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Anti-Fracking Study Gets Retracted for Basic Math Error
July 8, 20169:02 AM
A University of Cincinnati study regularly cited by activists claiming that hydraulic fracturing, or fracking, causes air pollution was quietly retracted due to “errors” and “incorrect” calculations.
The researchers admitted that correcting their errors “changes air concentrations significantly relative to those reported in the published article. This correction also changes some of the conclusions reported in the original article.” Researchers retracted the study because of a basic math error caused by the use of incorrect units and improper use of a spreadsheet.
The study was announced at an event hosted by the anti-fracking group Carroll County Concerned Citizens and the study’s co-lead author, Dr. Erin Hayes, has also participated in other anti-fracking events.
The study had numerous flaws, as participants were actively recruited by the anti-fracking activist group, did not use random testing and did not account for sources of health hazards other than oil and gas activity. The scientists behind the study previously admitted that the sample size used for their study was too small and that the chief assumption used for the research model was “totally impractical.”
“Scientific studies by universities should be just that – scientific and without bias, especially when using taxpayer dollars to conduct the research,” Jackie Stewart, the Ohio director for the pro-industry group Energy In Depth, told The Daily Caller News Foundation. “It’s interesting that researchers at the University of Cincinnati couldn’t wait to publish their now retracted and erroneous data on fracking and air pollution, yet they continue to delay publishing the results of their groundwater study, which showed no water contamination from fracking. This certainly raises a lot of questions.”
The University of Cincinnati has yet to be publish another three-year study, which was financially supported by environmental groups, that found fracking had no effect on water quality in five eastern Ohio counties at the center of the Utica shale boom. The study’s publication has been delayed for over a year despite media attention, and numerous calls from industry groups and elected officials.
“Our funders, the groups that had given us funding in the past, were a little disappointed in our results,” Amy Townsend-Small, the study’s lead researcher, told Newsweek in April. “We haven’t seen anything to show that wells have been contaminated by fracking.”
The other University of Cincinnati study is just the latest to prove fracking does not contaminate drinking water. It concurs with other studies by regulatory bodies, academics and even the Environmental Protection Agency (EPA).
“From our assessment, we conclude there are above and below ground mechanisms by which hydraulic fracturing activities have the potential to impact drinking water resources. We did not find evidence that these mechanisms have led to widespread, systemic impacts on drinking water resources in the United States,” stated a five-year study on the impacts of fracking published by the (EPA) in June 2015.
Another 2015 study, this one from Yale University, published in the highly prestigious Proceedings of the National Academy of Science, concluded, “[there is] no evidence of association with deeper brines or long-range migration of these compounds to the shallow aquifers.”
The Yale study, the largest of its kind, sampled 64 private water wells near fracking sites to determine if they could be contaminated by fracking fluids. The Yale researchers found essentially no contamination in well water, and the amounts they did detect were hundreds or thousands of times smaller than can be detected by commercial labs.
“[The chemicals] are likely not a threat to human health,” Brian Drollette, a chemical and environmental engineering graduate student who served as the Yale study’s first author, stated publicly.
” Researchers retracted the study because of a basic math error caused by the use of incorrect units and improper use of a spreadsheet”
What that means is that they had no idea about what they were studying!
Bob,
So what. Is that the best you can come up with to support the BIGGEST ENERGY PONZI SCHEME in history?
Steve
STEVE say’s SO WHAT:
Let me see if I understand your point STEVE, a article based on an example of BAD science with FLAWED conclusions, used for ILLICT purposes written by proclaimed “SCIENTISTs” with a agenda, does not bother you? That reflects very poorly on you as an author, I would think someone who wishes their views to be taken seriously would join in to effort to clean up this type of publication, you may not understand this or care, but the above statement reflects very poorly on you, that is if you wish to be viewed as an objective journalist? The article had nothing to do with the economics of LTO, that is a separate subject. I have been fracking wells for over 30 years and any body in our industry could explain in 30 minutes to an objective scientist/journalist/researcher how remote the chances are for contamination of fresh water aquifers are. In short they are exactly equal to the same chances vertical wells have in contamination, not impossible, but very small.
TT,
S. St Angelo is by far one of the best energy analysts out there and one of the few who THOROUGHLY understands the role energy (read FF, oil) plays in our system/civilization.
While you are correct in pointing out that Steve was way too brisk in his comment, I believe that his point was (Steve correct me if I have read you wrong all these years…, please) that the aforementioned error/article changes nothing in the outcome of the disaster that shale/LTO is (…….. unless you are D. Coyne who thinks that Bakken will produce 2 million brl/day in 2025… but I know you are not on that boat)
I believe that you are not familiar with Steve’s work long enough to know that he has explained in detail that point soooooooo many times in the past that he is tired (literally!) on doing it again in a detailed manner…. and more anoyingly to the same people over and over…… that is the reason he went short!
Go to his web site and you will see for your self the tremendous amount of time and work he puts into this thing everyday.
I have found that to be well, well worth the time and have thanked him (perhaps not enough) for the FREE knowledge and patience ( he sometimes deals with pretty “thick” brained fellas….with fixed opinions……well, akin to this site , I guess…).
So in short, Steve did not misspeak, nor did he neglect the math/numbers….he is just tired of writing detailed explanations….
Be well,
Petro
Petro I have read a lot of his work over the years. You are probably making a fair statement, and perhaps I am a little thin skinned, I get a little tired of climate hustles bending over backwards to destroy science to make personal profit or for political purposes with next to NO backlash. From purely ethical standpoint they make oil and gas “promoters” look like saints. Also I get a bit tired of folks falsely claiming people in the oil and gas bushiness running around destroying the world we live in either economically or environmentally. ?
Hi TT,
A hell of a lot of dead serious scientists have a lot to say about the impact of the ff industries on the environment.
Here’s just one example.
”
VOA News
August 29, 2013 3:18 PM
Air pollution causes about 200,000 early deaths each year in the United States, according to a new study from the Massachusetts Institute of Technology (MIT).
Researchers at MIT’s Laboratory for Aviation and the Environment, say emissions from road transportation are the leading single cause of pollution, contributing 53,000 premature deaths, and that electrical power generation causes another 52,000.
“In the past five to 10 years, the evidence linking air-pollution exposure to risk of early death has really solidified and gained scientific and political traction,” says Steven Barrett, an assistant professor of aeronautics and astronautics at MIT.”
Ask your personal physician.
Having said this much, I remain a firm supporter of ensuring our ready access to imported oil by any means necessary, for as long as we HAVE to have imported oil. Without enough oil, we will suffer the mother of all depressions. We might find ourselves fighting a really big hot war to regain access.
Good sense dictates that if we can get along with less, without seriously damaging economy, we ought to do so.
Renewable energy is actually most likely already saving the average consumer in this country money. I posted a comment in the non oil thread about why this is likely so.
How about refuting it , if you can, over there?
try plotting US life spans with the use of fossil fuels and then get back to me. The question is not how many lives “may” be shorten by “Air pollution causes about 200,000 early deaths each year in the United States, according to a new study from the Massachusetts Institute of Technology (MIT).” None one is in favor of “air pollution”. So let’s break this down. How many of these 200,000 people were smokers, drug users, had genetical medical issues or were compromised by other medical issues, i.e. chemo, that left them more vulnerable ? Once you get that number we can compare it the how many people lives have been prolonged and how many lives have been enhanced by the use of fossil fuels, and we can make a proper cost benefit analysis.
http://energyindepth.org/national/petroleum-products-and-you-oil-and-gas-materials-used-in-hospitals-to-save-lives/
Agreed, fossil fuels have given us immense benefits. But what if you could have those benefits without the costs? Isn’t that a no-brainer? Why are we burning anything? Fire was great in its day but we need to move on from it…
JN2
“benefits without the costs?” that does to exist in the real world, every benefit has some associated cost, its the relative cost that may be a question.
try plotting US life spans with the use of fossil fuels and then get back to me.
I wrote a comment addressing your point on the non oil thread if you’d like we can discuss this there.
http://peakoilbarrel.com/open-thread-non-petroleum-2/#comment-575443
Fred, I always heard you are judged by the company you keep. I like the company here much better? there are 7,324,782,225 people who lives are made much better directly or in-directly each and every day by the use of fossil fuels. I understand a fraction of them like your self see that as a problem, but I think that is a personal issue, talk to the✋
Tex,
Fossil fuels are a depleting resource. What’s the strategy for afterwards?
Isn’t it wise to begin substituting where we can?
Isn’t it wise to conserve where we can?
Fred, I always heard you are judged by the company you keep. I like the company here much better…
That’s fine! There are deep rooted evolutionary biological reasons why we choose to defend our own tribe to the death. I understand that very well!
Unfortunately while that mind set may have served us well back in the Paleolithic when we had to defend ourselves from saber tooth tigers, times have changed a bit since then and we are going to have to figure out ways to get past that if we are going to survive.
For what it is worth my comment wasn’t about fossil fuels or even energy. Which is why I took it to the other thread.
Hi Petro,
I never claimed the Bakken would produce 2 Mb/d in 2025, more like 1.2 Mb/d. If oil prices rise above $85/b by then, if not less oil will be produced. You believe oil price will remain low, I think you are wrong.
Scenario below is from June 19, 2016.
The researchers admitted that correcting their errors “changes air concentrations significantly relative to those reported in the published article. This correction also changes some of the conclusions reported in the original article.” Researchers retracted the study because of a basic math error caused by the use of incorrect units and improper use of a spreadsheet.
I haven’t read the paper but it sounds to me that the enterprise of science was working exactly as it is supposed to work, no? In any scientific endeavor when an error is demonstrated and that error impacts the conclusions of a paper it should be retracted.
Science is a self correcting system and methodology which in the final analysis doesn’t care about political ideology or agendas.
BTW could someone who has actually read the paper let us know if this paper was about air pollution or water pollution or both?
The impression I got was that those are two separate issues addressed in two different papers. To be clear, information that I have come across over the years has pretty much convinced me that ground water contamination by fracking fluids is pretty much a non issue. The issue as I understand it, is improper disposal of fracking fluids by corrupt contractors breaking the law, which ends up contaminating surface water, but that is a simply a regulatory or law enforcement issue.
I also agree that the economic fiasco of fracking is an entirely separate issue!
Bankruptcies down a lot compared to previous three months:
International rig count still falling:
Hi George,
Excluding the US it is falling but not by much, 7 rigs out of 997 is 0.7%, technically that is a fall in World rigs (excluding the US), when we include US rigs the rig count is not falling. June seems notable for the first monthly rise in World rig count of 2016.
Big rise in Canada, basically offset falls elsewhere,
if we exclude N. America, international rigs fell by 3% in June.
USA and Canada rigs increase:
That didn’t come out too well, Ron might repost with comments.
The monthly International Rig Count came out yesterday with rig counts through June. This count does not include US, Canada, inland China or any of the FSU countries.
Total international rigs were down 28, Europe down 4, Africa down 4, Middle East down 2, Asia Pacific down 8, and Latin America was down 10.
Interesting that though the US and Canadian rigs have stopped falling and are actually rising slightly, rigs in the rest of the world are still falling.
Interesting that though the US and Canadian rigs have stopped falling and are actually rising slightly, rigs in the rest of the world are still falling.
In a world in which central banks had not destroyed the meaning of money, this item would state that US oil fields (rigs) are more efficient than oil fields elsewhere and can earn a profit more readily than elsewhere. That’s why the rig count in the US would grow and decline elsewhere.
Anyone think LTO oil production is less expensive than conventional elsewhere?
The internaciotional rig contract set up usually requires longer term contracts, with hefty mob demob fees. A rig contract can also involve over a dozen additional contracts which also involve mob and demob payments (examples would be logging, cementing, camp housing, mud services). We also face a lot of resistance from governments and local authorities when we plan to shut down. In some cases we keep working and negotiate tax reductions or other arrangements.
This means suspending a drilling program can be a complex process, which requires more thought and analysis. In many cases the decision is made to push through with the drilling program until the contract is finished.
Also consider that many rigs outside the USA are hired or owned by government owned companies. These have an even slower response time. In some cases rigs are kept on working and the potential losses are accepted simply because the government doesn’t do nuances, they keep on marching ahead as if nothing were happening. But eventually the lack of cash flow does impact their ability to pay contractors, the payment delays induce contractors to suspend drilling operations, and the operation shuts down in a very disorganized fashion.
You just suggested why the count internationally should be higher, not lower.
International oil & gas rig count is generally less price-sensitive than the U.S. rig count. That means that, when oil prices drop, the number of rigs outside North America is declining more slowly and to a much lesser degree than in the U.S.
On the other hand, when oil prices rebound, international rig count recovers more slowly .
No i did not. Go change your left parietal circuit board and try reading Ron’s comment and my response.
Oil Production Vital Statistics June 2016
The following totals compare May 2016 with April 2016:
World Total Liquids down 760,000 bpd
USA down a significant 110,000 bpd
North America down 730,000 bpd (includes USA)
Canada down 620,000 bpd
OPEC down 120,000 bpd
Saudi Arabia up 40,000 bpd
Iran up 80,000 bpd
Nigeria down 250,000 bpd
Libya down 80,000 bpd
Russia + FSU up 80,000 bpd
Europe down 100,000 bpd (YOY)
Asia down 30,000.
http://www.oilvoice.com/n/Oil-Production-Vital-Statistics-June-2016/cc417cf6162c.aspx
“What: Shares of Marathon Oil (NYSE:MRO) jumped 13.5% in June. Fueling that rally was a well-liked acquisition.
So what: Marathon Oil acquired privately held PayRock Energy in mid-June for $888 million. What makes that purchase so compelling is the 61,000 net acres PayRock controls in the emerging STACK play of Oklahoma. That position is noteworthy because the drilling economics are quite lucrative at current oil prices. In fact, the company estimates that the internal rate of return from the acquired acreage is 60% to 80%, at $50 a barrel.
While Marathon Oil is paying a hefty price for PayRock at more than $14,500 an acre, that’s in-line with recent transactions. For perspective, Newfield Exploration (NYSE:NFX) paid $470 million for 42,000 acres in the STACK play this past May. That deal implies Newfield Exploration paid about $11,000 an acre.
Meanwhile, Devon Energy (NYSE:DVN) paid $1.9 billion for privately held Felix Energy last December. At that time, Felix controlled 80,000 acres in the STACK play, which implies that Devon paid nearly $23,500 an acre.”
not saying I told you so, but living large on being right?
API: US oil well completions fell 69% in second quarter
HOUSTON, July 7
07/07/2016
ByOGJ editors
US oil well completions fell 69% in the second quarter compared with year-ago levels, the American Petroleum Institute estimates in its 2016 Quarterly Well Completion Report.
Estimated exploratory gas well completions in the second quarter decreased 84% year-over-year. So far this year, development well footage has declined 53% while exploratory well footage has declined 64%, the report indicates.
An updated analysis from the International Energy Agency (IEA) has determined that the current oil price environment has boosted the share of oil produced in the Middle East. At 31 million barrels per day, the region now accounts for 35% of global oil supplies, the highest level since 1975, according to data from the IEA.
but we should not protect the flow of oil from this region….righttttt?
TT, so switch to renewables/EVs and save the $ and lives spent protecting the flow of oil from this region? Or, is this really how you want to spend our tax dollars and the lives of our military?
that is NOT the question, the question is what would happen and at what cost to the WORLD economy if a fraction of that 35% of production was compromised. Renewables are decades away from taking any real market share of energy worldwide. You do understand I hope, that if such a thing would happened like back in the 70’s my income would go up 300-400% overnight, you do get that right? But what happens to everybody else?
TT
You cannot reason with these people. It’s not possible. You’ll have better luck trying to convince baptists that Jesus never existed. They’re fanatics.
Sorry, I know you know this but you’ve poked them and in their minds dissent must be crushed. And they multiply like houseflies man. The whole blog is littered with environmental doom. They won’t be happy until we’re all living twenty to a room, sharing one bowl of rice and all riding bicycles.
It is what it is.
Anyway, cheers mate
I don’t think there is a serious fossil fuel discussion website to be found. They all seem to be thinly veiled anti fossil fuels.
Texas T, that already happened before and there was rationing and gas lines. We survived. Cars got better for a while, people conserved for a while. Then they forgot and sucked up the resources faster than ever.
Maybe this time some permanent sense will get knocked into the heads of Americans and we will finally divest ourselves from OPEC and anything like it.
Americans have to stop lapping up the propaganda being fed us and start acting like the world is not their oyster. Why should we hang ourselves just to make money for OPEC?
“The capitalist will sell us the rope we will hang them with”
-Lenin
again you clearly do not run a business, if you did you would understand you must protect and secure your supply lines. A lot of things have happened like ww1, ww2, plagues, etc that we “survived”. Sane people see the benefit in a protecting the worlds largest, stable, predictable energy source. I gather we can’t you in that group?
Sane people see the benefit in a protecting the worlds largest, stable, predictable energy source.
I guess that would make you a strong proponent of ‘Solar’, right? 🙂
I think most here would agree that ‘Peak Oil’ is happening now or is just around the corner and that does not bode particularly well for stability and predictability. Whereas the sun should be good for another couple billion more years or so.
14554 kWh per acre is the amount of solar energy that hits every day on average. Every day, all over the place. Seems like the largest predictable source of energy available and no need to fight a war over it or ship it across oceans. Free for the taking too. Supply lines are clear and easily protected.
Sometimes it is difficult to see what is right in front of us.
Pretty sure there is another thread open for this stuff.
Go, and sin no more.
Texas Tea said:
Sane people see the benefit in a protecting the worlds largest, stable, predictable energy source.
Maybe you think he should have posted that comment on the other thread…
In any case my original response to that was very much tongue in cheek.
Perhaps you also think humor and sarcasm should not be allowed on such a serious ‘Oil Only’ thread as this.
My personal opinion is that everything is very much interconnected and therefore sometimes a bit difficult to separate things into starkly black and white categories.
I guess an analogy that comes to mind is a hypothetical blog that deals strictly with the physiology of lung cancer and doesn’t allow any comments on what kinds of regulation on marketing cigarettes to teenagers might have on long term trends of lung cancer in adults who have smoked most of their lives.
I know it is tough to read the comments preceding a reply, but it might be well worth the effort.
BTW, your comment had nothing to do with oil or even energy. You go.
Is the US entirely full of officious little bullies, now? I’m writing about factors influencing oil demand. I’m sorry if it upsets you, you can always just skip it if it offends your sensibilities.
Nothing to do with you Patrick, the comment was a response to Watcher’s snide comment.
This is above your post, nothing to do with you. Just read up the page as I suggested to Watcher.
my apologies.
Maybe a decade away, for significant change in oil demand due to EVs?, see chart below of projected production of EVs and AVs [all assumed to also be EVs]. But given that price is set by demand and supply of the marginal barrel, it is not at all clear what proportion of new car sales as EVs is sufficient to affect that price? Certainly way way fewer than the projected 2025 total transition below….Worth a discussion.
When, and this is certain given auto-makers rush to transition to EV production, oil demand from transport sector starts to fall then oil price will have almost no floor. Expensive projects and fields will be unfundable.
So this is the likely mechanism that keeps all those expensive barrels in the ground.
It is possible that electric cars might rule the new car market by 2030, but there’s no guarantee.
In any case, it is very doubtful in my opinion that we will have batteries that are good enough and cheap enough by 2030 to run over the road trucks or farm or construction machinery. There is a hell of a difference between running a TESLA S cruising down the highway consuming ten to twenty kwh per hour, and running hammer down on a dump truck using TWO HUNDRED TO THREE HUNDRED kWh per hour equivalent burning diesel.
My combination orchard sprayer/ tractor tow vehicle uses a constant two hundred fifty horse power and it takes four hours to spray the orchard- or used to, before I quit. If I were to be using the biggest Tesla S battery currently available I would have a hell of a time finishing in two days unless I could afford a supercharger at home.
My backhoe has an eighty kw engine, and it probably averages forty kw output over the course of a day’s work. That’s normally eight hours but sometimes its ten or twelve hours. It would take a hell of a battery to run it all day, or even half a day.
And there will still be hundreds of millions of conventional cars on the road, plus all the legacy trucks, construction machinery, farm machinery, etc.
Considering depletion, which never sleeps, I will hazard a guess that oil will be selling for a good bit over a hundred bucks a barrel in 2030 in 2016 dollars.
It’s all guesswork, but it can be INFORMED guesswork.
Who wants to predict which countries flip from net exporters to net importers over the next fifteen years ?
OFM with respect this is the same mistake that people make with renewables. Immediately arguing that this or that job can’t be done by them, so therefore they can’t replace every current ICE machine, whether true or not [and it usually not], it misses the point.
Neither renewables nor EVs need to get anywhere near replacing all current devices to have a huge impact on the whole fossil fuel supply chain and, especially, price. The hit to demand for the marginal barrel from the transition to electrified transport will come early in the uptake curve. Price is set by supply of and demand for the next barrel, and we are currently seeing what happens when the next barrel doesn’t have a buyer. It is as plain as day that as all the major auto makers [yes and trucks and buses; look up Wrightspeed] transition to EV production the peak of the demand curve will get smoothed. And unless there’s a bigger supply drop at the same time, or some other new demand [India? I don’t think so], the result will be price through the floor as that extra barrel searches for a buyer.
Coal is dying from low price, not tight supply, and the price is low because its getting killed by energy production with a zero input cost advantage. Coal will never be able to match that. And oil will also not be able to match electricity, especially combined with the renewables roll out.
The difficulty in seeing that this is already true is simply because of the massive incumbency of liquid fuelled vehicles and extant electricity generation. It’s like those shoots of the city streets in the early 1900s; all horses, then suddenly all cars. Same is happening with renewables and EVs.
It seems we are all very poor at imagining change, even when it is underway. Also I guess we’re all hopeless at understanding the exponential function. Once doubling gets underway takeover happens with surprising speed.
Hi Patrick,
I have made the same arguments in favor of disruptive change you have, here in this blog, frequently, but I quit posting my own opinion on time lines for the most part.
Being wrong on time lines has humbled me somewhat!
You conveniently forget to mention depletion and population growth in your arguments, and I do recognize that vastly improved batteries or fuel cells might become available – eventually. Maybe even within a decade. WrightSpeed iirc is only a wanna be truck company that has not yet built even a single prototype.
Let’s not forget that the population is growing too, and that it will be quite some time, probably maybe potentially ???? five years up to ????? before an electric vehicle directly comparable to a conventional vehicle, actually sells for the same money.
I have in the past made the same point about the extremely high inelasticity of demand for oil crashing the price with even a small “surplus ” coming to market, pointing out that the same thing happens quite often in agricultural markets, when we farmers over produce in relation to recent consumption and price.
( On the other hand, substitution of foods is easily accomplished.If beef is unaffordable, you can eat pork or poultry or fish or beans, which robs us farmers of the occasional sellers dream market when we have a bad year in production. And you can switch your consumption pattern right on the spot, next trip grocery shopping. )
There simply aren’t any easy short term substitutes for oil, and there won’t ever BE any easy SHORT term substitutes. Electrified cars are going to take some time to scale up.Even if an individual has the choice, most people can’t afford to trade cars just anytime.
My point is that predicting is hard, and at best it’s just informed guesswork. Yogi said it first, lol.
Here’s another monkey wrench for your gears. If the price of oil crashes, then it will be DIRT cheap to put gasoline in new or existing cars and diesel fuel in new or existing trucks and farm and other heavy equipment. This will have the effect of slowing the adaption of electric vehicles.
HB comments below that regulation might FORCE the transition, and he might be right too. Countries dependent on imported oil might simply outlaw the importation of enough oil to run conventional cars!
YOU might be right.
I am not betting the farm on when the price of oil spikes way up and STAYS up, for a LONG time, but I believe it will happen. I MIGHT be right.
As for coal, depletion does not appear to be highly relevant to the price of it for the easily foreseeable future, say a decade or two. Oil otoh is obviously depleting at a rate high enough to create serious concerns short to medium term.
OFM
It is not the cost of the vehicle it’s cost of operation that matters.
Long haul trucking will be replaced by rail if Oil prices rise if they remain low because personal transportation moves to evs then the move to rail might not occur.
Population growth will stop by 2070 and then gradually decline. In the meantime there will be improved energy efficiency.
Hi Dennis, I mostly agree.
But hundreds of millions of people will opt to own and drive existing conventional cars if gasoline is cheap enough, rather than buy a NEW electric car. There won’t be many used electrics available for at least five to ten years after they get to be really popular.
I believe rail is going to mostly wipe out long haul trucking even if oil stays cheap. Railroads are learning how to pick up and deliver on time. They couldn’t do that until recently.
Carloads of produce used to rot in transit.That rarely happens these days.Carloads of component parts don’t sit a month on sidings these in these days of just in time delivery, holding up production at factories. If they do, the customer goes back to shipping by truck.
I wondered how few trucks are on US interstates when I visited USA 2 years ago. Made a national park trip from yellowstone south, and through californa to San Francisco.
Between bigger industrial centers we have here in Germany walls of trucks – filling one complete lane of an Autobahn, truck after truck during the workweek.
Never seen anything coming near to this in the USA, even when nearing centers in California.
But how much fuel do your trucks take? They go faster than ours (limited to 50 mph) and are bigger.
Hello Eulenspiegel,
Interstate 15 out of the Yellowstone area is not a heavy trucking area. Highway 99 which runs up and down California parallel to Interstate 5 carries most of the north-south truck traffic in the state. Interstate 40(east-west) is the major trucking route across the country. Which at times can look like a wall of trucks.
In most of the states crossing the country the trucks average about 70 mph and get about 6 to 7 mpg. California legal speed is 55 mph and it slows them down to about 60 mph. Most single trailers are 53 feet long and 102 inches wide. Limited to 80 thousand pounds gross.
Yellowstone is my favorite National Park. Hopefully you either entered or exited Yellowstone from the south and also saw the Grand Teton National park.
Population rise you say? Well the EV transition is on top of lower VMT in the US. China’s rising VKT has been the only floor under oil price this century and it’s done its boom.
OFM –
Wrightspeed hasn’t built a single truck/drive train, but how about Cummins?
“COLUMBUS, Ind., April 2016 – Cummins announced the company was awarded a $4.5 million grant from the U.S. Department of Energy to develop a Class 6 commercial plug-in hybrid electric vehicle that can reduce fuel consumption by at least 50 percent over conventional Class 6 vehicles.
When fully loaded, Class 6 vehicles weigh between approximately 19,000 and 26,000 pounds and typical examples include school buses or single axle work trucks.
With their expertise in internal combustion engines and related products, Cummins researchers will optimize the powertrain by selecting the engine with the best architecture to use as an electric commercial vehicle range extender, using the engine to manage the charge level of the all-electric drive battery pack. The range extender will be integrated, using advanced vehicle controls, with the electrified powertrain and other applicable technologies.”
http://social.cummins.com/cummins-led-team-develop-plug-in-hybrid-reduces-fuel-50-percent/
Everyone is jumping on the drive train electrification movement.
“WrightSpeed iirc is only a wanna be truck company that has not yet built even a single prototype”
C’mon Mac, really? Unless you’re mixing them up with Salt Lake City-based startup, Nikola Motors? When Nikola Motors was brought up for discussion previously, I had brought up Wrightspeed. Here are three videos featuring Wrightspeed prototypes:
A spot featuring the Wrightspeed electric/turbine powered truck performing on The Bonneville Salt Flats
Wrightspeed CNG Truck
The Wrightspeed powered Isuzu truck lands at Long Beach Convention center
Here’s an article on their partnership with Mack Trucks on a garbage truck.
http://www.gizmag.com/mack-wrightspeed-turbine-garbage-truck/43783/
I also mentioned in that previous discussion that, they are facing litigation from Capstone Turbine Corporation, who is accusing them of using Capstone patents in their newly developed ‘Fulcrum’ turbine. So, the drive train in the Mack partnership is actually a second generation prototype, using a Wrightspeed ‘Fulcrum’ rather than a Capstone turbine.
you are living in a world that does not exist or only exist in your mind.
Major energy sources and percent share of total U.S. electricity generation in 2015:
Coal = 33%
Natural gas = 33%
Nuclear = 20%
Hydropower = 6%
Other renewables = 7%
the economics of coal are mostly effected by the abundance and low cost of natural gas, in fact the charts are an exact inverse on one another over the last few years. Please note the chart in the link below, I would suggest doubling your understanding of the world you live in?
http://www.eia.gov/todayinenergy/detail.cfm?id=21912
You numbers without rate of change are meaningless or not so intelligent propaganda. 🙂
What do you expect for 2025?
Could it be that other REs are then >20%?
This discussion is about oil, right??
It doesn’t matter if the electricity comes 100% from coal – it still displaces oil.
The rate at which coal (and gas, etc) will be displaced by wind, solar and nuclear is a separate discussion. A useful discussion, but different and separate.
This is my very point; it’s all connected; oil supply, demand, and price, is affected by other things. And EVs are coming to upend your business. I guess I can see why you want to keep looking backwards and pretend it ain’t coming.
Here’s there thing; ever softer demand will mean even in a declining supply context that price just can’t lift. This is where I just can’t see Dennis’ future higher prices.
What is really interesting and unknowable is the interplay between softer demand-> lower price -> less new development, so therefore lower supply. Which should mean higher price, but if that arrives as demand leaves the market it just can’t rise. Competing feedback loops in supply and demand.
To complicate matters lower oil price should slow the EV take up, delaying the cost curve advantage, but only somewhat, and only really in the US which so undertaxes gasoline making retail price so much more variable.
What coal is going through now, oil will too. Only question is how soon.
Hi PatrickR
If Oil prices remain low very little substitution of EVS for ice vehicles will occur. High oil prices are what drive the rapid transition.
Note that my oil price scenarios are not that high about 100 per barrel. Supply falls at the same rate as demand falls in my scenario. Remember demand will be affected by oil prices.
If Oil prices remain low very little substitution of EVS for ice vehicles will occur. High oil prices are what drive the rapid transition.
I don’t think that tells the full story. A good example is what happened with the transition from whale oil to kerosene.
Technological progress is never a simple linear process because there are more often than not unforeseen feedback loops and unintended consequences which end up driving the process. Sometimes it’s simply a matter of a better product coming to the market.
Back in the days of whale oil it was a combination of factors and at one point both supply and the price peaked but later it crashed and never recovered. Demand simply dried up because petroleum a much better product came on the market and it was heavily subsidized.
Hi Fred,
Kerosene replaced whale oil because it was much cheaper. When EVs are substantially less to own and operate than ICEVs and have acceptable range (probably 200 miles or more) then EVs replace ICEVs the way kerosene replaced whale oil (and later the incandescent light bulb replaced kerosene).
How soon this occurs depends upon the price of batteries, the price of oil and the speed that the charging network expands.
I think estimates of 100% of personal vehicles sold being EVs in 10 years time is not realistic, 30 years seems more reasonable, but 20 +/-10 years may be a best guess. Note this is just new cars sold, if we assume 10 years to turn over 90% of the vehicle fleet it would be 30+/-10 years to get to 90% of vehicles on the road to EVs and plug-in hybrids. For VMT it might reach 95% because most miles travelled are in newer cars (10 years old or less).
Dennis, you are getting there. EVs will replace ICEs if and when they become cheaper to buy and cheaper to operate.
That could be in 30 years but I very seriously doubt it.
Hi Ron,
When oil peaks and begins to decline, I expect oil prices will rise. If oil output continues to decline even with high oil prices, oil prices will rise to the point that demand will fall to the same level as supply.
Perhaps you believe that everyone that cannot afford more expensive oil will walk or ride a bicycle, but I believe there will be some who will buy EVs and plugin hybrids.
As output of these types of vehicles ramps up there will be cost reductions due to economies of scale, and improvements in technology over time which will reduce cost. At some point the cost reductions will make EVs and plugin hybrids competitive with ICEVs, my guess is that 90% of new car sales will be EVs and plugin hybrids within 20 years, with roughly 90% of VMT (for cars and SUVs with GVW under 10,000 pounds) will be in EVs and plugin hybrids by 2045 (Worldwide).
It’s not just market price (though EVs are already cheaper to own and operate, for comparable vehicles – just use Edmunds.com to compare the Nissan Leaf or other EVs with comparable cars).
It’s also regulation. For example, EVs are popular in California because they’re allowed in HOV lanes. These regulations are recognizing real external costs, which can’t be internalized due to political resistance from legacy industries.
So, some cities are in the process of banning ICEs in certain areas, and certain times of the day. Some countries are considering banning pure ICEs entirely.
I expect the 2030 fuel mileage requirements to be set near the 100 mpg equivalent from the now 54.5 mpg 2025. The Auto manufactures have faced bankruptcy in the past now a couple of times because of price and availability of gasoline. The auto industry cutting their dependency on oil and the oil industry is a no brainier for many reasons. 100 mpg equivalent would force a good 90% of new vehicles to be EV’s. Anyone who follows Green Car Congress realizes EV advancements are happening on a daily basis. Fossil fuels are a dead end road and have no future. Most auto manufacturing comes from a small hand full of countries and their all in on reducing CO2, expect maybe the right wing oil industry controlled part of the United States.
DC, methinks you and I are saying the same thing but with different emphases. The only certain outlook for oil price is volatility.
Supply drops will push price, demand drops will pull on it; both with feedback loops…. interesting times.
And in economies dependent on FF revenue there are even more loops to contend with.
Oil producers like Norway and Texas are smart to diversify: Norway attacking its own oil demand by aggressively electrifying the transport sector so it can keep exporting the black stuff for longer, and Texas growing wind and solar to complement oil and gas.
ME and Russia gonna hurt, but will also keep supplying at any price; they have no choice. ME should aggressively get into solar too, while they have the financial resources, as should Australia.
Checkout how for net importers the financial sense in substituting renewables for liquid fuel imports now stacks up, despite low oil price, including heavy industry. One example:
https://theconversation.com/chiles-mines-set-hot-pace-on-renewables-australia-take-note-35533
Hi PatrickR,
Yes we mostly agree. My outlook is somewhat less optimistic than yours.
I think it will take 20 years (maybe more) before EVs and plugin hybrids will become a significant portion of the personal transportation market, especially if oil prices remain low.
My perspective may be skewed by being from the US where currently gasoline is about $0.6/litre (US $) on average. There will not be a big move to electric personal transportation in the US at those prices and even in Europe where gasoline is far more expensive most personal transportation remains internal combustion engine driven.
Liquid fuel supply will fall by 2018 (or it will not increase as much as demand for liquid fuel) and oil prices are likely to rise. My guess is that the increase in oil prices will not enable enough liquid fuel supply to be brought online to cause another oversupply situation. I expect that at about $100 to $150/b an equilibrium will be reached where supply slowly falls with demand also falling at a similar rate as some adoption of EVs and plugin hybrids occurs.
Eventually your scenario may arrive where oil demand falls faster than the fall in oil supply and oil prices may be driven lower by an oversupply of oil which will eventually drive more expensive oil production out of business.
I think this is unlikely to occur before 2035.
By 2035 we will be scrambling for oil at almost any price. Let me ask, once we run through the East Siberian oil, Brazil pre salt, the Kara Sea, Sea of Okhost, the USA and Argentina shales, the Beaufort, and those occasional deep water discoveries off West Africa, where do we go?
So pray tell, based on your prognosis of what will be happening by 2035, what are we to do between now and then? Do we just drink the oil optimist’s kool-ade, continue BAU and then sit and sing Kumbaya, while we await the arrival of one or more of the four horsemen of the apocalypse, when TSHTF?
I would have thought that the intelligent response would be to go all, in exploring improvements in efficiency and alternatives and at least make an attempt to put something in place so that the 7 billion inhabitants of spaceship earth don’t feel we have to fight over the dwindling remaining oil.
I get the impression that you are suggesting that renewables will never cut it. So, if not renwables, how do you propose humanity try and cope with declining oil production?
Islandboy, re-evaluate what it means to live.
Eyes Wide Open (Faex Optim Mercury/Drone Mix)
Hi Fernando,
I think the oil supply will fall, but demand will be reduced as EV and plugin hybrid output soars and demand for liquid fuels is reduced, at that point oil prices start to fall and only the cheapest oil will be produced (mostly from Russia and the Middle east and legacy fields).
I would be developing safe modular nuclear plant pilot designs, beef up battery and solar R&D to allow better deployment in ten years, when prices should be much lower. Also, growth should be reigned in to stabilize population, endless wars and imbecile human rights abusers should be addressed to avoid waste and reduce terrorism, etc. I could try doing some numbers and come up with a better prescription.
‘I think it will take 20 years (maybe more) before EVs and plugin hybrids will become a significant portion of the personal transportation market…’
But the question remains: What is a significant proportion of EVs to affect liquid fuel demand and therefore price? The US uses 9 million barrels a day of gasoline. Does it take 10%, or 5% of the market to go EV for this to be a meaningful hit on demand, or what?
Currently EVs make up 0.7% of the market. Knowing what the auto companies are making now, and how enough of the market is interested, that number will rise increasingly quickly over the next few years.
So my point remains; the growing numbers of EVs globally will soften oil demand, and therefore price, even as supply soften. We are in for a schizophrenic set of market signals from these combined forces, and bot just in 2035 or 2040, but way before then. 2020 probably, but 2025 certainly.
A lot of oil, like coal, gonna stay in the hole. Ultimately. And weirdly, low price is what’s gonna keep it there.
Hi Patrick R,
First we need oil prices to rise, this boosts demand for EVs and plugin hybrids. What happens to oil prices next depends both on the rate that supply of oil falls and the rate that demand for oil falls, if both supply and demand fall at a similar rate oil prices may remain high for 5 years or so.
At some point EVs and plugin hybrids will gain momentum and costs will fall as production ramps up and innovation continues. At that point demand for oil may start to fall faster than oil supply and oil prices will fall, this will not be enough to bring back much demand for ICEVs and oil prices will remain low.
When we get to that point (2030 possibly sooner, but I like 2030+/-5 years) a lot of expensive oil (LTO, oil sands, and deep water) will be left in the ground.
As you said before we seem to be saying the same thing in slightly different ways.
Basically I agree.
“electric cars might rule the new car market by 2030, but there’s no guarantee”
Yes there is, it’s called regulation
Points at the other thread.
Watcher,
Please let the site Mod(s) police the posts.
Old Farmer,
The best we can do about realizing the future is to make it. Current trends, driven by government regulation and demand, are to replace most ICE vehicles with electric or at least electric hybrids within a generation.
There are some promising new battery technologies that might make large trucks and farm equipment possible to be electrified.
However, it is more likely that gasoline and diesel production will be regulated and it’s use and production will be limited to heavy vehicles, some farm equipment, emergency and military vehicles. There will also probably be a growing synthetic liquid production as well as a biofuel contingent.
That of course could all change with a few technological discoveries and implementation. The future is quite variable until you get near it.
If net exporters start to become net importers, the US had better have plan B ready fast.
Who wants to predict which countries flip from net exporters to net importers over the next fifteen years ?
Ok, if current trends continue I think there could be quite a few. I’ll pick just one for now.
Mexico will collapse completely once oil exports cease. It will be interesting times. Guatemala, Honduras and Nicaragua have collapsed and the only thing between them and Texas is Mexico.
Think 14th century England governed by cocaine gangs.
Mexico was recently rated by the Pentagon thinking cap guys as one of the three countries in the world at highest risk of collapse.
Survivalist might be right.
Once the drug lords are in power, things will get to be very calm and peaceful in Mexico, except for turf wars. The business of drug lord will morph into the business of medieval king. Anybody who steps a few inches out of line will be put to work at slave labor, or shot out of hand.
HRC may find herself in a position of being FORCED to build TRUMP’S FENCE along about 2022 or2023 in order to keep ten million or twenty million new wanna be gringo’s from living their destiny.
Mexico is probably a dead man walking anyway , in terms of oil exports. If the government DOES collapse, corruption and cronyism will TOTALLY rule in every Mexican industry, not just oil.
And if it doesn’t , then the growing population and economy will suck up what oil is produced anyway.
Of course this will mean better times for our domestic producers.
The rest of the fellas waving flags on their domestic make ” need a ladder to get in” pickup trucks better hope they either own some oil wells or that Chevy, Ford, and Dodge figure out the battery problem.
I think it quite likely that the US would step in and stabilize Mexico. No Trump fences needed, they don’t work anyway.
We would want to develop all that shale oil, so be prepared for a unified Norte Americano.
Méxicos shale oil potential is pretty mediocre.
I agree that there is a strong possibility that the USA might under take the exportation of a little democracy down Mexico’s way, if things get really desperate.
In my opinion, the fence would come first, well before we would send any troops.
Fences work if they are SERIOUS fences. DAMNED few people managed to get thru the fences the USSR constructed in Europe to keep people IN.
A fortified and well guarded (by troops with ammo and orders to shoot ) fence would be much preferable from the pov of elected politicians to dealing with a few million desperate refugees.
It goes without saying that most of them would be great people, but they would be in competition with our own underclass for such unskilled work as is available.
It also goes without saying, because it considered racist to say it, that among those millions there would be a few tens of thousands of REAL low life types used to making their living by any means handy, including robbery , dealing drugs, etc.
Hell, my first cousin was one of those trouble makers shipped in by Castro during the Mariel exodus. He’s given the family all sorts of grief over the years. His half brother finished university, became an engineering supervisor and never had any trouble.
Thing is the bad sheep brother already had a criminal record when he was allowed in. To me it’s simply a question of screening Inmigrants and only accepting the ones the country needs. The USA doesn’t need illiterate criminals or people who can’t work their butts off in a job that really adds to society.
‘Collapse’ might be good for Mexico…
“The Zapatista Army of National Liberation… is a revolutionary leftist political and militant group based in Chiapas, the southernmost state of Mexico.
Since 1994, the group has been in a declared war ‘against the Mexican state’, and against military, paramilitary and corporate incursions into Chiapas. This war has been primarily defensive. In recent years, it has focused on a strategy of civil resistance. The Zapatistas’ main body is made up of mostly rural indigenous people, but includes some supporters in urban areas and internationally…
Although the ideology of the EZLN reflects libertarian socialism, paralleling both anarchist and libertarian Marxist thought in many respects, the EZLN has rejected and defied political classification, retaining its distinctiveness due in part to the importance of indigenous Mayan beliefs in Zapatismo. The EZLN aligns itself with the wider alter-globalization, anti-neoliberal social movement, seeking indigenous control over their local resources, especially land.” ~ Wikipedia
I can just see it, fully automated battery powered vehicles navigating Buenos Aires or Cairo traffic by 2025. ?
Have you lived or driven in Cairo? It’s polluted, insane and incredibly noisy.
EVs would be (a little) quieter and cleaner. Autonomous vehicles might make the traffic a little less crazy!
I have been driven in Cairo. I learned to race in Buenos Aires. The chaos and economy simply won’t allow fully automated EVs by 2025. What we got here is Americans and Europeans with a full disconnect from the typical “developing” nation.
What we got here is Americans and Europeans with a full disconnect from the typical “developing” nation.
Maybe, maybe not. This American based company has begun making inroads in the motorcycle based courier market in the bigger cities in Brazil. Maybe they are not as disconnected from reality as you seem to think…
http://www.currentmotor.com/
I could definitely see something like this working in places like Cairo, New Delhi, and Buenos Aires.
Who knows, maybe that last name will mean what it used to, again 🙂
I am more convinced than ever that EVs are the future in the very near term but they may look more like these electric motorcycles than Teslas and Nissan Leafs.
Hi PatrickR,
Does that chart seem realistic to you? How about a link to where you got the chart.
If I am reading the chart correctly he is predicting 100% of new cars sold will be EVs by 2025. A more realistic estimate might be 50% by 2030 (and that still seems optimistic if we are going to assume that oil prices will be low due to falling demand.)
Oh and can you answer on the non-petrol thread please?
we should not protect the flow of oil from this region
No one has made that argument!
In fact, the argument is the opposite: oil is unreliable, it’s price can spike unpredictable (or, like now, predictably), and protecting the oil import supply line is very, very expensive in both blood and treasure. Therefore we need alternative sources of transportation power.
As a business owner, you should understand the value of diversifying one’s supply line…
7/7/2016
Prime Minister Malcolm Turnbull’s exciting energy security in Australia
http://crudeoilpeak.info/prime-minister-turnbulls-exciting-energy-security-in-australia
Matt
this is one of the most serious issues facing Australia. Sadly, none of the pollies actually have a plan. there have been several white papers on this issue.
As you know – Australian manufacturing was built on relatively cheap energy sources in the 50’s-70’s (initially brown coal in Victoria, then cheap gas from the Cooper supplied SA and NSW). With the LNG export projects, Australia’s domestic gas is being repriced to Internatioal parity. Several coal fired power stations have closed. No one seems to be willing to answer the question of where Australia’s future energy requirements will come from, in particular liquid fuels for transport.
lots of questions to be answered.
rgds
simon
Recent post from Euan
http://euanmearns.com/oil-production-vital-statistics-june-2016/
Read Stuart’s post at the end of Eaun Mearn’s post.
Is this true, that there will be more wood, coal, oil and gas burned in this year than in any other?
Wouldn’t be surprised.
I would imagine stats and historical stats on wood consumed for fuel are pretty hard to nail down. The rest of those fuel sources mentioned are tracked pretty good though. Given the population increase in Africa and Asia I’d suspect a lot of wood is burnt these days compared to past times. Here’s an interesting link. Peak wood just crossed my mind.
http://www.ucsusa.org/sites/default/files/legacy/assets/documents/global_warming/UCS_DriversofDeforestation_Chap8_Woodfuel.pdf
The ‘PV/EV Set’ doesn’t seem to want to know this and to think that the New Economy will be powered by PV’s (etc.) and by those going to some sort of work in all their new EV’s, and that bailing from BAU is not really an option…
Chapter 2
Probably not.
More oil, probably. More coal, probably not.
Very likely not for wood – much of the word’s historic forests are gone. North Africa, the M.E., N. America (to a much lesser extent), S. America (except a shrinking remnant of the Amazon)…it’s just not there anymore.
For all the folks talking about North Dakota’s DUCs – the quantity, quality, potential economic parameters, etc., the head of ND’s pipeline authority, Justin Kringstad, just released a short study last week delving into it.
It’s accessible through their website along with a ten minute video of the guy describing the data.
Lottsa relevant info presented.
Link Please Coffee Guy?
John S
I’m not too skillful at getting’ those little blue letters on the screen but the site is “northdakotapipelines.com’.
Clicking on ” Presentations” brings up the piece.
The 11 minute video may be a little more informative than just looking over the pdf. as the author explains what his intentions are.
Plenty of concise detail on economics, sweet spots, etc. right from the horse’s mouth.
Coffee,
Getting the little blue letter to pop up is real easy.
Just click on the URL or the address in the top bar. Copy and paste it to a new line in your reply. That is is it! The web site recognizes it is a link and makes it clickable.
Thanks for the info coffee. That is a very interesting presentation. Its a new view on a hot subject that would be of interest to many.
Notice that he lists 704 wells as not completed and not completed waiver, while the latest directors cut has an estimated 892 ducs. Where are the missing 188 ducs?
His study universe of 6288 wells producing a peak of over 400 bpd is 4748 less that the 11036 wells Helms says are producing now. I wonder if that means many of those 4748 produced a peak of less than 400 bpd. Some of them may also be confidential but I think that status goes public after a year so probably not too many. That would infer a lot of wells that had a peak month of less than 400.
His data show 528 wells that had a peak month production of over 1000 bpd, which is about 5 percent of the 11000 producing. His data also shows that 471 of the 704 uncompleted wells are within two and a half miles of a well which produced over 1000 bpd. I don’t think that means many will produce at that rate, it just means these wells are largely near the sweet spots.
Link https://ndpipelines.files.wordpress.com/2012/04/ndpa-nc-wells-june-30-2016.pdf
DC
You touched upon a number of issues that may have relevance.
The “DUC” number discrepancy caught my eye but I didn’t get too worked up about it ’cause, to me, it’s no real big issue give or take several dozen.
Over the years I’ve been following this stuff, there have been several typos, revisions, change of definitions, etc. that trends of significance loom larger to me than micro data. (Case in point was Ohio’s just-released production data pegging Rice’s wells at 31 days output rather than the actual 91. Some people went ballistic at a dozen wells flowing 40/50+ MMcfd steady. Wrong).
The confidential status lasts only six months and the production numbers are actually publically viewable immediately on the monthly production reports.
They are listed under “Confidential Wells” and are the first postings per field on that 260+ page, alphabetized-by- field names list.
But you actually picked right up on a factoid that IS important, I think, the near 5,000 wells that are El Primo dogs … less than 400 bopd max. That’s a lot considering the total number.
Some well-recognized analysts (cough, Enno, cough) may be including these early wildcat, delineation wells in with ALL the producers – understandable from a statistician’s perspective, but not a ‘real world’ view, perhaps.
The most recent ND DMR presentation, viewable from their site and highly informative, depicts the “Typical” Bakken well production profile at 94 bopd at the five year mark … kinda high.
The troubles in Venezuela are spilling over into countries that have been getting oil from Venezuela on extremely favorable terms.
http://www.rigzone.com/news/oil_gas/a/145550/Venezuelas_Energy_Woes_Spread_to_Its_Closest_Ally_Cuba
I decided to put my response in a blog post because lately my comments go into the trash
http://21stcenturysocialcritic.blogspot.com.es/2016/07/the-castro-parasite-dies-as-venezuela.html
I know that most of us look unkindly on Fernando’s political convictions.
Personally I take him seriously after discounting his words somewhat out of consideration of his personal history.
He includes a lot of information that is relevant and solid in his personal blog, and every body would do well to read his blog for insights into the politics of oil.
Let me ask you, do you think Trump or Hillary are good candidates? What do you think about the results in Afghanistan after 15 years? Iraq after 13 years? Syria after 4 years? Do you like the way universities silence and repress free speech?
Hi Fernando,
Who are you asking, me or somebody else? I think both Clinton and Trump are grossly incompetent bumbling idiots not to mention both are sorely lacking in terms of ethics.
I support Sanders personally.
If you want a longer answer,I will put one in the non oil thread.
Hi Fernando,
I am not sure why your comments go into the trash. Sometimes long comments go there.
It is not clear why.
I think they are too long
Hi Fernando,
I made some changes to try to address the problem. Try a comment, but save it in a word processor. There are others who also post long comments without problems. Try avoiding using “bull****” in your comments, there are certain words that might land comments in trash.
The gulf oil states ( countries ) are piling on debt in order to make up for the lost revenues due to low oil prices.
http://blogs.wsj.com/moneybeat/2016/07/08/gulf-oil-states-drilling-down-into-debt-energy-journal/
It’s pretty obvious that if prices don’t go up a LOT, meaning beyond a hundred bucks, these countries will not be able to make good on these bonds. They were spending it as fast as it was coming in, before the price crashed, excepting what the insiders were skimming off and hiding or spending of course.
And it’s rather unlikely that they will collectively be able to raise production very much even if the price does go back over a hundred bucks. Depletion never sleeps.
They have their own central banks. They’ll just QE them.
Yes, bonds can be inflated out of any meaningful existence, but the people who bought them lose their PURCHASING POWER when they are paid off in near useless fiat currency.
If the currency does retain some value, then the loss that is suffered b any holder is in proportion to the amount of that currency held. If a pension fund is holding a million bucks and the currency loses half its value, then the pensioners just lost half of their investment.
Of course inflation is not necessarily evenly distributed all thru an economy. The owner of a rent controlled apartment might lose his ass while his tenant gets one raise after another and can pay the rent with fewer days work every time he gets an inflation adjusted raise.
The lender is defrauded in practical terms, in favor of the borrower, or perhaps more accurately, the people who GET the borrowed money. This would be everybody getting welfare payments in the country in question, plus lots of assorted bureaucrats, banking middlemen, etc.
Whether or not a country can QE without causing massive inflation depends on a few things including trade balances. If a country engaging in QE produces most of it’s own food, energy and durable goods, it can probably get away with it. The durable goods are probably the least important out of the three since demand for food and energy is largely inelastic below a certain minimum. If a country has to import large amounts of food and energy and engages in QE, runaway inflation is the likely result. Ask me how I know.
If a country’s CB issues a currency that is considered a global reserve currency, wherein food and energy prices are set in that currency, that also makes a big difference.
Natural gas and coal along with some petroleum account for 67 percent of all electricity generation in the US. Wind and solar are at 5.3 percent. There are about 48,800 wind turbines in the US, they generate 4.7 percent, approximately 10,000 wind turbines for each percent of electricity gneration. At 100 percent of electricity generation by wind turbines, there will have to be some one million wind turbines scattered all across the land. Every twenty years, maintenance will have to rebuild the wind turbines all over again. The viewshed will be something to see by then. Although, Florida won’t have any, one Cat 5 hurricane will destroy them.
https://www.eia.gov/tools/faqs/faq.cfm?id=427&t=3
I was listening to a financal news report on the radio about two weeks ago now. The discussion topic was robots and job loss. The reporter stated that robots will probably replace 90 percent of all jobs.
Should be interesting as to what effect it will have on consumption of resources.
Everybody will be driving around in their electric cars on autopilot, programmed to drive you home after a night on the town and you are falling down drunk, a robot in charge, not you. You will be able to have the robot car drive to your former place of employment and so you can watch the robot do the work you were once doing. So much fun when robots can do it all.
The other ten percent of jobs not replaceable by robots will have a lot of competition to fill those positions. Probably all government jobs. har
Unless solar can increase, wind turbines will power robots so you can be in Acapulco or Honolulu at the beach with another 5 billion souls enjoying a margarita or a mai tai served to them by a robot server. If you want to be in Miami, that’s OK, you will need a drink there too, make it a daiquiri! ?
There will be advantages to so much free time. Nobody will have to worry anymore where and how all of the power is generated, robots will build the solar facilities, the wind turbines, everything, you will just have to watch.
I love work, I could watch it all day. Robots can make it happen.
If this needs to be in the non-petroleum thread, fine.
Your numbers for wind turbines are nonsense:
The wind turbines in the US are relatively small (<2 MW) and old. Simply by replacing these turbins with modern designs will triple the electricity generation, with slighly higher towers you will get four times the current generation.
To make projections with average data that are heavily influenced by old designs is not very clever in a serious discussion.
Take a good bread and butter turbine of 2015/2016 and do your calculations again. Then we have something meaningful to discuss.
Hi Ulenspiegel,
You are apparently relatively new here in this forum, and not yet well acquainted with Ronald Walter.
He is our resident court jester and comic, and he makes fun of every body and every thing,sooner or later, excepting MOM and APPLE PIE. (No REAL American EVER makes fun of mom or apple pie! ) Sometimes he is serious, but not very often.
In this case , he is poking a little fun at people who think wind and sun can easily and quickly replace fossil fuels. So his numbers are not intended to be taken seriously.
While I believe it CAN be done, personally, I don’t think doing of it is going to be quick or easy or cheap. So I sort of agree with RW in this case.
I have never been able to decide for sure exactly WHAT he believes, but he knows a LOT about a lot of things. I THINK he believes that we are stuck with fossil fuels for a LONG time to come, until they run out. Of course by then he will be long dead. 😉
OFM,
“No REAL American EVER makes fun of…”
An apple pie walks into a bar. The bartender says “What is this, a joke?”
(sorry, sorry)
Here’s a better one, pasted from just below.
“Often times I am totally wrong, but not by much.”
Most people fail to understand that the court jester was more than just a comic there for entertainment. The jester was often able to point out things, say things, make fun of things, that would have gotten anybody else transported directly to the dungeon.
The king or duke or who ever was more or less the top dog wanted it this way. When powerful people are ready to go at it tooth and claw, or more accurately with sword and dagger, a little humor and sarcasm can help every body figure out who has the high cards without having to call and put the cards on the table.
Yes, sadly it’s clear that this particular Ron does not like wind power.
So he says lots of unrealistic things…
I never go to the non oil thread that appears too infrequently. Is there a great deal of proppant and oil well maintenance cost discussion there?
Often times I am totally wrong, but not by much. Not to the point that it is nonsense. Comes close, like horseshoes, and that’s good enough! And, if it is complete nonsense, it will be easy to tell, obvious, as it were. Not there yet, it takes time, just have to wait. har
http://www.awea.org/Resources/Content.aspx?ItemNumber=5059
Equivalent number of average American homes powered in a year by current installed wind capacity: 20 million
Wind energy’s percentage share of power capacity additions in 2015: 41%
Total number of operating utility-scale wind turbines: >48,800
Number of U.S. states with operating utility-scale wind energy projects: 40 plus
The utility owns the coal company, owns the power plant, and also owns the wind turbines, those giant big ones from Holland. Too many tulips there, not enough room, have to ship them over to the US and get them working there. 😉
Beautiful day out there today, so that’s where I am going to disappear for the rest of the day. Along with quaffing the barley pop.
From a private energy board:
Global oil inventories – a frightening outlook (for oil bears)
Early this year, the IEA frightened the markets by stating that global oil inventories had increased by 1000 Mb since the start of 2014.
As the IEA had probably strongly underestimated 2014 demand (having been partly adjusted in the meantime), among other errors, the real increase was probably closer to 700 – 800 Mb. Still substantial. That includes additions to strategic reserves in China and India. At the starting point, the end of 2013, oil inventories were quite low.
How much is added/substracted to/from inventories in 2016? Opinions vary. The Energy agencies, always behind the curve, are winding down their numbers. Raymond James, in my view one of the better analysts, expects, in its June study, an average 2016 global undersupply of 0.7 Mb/d. Second half undersupply being 1.7 Mb/d. That would mean a reduction of global inventories of 250 Mb in 2016
In the years 2014-2016, some 300 Mb will probably disappear in Chinese and Indian strategic reserves.
System inventories. What’s generally not taken into account is the increasing amount of oil that remains in the supply system, when demand grows. In the US and OECD countries, total oil in the supply-system used to be 60 days of consumption on average. In non OECD countries, the number of days was less but is growing. If we take a global average of 50 days and assume 4Mb/d consumption growth in the 3 years 2014 to 2016, 200 Mb more oil should remain in the system by the end of 2016, compared to 2013.
So, let’s do the math, regarding the commercially available inventory increase in Mb, by the end of 2016, compared to the end of 2013
800 (beginning of 2016, including sr) -300 (strategic reserve additions) – 200 (system) – 250 (2016 undersupply according to RJ) = 50.
At the end of 2016 (just 6 months from now), on a global basis, we would basically be back to the relatively low commercially available inventory level of the end of 2013.
For 2017, RJ forecasts an average global undersupply of 1.25 M/d. That implies an additional draw of 450 Mb from inventories in 2017, which means very tight supply
If RJ is only half right, the $80/b crude price estimate for 2017 could be very conservative.
Link to the RJ study:
http://www.investorvillage.com/uploads/31214/files/energystatMay31.pdf
LNG can be sourced from anywhere – ESET
New Fortress Energy, the company which has won the contract to supply the island’s sole power distributor the Jamaica Public Service Company (JPS) with LNG for substations in Bogue, Montego Bay and another to be developed in Old Harbour, St Catherine, said it buys supplies from sources worldwide.
The company has declined to comment whether its suppliers include Trafigura Beheer, from which the Jamaica Observer understands it has sought to make buys.
Meanwhile, the Electricity Sector Enterprise Team (ESET) has indicated to the Business Observer that it does not matter where in the world the gas comes from.
I guess by anywhere they mean any one of the 19 countries, according to IGU World LNG Report – 2015 Edition (PDF) (page 9), that currently export LNG. Wow! it looks like, to use a Jamaican proverb, we might be about to “swap black daag fi monkey”!
Hopefully, by the time Jamaica has completed all the construction of LNG infrastructure and gas burning power plants, LNG prices will not be significantly higher. I actually contacted New Fortress, urging them to consider building integrated facilities that can supply chilled water for industry and commerce as well as pre-cooling for the intakes of the combustion turbines. If the island is going to go with LNG, it would be best to get every dollar of value available. No sense in using electricity for large scale refrigeration and cooling when you’ve got LNG regasification going on.
It doesnt make any sense for Jamaica to buy LNG from Austronesian or Middle East suppliers. The best deals should be from the USA, Nigeria, Angola and Trinidad.
Anyone have primary experience with this?
Bolts Connecting Underwater Oil Wells Are Failing
http://www.techtimes.com/articles/169132/20160709/bolts-connecting-underwater-oil-wells-are-failing.htm
We usually request bolt certificates. I audited a project with lousy bolt, flange and valve certificate record keeping a few years ago and wrote them up, but I retired so I never followed it up. I don’t think the problem is widespread, nor is it a huge problem as they want to make it look in that article. The article authors don’t seem to be acquainted with the industry, they seem to jump from blowout preventer stack bolts to Xmas tree bolts in subsea wells, mention platform numbers as if they were the same thing, and so on. It’s basically a bullshit article which needs to be written in a much more professional way before I would worry about it.
Duncan
There are increasing number of instances where metallurgical failures are arising all over the industrial world, the nuclear plant leaks/shutdown in San Diego and the removal of new train cars in Philadelphia’s SEPTA system being only two of the more recent, noteworthy cases.
Many causes are suspect, but the main focus has been on the manufacturing processes (liquid phase) when the steel is formed.
In addition, marine environments, especially salt, can wreak enormous havoc on metal components (all material, actually) as the North Sea folks discovered long ago with the incredible rate of electrolysis damage to the production risers coming up from the sea floor.
These guys will identify and correct the problem … possibly accompanied by a change in supplier.
I commercial fished, and watched things dissolve before me, so I was curious about the problem with deep oil.
And I agree with Fernando, they don’t seem like pros on the subject.
The new bay bridge here in San Francisco comes to mind.
http://www.mercurynews.com/ci_23621993/bay-bridges-steel-bolt-failures-reveal-inadequate-metallurgy
Do we have a quote on record of the present typical cost of drilling a conventional well? Something that is firmly defined as a comparison with LTO.
Watcher
EnerVest may have recently provided the exact info you asked about with their seven pilot wells targeting the Clinton Sandstone formation in Ohio.
With 1,700 verticals already drilled/operated there, they wanted to see how a horizontal approach work.
Average cost of vertical – 3,000′ to 4 1/2′ deep … $400,000.
Horizontal, 4,000′ deep, 2,000′ long lateral … $1,800,000.
Expected revenue from vertical … $1 million
Expected revenue from horizontal … $7/$10 million.
In general, they currently project a horizontal to cost three to ten times more than a vertical and produce seven to twenty times the revenue.
Individual well parameters cause wide range of numbers.
If recent past is any guide, the company’s costs should drop and output increase as they become more proficient.
The seven pilot wells currently produce 1,100 bopd
collectively.
I take it that does not include fracking costs or other costs, just drilling. In previous posts the total costs for fracked horizontal wells ranged from $8 million to $12 million dollars. I have heard costs are falling but that may be partly due to lack of demand.
It is sandstone. It may not need fraccing!
Gone Fishing
In the Niobrara, companies are bringing in wells with D&C costs of $2 1/2 million, The increased employment of monobore drilling plays a role, along with 6,000′ depths and 5,000′ laterals.
This monobore type, also called ‘one run’ is being selectively implemented in both the EF and Permian.
There’s descriptions of this on the net, as well as an extensive report in the May (?) issue of aogr.com of how BHP developed it in the EF.
Even in the Bakken, in the shallower areas up north, SM, I believe, is bringing in wells at $4 million.
A fairly ‘normal’ Bakken well – 20,000 total measured feet – costs under $7 million now. This includes drilling and the latest iterations of frac’ing.
Push. ( I’ll practice on the blue letters), Exactly, frac’ing sandstone and other reservoir rock is starting to take place with horizontal wellbores. As short as EnerVest’s wells were, they took several weeks to drill because of bit problems (see the aogr article for BHP’s trouble with bits).
The recovery in these efforts may never challenge the deeper, bigger projects, but the lowered cost may encourage more attempts.
Thanks for info. So it looks like a higher percentage of new wells might actually be profitable or at least break even at current prices.
GF
To an extent, that is true, but as shallow and others point out, the ‘nuts and bolts’ stuff (lease operating expenses) make a big difference in these relatively low revenue producing projects.
In addition, the enormous, accumulated debt is hanging like a sword of Damocles over many of these outfits, most acutely, the Johnny-Come-Latelies who only acquired poor, marginal land.
Contrary to what some may think, there’s a freakin’ army of money people chomping at the bit to swoop in on these assets and effectively employ the latest technology so as to make them workable sans the pre-existing debt.
Enormous, global wide game of chicken being played out right now with a lot of people unwillingly caught up in the process.
It’s a Darwinian world, and the vultures are always ready for the feast when other creatures die.
I used to go to just about every farm and industrial sale within a hundred miles hoping to buy something for peanuts and succeeded often enough to maintain the habit.
Most of the tight oil acreage will be developed, if not right away, then a few years down the road, assuming prices go up to seventy or eighty bucks in constant money. That seems damned likely to me but I am afraid to guess WHEN.
A huge part of the work has already been done, such as putting in roads, housing , surveying, permitting, etc. Costs will be known, production profiles will be understood in some detail.
Tight oil won’t be a ponzi scheme going forward, it will be straight business.
It’s also important to figure out the well operating costs. I have designed horizontal well programs, and had to focus a lot on the well directional plan so that later we could run tubing and pump as needed. The most efficient method involves drilling from multiwell pads, and that adds another complexity because the wells have to make 3D turns. I’ve noticed the developments in North Dakota were being done with a fairly simple minded approach, and I wonder if they were really thought out or it was mostly adhoc without a full analysis.
Fernando
Apparently the operating costs are one of the bigger challenges to EnerVest as they needed to immediately put the wells on artificial lift.
With one and two mile laterals all over now, the artificial lift industry has become a focus of innovation and research. The site ‘World Oil’ has an extensive, two part series describing the latest goings on.
The operators in the Bakken faced enormous challenges in the early years.
From 2009 to 2012, or so, they had to drill and produce on an area spanning twice the size of New Jersey, existing of little more than empty range and and farmland, brutally long, cold winters, and – of the highest significance – only having 36 months to show production in order to keep their leasehold (the whole HBP process).
To assist somewhat in the process, the state doubled the size of their Drilling Spacing Units to two square miles (up from one), reducing the well obligations ‘down’ to about 6,000 or so. In, once again, a little over three years.
The ND DMR site has an incredibly instructive, graphic rich presentation – full of awesome aereal photos – dated August 6, 2014 titled ND Update, I believe.
Some of the data is a little stale, but it is a highly effective piece to explain what’s been going on up there.
I guess we can say North Dakota legislature and regulators were amateurs. The whole approach looks very third world.
Uhm, conventional . . . as in conventional.
As in what does it cost to drill a well in non shale areas, by a company with a few decades experience doing it.
We know shale wells are $7-10 million. We don’t hear much about purely conventional well costs.
Conventional well costs range from $2 million to $30 million in South America. But the majority costs around $3 to $7 million. These are onshore costs.
Watcher
Those EnerVest figures emanate from about as conventional a drilling environment as one can find.
The Clinton Sandstone was first drilled in the 1800s … that’s 18 … with the East Canton Well Field – site of Enervest’s 1,700 wells – first drilled in the 1940s.
But your comment may raise a much bigger issue, namely the targeting of reservoir rock, rather than source rock, with all the horizontal/fracturing techniques that have evolved these past several years.
Lots of geology, economics, physics, and even politics come into play.
The story is still unfolding.
So conventional wells are 1/3 the price of a 30 stage Bakken.
(And gets more oil out with probably more diesel in it)
Hi Watcher,
Wrong on the getting more oil out. There are very few places in the World where that is true, the middle east might be an exception and perhaps there are a lot of conventional wells still being drilled in Russia (I don’t know).
In the US, most conventional wells drilled today produce less oil per dollar spent on drilling and development. Why do you think the horizontal multifrack wells were developed?
Venezuela doesn’t have that much “shale” potential. In some selected areas it’s possible to drill a $6 million well and recover up to 2 mmbo.
Hi Fernando,
I figured all the good areas were already drilled, I assume this is not in the Orinoco. What would your guess be as to the average EUR of a Venezuela well drilled today?
I am also assuming 2 mmbo is a “good” well,rather than an average well.
Here’s some extra-somatic energy at work.
I have had some ground squirrels hanging out in the farmyard for the past four months or so. They know where to find something to eat. They have little bellies and there is plenty to eat, so I have to be tolerant of their trespassing offense. I don’t want to use poisoned oats, birds would eat them and die.
I’d be grief stricken killing squirrels and unwittingly murdering small birds like doves. Real tears, not from some crocodile. I’d be as guilty as a wind turbine chopping up a golden eagle out there in the Golden State. It would be cognitive dissonance all over again, a big dollop of it. If I can’t be kind to one of the earth’s little creatures, then why should I be concerned and outraged at some stupid wind turbine killing raptors? Just another stupid hypocrite is all I would be living by a double standard, a pirate flying the Jolly Roger. You get the picture.
But wait, there’s more!
For a few weeks now, an owl has been hanging around working for food. I don’t have to do the work of plinking at ground squirrels with my .22 even.
Had a few crows trespassing before that, but owls and crows aren’t friends, so the crows moved on.
The owl is some natural extra-somatic energy put to good use, me thinks the owl is picking off the ground squirrels so I don’t worry too much about the ground squirrels, they’ll have to watch out for the owl, for their own good. The owl kills two birds with one stone, scatters the crows to the four winds and depopulates the ground squirrels so they don’t overshoot.
Many thanks to the owl and the good work. Makes life easier, no dreaded drudgery ridding the ground squirrels all by my lonesome. Nature at work all day long.
This afternoon, I am going to have to do a raindance, the soil is becoming more like dust than dirt.
Of course, I have the weather app, so I do know what is headed my way later on today. The raindance is for fun and practice. har
Sorry, meant for this to be in the non-petroleum thread.
Shipping data in Thomson Reuters Eikon shows that two fully-laden very large crude carriers, the New Dream chartered by PetroChina and the Trafigura-chartered Britanis, are heading to Singapore with 270,000 tonnes each of fuel oil from the Bonaire Terminal owned by Petroleos de Venezuela.
Venezuelan exports of residual fuel oil have been sporadic into Singapore since the start of the year but the city-state has taken in 997,000 tonnes over the past three weeks from the country, recent government data showed.
The total amount of fuel oil arriving in Singapore from Venezuela between early June and early August is at least 1.5 million tonnes, according to International Enterprise (IE) Singapore and ship-tracking data.
In the week to June 29, net fuel oil imports into Singapore were at a 8-week high of 1.14 million tonnes, of which Venezuela contributed 563,000 tonnes, IE Singapore reported.
Traders said that the strong imports came as a surprise to some and could help ease a tight Singaporean fuel oil market expected in July as a result of fewer arbitrage flows during the past three months.
Interesting—-
Venezuela’s refineríes are in very bad shape, unable to make gasoline and diesel without component imports. Production is dropping gradually, and export quality is much lower than in the past.
Now WTI price has gone down more than 10% from the last peak – let’s see if the insolvency in the oil sector continues to pick up speed again.
I don’t believe all these company to break even at 40$ when they didn’t managed to build up reserves at 100+$.
Recently Chevron and partners announced their intent to proceed with the Tengiz development. This has been greeted as a sign of turn around in the industry, but in fact Chevron stated in their 2015 annual presentations that this would be the only project that they were probable to fund. Nevertheless it’s a lot of money, $37 billion to give 260,000 bpd nameplate capacity in 2022. I’d guess they work on a fairly low availability in that area so maybe 230 kbpd average annual production.
That is $160,000 per bpd. Natural decline takes out about 3.6 mmbpd, so to replace that with new oil (rather than in fill acceleration) would require $580 billion; maybe half as much again for gas. I say no chance, even when the industry was at it’s peak in 2013 it couldn’t do that.
There was a report from Morgan Stanley in early 2015 indicating 230 projects that were being appraised, of which fewer than nine were expected to be approved this year. Assuming 60% of those are for oil and about 70,000 bpd average capacity (about average over the past year) that gives 10 mmbpd, that is still only three years worth even if the development could be achieved; and note all that oil is presently less economic, maybe a lot less, than that for Tengiz, even assuming costs don’t balloon again once activity picks up. It will also equate to only about 60 to 70 Gb of recoverable oil. Rystad indicated recently 550 Gb of undeveloped, known reserves – where’s all the rest of it and what will it cost in time, money, risk acceptance and political will to develop?
The chart below is Rystad’s from earlier this year showing probable supply shortfall in 2017 and getting worse (2019 and 2020 are supposed to be much lower numbers for new supply but not shown, I don’t know of anything in the pipeline definitely due for 2021 start-up, Tengiz is 2022). I think unless infill drilling comes back fast to slow natural decline, and that can’t go on forever anyway and in many place, especially offshore, may have already exhausted it’s potential, we are in for a period of very rapid decline through to 2022 to 2025. Then what – maybe worse to come?
A 3% fall in production is about a 6% decline in exports and that ratio might be rising because of EROI decline and local population and economic growth. Really there needs to be a 1 to 2% yearly growth in exported oil to support BAU, even with current renewables expansion. Previous studies have indicated a rapid 5% fall in oil imports for countries reliant on them would lead to a deep recession, 25% fall (over three years) leads to social breakdown and 50% or more leads to a failed state and famine. I think the first is inevitable for most importers, let’s hope we aren’t about to find out about the others.
They could go broke a lot slower if they just bought several of the larger shale players.
Reno. With shale adding a few rigs, apparently a signal to the market that all is well, time for the price to go back down, just like last year.
Welcome $30s, most are back to getting that at the well head now.
It is interesting that the big M & A activity predicted in shale never materialized.
Shallow,
Let me say this. I used to leave a lot more comments, but I’ve been too busy with my site. However, I still read the articles and some of the comments on Ron’s blog here.
I always make the effort to read all of your comments because you are one of the few who WHO KNOWS WHAT THE HELL IS REALLY GOING ON in the U.S. energy industry.
Thanks for all the great info and comments.
Steve
Steve, thanks.
I am not sure that adding a few rigs signals “all is well”. At some point the rig utilization rate was going to stop going down after setting record low after record low, we have added what 15 maybe? With regard to some comments below, and this opinion is clearly not well received on the forum, why are such high values places on these reserves. Again think about what the alternatives are. Are you going to buy a negative yielding government bonds, Chinese real estate, where pray tell are you going to park money. Maybe some folks think that owning oil and gas reserves in the most business friendly states, in a country that has strong private property rights, in the most economic LTO plays demands a “premium” to other alternatives. There is a place for PM’s, but they do not provide income. Now lets think, what commodity will ALWAYS be in great demand, provides liquidity and income over a long term horizon. Yea that it, oil and gas? I could go on and on, but sometimes “follow the money” does make sense, like after the biggest oil and gas bust in recent history. You don’t make money when it becomes obvious to everybody?
TT. I don’t completely disagree. However, this acreage is selling/valued high. I don’t see where the bargains are.
I do agree with lack of alternatives. During the oil bust, we have also had a bust in many food commodities. Corn, soybeans and wheat have all fallen sharply. Yet farmland is not far off the highs of just a couple years ago.
Farmers are looking at year three of little to negative on their income statements.
Funny thing, however, is that the few farmland REIT’s have not fared so well. That is despite them paying fairly high dividends.
Farmland tougher to hype than oil, not a “get rich quick” mentality surrounding US Ag, like there is for US oil.
Chevron and Exxon have LTO options and yet they choose to put there money, a lot of it, into a project where they won’t see returns for 10 or more years.
Maybe they want to invest during a low cost environment and come on production with oil at $120 per barrel?
The Rystad chart does not take into account oil demand growth or outages. Like you, I don’t see where the oil will come from.
Good article in Financial Times on Oil Sands retrenchement, aquisitions, future production…Suncor, etc.
It is a quick and easy read.
http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/news/energy/u-s-shale-cant-feed-us-all-suncor-doubles-down-on-oilsands-future-with-deals-worth-6-billion&pubdate=2016-07-10
My son has an old school buddy who comes from a ‘drilling’ family. His Dad ran entire programs all over the world. The kid was working as a consultant running crews all over the world as well. I think his day rate was in the $1500 range. He bought a house in Calgary at age 25…one of those $500,000 sub-divison specials.
I just heard he bought a trailer and Bobcat and now does mini-excavating. That, might be more of a picture into Canada’s Energy Industry today.
There was a two word phrase that struck my attention from the article. It was towards the end, “cost cutting”.
JIC you not seen the movie THE BIG SHORT , now new on NetFlix. The complexity of financial instruments, deception, corruption, institutional responses and coverup is … well an extreme level of madness , perhaps even ELM … Extreme Loco Madness. Concern is current transparency and the new Lingo. BOE mixing up unlike gases and liquids. OIL a known till you change the “meaning” of OIL, ie. wide API ranges.
Possible that some of these mega institutions are so detached from reality that they make a HUGH mess? Capitalism invisible hand selection process overridden by Government bailouts.
Shall we ever hear pushers of Energy related Instruments refer to such products as “vomit” or dog poo?
Can anyone explain who actually covered the back side of the 2015 Oil Production Hedges? ( SS and all, keep the flashlights out )
Longtimber. It would be interesting to know who is buying all of the dilutive equity in US E & P. For example, PE has raised hundreds of millions several times. Interesting for a company that, by my count, operates just 98 hz Permian wells, to go along with 600+ vertical Permian wells, approximately 75% of which are stripper wells, with almost all of the remaining verticals producing less than 50 bopd in the most recently reported month.
PE has to be getting all the money based on having a large acreage position, and the belief that oil prices are headed much higher, and will stay high long term. IMO the majority of both their vertical and hz wells are challenged at $45 WTI and $2.75 gas.
The Spraberry has a long history, discovery well dates to 1943, the first Spraberry boom occurred in 1951. Initial EUR from those days turned out to be overly optimistic, as wells then had high decline after high IP.
The Spraberry has been economic in times of high oil prices, there was a boom in Spraberry development in the 1970s – early 1980s. The Spraberry again boomed in 2005-2008.
The current debate is not new, the question is whether hz wells with modern completion techniques will be able to somehow solve the problem of quick, steep production declines.
Mike has Spraberry operating experience. He has a lot of first hand knowledge about vertical Spraberry wells.
It is interesting that PE, EnCana and others are still drilling vertical Spraberry wells in addition to hz.
It does appear there is IP improvement in these wells, but need more time to see what the reasons are, and more importantly, whether same will result in long term higher production rates.
Longtimber, on your other point, it is also surprising there was not more counter-party failure on oil hedges in 2015, considering that WTI halved.
Additional on PE (Parsley Energy).
Based on Q1 reported production, the have an enterprise value of about $177,000 per flowing BOE. That is a very high price, not many sales were seen above this amount during 2011-14.
They have about 102K net acres in the Permian as of Q1 end, with about 75K of that in Midland Basin. They estimate they have about 2,700 locations for hz wells, plus another 150 for verticals. I assume that is a separate well for each zone, as I doubt they could otherwise fit that many wells in 75K acres, given the well depths and lateral lengths.
PE hedges, they picked up about $11 per BOE from derivatives in Q1.
Will be interesting company to follow in that they are completely in Permian.
Interesting Shallow, thanks.
Raw Energy just released an amazing article on SA with detailed info on many E&Ps:
http://seekingalpha.com/article/3987205-e-and-p-mid-year-2016-financial-overview-stats-folks-part
Enno: That article, plus the one tomorrow saves a ton of time sifting through 10K and 10Q.
After reading through the Q1 data, why would anyone think that US E & P is getting ready to turn the corner.
A lot of well head prices are back below $40. Simply does not work.
Thanks Enno,
Interesting article.
here is the part 2:
http://seekingalpha.com/article/3987208-e-and-p-mid-year-2016-financial-overview-stats-folks-part-ii
The Big Short was not comprehensive. Oil scarcity is driving choices that are not choices. They are required actions.
The film did not note HFT having become so large a proportion of trading volume. Nor did it talk about the eventual QE bandaid.
Oil scarcity is deflationary. Think on that.
Opec June production said to be up 300,000 bpd according to Platts survey.
http://www.prnewswire.com/news-releases/june-opec-output-of-3273-mil-barrels-of-crude-per-day-highest-since-aug-2008-sp-global-platts-300296516.html
Biggest change is Nigeria net increase of 150,000 bpd on the return of Qua Iboe exports.
Also, Niger Delta Avengers report blowing up the Qua Iboe 48 inch export line today.
http://www.reuters.com/article/us-nigeria-delta-exxon-mobil-idUSKCN0ZR2M9
Qua Iboe exports are supposed to be around 300,000 bpd, I’m not sure if the reported June increase of 150,000 bpd is half a month or something else. At any rate, it seems the Opec increase will not last long.
Also, Venezuela’s reported production for June was down another 120,000 bpd.
Exxon says their pipeline was not attacked.
http://www.reuters.com/article/nigeria-delta-exxon-mobil-idUSL8N19X5NR
No one seems to know. I suppose we shall see in a day or two.
http://www.digitaljournal.com/news/world/nigerian-militants-claim-they-blew-up-pipeline-but-who-knows/article/469785
Like the gadget in your pocket. – Your next ride built by Flextronics or Foxcom? Incumbents and Oil Demand in a Death Spiral?
“Mr. Cox also examines the economics of selling (as opposed to producing) EVs from the standpoint of the incumbent auto companies, and concludes that, once consumers have the option to buy a compelling EV, and are able to comparison-shop between electric and fossil-fueled options, the Dinos of Detroit could well be sucked into a death spiral, hastened to their extinction by sub-prime leasing.” Video here:
https://chargedevs.com/newswire/how-the-tesla-model-3-could-trigger-the-collapse-of-the-auto-industry/
Amazon is not going to run Malwart out of business. If the retailing industry moves en mass to online, Walmart will just move on line too. Walmart will have the resources and buy any expertise needed to do so.
Most of the electric cars that get built will be built by existing manufacturers who will just switch from engines and transmissions to electric motors and batteries on their existing assembly lines.
My opinion at the moment is that except for TESLA and the Chevy division of GM, the rest of the industry is mostly into electrics right this minute more to LEARN HOW to build them efficiently than to actually try to sell them in large numbers.
The big marketing push will come two, three, four years down the road, when the big boys have all their engineering and manufacturing and supply chain ducks in a row. By then, they will be ready to produce, sell, and service electrics with range enough, at a low enough price, to make it worth their while- meaning selling them by the hundreds of thousands and soon after that, by the millions.
OFM: “the rest of the industry is mostly into electrics right this minute more to LEARN HOW to build them efficiently”
They already know how. Having spent 5 years working in automotive quality management, I can assure you they already know very well how to build EVs. The reason why they are not building them is the uncertainty of the whole business model (evidenced by Tesla’s dismal financial results so far) and especially the battery scalability uncertainties. Let’s see Tesla building those 500,000 cars a year by 2018 as they promised and then the big ones will start paying attention. But we already know those 500,000 are not gonna happen.
Hi Strummer,
You tell me they already know how, and then tell me they are worried about batteries, and the “business model”.
I said” when the big boys have all their engineering and manufacturing and supply chain ducks in a row”. Obviously enough manufacturing engineers know very well how to ASSEMBLE electric cars.
Now as far as Tesla’s five hundred thousand go, I strongly doubt they can ramp up that fast myself, but otoh, as Yogi ( ?) said about Mickey waving his bat at the way off right field grand stands, “It ain’t bragging if he can do it.”
Musk has a most extraordinary record of getting it done. Maybe he will only manage 200 k in2018. That would still be super results, and an extraordinarily high rate of growth, considering the industry and the competition.
Of course Tesla bashers will see such awesome growth as nothing less than miserable failure.
Let’s see how well that battery factory does. Considering that Panasonic is in for half iirc, it ought to be one hell of a success in terms of building good batteries economically. If anybody knows the electronics manufacturing and assembly industries , it’s Panasonic.
Maybe, just MAYBE, the management at the other big companies, other than Tesla and Chevy, are thinking that it’s just not TIME yet to push really hard on electric car sales. They want to have established models and established relationships with suppliers and they want all the expertise they can accumulate, as I see it, but they don’t really want to sell a LOT of electric cars at the moment, as I see it.
The business model is still green,and needs a few years to ripen up, is what I am trying to say.
This IS a peak oil blog, it says so right up top.
My personal opinion is that every top level exec at every car company is quite well aware that oil may be back at a hundred bucks in the near future.
The real cost of electric cars, the constant money costs, will be coming down, even as the constant money costs of building conventional cars holds steady or rises.
The auto industry is mature, except for going electric. That’s where nearly all the potential lies for reducing current costs.
“The auto industry is mature, except for going electric.” Imported Pickup’s are non existent due to tariffs, so in the US we are stuck with over-sided expensive Junk. A Truck with an Automatic Transmission with 900+ parts Inside. Nonsense
What I’m saying is that it’s not about engineering or about supply chain efficiency. It’s about proper returns on investments, which, looking at Tesla, seem to be pretty much negative. And even if oil goes to $150, those returns may stay negative, because the overall economy will tank.
Every week, natural gas storage build continues to be less than last year. http://americanoilman.homestead.com/GasStorage.html
EIA recently put out a short report on US stripper wells, which are defined as producing less than 15 bopd.
Estimate about 380,000 stripper oil wells produced about 935,000 bopd in 2015, or at least that is what the graph appears to show.
10% of US production, down from 19% in 2008. The remaining 90% comes from about 90,000 wells which produce 15 bopd, or more, each.
shallow sand,
935 kb/d is 2015 average. Would be interesting to know, how stripper wells production changed from early 2015 to mid-2016. I guess most of the decline in Lower 48 conventional onshore production was from stripper wells.
AlexS. I doubt this to be the case.
I suspect stripper well production could be lower in 2016 than 2015, however, remember that non-stripper wells convert to stripper wells in fairly large numbers every year in US. There are many horizontal wells that are already stripper wells too.
I am guessing a good chunk of 2015 to 2016 decline came from conventional, as very few new conventional wells have been added.
Does that make sense? In other words, I have no doubt the stripper wells from 2015 have declined quite a bit more than usual, but there will also be many “new” stripper wells added to their ranks in 2016.
I tend to think of the decline in US conventional to be substantial, but I think EIA believes “LTO” is falling too, and I think Enno’s data agrees with that.
One example is ND.
It appears to me that, for horizontal wells in North Dakota with first production of 1/1/2006 or later, just a few shy of 1,000 produced 450 bo or less in April. That number climbs to just shy of 3,400 wells that produced 1,200 BO or less in April. Due to high operating costs, ND considers the later strippers for purposes of various rules. I assume a number of those at 15-40 bopd wells will join the stripper well ranks each month.
We have discussed “fat tails”. I am yet to be convinced they exist in large numbers. This is why I doubt EUR claims.
One more thought. When WTI averaged $33 in Q1, many stripper wells were shut in. Some of those I am sure resumed production in Q2.
I do drive by many wells that have been shut in since 1/15. More that were shut in since last fall.
shallow sand,
I have seen reports that shut-in stripper wells could reduce U.S. production by some 200-300 kb/d.
As I understand from your post,
1) stripper well production proved more resilient;
2) at least some of shut in wells are returning to production.
AlexS. Not sure if more resilient. My point is that strippers are added all the time, so even a bunch of stripper wells are shut in, many previously non strippers become strippers every year.
I think a lot of US stripper wells are fine at $40s WTI, at least not negative. $30s is tougher and I suspect $20s causes majority to be uneconomic.
This will be having some effect on natural gas markets in the eastern US.
http://e360.yale.edu/digest/tax_credit_solar_growth/4760/
And this one may be having some effect on Venezuelan oil production.
http://economictimes.indiatimes.com/news/international/business/citibank-to-close-key-venezuela-payment-account-venezuelan-president-nicolas-maduro/articleshow/53166578.cms
Maduro just named the defense minister, Padrino López, to be Shogun. Padrino will use the military for just about everything. This is probably the result of instructions from Raúl Castro.
Citibank announced it will close the Venezuelan Central Bank and Bank of Venezuela accounts within 30 days. They cited excessive risk.