisingly, straight-talking gentleman.
In his keynote speech, Barkindo warned that “OPEC is running out of capacity,” and that “with the exception of two or three members, all are maxed out.” Further, “the world needs to come to terms with this brutal fact” and that it is a “global challenge.”
It is difficult to describe the immense satisfaction that came on that day, to have one of the core underpinnings of our thesis, still wildly underappreciated by investors and the oil market alike, be affirmed by the head of OPEC.
Hey, wake up and smell the coffee people. OPEC is out of spare capacity, the US shale boom is almost over, and the world is on the downhill side of peak oil. Either oil will hit $180 a barrel soon or the world will go into a serious recession, possibly even a depression.
Putin’s timing a coincidence? I think not
He knows as much or more than Barkindo.
Ron,
I agree that OPEC is close to capacity at present, I disagree that the tight oil boom is over.
Dennis, simplify your very optimistic graph in terms like “we’re approaching the plateau phase” and you certainly could agree that the tight oil boom is, if not over, at least nearing its end. Whatever our perspective may be, peak oil is there or very close. IMO the war in Ucrania and the embargo against Russia finally tipped the balance towards the post-peak-fraction, future US tight growth will do nothing but compensate losses somewhere else.
Westtexasfanclub,
I believe my tight oil scenario is actually quite conservative, but agree the tight oil boom may end over the next 5 years and we will be at peak oil. I also agree this might only be enough to offset decreases in Russian output and we might struggle to reach a new peak in World output.
Much will depend on future oil investment levels in response to a high oil price environment.
If my view that the transition to electric transport will result in falling oil prices by 2030 or so were to become the mainstream view (this seems highly unlikely imo) then it would make investments in ultra deep offshore oil and artic oil and new oil sands projects less attractive and most new long term oil investment might cease. In that case the peak for World C plus C output might remain at the 12 months centered on Oct/Nov 2018, rather than 2028 which remains for now my best guess. I would change my view if I started hearing most pundits on CNBC repeating my thesis that peak oil demand is likely to occur around 2030, that will be the death knell for most new long term capital investment in oil production.
Sounds coherent to me, Dennis.
I don’t have so much of a problem with a second peak itself (even if it would be slightly higher than the one of 2018), but with the cornucopian interpretation of it: Everything is fine, there’s still plenty of oil, no need for mitigation … even if – as you wrote – this could boost oil production because it’s directing cash flow towards the oil industry.
To me this sounds like horizontal drilling of cash reserves: once the debt infill reaches a certain level, all money flow ceases and from thereon we will go down a steep cliff.
Something is telling me we’re in for a rough ride.
Westtexasfanclub,
I try to find a balance between “peak oil is the end of the world” and “there is plenty of oil, everything will be fine”. Reality is somewhere between these two views. Oil will peak (along with coal and natural gas over the 2028 to 2035 time frame with oil first, followed by coal, and natural gas last), the peaks will be due to a combination of geology and technology affecting both the supply and demand sides of the equation.
The transition will not be easy, but it will have to be done despite the many likely bumps in the road (including a potential economic depression due to financial panic when peak fossil fuels is finally acknowledged by mainstream analysts).
As always I have no special foresight about how this plays out, it could be very ugly, but some recognition of the problem and planning by governments might lessen the pain.
“Either oil will hit $180 a barrel soon or the world will go into a serious recession, possibly even a depression.” Never heard of high oil prices saving the world from a depression. But I think you mean that high energy cashflow would indicate a booming economy. IMO the crisis is already baked in and high oil prices will do nothing but accelerate its downfall.
In a sense, the reserve capacity of OPEC is not overwhelmingly important, what is key, is that they can now comfortably modulate their production to prevent any significant downslide in oil prices and nobody can do anything about it. If they are truly out of capacity financial pain will define the upper limit.
Old Chemist,
The biggest problem with OPEC reaching their capacity limit is that the mainstream economists still are under the impression that OPEC has 2 Mbpd of spare capacity, which is false. When most people catch on we may see a severe spike in oil prices, especially as 2 to 3 Mbpd of Russian oil may be removed from the market due to sanctions. For OPEC this could be a problem due to an acceleration of the EV transition that may result from very high oil prices (say $150/bo or higher). Under that scenario we might see demand for oil start to fall faster than supply by 2029 to 2031, oil prices start to fall, but supply only falls as fast as supply if oil prices continue to fall. OPEC then falls apart as middle east producers start to compete for market share and develop resources as quickly as possible, prices may fall to as low as $30/bo and a lot of oil may become a stranded asset due to lack of demand for oil. All of this takes place over about 35 or 45 years as World oil demand falls to about 30 Mbopd by 2078 or so.
I agree with you that when (not if) the world realizes we are past peak oil there will be a sharp increase in oil prices. If I look at the real price of oil from 1861 to present, I see the supply/demand curve from the old ECON 101 textbook. Not smooth ( we live in the real world where wars, pandemics and manic development of oil shale can bounce the price around) but we are really into the interesting part of the curve.
https://data.nasdaq.com/data/BP/CRUDE_OIL_PRICES-crude-oil-prices-from-1861
I think the use and price of oil after that spike will be far more nuanced than the scenario you outline above.
The jump in the price of natural gas in the last year has been a surprise, driven, as best as I can tell by demand from China to alleviate the air pollution in their major cities, and by Europe to compensate for an extended period of weak performance from their wind farms. The Ukraine war is now exacerbating the shortage, and fertilizer plants and other industries have been curtailed or closed to try and ‘get by’. During the winter, some Scandinavian power facilities switched to oil.
What is clear, is that standby fossil fuel generating capacity will be needed in substantial quantities for the forseeable future. A gas turbine is just a repurposed jet engine and can run on diesel or jet fuel instead of natural gas if the price is right. The engineering firm I worked for installed a 225 megawatt unit in a process industry, but only an interruptible gas supply was available, so we had to include a large diesel storage tank as part of the project (the turbine supplier was picky about the quality of the diesel).
Industrial boilers, lime kilns, cement kilns and other industrial applications are easily converted from one fuel to the other and when I first started working in industry, often came equipped to use either, depending on the competitive price of the fuel.
Cracking of high viscosity oil requires a lot of hydrogen, currently generated from natural gas but if natural gas prices go high, other hydrocarbons from the gasoline fraction can be the source of that hydrogen.
The energy values of oil fractions will largely determine where they go and the price they command in an energy constrained world .
Old Chemist,
Your scenario is likely more realistic than my more general outline which focused more on oil, there may be shortages of natural gas, though i think high natural gas prices are likely to lead to lower demand for natural gas as wind and solar investment will be far more attractive at the current price levels for nataural gas, coal, and oil. I agree fossil fuel backup will be needed over the medium term, eventually as the total quantity of wind and solar power rises and is widely dispersed and highly interconnected the amount of fossil fuel backup required will be diminished (this would be 30 to 40 years in the future). There are other types of backup such as batteries, synthetic fuel, or pumped hydro which can utilize excess power production during high wind or high solar periods which will provide low cost power, potentially vehicle to grid systems could provide some short term backup.
If it weren’t true, it would be funny in a way-
Just how narrowly focused so many tend to be on specific sources of energy.
Ex-
In response to the statement “we need to invest quickly and heavily in wind and solar”
so many times we hear- “they will never ‘save the world’, or they ‘won’t work because they are intermittent”
Thanks Old Chemist for helping to describe how it is standard practice in this world to use a mix of energy sources to get by. Changing sources as the supply, and costs, change.
We are in the early phase of a massive time of change now.
C8
Eric Nuttal has been an oil Fund Manager since I can remember, about 15 years. He has had a tough time over the last five years but has hit a four bagger over the last two years. I think I heard him say that his oil stock fund was number 1 in the world in 2021.
My only concern with his scenario continues to be his US outlook. He thinks, along with many others on this board, that growth in US shale will slow. On the other hand, the DPR keeps putting out monthly reports that the DPR basins will increase production at a rate of 140 kb/d/mth. (See chart. Note April decline from ND does not show up in this latest DPR chart)
Hopefully in six moths we will know who is right on LTO output.
Here is a quote from an article that agrees with Eric’s position on share holder return: “One thing Henke and his team will not be doing with that free cash flow is implementing major increases in the company’s drilling program. “We haven’t had shareholders on our doorstep demanding we grow our production and out-spend our cash flow like the industry did for many years,” he told me. “That’s certainly not what is being rewarded in the market now.”
https://www.forbes.com/sites/davidblackmon/2022/05/04/how-one-eagle-ford-shale-producer-illustrates-the-new-model-for-success/?sh=13307bd9752d
OPEC output from 2021 IEO from EIA, reference and high price scenarios, it seems likely the high price scenario will be closer to reality, note that this is C plus C rather than crude only as reported in MOMR.
Brent Oil Prices in 2020 $/b for reference and high oil price cases (reference case is lower than high price case).
A wider view of Dennis’ OPEC oil production prediction to 2030. Data is in thousand barrels per day.
I dunno why that has any credibility as literally all his predictions have been wrong in the same direction, while everything mustang and hubbert said has been true for 70 years.
Everything Hubbert said has been true? Which parts? Ohio production peaking early in the 20th century rather than early in the 21st? The world making 12 billion a year at peak in the mid 90’s, rather than 30+ in 2018? The US peaking in the early 70’s? Natural gas as well? Pick a volume and rate that Hubbert called that was RIGHT. You aren’t ShortOnOil in disguise are you? Otherwise known as Mustang19 over at peakoil.com?
Hubbert famously won a bet with the USGS that production would peak in the 70s, and now they have to pretend shale matters.
Dennis tried a little harder, he noted that the 1900 trend was wrong, because spraberry. Absolutely every country has followed the hubbert curve, I can provide a excel containing a hubbert curve for every country on earth.
Most of my scenarios have been lower than actual output.
Though I did miss the coming pandemic in 2019 and the Russian invasion of Ukraine, so some of my World scenarios were incorrect because I did not anticipate these in advance. Nor did anyone else.
Below is a fairly conservative scenario with low World extraction rates for conventional crude after 2021. My guess is that actual World C plus C output will be somewhat higher than this (extraction rates for World conventional crude will be higher than this scenario due to high oil prices from 2022 to 2030. LTO=light tight oil, XH=extra heavy oil with API gravity 10 or less.
Dennis , somebody said this ” As to your posts and predictions, I just love them. Don’t you dare stop. If you do, then who the hell am I going to argue with. And God how I love arguing. 🤣 ” .
I agree with somebody . 🙂
Dennis, World C+C stood in February, at 80,621 Kbp/d. Your chart shows it over 3 million bp/d below that figure for today. I know you often get the future figures horribly wrong but how could get historical figures also so horribly wrong? 😂
Click on graph to enlarge.
Ron,
The Chart uses annual data not monthly data note that your 12 month average is about 78 Mb/d at present and my estimate for 2022 is about 77.6 Mb/d. Russian output has decreased and we are likely to see Feb 2022 as a high point for the year. The future is unknown and my predictions about future output are wrong 100% of the time. We do not know what annual average World C plus C output will be for 2022, we will have our first estimate in March 2023 from the EIA. The scenario above has the following from 2021 to 2029 in Mb/d:
77.02
77.64
78.53
79.49
80.67
81.75
82.52
82.88
83.27
The extraction rate for World conventional producing reserves is 5.25% in 2029, less than in 2019 (5.47%). Note also that this is about as low as I would expect World C plus C output to be from 2022 to 2030, interesting to have you suggest for the first time ever that my scenario is too conservative.
interesting to have you suggest for the first time ever that my scenario is too conservative.
Don’t get too excited about that. I was talking about your historical data, not your future predictions. 😁
Ron,
The World C plus C scenario uses the annual average output centered on June/July of the year, we do not yet have that data for 2021 so you have misunderstood the chart, as always I am uninterested in individual monthly datapoints, in my view it is the 12 month average that is important and for a scenario that covers 1871 to 2294, I only use annual data, not individual months. The URR of 3000 Gb for the scenario above is World C plus C output from 1871 to 2294 CE.
Unbelievable .
Ron,
It is the EIA’s projection from the 2021 International Energy Outlook, the high oil price scenario is more realistic, but I would agree that might be too optimistic. I also have often underestimated future output.
Ron, is 2930 a typo or irony? It would fit that graph.
Dennis, your chart has OPEC 5 million barrels per day below your 2030 level. All that must come from just 5 nations, Saudi, UAE, Iran, Iraq, and Kuwait. Also, the other 8 will be down by at least another 1 million bp/d by then, more likely 2. That means the big 5 will need to increase production by at least 6 million bp/d. They are currently at about 23 million bp/d. They will need to go to 29 million bp/d. And they are currently out of spare capacity. They need a miracle.
Ron,
My chart is simply showing the EIA’s 2021 International Energy Outlook for OPEC crude plus condensate.
OPEC is currently out of spare capacity, I agree. They can invest and add to current capacity, just as they dis from 2010 to 2018 to increase their capacity from 31 to 34 Mb/d. Can they do this again? Time will tell, if oil prices are near $150/bo in 2022 $ for the next 8 years (average price level) then we might see OPEC capacity increase from 30 to about 32 Mb/d. February OPEC C plus C output was 30.7 Mb/d according to EIA. Capacity may currently be about 31 Mb/d for OPEC C plus C.
Dennis, what OPEC did was bring two old mothballed fields online at a great expense. Mantifa cost them a mint. But they have no more mothballed fields to bring on line. Since early this century they have also relied on massive infill drilling to keep production up. They are about to suck that cow dry.
No, Dennis, just throwing more money at the problem will not work this time.
A great read: The Mantifa Story: A triumph of engineering, nature and human spiri
Ron,
We will see. Note that OPEC is more than just KSA. Some new capacity may come from UAE and Iraq.
Dennis “Some new capacity may come from UAE and Iraq. ”
Reminds me of the popular Boy George hit ” Sweet dreams are made of this , who am I to disagree ” . 🙂 . Sweet dreams .
Hole in head,
Since 2011 Iraq and UAE have increased their capacity by about 2600 kb/d, you imply further increases are not possible. I would have said the same in 2011 (and probably did), I try not to make the same mistakes over and over. You may be right, nobody can predict the future, I think it remains a possibility that the OPEC big 5 (KSA, Iraq, UAE, Iran, and Kuwait) might increase their capacity in the future.
My guess is that OPEC might increase capacity to 32 Mb/d, but I doubt they will return to their previous peak. In the past I have underestimated future increases in OPEC capacity and perhaps I am repeating that mistake (meaning that maybe they could exceed their previous peak, if Iranian and Venezuelan sanctions were removed, Libya settled its civil war and the big 5 expanded capacity, but it seems the odds are low that all of these things will occur.)
Hey Ron, I got a good book for you to read – My Big Toe. You’re a science guy like me that wants to understand the universe and seeks insight into its inner workings. The author – Tom Campbell shows how the proven discoveries of quantum science provides a new view of the universe. One that we live in a universe that is an approximation of an objective universe and that consciousness is highly involved in the mechanism. Check out the book website – https://www.my-big-toe.com/
Thanks Izzy, I will check it out. However please post these subjects on the non-petroleum thread. Anyway, I have heard of this before but never bought the book. There are several YouTube videow on the subject if you search on that title. I will check them out also.
Why would production be less for the high oil price scenario?
Joe Clarkson,
The EIA must be assuming that OPEC restricts output in order to keep oil prices high in the high oil price scenario, also when oil prices are higher (all else being equal) demand for oil will tend to be lower (assuming the same level of real GDP). So in the high oil price scenario consumers have moved to substitutes for oil, perhaps higher sales of plugin vehicles, etc.
Mr Clarkson . Sometimes the simplest route is the best route . My take .
1. All OPEC reserves are overinflated and do not exist . Cannot pump what does not exist .
2 . Whatever oil they have they are better off stringing it out for as long as possible . Applies specially for countries where oil is the ” single trick pony ” . End of oil is end of the nation state .
3. Geology is not kind to the old oilfields ( pressure , water etc ) . They cannot be pushed too hard to avoid damage . Just like old age in humans . Having a fracture at 70 takes a lot of time to heal .
4 . This is of recent and as per the real oilmen who comment here is manpower . Not enough trained and competent men to run the operations efficiently .
Better to pump less and keep prices high . No loss of revenue to Russia in 118 days of war due to high prices .
Dennis, can you comment on why Saudi production is still following the hubbert curve, and when that will end?
https://i.postimg.cc/C12vnCsC/C92861-FD-BB45-4523-A7-BD-1789-C5-FF08-FD.jpg
You didn’t post an image of SA following a Hubbert curve ShortOnOil. Make up another one maybe? Change all the data first perhaps, because otherwise it won’t work.
As you can see, and I’ll post again, Saudi production is broken down into each part of ghawar. Shedgum, haradh, permian and tertiary. Each followed the curve and we’re at the end.
https://i.postimg.cc/P5NFPW2T/Saudi-combined-e.png
You need to learn how to model field level production then, if that is what you want to do, rather than the initial claim that SA followed a bell shaped curve. Because it doesn’t. Like I said Short, you’d do better if you just changed all the raw data to your liking and then drew your conclusions, otherwise you just confuse people with conclusions that don’t match the data. Maybe if you had engineered rather than becoming a web page designer you would know something about…anything?
Peak oil,
Perhaps you forgot a wave? Also keep in mind there are other fields in Saudi Arabia besides Ghawar.
I wouldn’t be surprised if the long-term nature of bringing non-shale oil on line is going to lead to de-globalization. The correlation between energy and economic growth is very high – mid 90% or so. Granted – it has been shrinking somewhat but it seems clear that without energy inputs economic growth is very hard to accomplish.
North America, and the Americas in general, is in a pretty good position from that point of view. It has still lots of resources and a relatively young population in comparison to the rest of the world. The rest of the world not so much.
As the ROW is essentially in a corner between squeezed between an aging population and resource constraints war seems to be an outcome that can reasonably expected. And although Russia has tons of resources it has pretty terrible geography and, more importantly, an aging and skewed population.
Rgds
WP
But engineers are making great strides in renewable energy production and storage, are they not? This is what I read at least. How true is it?
Thank you
Things are going to Coal to Liquids.
I remember reading Ron P (Darwinian) on the Oil Drum years ago.
“How do you become one of the survivors” – paraphrased and thankful/grateful for his advice of course…
My opinion is live in USA or Australia or Canada.
Hitler proved Coal to Liquids was possible. But did not prove it was scalable.
Australia and the USA own 40% of the world’s coal reserves.
And the USA has the military muscle to pull it off.
It’s the new OPEC.
Peak etc , forget CTL and GTL and H2 and XYZ . TINA is the acronym for the black goo . They also call it crude oil . Some people learn the hard way .
https://mishtalk.com/economics/the-harsh-reality-of-energy-tina-strikes-the-us-and-europe
Why are you so certain that CTL won’t work when it has proven to work before?
It might be slightly uneconomical compared to what we are paying today (125 a barrel compared to 150-200 CTL?).
The political and economical barriers that are causing it not to be used today, will get flushed down the toilet when the alternative is starvation.
And yes, I think Climate Change is a devastating problem, I just don’t think humans will sacrifice their own comfort and survival to attempt to get to Net Zero emissions.
Peak , hope this will clarify .
https://energyskeptic.com/2022/gas-to-liquids-gtl-coal-to-liquids-ctl-can-not-compensate-for-declining-oil-production/
A full scale CTL plant, say 150 kbpd diesel, would cost around 20 billion dollars and be a giant global, multiyear project (probably the biggest global project around while it is built.) I doubt if there are resources available, whether human or equipment supply, to support more than two such projects at any time at the moment and the capacity that exists is gradually falling. If the global industrial society collapses as it seems to be going I think mega projects like this will prove increasingly difficult to execute and, even if completed, to maintain.
From memory about 40% of the energy in the coal feedstock comes out as fairly low grade heat. To be anything like economic against just burning the coal for power that heat has to be used for something. In the Pearl GTL last I think it is for desalinisation, but most such plants would have to use it for steam raising and then power generation, which would likely add to the cost and complexity.
That said the compact, transportable and flexible nature of liquid fuels gives them huge local advantages over electricity, e.g. I can’t really see EV vehicles providing emergency services following major disasters like a hurricane that takes the grid down for three weeks, so there may be increasing pressure for manufactured diesel as oil decline really bites.
Just need some elbow grease and a positive attitude
Git ‘Er Done!
Peak Avocado,
Below is a chart from the EIA’s 2021 International Energy Outlook for coal to liquids output. They expect about 340 kb/d in 2028 and 400 kb/d in 2040, this does not help very much for World consumption of 80,000 kb/d or more.
Thanks Dennis.
That chart isn’t factoring in Peak Oil.
When South Africa got embargoed, they immediately went to CTL. And it worked!
Peak Avocado,
CTL can work, but it is very expensive and not likely to be a major source for Worldwide liquids. If it were competitive there would be more of it, in 2019 it provided about 0.3% of World Liquids output (0.3 of about 100 Mb/d). CTL really doesn’t move the needle, and there are much cheaper ways to go. Coal prices are currently very high, making this a high cost option at present.
Thanks Dennis.
Don’t disagree with you.
I just think the incentive will be there to make it work.
Starvation is a great motivator.
Botswana is building a plant that will serve a considerable portion of their needs-
Botswana plans to build $2.5bn facility to convert coal into liquid fuels-
The plant will have the capacity to produce 12,000 barrels of diesel and gasoline per day.
https://www.offshore-technology.com/news/botswana-coal-into-liquid/
Peak avocado,
There are likely less environmentally damaging and lower cost options than coal to liquids. It is not obvious that there will be a shortage of energy, keep in mind that roughly 60 to 70% of the primary energy in fossil fuel produces no useful heat or work, it essentially is simply waste heat. Producing energy with wind and solar has far fewer losses.
@Hickory
Based on my calculations and brilliant mathematical mind
100,000 barrels / 12,000 @ 2.5 billion = ~21 billion
Australia could service its own needs for ~100 – ~120 billion @ 600,000 barrels per day
The USA could do 6 million barrels for a trillion ( FED )
Yes, this is completely over simplification
C8
One thing engineering runs into is physics. Tesla has just raised their average car price by $6000 according to Bloomberg because of the higher cost of battery materials. Lower and lower cost per KWh in batteries is over. In the UK with the summer solstice and what should be peak solar electric production they are experiencing very cloudy weather, just like last year. The wind industry is now building 12 MW behemoths but where on earth do you get constant 30 mph winds that makes the investment worthwhile?
Ervin,
Tesla may have raised prices because of overwhelming demand for their products, people ordering a Tesla Model Y today have a 10 to 13 month wait (long range AWD) to get their new Tesla. I was lucky and only had to wait about 8 months to get mine.
D Coyne
I don’t disagree that the demand is there and Elon raises the list price of Teslas because he can, but it does not change the fact that since Jan1, 2021 the price of lithium carbonate is up 700%, cobalt by 230% and nickel by 58%. I just looked it up.
Ervin,
Yes prices are up for many inputs for batteries, often this leads to more investment in mining and producing thos materials, an increase in the supply of those goods and then lower oil prices. Car prices in general have been increasing.
Dennis , demand is useless if you have no capacity to supply . This is a boggy . Rivian has an order book for 100 K vehicles but they produce not more than 5 K in a year . So their waiting time is more than Tesla . Waiting time is a useless parameter . Musk has to increase the price because inputs costs are going up . Tesla is not fenced off from the general economy .
P.S : Waiting time is not important . What is the price of a can of beans that is not on the shelf ??
Hole in head,
Tesla is producing a lot of cars, just not as fast as the demand for them is increasing. Lots of car companies are raising prices, perhaps due to higher costs and in part because people are willing to pay the higher price.
Dennis , as usual high prices lead to new investments to produce lithium and cobalt . This is not true . No new investments in the oil industry inspite of high prices . There are too many external factors at play that you don’t take into consideration . Try lateral thinking ( Edward De Bono) instead of linear thinking .
Dennis , what is a lot ? Get things in perspective . Total cars produced in 2021 is 79.1 million worldwide . Total Tesla deliveries in 2021 is 934,000 . If this is a lot what is ” not a lot ” . All manufacturers are increasing prices ? Of course they have too , if all inputs (steel, aluminum, chips ,copper , oil etc. ) are skyrocketing . This is also called inflation in economics . Peak cars 2018 = peak oil (all liquids ) 2018 . Coincidence ??
Hole in head,
Here is what I expect for future, if plugin vehicle sales growth rates of the past 7 years continues. Perhaps oil companies see a lack of demand ahead or are only thinking short term and making poor decisions, we are seeing a lot of investment in batteries and EVs as businesses see an opportunity for future profit.
“where on earth do you get constant 30 mph winds that makes the investment worthwhile?”
silly thinking,
average wind speed at hub height over 17 mph is plenty for worthwhile investment
average is different than constant, in the real world
every amount of energy that wind or solar or hydro, for example, produces is less scarce fossil fuel that a country needs to keep running.
“In 2020, 57% of Iowa’s total electricity net generation came from wind” EIA
Ervin,
Did you expect that energy would so easily available… indefinitely?
Did you expect that bananas form the subtropics could always magically appear on your grocery shelves, or that an individually packaged sterile plastic syringe could be afforded by your health care system or funded by your taxes or insurance payment, indefinitely?
Did you think that it would pencil out to drive your petrol car to work more than 5 miles, even as fossil oil depletion was ticking away every second?
Did you think that a new replacement refrigerator or clothes washer would be affordable, or even available, in this current century?
Lets be clear- when the supply of an item becomes less/person than before
at first the price goes up
and then the products derived become less available, or restricted.
Now its said been plainly.
Just what is the response?
Hickory
I have often wondered if using any form of (renewable) energy has the benefit of conserving fossil fuel for some future generation. But in my opinion from decades of reading and just seeing how the world is evolving I see no evidence that carbon dioxide is now or will ever harm our world. I hate the lie that solar and wind energy will save us from a life ending catastrophe. Europe is now a test case of dealing with a real catastrophe. Next winter the possibility of people dying from cold is very real.
Ervin…where to start
-“wondered if using any form of (renewable) energy has the benefit of conserving fossil fuel for some future generation”
I don’t know about future generations…but it certainly helps in the here and now, and the next decade or two.
-“I see no evidence that carbon dioxide is now or will ever harm our world”
great example of how a person won’t see what they don’t want to.
Another example- the world is flat.
– “I hate the lie that solar and wind energy will save us from a life ending catastrophe”
I can’t help you with the hate, but I agree with the notion that no energy will ‘save the world’.
-“Next winter the possibility of people dying from cold is very real.”
Yep, just as it always has been, and will be.
Your going to need all sorts of energy, just like before.
Except now there are more people and less big chunks of coal to dig.
C8,
Much of this will depend on energy prices and government policy, costs for wind and solar are very competitive at current fossil fuel prices so the ramp up in these technologies may accelerate in the future.
On current price trends synthetic liquid fuel based on carbon capture and solar energy will soon be competitive. But I wouldn’t hold my breath waiting for it to happen.
It’s an insanely inefficient way to power a vehicle (well over 90% of the electricity is lost in the synthesis and subsequent burning) and the infrastructure simply isn’t there.
The choice is between dumping the huge fleet of combustion engines for electric vehicles or building a complete new system for making fuel.
Most of the world’s car industry is betting the farm on EVs right now. The car industry is the middleman between the oil industry and consumers. Their choices will likely decide what technology is used in the future.
There is more than enough viable oil to wear off the current car fleet, and a lot of new ones without doing stunts like this.
Alternative and additional energy can be used first for better things – first common electric consumpion, and then stationary demands like heating, industrial heat and processing energy.
If you go green, green steel, green cement – all needs before creating artificial gas in the most inefficieant way. If going this way, a hydrogen system would be much better. You need it anyway for green steel and seasonal/emergency storage – and it’s less efficient than batteries, but about twice as efficient as synthetic fuel. Round about 25% of the raw input arrive at the wheel.
The energy crisis shouldn’t be that strong if we wouldn’t be ideologic restrained.
Additional to wind/solar we could push fusion deveolpment in a Apollo program like mode: All components are there – even the in build ITER is already technologically old. It uses low temperature superconductors instead of high temperature which are able to deliver much stronger fields (= cheaper + better results). And then build a middle size factory mounted model – produced like Boeing jets and only installed in site.
This will take 20 years, especially the ramping up, but we have that much oil gas and coal left. Additional solar for the sunny countries, and wind where it is. It’s good to have more than one shot, you can do many things the same time.
Europe would need a freight railway system, build in a war like effort (otherwise NIMBYs would sue it into oblivion) to reduce Diesel demand.
Percent of global energy that is contributed by oil for road transport is 19.6% of total.
That energy will start to decline, and so it will be time to drive less and/or switch to electricity.
Voluntarily, or be forced by pricing and rationing- these mechanisms will serve to prioritize consumption.
Except for the very wealthy who don’t play by the market (or legal) rules like everyone else does.
Hickory, I thought you were banned.
Like you were Short?
“Hickory, I thought you were banned.”
No, that was you before you changed your name.
We must bring ” grades of oil” into discussion .
HOLE IN HEAD
IGNORED
06/18/2022 at 4:17 am
85% of…SPR [sales] have been medium-sour…By …October…only 179 mmb of [it will remain]..
Biden is not going tp KSA go on Haj or eat kebabs . He needs the to replace the medium sour in the SPR that he has been selling .
Hole in head,
Not surprising as US Gulf coast refineries are optimized for heavier grades of crude, it is a dumb plan to sell oil from the SPR, but unfortunately Biden is not getting good advice, I don’t think he has any oil industry experts in his administration or if he does he is not listening to them.
Dennis , ” not surprising ” , but also not my problem . Not getting good advice ?? Are you implying his advisors don’t know about grades of oil , blending and limitation of refineries to refine specific blends ? Not much even the experts can do if the refineries are not getting the correct blend . If medium sour is needed , then medium sour is needed . TINA . He better get to replenishing this draw down or WCS is going to be useless .
Hole in head,
The SPR should not be used until absolutely necessary, this is just stupid political short term thinking.
Dennis , but this is reality . What you and I think is immaterial . TINA is TINA . If medium sour is needed then medium sour is needed . QED .
Weekend peak,
Note that correlation does not tell us anything about causation, perhaps real GDP determines demand for oil which then influences the supply of oil through market prices. You may have the causation arrow reversed from reality.
Dennis:
That is possible but unlikely. In order to create widgets you need inputs – and oil is one of those inputs. If oil were an output rather than an input we would be surrounded by oil in storage. And we are not (and it makes absolutely no sense). How much oil does your Tesla produce? (still waiting for my model Y btw).
Oil is an input, not an output.
I think…
rgds
WP
WP, “Oil is an input, not an output.
I think… ”
Correct . Oil is the master resource and Diesel is king . Just for info , there is are now worries in Austria , Slovakia and Hungary regarding diesel . These countries are at the fag end of the Druzba pipeline and the stupid EU sanctions are creating problems . Rationing ???
Weekendpeak,
Energy is a necessary input, oil not so much, the amount of input consumed is in part dependent on the amount of output produced. This is a chicken egg argument, I go for chicken, you seem to think it is the egg that matters most. Here is my viewpoint in a nutshell, oil is not the master resource, there is no master resource, there is a set of resources that are necessary and the proportions change over time with changes in technology and consumer tastes.
Dennis , understand the three legs of the stool called IC . Oil , electricity and metals . No oil (diesel ) means no mining = no coal and NG = no electricity = no metals . Game over .
P.S : Don’t come back to me with nuclear/ hydro/wind/ solar etc as replacements for diesel . That argument is already buried .
Hole in head,
You are just not correct, electricity or natural gas can replace most uses for oil and coal. There are other fuels besides diesel, and al lot of diesel is wasted on uses such as personal transport. Lots of mining is done with electricity, which covers metals and coal.
Just because you make a claim does not mean it is proven. QED, means something has been demonstrated. Your “proofs” amount to I said it therefore it has been proven, I’m not buying it.
Oil can be replaced as it was in the 80s, it does not have to happen overnight, in the mean time high diesel prices with both increase output of diesel and reduce consumption of diesel.
Mr Coyne , ” electricity or natural gas can replace most uses for oil and coal. . other fuels than diesel ” . Please enlighten . How will you produce coal + NG= electricity without the Caterpillars /Komatsu’s mining and the Volvo HD dumpers hauling the coal without diesel or the gen sets ( diesel ) in remote locations drilling for NG . Your “Lots of mining is done with electricity, which covers metals and coal. ” . Can you give me an exact / approx figure of the diesel vs electricity used for mining worldwide ? It will be miniscule , not even worth discussing . I don’t claim anything but the facts . Since 2020 I have said peak oil (all liquids ) is 2018 , US peak is 2019 , OPEC + has no spare capacity , Russia has peaked , KSA has peaked , Covid will lead to a worldwide recession ( my take a depression ) . Always early to the party , but no regrets . I would rather be at the airport an hour before my flight then a minute late . 🙂
Hole in head,
I did not say it has replaced diesel, I said that it can, and likely will see link below, it estimates in Sept 2021 that about 1% of global mining, but with current technology and high diesel prices the electric option is cheaper and is likely to expand rapidly.
https://www.newscientist.com/article/2290944-how-electrification-is-changing-mining/
It’s been a long time since I’ve seen any estimate at all about the cost of doing coal to liquid, but the energy cost is high as a kite.
We would be far better off to burn coal to generate electricity and then run our vehicles and machinery on electricity to the extent we can, while reserving whatever oil we can produce for ESSENTIAL use such as in military vehicles, heavy construction equipment, farm machinery, etc, in cases where batteries just can’t get the job done….. unless……..
Unless the highly speculative green hydrogen revolution actually comes to pass.
I’m willing to believe it will happen, given that I also believe that we will have wind and solar power out the ying yang so that we can AFFORD to manufacture hydrogen via electrolysis of water and use it to run fuel cells so as to avoid needing super batteries.
Hydrogen has some very real problems, but it’s also the ultimate trump card in one respect…….. it can be stored indefinitely, by pumping it down an old oil well or into a salt cavern or even into tanks, if tanks can be built cheaply enough. This has the potential to more or less WIPE OUT the wind and solar intermittency problem.It could even wipe out the SEASONAL supply problem.
In the past I’ve mostly thought and argued that batteries will rule, due to the lack of any infrastructure system to distribute hydrogen to retail outlets, and the energy cost of producing and handling it.
But I also think if oil is expensive enough, hydrogen WILL find it’s way to truck stops and school bus fleets and city bus fleets, and just about any sort of truck fleet operation where one refueling installation can service a lot of vehicles.
From there it might actually eventually be possible to sell it at retail stores so people can run cars on it…… but my guess is that won’t happen, and that batteries will indefinitely out compete hydrogen for cars and small trucks.Let’s not forget that batteries might keep on getting cheaper too, lol.
Battery swapping hasn’t worked, and most likely never will work, imo, because it’s just going to be easier an cheaper to wait a few minutes to charge up.
But standardized H2 tanks are a real possibility. An eighteen wheeler load of them could be parked at a good location, and people could potentially swap out an empty one for a full one in as little as five minutes, and go three or four hundred miles on one tank. Dual tanks wouldn’t be a problem for larger vehicles, thereby doubling the range.
Tanks could or can work because they’re small enough, and can be swapped out without worrying about getting an old one while trading in a new one, when swapping batteries.
Toyota has made a LOT of progress lately with small hydrogen tanks big enough for three to four hundred miles range in an automobile.
Shale itself is already marginal, it’s condensate, and you realize that coal gas cannot be turned into any longer chain. So it’s physically impossible. Note that the countries that do it (China) are collapsing anyway.
Libs will say all kinds of physically impossible things but you can’t transform a gas back into a liquid and gain energy, that would be a perpetual motion machine.
Light tight oil sourced and reservoired in shales is primarily medium to light grade sweet crude Short. Now run along and create another Hill’s Group report so we can all have another good giggle at how engineers who never engineered get laughed out of technical review when they try to do something they have no experience with.
Ok well how is your argument even physically possible?
You cannot make diesel from condensate. That’s like making oil from styrofoam. Even if you were able to you can’t make chains longer in any useful way, it’s physically impossible, the point of entropy is to make the chains shorter.
This is why- surprise- it isn’t done and diesel is declining.
Mustang,
Light tight oil is not condensate despite your claims which are not supported by any evidence. The API averages about 42 degrees, it is light crude oil which once commanded a premium on World markets, but refineries in much of the world have been set up for heavier crude which dominates World crude supply.
Information on tight oil here (see Working with Tight Oil download at link below)
https://www.emersonautomationexperts.com/2015/industry/downstream-hydrocarbons/challenges-in-refining-tight-oil/
Chart from “Working with tight oil” referenced above presented below
plenty of gasoline and diesel from tight oil, low residual oil yield. making it more profitable, but US refineries have been optimized for heavier grades of crude.
I didn’t make an argument Short. I just happen to know the API gravity of various oil types by the formation they are produced from. You’ve made this claim before, been told it was wrong before, and it still is.
I recommend learning. Otherwise you just make Happy McPeaksters look bad, and that is saying something.
Oligomerisation. You can do want you want with hydrocarbons but if the feedstock prices are near the product price there is no driver:
Peak, I wish you would quit trying to blame everything on the libs. It is the conservatives who, in general, are the cornucopians. They are the ones who believe we have enough oil to last us for 100 more years, at least, if we would only allow drilling and pipelines everywhere. A liberal is far more likely to be pessimistic than a conservative about the state of the world,s oil supply than a liberal.
So please knock this “libs” shit off. You are 180 degrees off as to who to blame for “saying impossible things”. It is the conservatives who, in general, are the idiots concerning the world’s oil supply.
I second Ron. As a self proclaimed leftist, here is how I see it:
Liberals think we can just cut out oil and gas out completely and fly battery powered planes to Catalina to enjoy a nice brunch of organic avocado toast and free range champagne. The laws of physics do not matter. Elon is a nutty conservative, but he will save us. Just apply Moore’s Law to everything. On the way home in our 5,000 pound hybrid SUV, we can drop off the kids’ old scool clothes to fix income and social inequality and then pick up Mom’s mood stabilizers and Dad’s blood pressure meds. I miss Obama. BAU continues.
Conservatives think we can apply good ol’ American ingenuity and, because we are exceptional, drill our way through the future. The laws of physics do not matter. Elon is a nutty lib, but he will save us. The company will always take care of me, so I just used my bonus to lift my Yukon and put 30 inch mudders on it. Can you believe what Brandon did to gas prices? Anyway the unfettered free market will steer us when the time is right. Until then we just need to work hard and pray. BAU continues.
In the grand scheme of things, there isn’t much difference in what libs and cons DO. Nobody is taking the future seriously.
At least they both like Elon!
The Dim-Repug paradigm is a stage set for idiots to argue upon about how they should best starve to death.
Let me say this about hydrogen. Under no circumstances, no mater what process is used, the energy in a kilogram of hydrogen is less than the process used in its production. So, how in the hell can spending $1.00 to get $.50 worth of energy going to save us. Do the math !!!
So, how in the hell can spending $1.00 to get $.50 worth of energy going to save us.
Naw, it is $.30 worth of energy for each $1.00 spent producing hydrogen.
Scam Alert: Hydrogen Hoax – The Next Great ‘Renewable’ Energy Fraud
Here they come again for your money. Firstly, it was wind, then it was solar. Now they’ve put the two together and it’s hydrogen. And what they’re trying to do is to skin us alive forever. Now your previous segment on education reminded me of politicians, but totally and absolutely scientifically illiterate. It’s equivalent to a politician not being able to read or write. So let me say a few things for an illiterate politician. You need electricity to make hydrogen and you have losses when you do that. And then with the hydrogen, you need to make electricity, again you have losses. And so you get about 30% of the energy by that process, the rest gets dispersed. Unless legislation can change the laws of thermodynamics, you are in a loss, loss, loss situation. Loss because we taxpayers get skinned alive, loss because we redistribute energy, and loss because we cannot replace that energy.
I have read other reports that put the energy from water electrosis produced hydrogen at 20%. I think 30% is really quite optimistic.
Electric power at $0.05/kWh produces hydrogen at $7.00/kg. That power is more likely to come from nuclear reactors than wind turbines.
Hydrogen is not renewable energy.
It is a form of energy storage.
All forms of energy storage lose energy in the round trip process.
Some more than others, and some at much more expense than others.
I am not convinced that hydrogen energy storage is a worthwhile pursuit from what i have read,
but I am no expert on it.
Some very big companies, and countries (Japan for example) have decided it is a mechanism worth pursuing.
It seems to me that there are some much more solid, affordable, and reliable mechanisms available.
But these mechanisms are not at all ideal for heavy and long distance transport (batteries are heavy).
Don’t forget that poor energy efficiency is our civilizations baseline condition- less than 25% of the refined energy in crude oil transport fuel is converted to forward propulsion at the level of the wheel.
Hydrogen, currently, is not renewable because, once it comes out of the ground, it rises in the atmosphere and is lost in space. By using hydrogen from natural hydrogen sources, we will turn it into water, which will at some point in the future return to the earth’s mantle and be broken down again into hydrogen and oxygen. Then the hydrogen from these sources will become renewable.
Hydrogen is the “jack of all trades”. It can have a number of applications, but is a high cost solution.
The only reason why investments in hydrogen are popular is to make the most out of intermittent wind and solar energy resources. How can the solar (or wind) resources in Saudi Arabia or Morocco be converted into something useful where people live or where industry is located?
Two projects illustrate proposed solutions for this. One is the underwater interconnector cable from Morocco to the UK and second one is the hydrogen project between Germany and Saudi Arabia, where where hydrogen (based on solar power) is to be shipped from Saudi to the industry in Germany.
There is some viability for small scale hydrogen production used for transportation also. The idea is that the grid can be tapped for hydrogen production when electricity is cheap, that the energy loss of compression is not too high and that just enough can be produced to serve a hydrogen refueling station (or a back-up power generator).
Here is some promotion material from for example NEL:
“With advanced heat recovery, recent NEL electrolysers have reached up to 80%-85% efficiency. The mass produced containerized units would be ideal for smaller distributed clean H2 production for FCEVs, fixed standby power units etc”
https://nelhydrogen.com/water-electrolysers-hydrogen-generators/
Good point Kolbeinih.
And that is exactly why Hydrogen as energy storage has drawn very wide attention from many big energy companies and countries.
And if small scale “Water electrolysers / hydrogen generators” do indeed become widely available at good cost, one can foresee many useful applications. For example, many large scale farm operations could be fueled by hydrogen produced on-site by PV or wind.
Hickory,
You are correct in your thinking in your last sentence. It would be a relief if a cluster of large scale farms could run on renewables, including probably both battery and a hydrogen set up. In principle able to operate off grid. Maybe something to think about for the great plain states in the US.
Best of luck Prof Bardi .He got sick of the bureaucrats .
https://thesenecaeffect.blogspot.com/2022/06/bye-bye-university-how-to-leave.html
For those who may not know Dr Bardi is the one who coined “The Seneca effect ” .
A comment on the above link regarding EROEI .
AnonymousJune 15, 2022 at 12:35 PM
“And you may have asked yourself (but never dared to ask) what is the value of the EROI at “peak oil”?”
EROI is smoke and mirrors….
EROEI is the real deal:
The energy invested, measured in barrels of crude oil, say, is always millions of times more than the barrel extracted.
And that is when a newly drilled oil well comes gushing – creating lakes of crude around the well (actually, that what has happened in Baba Gurger in Iraq, 1927, and many others).
Not when water injected, gas injected, magical liquids injected to force the oil out
Coal didn’t take over wood – only after 60 years from its mass production in America.
But that didn’t stop the relentless deforestation of America to date.
When oil started its mass extraction in Pennsylvania, wood and coal were produced like no tomorrow – just to produce hundreds of barrels of Pennsylvania oil a day.
Only after 60+ years, Ghawar has come in 1937 online – and that’s is after Iran, Iraq, Azerbaijan, American, Canadian, Romanian and S. American oils were produced in millions and millions of tonnes per annum.
No matter how Ghawar has been massive and productive, all what it has produced was a subproduct of what energy has come before it.
Ghawar will dry out before Iraq, Iran, Azeribidjan’s oil – like Alaska and North Sea oils?
Whatever oil fields have come last – they will disappear first:
This is simply a testimony on there was never something like flying-carpet positive EROEI – as our Western Civilisation has claimed all the last 120+ years.
“No energy store holds enough energy to extract an amount of energy equal to the total energy it stores”
Wailing.
I googled “What is the history of the Ghawar oil field?” Here is what I received.
Ghawar was discovered in 1948, and put on stream in 1951. Some sources claim that Ghawar peaked in 2005, though this is denied by the field operators. Saudi Aramco reported in mid-2008 that Ghawar had produced 48% of its proven reserves. Approximately 60–65% of all Saudi oil produced between 1948 and 2000, came from Ghawar.
There is no doubt that Ghawar is way past peak and, I believe, is now in steep decline.
As goes Ghawar , so goes the world .— Matt Simmons .
Hole in head,
It seems Simmons was wrong, based on what has happened since twilight in the desert was published. Interesting book, though, it got me interested in peak oil.
And nukes are needed to fix blowouts in the Gulf. There is a reason I suppose why I never ran into accountants drilling wells in the GOM, they were apparently too busy selling horseshit to the peak oilers.
“If I want to understand something about an oil field you ask a reservoir engineer, not an accountant”….paraphrasing Mike Lynch circa first decade of this century.
In the half century I have been an oil and gas operator (and a worldwide well control hand for the biggest well control company in the world), I’ve only met five fingers of reservoir engineers that had the courage to put their money where their big mouths were. , They always worked for somebody else, on a salary, were pompous and arrogant, and quick to blame somebody else, like other engineers, or geologists, for their hypothetical BS.
Man, given what we now know about reservoir engineer induced EUR exaggerations in the tight oil and gas biz; yikes! THATS embarrassing.
In the well control business, engineers always stood back 500 yards and watched us fix their mistakes, reservoir engineers never left the office. Bad analogy there, big boy,
If you want to understand something about an oil field, avoid engineers (and Mike Lynch, good grief!) and ask somebody with their own money invested in it. They’ll shot straight with you every time.
And by the way, if there is SOOOOOO much oil everywhere in the world, so much tight oil in the US, if reserve growth actually “rules…”
…why is the price of oil so high?
Read something the new this morning, a magic wand to solve all oil problems.
The west wants to limit oil prices – that would solve all problems: Less to pay at the pump, and more supply since then all countries would pump more.
Easy – why didn’t they invented it before?
— They should try other pills, these are bad —
Eulenspiegel,
Not clear why everyone would pump more at lower prices, perhaps the thinking here is that when profits are negative you make it up by increasing sales? Pretty sure when in a hole a ladder is a better option than a shovel.
Ron
Why do you think that Ghawar is in steep decline. I assume that you don’t believe Obaids’ comment that continuous drilling and water flood has reduced Ghawar’s decline rate to 2% annually.
Guys , I pulled this out of the archives . It is a post on POB in 2019 regarding Northern Ghawar .
https://aktiertips.se/northern-ghawar-water-and-production/#more-214
Another post by the same gentleman on Ghawar .
https://aktiertips.se/saudiarabien-ghawar-och-i-told-you-so/
Ovi, of course, I believe that. But you seem to completely miss the gist of my argument. Decline and depletion are two different things. It would have been clearer if I had stated that the depletion of Ghawar is steep and will soon hit the Seneca Cliff. If you have a natural decline of 8%, which OPEC stated in 2006, and you, via the use of massive infill drilling, you reduce that decline rate to 2%, all you are doing is pulling the oil out much faster. Yes, you do get some oil out that would otherwise be left behind, but that is minimal. You are not creating more oil, only getting it out of the ground much faster.
William Catton, in “Overshoot”, compared that to being able to write withdrawal slips from your bank much faster. You are getting your money much faster but also depleting your bank account much faster. That is exactly what is happening to Ghawar. They are getting their oil out much faster but also drawing their reserves down much faster.
I hope my argument is clearer to you now. Anyway, that has been my argument all along.
Ron
I did not realize you were comparing 2% vs 8%.
What we really need to know is the water cut ratio to get a better idea of how close Ghawar is to the cliff. A few years back an article I read claimed that 7 Mb/d of water was being pumped into Ghawar and that they were recovering 4.6 Mb/d of oil or close to a 34% water cut ratio. If they are still pumping 7 Mb/d into Ghawar and with oil output today being close to 3.5 M b/d, then the water cut ratio is now close to 50%. At what point do the water columns leave stranded oil behind.
It is my understanding that by resting a well, the initial water columns will settle and oil will float up and a water oil mix will then come out again if the well is restarted. Apparently at some point the settling stops and oil is left stranded behind. I once read that the maximum amount of recoverable oil for Ghawar was around 70%. Not sure if new technology today would change that percentage.
“Whatever oil fields have come last – they will disappear first”
I do not understand this comment- can you kindly explain?
HiH will have to explain exactly what he meant, but there is the fact that all the super-giant fields, all the giant fields, and even all the medium size fields have already been found and many are close to exhaustion. However, what is left are the tiny fields. They are the last to be discovered and because of their size, they will not last very long nor will they produce a lot of oil. We are down to picking up the crumbs. Many will dry up years before the giants and super giants discovered half a century ago stop producing.
The Anonymous comment makes no sense at all. Somehow he thinks that all energy extracted is just a fraction of the energy devoted to the extraction process, i.e., all EROIs are negative. This is just silly. I hope a good laugh was your intention in quoting his comment.
Thanks, Dennis, I didn’t realize this was the same guy. Let’s get rid of him.
As to your posts and predictions, I just love them. Don’t you dare stop. If you do, then who the hell am I going to argue with. And God how I love arguing. 🤣
Edit: The guy who called himself “PeakOil” is gone. As a result all replies to his nonsense are gone also. That is just the way the system works and is unavoidable. Sorry about that.
Dennis
The CEO of Ford recently said that it costs $25,000 more to build a Mustang Mach 1 than a gas powered Ford Edge. The high cost of battery materials has ended any hope of profits from our EV,s. The average EV cost now exceeds $60,000 and the overall average auto purchase cost is $43,000. $17,000 difference at $5 / Gal. Will get you a 15 gal fill up once a week for 4.5 years. I just don’t see EV,s taking over the future.
Ervin,
Many EVs are priced around 43k with 300 miles of range, some still have the federal tax credit of 7500 which reduces the net price to under 36k. If we assume 30 mpg for the average ICEV and $5/gal for gasoline that is about 16.7 cents per mile, an EV can travel about 4 miles on 1 kWh of electricity input at a typical 13 cents per kWh that is about 3.25 cents per mile for the EV. So we have a difference in cost per mile of 13.417 cents per mile. Lets assume the car is driven 150,000 miles (note that an EV will likely go 250k, but many ICEVs will be junk before this).
So 150,000 miles times 13.417 cents per mile is $20,125 dollars, subtract that from the net cost of the car (35500 minus 20,125) and we get a comparative cost of $15,375 for the EV vs $43,000 for the ICEV.
I think we can see why many people would prefer to buy an electric vehicle. Note the price of the Mustang EV is 44k, so that would be 16375 vs 43000. There is also a Hyundai for 44k with 300 miles of range, the VW Id4 (275 miles range) is 42.5k, all of these EVs qualify for the 7500 Fed tax credit and in many cases there are state incentives as well (in Maine it is a 2000 rebate for these cars as well, so net cost after energy savings would be 14375 over the 150,000 miles assumed life of the car.)
Dennis/Erwin/Others
I have said it before and I will say it again. The concept of BEVs is totally crazy at this point in time. The main objective should be to reduce gasoline consumption over the next 10 to 15 years by 50% to 75%.
The most economic and quickest way to do this is thru PHEVs with a range of 125 miles. The battery cost for that vehicle would be close to 1/3 of the cost the battery in a BEV. Lower cost means better market penetration. Also the gasoline engine as a backup would remove a lot of potential buyers from the “skeptical” group to the “Maybe” group of potential buyers.
Places like California which are pushing for BEVs are not being helpful to the CC issue.
Ovi- “The most economic and quickest way to do this is thru PHEVs with a range of 125 miles. ”
That would indeed be an excellent combination of capability.
From what I’ve read, the reason that manufacturers have struggled to come up with passenger vehicle PHEV with over 30-40 miles electric range is that the combined battery weight plus ICE weight creates a heavy vehicle with need for heavy duty suspension/structure, and poorer energy efficiency performance.
Maybe there are other reasons, but I agree these vehicles would be very useful.
You can be certain that the legacy auto manufacturers like Ford, Toyota, VW etc have had great incentive to make the PHEV system work with longer ranges, but up to the current time have been unsuccessful.
Hickory,
It might also be a cost factor as well as weight.
I know quite a few people driving a PHEV here. There is one main problem of these things –
electric range and consumption. Due to the dual structure and additional moving parts, they use much more electricity than a pure EV.
Most times they are around 30 Kwh/100 km – which limits electric range to 30 miles. And they have limited trunk size due to the place of the battery there.
No easy way here. Many companies are looking at the sodium battery already – to get rid of these sky high raw material prices.
Cars are the problem. No car is a solution, even boondoggles like a fully EV fleet (which literally cannot happen with current resources and prices).
If only there was some other mode of mass transit that didn’t rely on the dumb American disease of carbrain…
Mass transit works in towns, together with a fleet of commercial trucks.
On the wide country in the USA it doesn’t work – no sense to drive around lot’s of air in a bus when there are only few passengers.
The next problem: To be very efficient, mass transit has to be unconfortable. Busses / trams have to be filled to be efficient.
Eulen , I see this ” driving of air ” all the time between 9 am and 4pm in the trains and buses in Belgium . Some pensioners just sit in the bus and ride spending time . In Belgium bus was free for +65 a few years ago . Now it is a small sum . I think Euro 100 per year or something for unlimited travel .
The wide country is irrelevant, because not many people live there anyway.
Anyway mass transit works fine in low density countries like Sweden.
Mass transit and crime are locked together in the public mind. People are very vulnerable on mass transit and you will have a hard time convincing them to ride when thugs with 15 prior arrests are constantly released to prey on the weak. The media feasts on these type of stories and the fear is real. Paying extra for gas is like paying for life insurance- its viewed as a necessity.
The left does not see the link between crime and cars- the current soft on crime policies of DA’s are defeating green energy goals.
Norway and Finland are soft on crime, have low incarceration rates, low crime rates, and low recidivism. If putting people in jail made life safer, the US would be the safest place in the world. It is not. Crime rates have been falling for decades in the US and the prison population keeps rising.
The USA has one of the most ineffective criminal justice systems in the world. Read Judge Jed Rakoff’s book “Why the Innocent Plead Guilty and the Guilty go Free”.
I attended my sister’s trial in 2018. What stood out was ignorance and poorly designed economic incentives.
Actually in the USA light transport is directly involved in many arrests.
Typical scenario. Driver who is addicted to drugs drives vehicle. Driver is pulled over for minor traffic violation. Expired registration, no turn signal, or some other “fine only” violation. Driver who is addicted to drugs usually has no license or is driving while suspended/revoked. So driver is arrested. Search of driver/vehicle incident to arrest usually results in discovery of felony drug possession/with intent to deliver.
Other unfortunate scenarios which result include driver attempting to flee in vehicle, driver fighting officer, etc.
Of course, many shootings are from vehicles in the USA “drive-by.”
In some left leaning jurisdictions, police are discouraged from making traffic stops.
The bottom line is that USA has a very significant drug problem and has for many decades. No easy answers to it.
Oregon is trying a new approach, but the approach seems to be failing early on.
Proponents of decriminalization have a point, as incarceration doesn’t seem to work. However, “offering treatment” rarely works either. Oregon has an “offer treatment” regime. Thus far less than one percent have sought treatment after ticketed for low level possession, even though just one treatment session attendance results in automatic dismissal of ticket. 70% of the drug possession tickets in Oregon are simply ignored.
I sometimes think we are just going to have to accept a certain level of drug abuse and the crime and child abuse and neglect that accompanies it.
I think many of the labor shortages and supply shortages are a direct result of increased drug abuse. People on meth/opiates usually work sporadically. Use of these drugs spiked during COVID and has not fallen yet.
Example is where I live. Estimate is that 5% of adult population is in active meth addiction currently. If those 5% weren’t, the labor shortage in my area would be solved
I really don’t think either the liberals or conservatives have the answer to crime. Crime is a moral failing instilled in most at youth. It’s mostly generational. We try to hard to blame government systems for crime, when in reality blame for it falls on the individual, provided he is mentally fit to stand trial.
Moral reconation therapy is necessary to achieve change. Getting the defendant to bother to show up and actively participate in these sessions is very difficult.
Poverty is a huge driver. I have a good friend who works in law enforcement in one of the richest towns in the USA. More violent crime in my town than in his which has 12x the population.
Changing criminal behavior is a huge, costly lift. Doesn’t mean we shouldn’t try, but need to quit blaming each other for it. Blame falls on the perpetrators first and foremost.
Most think USA wants to lock people up. Not true. In USA probation is mandated unless courts find certain factors or crime is particularly violent.
The large numbers in prison result from probation revocations, as few successfully complete probation, or due to recidivism. Courts give people plenty of chances in the USA.
My sister got late onset schizophrenic symptoms. She hears voices, is
delusional, and has had several psychotic episodes. Her husband got tired of
it. Instead of coming to us to help him get a divorce he went to a lawyer.
The lawyer obtained a restraining order preventing my sister from going to
their house. My sister broke the restraining order. In France this would
have been an open and shut case: not mentally capable of understanding the
restraining order, not guilty. It would have cost my sister around $5,000.
In the U.S. my sister paid $10,000 to be evaluated by an “expert witness”
only to have the judge exclude any explicit mention of her mental state at
the trial. She was found guilty, her defense lawyer charged around $50,000.
My sister was sentenced to two group therapy sessions. One was supposed to
help her mental state, but didn’t. The other was to treat abusing spouses.
My sister was the only woman there. The rest of the group were men who got
drunk and beat up their wives. A complete waste of time.
In the U.S., if you don’t have money and have mental issues you end up rotating between prison and the street. The people running the jails do not have training in dealing with this kind of problem, nor do they have an economic incentive to keep people out of jail.
On the other hand, if you have a lot of money, you can break all kinds of laws and face virtually no penalties. Read Rakoffś book.
The official justice system in Norway is restorative justice. Prison is not
seen as a punishment, it is seen as a place to learn how to be a good
citizen and reintegrate society. The numbers are impressive.
In the last 50 years we have learned a lot more about who is in prison and
why they break laws. We also know more about how to help the prison population.
That is the basis for the compassion prison project
(https://compassionprisonproject.org/). It is also the theoretical basis for
the so called “soft on crime” DAs. If you actually look at the numbers,
crime does not significantly increase with soft on crime DAs. What
significantly decreases is the money spent on the criminal justice system.
Ovi,
I know this is what you think, we might not end up with a lower cost car. If this is an option people want then that need will be fulfilled by the market in theory. Currently the longest range of a plugin hybrid is 126 miles for the BMW i3, the total range of the car is only 200 (it has a very small gasoline tank, about 2 gallons) and the price is 48k about the same as a Tesla Model 3 with 279 miles of battery range. The BMW can get the 7500 Fed Tax credit in the US, other options of plugin hybrid with 61 miles of electric range (84k price) and 52 miles of electric range (155k price), the RAV4 with 42 miles of range is about 44k.
That is what is out there for those with range anxiety. I like the Model 3 and Model Y, but they are not for everyone. The RAV4 is eligible for the 7500 Fed tax credit in the US so it would cost only 32800 after rebate, not clear how many of these are available, but the 42 miles would cover much around town driving for those with short commutes and if the car can be plugged in at work, up to a 42 mile commute would be covered.
VW reckons the effort involved in building an EV is about 40% lower than in an ICE.
But cheaper cars isn’t the solution to America’S transit problems. The solution is better city design.
My lament . America is not the world . USA was/ is living on a maxxed out credit card virtue of its reserve currency status . Trade deficits and current account deficits since the Vietnam war . Well , that credit card limit is now under review for the first time . City design ?? Read JHK ” The end of suburbia ” Anyway , the days of unlimited money printing are over because there is no nett ” energy surplus ” to underwrite new stupid adventures such as redesign cities . Reality bites .
Dennis/Hikory
I guess I was getting a bit too idealistic with my 125 mile battery range. Maybe a more realistic target might be 80 miles.
I looked up the current California ZEV standard that allows PHEVs to earn full credits as a ZEV. It must have an 80 mile battery range.
Interestingly California is in the process of proposing new yearly standards for the percentage of car sales that must be BEVs by 2035. In those standards, they will allow PHEVs but they must have a minimum of 50 mile range on battery. They must have had a lot of kickback from manufacturers for them to lower the battery range from 80 miles to 50 miles for PHEVs. Maybe more than 100 miles on battery is a bit of a stretch for now for PHEVs.
As a sidebar the new standard is based on falling battery costs. Not sure that projection still holds. There is currently a big price spike. Prices could fall once the spike peaks.
https://www.greencarreports.com/news/1132190_california-plan-80-fully-electric-by-2035-50-mile-plug-in-hybrids-tighter-tailpipe-emissions
https://timesofsandiego.com/tech/2022/04/17/california-regulators-release-detailed-plan-to-end-sale-of-new-gas-cars-by-2035/
Another obstacle is the cost of the vehicles. “The cost to manufacturers will be high per vehicle in the early years, but significantly decrease over time by 2035,” the air board’s staff report says.
Mazda is late to the EV market but they are coming with a different approach. They have introduced the MX 30 BEV in California. It has limited range, 125 miles, and will add a rotary engine as a range extender in 2023. It was supposed to be out by June 2022 but is delayed again. I think the delay is due to the California standards not being finalized. It will be interesting to see how this car technology evolves over the next five years.
https://topelectricsuv.com/news/mazda/mx-30-range-extender-rotary-engine/
Ovi.
I’m in the market for a new pickup truck. I trade every 6 years more or less and am driving a 2017 I bought in late 2016.
A few years ago I thought I’d maybe be buying or at least considering an EV pickup truck around now.
I was even kind of hyped on Rivian. But geez they are having trouble.
I talked to our local GM dealer about an EV truck, and they just kind of chuckled and said they wouldn’t recommend me waiting that long and/or being a Guinea pig.
Now I’m not sure when these will be a practical reality for me.
I think this EV conversion might end up being harder than us skeptics even thought it would be.
Tesla sure has the lead on automobiles but trucks seem to be a different animal?
SS
I agree this will not be an easy transition. I would look around to find the pickup with the lowest fuel economy, provided it meets your requirements and hope that the price of gasoline drops.
Not sure if the Ford F-150 would meet your needs. However I understand it is sold out for 2022.
Ovi.
As we weren’t able to sell our leases, we are benefiting from the greatly increased oil income right now.
So $5-6 gasoline isn’t an issue for me.
You’d think we’d have inquiries for our leases now, given people knew we were trying to sell in 2021. Nope. Zero.
Hence building the P & A fund. We are truly married to them it seems.
Shallow sand,
Most car dealerships are not interested in selling EVs as it will nearly eliminate their revenue from service. If the truck is still reliable, maybe wait a few more years, GM actually has more experience with EVs than Ford (with Volt and Bolt sales) so they might be a better choice, assuming you are not interested in the Cybertruck.
Don’t count on this.
There is enough electronics in them (much more chips than in an ICE car) due to the electric power train.
And this stuff tends to have strange problems – so a lot of money to earn for fixing it. Or swapping parts until the problem is solved.
Seen this already with the current cars – the most nasty stuff is electronics.
Dennis.
The closest place for me to buy a Tesla is over two hours away. I don’t really care at all for the look of them. Seems like the launch of those has been delayed a lot.
I liked the look of Rivian, but those are now nearly $100k. Again, not sure where I’d buy one.
I drive my truck on gravel and dirt roads a lot, sometimes in mud. Not sure about how any electric truck does in that.
I don’t spend a ton on service. Knock on wood, so far with the current truck despite over 130k miles, I haven’t had a lot of issues. Routine oil changes and tire rotations. Of course have replaced the tires as recommended. Spent a little on the air conditioning unit. Just some other minor stuff, but it’s getting to the point where soon more major stuff starts to happen. Why I normally trade between here and 160k miles.
Of course, I still have range issues w EV, and what Ovi says would be better for me anyway. I have to make several 250+ mile trips annually. Which I know isn’t ordinary for most. Some are job required and some are to see family.
I’ll likely buy another ICE truck, might take a long time anyway to get what I want there. Maybe 6-7 years from now they will have the EV truck figured out.
I have noticed a couple Model 3 have showed up in my town. I think we now have 5-6 Tesla here.
Shallow sand,
I make 250 mile trips all the time, at least 2 or 3 per year, if you make those trips on the interstate, you will find Tesla chargers, I also have a camp that is at the end of a gravel road and it is not a problem for the Model 3 and Model Y and I imagine the EV pickups are designed for that. Do you buy a pickup truck for the way it looks? If you have range anxiety, at present the Tesla charging network is probably best in the US.
https://www.tesla.com/supercharger
Buying a Tesla is not always convenient, the nearest Tesla Sevice center is 4 hours from my home. The Model 3 was delivered to my door in October 2018, for my Model Y it was $750 to have it delivered and the nearest place to pick it up (due to laws in various states) was about 8 hours away, so I flew to that location and visited my brother who lives near the Tesla store where delivery was set up and drove it back. Is there a Rivian store near you?
Yes Cybertruck ordered today probably wouldn’t be delivered until Dec 2024 (and that might be an optimistic estimate), Tesla is focusing on the Model Y and Model 3 at present.
Eulenspiegel,
Small sample, but my Tesla M3 has been problem free, but that has also been true for Toyotas and Hondas, I have owned, my last GM car (in 1985) was a Chevy Chevette and I would never buy another GM car, my dad had a Ford that was almost as bad as the Chevette, I wouldn’t buy a Ford either, we have never had any Chysler products.
That GM Silverado EV may be a good vehicle- but not out just yet.
I’m keeping a eye out on their Ultium battery to see how it pans out.
https://www.caranddriver.com/features/a36877532/general-motors-ev-ultium-battery-electric-future/
In Marin, I rode in friends EV’s frequently.
Central Oregon? None
Pickups? Great for work on the property, or very local transport.
Dinosaurs for road vehicles.
It isn’t 1968.
(I had a VW in 1968)
HT , as my friend says ” All so ignorant and all so happy ” .
Ovi,
Does it seem that gasoline prices will be falling in the near future? Maybe in 6 or 7 years, sooner if there is a severe economic crisis before 2029.
Dennis
I think gasoline prices will stabilize here for a month. However I think in August they will start to rise, along with crude. I think crude stabilizes here between $100/b and $120/b. After August as it becomes clear that OPEC is near capacity, crude will begin to climb and take gasoline with it.
Here in Southern Ontario, gasoline peaked at $Cdn214.9¢/litre (US$6.29/gal) about two weeks ago. Currently Cdn$200.9/l,(US$5.88/gal).
Here in Ontario there is a one day delay between WTI going up and Gasoline going up. No two week delay as in the US. Also the news stations broadcast the price of gasoline for the next day. If the jump is 3 or 4 cents for the next day, cars pour into the gasoline stations and long lineups show up.
The last time I filled up at the gas station I saw the new secret Tesla. This station does not have a charger. 😟🤣🤣😟
Ovi,
As usual your predictions seem very reasonable to me. The Tesla should stay out of the way of the fuel pumps imo, just as ICEVs shouldn’t block chargers by parking there, nice car, is the Y a secret in Canada?
The (German) Sono Motors (https://sonomotors.com/) Sion looks interesting. An EV that comes with solar panels and is supposedly DIY friendly. A couple of years ago they were supposed to come out this year, that has since been pushed back to the end of 2023. We will see if they make it.
I have been trying to find an excuse to buy a Twike 3 (https://twike.com/) for years. The problem is I wouldn’t use it, so I have to convince the wife who is dubious. I’ve got 4 bicycles, a tandem, and an electric bike to get around.
One word-
Arcimoto.
https://www.arcimoto.com/
Thanks Hickory.
SS
Interesting dilemma. Mine’s not totally different. I have a 2006 Tundra with 240k on it. At this point, I use it to tow a cargo trailer long distance several times per year and for hardware store trips. For grocery getting and leisure, we drive the most fuel efficient car we have. If you need the truck every day for truck things, my plan doesn’t work for you. But if not, a 4 cylinder ICE is a great choice. I have been pondering changing out both vehicles but haven’t for a couple of reasons. If the range and refuel constraints are not a problem for you, Ford et al EV trucks are the best option. If you do a ton of driving, they can turn more economic than ICE. I don’t know who designed the Tesla truck, but it’s fairly obvious that it was somebody who has never used a truck. Just look how high the bed wall is behind the cab. You’d have to be Shaq to access the most commonly used area of the bed. My buddy who owns a survey outfit in California has been buying Chevy Colorados and reports that so far they have been dolod. Ultimately, most pickups rarely get used to their abilities. So wasteful.
Dan
Hoping Mazda gets that bad boy out just in time for the water wars. That’ll be a hoot.
Hoover Dam is maybe 100 ft from dead pool level. You can live without power. Try living without water.
Would have been nice for someone to tell us that making cities and farming in a desert was a terrible idea. Oh well.
@Dennis Coyne
It could be interesting to complement the graphs of each OPEC 10 countries with a reminder of their commitment under OPEC ‘s quotas. For several countries (Angola, Congo, Gabon, Guinea, Nigeria, Sudan), it shows a clear discrepancy – not only underproduction – but opposite trends. Other countries such as Saudi Arabia, EAU, Iraq or Koweit still manage to stick with their commitment and raise production.
In fact that analysis could be enlarged with NOPEC countries part of the quota deal (same or worse conclusions here).
OPEC plus quotas at link below for May 2022 (link on right side of webpage)
https://www.opec.org/opec_web/en/press_room/6845.htm
I don’t have data for any of the non-OPEC OPEC plus members except Russia, and for Russia I only have C plus C data and the quota is crude only, the condensate may be about 0.5 Mb/d for Russia, but that is a guess on my part. So in the chart below for May 2022, I have included Russian crude quota and C plus C output without including any guess for condensate from Russia.
All of the OPEC nations are likely close to capacity, we might see some recovery from Libya (perhaps 200 kb/d) and maybe a bit more output from Iraq and UAE (perhaps another 300 kb/d). Removing sanctions on Iran and Venezuela would result in a 1300 to 1600 kb/d bump up in output (it would take 6 to 12 months).
Biden would be wise to put together a compromise package giving in to suggestions from US oil industry in return for EV incentives and other climate friendly policies (maybe eliminate the Federal fuel tax in exchange for a carbon fee and dividend program).
Looking at OPEC 10, 74% of the output below quota(780/1047) is from Angola and Nigeria. The other 8 OPEC nations with quotas are producing 98.8% of their combined quota (22103/22370).
SA and Iraq is lagging – they look like to have problems to ramp up fast enough. They manage to hold the speed, but how long?
Only Kuwait and UAE have true reserve capacity at the moment – being able to hit the quota without problems.
Sorry I wanted to post a picture to illustrate the idea but again struggled to use it. 😞
What I meant is that adding the quotas curves in the production graphs would be valuable to understand the quota policy. It is especially clear with countries like Angola or Nigeria that quotas are being given to reflect countries influence, more than ability to produce so. For instance, it can be noted that KSA and Russia get the same quota every month, whatever the constraints in the fields.
Ganesa,
Usually if you save the image in gif format it will be smaller, there is a 60 kB limit to image sizes, also you can sometimes edit the image for lower resolution to reduce the file size.
Not going to do that, would require too much work to go back and get quotas for each month. Mostly it is Nigeria and Angola that are missing their quotas by a lot. How the quotas are set is a matter of politics more than anything. When the quotas agreement was penned, crude output from Saudi Arabia and Russia was very similar.
To me actual output is of most interest rather than production targets. Currently the OPEC nations subject to quotas are all very near capacity (UAE and Iraq are the only two who might increase output a bit, perhaps by 200 to 400 kb/d combined). The EIA forecasts OPEC crude to top out at about 29.5 Mb/d in late 2022, this seems a reasonable estimate to the end of the STEO forecast window in Dec 2023.
“Between 2006 and 2019, the top 50 U.S. oil producers spent $170 billion more in capital expenditures (capex) than they collected from operations, using debt and equity to cover the deficit. ‘Effectively, there were no returns’ for shareholders.”
– Paul Sankey, independent oil analyst, cited in Reuters article
https://www.reuters.com/business/energy/drilling-vs-returns-us-oil-producers-tradeoff-windfall-tax-threatens-2022-06-13/
(via Tom Whipple’s Energy Bulletin June 20th)
John Norris,
Great article, thanks.
That $170 billion figure is interesting, it is different from other estimates I have seen. My own analysis focusing on the Permian basin only has about 106 billion of cumulative cash burn in 2020 US$ from Jan 2010 to Dec 2020, by May 2022 cumulative cash burn is reduced to 82 billion and if we assume a future Permian completion rate of 400 new wells per month and also assume average new well cost rises to from $10 million at the end of 2020 to $14 million (in 2020 US$) by May 2022. All cumulative net revenue from Jan 2010 to mid 2024 is 5 billion, so all debt could potentially be paid of by that point assuming well cost remains at $14 million in 2020$ and that oil prices remain $100/bo in 2020$. For this very conservative Permian scenario the URR is 37.5 Gb with completion rate remaining at 400 wells per month or less from 2022 to Feb 2033 when the last well is completed for this scenario. Chart below has this Permian scenario which is NOT my best guess, my subjective probability estimate that output will be at least this high as this scenario is 99% or more.
Russian brownfields are in steep decline while their greenfields look downright pitiful. All but one peaked in 2020, last year, this year, or next year. That one peaks in 2025.
Russian Regional Report: Isolation 2.0
Russia’s oil production outlook is constrained by a difficult balance of greenfield and brownfield items. In the short term, oil production will benefit from the completion of greenfield projects under development, Table 1. But declining output from mature fields, primarily in Western Siberia (the country’s largest oil producing region), may offset any of those gains. Brownfield efforts to improve productivity, seen largely in more drilling and tying smaller fields to existing infrastructure, are unlikely to reverse a decline in total production late this decade, EIA reports.
Click on chart to enlarge.
Hi all –
Been a long time reader, seeing all the tesla talk…wanted to give you my experience:
Long range model 3 delivered April 2018 in Fremont.
No issues whatsoever, no maintenance to speak of…
143,175 miles as of now. Original range was ~310 miles, now it’s down to ~290 miles.
In CA, my charging cost has been right about $0.05/mile (long distance efficiency of 260 Wh/mile).
Spent roughly $7k charging the car and estimate that I’ve spent something similar on tires…(~$5k).
At the current price points, I don’t think I’d be buying a Tesla…too much $$$, but 4 years ago it made good sense…
Right now, if I was charging at Tesla charger the cost would be almost $0.20/mile (or $0.10/mile off-peak, before 11 AM or after 9 PM)…
At this point, if buying an EV I would go for a 2016 Model S with the grandfathered free supercharging (have to buy private party)…the free charging could really add up if you drive alot…
It blows my mind to look at US proven reserves and how we only have 4.9 years of oil left in the us.
Really appreciate all that everyone does on this site, it’s a critical discussion and hope you all keep it up!
Kengeo
How much has the price of the T changed from 4 years ago. What is the current price in Fremont and do you still get the rebate.
Have the rolling blackouts ever affected the ability to charge your Tesla?
Not sure where you got the impression that there is only 4.9 years of oil left in the US. Definitely more than that. Dennis can provide a better answer
Hi Ovi – I purchased the Model 3 for ~$51k but got $10k back (so ~$40k). Now it’s almost $60k for same/similar specs. There’s no longer a fed. credit, and state credit is reduced. Translates to about a 10% annual cost increase compared to 2018.
I never had issue with rolling blackouts, and surprisingly, in addition to supercharging, charging at 120V was useful (4 miles per hour every night for 10 hours yields 40 miles/day, almost 15k miles per year)…
I think the holy grail of EVs is somewhere around 120-140 miles range (get the battery pack 30 kWh or less), the 2018 M3 is around 75 kWh…
See my other reply below (30 billion barrels proven divided by 5/7 b.b. annual consumption)…
Kengeo,
Thanks for your personal insights regarding Tesla.
Regarding your reserves comment – how are you arriving at 4.9 years of reserves for the US?
By doing some quick math – 11 mmbopd —> ~4 billion barrels / year x 4.9 years = ~ 20 billion barrels
Are the US’s latest reserves that low? I know they had been higher, but low prices may have cut them back to that number.
Reserves, by that I mean P1 reserves, or proven reserves, are meant to be continuously updated (as are all of the other reserve/resource categories). Even though the US has some of the most conservative/thorough reserve reporting requirements in the world, as production lowers the reserve number, things like reserve revisions, etc usually replace alot of the production. And also, price effects this year will certainly result in reserve adds.
In other words, I’m not convinced it’s as bad as you state.
Oh sorry, should backup my math (it’s a very simple approach – prob. too simple):
Per EIA: “Proved reserves of U.S. crude oil and lease condensate declined 19%, from 47.2 billion barrels to 38.2 billion barrels at the end of 2020”
Based on info above in early 2021 we had ~38,200 million barrels remaining.
If consumption is around 20 million barrels per day (13 million domestic/7 million import), then annual domestic depletion is ~5,000 (13×365) million barrels/year. Which means we currently have proven reserves of slightly over 30,000 million barrels (removing 2021 and half of 2022, about 7,500 million barrels).
Without imports that yields slightly over 4 years (30,000/7,300)…
If we assume imports remain at ~33%, then we get to stretch it all the way out to 6 years (30,000/5,000)…
Something tells me imports are going to go up a whole lot next 10 years…
I would love for this NOT to be the case so hopefully I missing a piece of the puzzle?
Kengeo – thanks for backing up your case with numbers.
On the reserves side – I’m sure the big US reserve drop in 2020 was largely due to the price crash related to covid. Alot of reserves had to be written off because they were no longer economic. Alot of those reserves will be added back this year because of high prices. Some were maybe even added back last year. Also, reserve revisions and other things like field extensions and discoveries will help to add to the reserves – to offset production. By the way – have the YE 2021 US reserves been published/released?
On the consumption/production side – as far as I know, the US is still a net oil exporter, but not by much. We export a fair bit of the light unconventional oil we produce, and we import a fair bit of the heavier oil because our, overall, our refineries are better able to refine that heavier oil.
The US produces about 13 million barrels a day.
It uses about 20 million.
Real basic math.
It’s actually not quite that simple because the US produces around 11+ mmbpd of crude and condensate, but when you add NGLs, biofuels and refinery gains, it’s closer to 20 mmbpd.
Bob,
When did the EIA start including condensate in oil volumes? This site is a rare forum in which “c + c” implies something other than a music factory. (Let’s see if any gets that joke!) I find the loosey goosey bucketing methods to be hugely problematic. You wouldn’t put filet mignon in the same package as ground chuck, but somehow the EIA does that with 25 API oil and 55 API condensate. The energy content differences and potential product streams are starkly different.
Thanks,
Dan
Dan,
I assume they always have. In a quick search on the EIA website, I couldn’t find an answer though.
I’m more familiar with BSEE/BOEM, and how they lump crude and condensate together for the Gulf of Mexico. You can dig into the field specific data and find oil and condensate broken out, but when they list total liquids production they combine them.
No one except OPEC separates condensate from crude. Every other nation includes condensate with their oil production numbers. The EIA has always included condensate with oil production and so has the IEA. Condensate is often just mixed with the crude as it goes into the refinery. They are usually not separated because they are shipped in the same pipeline, mixed together.
Kengeo,
A better number to focus on is the crude input to refineries, which is about 16 to 17 Mb/d (it was 16.5 Mb/d in 2019). If we use 16.5 Mb/d that is 6 Gb per year and in 2019 (before the unusually low average oil price in 2020) proved reserves were 47 Gb, so that is about 8 years. Note that we import oil and as Bob says there are possible reserves (likely around 24 Gb), contingent resources, reserve revisions, field extensions etc.
For US tight oil cumulative production form Jan 2000 to Dec 2020 was about 18.84 Gb, proved reserves were about 19.66 Gb for a combined total of 38.5 Gb. A conservative estimate for US tight oil URR is about 74 Gb based on my analysis, if we deduct cumulative tight oil production through the end of 2021 (21.5 Gb), we are left with 52.5 Gb of tight oil remaining resources. For conventional oil there are likely around 29 Gb of proved plus probable (2P) reserves and perhaps 10 Gb of possible reserves, contingent resources, and reserve appreciation combined. Adding it all up we get 52.5 plus 29 plus 10 equals 82.5 Gb of remaining C plus C resources in the US.
If we divide by 6 Gb per year input of crude to refineries, that is 13.75 years. Note that after 2030 we may see decreasing crude input to refineries as demand from land transport may decrease dramatically as plugin vehicle share rises. For this reason after 2030 the crude input to refineries will decrease.
WTI is at $104.30 this morning.
Guys we are getting a deflationary outcome. Eurodollar futures curve which represents globally all the huge banks that lend actual money into real economy instead of bank reserves created at central banks. They don’t agree with the central banks.
Eurodollar futures curve is basically saying central banks will be cutting interest rates very soon otherwise there will be no money created and loaned into real economy.
The shortest end of the Eurodollar curve known as the whites is now inverted. This is deflationary beyond belief.
Lending for apartment or house buying here collapsed already. Real estate trade down by more than 50%. Interrest rates going up from 1.x% to 3.x% did the magic.
Nobody can afford this anymore here. Sounds deep deflationary.
And this is before the ECB did anything – imagine what happens when they stop barking and start biting.
And as I said the last year, stocks are starting to crumble. A nice additional 1x% crash, and this lowering cycle is done – and the FED and others starts buying bonds on hyperspeed again.
Here the state greed is high – social benefits for the high energy prices, plans for green energy, plans for more mass transit, plans for everything… this should be a state spending binge financed by federal reserves.
In theory FEDs fund rate should be the floor of interest rates. In reality the 4 weeks, 8 weeks and 3 months T- bills are all lower than FEDs funds rate.
Huge demand for collateral pushing rates below FEDs fund rate and actual collateral shortage or short supply of collateral. Not enough collateral is deflationary.
Fed doesn’t have control of either end of yield curve. Central banks don’t have the answers.
HHH , as usual your insights are invaluable . i am also watching beside the Eurodollar outflow which are accelerating at the following issues :
1. HKD peg
2. Yen devaluation
3 . Fragmentation of the interest rates in ECB . The spread between the Italian , Greek bonds and the German 10 yr bund is increasing and the ECB is jaw boning .
All these are good triggers for a meltdown .
Another graph .
Asia currency crisis 2.0 on deck. It’s not just Hong Kong and Japan. It’s mainland China and South Korea.
High Oil price isn’t going to survive what is coming.
Anybody thinking the FED and other central banks got this is naive. Anybody thinking the FED will and can bailout all the USD denominated debt outside of the US is naive.
My opinion is we are going to see the largest unwinding of debt ever by a long shot.
The world’s most rotten bank CDS is rising . Deutshe Bank .
HHH
Thank you for your input on the fragile global financial situation. If I understand this correctly, one of the uncontrollable aspect of this is the Eurodollar system, which is in nobody’s control. My understanding is that the Eurodollar system in basically loans taken outside the USA banking sector in dollars, mainly in Europe first, although this has in the last few years expanded to countries other currencies as well, but less so . So, are you saying that with the dollar strength these loans are more difficult (or impossible to pay off) and the ECB cannot rescue the European banks and the FED will not (or cannot) do the same. Perhaps you have posted this many times before, but I have not paid enough attention to the line of reasoning. Thanks.
Other news OPEC is out of spare capacity.
HHH,
Do you expect oil prices to go down or that this will triggar a new round of QE and lower rates that inflates (oil) prices?
Jeff,
It is likely that higher interest rates as reflected in Libor rates (which is what the Eurodollar future is a derivative of) will reduce investment spending and the growth rate of the real economy. Thus inflation will come under control and central banks will reduce interest rates in response once the 2% inflation target is reached. We might see a small dip in oil prices to $90/bo if we have a mild recession (due to aggressive interest rate increases), but the balance of demand and supply in the World oil market will require oil prices to remain in the $90 to $130/bo range imho.
Dennis . ” Thus inflation will come under control ” . No , it won’t . The FED is helpless against supply chain breakdown and a cumulative effect of past mistakes . Learnt a new word ” Incession ” = inflation & recession . Gear up .
Hole in head,
Time will tell who is correct. My guess is the US inflation rate is under 4% (12 month % change in chained CPI) by December 2023.
“This is deflationary beyond belief”
You can get whiplash reading deflation vs inflation predictions.
The US federal reserves mandate is stable prices. That should be 0% inflation/deflation.
But they “chuck a sneaky” and target 2%.
In the past I have commented that transition from primary reliance on fossil fuel to other mechanisms like solar wind/batteries/EV’s/heat pumps etc
will require a considerable level of prosperity, in addition to a strong sense of purpose and smart policies.
The prosperity required is at all levels from national to personal, since we are in a position where simultaneous spending for the coming decades on both increasingly scarce fossil fuel and on alternative energy mechanisms is required. You can’t spend on just one of these paths and then suddenly one day switch to the other.
This is one of the big reasons why I expect that only part of the job of weaning civilization from extreme dependence on fossil fuel energy will be accomplished successfully- at scale and in a timely manner.
General prosperity has always been at risk, and the additional affects of war, of pandemic, of high debt or other forms of financial policy over-extension, of partisanship, and of climate instability are examples of the big threats to the general prosperity that is required to get some of the job done.
The common reaction of denial-ism of the base factors only delays appropriate action taking, yet so many people cling to this reaction. Perhaps the reality is just too tough to digest, for anyone.
Hickory,
The lack of good government policy in the US and the faith many economists have in markets allocating resources efficiently (the underlying model depends on perfectly competitive markets with no externalities that exists only in economics textbooks) will make the transition more difficult than needed. Europe and Asia have a better shot at good government policy because their government structures were not set up to thwart any government action and may be more representative of the will of the people.
Market forces will gradually push things in the proper direction, and the mainstream realization that fossil fuel energy is indeed limited and that alternatives are cheaper might also lead to better government policy.
It is too bad that a group of moderate senators and congressmen dont get together and formulate a compromise package that gives the fossil fuel industry some of the reforms they want in return for subsidies supporting non-fossil fuel energy. There doesn’t seem to be a lot of these moderate legislators in the Federal government, which is unfortunate.
There is something strange/Non-normal happening in the WTI market. At 1:30 EST, there is a $5.29/b difference between Brent and WTI. This looks like a bit of market manipulation by some entity. Note both are August contracts.
This looks like a bit of market manipulation by some entity.
The only to manipulate the oil market is to buy enough contracts to cause the market to rise, or sell enough contracts to make the market fall. Is that what you think is happening? And why would you call that manipulation?
Ron
Saudi Arabia could be doing that because they can afford that and may be trying to avoid a recession that would hurt them in the end.
If the drop were due to news it would have affected both WTI and Brent, Appreciate that this morning WTI was down $8/b. And a few days ago WTI dropped $10/b in one day.
Let’s see what happens over the next week or so if things get back to normal
I really don’t think that is why US prices are falling or why they fell slightly more than Brent. Bold Mine.
Oil prices fall 7% as recession fears mount and Biden calls for a 3-month gas tax holiday
Crude oil prices plunged as much as 7% on Wednesday as fears of an economic recession surge.
Deutsche Bank is the latest Wall Street bank to estimate imminent recession odds at 50%.
The decline in oil comes as President Joe Biden announces a gas tax holiday during the summer months.
Ron
Recession fears have been around since last Wednesday when the Fed increased rates by 0.75%. To raise recession fears one week later is a bit late. Also, the gas tax holiday will help to increase US demand for gasoline.
Ovi, a recession is an ongoing event. It just does not happen one day or one week. It all depends on how bad it gets or if it is perceived to get worse.
A tax holiday of just a few cents the federal government taxes gasoline would have little effect on demand, but it was perceived to be bearish by traders. What is really happening is that high prices are causing people to cancel summer holiday trips. Airlines are cutting flights and people are driving less cross country.
Any attempt to manipulate the market by selling contracts would be short-lived. After the selling stopped, prices would soon move back to where current supply and demand dictated. That is how it always works. The market may swing wildly on news and rumor but the long-term trend depends on supply and demand. It cannot do otherwise. The market moved down because traders think demand is about to fall. If it does the market will stay lower. If it does not, then the market will just move back up again. That is what causes swings, traders try to anticipate what the market is about to do and hope to beat the market and make a bundle.
I don’t think it’s manipulation either. WTI futures are priced in dollars. When you have debts that are denominated in dollars and there is a shortage of dollars you can sell dollar denominated assets to get dollars to service your debts. Foreign entities are selling US stocks and bonds right now. Not because they necessarily really want to sell but because they need dollars.
I also think some entities are having a hard time rolling over their leveraged long WTI positions. Because they don’t have enough collateral or the right collateral to roll those positions. And they are having to exit them.
HHH.
It’s happening in other commodities too.
I listen to a lot of ag news. Grains are getting hit hard, the insiders say it’s all fund liquidation.
Right now actually there are several hot and dry areas in the corn belt. Further, US wheat crop isn’t looking all that great. Yet both are tanking.
Yeah grains are being hit hard yet there is a global food shortage due to lack of fertilizer.
Supply side issues will remain and even intensify. But as finance fails prices will fall.
BP bible release date June 28.
It is quite interesting (and telling) that instead of taking measures to reduce the consumption of oil, almost every Western government is taking policy measures to subsidize its consumption. If indeed peak oil is here to stay then this will get ugly in regard to popular protest soon enough. Yikes.
Required-
I suspect, unfortunately, that if Biden even suggested that people reduce their consumption, he would get so lambasted, mostly by right wing media and their toadies, that he would regret it. Although I have to believe that those who have trouble affording the current price of gasoline are doing what they can to reduce their usage.
The Federal excise tax on gasoline is only 18.4 cents per gallon, so this doesn’t help much, for diesel the tax is 24.4 cents per gallon. Unless states also reduce their excise taxes, this won’t help very much.
Dennis
I think the main objective is to get the average price below $5/gal
Ovi,
Good point, that is a big psychological barrier in the US, I think the World is so short on supply that this might have little effect, though I have read that there is quite a bit of refinery capacity coming online in the Middle East and Asia, so perhaps N. America, Europe, and South America will import more products and this might reduce the crack spreads. That is likely a medium term result and may not have any effect befor November midterm election in US. The legislature is likely to return to Republican control in both houses.
OVI —
I suspect Biden’s real motivation is to dare Republican congressmen to oppose a tax holiday.
That’s the advantage of high fuel taxes. It allows the government to react to price spikes, and generally reduces the shock of commodity price instability.
What I find to be so very hollow in the public discourse, including what I hear from the white house, is the complete lack of discussion of the big underlying situation-
We are well beyond peak oil production /capita.
And that the residual resource and economics do not support any additional domestic refining capacity… ever.
And that the various sectors of the oil industry will make investments in production as they see fit based on market considerations, which includes the global policy stance on energy and environmental policy.
Its past time to be straightforward about the limits. When people have a realistic understanding of the conditions , they can start to digest the situation. And perhaps begin to adjust.
I’m sure Biden has a plan. Any day now, and BAM, he’ll do something. You just watch. They say he’s feckless, ignorant, frail, and maybe a little senile. He may be that… and aloof, disconnected, not particularly savvy, or diplomatic. But, one day soon, he’ll write a really stern and persuasive letter to OPEC+. And they’ll cave.
It’ll happen. Or he’ll just tank the rest of the global economy and block exports. I guess that’s a thing that may as well happen too.
Agreed. My amigos and I have been discussing it for years. Unfortunately, it was political suicide for Jimmy 4 decades ago, and now that we are well into the post-truth era, I suspect the fallout will be even worse. Now if some huckster like Elongated Muskrat would come out and say this, it might get some traction. But doubtful. Even the Saudi oil head recently made some comments along those lines, and nobody even raised an eyebrow. One of the horrible side effects of our two party system and short election cycles is the see-saw effect on policy. The cons have a government sponsored drill baby drill policy that has shaped this country for decades, and the dems have a preventative policy intended to limit their vote losses that ultimately maintains BAU. At the state level, such as in California, *some* policy has been enacted, but it tends to be fairly drastic, short-sighted, and heavily bogged down in bureaucracy. That lobbyists, lawyers, capitalists, and politicians run the country instead of scientists and engineers is turning out to be problematic.
EIA says tomorrow’s weekly crude oil inventory report will be delayed due to ‘systems issues’…
https://www.zerohedge.com/energy/wti-extends-losses-after-surprise-crude-gasoline-builds
Perhaps the EIA’s spreadsheets don’t know how to handle the value “0” (zero)…
Just a spreadsheet bug, no worries…
EIA furiously trying to cook the numbers to stop a panic but can’t carry the 1 or divide by 0.
Permian is flatlining. All pipe appears to have been sold out for this year.
Seppo,
That is an interesting chart, thanks. My guess is that the source of the data is the Texas RRC, often this data gets revised higher over time, especially the most recent 12 months or so with larger revisions for the most recent data. In addition that chart is scaled in a manner that makes any increases look very small.
Permian output growth has been relatively flat over the past 12 months, about 417 kb/d based on the latest EIA estimate, from 4054 kb/d in April 2021 to 4471 kb/d in April 2022.
Recent post on Permian by Enno Peters with a great chart on normalized well productivity (last chart in post).
https://novilabs.com/blog/permian-update-through-march-2022/
Chart for Permian tight oil using EIA data below
see tight oil estimates by play spreadsheet at page linked below (add wolfcamp, bonespring and spraberry plays to get an estimate of Permian basin output)
https://www.eia.gov/petroleum/data.php#crude
Treasury yields are tanking. Flight to safety. But that isn’t all it is.
As FED allows securities to roll off it’s balance sheet the bank reserves end up on balance sheets of commercial banks.
Banks can do two things with these bank reserves. Use them as collateral to make loans. Or buy US treasuries. The latter is what is going to happen.
Yields are headed towards zero and FED can’t do anything about it. They have zero control over where yields are going.
My projections/analysis based on the 2021 review of global recoverable resources, Magnus Nysveen at Rystad Energy, July 13, 2021:
In 2025, Australia is entirely tapped out of oil, the small amount they were producing (33% consumption) is done. Instead of importing about 0.5 Million Barrels per Day (MBpD), now they need 1.0 MBpD.
[Apr 22, 2022 — Australia ‘has just 68 days of oil reserves’. The country is nearly 91% dependent on imported oil, a public policy think tank has warned.]
Next up in 2026 the UK goes the same route, but the impact is more significant, production drops from 1.0 MBpD to Zero which means imports have to jump to 1.5 MBpD (but where do those imports come from?).
2027 proves to be a worse escalation where the US and Argentina both join the ranks of the UK and Australia. Comparatively Argentina is a much smaller impact to the global oil supply chain. The US however already imports a significant amount of oil and will be hard pressed to find supply in the market for at least another 10.0 MBpD needed!
The next countries to go bust, in 2028, are true giants. Brazil gets to the end of the road and is now looking for 3.0 MBpD to buy from somewhere, much worse as China joins the group…who needs to almost double imports from 7.0 MBpD to 12.0 MBpD, a tall order for the stressed global supply. Not to be excluded, two smaller countries also should be mentioned, Mexico and Oman, while the impact is primarily felt by Mexico’s need to import 2.0 MBpD when they had been producing 2.5 MBpD. [Brazil’s proven oil and gas reserves hit lowest level in 15 years, Bnamericas, Published: Thursday, October 28, 2021]
At this point, new global oil supply of almost 30.0 MBpD is needed to make up for the losses from 2025-2028.
The next ~5 year period proves to be almost as severe, culminating in major negative impacts to the global oil supply network to the tune of a loss of approximately 25.0 MBpD. Most noteworthy is Russia’s loss of more than 10.0 MBpD around 2030. Iraq and Iran have nearly the same impact (loss of 9.0 MBpD) in 2033 and 2035, respectively.
Canada and Saudi Arabia prove to be resilient, holding production levels out until 2040 at which point the Saudi’s stop exporting the 10.0 MBpD that they were, but Canada’s net effect is small since they were only exporting 2.0 MBpD anyway.
Country | Inversion Date | Exports before | Net effect (new supply needed) | Total new supply required
Australia 2025 -0.7 0.4 0.4 MBpD
UK 2026 -0.5 1.1 1.5 MBpD
US + Arg. 2027 -5.5 15 16.5 MBpD
Br+Ch+Mx 2028 -6 12 28.5 MBpD
Ru.+Irq+Irn 2030’s 14 20 48.5 MBpD
Cn+S.A. 2040 11 17 65.5 MBpD
I guess the silver lining is that exporters continue to export until the 2030’s…
But where do we get new supply of 30 MBpD by 2028? Then a similar amount is needed by 2035????
2040 is only 18 years away…if it ever comes…if you want to start plotting some downward trajectories on your charts 2027 is as good a year as any…
Australia needs to step on the Petrol Pedal for CTL.
Git ‘Er Done!
There will not be nearly as much oil available to import later in this decade.
You will need very valuable money [or the stuff it buys], or special trade relation with the few exporters to secure oil imports.
Kengeo,
With a transition to electric powered land transport, with similar sales growth rates of the past 7 years (about 39% annual growth rate in sales volume for plugin vehicles) from 2022 to 2027, with slowing growth rates from 2028 to 2030 and an EV sales growth trajectory for heavy duty trucks that is simiar to light vehicles, but delayed for 9 years (starts in 2023), I get the following for World demand for C plus C. Note that for simplicity I assume demand for non-land transport uses of C plus C remains at the 2019 level, only changes in land transport oil use are modelled.
Three scenarios for oil demand are shown based on a fast EV transition (outlined above), a slow EV transition and a medium scenario (average of high and low scenarios). Note that I have assumed there is no widespread use of self driving vehicles in these scenarios, once this technology is widely adopted, the transition to electric transport may occur far more quickly than my “fast” EV transition. Basically most personal transport moves to EVs very quickly with the wide adoption of self driving vehicles. Also there are plenty of discovered oil resources (including reserve appreciation of already discovered plays) to meet the high demand scenario below.
I have not understood why people think that self driving cars would impact gasoline demand much
until i read this from BP-
“What we expect to see in the 2030s is a huge growth in shared mobility autonomous cars … Once you don’t have to pay for a driver, the cost of taking one of those share mobility fleets services will fall by about 40 or 50 percent,” Dale said. Their initial high cost means the vast majority of the cars will be bought by fleets offering shared mobility services.
The average electric car is expected to be driven about two and a half times more than an internal combustion car, according to Dale.
The vast majority of the shared mobility is expected to be EVs because of their lower maintenance costs.
Car makers including General Motors GM.N and high-tech giants such as Google Waymo and Uber Technologies have poured billions into the autonomous vehicles industry hoping gain a first-mover advantage. Robo-taxi services are seen as the main use for most self-driving vehicles.”
I have been skeptical, but the technical hurdles will likely be tackled as this decade unfolds. This would be especially useful in cities and suburbs.
Hickory,
For a video of self driving cars today see
https://www.youtube.com/watch?v=yjztvddhZmI
It is already available in Phoenix, Arizona and may expand rapidly in Cities across the US, a trusted tester program is available in San Francisco, where you can sign up to use the service.
Unclear how long it will take Waymo to expand to larger cities.
That is a great video.
I am now about 100% better informed, and impressed.
Yeh, its coming…and sooner than the vast majority of us think.
Thanks Dennis.
I have never been a big fan of autonomous cars. But the main point still stand; heavy usage of decent electric cars will most likely be the future. We have now up to 7 million plug-in cars produced per year, and it should be possible to get that number up to 10 million. About 100 million cars over 10 years of production. We probably need a lot of no frill electric mini cars to make up numbers. If 1/3 rd of the resources are used on that type of car there could be a potential to get to 100 million in inventory there too. In addition at least as much devoted to delivery vans and trucks up to 25 tons. A doubling of resources to electric cars from now, seems pretty realistic. With a lot of downside if global trade all of a sudden is considered a second priority. A lot of heavy usage on fewer electric cars/vans/trucks and numerous mini cars (but also mini consumers). It will shave off a lot of oil consumption in the industrial world – a substantial part of lets say at least 20-25% oil consumption for personal transportation and some of the 20-25% for commercial transportation in total. It is doable some places, but it would not be easy. The big gain is the longevity of this situation given that enough renewables are built. Solar and wind lasts for a long time, and does not take a large enough part of the economy devoted to these energy forms to be able to build, maintain or rebuild them for quite a long time period for it to really hurt everything else. Until it does. IEA and others have warned that globally we are not building renewables fast enough. I don’t doubt that it is the case, meaning a likely recession while trying to do the energy transition.
“I have never been a big fan of autonomous cars.”
Neither have I, but prepare to be impressed.
Watch that video from Dennis. It is already a year old, but you get the idea.
Dennis – That is an interesting set of scenarios, but it appears you assume all 3 have growth of 5.0 MBpD until 2030.
It appears that it also ignores any type of battery supply constraints.
Basically, your response is that everything will be fine for the next 8 years, we’ll have a smooth and orderly transition away from fossil fuel, but even if we need more it is somewhere and we’ll find it and bring it to market…
I like the optimism!
Ken Geo,
See
https://royalsocietypublishing.org/doi/10.1098/rsta.2013.0179
and
https://peakoilbarrel.com/category/shock-model/
At the second link see older posts first and work to newer posts to understand shock model.
Model for supply assuming demand is unlimited in chart below, no EV transition assumed.
What I’m specifically asking you, Dennis, where exactly is the spare capacity of 25-30 MBpD going to come from?
Under the most optimistic circumstances, 6 significant countries need around 10 MBpD by 2028, shortly after that China and US need 20 MBpD.
Not even factoring Russia into the equation…
You could tell me that each country will only get half of what they were, that still means 15 MBpD are magically appearing out of thin air!
Currently, when you add up exports from Russia and S.A., then subtract what China and U.S. import, there’s only 4 MBpD left over for everyone else. I know you get another 15 MBpD adding up all the other top ~10 exports…
Something doesn’t add up, I don’t see any possible way we reach 2030 at 80 MBpD, it seems entirely impossible, under the most optimistic scenarios even. Could you tell me what the top 15 exporters are producing in your models at years 2028, 29, and 30?
S.A. ?
Russia ?
U.S. ?
Iraq ?
Iran ?
UAE ?
Canada ?
Norway ?
Mexico ?
Qatar ?
Kuwait ?
Nigeria ?
Angola ?
Venezuela ?
Kazakhstan ?
(Or point me to the resource and I’ll dig in)
Thanks Dennis!
Kengeo,
My model is not bottom up. I don’t have that information.
Kengeo,
Jean Laherrere has estimates at link below
https://aspofrance.org/2018/08/
We often think of oil production and consumption in terms of globally, or our particular country.
Less often we consider specific other countries.
Many countries will join the list of those that already have difficulty importing or their citizens affording petrol.
The list will grow rapidly in this decade, with big repercussions.
The global energy landscape is changing fast.
Just for laughs . Silly energy organization acronyms from the Naked Gun 2 1/2
https://www.youtube.com/watch?v=M8Wk79i1gcg&ab_channel=ChemDemos
I am going to buy this and wave at Dennis in his Tesla when I overtake him . 🙂
https://www.wsj.com/articles/cadillac-plans-to-price-its-future-celestiq-ev-around-300-000-11656072000
I wonder what something like the stuxnet virus could do to EIA’s tank level sensors? sensors in storage caverns?
A new thread regarding the EIA’s June 2022 Oil Production Outlooks has been posted.
https://peakoilbarrel.com/eias-june-2022-oil-production-outlooks/
A new open thread Non-Petroleum has been posted.
https://peakoilbarrel.com/open-thread-non-petroleum-june-25-2022/