Open Thread Petroleum, February 5, 2019

D Coyne Natural Gas Production, Oil Production

Comments about oil and natural gas production in this thread, please.

All other comments not related to oil and natural gas production should be posted in the Electric Power Monthly comment section.

Thanks.

I will just delete comments that are not related to oil and natural gas, they will not be moved.

125 thoughts to “Open Thread Petroleum, February 5, 2019”

  1. Does anyone have a giant oilfield depletion index for 2019? Shouldn’t we be under 10% remaining and having issues? Won’t that drive markets? Inflation? Treasury bonds sales, not deficient spending?

  3. How a ‘Monster’ Texas Oil Field Made the U.S. a Star in the World Market
    By Clifford Krauss

    https://www.nytimes.com/2019/02/03/business/energy-environment/texas-permian-field-oil.html

    In a global collapse of oil prices five years ago, scores of American oil companies went bankrupt. But one field withstood the onslaught, and even thrived: the Permian Basin, straddling Texas and New Mexico.

    A combination of technical innovation, aggressive investing and copious layers of oil-rich shale have transformed the Permian, once considered a worn-out patch, into the world’s second-most-productive oil field.

    Permian production has quadrupled over the last eight years, in contrast with the decline of most other established oil fields, for several reasons.

    Companies found ways to lower exploration and production costs in tapping the Permian’s accommodating shale. New technologies for drilling and hydraulic fracturing helped bring the break-even price for the best wells from over $60 a barrel to as low as $33.

    The Permian, as vast as South Dakota, is distinct from other shale fields because of its enormous size, the thickness of its multiple shale layers — some as fat as 1,000 feet — and its proximity to refineries on the Gulf of Mexico. Some shale fields produce too much natural gas, which is worth less than oil. Others have uneven layers of rock difficult to drill through. The Permian is rich in oil, and its shales are relatively easy to tap with today’s rigs.

    Today the biggest risk, at least for producers, is that too much output might drive down prices too much and jeopardize their profitability. They could also prompt another round of aggressive actions from OPEC and its new ally, Russia.

    Despite the ups and downs, there are signs of expansion everywhere in the West Texas desert. Trucks line up at dawn for half a mile to pick up sand at local mines for the day’s fracking jobs. Competition for workers is so fierce that fast-food restaurants have blinking signs advertising their salaries. Anadarko Petroleum and Plains All American Pipeline are constructing new regional offices to add to those built in recent years for Chevron and Apache.

    Motel rates and apartment rents have climbed so much that trailer parks are the only option for many workers. But few seem to mind.

    “I will have work here forever,” said Mike Wilkinson, a truck driver who came from Dallas a year ago and moved into a trailer with his teenage daughter. “As hard a place as this is to look at, they are going to need guys like me to move equipment around here for years to come.”

    1. The mean USGS TRR estimate for the Permian basin tight oil is about 75 Gb, when reasonable economic assumptions are made (including the EIA’s AEO 2018 reference oil price scenario) the Economically Recoverable Resource (ERR) is about 60 Gb for the mean case. Compared to World URR of 3100 Gb and remaining resources of crude plus condensate of about 1740 Gb, 60 Gb is not a lot of oil, it is about 3.4% of remaining recoverable resources, the peak in the Permian Basin is likely between 2027 and 2033, depending upon the rate that new wells are completed with a peak between 5.5 and 7.2 Mb/d (the lower peak corresponds with a lower completion rate and the later peak.)

      The lower peak scenario with slower ramp up in well completion rate shown below. This is more in line with larger oil companies taking over smaller players and “managing the plateau”. It is also fairly close to the EIA’s AEO 2019 southwest region scenario through 2033, though decline from 2033 to 2050 is considerably steeper in my scenario which is based on a TRR of 75 Gb, but 13 Gb of these technically recoverable resources are not economic under the assumptions I have used (well cost $9.5 million and new well EUR starts to decrease in Jan 2025). The average new well EUR is assumed constant at 432 kb from Jan 2018 to Dec 2024. ERR is 62 Gb though 2065, output falls to 2.4 Mb/d in 2050 from a peak of 5.5 Mb/d in 2033, total wells completed is about 177,000 and maximum monthly completion rate is 500 new wells per month (current rate is about 400 per month).

      1. The Permian scenario above may give the impression that US LTO will peak in 2033.

        That is not the case because other tight oil plays (Bakken, Eagle Ford, Niobrara, and other US tight oil plays) will peak in 2022 at about 4600 kb/d and then will decline by more than the increase in Permian output from 2022 to 2033 (Permian increases by 1300 kb/d while the rest of US LTO declines by 3100 kb/d from 2022 to 2033).

        The peak for US LTO for my best guess scenarios (including Permian scenario in comment above) is in 2023 at 8960 kb/d with decline to 8500 kb/d by the end of 2025 and to 4300 kb/d by 2045. For US tight oil the URR=87 Gb over the 2006 to 2051 period.

        1. A conservative Bakken Scenario is below, 30,000 total wells drilled from 2000 to 2041 in North Dakota Bakken/Three Forks with economically recoverable resources of 9.4 Gb form 2000 to 2040. Peak about 1500 kb/d in 2022, about 200 kb/d above Nov 2018 output.

      2. All of these revised models (Permian, ND Bakken/TF, Eagle Ford, Niobrara, and US other LTO) are combined for an updated US LTO scenario in chart below.

        Peak is 8.7 Mb/d in 2024 with a URR from 2006 to 2050 of 86 Gb assuming the USGS mean TRR estimate is correct and oil prices follow the EIA’s AEO 2018 reference oil price scenario, the usual economic assumptions for well costs, royalties, taxes, oil transport costs, and LOE have been used. The Other US LTO scenario is particularly speculative as I do not have good data on well profiles or well completions outside of the Bakken, Eagle Ford, Permian and Niobrara.

        Data from the EIA, shaleprofile.com, and input from comments here and other information found on the web and in journal articles were used to inform this analysis.

        Any errors are mine alone as the work has not been reviewed.

        Interesting analysis by Enno Peters and others suggests that terminal decline rates may be higher than I have assumed in this analysis (10% exponential terminal decline rate after the hyperbolic well profile falls to this rate.) This information led me to review terminal decline rates in the Bakken and Permian and it appears that the terminal decline rate is at least 15% based on the data we have so far.

        For this reason the scenarios above (and below) are likely to be too optimistic especially in the tails after the peak, overall URR is likely to be 10% less if the 15% terminal decline assumption proves correct. Note that Enno Peters is skeptical of the 15% assumption and thinks it may be higher, though more data may be needed to determine the precise level (or it may accelerate over time).

    2. Maybe Mike’s right if he goes to work for Allied Van Lines.

      And its not hard to look at either! 🙂 Once you get off the interstate!

      1. Mike:

        Funny link!

        However, I hope for Mr. Wilkinson’s sake, things go well for him and his daughter.

        I also hope for his sake, after 10+ years of “cowboyistan” lunacy, shale management finally decides to develop this stuff with some sense.

        Last thing guys like Mr Wilkinson need is shale induced oil busts, where the layoffs are brutal. 2015-16 wasn’t long ago but folks in the USA seem to not be big fans of history anymore, even as recent as 2-3 years ago.

  6. Bank Of America: Oil Demand Growth To Hit Zero Within A Decade

    By 2030, oil demand could hit a peak and then enter decline, according to a new report.
    For the next decade or so, oil demand should continue to grow, although at a slower and slower rate. According to Bank of America Merrill Lynch, the annual increase in global oil consumption slows dramatically in the years ahead. By 2024, demand growth halves, falling to just 0.6 million barrels per day (mb/d), down from 1.2 mb/d this year.

    But by 2030, demand growth zeros out as consumption hits a permanent peak, before falling at a relatively rapid rate thereafter.

    The main driver of the destruction in demand is the proliferation of electric vehicles.

    All of that implies a peak in oil demand by 2030, a little over a decade from now. We are in the midst of the “biggest structural shift in demand growth since the proliferation of the car began in the early 1900s,” BofAML concluded.

    https://oilprice.com/Energy/Energy-General/Bank-Of-America-Oil-Demand-Growth-To-Hit-Zero-Within-A-Decade.html

    1. WTF do these jokers know about Oil Growth in 2030? What’s the chance of these TBTF “Too Big To Fail” Banker Quants being around Stardate 2030? Even aliens can’t comprehend BOA’s financials. Can ya say derivatives? Show us the money.

        1. Longtimber,

          As oil output is likely to peak by 2025 or 2026, the BOA estimate is likely “conservative”. Oil demand will peak when supply peaks and oil prices will rise to a level that makes it occur, there might be a bit of a lag depending on oil stock levels, but typically those can be drawn down pretty quickly as supply falls short of demand and prices will react as stock levels fall.

          2030 is not a bad guess, but I think it will happen sooner by roughly 5 years.

          1. I have problem with demand “equaling” supply, when it is for a need. It will, but there will be no equality about it.

            1. Guym,

              Think of production plus stock draws as “supply” and oil consumption at free market prices as “demand” (that is how economists think about it) and supply equaling demand is as straightforward as 1+1=2 (assuming we are not using a base 2 arithmetic system).

              Prices adjust to a level where the most important “needs” are met, the less important “needs”, such as a Sunday drive to nowhere in particular will not be met as oil prices rise due to lower oil output as World oil output declines.

    1. 24000 ft is not always where there is transition to natgas. The heat usually does it over a few million yrs, but Thunderhorse is down 29K ft.

      The deeper the hotter.

      1. The primary reason oil is found at depths greater than 20,000′, and even below 30,000′, in the deep Gulf of Mexico is because the reservoirs and source rocks are subsalt. The overlying salt canopy has a high thermal conductivity and wicks the heat away from the subsalt section. It keeps things cooler, it preserves porosity and permeability and keeps the source beds in the oil window.
        I think offshore Guyana is completely non-subsalt, so the gas window is encountered shallower.

        1. I should have jumped on that snippet in the article when I saw the depth — billions of barrels of oil equivalent.

          Is there a magnitude of thermal conductivity measured as part of exploratory drilling? Just was reading about the units (Watts/meters Degs K). Not clear if DegsK is the change of temp across the distance in meters or the avg temp in the middle of those meters.

          Do you know the typical difference in thermal conductivity in sub salt vs . . . generic rock? I suppose the difference doesn’t have to be much to get lower temps at deep depth given a few million years.

          1. This is outside my area of expertise – but if I’m interpreting some online date correctly, it shows the thermal conductivity of salt to be about 2-4x that of sands and shales. One reference, from an online source called thermopedia, puts the value of salt at 6.9 W/M/K, while another source, a recent document that includes the thermal properties of rocks, shows the value of sandstone to be about 2.5, and shale to be 1.1-2.1. I found these data after 2-3 minutes of online searching, so these numbers should be easy to confirm.
            As far as I know, in the course of exploration drilling, thermal conductivity is not measured.

            1. SouthLaGeo-
              I believe you are correct- we perform HF analysis for exploration-I don’t know anything about the drilling/production side of the aisle…

              Take a look at “geothermal heatflow” on the FIELAX website.
              We buy our HF loggers from them – I just cut a PO yesterday to replace a set we lost last year.
              Here is a clip from one of our brochures for one of the many SGE services we provide.

              “Surface Heat Flow (HF) Measurements serve critical purposes in oil exploration and production, especially when combined with SGE data. The measured background or equilibrium heat flow, and measured sediment thermal conductivity provide strict constraints to geochemical models that determine regional scale maturation of basins with respect to oil and gas. In addition, area-wide heat flow surveys provide significant geological information on fluid flow from faults, lineaments, and around structures.”
              “Scientific Services on a Global Basis”

            2. Does occur to me that sub salt vs . . . whatever super salt could be important. Dood above presents a differential of thermal conductivity for salt vs rock and that’s exactly what I asked so good.

              Of course, if the salt is below the deposit rather than above, then presumably it becomes gas easier/earlier in the millions of years as heat from beneath conducts upwards, rather than cool downwards. Or something like that.

  8. The critical difference for proper gasoline cars and these . . . available heat.

    https://www.cnbc.com/2019/02/06/aaa-confirms-what-tesla-bmw-nissan-ev-owners-suspected-of-cold-weather.html

    First time a disciplined, repeatable measurement has been taken by an impartial agency, AAA. Huge range destruction via cold weather. Probably the death knell.

    Speaking of which why don’t we hear much about temperature in NoDak this winter. Remember when above ground water storage required heat just to keep it from turning to ice waiting for the Halliburton fracking pump to arrive? Have we seen any pictures of that above ground storage lately? Or pictures of NoDak electric cars being towed for charging.

    1. “Or pictures of NoDak electric cars being towed for charging.”

      Thousands of ND cars for dead sure refused to start at all. Lots of the ones that DID start were hooked to an extension cord that kept the engine warm. If you can have a grid tied electric engine heater for a conventional car, there’s no reason you can’t have a grid tied battery heater for an electric car.

      I find it amusing that so many of the people who are oil cheerleaders, always touting new technology and new sources of oil, are also the same people who never get tired of telling us electric cars aren’t and never will be practical replacements for conventional cars.

      They worship oil tech, but they believe battery engineering and automotive engineering tech are stuck at the Model T stage, or worse, and will never improve.

      1. In middle Sweden ALL parking lots have an electric plug. I have seen them when I was there on vacation 20 years ago. No electric cars at this time.

        1. You were probably looking at some parking lot for business employees, where all lots have an outlet for engine heater, go to a mall or similar parking lots and its a different story.

          1. The customers at a mall aren’t generally going to leave their cars sitting long enough to NEED an engine heater to get them started again.

            Employees working more than three or four hours would have a problem, depending on just how cold it might be.

            I have always favored manual shift cars for their simplicity and reliability, and for the fact that you can push start them, if they refuse to start otherwise.

            Sub zero F temperatures used to be common where I live. We could always start our cars and trucks by simply allowing them to roll down the driveway…… which is long enough and steep enough to work just fine for that purpose.

          1. I believe that they’re called engine block heaters.

            Batteries become less efficient, but IC engines become much, much harder to start when they’re cold. I’d be curious to hear if block heaters are an electric blanket, like you describe.

            1. Not sure if I should answer the question on block heaters based on Denis’ comment below. Also I don’t know where else to answer it.

              A block heater is a heating element, similar to a heating element in a hot water tank but much smaller. In Canada, it was offered as an option when buying a new car. The heating element was inserted into the engine block, by knocking out the “ice plugs”. This is an intentionally weak spot in the block in case the coolant froze. Not everyone would use the proper mix of anti- freeze and water in the northern town in Canada where I came from. A very cold night would often happen in August.

              The block heater heats the coolant and piston walls so the car starts very easily. More importantly it supplies warm water to the car heater to warm the passengers almost immediately and also to the transmission oil cooler/heater.

              In the late 80’s, they became standard equipment in Canadian cars. Starting in the mid-90s the car companies made starting at -40F part of their internal design standard and block heaters have vanished from most parts of Canada. Not sure about places that get temps below -40. The use of synthetic oil today makes starting a car easier in cold climates. My dates might be slightly wrong.

        3. In practice here in Scandinavia most apartment blocks have parking areas with plugs for the winter timeuse, to warm the engine and possibly cabin for max two hours in the mornings before going to work. Reduces engine and transmision wear.

          1. It’s not unusual for apartment complexes in Minnesota and North Dakota to have electrical outlets for block heaters too, if the complex doesn’t otherwise have a sheltered or heated parking area. Occasionally you’ll find a hotel parking lot with a number of outlets as well.

    2. Please take this to the Electric power monthly.

      All these comments above may be deleted (those in response to the Watcher comment (link below).

      http://peakoilbarrel.com/open-thread-petroleum-february-5-2019/#comment-665982

      Go to link below for further discussion.

      http://peakoilbarrel.com/eias-electric-power-monthly-january-2019-edition-with-data-for-november-2018/#comment-666004

      And be warned when you respond to these comments that are not in the right thread the lead comment and all that respond to it will be deleted.

      Next time it happens.

  11. Russia didn’t cut in January.

    Russian C+C production was supposed to be 11,191,000 barrels per day if they produced their promised quota. That would be down 217,000 bpd from their December production. They produced, in January, 11,330,000 bpd, down 78,000 bpd, in line with their average for the last 5 month.

    Russia Ministry of Energy Oil Production

    1. Hi Ron,

      Is ~11.4 million barrels/day the highest historical output for Russia?

      1. Yes, by far. The data for Russia has only been collected since 1992, the first year after the breakup of the USSR.

        The below data is from the EIA. Their data averages about 400,000 barrels per day lower than the Russian Ministry of Energy’s data. I have no idea why. However, it is likely that the EIA uses a different number for barrels per ton. I use 7.3. But Russian oil could be heavier and the EIA could be using a lower number.

        The data is only through October 2018.

      2. Here is the historical data for the USSR through 1991, when the USSR broke up. The data is for all of the then USSR nations, not just Russia. The Russia only data would have been much lower.

        1. Thanks for the info Ron. It would be interesting to see the USSR data projection up to the present (assuming it didn’t break up) to see how much the overall production has grown.
          I’d assume they are as secretive about their reserves as Aramco, but regardless do you have an estimate for peak production for Russia?

          1. I was of the opinion that Russia had peaked in the last quarter of 2016. They have increased, average of the last 5 months, 18,000 barrels per day above that 2016 number. That is an increase of 90,000 barrels per day per year. Not a lot when compared to the gain from the USA during those two years.

            So to answer your question, I believe Russia is at peak right now. There is no doubt that they are producing every possible barrel they can. However there is always the possibility that they might find a few more barrels. But their increase will be slight, if any at all.

            1. Ron,

              Probably 2020 will be the peak according to an Oxford Institute for Energy Studies analysis from February 2017.

              When the impact of the brownfield and greenfield analyses are combined the outcome is consistent growth of Russian oil production to 2020, as shown in Figure 12. The total for 2017 reaches 11.25mb/d, although this does not take into account the OPEC agreement for the first half of 2017. If we assume that the impact is reduced output equivalent to 100,000b/don average for the year, then the actual outcome in terms of total production would be around 11.15mb/d. However, we would not expect the OPEC agreement to undermine the country’s long-term growth prospects, which could see production ultimately reach 11.65mb/d by 2020. Thereafter output goes into gradual decline, because the visibility of assets becomes less clear, but as we will discuss below there are good reasons to believe that production could be sustained at well over 11mb/d for a considerable time as new regions are developed.

              From https://www.oxfordenergy.org/wpcms/wp-content/uploads/2017/02/Russian-Oil-Production-Outlook-to-2020-OIES-Energy-Insight.pdf

              Figure 12 below is from Page 15 of that paper and the quote above is on page 14.

              From the conclusion (page 18):

              In the longer term East Siberia, the Arctic and offshore regions and Russia’s tight oil resources offer further upside potential, which could keep overall production above 11mb/d during the next decade.

              Longer term production opportunities are discussed in detail on pp. 17-18.

            2. If we consider the 12 month average for Russia the trailing 12 month peak is about 11.15 Mb/d for Jan 2019. If the linear trend is followed until 2020 the 12 month average C+C peak would be about 11.4 Mb/d. The monthly output may indeed be at its peak at 11.4 Mb/d in Dec 2019, though monthly peaks are of less interest from my perspective.

              In any case I agree with Ron’s assessment that Russia is either at or very close to peak C+C output (especially on a 12 month average basis).

    1. Thanks GuyM.

      Average since the beginning of 2018 for new well oil completions in Permian Basin (Districts 7C, 8 and 8A) is about 380 completions per month, with 401 in Jan 2019. I would expect this to drop at some point, maybe March?

      1. Good question, but the answer is, I’m not sure. Let me throw out just one scenario. Suppose I was big oil, and had more pipeline capacity than I knew what to do with. If I pump up my production, I could push off smaller operators making their financials look worse. Then I could offer them a deal they can’t refuse. I just don’t think the other operators understand yet what competition with big oil can look like. Not saying that’s what’s going to happen, but the community will never be the same, again. Maybe Exxon can cause some disruption to other pipelines by building their pipeline. I think JR is alive and moved West a bit. “Friendly” competition with big oil means they are part of it. Service companies, pipelines, other transportation and anything else is fair game, now.

        1. GuyM,

          Interesting scenario which I think would imply no drop in completions in the short term if it is correct. My guess is that your scenarios would be better than mine as you at least have access to oil industry insiders even though you don’t live in West Texas.

          1. I really have no access to any insiders. But; my history tells me that if you have it, someone will try to take it from you. I’ve just been thinking about it, and that could be dangerous.

            There are some companies that are somewhat immune to being a desirable takeover in the short run. Oxy, because of its international interest and heavy footprint in pipelines. Plus, it has downstream interests. Chevron, Exxon, ConocoPhillips, Shell and BP are obvious competitors for takeovers. Marathon as the largest refinery in the US would cause major indigestion. Some larger independents still have other sources outside of shale. Not many, but a few.

            The acquisitions that are prime, are those primarily in the shales, and not diversified. If prices go up, then those that are also outside of the Permian should do ok, and be more expensive. Although, even EOG would benefit long term. It’s footprint outside of shale is pretty small. Shale will not last forever. We are in the final quarter, and they are down by 30.

            I realize that logic does not always equate to real life, but I am quessing that it will within two to three years.

            1. GuyM,

              I thought everyone in Texas was an oil man or woman. 🙂

              Next thing your going to tell me that everyone doesn’t drive a pick up truck wear a cowboy hat and boots and wear a six shooter on their hip.

            2. Well, looking at their elected representatives, it is not that much of a delusion.
              But, reformist politics are in the rear view mirror anyway IMHO.
              Hey, it is becoming more culturally and racially diversified—

            3. Well, Texan’s always like to be biggest, and in terms of minority population we may be one of the highest. Always have been. Even now, the non-Hispanic white population is around 45%. So, we are rather used to being culturally diversified. Which includes elected officials, and those are HIGHLY diversified?

              Texas is not so much a red state because of “Republicans”, but rather because of more conservative outlook. Most of those conservative family ideals come from the predominate Catholic upbringing. A “conservative” Democrat could win quite easily, though I am unsure if any more exist. Heck, sixty years ago, a Republican convention in Texas could have been held in a telephone booth.

              The most common Texan does wear a hat, drives a pickup, has a cross hanging from the rear view mirror, and listens to accordions hammering out Hispanic music. Mi musica es su musica.

            4. I’ve travelled internationally with many a Texan.
              I like them, but one must always keep in mind that they are Texans.

  13. From what I have been reading, Shell wants into the Permian. Probably sometime this year, they will get their chance.

  14. Venezuela and oil:

    Venezuela – U.S. Aid Gambit Fails – War Plans Lack Support

    https://www.moonofalabama.org/2019/02/venezuela-us-aid-gambit-fails-war-plans-lack-support.html

    U.S. politicians are making the same mistakes with regards to Venezuela as they made with the regime change wars on Iraq and Syria. They believes that all people are as corrupt and nihilistic as they are. They believe that others will not fight for their own believes and their own style of life. They will again be proven wrong.

    While we do have morally absent politicians as leaders, this is a bit harsh.
    Possibly, they are just morally bankrupt, and just stupid.

    1. Hightrekker,

      I find moonofalabama has a more than slanted presentation of pretty much anything that the US does.

      1. It has no problem expressing its view.
        More French in its view, rather than pretend to be “fair” like US publications, that get few things even remotely on base.

      2. Synapsid,

        I agree a very left wing view, especially from a US perspective. In many European nations this type of view would be a little closer to the center, but still a bit left of center.

  15. https://seekingalpha.com/amp/article/4239348-apache-gets-lower-oil-prices-means-spend-less

    Apache capex cutback for 2019. I have never understood the economics of their Alpine High. The big oil can still raise production by bumping others off the pipelines, I remember reading somewhere. There can still be a 200k increase before new pipelines due to the conversion of the gas liquids pipeline. It depends upon how interested they are at $52 a barrel less discount. Big oil makes more money downstream, so it doesn’t hurt them.

      1. Seems a tich misleading. Yes, their production is scheduled to rise on a year over year basis. But in the fine print, the production for q4 is a little over 68 thousand barrels a day, and will average 67 thousand barrels a day for 2019, so a decline from where they currently are.

        2. Presentation people prefer the term imaginative. Pure Permian companies will set the Walt Disney records in imaginative during the first and second quarters.

    1. GuyM,

      Eventually fossil fuel output will peak and things will need to change. Government action might not be necessary, a free market might take care of things on its own. A carbon tax is the best approach to speed the transition rather than government bureaucrats choosing winners and losers. The extra taxes collected could either be used to reduce taxes on the middle class, returned to all citizens equally regardless of income, or be used to reduce government debt. Or it could be some combination of all three of these approaches.

      It need not be “socialist”, it could be a free market government hands off approach.

      Or we could just let the market work with no government action, but that is likely to be highly disruptive and might maximize suffering.

      1. Doesn’t that fair point on carbon tax depend on where the tax is collected?

        1. Yes, and a big ‘detail’ is what the revenue gets spent on.
          If it was to be spent on national infrastructure and energy sustainability type projects, that would surely be better for the longterm health of the country than on medical or military spending.
          Oops. Sorry for non-petrol [green new deal, venez, socialism, etc.] comment.

          1. Naw, I think carbon tax is a petroleum thread item. JMO. Where is probably not important to be fair. Upstream, import, refining, post refining processes at chemical plants, or the end user, which is most everyone? If it is the end user, it’s just another regressive sales tax. And nothing is “fair” about that. And where it’s taxed is really unimportant, it will eventually trickle down to the end user. So, we go to being a nefarious Robin Hood, robbing from the poor to support the upper and middle class, so they can better afford to switch?

            1. “Naw, I think carbon tax is a petroleum thread item”
              So, do your extend the same line of thinking to carbon emissions?

            2. That would be left up to the ones that run this board, I don’t. If we are going to run the petroleum people off this board with anti oil crap, then I am gone, too. Because, I do not come to this board for that. I can get that in a lot of places. I come hear to learn about oil, and where it is at.

            3. Hickory,

              GuyM brought it up, it does affect oil production. I don’t think a discussion of climate change is appropriate in this thread.

              I bring up greenhouse gases because EPA rules on methane affect oil and natural gas producers, if those types of rules are applied to some businesses then fairness would dictate that they be applied to all businesses that release greenhouse gases or not apply those rules at all.

            4. It has to be end user, as with the petrol taxes in Europe.

              But end user can be a big company, too.

              Otherwise – if you tax oil sources, cheap oil will be imported. The same with any point of midstream taxing. Avoiding here will be the effect of it.

              Just tax burning fossils.

              The effect is relevant – here in Europe still is too much driving and too big cars. But not as much as in Countries without relevant gas taxes. I think here would be lot’s of pickup trucks, too, when they wouldn’t tax the stuff – so reduced oil demand from Europe.

              Normal people get a part of the gas tax back with tax refunds – you can use your way to work to get a refund. Since some years, you can drive to work without a car and still get a refund. It’s an incentive to do this. It is cheaper to buy a year ticket of public transport or a good bike than the fuel tax.

            5. Eulenspiegel,

              End user is probably most sensible. The idea is to reduce the rate that fossil fuels are burned, it is the consumer who decides the rate of burn.

          2. Hickory,

            Yes that is indeed a big detail and agreement would need to be reached between liberals and conservatives for any measure to make it through the legislature so there would need to be compromise or no bill would pass (the most likely scenario).

            One option is tax relief (say reduce middle class tax rates) the other is deficit reduction or even reduction of government debt level. Either of these might be ideas conservatives would like. Generally it would be easiest to pass a measure that was revenue neutral and not increase government spending or at least minimize government spending.

        2. GuyM,

          Could be a tax on consumption or production, seems it would be easier to tax where it comes out of the ground and those costs are passed on to consumers, but if producers deem this unfair it could be taxed at point of use. The effect on consumption would be nearly identical. Note this tax would apply to oil, natural gas and coal, but could also be applied to beef, dairy, and other agricultural products whose production releases greenhouse gases (methane and N2O).

            1. GuyM,

              Yes that is true. That suggests tax cuts to lower income folks to leave overall tax rate about the same. Another option is returning all carbon taxes collected back to every family in equal measure.

              Lets say there are 90,000 families in the US and $9 billion in carbon taxes was collected in a year, each family gets a check for $100,000 at the end of the year from the government.

  18. So if the high for the year of 2019 price wise has already happened for WTI. And price holds a range between $53-$30 for the rest of the calendar year. Any best guesses where production will be by years end?

    Technically price touched the underneath side of an old trendline coming off the lows of 1998 to the exact pip or point and was rejected by this old trendline twice both in Jan and Feb. Chart is saying something different than what people who believe there is a fundamental reason for price recovery this year. There are several different ways to breakdown the chart on different time scales and they all point to no recovery from current price.

    1. HHH,

      If oil prices remain under $53/b output will either be flat or decrease. I doubt oil prices will remain at current levels or lower for the remainder of 2019, though I tend to over estimate oil prices. My guess is an average price for WTI of $60/b for 2019.

      1. Take a look at the dollar index. Look at the dates 07/2014 and 02/2015. Take a look at WTI chart look at the dates 07/2014 and 02/2015. The month of July 2014 dollar takes off like a rocket. Oil tanks. Since the month of 02/2015 the dollar has moved sideways for 4 year. Since 02/2015 WTI has move sideways for 4 year. Take a real good look at it because price on both are almost exactly where they are today 02/2019 as they were in 02/2015

        Dollar index is looking really bullish IMO. Fundamentally Fed is still allowing up to $30 billion to roll off it’s balance sheet a month. $30 billion vanishing into the thin air it came from. Dollar scarcity = lower WTI.

    2. We may not get a price recovery, I see no relationship now between oil prices and fundamentals. Oil may trade at $30 by the end of the year, but there won’t be as much of it.

      1. That isn’t sustainable, especially with a commodity with inelastic demand like oil. If supply decreases and demand increases by another 1.2-1.7MM barrels per day, inventories will get critically low and oil prices will skyrocket.

          1. As of now most shale Area in US continue irs decline in oil riggs , think permian was -3 this week. I believe mostely this is related to lack of investment because of WTI 50-55 range. Than I see in Alaska there is now some increased investment because of some tax intensives. Number of riggs are increasing and there is undescovered resourses offshore. Even there is pipeline capacity. This resourses might be profittable at lower prices than shale abd fill some of the lost barrels from permian and other shale field. Investors mught also find more trust in Alaska oil, beside this refinery need more heavey oils to produce diesel and price exspect to raise . We might se a decrease in light sweet shale price at range 40-50 sec. half 2019.

  19. https://www.zerohedge.com/news/2019-02-09/reporters-diary-venezuela-insolent-american-bastards-should-be-hanged-first-tree

    Gasoline is 10 cents per 60 liters in Caracas. There is really no price for anything because cash conversion is impossible. All things are bought with plastic cards that seem to be government distributed. The writer’s taxi from the airport filled its tank with no problem (and nearly no money).

    The writer is Russian who made the trip to see what’s going for himself. This is immediately suspect. But as one reads, it becomes less so. He writes like a Vice reporter and he takes pictures. He interviews people who are rabidly anti Maduro. He challenges them. He interviews people in the barrios who are rabidly pro Maduro, and he challenges them, too. He whitewashes nothing.

    The poor in the barrios are given food and free apartments by Maduro, as did Chavez. They say “we will cut the throats of any invader who comes to remove Maduro.”

    The people in the barrios outnumber the middle class who are anti Maduro.

    The guy is Russian, but if he’s propaganda and disinformation, the CIA better hire him because he’s 100X better than theirs.

    1. That’s not difficult, the CIA, as a whole, are not the sharpest tool in the shed. Nor, is this tidbit.

      1. That’s not difficult, the CIA, as a whole, are not the sharpest tool in the shed

        Yeah, that’s similar to what Trump said. However I would take their opinion over Trump’s or that of his buddy Putin.

        But why are you guys talking about this on the petroleum list.

        1. FU, I’m outta here. You start equating me with Trump, as I am definitely not wanted here.

          1. GuyM,

            In my opinion Venezuela is an appropriate topic, I also agree sometimes the CIA gets things wrong (WMD in Iraq for example). I certainly appreciate your comments.

            2. Ron,

              Pretty sure nobody is claiming that Trump knows more than the intelligence agencies, simply that they are less than perfect. As I am guessing you would agree with.

            3. Well Trump himself thinks he knows more than our intelligence agencies. And I know a lot of people who agree with him.

              The CIA knows a whole lot about what’s going on in Iran, or Iraq, or Syria, or Venezuela than Trump, or you, or I, or anyone else I know of.

              Trump, demeaning our intelligence agencies only made himself look stupid.

      1. When, and if, Venezuela changes is pertinent to oil production, or am I missing something?

        1. GuyM,

          I tend to agree that what happens in Venezuela is relevant it will influence World oil output.

          1. Well, good luck with the board, your doing an exceptional job. I’ll continue to read it, as there are some valuable contributions. I just don’t have anything more I want to add.

  20. Washington Eyes Crackdown On OPEC

    Legislation targeting OPEC is suddenly gaining steam in the U.S. Congress, raising alarm bells for the cartel.

    On Thursday, the House Judiciary Committee passed a bill that would allow the U.S. Justice Department to sue members of OPEC for manipulating the oil market. The so-called “NOPEC” bill would remove sovereign immunity, exposing member countries to antitrust regulation.

    The bill has appeared in the past under prior administrations. But previous presidents from both political parties have opposed taking punitive action, fearing damage to the U.S.-Saudi relationship.

    Times have changed. President Trump has repeatedly posted angry tweets about OPEC, blaming it for high gasoline prices. That led to a revived push for the NOPEC legislation. The murder of Saudi journalist Jamal Khashoggi may have also been a turning point, erasing a lot of goodwill for Saudi Arabia in Washington.
    In theory, OPEC members could face confiscation of their assets in the United States. Saudi Aramco, for instance, controls Motiva Enterprises, which owns the largest oil refinery in the country in Port Arthur, Texas.

    According to the Financial Times, the prospect of the NOPEC bill becoming law has raised alarm bells not just for OPEC, but also for international oil companies who fear reprisals abroad. Companies like ExxonMobil and BP have major stakes in projects in places like Nigeria and Iraq. These OPEC-member countries could retaliate if they face punitive action from the U.S. government. The FT reports that the oil majors, along with the American Petroleum Institute and the U.S. Chamber of Commerce, are lobbying against the NOPEC legislation.

    Analysts speculate that Qatar exited OPEC in 2018 not just because of its rivalry with Saudi Arabia, but also because it has major interests in the U.S., and does not want to face antitrust action. Qatar Petroleum, along with ExxonMobil, just gave the final investment decision for the $10 billion Golden Pass LNG project in Texas.

    1. I can remember this sort of thing arising in years past, but I do not recall that the reason for the proposals dying was focused on the KSA relationship.

      I think it was more of an issue of it being too extreme. U.S. laws being imposed on non US entities was not always an acceptable scenario. Enforcement is essentially a matter of sanctions, and those have now become so common that past reluctance is eroded.

      The US does not buy all that much OPEC oil nowadays. That might also be one of the reasons for the past proposals dying. The United States of the past was more vulnerable to retaliation.

      Anyone know if the WTO, or World Court, hears anti-trust cases?

      1. “The US does not buy all that much OPEC oil nowadays.”

        Check: https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTIMXX1&f=M

        The US import around 3 MMb/d of oil from OPEC, down from 6 MMb/d in 2008. This is strongly correlated with the growth of LTO production. The pressure is indeed lower, but it’s still significant. 1/3 is imported from KSA.

        I think the US still depends too much on OPEC to really threat them with sanctions.

      2. Looked it up. The World Court at the Hague does hear oil relevant lawsuits. 1952 was the UK vs Iran oil company seeking to enforce an agreement from the 1930s about how oil revenue would be divided. (This was the first case that seemed to fit oil focus on the list of cases, might be more, didn’t look) The Court decided there should be a 5 man board controlling the oil, 2 from each country and a 5th from a neutral country to be agreed on by both parties.

        This decision included a temporary ruling pending the board being put into place that found for the UK. Iran rejected the ruling as lacking jurisdiction. UK appealed to the entire UN. Necessary votes were not forthcoming.

        Looks like an elaborate mechanism for lawyer billing with no eventual result.

  21. Total announces 1 billion boe find offshore South Africa. Text emphasis is gas.

  22. Western Media Fall in Lockstep for Cheap Trump/Rubio Venezuela Aid PR Stunt

    Context that, when presented to a neutral observer, would severely undermine the cartoonish narrative being advanced by US media.

    Both the Red Cross and UN warned the US not to engage in this aid PR stunt.
    The bridge in question is a visual metaphor contrived by the Trump administration of little practical relevance.
    The person in charge of US operations in Venezuela has a history of using aid as a cover to deliver weapons to right-wing mercenaries.
    (1) Not only has the international aid community not asked for the “aid,” earlier this week, both the International Red Cross and United Nations warned the US to explicitly not engage in these types of PR stunts.

    https://fair.org/home/western-media-fall-in-lockstep-for-cheap-trump-rubio-venezuela-aid-pr-stunt/

  23. OPEC, citing secondary sources, says its January oil output fell by -797,000 barrels per day month/month to 30.806 million barrels per day as members implemented new supply cuts.
    OPEC MOMR https://www.opec.org/opec_web/en/publications/338.htm

    Preliminary data for December showed that total OECD commercial oil & products stocks fell by -10.8 million barrels month/month to stand at 2,851 mb. This was -2.5 million barrels lower than the same time one year ago.

    2. So, OPEC change from Nov to Jan was -1.5 Mbd. Saudi was responsible for most of it by not drawing down their stock as fast as in previous months.

      IEA OMR will be released tomorrow and should give a better picture of current stocks. At this pace, OPECs autumn boost could vanish pretty quickly.

      Any news on what is happening with Khafji and Wafra?

      1. Neutral zone – the last thing that I can remember is that (October 2018) the talks had been put on hold again.

  24. It sounds like Libya’s oil production will be returning to full capacity…

    2019-02-11 (Bloomberg) “Sharara is completely secure and ready to resume pumping. Restarting production is the jurisdiction of the Tripoli-based NOC” –Libyan National Army

    earlier 2019-02-11 (Bloomberg) Forces loyal to Libya’s eastern leader Khalifa Haftar have taken control of the country’s largest oil field (El-Sharara 300kb/day) and pledged to hand it over to the National Oil Corporation once it’s fully secured.

  25. Most interesting part in this article is: They claim initial production per well for shale is already falling:

    https://oilprice.com/Energy/Energy-General/An-Unexpected-Bullish-Factor-For-Oil.html

    I don’t now the data this author uses. This would dampen shale growth very much even this year already.

    My thoughts when this is right:
    For this effect taking happening it could be enough when big oil has bought many core areas planning to drill them more slowly over the next 10 or 20 years- so the fast drilling small companies have already now to fall back on B quality areas even when there is much undrilled space in A qualtity regions.

      1. “Initial oil production per rig” is not a very good parameter – in my opinion this is garbage.
        Old rig? High tech rig? Only half booked rig?

        I think oil per hole (even more exactly per foot lateral) is what counts, for both land owners and old school oil man like Mike.

        1. Do you have access to such data that you can post publicly? I don’t and in its absence I use what I can find and add a disclaimer.

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