176 thoughts to “Open Thread Petroleum, April 20, 2018”

  1. “the Wall Street Journal reported that “energy companies [since 2007] have spent $280 billion more than they generated from operations on shale investments, according to advisory firm Evercore ISI.”
    Profit is no longer necessary?

    1. How does that compare to the gross intake and net profit of these companies?

        1. Hightrekker,

          Yes… the Shale Energy Industry is a Ponzi Scheme that would make Bernie Madoff jealous. While Bernie defrauded investors by a sum of $65 billion, that pales in comparison to the $250+ billion by the Shale Energy companies.

          The Shale Energy Industry and Wall Street have come up with an ingenious plan to continue producing unprofitable oil.

          HERE IT IS… they use SNAKE OIL type salesmen tactics by getting unsophisticated investors to fork over $billions a year, but only have to pay a small percentage as an annual INTEREST EXPENSE. These companies and Wall Street realize investors will never see the return of their capital, but what the HELL, this sort of financial crap has been going on forever.

          So, the Shale Energy Ponzi Scheme continues until oil prices really fall and it makes it difficult for these shale companies to service the interest on their debt. The only shale play that is seeing real growth is the Permian.

          But, like with all gold rushes, there’s a huge spike and then rapid decline. So, make sure if you are invested in these PONZI SCHEMES that you know when to sell before the SHYTE hits the fan.

          steve

          1. Profit is not a requirement, as anyone can see from the financials.
            This can only last for so long, but it has been going on for quite some time.

    2. Let me work out some rough numbers for you: say shale production is 5 mmbopd, and that stream will produce 7 billion barrels. If the cash out is $280 billion, then we divide 280/7 and get $40 per barrel CAPEX. If the opex is $20 per barrel then there’s a tiny return when price exceeds $60. Evidently we have to account for the discount rate, royalties, etc.

      So now somebody has to figure out if the remaining developed reserves from all those wells are 7 billion barrels and correct my figures. And this is one reason why my model says the industry should run its economics at $68 and up. There’s no way these guys can survive at low prices. Most of them are PowerPoint types, I’ve watched them over the last decade, and they don’t really have much that’s new. They are LEARNING what was already known or should have known. That’s all.

      1. Oil prices fell from over $100 in 2014 to less than $30 due to OPEC abandoning it’s long term policy of restricting production to maintain a reasonable price.

        Demand is rising and in a few years production will not be able to meet this demand.

        https://www.reuters.com/article/us-iea-oil/global-oil-demand-picks-up-but-still-lags-rising-supply-iea-idUSKCN1GR123

        At $80 per barrel shale is is profitable at $100 per barrel, shale companies will be making $180 billion per year and easily pay off that debt.
        Some have gone under but companies with deep pockets will make it through.
        Shale oil is here to stay and with over 40 countries past peak will be a good earner for many people.

        1. Peter Wrote: “At $80 per barrel shale is is profitable at $100 per barrel, shale companies will be making $180 billion per year and easily pay off that debt.”

          Wouldn’t recommend betting the farm on those assumptions. First off the debt bills are coming due starting in 2019 and peak around 2022 or 2023. Interest rates are rising and shale drillers may not be able to afford to roll over their debt, if interest rates continue to rise.

          I doubt $80/bbl is sustainable due to excessive global debt loads. Back in 2008 the debt bubble popped causing Oil prices to collapse to about $30/bbl. Since than consumers, gov’t & business went on a borrowing binge instead of using the lower rates to paydown debt. When borrowing rates for businesses & consumers dropped from about 7.5% to about 3% it basically permitted them to double their debt load. However, rates are unlikely to go to zero to permit the the debt bubble from getting re-inflated the next time, unless Central banks start handing bailouts to non-financials & consumers.

          Then there are demographics. As Boomers retire, stop paying taxes and start drawing entitlements & pensions its going to force companies & gov’t to increase taxes/prices as well as downsize jobs to pay for the much higher outlays for pensions & entitlements. This will certainly cause a decline in energy demand: smaller laborforce & higher tax loads. There is not a day in the news that doesn’t have an article about serious gov’t\private pension funding shortfalls.

          Third, Most shale drillers were unprofitable when Oil was $100/bbl. They simply borrowed for CapEx & OpEx spending. To this date they continue to borrow money to keep operating. I am not sure if higher Oil prices will help that much.

          Peter Wrote: “Some have gone under but companies with deep pockets will make it through.”

          None have “Deep Pockets”, all of them hang on with cheap and easy credit. The weaker players simply didn’t have the means or desire to borrow as much as the remaining players. Shale drillers did most of their profitable drilling on Wall Street, not in some holes in the ground.

          “Shale oil is here to stay and with over 40 countries past peak will be a good earner for many people.”

          Companies like Sears managed to hang on for more than a decade while remaining unprofitable. Sears should have been liquidated more than 5 years ago. A lot of people are going to lose big money on propping up Sears.
          My guess is that sooner or later Shale drillers will start sell off assets, probably beginning sometime between 2019 and 2021, depending on interest rates, the global economy and their ability to continue to borrow.

          If Shale was such a great investment, The oil majors would have jumped in. It would be like Microsoft & IBM never bother to invest in Internet based technologies.

          1. Techguy

            Global debt is a huge issue but it is not debt per se that caused the financial crises of 2008. What caused the financial crises was vast amount of money lent to people who had no jobs or little ability to pay mortgages. The dirty financiers who turned worthless mortgages into so called AAA securities allowed this to go on for years.

            Debt can be a very good thing. Few people could buy a home without debt. Companies buy new premises and machinery with debt, in order to produce more and better quality products.
            It is all a question of how much debt and what that debt is used for.
            The shale oil and gas companies invested in a new technology which has considerably increased U.S. oil and gas production. They were not to know that Saudi Arabia would embark on the mindless policy of producing all out and collapsing the oil price a policy that has destroyed global oil and gas exploration and has set us up for another oil price spike and global recession.

            The shale companies produce 5 million barrels of oil a day. If even half went bust the oil prices would be hitting $100 and the others would reap the benefits. Even at $120 oil is cheap,being only 6% of global GDP. For $6 of every $100 spent all our food and goods are transported. All the planes, cars and ships moving everyone and everything around the world. Crops planted and harvested.

            If Americans drove smaller cars, no one would complain about $120 oil.

            1. I cannot resist commenting on this conversation. Tech guy is correct on all fronts. The Moody’s ratings, the credit score, for most shale oil companies, even the good ones, is so bad they could not legally buy a pickup truck without needing a co-signor. As their debt maturities are refinanced and pushed down the road, interest rates are as high as 6, 7 and 8% and going higher. Reserve assets were vastly overstated from the get go, both to lenders and the SEC; some of us have known that from the beginning, possibly by a factor of 2. Seventy five percent of America’s shale oil wells now produce less than 50 BOPD and decline at the rate of 10-12% annually. If shale oil reserves were now re-audited, using proper DCA and not type curves, assets would realistically not come close to covering loans.

              Borrowing money, debt/credit, to finance the drilling of marginally (un)profitable oil wells that decline at 27% the first 3 years of production life, then 10-12% thereafter, only works if you are incredibly disciplined as to debt management. Obviously it has not worked for the US shale oil phenomena, for total lack of discipline, and it will not work going forward short of $100 oil prices, sustained over a long period of time… and then only at the expense of growth. Debt is never good in the oil exploration and production business; one’s assets begin to depreciate the day that well goes on line. Shale oil is not the same as borrowing money to build a tire plant, or to buy a pizza store.

              The shale oil industry is using old technology that is 40 years old or more. It tweaked it, that’s all. Stuffing more sand into longer laterals is not a miracle of technology. The shale oil industry did not “invest” in technology. It bought millions of acres of leases at stupid prices, using borrowed money, and drilled a ton of wells that will NEVER pay back leasehold, drilling and completion costs, on borrowed money. It has tens of thousands of wells now making less that 50 BOPD that have not been paid for, yet. At $35 net back oil prices, after all costs are deducted, the public US shale oil industry alone must produced 8G MORE barrels of LTO, just to get out of debt, just to get back to even. That is about what it has produced in the past decade.

              The LTO industry thought prices would stay above $100 forever and they could muddle thru their business model. They forgot about keeping the world oil market balanced and shot themselves in the foot.

              OPEC has absolutely nothing to do with the shale oil industry’s financial failures. Prices collapsed in 2014 and a lot of us could see it coming as early as 2013. OPEC began its goal to re-claim market share in 2015, after the price collapsed. Google it. NOW, OPEC and Russia, since October of 2016, have been trying to cut their production to stabilize prices, the US shale oil industry, on the other hand, is defiantly still growing, still borrowing more money, on the backs of worldwide production cuts. Prices are, accordingly, still very volatile. Price instability and fear that the US shale oil industry will do, is doing, the same stupid things again is what has, and is, destroying the rest of the world’s ability to maintain production rates.

              People have, forgive me, a very distorted picture of shale oil in America. I am often astounded at how few people realize how unprofitable it is, how little there is of it, and how detrimental debt is to its future. You can run facts, date lines, do basic economic calculations in crayons on the sidewalk and they refuse to accept it. Judging the success, or failure, of this oil play by its production rates, that decline so steeply, is really dumb. Its reserves that matter and then only if there is CAPEX that can be borrowed to develop those reserves. Cheap oil is good for consumers, shale oil E&P’s are good for day traders at Seeking Alpha, the business aspects of it are completely overlooked. Its a miracle of abundance and that is as far as most people can think. Not everybody, thankfully, but most, unfortunately.

            2. Thanks Mike,

              I mostly agree, but lack of oil supply may drive oil prices up to $100/b (in 2017$) by 2020, even if LTO produces are not very disciplined, high oil prices might allow the better run (those who are more disciplined) companies to make a profit.

              Eventually investors will recognize the good companies and more debt for the less well run companies will dry up and they will enter bankruptcy. The better businesses can buy up the better assets at bargain prices and life will go on.

              Interest rates are gradually rising, that will also result in better discipline. The US government would be wise to raise taxes rather than reduce them (and thus reduce the national debt) so when the next crisis hits there will be room to use debt to reduce the extent of the crisis (as was the case in 1933-1945 when government debt got us out of the Great Depression).

              In fact a good compromise between the right and left might be to institute a hefty carbon tax (which the left might like) and require that all revenue be used to reduce the national debt (which those on the right may like).

            3. Mike

              What you are saying about OPEC boils down to this.
              They consider market share so important that they were prepared to sell 33 million barrels per day at $55, rather than 29 at $115.
              Lets do the maths.
              29 million multiplied by $115 is $3.3 billion revenue per day.
              33 million multiplied by $55 is $1.8 billion revenue per day.
              Do you seriously think OPEC increased production which could only drive prices down to record lows, losing $1.5 billion is each day, just to gain market share?
              I think I will stick with believing their aim was to destroy the shale industry and not play Father Christmas to their customers

  2. Chart from Dean Fantazzini, thank you Dean.

    Estimate is for Texas C+C output in barrels per day and is based on Texas RRC data and how it changes from one month to the next. All data uses data going back to April 2014, the “last month” estimate is based on the changes from last month’s RRC data and the most recent month’s data and seems to match the EIA estimate fairly well through Nov 2017 with some divergence in Dec and Jan.

  3. Question for especially for all the really smart oil people on this website. I have read for probably the last 3-4 years how unprofitable the oil shale and gas drilling business has been, including bottlenecks in the Permian basin. Yet production continues to increase! I have no investments in the oil business so have no dog in this fight if you will. What am I missing here? Just asking for some insight.

    1. Study oil industry credit ratings, and how they changed since the Fed created money equal to 22% of US GDP since 2009.

      Synopsis: banks lend money. If they lose money on those loans, they will have it replaced.

      And if you really want to get macro, have a look at what the dollar value is of 2.5% GDP growth. Then look at the US budget deficit magnitude.

      It nearly all comes from deficit. For oil, think a lot more about geology than dollars, because if you have to have it, and you do have to have it, you’ll get it, regardless of what dollars say.

      1. Yeah, and the oil companies are not thinking the price increase is as unrealistic as Trump thinks. It needs a higher price with higher costs. It’s all risk/reward in this business with bust and boom times. They have just completed four years of bust time. It will come back at least one more time.

    2. Doc Rich,

      EOG made money last year (2017), so the better companies are doing ok (or at least net profits are positive), they lost money in 2015 and 2016 though. I just picked a company touted as “very good”.

      Lots of companies no doubt lost money in 2017.

      1. Doc Rich.

        Make sure when you look at earnings per share for 2017 you subtract out the one time effect of the “Trump” tax cut.

        Not sure I am able to explain it well, but dropping from 35% to 21% caused companies to recognize a ton of income for GAAP purposes.

  6. https://www.epmag.com/after-25-billion-barrels-eagle-ford-has-more-oil-coming-1672101

    Refreshing getting info from somebody at Drillininfo. Eagle Ford not quite dead, yet. Higher oil price will slow decine curve. In his description of the 30% drilled area, the averages of peak 367 hide a wide variety of median peak. There are many areas like mine that go 800 to 900 median peak, that are averaged with really low first month median peak. Some of the lesser may just stay in the ground. Of course, the same is true of the better average of 922, although almost all of that will be drilled.

    1. 2.5 Gb produced, 2.1 remaining, but the total is going to be 20 Gb – how does that work.

      And: The industry has drilled up to 90% of the best grade rock, but only about 30% of the largest tranche of mid-quality rock. Median peak rates for the best rock average 922 barrels of oil equivalent per day (boe/d) across 2,000 wells vs. 367 boe/d in mid-grade rock across more than 5,500 wells. The highest quality rock has about 230 locations remaining vs. more than 13,000 locations for mid-grade rock. Depending on future well spacing, the Eagle Ford is either a third to a sixth developed in terms of well count.

      But the remaining 2/3 to 5/6 are at best about 40% as productive as the stuff so far developed – which doesn’t seem to correspond to either the 2.1 + 2.5 or 20 Gb number: 237 wells at 150 mbbls is only 35 mmbbls, 13000 at (say) 100 mbbls is 1300 mmbbls, plus run down on whats on line would give (say) 2 to 2.5 = about 4 left to come

      1. Agree, that’s probably some reporting problems on what he actually said. But, I follow the area and the wells drilled. There are a lot of areas that are not quite as good as the Karnes Fault area, that still get some very good median peak rates that are only slightly under the Karnes Fault area. Then there are really doggy areas, and areas in between. The 2.1 number looks reasonable.

        1. 2.1 Gb left is a lot less than even the 1P 2016 estimated reserves that EIA published earlier in the year, which were 4.2 Gb, and would give a lower total production by about 40% than the David Hughes 2012 estimate in “Drilling Deeper”. A similar reduction for Bakken on his numbers would take the total to around 4.0 to 4.5. Those numbers are more in line with Laherrere estimates, but I think they must be too low just based on the run down from normal decline of the developed and on line wells.

          1. It hasn’t performed to original expectations, and I doubt any of the shale would meet EIA’s projections. A lower number does look more reasonable to me, but that’s just me. I remember back in 2012, the story line was you could drill just about anywhere and get a profitable well. Not. They projected the production on these wells out to thirty years. How stupid, and they are still doing it. Five or six years, and you have a stripper well in many cases. If it doesn’t cover the capital cost the first year, you may have a not so productive well. I’m pretty sure that’s how EOG developed their guideline on the price of oil, and where they drill. In a nutshell, that’s how a lot of these companies lost money. EOG was sitting on a lot of wells that could have been ok at $90, but when it dropped to below $40, they had to have lost money. They revised their tactics, others did not.

            1. I’d agree from the little I know of it, and DrillingInfo would seem as likely as any to get it right with the most up to date and complete data, so it’s a pity the article wasn’t a bit clearer. Maybe he meant 2.1 Gb for EF but 20 Gb for all LTO in Texas. That would be in the right area, but still looks a bit low. As usual in any such article these days the mix of oil and gas just adds to the confusion.

            2. My guess is the proved reserves will be pretty close, possibly too low. Generally to be booked they are supposed to have 90% or greater probability of being produced.

              So an ERR of 6 Gb would be the minimum for Eagle Ford. For Bakken about 2 Gb was produced through the end of 2016 and 1P reserves were about 5 Gb., so there the minimum will be 7 Gb.

              More reasonable estimates (assuming 2P/1P=1.3) are 8.5 Gb for Bakken and 7.2 Gb for Eagle Ford, if no more discovery or reserve growth occur in the future.

              Even 8 Gb for Eagle Ford and 10 Gb for Bakken are possible with high oil prices (over $100/b).

            3. Looking at US tight oil 1P reserves in 2015 and 2016, they increased by about 5.3 Gb (when output in 2016 is deducted from 2015 reserves) from 2015 to 2016, most of this reserve increase was in the Permian basin (87% of total increase.)

              If we assume 2P/1P reserve ratio is about 1.5, then US tight oil 2P reserves increased by 7.3 Gb in 2016.

              Unfortunately we don’t have a good estimate of US 2P tight oil reserves. The median 2P/1P ration for the United Kingdom from 1973 to 2015 was 1.7 with a range of 1.3 to 2.6 over that period.

              Also at the end of 2016, US tight oil 1P reserves are about 15 Gb and all US C+C reserves were 35 Gb, so about 43% of all US C+C proved reserves are tight oil reserves. About 53% of US C+C output in Jan 2018 was from tight oil, RP ratio for tight oil in 2016 was about 10 and for not tight US C+C was about 11.

    1. Good info. ExxonMobil pulled out of or was kicked off the original mega project (12 mmbwpd – would have been second only to Saudi’s) in 2012, and then looks like they were asked back in, and now out gain. BP and Eni were developing some smaller projects for their own fields but I’ve not seen much in the news of progress. Statoil and Shell gave up and left Iraq. If the fields need that much water injection they must be gradually reducing in recovery factor if they continue to be pulled on without voidage replacement, especially as they are developing heavier oil now.

      1. Thanks George. I was very surprised to read that. Most of the info i’ve been getting from the mainstream was that Iraq has vast reserves as quoted by OPEC and they can even ramp production to above or the same level as the Saudis.
        As you stated, if they need that much water injection, the pressure must be dropping quite rapidly as the field depletes. So who knows what is going on there really. And who can believe these OPEC reserve estimates?

        2. Lets say the water is intended to water flood fields producing 3 million BOPD. Assume the oil volume factor is 1.2, then to keep pressure steady they have to inject 3.6 million Bwpd. But a water flooded reservoir produces some water, let’s say the estimated water cut is 20%. This means the fields produce 1 barrel of water per four barrels of oil. Thus the total volume injected has to be 4.5 million Bwpd. I don’t know what the water flooded fields produce, nor do I know if they intend to reinject some produced water, but it seems reasonable to design the system to take 5.5 million Bwpd, and then clean up and reinject produced water as water cut increases. I assume scaling can be controlled.

  8. Sorry, Barclays Here’s What You Got Wrong In Your Oil Forecast

    In a note last week, investment bank behemoth, Barclays said it expects Brent crude to average $68 a barrel in the second quarter, but sees crude prices collapsing in the back half of 2018.

    According to the report, Barclays believes the market has already priced in reduced output from Venezuela, and that the impact of renewed geopolitical tensions have been exaggerated.

    “In our view, we think prices are skewed to the upside this quarter, but we’re looking for a correction as we go into the second half of the year and into next year.”

    It forecasts the price of Brent will average $63 per barrel this year and $60 per barrel in 2019, approximately 12% and 16% lower than its current price.

    Looking at the report myself, I couldn’t help but shake my head.

    Simply put, Barclays couldn’t be more wrong.

    In fact, I’m expecting at least a 30% increase in prices from here.

    Looking at the energy market landscape over the next few months, what’s truly exciting is that in the four decades of my career as an energy analyst I can confidently say that oil prices will hit $100 (or beyond).

    I will have to agree with Dr. Kent Moors of “Oil & Energy Investor” here. I think oil can only go higher.

    1. While I agree with his conclusion, the rationale will be supply/demand by year end. Sauds will push it along as well as they can, but it will be the almost 2 million barrel a day draw that will seal the fate. If they declare the “cut” dead, then they could only knock off about a quarter of that, and Venezuela will keep dropping. Looking at IEA’s projections and correcting it. They start off by admitting there will be a .6 million daily draw. There will only be, at the most, a .9 million increase in supply vs a 1.8 million. Their 1.5 million increase in demand is tradionally low. Some say 1.7, and some say closer to 2. So, .6+.9+.2=1.7 million daily draw. Very roughly, but possibly 2. My guess. I could be a half million barrels over, but it would still drop like a rock. That is leaving China out of the equation, entirely, and the IEA hates to consider decline rates with any seriousness. Sauds would love to see that happening, but they are not the cause.

      And that’s not the wildest guess. I read where one person predicts a 2.5 million barrel a day draw by year end. In two years, there wouldn’t be much left of OECD commercial inventories. Maybe I should change my posting name to Chicken Little.

      That carries over into 2019. Let’s say we wind up at 1.5 million short. Demand increases again by 1.5 million, and we need 3 million to cover it. Sauds can add .5 million more, the US is slowed up until second half on the Permian, but with others they could get 1 million more. Canada could clear up some pipeline issues, and Russia could add some more, but I think we could still be shy a lot. Just guesswork, but doesn’t look promising.

      1. Guym,

        Let’s assume you are correct about supply demand balance at $70/b. I agree oil price rises, but eventually this tamps down demand growth. Not sure what oil price balances things as supply will take some time to increase, maybe $120/b?

        1. Surely not much change in 2018, because it will take some time for price to rise much. I only used 1.5 for 2019, but even if you cut it to 1, then we are still behind.

          1. Then the 2019 amounts I put forward have no decline figures. I am not sure how well IEA factored in 2018 declines, the exercise assumes everything but the additions in demand and supply are correct. They have been correcting this since January, so we know the 2017 was off. January was warning about a new glut, and April tells OPEC mission accomplished, and that we will be drawing inventories by .6 million a day. That’s after they upped demand. The figures I put forth for 2019 are incorrect, but conservative, based on current conditions.

            But, I have been reflecting on exactly how it would ever catch up from this point, forward. Substantial decrease in demand? Do we switch from keeping up to demand to just keeping up with decline? Seems like we are pretty close to peak. I think peak demand equals peak supply.

            1. But I did not answer your question on price vs demand. That will be determined at the refiner/consumer level on product pricing. Both will be affected. I have no real guess on that one. If they can’t sell the product, oil prices will go back down. But, they can’t just make one product.

            2. Guym,

              Thanks I don’t know the answer either. In any case higher prices will increase supply and decrease demand relative to lower prices. The price where the market balances is difficult to guess, mine is $120+/-20 per barrel.

              If stock draw is zero then peak supply=peak demand, I forget which side of the supply demand equation stock draws are on (consumption makes sense to me), but in theory supply is always equal to demand, so peak supply is the same as peak demand if the theory is correct.

              In my view peak crude plus condensate output is what concerns us, also we have pretty good data on output so the picture for historical output is relatively clear.

  10. The urban development model of São Paulo needs to be reversed

    “This article aims to point out some of the main changes needed in São Paulo’s development model… The continuance of the model that has guided urban policies in the city for decades – based on the unlimited expansion of the urban footprint, on the primacy of the automobile, on increasing soil imperviousness, on the depopulation of consolidated regions, on ingrained but outmoded processes of real estate development, and on the creation of outlying peripheries lacking infrastructure, services and jobs – will lead the city to an unsustainable situation, aggravating its already existing chaotic conditions… consistent alternatives do exist, but… their implementation would require increased participatory planning and societal mobilization, because changing a deeply ingrained model runs counter well-entrenched vested interests…

    The model of low density gated communities is spreading exactly in this region, tending to eliminate a greenbelt that still exists around the urbanized mass. The process will contribute to global warming, to change in water behavior, with serious consequences for water supply and the worsening of floods, besides promoting the way of life based on individual cars, the only way to access these communities. This urban model is incompatible with public transport…

    Reducing inequalities also means bringing housing, including social housing, closer to workplaces and facilities…

    That would enable reducing commuting needs and time, thus reducing the need for cars and motorized transport.“

    Increasing the Capacities of Cable Cars for Use in Public Transport

    “Cable car transport has many advantages compared with other modes of passenger transport, such as clean electricity drive, high levels of safety for passengers, and quiet operation. The most important characteristic is that cable car transport can be installed in the air over streets in urban areas, independent of congestion…

    This paper has demonstrated that cable car transport can become competitive with other types of passenger transport in urban areas. With additional platforms in gondola stations, it is possible to achieve reduced distance (intervals and spacing) between vehicles on the line and increase capacity. In this way, the necessary surfaces for passenger entry and exit in the cabins increases, which is necessary for passenger transport with large capacities…

    Gondolas also have advantages because of smaller vehicles. This means that at intermediate stations on a line, it would not be necessary to stop all cabins, but only those in which passengers would like to exit; other vehicles could freely travel to the other stations. Gondolas with two platforms in a station with twofold greater capacity would be more expensive but not twice as expensive as existing conventional gondolas with one platform. The price for a mono-cable gondola with two platforms in a station would be $11–20 million US per km…

  12. Hi I would like to know why Canada cant avoid the global peak for the next decades. They say that the limit of tarsands is nearly at 5 bbd. But why? What prevents an increase to 30 or 40 bbd?
    I mean it serious. The tarsands are produced in open cast mining so where is the problem in building right to the existing upgraders and refineries just another one and so one? Increasing the production 10 times would consume 10 times of soil and reserves, i know. But why shouldn it be possible if they realy want? Where is the bottleneck?
    And pls dont tell me that they dont have the pipeline capacity or a lack of workers or stuff like that. These are all problems that can be served. So i think that if they realy want they could raise the production to the sky. It would be the super catastrophe for the environment but it seems to bee possible for me.

    1. There aren’t many undeveloped mining sites left. Most recent projects use SAGD, future ones may need more exotic recovery schemes still. At 30 mmbpd, I think that was what you meant, their reserves would be gone in about 10 years. It take at least 5 years to design and build a major oil sands project, maybe more when new upgraders are needed, and there isn’t the resources in Canada to do more than 3 at a time if they run exactly concurrently, probably less after recent downsizing. It also takes a lot of natural gas to operate (EROI may be as low as 3:1 by some estimates, and reducing as the best reserves get exploited first, much of the profit for a oil sands barrel is simple energy arbitrage as the oil is worth more than NG).

    2. There are many short term bottlenecks and long term limits (energy input is one, see below) that make it difficult to scale up production of heavy oil in Canada. In addition to pipeline issues, environmental approvals also take time. Alberta approved three projects in 2016. The biggest of the three (Blackrod) took many years to get approval and has not moved an inch forward since (low oil price, lack of pipeline capacity, lack of interest from external investors). It will take time for upstream to turn around if/when sentiment change. Canadian regulation is a bit of a mystery and I don’t know if current revisions are done to make it easier or more difficult for oil investors. It seems Trudeau’s original idea was to have a carbon cap (emission trading scheme) and allow oil sands to expand their business and pipelines as long as it was profitable.

      This was published in 2007 (probably written in 2005/06), i.e. before shale gas in N. America: “There is not a large enough supply of natural gas to support a future Canadian oil sands industry with today’s dependence on natural gas. It is possible to use bitumen as fuel and for upgrading, although it seems to be incompatible with Canada’s obligations under the Kyoto treaty. For practical long-term high production, Canada must construct nuclear facilities to generate energy for the in situ projects. Even in a very optimistic scenario Canada’s oil sands will not prevent Peak Oil. A short-term crash programme from the Canadian oil sands industry achieves about 3.6 mb/d by 2018. A long-term crash programme results in a production of approximately 5 mb/d by 2030.”
      from: Soderbergh, B., Robelius, F., Aleklett, K., 2007. A crash programme scenario for the Canadian oil sands industry. Energy Policy 35: 1931-1947. https://doi.org/10.1016/j.enpol.2006.06.007.

    3. It’s cheaper to build nuclear reactors in British Columbia, generate electricity and make hydrogen. Developing 1 million BOPD of heavy crude using SAGD would cost $30 billion and take 15 years, because there are huge system bottlenecks in the supply chain. And we can’t put that stuff in the market without upgraders. Plus we would need natural gas.

      There are very few individuals who have ever put one of these plans together, those of us who have done it can’t conceive of what you propose being remotely possible. It can’t be done.

      1. Hi Fernando,

        What is a reasonable estimate for the URR of extra heavy oil (API gravity <=10) from both Faja and Canadian oil sands combined in your view?

        Jean Lahererrere uses 500 Gb, for reference, it seems based on your comments that maybe 300-400 Gb is more reasonable.

  13. While I do not wish to sidetrack this thread, the recent post by North Dakota state prosecutor, Ladd Erickson from McLean county, describing the DAPL protests, is exceptionally enlightening to anyone seeking truthfulness.

    This is relevant as a follow up to last thread’s dust up surrounding paid protestors. Ericsson’s post is on ‘Say Anything’ blog, linked via Bruce Oksol’s ‘Milliondollarway’ site.

    (Historical events such as 1954’s Operation Ajax in Iran, Victoria Nuland’s recent boast about the mere $5 billion it cost to overthrow the Ukranian government are but 2 of a thousands of years long practice to “defeat an enemy without striking a single blow” as per Sun Tzu).

    Mr. Ericsson’s post is particularly informative if the included links are read/viewed.

    The preposterous narrative of ‘blood from bitten victims dripping from dog’s mouths’ is clearly demonstrated as the staged lie it always was.
    Likewise, the spraying with water to deflect attacking ‘Water Protectors’ is both described and viewable on the embedded video.

    Absent from the post was how Sophia Wilansky attempted to dislodge a truck with a homemade propane bomb.
    While the mishap severely injured this perpetrator, all MSM recounting falsely described the police as probable cause.

    The few Bolsheviks amongst you will shrug off any semblance of honesty in your zeal for control.

    The vast majority of readers to this site may well benefit from the 5 to 30 minute time it would take to learn more of the bigger picture of the DAPL protests … and consider how this underlying deception continues to this day.

    1. Yes, resistance is futile, all will be assimilated, the people’s will is irrelevant. All news will be propagandized and contradicted to the point of confusion. Welcome to Amerika.

    2. coffeeguyzz,

      Hmm, so is your thesis that all protests are fake? Is it possible then that people from both the left and the right try to manipulate the media?

      Who do you think is more successful in this regard?

      Hint: Which party in the US has had more powerful politicians (presidents and governors) from the entertainment industry (actors, reality TV stars)?

      Perhaps everything reported by the media is false and only conspiracy blogs report “the truth”. 🙂

      sarc off.

        1. Really now? Just who are these communists who are taking over the US? Is Trump a communist? Or perhaps it’s congress you are talking about. Who are the communists in the house or senate who are taking over? I really need to know who these guys are Fernando.

          1. I think he may be referring to the people believe that each person should have a vote, even those who don’t own property!

          2. The comunists taking over the US are the ones who brainwash students in high schools and universities, make them into Marxists and identity politics zombies, advocate open borders and illegal immigration to increase the population of left leaning Mexicans and Central Americans. The trend is clear, the USA is bound to fall to a communist dictatorship within three decades.

            1. It’s more a brainwashing of themselves – this political correctness thing has gotten out of control. Like a radical branch of any religious faith.

              Only in this religion the migrant is the messias (in communism it was the worker). And as in every good religion the own life counts nothing on the crusade to the paradise.

              And communism is not what you get – just look to Sao Paulo or Mexico City – that’s what you’ll get. Just another drug+mafia failed state with lots of religion instead of science.

              It’s the dawn of the chinese century. The western states will descent in political correctness.

        2. Such a optimist!
          It appears to me the US is being taken over by Fascist’s.
          Of course, this is coming from someone who left Cuba as a rightwing dictatorship fell, and escaped to a Fascist Spain under Franco—-

          1. I left Cuba seven years after communists took over the island. I was witness to the economic destruction, the abuses, and went to a school where I was taught to memorize Marx and quote Mao. I left on my own because in those days the regime allowed minors to be sold for hard currency. I flew out in a KLM charter with 152 children and four Dutch adults who were our chaperones. When we arrived in Spain the girls were separated, and the boys were sent to a UN financed refugee camp located in Casa de Campo in Madrid. The camp had several buildings which looked like warehouses, were unheated, and had three tier bunks. The day after we arrived we were taken to a building located near plaza de España, interviewed, photographed, fingir printed, and asked to show any documents we had with us. I had my school notes, and that really helped, because i was put on a list of good students very suitable to go to the usa, provided I had a family willing to take me in. The next year I was lucky enough that a middle class family living in the NY Jewish suburbs took me in. So I ended in a nice school, became first board in the chess team, joined the swimming team, etc. In those days I was focused on getting top grades, saving money from my partime jobs, and eventually joining the USA armed forces so I could go kill as many communists as possible. I never gave Franco’s government much thought, but I was grateful they did provide the space and allow the system to get us out. I heard 8000 of us left Cuba using that way out, but I never read anything about us in the media.

  14. An oil crisis may be brewing — and it’s not because of decreasing demand

    Since the beginning of the shale revolution a decade ago, the world has discovered 110 billion barrels of oil. Meanwhile, consumption has totaled 360 billion barrels. This 250-billion-barrel deficit between discoveries and consumption seems sure to grow in the years ahead, given recent oil discovery trends.

    Apologies if this article has already been posted but it’s a good read.

    1. The Comments are Priceless – almost as good as ZeroHedge.
      “Libya is a location not a nation, how can it have a ”national” oil company”

      1. Hi Longtimber,
        Might you have a recommendation for a good electric front-wheel hub for a mountain bike?

  16. Q1 global oil demand growth strongest since 2010 – Goldman Sachs

    2018-04-20 (Reuters) Suresh Sivanandam of energy consultancy Wood Mackenzie said he expected China’s overall oil demand to grow by 370,000 bpd this year to 12.78 million bpd.
    Adding in other regions, Goldman said global oil demand in the first quarter of 2018 is likely to post the strongest year-on-year growth since the last quarter of 2010.
    https://www.reuters.com/article/us-asia-oil-demand-analysis/asian-oil-demand-to-hit-record-but-industry-cant-take-eyes-off-middle-east-idUSKBN1HR16Q

  17. (Meant to post this under Frugal’s post above)

    The article’s author is skeptical about how quickly EVs will take a meaningful bite out of oil demand. I have read on this site many predictions about the growth and impact of EVs. It makes me wonder how many of these writers have actually lived with an EV. I have for almost two years and here’s my take.

    I live in the most EV-friendly place in the nation. I say this for three reasons — the state kicks in an additional $2,500 for the purchase of an EV on top of the $7,500 Federal subsidy. The climate eliminates problems created by very cold and very hot weather. And by far the most important reason, EVs get to use the HOV lane during commute hours. A small additional incentive is the widespread availability of level 2 chargers, especially at work parking lots and EV-only parking spaces at malls (this is actually a big benefit given the difficulty of finding parking at malls).

    Yet, with all these incentives, EV penetration is still relatively small. EVs are not rare, but they are still a tiny proportion of the car population. Every day as I breeze down the HOV lane, I pass thousands of people in bumper-to-bumper traffic. Surely, they can see how much time I am saving. Why are they not driving EVs?

    The answer is not difficult. EVs are a pain in the ass. My Nissan Leaf, when fully charged, has a supposed range of about 110 miles. But, keep in mind that letting the battery get down to 10% full is a nerve wracking experience. I get nervous when it goes below 20%. Then on cold days, which in Sunnyvale means morning in the high 30s to low 40s, the range is cut by about ⅓. I was surprised by that and it doesn’t have that much to do with the heater — I guess it’s the battery conditioning. I can only imagine what happens in colder climates.

    And what happens if I need to unexpectedly make a trip? Suppose I’m at work and I have to pick up my son at school and take him to the doctor? Or a friend calls from the airport and needs a ride? Or any of a million things that might come up? Can’t do it. Period. Just can’t. Sure, DC fast charging stations can bring me up to 80% full in about 20 minutes, but guess what? There are hardly any and they tend to be in use when you get to one and they are expensive.

    Bottom line, you can’t live with an EV alone unless you live a highly restricted and predictable life style. Anyone leading a normal life needs the range and flexibility of an ICE car at some point. So do you buy one of both? That’s what my wife and I did, but that makes sense because she needs a car. But what if you live alone or live in an apartment with no ability to recharge where you park? How much are you willing to bet that you won’t need to make an emergency trip at some point that exceeds the range of your EV? And how about people who live in cold climates where EV range is drastically reduced?

    I have spoken to many EV owners and a lot of them say they will never buy one again. OK, that’s anecdotal, but here’s some numbers:

    “Only 27.5 percent of all hybrid and electric vehicle trade-ins in 2016 have been applied to the purchase of another hybrid or EV, according to a new analysis from car shopping destination Edmunds.com. The rate is a precipitous drop from the 38.5 percent of hybrid and EV trade-ins in 2015, and the findings reinforce a trend first identified last year by Edmunds that owners of alt-fuel vehicles are returning to traditional gasoline-powered vehicles in greater numbers than ever before.”

    https://www.edmunds.com/about/press/ev-and-hybrid-loyalty-falls-to-all-time-low-even-as-overall-fuel-economy-thrives-says-edmundscom.html

    If EVs improve so that a 200+ mile range can be recharged in less than fifteen minutes at a large number of convenient locations, then I think they have a chance of making a big impact. Until then, I see them as a niche vehicle that makes sense for particular people under particular circumstances.

    1. I am a EV owner and agree 100% With the above. As long as the governmont subsidizes ownership I will own one, but it is a major pain in the backside

      1. Daniel, the Evangelitcals believes the “governmont” subsidizes Planned Parenthood abortions. Are you going to get one of those too?

    2. Silicon you seem to have first generation Leaf problems. Along with some observation issues. Clearly the Leaf was advertised range bound with to 110 miles per charge before your purchase and your post should have been placed in the open thread non-petroleum section.

      Also the Chevy Bolt- 238 mile range on a single charge has been around for more than a year, you get what you pay for.

      1. Longer range= longer recharge time. Doesn’t solve the problem. Also, my leaf has upgraded 30kwh battery.

        1. Yea, I ride with a friend in Sonoma in her Fiat EV.
          Fine for around town, and you have the recharge issue in the evening, but you are not going anywhere out of town.
          Get in the ICE to do that.
          I have driven a Prius quite a bit (once from St Louis to Marin in the Bay)– it works.
          As a side note, her Dealer that she bought it from, says Fiat loses 6,000 dollars a car on the purchase.

      2. I’m going to buy my father in law’s 2014 Altea with a small diesel. I converted the mileage to USA units, and it gets 39,6 miles per US gallon. I think I’ll use that for five years, then I’ll buy a plug in hybrid with one of the newfangled diesels which achieve ultra low emissions. The combination of a diesel tank for long trips and having a small battery for short trips is ideal. And the new diesel system allows the car to get the ECO rating for lower cost parking.

    3. SVO- thanks for the perspective on EV’s.
      Do you think that having a plug-in hybrid would change your take on it?
      For example, a Chevy Volt is an upgrade over the N. Leaf in most ways,
      and gets a listed 53 miles on electric, and then an additional 367 miles on its ICE when the tank is full.
      That seems like a good combination for practical purposes. Do you think so?

      1. Plug in and regular hybrids are the best overall answer. Going all electric is a dream.

    4. The Leaf is basically a local car with minimal charge and charge control capability with range less than 50 miles (take given range divide by two which is as far as one can go from home and not get stranded). That article is two years old and now there are vehicles that are in the practical range, though still a bit expensive for what they provide.
      Until a widespread charger network is set up the safe and practical range for EV’s is less than half the stated range. 100 mile safe range is practical for most people but without big subsidies the cars are too expensive. Maybe in two or three years the charge network and lower cost vehicles with range will start to come together. Batteries may give 300 plus range at lower cost by then (150 safe range). If not the EV will remain at a low level of acceptance and retain.

      1. My prediction is EVs will remain a niche vehicle for the relatively well off. Unless there is a game changing technology, and I mean a quantum game change.

        1. We are still using Lithium Ion batteries, first on the market by the Japanese in the early 1990’s.
          It has been a while– they have made them considerably more efficient, but something better happen soon—-
          Just saying!

        2. Your objections are the same thoughts I was coming up with why I shouldn’t go EV, yet. Especially in Texas. Not useful.

          1. Yeah, for most people in most places, a plug-in hybrid like the Chevy Volt is far better. You can get them pretty cheap, used.

          2. “Tesla has been feeding one of the chief fantasies of the day: that we can banish climate problems caused by excessive CO2, while giving a new lease on life to the (actually) futureless suburban living arrangement that we foolishly invested so much of our earlier capital building. In other words, pounding sand down a rat hole.”

            3. His record has been far from stellar— a entertaining writer though.

            4. Tesla is just another business. One using the government subsidies to make the bottom half help pay for the top half’s glitzy computer driven big boy toys.

              We don’t need 800,000 cars a year to change the CO2 rates, we need 100 million EV’s a year. Slight difference in those numbers.

            5. subsidies…for toys

              That’s the propaganda from the fossil fuel industry, which is desperate to slow down or stop Tesla. Don’t believe it. Tesla is driving a dramatic shift in the car industry, by design. The transition to electric is MUCH faster because of Tesla.

            6. I am not the fool you desperately try to make me out to be. I have never read any such propaganda. That is the reality. Who do you think pays the taxes that subsidize the EV’s , Putin, Trump? Nope, the cashier, the laborer, the guy in the cubicle working day in and day out, the janitor. Given to people who have a lot of money to begin with.

              Aren’t you the one who thinks that 1 billion EV’s will sell at $100,000 apiece?

              Stop trying to promote a “transistion” to electric vehicles. The only transistion that high priced EV’s promote is the transistion back to walking as higher taxes and greater inflation steal the money from most of the people to keep all kinds of ineffective subsidies promoted.
              You really think one or two billion high priced vehicles will sell in the next twenty years? To whom, to the people out of jobs from automation. To the people who are getting paid less and less each year? Get educated in reality. Look at how things are really working and the trends that have been happening for decades.
              All those subsidies do is promote profits in the various industries whether they be FF, renewable or EV. They are all paid for by the citizens in the long run. They pay twice for everything.
              Next you will be saying a carbon tax is good.

            7. Oh, my. Don’t take things personally. As it happens, this meme of Tesla as rich person’s toy is very common. And, it’s highly unrealistic.

              1st, Tesla doesn’t get more subsidy than any other low priced EV.

              2nd, ICEs are far more heavily subsidized: who pays with asthma, and losing limbs and sanity in oil wars? Low income folks, that’s who.

              Finally, no, no one (and especially not me) is expecting the future of EVs to be high priced. No one. Except, of course, for those who don’t like EVs and therefore suggest unrealistic things…

            8. Hello GoneFishing,

              Let me start by saying I don’t think your a fool by any measure. But, I strongly disagree with most of what you have to say about subsidizing EV’s and the average man paying for it.

              First of all, I think you don’t understand the complexity of the transformation to EV’s for the manufactures, consumers, oil industry and infrastructure. There are trillions of dollars invested in BAU. Nearly all the business involved have to continue in their current operations just to finance the investment for the transformation. If Ford and GM stopped their current ICE sales tomorrow. We would be in a recession that would make 2008 look like a cake walk.

              Second, I would argue with you that actually the people who are buying those 100K EV’s are subsidizing the transformation for the average working man. You can buy a 60K ICE that is every bit as nice as a 100K Tesla. Also keep in mind the 60K ICE buyer is paying the bills at GM, Ford, Audi, BMW etc. as they transform. Here is a quick google comparison.

              https://www.suvdrive.com/comparison/cadillac-xt5-base-2017-vs-tesla-model-x-p90d-2016

              Third, macro economics don’t play by the same micro rules you live under. The strength of the US dollar is a lot more important to the American economy than any taxes you pay. You wouldn’t live with half of the quality of life you currently have without trade and the world value of the dollar. Your taxes will never pay for the American opportunity you have experienced in life. Ask Ron about what the average man’s life is like in Mexico.

              Fourth and Nick touched on it. The actual cost of ICE are not factored into the price. The shale play in Canada is destroying hundreds of square miles of forest, the solar ice caps are melting, lung cancer and asthma. All are costs that humans are paying for by a lower quality of life.

              When you look at the big picture. A $7500 subsidy is just a drop in the bucket. Just like the amount of taxes you pay. When the US economy does collapse and the country has to pay the piper. It’s going to have to come from the rich anyway. Their the ones the country owes the money to anyway.

            9. So Beach, you are another one that thinks high priced luxury type EV’s will sell a billion or more EV’s. Good for you. Keep on watching the logistical rise of EV’s and when it flattens out soon because they are too expensive for most buyers then that is that.
              Here I thought we were trying for an energy transistion, but all I find is more money subsidizing the well off and rich. I should have known better.

              Either prices drop fast or takeover is not going to happen.

              https://insideevs.com/american-perspective-own-drive-cheap-chinese-ev-2/

            10. NIck, you missed the point and waiting for the “future” is a very dangerous and stupid game as we have proven over the last five decades.

            11. GF,

              Don’t be cryptic. If you feel I missed the point, then restate it.

              another one that thinks high priced luxury type EV’s will sell a billion or more EV’s.

              That’s really not clear. You understand that neither HB nor I are suggesting that a billion luxury EVs are going to be sold?

              If your point is that we need to have EV sales increase faster than they are….well, we agree. As a society, we’re not making the transition away from FF a high enough priority. Accelerating the transition wouldn’t be hard – a stiff increase in fuel taxes combined with a big increase in CAFE standards would do it for vehicles.

            12. I repeat, the model is wrong. We need high rates of replacement now, not dawdling waiting for some imagined future.

              Get over it Nick, we subsidize the huge rich oil companies that don’t need it. I guess subsidizing luxury cars for the rich is about on par with American thinking.

            13. We need high rates of replacement now

              Yes. We agree. Uhmm…again, we agree.

              subsidizing luxury cars for the rich

              What’s your point? The tax credits are for all EVs, not just Teslas. A really high gas tax would be the best thing. But, the FF companies have managed to demonize taxes on FF, so subsidies for EVs are better than nothing.

              This idea that Tesla is the only EV in town, and that Teslas are toys for the rich, is the message of people who are fighting EVs. They’re trying to pretend that EVs aren’t real. That they’re just toys for the “coastal elites”…

            14. A $100,000 EV is not what is needed now, it is a waste and does not improve the market.

              If you agree, why keep arguing and bringing up imaginary FF propaganda. I have never seen any of that. Of course I don’t watch Faux News.

            15. Well, on that I don’t agree. If you want a faster transition to EVs, then root for Tesla. Tesla is forcing other car companies to respond, and is making a very big difference to how fast EVs arrive: they’re the main reason that so many car companies are developing EVs (the next biggest reason is demand by governments like China).

              Tesla is taking away the most profitable segment from other car companies. Luxury cars are where most car companies make their profits. They make cheaper cars because they have to, but their real money comes from the higher end. So, when Tesla eats their lunch, it really hurts. So, those companies are responding: they know they have to because if they don’t they’ll lose their profits, and then Tesla will move downmarket and take the rest.

            16. HuntingtonBeach:
              “The actual cost of ICE are not factored into the price. The shale play in Canada is destroying hundreds of square miles of forest, the solar ice caps are melting, lung cancer and asthma. ”

              All Those issues/subsidies apply to EV vehicles, since Coal is primary source for power. Then there is mining for the Lithum, and Cobalt, leaving a trail of pollution. EV’s solve nothing. It just tugging the same rope in a slightly different direction.

              Trying to rationalizing one tech over another is just ridiculous.

            17. Gonefishing,

              Interesting, so you believe a carbon tax is a bad idea?

              Yes the subsidies help to get the industry started more quickly.

              Do you also believe government subsidies for wind, and solar are a bad idea?

              I think in comparison to a carbon tax they are (note I mean the carbon tax plan that refunds the tax to all citizens in the Cantwell-Collins cap and dividend plan) a bad idea.

              See

              https://www.brookings.edu/on-the-record/fiscal-reform-and-climate-protection-considering-a-u-s-carbon-tax/

              Also note that the subsidies for EVs are gradually phased out after 200,000 vehicles are sold.

              Each independent automaker’s eligible plug-in vehicles receive a federal credit (up to $7,500) federal credit – until the 200,000th plug-in is registered inside the US, when a countdown for phaseout of the credit begins.
              At the time of the 200,000th sales, and so as not to disrupt/confuse those buying the EVs, that full $7,500 credit continues through the end of the current quarter and to the completion of the next quarter. After this period ends the “phase-out” begins, meaning the credit is reduced to $3,750 for the next 6 months, then to $1,875 for the next 6 months before expiring completely.
              During any part of the phase-out process (between sale #200,000 and the calendar expiry date), the OEM is free to BUILD AND SELL AS MANY EVS as they can/want, receiving the applicable incentive amount.

              https://insideevs.com/us-federal-7500-ev-credit-expiry-date-by-automaker-estimates/

              Also note that Tesla may try to hold off the registration of the 200,000th Tesla in the US until the start of Q3 2018 so in Q3 and Q4 the full $7500 rebate can be collected by customers. It will possibly accomplish this by shipping more Model 3 vehicles to Canada and Europe and Asia until the start of Quarter 3. I hope this is the case because this would give me a shot at the $7500 rebate, but it’s more likely I won’t get a Model 3 until 2019.

            18. Dennis,
              I stated Tesla is a business, which it is.
              I stated that subsidizing luxury cars (there had been a new $100,000 European one just came out and was discussed on the other thread) was lower half (economically) supporting the rich who have the money, with little effect. Subsidizing luxury cars is like walking around the block to get next door. A small market and not much effect.
              Instead, subsidize low cost EV’s, that will open up a huge market and be much more effective in reducing CO2. Highly encourage the EV makers to produce low cost models in the name of the public good and only subsidize cars below a certain cost with credible performance. Also give higher subsidies to more efficient EV’s.

              As far as the carbon tax, I don’t believe it would come back to the people here in the US if it ever was implemented. Our current government of the last few decades will never let that happen, it’s a nice idea, still not what is needed nor will it happen in an equitable fashion.

              Mandating much higher mpg for ICE and giving a progressive lowering of percent production along with a deadline for the last ICE production would be much better way. Again, not going to happen here.

              Solar and wind subsidies were needed due to their original high cost and the many subsidies given to FF energy. Now both are becoming equal or cheaper, so soon all subsidies to energy could be removed, FF included. Otherwise, keep the subsidies to help level the playing field, but give priority to installation of renewables and cut the high costs from excessive red tape.

              Again, the real solution is to mandate the reduction of FF burning with time and give a date when it ends. That would give the energy industry a clear picture to work with in heading toward the future and where to direct the investments. Otherwise it will take a long time, if ever.

              Other countries are making commitments, time is running out.

            19. Gone fishing,

              Taxes or cap and trade (with no givaways) are much more efficient than mandating limits. This gives businesses and consumers freedom to decide what is best given the new rules.

              Low price and high price EVs get the subsidy, from a percentage perspective, it’s much more significant for a 30k car than a 90k car. Tesla’s working as fast as they can to bring a cheaper car to market. As are some others.

              I would also like things to move faster, but do not rule.

            20. Taxes or cap and trade (with no givaways) are much more efficient than mandating limits.

              Fuel taxes also have the advantage that they go far beyond incentivizing the purchase of efficient new vehicles: they also incentivize the purchase of efficient USED vehicles, and efficiency in operating ALL vehicles.

              In fact, fuel taxes are so effective that FF interests have fought them viciously…that’s why we almost got cap n trade, instead…

            21. Fantastic, instead of making affordable EV’s and forcing ICE’s to do better and eventually phase out (actually solve the problem), we will add a carbon tax to crush the internal economy.
              Now I know why people voted for Trump and the Republicans.
              I agree it would be efficient, but the results would not be anything like you expect.

            23. Dennis,
              Sounds like a shell game that does not address the actual issues but hopes to make some changes through monetary pressures.
              Instead of an immediate effect, it would take a long time to have a limited effect.
              Won’t work anyway because major GHG sources would be unaccounted and food prices would skyrocket.
              Never go through Congress anyway, or at least not in the next 10 years, after that it doesn’t make much difference since the plan is too indirect and slow.
              Might have partially worked if we started it two decades ago.

            26. “That’s the propaganda from the fossil fuel industry…” ~ Nick G

              Maybe it’s your own propaganda, Nick…
              See here.

              Preview:

              “ ‘According to the World Bank, NOCs accounted for 75% global oil production and controlled 90% of proven oil reserves in 2010…’ ~ Wikipedia

              Shell CEO: Solar Energy To Be Backbone Of World’s Energy System…

              Big Oil Leads in Innovations and Renewable Energy…

              The Greenest Oil Companies In The World

              Total – Investing In Solar…

              Statoil – Placing Its Bet On Wind

              Myth: U.S. oil companies have refused to invest in alternative energy and other clean technologies.

              Are oil companies promoting alternative energy?

              When renewables meet the oil and gas industry, opposites attract

              Difficult to invest in green energy in Canada without Big Oil

              Big Oil To Invest In Renewable Energy…”

      2. Hi Gonefishing,

        If you plan your trip and know where to charge your car, then often one can go quite a ways with a Tesla, there is a pretty good number of charging stations near major highways, stop for a meal charge your car and continue on your way. A bit inconvenient on long trips, but before long places to plug in will become ubiquitous.

        1. I agree, Tesla has a better charging point system distribution but it is proprietary or should I say exclusionary? Still a bit thin in my area and non-existent where I like to go most of the time. When they produce an inexpensive car people will flock to them.
          if India and China can do it for $5000 to $7000, we should be able to do it for $12,000 to $15,000 and have even greater range and performance. That is if we are actually interested in switching to electric.
          https://www.youtube.com/watch?v=2B20sgxLmys

          Please inform us of your experience with your new Tesla (when you get it). I didn’t like where the speedometer and gauges was placed but there will probably be a work around for that soon.

          I am not too sure what you mean by before long (2025? 2030?) but I have seen little progress in the last few years for EV’s in general when I check the locations of charge points.

          1. Agree it would be better if there were a standardized system for charging.

            For me a Tesla with 300 miles of range will work pretty well. I usually don’t travel on long trips (more than 100 miles one way) without using a highway. I would say as more EVs are purchased there will be more charging stations at restaurants, stores, malls and parking areas. I think 2020 to 2025 they will be pretty common, by 2030 they will be more plentiful than gas stations.

    5. As long as petroleum consumption for transportation goes down, I don’t think how that is accomplished matters all that much. EVs replacing some cars works. More fuel efficient ICE vehicles works. More public transportation works. More human powered transportation (walking, bikes) works.

    6. SVO,

      ‘Sure, DC fast charging stations can bring me up to 80% full in about 20 minutes, but guess what? There are hardly any and they tend to be in use when you get to one and they are expensive.’

      Is this not a signal to ‘the market’ that there are too few of these fast chargers and more need to be installed, pronto? Or am I missing something…?

      Might there be an opportunity for entrepreneurs with a truck, diesel of course for long-range and ease of refueling, to load them with Lead acid batteries and a generator, and roam the freeways looking for flat EVs in distress?

      1. Shell, BP, Sheetz and several smaller gas station chains have begun installing high speed EV chargers. The market is there. I drive a first generation Leaf and mostly agree with SVOs comments. Its not a mainstream car. I have a small older Nissan pickup to use as needed. 200 mile range would probably work for everything with me. I’ll buy a used one in a few years.

  18. 2018-04-20 API released its quarterly well completion report for the first quarter of 2018 showing that natural gas and oil drilling and completions rose more than 35 percent over 2017 levels signaling the strength of the U.S. natural gas and oil industry. In addition, the success rate for exploration of natural gas and oil was more than 60 percent, the highest rate since 2009.
    For Exploration (as opposed to Development) wells, completions rose by 29 percent, while drilled footage increased by 45 percent, which suggests continued technological progress in Exploration.
    For more information and to subscribe to the complete 2018 API Quarterly Well Completion Report, First Quarter, please contact API’s primary distributor, IHS
    https://www.hellenicshippingnews.com/api-natural-gas-oil-drilling-and-completions-up-more-than-35-percent-over-2017/

    In other news, API reported U.S. petroleum demand reached 20.6 million barrels per day (MMBPD) in March — the highest level since 2007.
    The U.S. also produced a record 10.4 MMBbl of crude oil plus another 3.9 MMBbl of NGLs.
    https://www.kallanishenergy.com/2018/04/23/api-drilling-completions-jump-more-than-35-from-q1-2017/

  21. 2018-04-23 (Reuters) Exports of Canadian crude oil by road to the United States have surged on full pipelines and rail limitations
    However, a truck can only carry 200 barrels of oil, compared with 60,000 barrels in one unit train, or nearly 600,000 per day on the Keystone Pipeline – the equivalent of 3,000 trucks. Each one of those trucks needs a driver and enough fuel to carry crude over long distances. Moving crude by truck is at least 10 times more expensive on a mile-for-mile basis compared with rail or pipeline.
    Reuters https://www.reuters.com/article/us-canada-crude-trucks-insight/facing-shipping-constraints-canada-moving-oil-one-truckload-at-a-time-idUSKBN1HU0F4

    February 2018: 206 kb/day
    Sources: Statistics Canada; Transport Canada

    1. “At the end of the day, you cannot put it back in the ground-it has to go somewhere.”, he said. “If your alternative is a camel or a donkey, then that’s the alternative you have to go with.”

      Rowboats down the Rio Grande. Of course, the Permian’s problem will only last about a year. Canada’s could go on a lot longer.

  22. Comment: Surging crude price risks major oil shock

    The world risks a full-blown oil shock within months as three geostrategic crises come to the boil and Saudi Arabia hints at US$100 ($140) crude, setting off a speculative scramble by commodity hedge funds.
    Brent crude has surged this week to a 40-month high of almost US$75 a barrel even though the global economy is losing momentum. This price spike is different from earlier China-driven episodes over the past 15 years. It reflects a constriction of supply and a rising “political premium”. Such a context makes it more threatening.

    It is now highly likely that Donald Trump will reinstate oil sanctions against Iran on May 12, this time adding extra curbs on distillates. Japan and South Korea will almost certainly join the Americans. Most European firms will fall into line whatever the policy of their own governments since it is dangerous to defy the US Treasury. Most insurers and shippers will steer clear of Iranian cargoes.

    “We are pretty confident that oil will be in triple digits by next year,” said Jean-Louis Le Mee from Westbeck Capital. By then the oil market will be feeling the delayed effects of a 40 per cent slump in investment from late 2014 to early 2017, storing up a structural shortfall of 8 million barrels a day (b/d).

    Le Mee said the Iranian sanctions alone will take up to 500,000 b/d off the global market by the fourth quarter, rising to 700,000 in 2019.

    Is Trump really dumb enough to put sanctions back on Iran? If he did and oil hit $100 then everyone would blame him. And, of course, he would blame OPEC. That man is an idiot.

    1. The US has a lot of politicians that are the best at one thing, bringing down civilization.

    2. Worst part is that he is overwhelmed and doesn’t realize it. He watches TV to figure out what is going on. He tweets before serious investigation. It’s a huge responsibility, and he treats it like reality TV. Let’s hope the tax cuts help mitigate his influence somewhat. Oil will be a hundred despite what he does. I think they will need the oil bad enough to swim against the US Treasury.

    3. Presumably Saudi, as would any competent capitalist, is aiming to roll up its paydays into one, and that asap. Sale of Aramco will have the wind in its sails with oil at $100, and a mega price to match, despite everyone knowing full well that it probably can’t be sustained.

    4. Now the MSM have given up on “lower for longer” and “OPEC is finished” and all the other crap they were coming out with to fill their columns and satisfy their advertisers one to two years ago, how long before they switch from “lack of investment” to “lack of oil”?

      1. George Kaplan,

        My guess about 3 to 5 years before MSM starts to realize that peak oil (C+C) output is very near. By 10 years, even the cornucopians may be admitting that peak oil has arrived (though we might be on a plateau from 2024 to 2027, and they may claim this plateau can be extended forever, clearly that claim would be false).

  23. This is said to be a sign that the pipelines out of the Permian are full?

    2018-04-24 (Bloomberg) WTI Midland-Cushing oil spread widening sharply this week, to -$6.70 a barrel now (the largest spread since 2014)
    https://pbs.twimg.com/media/Dbjpk8SW0AEAYHK.jpg

    Natural gas prices at Waha hub have also been going down

    1. Full or they auction the last free slots.

      This should give a hard break to permian extension. But I don’t know how good the rail system is there (and how many oil rail cars are free) or how many oil trucks can be organized to bring the stuff in long traffic jams to the coast.

      Mid next year they get an addionional 1mb/d capacity? I think it will take not more than a half year to fill it up again.

      1. I don’t know but if the EIA’s Permian production forecast is right then I guess that all of the pipeline capacity is fully booked, and probably this new 35 kb/day due in May too. But I will have to wait and see.

        2018-04-16 (Platts) Enterprise Products will add an additional 35,000 b/d of new capacity to its Midland to Sealy, Texas, crude pipeline in May, taking its total throughput to 575,000 b/d, the company said Monday.
        https://www.platts.com/latest-news/oil/houston/enterprise-adds-new-capacity-on-midland-to-sealy-10364245

      2. Supposed to be 1.5 by next year end. It doesn’t matter, they won’t be able to increase enough for shortages by then. Consider that IEA’s latest projection is for a .6 million barrel draw for 2018. But they projected a 1.8 million barrel increase with a 1.5 million increase in demand. Logically, that meant a .9 million barrel a day shortage transferred over from 2017. Production will be lucky to be half of the 1.8 million, and demand will be higher, which will probably equate to an additional 1 million barrels for 2018. 2019 is not looking much better, even if you include OPEC pumping what they can. We don’t just wipe the slate clean at the first of the year. Shortages and depletion carry over in to a new year. Yes, demand will probably be lower in 2019 and 2020, but depletion doesn’t care what the price of oil is. It’s relentless.

      1. I guess the same holds true for oil as real estate

        Location, Location, Location

  24. Phil Flynn reports that Cushing increase last week is probably transitory. Genscape reports that inventory has decreased 560,000 barrels within the past three days. At a $6 WTI/Brent spread, no doubt that will continue for awhile. Wonder how high exports can go without a Loop loading?

  25. Trump indicates a deal with France is almost ready to keep the Iran deal in place, and oil drops a dollar. Oil prices are NOT up primarily on geopolitical tensions, obviously. Wait til the API report comes out, today, and we will see the real reason. Whoops, it’s up a million, but doesn’t tell the finished goods draw. Ok, gasoline and distillates down 4.635, and Cushing down 930,000. That’s another healthy drop in inventories. Of course, it’s not the US inventories that are recording the bigger drops, it will be the rest of the world. Heck, we are supposed to be the big extra supplier of world oil. But measurable drops here, tell me big drops are happening worldwide. Trump thinks it’s OPEC. In the old days, we could rely on the Farmers Almanac, or astrology. Next, we may try tea leaves. Anything but an oil shortage. We must remain firmly in denial.

  28. Gotta love this headline…
    Is This The Most Bullish Oil Market Of All Time?
    https://oilprice.com/Energy/Energy-General/Is-This-The-Most-Bullish-Oil-Market-Of-All-Time.html

    gotta give credit where credit is due, many of you including Dennis saw this coming. Of course there was one naysaying nincompoop who’s name rhymes with like, bike and hike who couldn’t tell a turnip from a T-Bone steak who called it different and could not see it coming….hard to see a thing when one’s head is stuck up thier own >>>>>>

    PS: i don’t like the author of the article, and have grave doubts when GS publicly is on the same side of the trade as I am, just sayin?

    1. I am pretty sure Mike Shellman has never made a prediction of oil prices at Peak Oil Barrel. He has said that basing production plans on the hope that future oil prices will be higher is not very smart.

      Mike has been producing oil successfully for a long time, my guess is that he is correct.

      I have been wrong about future oil prices much more often than I have been correct.

      I would not suggest a bet on oil prices based on my predictions would be likely to be a winning proposition. Coin toss would be a better bet.

      1. what he did say many times was that this cycle was different from all the rest (it’s not) and to stay away from the permian basin, now looking to be one the largest oil producing areas in the world. for the record many small oil and gas producers had a similar perspective early in the Horizontal plays and were right to take that position. the difference is successful people in any line of business, adapt to change, keep up with the changes and then implement the new technologies into their business, when appropriate. unsuccessful people don’t, they whine and bit*h.
        In our case horizontal production continues to be less than 20% of our production, but going forward that is going to increase to over 50% in a short time and that it will be very profitable at the current prices.

        1. Texas Tea,

          We know there is at least one person who has been successfully producing oil for 40 years or more (maybe more like 55), and it’s not you.

          We don’t know who you are, you could be a 12 year old in his/her bedroom.

          The fact is that there is a ton of debt in the LTO focused industry.

          As far as the Permian being the largest field in the World, 30 Gb is a drop in the bucket (and that about all of the C+C that will remains to be produced in the Permian Basin). It is likely to be the proverbial flash in the pan and might peak by 2022 and decline will be rapid.

          Successful businessmen don’t rely on hype alone, or the hope that oil prices will become much higher.

          The concern over LTO is that the debt may never be paid back.

          https://www.oilystuffblog.com/single-post/2018/04/23/Visualizing-Americas-Shale-Oil-Future

  29. Thinking some more on Permian takeaway in relation to rail. It’s not the Permian’s first rodeo. Rail has the capacity to load oil. One tanker holds about 700 barrels, and a full train has 100 to 120 cars (70k to 84k). The problem I have not been able to comprehend yet is getting the oil to the rail. I assume that is going to take truck (200bbls). Based on what I have read of the trucking shortage, that would be the problem. Anyone know about transporting oil to rail?
    Ok, found this, it is truck to rail. Discounts even more today:
    https://www.platts.com/latest-news/oil/houston/permian-crude-differential-hits-lowest-since-10381488
    My take is there are some inaccuracies here. 3.3 is probably pipeline plus local refinery. Pipeline is probably 2.91. 2.7 plus the new Sealy addition of 210k. Which was probably pretty well functioning before the announcement. 3.3 capacity and 3.1 production, which shouldnt result in huge discounts.

    1. Yes the oil will have to be trucked to the rail terminal, it’s still a lot cheaper than trucking it all the way. Although there could be some local pipelines to rail hubs in places?

      It gets a bit confusing as in one news story they include existing rail transport in their total take-a-way capacity, as well as the local refineries. Some of these reporters seem to be as confused as we are (or more?).

      The current Midland price is $59, which I guess is still enough to make producing more worth while, that’s if there are enough trucks & trains etc? In the Bakken in 2016, when oil prices were lower & before the new pipeline, only the producers closest to rail terminals used rail.
      https://pbs.twimg.com/media/DbmijXfU0AIIiDJ.jpg

      2. I’ve only just noticed these futures. They seem to be pricing in a shortage of pipeline capacity into 2019. Just yesterday – the May price for WTI Midland went down another -$2 compared to WTI Cushing.

  30. Permian basin seen growing to largest oil patch in the world
    By JESSICA SUMMERS AND SHEELA TOBBEN on 4/24/2018

    NEW YORK (Bloomberg) — The Permian shale play is all about setting records. Now, the region will probably become the world’s largest oil patch over the next decade.
    Output in the basin is forecast to reach 3.18 MMbpd in May, according to the Energy Information Administration. That’s the highest since the agency began compiling records in 2007. The size of the oil deposits coupled with increased technology and efficiency are fueling the rampant growth.

    “The technology is the biggest driver,” said Rob Thummel, managing director at Tortoise, which handles $16 billion in energy-related assets. “The basin in and of itself could end up being the largest oil field in the world.”

    By contrast, top-producing members of OPEC such as Iran and Iraq pump less than 5 MMbpd. Iran produced about 3.81 MMbpd in March, according to data compiled by Bloomberg.

    “If the Permian was part of OPEC, it would be the fourth-largest OPEC member, right behind Saudi Arabia, Iran and Iraq,” Thummel said. “By the end of the year, the Permian probably overtakes Iran.”

    1. I never understand this. If total inventory dropped millions, why are we concerned about a 1 mi increase in crude? Is the market really rattled? Ok, your right, they are always rattled.

      1. I think there’s lot’s of noise on the figures, API more than EIA but both are much better looked at as a trend than week to week. The Wednesday and Thursday machinations are just day traders, not all of which are human, trying to get an edge. To be accurate all stocks would have to be read and reported at exactly the same time and without error, that can’t happen by a long shot.

    1. Where does that 1.5 to 2 mmbpd come from and what does it represent (heavy/light, well capacity/production capacity, instantaneous/taking six months)? It’s been the same number for several years, but probably only because no-one has come up with anything new. What happened to the Manifa water injection issue from last year – that isn’t a quick fix, the EPC contract went to Saipem only in December, and would take out 900 kbpd if the water isn’t available? Why do they choose to deplete their stocks if they have that spare capacity available? Why are their drilling rig numbers continuing to decline even as the price has been rising (they say they are stimulating oil investment, but are doing the opposite themselves)? Could they actually increase produce while maintaining voidage replacement and without flaring? How are things going to change when Khurais expansion of 300 kbpd comes on line soon?

  33. Russia was China’s largest crude oil supplier in March, data showed on Tuesday, retaining the lead spot for a 13th consecutive month.

    “Last month, Russia supplied 5.79 million tons, equal to 1.36 million barrels per day (bpd), up 23.6 percent from the same month a year earlier, data from the General Administration of Customs showed.

    Russia has been the biggest oil exporter to China since March 2017.

    For the first quarter, Russian shipments rose 22 percent from a year earlier to 16.51 million tons, or 1.34 million bpd.”

  34. Why wouldn’t a company who owns the right to drill in, pick a spot- say the Permian basin, choose to go very slow with drilling and production currently, while waiting for more favorable returns down the road?
    It sure seems likely that the price for their product will be higher in the next few years, and the transport bottleneck costs may decline.
    It seems to me that a barebones ‘keep the light on’ operation would be optimal until the economic winds improve would be best. No?

    Attempt to answer my own question- the low interest rate provides an artificial incentive, like a zero percent 72 month auto loan did for me?

      1. Not quite- pay principle over 72 months, at zero percent interest. These loans have been common in the USA since 2009, off and on.

    1. Direction is good, one week does not explain anything, as they are mostly estimates.

  36. 2018-04-25 (Reuters) – U.S. oil major Chevron Corp has evacuated executives from Venezuela after two of its workers were imprisoned over a contract dispute with state-owned oil company PDVSA, according to four sources familiar with the matter.
    Chevron’s move to evacuate its expatriate workforce underscores the how arduous it has become for foreign oil firms and their workers to sustain operations through Venezuela’s accelerating political and economic meltdown.
    https://www.reuters.com/article/us-venezuela-oil-chevron-insight/chevron-evacuates-venezuela-executives-following-staff-arrests-idUSKBN1HW2BD

      1. I was just having a quick look at this but I’ve not got gained any insight from it
        OPEC Data Table 3.3: Wells completed in OPEC Members (Yearly to 2016)
        Some OPEC members slowed activity in 2016 (in red) while the others stayed busy (in light blue)

  38. Finally got the Texas pending data file for Feb. second month regular and pending is 3933 for January, which is 44k over EIA’s monthly. Based on current data February EIA will probably be from 3968 to 4012 at a rough estimate. Dean’s is not too different at 4100. December monthly was 3945, so not rising too much through Feb. makes the weeklies look really wild, but what’s new. Jan and Feb had sand delivery problems. All these capacity problems will create multiple tolls on expectations. Anyone want to hazard a guess as to how close US increase for a full year is to EIA or IEA projections, based on results so far? All this 1200k to 1300k increase could be coming from the Permian section in New Mexico, so I may just concentrating my efforts in the wrong state?

    I really never understood how they could come up with 1200k or 1300k. 2017 was a banner year for increase in Texas production. Using EIA monthlies, it went from 3153k in Dec 2016 to 3945k in Dec 2017. That’s a 792k increase, and about 200k of that increase came in January and February. To increase that to 1300k, they would have to more than double completions. They will be lucky to get half of that with all the capacity problems. Seems to me, you would want to look into that, before you made all the wild assed projections. Genscape was predicting pipeline constraints early in 2017. I can make numbers do anything I want them to do. Dealing with realities is a little more demanding.

    Or, come up with something simple, like self driving oil tanker trucks. Insurance rates in Texas might rise a bit.

    1. “Maximum Overdrive” three thousand computer run trucks on Texas highways laden with hazardous materials. What could go wrong? Beat that, Stephen King.

  39. Ford’s plans for the future.

    According to its latest financial release, the auto giant “will transition to two vehicles” — the Mustang and an unannounced vehicle, the Focus Active, being the only traditional cars it sells in the region. Ford sees 90 percent of its North America portfolio in trucks, utilities and commercial vehicles. …

    Ford also today reaffirmed its commitment to bringing hybrid-electric powertrains to the F-150, Mustang, Explorer, Escape and upcoming Bronco. …

    With this big hybrid push on the SUV side, Ford expects to go from second to first-place in the U.S. hybrid vehicles market by sales, surpassing current leader Toyota by 2021, thanks also to the forthcoming hybrid Mustang and F-150.

    https://techcrunch.com/2018/04/25/ford-to-stop-selling-every-car-in-north-america-but-the-mustang-and-focus-active/

    1. In a years time, the Hybrids will be a big seller, along with the Fiesta. The rest will be collecting dust.

      1. The Fiesta is being discontinued, so do you mean there will be a rush to buy what’s left of them?

      2. With the hybrids, it’s possible that though Ford will be mostly selling trucks, SUVs, and utilities, petroleum consumption will trend down.

        Who really cares if people buy big vehicles as long as petroleum use for transportation gets reduced?

  40. A search for Alaska oil discoveries yields big numbers for about the past 5 years. Lots of hyperbole.

    Have yet to hear of any production dates.

    1. I don’t believe anyone audited Saudi oil in the ground. They audited Saudi’s books. That is, they audited Saudi’s audit.

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