188 thoughts to “Open Thread Petroleum, June 28, 2019”

  1. From last night. Re: signing onto the mining theory for the tankers hit last week.

    For those who don’t know, Shiite and Sunni Muslims have no small hatred for each other. At time of Mohammed’s death, he had some friends and associates who announced they would be the leadership of Islam. There was talk of democracy and voting (voting among them, not the populace) to select the Who’s Who. That started the Sunni bunch, currently the majority. The Shia group rejected all things these people had to say and declared instead that leadership would be familial. The closest relative to Mohammed at time of death would become the leader. Guy named Ali bin Abu Talib.

    Lots of process and procedure departed from each other at that point. Imam’s became saint-like figures for Shia. These were originally people appointed directly by Mohammed or by Talib and later family, and they were not capable of error. They have huge power among Shiites.

    KSA is majority Sunni. Iran is majority Shiite. This is the core reason for their mutual hatred. But as for the tankers, there is this:

    UAE has announced they will not sign on to the conclusion that tankers were mined. Qatar made similar comments, but Qatar has Shiite among its powerful merchant (and royal) families (though the population as a whole are not specifically Shiite) and the UAE is majority Sunni. This is a big step away from KSA by UAE.

    The relevance of Qatar derives from the content of one of the tankers, methanol. We don’t talk much about methanol here but it has many applications, one of which is fuel, and it’s made from natural gas. Hence, Qatar.

        1. Yep—-
          Failed economic ag policy and authoritarian rule .
          Of course now, a major player.

      2. “Religion is poison”
        -Mao
        Kind of ironic when he managed to kill on his own a lot more people than any religion.
        Let’s double down on irony:
        Or how can you say to your brother, ‘Let me take the speck out of your eye,’ when there is the log in your own eye?
        Matthew 7:4

        1. The competition for numbers of people killed is pretty close:

          “The death toll of Christianity is a disputed subject, with controversies including the death toll of the events, how much the death toll can be attributed to Christianity, and how it compares to the death toll of communism, which is often blamed on atheism. The most famous estimate is 56 million deaths, but a more critical examination would put Christianity’s death toll at 9.064 to 28.734 million.” However, if you widen responsibility to mean any mass atrocity caused by largely Christian societies regardless of motive [Like how atheists get blamed for the Great Leap Forward which caused half of communism’s deaths even though the motivations were economic not anti-religious] then the death toll of Christianity would ascend to 82.069 to 106.734 million deaths more or less equal to the “Black Book of Communism” 85 to 100 million deaths from communism-(Which is disputed by some of the book’s own authors[1])-that all get blamed on atheism regardless of other motives to the killings which is what you’d be doing here if all of these deaths were blamed on Christianity alone. (see details below.)

          The most notable events contributing to this total were the Thirty Years War, the Crusades (including the Albigensian Crusade, a.k.a. the Genocide of Cathars), the Encomienda brought by the Spanish colonization of the Americas, and the French Wars of Religion.”

          https://rationalwiki.org/wiki/Death_toll_of_Christianity

          1. And both major countries under “communism” were dominantly Christian (Russia)and China (Chinese civilization has historically long been a cradle and host to a variety of the most enduring religio-philosophical traditions of the world. Confucianism and Taoism (Daoism), later joined by Buddhism, constitute the “three teachings” that have shaped Chinese culture.).
            These were not non religious societies.
            Not like Norway today, or other Western Democracies.

        2. Mao didn’t kill as many people as the Taiping rebellion in the late 19th century. It was led by a guy who learned about Jesus from American Baptist missionaries and declared himself to be the reincarnation of Jesus.

    2. Watcher Wrote: “UAE has announced they will not sign on to the conclusion that tankers were mined.”

      Some non Islam countries aren’t buying the US story that Iran mined they tankers. The Japanese Tanker captain stated that some type of flying object struck the ship & it was not a mine. I believe a few European nations also rejected the US claims too do to lack of conclusive evidence.

      https://www.pastemagazine.com/articles/2019/06/japanese-tanker-operator-denies-being-hit-by-irani.html

      From Hightrekker
      ““Religion is poison”
      -Mao

      Right because it competed with Communism. Communism is just another form of religion as its followers become locked in its ideology.

  2. EIA has just posted their April monthly data. Their initial production estimate falls in the middle of the weekly data for April. Production from the lower 48 is up by 252 kb/d. Primary contributors are Texas 107 kb/d, GOM 77 kb/d and Oklahoma 32 kb/d.

    1. April GOM production was another record, about 1.98 mmbopd, and this would be without any Appomattox contribution. (First oil for Appomattox was in May-2019). Wouldn’t surprise me to see production going over 2 in any given upcoming month. I need to revisit my views of GOM production over the next few years. The 2018 average, from BSEE data, was about 1.75. My previous 2019 estimate was in the 1.80 range, +/- 50kbopd. Production so far in 2019 has averaged 1.88 (using EIA data. EIA data and BSEE data used to be very close to each other. Of late, the difference have been a bit larger).
      Right now I’d be comfortable increasing that estimate a bit – to 1.85 +/- 50kbopd.
      Image below is GOM EIA oil production data. The last blip is the April-2019 data point.

      1. SouthLaGeo,

        Thanks for the info. If you ever want to do a brief post to lay out your ideas, let me know at peakoilbarrel@gmail.com. Or make a comment here (sometimes I don’t check that email very often).

    2. Okla is fxxxing dying. Colorado and Bakken are sick. Thats current, so who knows for April. I have to give the monthlies the benefit of doubt. They are the most accurate. Baker Hughes shows two up for the Permian, and two down for the EF. Net zero Texas. April, May and maybe June will be the apex for the Permian. I think the majors got what they needed. But, that’s all a guess. But, traditionally it slows down on completion after June and July. August heat in Texas is deadly. July is about the same, and oddly, it is just getting hotter in June.

      1. I presume when Permian stalls so it will be the Peak of US production? I haven’t been following US Oil production growth lately.

        I presume when US Peaks it will be the global Peak production as the non-US production growth cannot beat declining production from older fields?

        1. Yeah, I think that is the consensus. US growth determines if we are ok, or sucking inventory levels.

        2. The Permian is the only plausible growth area, yes. The enormous proposed oil in place in the official EIA forecasts of Bakken and Eagle Ford kinda ignore that both have a handful of counties where the action is. In Eagle Ford’s case, one county. Most of the geographic play either acts like it is in decline or sees no drilling to begin with because it isn’t believed to produce profitable wells. As most companies fail to make money on fracking *anyway,* there is a money clampdown going on with investors and lenders saying “no more, you make money from operations now or else.” So it is unlikely to say the least that we will see material growth from either the Eagle Ford or Bakken.

          Those are the big three basins. Finding additional hasn’t worked out well. So Permian has to grow. A lot. There isn’t anywhere else to go. Once Permian can’t drive Texas as an aggregate higher – that’s the second USA peak.

          And ex-USA and Canada unconventional resources, world production already peaked.

            1. I meant that Karnes is the only one that may still have significant growth.

        3. Techguy,

          Correct t on both counts in my opinion, I expect Permian won’t peak till 2028, but declines in other plays after 2023 will result in a 2024 to 2026 peak for US tight oil. That peak may coincide with the World peak, though possibly the World peak might be a couple of years later, depends on too many factors to make an accurate prediction, for that reason, I stick with 75% probability of a peak between 2023 and 2027 and perhaps a 12.5% chance it might occur before 2023 and a 12.5 % chance it might occur after 2027 (for centered 12 month average World C+C output).

          1. Looks like Permian is peaking now or within the next 4 to 12 months:
            https://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&ved=2ahUKEwin-tfDiJDjAhWqUt8KHRGDCvsQjRx6BAgBEAU&url=https%3A%2F%2Fwww.energyindepth.org%2Fthe-permian-basin-is-now-the-highest-producing-oilfield-in-the-world%2F&psig=AOvVaw2OcUgCay2cpIvqOPHcmerN&ust=1561944901084760

            https://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&ved=2ahUKEwi7_5r4iZDjAhVth-AKHULYB6EQjRx6BAgBEAU&url=https%3A%2F%2Fwww.cmegroup.com%2Feducation%2Ffeatured-reports%2Fbrent-wti-oil-spread-taking-cue-from-houston-midland.html&psig=AOvVaw3LEcElqv_OvApkYXzmWNfb&ust=1561945175916342

            So if these trends hold PO is either 2019 or 2020 🙁

            1. Tech Guy,

              Through May 2019 the trend in Permian basin output has been has been higher. That is the trend that is likely to continue, especially when oil prices rise later in 2019 (probably $75/b for Brent by Oct 2019).

              The trend for Oct 2018 to May 2019 is an annual rate of increase of 445 kb/d.

              Things have changed since Feb 2019, and they could change again in the future.

            2. “The trend for Oct 2018 to May 2019 is an annual rate of increase of 445 kb/d.”

              OK so if the annual increase is only ~450Kb/d The gain is tiny compared the total global production ( ~100mbpd) and that is not factoring declines in older fields.

              If total global production is just increasing by a couple of hundred barrels per day, than I would consider that peaking, just not “the peak”

              FYI:
              https://www.eia.gov/outlooks/steo/report/global_oil.php

              Oil production between 2018 & 2019 has been almost flat (about 200kbp/d increase between 2018 & 2019)
              EIA has forecast that oil production will increase to about 102.82 (about 2Mbpd) However if Permian does not substantially increase production over the next 12 months then global production will very likely peak.

              So is there any major project coming on-line in the next 12 months: Something that can produce 1Mbpd+?

            3. Techguy,

              OPEC output can increase, Canadian, Brazilian, Russian, the average annual rate of increase in World C+C output from 1983 to 2018 was about 800 kb/d. US output is likely to rise by about 1150 kb/d from 2018 to 2019 (in terms of annual average output for the year). Total decline for the rest of the World (excluding US) has been relatively modest (under 100 kb/d each year from 2015 to 2018), so it is not likely the peak will be 2019 or 2020, probably 2023 at the earliest, perhaps 1 in 4 odds it will be 2023 or earlier.

            4. “OPEC output can increase, Canadian, Brazilian, Russian”

              Can or Will? Doubtful Russia, or even OPEC can increase much (See Chart). I believe any growth in Canada would be from Tar sands, and likely to be slow or non-existant with Oil below $100/bbl. Brazil has financial challenges that will likely retard any production increases.

            5. Tech guy,

              OPEC+ has cut output because they believe the World oil market would be oversupplied if they did not cut. Cuts have been extended through March 2020. So OPEC/Russia will likely be flat for now until March 2020. Canadian increases will indeed come from oil sands and will increase when they can get their oil to market as currently there are pipeline constraints. US trailing twelve month C+C output will increase from Dec 2018 to Dec 2019 by 1150 kb/d. World C+C demand has been growing at an average rate of 800 kb/d from 1983 to 2018, the increases in US output have been enough to meet increased demand. As the US increase slows, OPEC/Russia and Canada and Brazil will pick up slack from 2020 to 2022, after that output will increase more slowly as higher oil prices will destroy demand from 2022 to 2025. The peak is likely to be 2024-2026, though potentially we might see a plateau from 2022-2028.

            6. Techguy,

              “So is there any major project coming on-line in the next 12 months: Something that can produce 1Mbpd+?”

              Not 1mbpd+ but still note worthy, Johan Sverdrup comes online in Norway in a couple of months now. Phase one will have plateau at about 440.000 boepd and they should reach that level in late 2020. Phase two is set to 660000 boepd and is planned for 2023.

              Opex for field will be 2-3 dollars/barrel and full circle profitability below 20 dollars/barrel.

              To my knowledge one of the best discoveries in “recent” years.

            7. Below are two charts which show the production in each of the LTO basins as taken from the May EIA tight oil sheet. In the first chart Spraberry and Wolfcamp continue to show increasing trends. In the second chart, all are flat except for possibly Bonespring. Its trend should clarify itself in a few months.

            9. Second chart total about 1.6 Mb/d, first chart about 6 Mb/d, Wolfcamp and Spraberry about one third of total output and output of these combined formations has more than doubled in the past 2.5 years, they are the ones to watch going forward.

    3. Based on EIA data through April we get a trend from Dec 2018 to April 2019 of about 545 kb/d annual increase, if we follow the trendline the C+C output increases by only 400 kb/d from Dec 2019 to Dec 2019, however if we consider trailing twelve month average (TTMA) output, the increase is 1150 kb/d from Dec 2018 to Dec 2019.

      Chart below shows TTMA for US output, blue dots are based on projection from May 2019 to Dec 2019. TTMA output is 12.1 Mb/d in Dec 2019, projected output in Dec 2019 is 12.7 Mb/d.

      1. Attached below is a chart that shows production from two Permian basins, Spraberry and Wolfcamp, are continuing to show consistent increases. In an earlier chart above, it was shown that Bonespring appears to be plateauing, similar to six other LTO plays.

        The linear approximations for these two basins show that Spraberry production is increasing at 29,500 kb/d/mth while Wolfcamp is increasing at 34,200 kb/d/mth. Comparing the linear approximations to the actual data shows that there is no indication yet that production from these two basins is starting to roll over. Surprising! This may show up later in the year as the number of rigs continues to decrease or the legacy decline continues to increase.

        By Dec 19, these two basins will add an additional production rate of 0.513 Mb/d. Assuming the other basins production remains on a plateau, LTO production by Dec 19 should be close to 8.0 Mb/d. The June STEO projects that the production increase in the lower 48, ex GOM, between May and Dec is 0.61 Mb/d. It will be interesting to see where it ends up.

        1. Thanks Ovi, very interesting.

          Oil prices have recovered somewhat, so it is possible the rate of increase might be a bit higher than the linear trend. I agree it will be interesting to watch. Note that if there are fewer completions due to fewer rigs, the legacy decline rate tends to decrease. You can see this by looking at the drilling productivity report in 2015/2016.

    1. No, I didn’t. That won’t hold up. They found that the shale rocks did not hold up, because they were intermingled with non shale rock. June disclosure. A lot moving out, now. EIA’s estimates come from drillinginfo data, which are estimates within the last two months, and is why the EIA estimates are off. Your looking at funky numbers. They will clear up when EIA posts the monthlies, which is a couple of months behind. And I was born in Ada, Okla., my bachelors is from OU, but only because of an early out to my original State of residence during Vietnam Nam. Still love OU football, always will. So you see, pretty difficult for me to pick the wrong state?

      Yeah, I’m a Texan, too. Parents came from San Antonio. Mother’s family predates the year of the Alamo, so I got rights to the Sons of the Republic of Texas, too. And, two Masters from Texas, UT Arlington, and A @ M Commerce. Not counting my lifetime membership in the Freemasons in Atascosa County. Oh yeah, my CPA certificate is from Texas, too.

      Of course, there is still a possibility that all that press was sure BS. Seen it before. So, what I read, is just what I read. Last I recall, Anadarko is in Okla. I have very small remainderman interest there. My Father, and his father have bits of interests in about five states, because they were oilmen. I’m just a holder. And, often, not too smart and wrong?

      However, none of my immediate family would have anything, if I did not do the research of what my family held (in hardcopy documents going back to 1970). I wouldn’t know I belonged to th Sons of the Republic of Texas, if I hadn’t looked at land deeds going back to the original colony of Texas. So, sometimes my meager efforts pay off. Sometimes, they don’t.

      1. It has been about 3 years since I took a close look at OK tight oil. However, I recall a decent amount was 50+ gravity.

        Colorado may have a difficult time growing as the state government is not generally in favor of fossil fuel development.

        2020 looms large. Trump barely won. However, many Democratic candidates say they will ban fracking.

        It is just one issue, but are Americans willing to give up access to shale oil and gas?

        I need to read up on the candidates positions to see how they each define a fracking ban.

        1. You know, my first reaction to this is based upon my guesses of were we will be in Nov. 2020. I shouldn’t do that. I will guess that big oil will probably object to any fracking limitations. And, if they place any value on votes, they will listen. Bubba can buy a lot of fritzing votes. And Bubba will have grown, since now and then. Bubba don’t need a Republican win, he just needs a win that will ensure he is not burned at the cross, and can still operate.

          1. GuyM. I know people don’t like the anecdotal.

            However, this month I have had to do a lot of driving, I 35 through Wichita, I 135 through Salina, I 70 through Kansas City, Columbia, St Louis and Indianapolis, I 57 to S of Chicago, I 80 to I 355 to I 290 to the Jane Addams tollway, to the far NW Chicago burbs, I 39 from Rockford to Bloomington Normal. Ugh. A lot of driving.

            I always look for Tesla’s. I saw a Model 3 on I 57 in Will County and a Model 3 on I 355 just before it merges with I 290 a few miles S of Woodfield Mall. I hate to think how many semi trucks I saw during all of that driving.

            I am sure I likely missed one. I am sure there were hybrids.

            However, that is a lot of darn miles, heavy traffic for the most part, and only two of the many thousands of vehicles I saw were EV.

            One look at shaleprofile.com instructs us on what happens to US oil production if fracking stops.

            I cannot imagine how many thousands of grain farm acres I drove by, all farmed with diesel. The traders are arguing if 91.7 million corn acres were really planted. How many farmers in 2020 will vote to ban fracking?

            Then, of course, there is the natural gas, which is now providing a very large amount of heat in winter and electricity year round.

            What percentage will vote for high gasoline, home heating and electricity prices? Let alone all those employed in oil and gas, ICE auto manufacturing, trucking etc.

            Not saying who is right. Just saying 10 of the 20 Dem candidates clearly stated they will end fracking in the USA. Right or wrong, I think that will lose the election to the Donald.

            1. Voters that will decide the election don’t like fracking. Most people don’t understand – because the retail media is bad at reporting this – that the flipside of “Saudi America” is that we would be hugely short without it. Its just an abstraction that is messy and bad for the environment. The people who are impacted by oil and gas drilling, they don’t want said drilling. Look at Florida whenever opening up more blocks is discussed. Florida HATES oil drilling.

              Also I hate that Saudi America thing both on style (“Saudi” is strictly for that royal family, not the equivalent of Cowboystan) and substance. The pitch that fracking is cheap and can be profitable at prices normal oil is, well, that’s a flat out lie. Not misleading, just lying.

            2. The voters who will decide the election don’t care about fracking one way or the other. The voters who will decide the election are white males in Wisconsin, Michigan, and Pennsylvania. It is they who switched from Obama to Trump according to the exit polls. If you don’t win them, you don’t win. All other segments are largely static.

              The primary factor of those decisive states is they are out migrating states, and the people who are leaving are not leaving the multi-generational farms. They’re leaving the cities to go south. This amplifies the white male demographic from those states. Win them, or lose.

              There may be some gas fracking in Pennsylvania, but none in the other two locales. Fracking is not going to decide the election.

            3. I think you misunderstood my post. No one in Michigan or Wisconsin has a concrete reason to like fracking, or care when someone says they want to restrict it. There is no fracking industry in Wisconsin or Michigan. Its free to dislike it and the oil supply issue is not on people’s minds, not least because neither the government nor the media has sold it that way.

              Pennsylvania at least has some jobs but the people who might swing their votes around aren’t in them. They’re hundreds of miles away, big state. Colorado we know how people feel and its they don’t like it in their backyard.

              North Dakota isn’t a swing state and if Texas is, the election is already over.

            4. If the Democratic candidate for President in 2020 says that he or she will ban fracking in debates with the Donald, I predict that will not go well.

              I agree the masses are uneducated on this issue, but they will become educated when they are bombed by ads from pro oil and gas interests.

              If I recall correctly, CO voters actually voted down restrictions on where new wells could be located. Then the legislature went ahead and passed restrictions anyway.

              Fracking is not the only issue, but will the majority of the voters needed to win the electoral college really go for a fracking ban, after all of the ads explaining just what that means? What happens when oil production in the US drops 5 million BOPD in two years and gas production likewise falls off a cliff?

              I think this site has the premise that oil will peak in the near future and there are some big economic problems resulting therefrom that will need to be overcome.

              I just don’t think the Democrats who would immediately ban fracking nationwide either know or are willing to admit what will happen if that occurs.

              Likely all will back track from this position once they are called on it.

            5. I took a quick look at shaleprofile.com.

              If fracking operations ceased effective 1/1/17 (no wells completed after that date in the USA) US C + C production would now be about 4.8 million BOPD.

              I am sure OPEC, Russia, Brazil etc would be producing maximum if that had occurred.

              However, 7 million BOPD is a lot to replace.

            6. Prediction, unless gas prices at the pump increase to over 4 dollars a gallon, no discussion of fracking will occur in the presidential debates. Regular folks just don’t care until it affects them.

            7. Look at Florida whenever opening up more blocks is discussed. Florida HATES oil drilling.

              I’ve been a south Florida resident for the last quarter of a century.

              Florida’s main source of revenue is tourism to the Sunshine State’s beaches. Whether or not it is true or not, there is a general perception that oil drilling is not compatible with this source of revenue.

              People hate it when they even think something might interfere with their main source of revenue and perception is a big part of the decision making process! Just ask any fishing or dive boat captain in Florida.

              Cheers!

            8. @shallow sand

              ‘What percentage will vote for high gasoline, home heating and electricity prices? Let alone all those employed in oil and gas, ICE auto manufacturing, trucking etc.’

              Hear Hear, from the UK side of the pond,

            9. Mr Madden and Shallow Sand,

              There are high paying jobs, producing EVs, wind turbines, solar panels and installation of the wind turbines and solar panels as well as upgrading the grid to HVDC to move power from high wind and high insolation areas to areas with fewer renewable resources.

              You guys are familiar with the concept of peak oil and peak natural gas right?

              It is likely that between 2030 and 2040 the World will have seen the peak in World fossil fuel output in millions of tonnes of oil equivalent. We need a backup plan, it doesn’t happen overnight. Starting the transition now is the prudent plan.

            10. Shallow sand,

              It is pretty difficult for a President to fulfill their campaign promises, and often the promises change in the general election from the primaries. Doubtful the more left leaning Democratic candidates will win the primary and even if they do, doubtful they will ban fracking.

              Some regulation makes sense however, at least based on the comments of Mike Shellman, proper well spacing, reduction of flaring are a couple of things he mentions. Perhaps a Democratic president might push for those kinds of sensible regulation as many states seem to be shirking their responsibility in that regard.

            11. Clearly, RRC is shirking it’s purpose on drilling. To suppose that the Fed has a right to change laws that are traditionally States rights, poses some clear Constitutional challenges. Could wind up in the Supreme Court for quite awhile, and in my opinion, the Fed would lose. Same thing on prohibiting fracking.

            12. Agree on prohibiting fracking.

              The commerce clause allows the Feds to intervene in some cases for clean air and clean water, but probably you are correct that the Federal government can not decide on oil and gas production unless they create an imagined national emergency, perhaps along the lines that oil and natural gas is an important natural resource that needs to be conserved for the good of the nation.

              Given the makeup of the current Supreme court, you are likely correct that it would be ruled in favor of States Rights and States could continue to do a poor job of regulating oil and natural gas.

              There is a minority in the Oil and Gas industry that believes many states are doing a pretty poor job of regulating their oil and gas industries.

              How do you think the RRC is doing, do you agree with the criticisms that Mike Shellman has often raised?

              One might also claim that clean air and clean water should be up to individual states rather than the US EPA, but that seems to have been overridden by acts of Congress and if these laws have been challenged, it seems the Supreme Court has ruled in favor of those Acts of Congress in most cases.

            13. FWIW: Usually when a state rebels or flants states rights, the Federal gov’t threatens to pull highway funding or some other critical funding. Back in 1970’s it how the Federal gov’t got all of the states to comply with the 55mph mandate.

              That said, I doubt the socialists would pull fracking. Really all the want is more tax dollars so they can spend it on pet projects or use it to get re-elected with spending programs.

            14. Shallow sand,

              Guess the Teslas are sold in other parts of the US. The Model 3 was # 30 on the list of vehicles sold in the US so far in 2019 (includes pickup trucks, SUVs and cars. Only 46,425 vehicles sold in the US year to date as the focus has been on Worldwide sales since Jan 1, 2019. It will take some time for EVs to become commonplace, prices for EVs will fall, oil prices are likely to rise and adoption of EVs is likely to accelerate.

              http://www.goodcarbadcar.net/2019/06/may-2019-the-best-selling-vehicles-in-america-every-vehicle-ranked/

              No figures on Worldwide sales until early July.

            15. Shallow Sand,
              Looks to me like the FF interests have won, at least temporarily. The PV and wind installation rates have lost steam so the fossil fuel replacement is not anytime in the near future. EV sales in the US is too small yet to make any big dent and won’t go very far without heavy government and industry support.

              If you recall, fracking grew up during the Obama administration so I am not too sure that Dems will really slow fracking that much. The drum beating we hear now is mostly to grab votes in the next elections, I doubt if there is any real meat in any of the proposals.

              Unless things change soon, the US will be way short on energy in the not too distant future. Which is probably OK with both Rs and Ds at the top and their big money supporters. Crisis is always a good time to turn a profit and take control.

            16. I see them all the time on the East Coast (I-95). I usually keep a look out for them and keep my distance: (Self-driving malfunction, Loss of front wheel, or battery fire).

              In one of the buildings I work in, There are usually a couple of them charging. I did notice that now there are several large fire extingishers close to the charging station. 🙂

        2. The problem for Colorado is that drillers want to drill right next to housing developments. Oil and gas activities just aren’t that significant to the Colorado economy anymore, even if the companies try to claim otherwise. Housing is more important. And those suburban families are organizing and gaining clout.

          And if fracking money dries up, there is even less reason for companies to expand in Colorado or for politicians to go out of their way to accommodate them.

          1. Boomer. As we have discussed before, I understand the sentiment. We operate very small footprint wells that are producing so little gas a flare cannot be burnt from any of them. We don’t like to operate near homes because, even with a fence around the pumping unit and tank battery, with plenty of danger – keep out signs, we still are worried about people getting caught in them (which will result in death or serious injury.). Also, people tend to dig around and cut into our electric lines, flow lines and/or injection lines.

            I am not arguing who is right or wrong, just stating CO has decided to discourage fossil fuel development, so likely its production growth is at or near peak.

            1. My intention is to explain that Colorado as a whole isn’t anti-gas and oil. But there are competing economic interests. The state benefits from the people who live in those housing developments, from agriculture, from recreation, from tourism, etc. When gas and oil encroach on any of those, especially when it comes to water use, then voters, economic planners, and legislators have to weigh competing interests.

              After too many extraction industry boom and busts over the state’s history, the economic development folks have successfully diversified the state’s economy. So now if local governments put restrictions on drilling activities within their boundaries, they may actually benefit economically from doing so.

            2. I imagine there is a lot of Colorado that is pretty sparsely populated and perhaps some areas where the tourism is less important. I would think in those areas there are fewer restrictions on oil and gas drilling, though I only occasionally have been in Colorado for ski trips.

            3. Yes, when oil and gas activities were out in the middle of nowhere, there were few complaints. But all the new activity is next to where people currently live or will be living.

              There are conflicting interests.

              Now, in term of water usage, that is a statewide issue. If industry, agriculture, ski areas, and cities are all competing for the same water, it doesn’t matter if drilling and tourism aren’t happening right next to each other.

            5. Boomer II,

              Good point, water is pretty scarce in Colorado and that is a problem for tight oil producers, I imagine the water is quite expensive even in the middle of nowhere. Is a lot of the fracking activity near Denver, it is called the Denver Julesburg (DJ) basin, I believe. So I am guessing it is at least near Denver and its suburbs.

            7. Unfortunately, my geographical knowledge of Colorado is not good.

              For those like me that don’t have a map of Colorado in their brain (I fly in to Denver and take a shuttle to the Ski area).

              Map at link below

              https://geology.com/cities-map/colorado.shtml

              I think the answer to my question is that yes a lot of the drilling is happening near Denver.

            8. I still haven’t found a good map that shows both wells and cities, but this map is helpful. You need to zoom into Colorado. You can see that the general well activity runs north and south from the Rocky Mountains east. Most of Colorado’s population is along I-25, which sits in this well activity region. New drilling isn’t happening in Denver itself, but it is happening mostly to the west, east, and north of Denver. These are towns where people who can’t afford to live in Denver or Boulder are buying homes. So the drillers and the homeowners are moving into the same areas. I predict that the homeowners will win out.

              http://maps.fractracker.org/latest/?webmap=b26c43968bf8435388cbd4b33f2c4b3d

            9. Ok. This is what I want. While there isn’t activity in Denver or Boulder, the areas that show activity are places where people live or are moving to.

              There is a map. Plus this.

              “The vast majority of modern oil and gas drilling in Colorado has occurred in the Wattenberg Field, an oil- and gas-rich patch situated roughly between Denver and Greeley. But the fossil-fuel reserves buried deep underground in the Wattenberg have no clearly defined boundaries, and drillers’ rush to expand south suggests they may extend farther into Denver than once thought. And that expansion has put powerful drilling interests on a collision course with the residents of fast-growing neighborhoods on the edges of the Denver metro area, who never expected to count large, disruptive, potentially hazardous fracking sites among their next-door neighbors.”

              The mention of the area between Denver and Greeley also contains new housing.

              And the article says this. Erie and Lafayette are the towns where people who work in Boulder but can’t afford to live in Boulder live. They are fight back hard against wells next to their homes, parks, and schools.

              “The communities on the front lines of Colorado’s fracking wars increasingly aren’t just far-flung exurbs like Firestone, Erie or Lafayette; they’re also inner-ring municipalities like Thornton, Commerce City and Aurora, where dozens of new extraction sites and hundreds of individual wells are expected to be drilled in the coming years.”

              https://www.westword.com/news/how-close-will-fracking-get-to-denver-11245494

            10. Boomer II,

              Thanks for all the info. Aurora is the third most populated city in Colorado and Fort Collins is fourth (you know this, others may have known as little as me.) Colorado Springs is second and Denver is obviously first (that I knew). I had heard of all of these except Aurora, which is just east of Denver (maybe 15 miles or so?) and might be affected quite a bit by the DJ basin drilling.

        3. I don’t think a Demo prez would ban fracking. Even if they wanted to personally, pragmatic voices would stop the notion dead on the tracks within minutes.
          Its more of state decision.
          Calif voters don’t want water being used, or polluted, for that. Water is difficult in Calif, and there is not much petrol and gas to be had by fracking with the Monterey shale geology. If the geology was ripe, it would be a big argument.

          But there is no way the Feds are going to stop fracking in Texas, or any other state that is gung-ho on it. Colorado will have its own vote, as will NY and Ohio.
          So, to worry about it at the prez level is a wasted worry.

  5. I’m not sure exactly where in the Constitution it would give the Fed the right to abolish fracking. Quite sure Texas would ignore it.

    Doesn’t matter, Texas and La have oil, shipping and refineries. If the rest of the country doesn’t want it, they don’t have to take it. Lol, that’s exactly why Texas has its own power grid. To prevent Fed intervention. If the Fed prevents fracking, bye bye natural gas for power. You can replace your ICE with a Tesla, you just can’t charge it. Which would probably be best, as without traffic lights, driving would be insane. Or have some non essentials like heating and A/C. Fracking ban has the same life span as ice cream in hell. Or, if it does hold up, Texas better brace for a population explosion.

    1. GuyM- ‘ Lol, that’s exactly why Texas has its own power grid. ‘
      Please explain this.
      I still don’t see why Texas doesn’t want to become the major exporter of electricity to every state within 1500 miles.
      I believe in the future that will happen, and many Texans will be prosperous because of it. (regardless of any feds).

      1. Don’t ask me. I don’t run Texas power companies. Don’t even have an investment in them. They can export in emergencies, but it requires a specific process.

        Maybe Island Boy knows more. My knowledge does not extend into electricity much.

        1. Texas has its own grid, but it has interconnects with other US Grids, all three Grids in the US are interconnected. Texans just don’t play well with others, so they have their own 🙂

          1. It seems likely to me that eventually the good people of Texas will decide it’s in their best interest to build wind and solar farms out the ying yang and export every kilowatt hour they possibly can.

            They may make fun of tree huggers and green deals, but they can count the green as well as anybody, and it looks as if there’s ample opportunity for them to export wind and solar juice at a substantial profit in the not so distant future.

    2. GuyM,

      Eventually the fracking is not really going to provide a lot of energy, probably poor policy to depend too much on it we need to move on. Texas can continue to put all its eggs in the oil and natural gas basket, but it’s not a great long term plan. Pennsylvania and Ohio make the same mistake if they believe the shale gas boom will last for long, it might go to 2035 at best, then it will be steep decline. Again a bad long term bet.

      The nation and World need to start moving to alternatives to fossil fuels, it cannot happen overnight, so it would make sense to start now,

      There is no need to ban fracking the economics will make it a losing bet in short order. The smart Democratic candidates would realize this, just a way to piss off the undecided moderate voter.

      1. Why are you so down on Texans? The local energy companies decide how energy goes, not Texans as a whole, and I assure you the economy of Texas is no longer dependent on oil or cotton. The State of Texas could be developing a dependency on it, but not the economy.

        Hell, we even attracted Elon here. And, Texas leads in wind energy, remember?

        Top 50 employers in Texas:
        https://www.careerinfonet.org/oview6.asp?stfips=48

        Appears health, health research, technology, and Universities dwarf all others. However, the old oil that was pulled up provides the funding for most Universities and Health Research. The amount there is astronomical, but I haven’t been able to uncover it. It’s not directly owned by the Universities, but rather trusts left by donors. Those trust directors will probably be found on most huge corporations major shareholder list, and Bubba.
        OU has basically the same. Probably, not as big. The final winding up place for most of this Texas oil, will provide for the future of Texas. Trusts in Texas have no responsibility to report to anyone, but the IRS.

        1. No Texas tax on trusts. There is absolutely nothing prove what I said above. So, you believe me, or not believe me, I’m too old to worry about it. But, a good portion of wells names or lease name give that away. And, most of that, is within the Permia area. And most, they have already extracted. Most of the operators that are completing with the leases name containing a University name, will survive. But, probably a larger number will have no name connection. And most will have already provided their goodies. And then they will survive, unless, they pissed off the royalty owner.

          A lot of the trust Benefactors, were mostly “Christian” people who were fairly altruistic. They stood by the US in WWII and after. Only a few bought big mansions they couldn’t afford, and they laughed at the ones who bought big Cadillacs and put horns on them. Although, the UT crowd probably laughed less.

          Hardly a picture of southern sloth:
          https://www.thc.texas.gov/preserve/projects-and-programs/military-sites/texas-world-war-ii

          And every oil man in Texas was supporting them. Hence, the availability of US oil to the cause. Make no mistake, Texans are for the US. We don’t think anyone is special. And I’m a veteran, who is sure Nobody is special. All States, all colors, all religions, it don’t matter. What matters is the guts of the person beside you. Literally, or by spirit. And there were some, not close to the same spirit, even if they wore the same uniform as me. But, they were entitled to that viewpoint, because they were US citizens. And most of them were right, the US was clearly in the wrong. But, my friends, and the continued existence of this country was more important. And if you think that is hokey bullshit, you have that right. I fought for it. Just like my forefathers did for Texas Independence. It don’t matter. Remember the ###### Alamo, and Calle.

          What you think the Battle of San Jacinto was won by military might? Shit no, we attacked them, and won by a lesser force, because they were hung over and sleeping. Reality is reality.

          1. What is right, and what is wrong? Not to take away, that was sure military genius of Sam Houston, he won, and lost very few men.

        2. GuyM,

          A joke, that’s what the smiley face indicates. Not down on Texans at all, just think the US as a whole should realize we need to transition to alternatives. It will not be easy, it will take time, better to start early in my opinion as it might make such a transition a bit smoother. Yes Texas has Dell, Intel, and others, oil is not the only industry, also the most wind power in the nation.

            1. No Problem. The “tone” of a comment is not often conveyed correctly in a comment, and my “jokes” are usually not funny, so I should refrain. I did not mean to offend and if I did, I am sorry to have done so.

            2. No, please, henceforth, please do not hesitate to write whatever your thinking at the time. You can’t blame yourself over someone else’s shortcomings. And, while not far often enough, you have a great capacity for humor.

  6. Putin says it’s a done deal on the cuts. Bet they don’t make it into 2020. Waiting on Monday and Tuesday is not necessary.
    https://www.bloomberg.com/amp/news/articles/2019-06-29/putin-says-russia-saudis-agree-to-maintain-oil-cuts-6-9-months

    Be too much wailing and gnashing of teeth to extend into 2020.

    The only surprise they may have is on how much more they cut, or if they do extend it into 2020. But, they have to. They have to account for all the US phantom oil production. And none of this will add to the independents capex supply. Only very marginally, if prices rise enough.

  7. From previous:
    ” Dennis Coyne says:
    06/27/2019 at 6:50 am

    “Greenbub,

    Any crude blend is a mixture of many different types of hydrocarbon molecules (and other stuff), the API gravity is an average of that mixture.
    So for any crude blend with an API of 39.5, the components that might make up that blend are quite diverse, some blend might contain mostly crude in the 36 to 44 API range, others might be so called “dumbbell” blends with most of the blend in the 20 API and 50 API range. The two blends are likely to have different refinery yields.”

    Ok, I did not realize you were talking about blends. So two unblended oils from different locations with the same API would yield the same?

    1. Greenbub,

      Any crude oil is a mixture of differnt types of hydrocarbons (a blend of different molecules). Think of it as more like salad dressing, than tap water (which is probably at least 99.5% H2O.)

      See https://en.wikipedia.org/wiki/Petroleum

      Sort answer is no, same API gravity means very little, you could mix water and olive oil and get a certain API gravity for the mixture, but you probably wouldn’t get a lot of gasoline or diesel fuel out of that mixture compared to a crude oil with the same API gravity as the olive oil and water mix.

      The “blend” that comes out of the ground is random, and API gravity is just a number that represents the average density of the crude.

      It might have a lot of condensate mixed with medium or light grades of crude, the oils produced are all over the place, they cannot be boiled down to a single number.

      1. Thanks for the explanation, Dennis. That was not at all my understanding.

        1. All of that is pretty much wrong. Here is how it works.

          The API number for a given locale’s oil comes from a sample that is sent to a company that performs assays.

          A given field’s oil may have an assay repeated years later depending on obviously the request of a customer. That assay can change. Bakken oil has changed its API number over a period of about 5 years. What specifically changed over that time could be many things, for example the sample sent for assay might come from a different oil well, which might not look like an oil well a few miles away.

          The low permeability of shale can be responsible for this. In a conventional oil field with high natural permeability the flow of oil out of a given well could be coming from over a mile away in the XY plane. With shale wells and their focus on communication of just a few hundred feet, there won’t be much geography-derived variance from a single well. So in the case of the Bakken and its changed API measurement, the cause of this would be different oil wells being the source of the different assay samples.

          So imagining the oil to be an average or blend of different oil types or densities flowing out of a single well from just a few hundred feet of XY geography expanse, nah. That really is the source of the overall mistake above. The assay is from a single sample.

          Now there are oil types that are explicitly described as “blends”, and some customer has asked for that blend to have an assay and assay lists include sources labeled blends. Several of these from the North Sea. But this is not the correct way to think about oil from individual wells, and certainly not shale wells.

          1. Watcher,

            All oil is a mixture of different types of hydrocarbons. Everything you said is both correct and consistent with my comment, perhaps you read quickly and misunderstood what I said.

            The API gravity by itself tells us very little.

            Every well will probably give a different assay result and every day probably would give a different result from the same well. In reality the oil from the various wells are often mixed in the same pipelines and end up in the same tanks with all the rest of the WTI crude. So individual well results may not be very important.

  8. The Universe is made up of Source Energy

    All energy vibrates at a certain frequency. Which means your’re vibrating at a certain frequency, and everything you desire, and don’t desire, is also vibrating at a certain frequency.

    Vibration attracts like vibration

    Otherwise known as The Law of Attraction, the basic idea is: Focus on that which makes you feel good and ye shall find (attract) that which makes you feel good.

    We’re all attracting energy to ourselves all the time whether we realize it or not. And when we’re vibrating at a low frequency (feeling pessimistic, needy, victimized, jealous, shameful, worried, convinced we are ugly) yet expect high frequency, awesome things and experiences to come into our lives, we are often disappointed.

    You need to raise your frequency to match the vibration of the one you want to tune into.

    It’s like trying to listen to a certain radio station but tuning in at the wrong frequency. If you have a hot and sexy date and want to listen to 105.9 Slow Jamz, but set your dial to 89.9 National Public Radio, you’re not only going to be Slow Jamless, but you’re more likely to attract a discussion about immigration laws in the US instead of attracting a relaxed and candlelit body that’s in the mood for love.

    Jen Sincero

  9. I’m going to see if I can add an image of drilling activity in Colorado.

    This will give you an idea of how Colorado cities and drilling are colliding. In places where you don’t see a city, there are still smaller towns with rapidly growing housing developments. There are communities east of Boulder, Longmont, etc. where housing is already there or expanding.

    You can see I-25 and there is development all along it. All that red between Greeley and Thornton will likely be filled in with housing.

    This is why there is opposition to fracking/drilling in the state.

    1. It reinforces the idea- fracking is a state level decision.
      The fed can tinker at margins on rules like disclosures of the ingredients utilized, or gas flaring.

      1. In Colorado they are fighting it at the local and county level. They want to control where wells are drilled the same way they would use zoning laws to determine what industrial activities can be located within city boundaries.

        The reason it went to the voters was that the last governor, a Democrat, didn’t want cities to set their own rules. Therefore voters were trying to pass statewide rules which were probably unnecessarily restrictive for rural areas.

        The state is now bluer than in the past, so the government will likely be more open to letting local governments decide whether they support drilling within their boundaries.

        Again, the problem isn’t that companies want to drill in the state. It’s where they want to drill that is the problem.

        1. What are all those people in Colorado living on top of our oil! They should have know better not to live on top of a black goldmine! /sarc

          1. In Fort Worth regarding Barnett shale, they are just building over the lines. Closest one to me is now more than 500 ft. All over Texas. Not hurting the value, or any history of problems. But, that’s up to the State, and really the formation. In Oka., it’s been a huge problem on disposal.

            1. Whenever there is an explosion, fire, or leak related to Colorado gas and oil, it reminds homeowners there are risks.

              If the industry could be accident-free, that would help its cause.

    2. That map really shows the density of Colorado drilling in Weld Co. and the serious constraints (worthwhile resource concentrations, people’s housing) in moving outside it.

      1. I read somewhere that Weld County has more wells than any other county in the country. I’ll have to look for that reference.

        I did find that the county has more than 23,000 active wells.

        Also this in Wikipedia.

        “Location of the Wattenberg Gas Field, Colorado
        The Wattenberg Gas Field is a large producing area of natural gas and condensate in the Denver Basin of central Colorado, USA. Discovered in 1970, the field was one of the first places where massive hydraulic fracturing was performed routinely and successfully on thousands of wells. The field now covers more than 2,000 square miles between the cities of Denver and Greeley, and includes more than 23,000 wells producing from a number of Cretaceous formations. The bulk of the field is in Weld County, but it extends into Adams, Boulder, Broomfield, Denver, and Larimer Counties.”

  10. The nomination process is generally an effort to get to the right or left of the rest of the field. It is VERY conceivable that Democrat candidates, at least 1, would propose a fracking ban. The rest would have to join him or her or risk being flanked on the left. This is where the whole Obama promise to have total withdrawl from Iraq in 90 days of election outflanked Hillary during that nomination battle.

    The NY Post had a photo of all the candidates raising their hands to the question “Which of you will support free healthcare for illegals?” The Post captioned the photo “Who wants to lose?” None of them could dare refusing. There is no flanking on the right possible in that field, as Tulsi Gabbard is learning.

    Now you can expect the eventual nominee to put on track shoes and sprint away from the position to some sort of state by state support instead, but the original video will likely be played anywhere there are jobs at risk.

    None of which matters. Really, if you’re not a white male in the 3 relevant states, your opinion doesn’t matter and fracking doesn’t either.

    1. One of them might tackle fracking, but it would be more on point to talk about climate change. Fracking isn’t an issue in most places around the country. It would make more sense to talk about reducing fossil fuel use. Fracking isn’t a problem unless you live nearby and don’t like it. What people do with the gas and oil is a bigger issue, although flaring, too, should be addressed. Wasteful and damaging.

      Now, I am opposed to drilling in off-shore and arctic areas because of leaks and environmental disruption. Also, I don’t like selling leases in national parks. I don’t live near any of those, but I still don’t want to see them damaged. Fracking, on the other hand is more localized in my mind and the potential damage seems more limited. If the fracking areas experience busts, and I think they will, some of those areas will revert back to ghost towns, but I am less concerned about lasting damage to those eco systems.

      In summary, I hope candidates don’t try to use fracking as a proxy for climate change proposals.

  11. Interesting comments.

    It appears the consensus is that the candidates proposing a national fracking ban aren’t serious.

    Just trying to gain primary votes from a group of voters who don’t understand what a fracking ban would result in.

    I do not disagree that there need to be enforced spacing and flaring rules. I think I have made it clear that I agree with most of Mike’s criticisms of how the shale industry has been regulated.

    But even in our conventional field, we frack new wells and occasionally re-frack existing wells. Very, very small, very low pressure compared to shale.

    1. Shallow sand,

      I agree banning fracking is a bad idea. Politicians often times say what they think people want to hear.

  12. G20 meeting came and went. Market will digest the outcome this week. From a market point of view this might be the worst possible outcome. Likelihood of FED easing monetary policy. Cutting interest rates in the near future just went down dramatically.

    Yes a no deal would mean immediate selling. But would also lead to more easing. Truth is no matter what the outcome was going to be this was going to be sell the news event. I know i’m saying this before market even opens this week. But the one thing underpinning the market. Expectations of monetary easing just got removed.

    One could argue that the recent spike of WTI and Brent was solely due to the situation with Iran and a couple of ships being blown up. And a couple of big draws. But one could also argue that these events coincided with an expected shift in monetary policy that is not going to materialize.

    If you go look at the charts 6/19/19 is when expectations for monetary easing changed. FED meeting that day. Take a real close look because the dollar index and WTI moves coincided.

    1. “One could argue that the recent spike of WTI and Brent was solely due to the situation with Iran and a couple of ships being blown up. And a couple of big draws.”

      The Fed Doves is also another likely possiblity. Fed cuts almost always spur commodity price increases.

      1. Dollar is likely to take off like a rocket from where it is technically. It hit trendline support last week. WTI and Brent did some weird stuff tonight in futures market. They both gaped open big but in opposite directions.

        Usually If there is a gap at open there both in the same direction either both up or both down.

  13. A fracking ban is extremely unlikely to come form the federal level. We’d more likely give up football for soccer perhaps.
    But I would not be surprised if a nationwide carbon tax was instituted at some point.
    Some in government are talking about one where the revenues would be rebated back to consumers.

    https://www.taxpolicycenter.org/taxvox/how-should-government-return-carbon-taxes-households
    “A diverse mix of progressive and conservative voices are backing the idea of returning carbon tax revenues to households in the form of regular “dividend” payments. So are a range of businesses and environmental groups. Two weeks ago, six House members—three Democrats and three Republicans—introduced carbon dividend legislation.

    Canada has such a system-
    Trudeau’s carbon tax rebate is smart – but complicated
    https://www.theglobeandmail.com/opinion/article-trudeaus-carbon-tax-rebate-is-smart-but-complicated/

    The goal of such a system is to gradually reduce fossil fuel consumption in favor of non-carbon emitting energy source development.

    I have mixed feelings about it. Not crazy about taxes.
    But if the goal is to gradually shift to energy sources beyond depleting oil, gas and coal, then I’d rather see revenues go towards developing the nations energy infrastructure, efficiency and sustainability.

    1. But I would not be surprised if a nationwide carbon tax was instituted at some point.
      Yep–
      On this date:

      1971 — US: I Am Not a Crook Dick m Nixon orders felony burglary of the Brookings Institute, where Daniel Ellsberg, Leslie Gelb & Morton Halperin work. This comes during a meeting with National Security adviser Henry Kissinger, Defense Secretary Melvin Laird, Attorney General John Mitchell & Haldeman. Colson later proposed a firebombing. When this meeting was later exposed, future Nobel Peace Prize winning war crimes hero Henry Kissinger claimed he couldn’t recall the meeting:
      “I have no such recollection.”

  14. Tired of over predicting. Going REAL conservative. OPEC agreement to keep status quo until Dec. OPEC is already under by about a 163% due to Sauds, Iran and Ven. Drop. But, Iran gets around, and call it only a 2 mbpd drop. US, per Dennis gets 600k mbpd increase. Which, we both question. A 1.4 mbpd draw through Dec. unless, you add in whatever number you come up with for demand increase. It’s looking interesting for an increase in price, sometime. I hear sucking sounds from World inventories. Though, it might show up in finished products, quicker. Though, much slower in China finished products. Think that last EIA weekly was a fluke? Stay tuned. EIA will again say that US production is at 12.2 next week. But, it will only stave off the inevitable.

  15. Vista Oil and Gas, a small Argentina company, just shipped the first light oil from the Vaca Muerta shale. That is **exported** it. There is also an LNG conversion barge offshore and fracked gas from the VM also saw its first export this past few weeks.

    Light oil exports, beyond domestic consumption, are targeted at 70K bpd. Nat gas pipelines are under construction to Chile, Brazil and Uruguay. Hard to see how any of that is good for US LNG exporting.

    1. Boomer,

      Good article, thanks. The article claims (likely based on the poor projections of the EIA) that the US will raise output by another 5 million barrels per day. That is highly unlikely (perhaps odds of less than 1 in 25). With higher oil prices US output might rise by another 2 Mb/d by 2025 to perhaps 14 Mb/d, but that will be the peak and it will require oil prices close to $100/b. If Oil prices remain under $70/b (WTI) then the peak is more likely to be 13 Mb/d in 2022 to 2023, I believe the odds are quite low that oil prices will remain at current levels or lower beyond 2019 (maybe 1 in 10 odds).

      1. Dennis.

        One thing I wondered about were the slowing demand claims in that article, which I agree is a good one.

        This is what I found online:
        Worldwide oil demand as of:
        12/31/18. 99.84 million.
        12/31/08. 86.62 million.
        12/31/98. 74.52 million.
        12/31/88. 64.27 million.
        12/31/78. 62.73 million.

        Interesting how the high prices hurt demand in the late 1970s-early 1980s, but did not affect demand so much once prices took off in 2005. I suppose the Central Bank actions of the later period are responsible.

        I am not necessarily disagreeing with the notion that a major shift in energy usage needs to occur. It just doesn’t appear as to oil demand that is occurring.

        And as I have stated repeatedly, I am not seeing it occurring in the Middle of the USA, where a large chunk of the USA (and world’s) food is grown.

        1. Shallow sand,

          I imagine oil will continue to be used on farms. At some point people will start to buy EVs, there are not a lot of Tesla’s on the road, it will take some time, as other companies start to sell them they will become more common. Note that many companies only offer these cars in about 12 of 50 states, it may be that nobody wants them in the Midwest.

          The average growth rate in the use of light and middle distillates plus fossil fuel has been 1.3% per year from 1986 to 2018. In the 1965 to 1973 period it was 7.8% per year. In 2018 the annual rate of growth was 1.1% In 2004 there was 3% growth, but that year was far from typical, the average from 2002 to 2006 was 1.7%, also if we look at the linear trend from 1986 to 2018 it is about 785 kb/d for the annual increase.

        2. Shallow sand,

          Listed below is light and middle distillate consumption for the World from 2000 to 2018. Consumption grew by 1.7% in 2018 from 2017 level and the average growth rate over the 2000 to 2018 period was also 1.7%. Peak oil in 2025 will require that this growth rate is reduced to zero over the next 6 years.

          50,713
          51,648
          52,355
          53,438
          55,353
          56,419
          57,383
          58,590
          58,533
          57,897
          60,118
          60,793
          61,483
          63,103
          63,835
          65,422
          66,244
          67,579
          68,735

      2. “Highly unlikely” is generous to the EIA-based projections. Those would require huge, not even suggested unproven reserves to exist in the three main play areas well beyond the current drilling focuses. IOW, everyone on the ground in North Dakota or Texas is a dunce that can’t find these new, free for all sweet spots with no well interference. Yeah right. Guys with BK breathing down their neck are totally going to pass up easy money.

        Alternatively, all that acreage that is being ignored is, shock, not actually top tier acreage. Hmmm….

        Its ridiculous propaganda coming out of EIA and hopefully will be a large scandal about the lack of work/intentional puff being done with taxpayer money.

        My personal hypothesis is that while low oil prices clearly slow down fracking, the lack of profitability means that much of the LTO boom has been price-insensitive on the upside. So I consider projections that a supply squeeze and higher prices will increase the LTO drilling rate significantly vs. “decent” prices as a big question mark. LTO can respond on a short cycle, sure, but where is there to respond to that isn’t already stuffed with wells. Density was a problem in the sweet spots two years ago and all of that production will have to be replaced before anyone can talk increase.

        I don’t think that works. We will see.

        1. Propoly,

          Higher oil prices may make the areas near the sweet spots profitable, so far there is little evidence of any significant deterioration of new well EUR in most of the tight oil plays, though I expect we will see this first in the Eagle Ford, then Bakken, Niobrara, and last in the Permian basin. Check shaleprofile.com for details.

          The EIA’s AEO 2019 reference case through 2025 looks pretty reasonable to me, see chart below. After 2025 they see continued increases in US output, that will be proven wrong in my view, 2025 is likely to be the peak.

        2. Propoly,

          I was checking the EIA’s AEO2019 tight oil reference scenario and it is pretty ridiculous after 2025, see chart below with my projection in red.

          For those who will comment that a projection to 2050 is ridiculous, I agree.

          My scenario is just less ridiculous than the EIA’s scenario for tight oil, but will likely also be incorrect.

      1. I believe the above includes the US? The article seems to suggest that ex-US production, non-OPEC production has held flat at 45M.

        1. Ivan,

          Yes that is correct.

          They must be including “all liquids”, which is not very useful in my view (a lot of those “barrels” are lower energy biofuels and NGL), my charts are based on EIA C+C estimates as crude is the form of energy that is limited and the main component of gasoline, diesel, and jet fuel. So yes without US C+C output from non-OPEC has been flat at about 38 Mb/d.

          I should have read the article before posting my comment.

          The peak in World C+C output may coincide with the US tight oil peak, which I expect will be 2023 to 2025 depending on oil prices. If oil prices rise as I expect (OPEC seems likely to continue with their current level of output), then 2025 seems the better guess in my opinion (peak at about 9 to 9.5 Mb/d for US tight oil output, roughly 1.5 to 2 Mb/d more than current level).

    2. Ivan,

      Nice piece. For Non-OPEC less US output from Jan 2015 to March 2019 the average output has been about 38 Mb/d, the annual decline rate has been 0.067 Mb/d or about 0.2% per year. This might change in 2019 or 2020 due to low investment levels from 2015 to 2019, though there has been some continued investment in the North Sea, Gulf of Mexico, Brazil, and Africa, the projects coming online in 2022 and later may not be enough to offset declines and tight oil growth will also slow in this time frame so a 2024-2026 peak in C+C output is looking fairly likely. OPEC might be able to keep World output on plateau for a couple of years, but after 2028 decline in World C+C output will be apparent and the ensuing spike in oil prices will not be enough to increase oil supply any further. Such a scenario may accelerate the transition to other non-oil forms of transportation energy.

  18. Baker Hughes has Europe rig count April 2019 at 98 rigs May 2019 at 186 rigs. It this an error or does anybody here know of a massive drilling project.

    1. Big project in Norway, I think. Do they break it out by nation?

    1. I didn’t know the USA still had a face to lose.

      From Irans perspective (and N.Korea) it makes sense to go on with the nuc weapon programs. It provides bargaining power at minimum, and in the worst case scenario it gives you deterrence to attack.
      At this point, trumps actions have enabled both countries to go on with nuc weapon development.

  20. More outright wrong data above.

    Global oil consumption 2018 +1.5%.

    Global middle distillates 2018 up 2.1%. Since 2000 middle distillate consumption +1.94%/yr.

    1. Watcher,

      The data is non-OPEC production excluding US (rather than consumption), see

      https://www.eia.gov/totalenergy/data/browser/index.php?tbl=T11.01B#/?f=M&start=200001&end=201903&charted=11-10

      Data in chart below is from BP-stats 2019, Oil-Regional Consumption tab, total of light distillates and middle distillates take natural log and plot 2008 to 2018 data, trend line is the average growth rate over the period in question, also shown are natural log of light distillate and middle distillate.

      The rate of growth in consumption for both light and middle distillates from 1986 to 2018 was 1.82% per year, with middle distillate growth at 1.86% per year and light distillates at 1.77% per year over the 1986 to 2018 period. From 2008-2018 the rate of growth for light and middle distillates was 1.72% per year with light distillate consumption growing at 1.96% per year and middle distillates at 1.52% per year.

  22. OPEC’s Future Looks Bleak As It Extends Deal

    OPEC and its partners have decided to roll over the existing production cut agreement for another 9 months. After weeks of deliberations, infighting, global pressure and media hype, OPEC and Russia have confirmed the global oil market still needs support. OPEC officials stated the latter to the press, repeating Russian President Putin’s and Saudi Minister of Energy Khalid Al Falih’s former statements. Russian President Vladimir Putin said on Saturday that he had agreed with Saudi Arabia to extend existing output cuts of 1.2 million barrels per day, or 1.2% of global demand, until December 2019 or March 2020.

    1. And that’s C and C, not cheap LNG. Supply gets completely distorted, when you combine them. IEA does that, and EIA, they have NO concept of what C and C will be. Clueless, lost, and listening to them will create vast differences to what is really happening.

    2. So they are “extending” something that Iraq is ignoring and that Kuwait and UAE are “cutting” to from intentionally inflated numbers to get said quota at their long term average. And the Saudis cut so far has little to do with their quota number; they could come up half a million bpd and still be at quota while making more money. Russia has been dealing with involuntary cuts because of the contamination fiasco.

      1. Er, yeah. The cuts and extensions are smoke and mirrors. but all will “normalize”, the price of oil for little while. Following that, there is sheer panic. Because, I don’t think there are any more lies that will hold up. Or, maybe it will. Surely, we can come up with another Big Lie. BS, does not die hard. But, ultimately, lead to panic. Best efforts are forestalling it.

        1. GuyM,

          There is a lot of Iranian oil that could be brought back on line with a simple decision by Trump. Saudis could probably produce more if needed, panic may arrive in 2025, possibly as early as 2023, in the mean time there is oil that can be produced with sensible foreign policy.

          1. I don’t believe that the Iranians are loosing a lot of exports . They have been under sanctions for ages and know the smuggling routes and are assisted by Russia,Turkey,Iraq etc . The trump admin and KSA etc are aware of this but dare not pick up a fight . They know that Iran can unleash a war and in the current situation with their back to the wall ,they have nothing to loose . Of course the US can destroy them but then the US and the whole world must also be willing to die .

            2. Hint:
              They just shot down the US’s advanced drone easily—
              They even put a 737 with a load of people next to it, hoping for a mistake.
              The Iranians easily shot down the drone.
              That was an easy 120+ million dollars gone.
              This won’t be a piece of cake- they are keeping all of their naval ships (especially aircraft carriers -5000 men and women are an easy target) quite far away.
              Even the Fat Boy has got the message.

            3. How can their be evidence if it is smuggled ? That is like asking ^Is there a black market?^ . Any evidence ?

            4. holeinhead,

              There may be a bit of oil smuggled. The implication is that the sanctions have had no effect. Evidence to the contrary is the recent actions by Iran in response to the sanctions which supposedly are ineffective (or at least that has been implied).

        2. GuyM,

          Chart below has EIA’s AEO 2019 outlook through 2026. It doesn’t look too bad up to that point, after that it becomes fantasyland with OPEC output increasing drastically (by 15 Mb/d from 2018 level, flat up to 2025) and non-OPEC output flat through 2050, output increases from 86.6 Mb/d in 2026 to 103 Mb/d in 2050. I thought marijuana was still illegal at the Federal level, maybe the EIA has it’s main office in Colorado, they are smoking some strong stuff. 🙂

      2. Propoly,

        Saudis are showing restraint to keep oil prices up. Sometimes producing an extra 500 kb/d just drops the oil price so total revenue is unchanged. Makes more sense to produce less and keep oil prices up.

          1. Propoly,

            I think KSA would like higher oil prices. When they see $75/b, maybe they will increase output.

  23. How the Problem Could be Solved
    https://questioneverything.typepad.com/question_everything/2019/06/summer-solstice-2019-how-the-problem-could-be-solved.html

    A interesting read—–

    We will do nothing to avoid catastrophic climate chaos, I am pretty sure, as long as such clowns and fools are in charge, and as long as there are enough less-than-sapient citizens who want them in charge. Even the so-called progressives (Democrats, social or otherwise) still buy into capitalism in some form and economic growth as a goal. Out ideologies are going to be our undoing.

    1. Good numbers.

      Maybe by 2021 the USA will be in a position to ban fracking nationwide.

      Lol. Just kidding. Going to be a multi decade transition. Wish the D’s didn’t feel they had to go so far left that they could lose 2020.

      1. “Wish the D’s didn’t feel they had to go so far left that they could lose 2020”
        Me too. Too many young people I talk to are just so naive.
        I guess somethings don’t change.

        “Going to be a multi decade transition.”
        Indeed. And it could be a relatively smooth transition in the USA, if policy was well-crafted. I’m turning blue holding my breathe for that.

      2. shallow sand,

        I agree, a center left candidate would probably be best, there is a general tendency for Republicans to go to the right and Democrats to the left in primaries. Part of the problem is the closed primary system, it would be better to require that all primaries be open and we would get better candidates.

        Tesla’s market share for all US vehicles sold was 0.082% for the first 6 months of 2019.

        If Tesla meets its goal for US vehicle sales in 2019 of 380,000 vehicles sold, it will have 0.187% of the US vehicle market (about 203 million vehicles sold in the US, if the Jan to June sales rate continues for July to Dec 2019.)

        If we assume sales grow at 50% per year in the US we reach 50% of new vehicle sales in 14 years. If we assume annual vehicle sales for BEVs doubles each year, then 100% of new vehicle sales are BEVs in 9 years (and 50% in 8 years). It is possible the rate of growth might accelerate as battery costs decrease and fuel prices rise. Doubt it will be 9 years, but might be faster than 15 years. A 75% annual growth rate in sales would get us to 100% new vehicle sales as BEVs in 11 years (so about 2030). Note that if we get autonomous vehicles approved in 2027, the number of new vehicles sold may fall by a factor of 5 as the average new car will be a robotaxi driving 6o,000 miles per year instead of 12,000 miles per year. So new vehicle sales falls to 40 million per year and at the 75% growth rate is reached in 8 years. In that scenario, BEVs quickly take over most driving of personal vehicles after 2028.

        Of course we do not know if autonomous vehicles will ever be approved, Tesla still has a ways to go on roads that are not well marked (rural roads with poorly defined shoulders are currently a problem), does not work at intersections and stop lights, fairly good on highway, but entrance and exit ramps when in right lane can be a problem. There is definitely much to be done before reaching full self driving, probably at least 3 years away and 5 years seems a better guess. It will take a few years to get regulatory approval so that is my reasoning for 2027 as the year when most US states approve autonomous vehicles. The statistics will quickly show that autonomous vehicles are safer and before long humans will only be allowed to drive on closed courses (race tracks and such) due to safety concerns and possibly off road or on private roads.

        Bottom line, not likely to be any problems before 2023 to 2024.

          2. sorry Hightrekker, but I’m not seeing it like you on this.
            There is a huge difference in the choice.
            Not on every issue, but on many very big ones.
            You know history. Just think of the supreme court.

            1. I agree Hickory, but we are dealing with the same economic concept there- capitalism.

            2. Sure.
              Thats ok with me.

              If its wisely applied (regulated and enforced).

              Such as preventing excessive accumulation of wealth, that can be sequestered from the public economy.
              Such as preventing bribes and price fixing, and other forms of corruption.
              Such as tax enforcement, even on orange rich guys.
              Such as discouraging free-loading.

              Happy Independence (from cyber-surveilliance) Day.

    2. I find interesting the reporting parallels shared USA LTO and TESLA . Primarily, that both focus on production metrics, and not on profits. Profits are always off in the distance somewhere; but, say fans and supporters, are soon to be realized- so don’t lose hope! Perhaps Profitless Capitalism is America’s new ‘edge”; nothing a little Corporate Socialism won’t mitigate.
      I often hear folks disparage the economic strength of USA LTO on the grounds that it would’t have produced so much without rock bottom interest rates. TESLA is likely qualified for similar criticism.

      1. Survivalist,

        Tesla does not pay low interest rates, it is correct they have not been profitable, but this is often the case for a growth company. Amazon did not make a profit for many years.

        Perhaps Tesla will fail, the auto business is very tough. Note that World wide in 2018 the Mercedes C class sold about 478,000 vehicles. The upstart Tesla in the first 6 months of 2019 has sold about 128k model 3s or an annual rate of 256k and if they match Q2 sales could sell 284k for 2019. As production ramps up Tesla may become more profitable, the Model Y may sell well in Europe as hatchbacks seem to be favored there.

        1. My plan for an EV hatchback, should it ever materialise, would be to have a trailer diesel generator hooked up on the tow bar. Then on trips to remote parts, where there are few volts and no signal, I can charge up while enjoying the delights of wild camping. Can’t wait!

          1. Jonathan Wrote: “My plan for an EV hatchback, should it ever materialise, would be to have a trailer diesel generator hooked up on the tow bar.”

            I am pretty sure that would be referred as a Red-Neck EV 🙂

      2. Surevivalist
        One cannot ignore production since it does give clues to a company’s future. Here is a quote from the Verge regarding Tesla’s Q2 production.

        “After a slow start to the year, Tesla announced Tuesday that it made and delivered a record number of cars in the second quarter of 2019. The electric automaker produced 87,048 vehicles in the quarter, and delivered “approximately 95,200,” after having finished the first quarter of the year with some 10,000 cars listed as “in transit.”

        Of the total cars produced, 72,531 were Model 3s. Tesla also delivered 77,550 Model 3s in the quarter.”

        This info is telling us that in the 2nd qtr, production was lower than deliveries due to a backlog of deliveries in Q1 and possible production issues. Since Tesla’s target is to deliver a minimum 360,000 vehicles this year, they will need to ramp up production to a rate higher than 90,000 per month. Musk’s recent tweets to his staff have been to work harder and more efficiently. Essentially Musk knows he needs higher productivity from his staff to get to breakeven.

        1. Maybe he should beat his staff with whips. That’ll teach them to work more efficiently!

        2. Mark B. Spiegel
          @markbspiegel
          The following sentence was in the $TSLA Q1 deliveries report. It’s missing from today’s Q2 report:

          “We reaffirm our prior guidance of 360,000 to 400,000 vehicle deliveries in 2019.”

          Pull forward is what niche companies tend to do when demand is flattening.

        3. Ovi,

          About 34,000 cars per month need to be produced. The number of 360k is a sales number which includes some cars that were in transit at the end of 2018 (produced but not delivered to customers). About 158k cars delivered in first half of the year, 360-158=202/6=33.67k cars per month need to be delivered to customers on average to meet the 360k sales (delivery) goal. You may have meant 90k per quarter, it is actually 101k per quarter for the average rate needed in Q3 and Q4 of 2019. It will be a challenge to meet that goal, in my opinion, but typically Tesla sets a high bar for itself.

      3. Hey Survivalist. I saw a quote last week from a bmw executive who admitted that his company couldn’t compete with tesla on price for electric vehicles.
        Well, they had better figure out how to, or they will be bankrupt (lack of Survival) in a decade.
        I wouldn’t mind. Their customers can buy from the Chinese.

    1. Related: The Stability of the Geopolitical world as we know it.
      Since 2016 Russia has a growing role in Saudi Arabia’s Stability.
      Sure a Russia viewpoint, but an eye-opening discussion on
      an Economic Geopolitical shift and the perils of weaponizing the dollar.
      ” Nothing is more important to the US than the Petrodollar”
      ” The US will never agree in production cuts” pushes SA to Russia.
      Here on POB, we comprehend the Depletion horizon factor that is ignored and/or covered up.
      https://www.youtube.com/watch?v=fabzmYCNy00&t=736s
      My Q1 – Is the biggest threat to human welfare now poverty or the health/stability of the Ecosystem?
      Q2 – How soon will Oil be traded in Gold or barter again?

    2. Here’s another choice quote from the above article:

      When assessing the long term outlook for oil prices and the opportunity to invest in the sector, Horwitz told Yahoo Finance that he expects oils prices to come down because the economy is slowing, supply is increasing and demand is falling. “We do have, in this country right now, well over 200 years supply of oil. Now that we’ve become master frackers, we have an overabundance of supply,” he said.

      Well over 200 years supply of oil in the US??

      1. Nope, the US uses about 16 Mb/d of crude. The math is pretty simple.
        16*365/1000=5,84 Gb of C+C consumed each year.
        5.84*200=1168 Gb would be needed for 200 years of supply.

        The US might have as much as 112 Gb of remaining reserves[RR] (assumes 38 Gb of conventional RR and 74 Gb tight oil RR). That would be more like 19 years, if production could remain flat. Instead C+C output will peak in 2025 (at about 14 Mb/d) and then decline quite rapidly, and average rate of decline of 2.56% per year from 2025 to 2050 (this optimistically assumes conventional output will be flat).
        If we make the more realistic assumption that conventional output also declines at an average rate of 2% per year from 2025 to 2050, then the decline rate for US C+C output from 2025 to 2050 would be 3.66% per year on average over the 2025 to 2050 period and would fall from 14.1 Mb/d to 5.6 Mb/d over that period.

  28. For those who missed it above, Chevron and Exxon spent $13B in the Vaca Muerta and they are now getting some output. This does not mean they are getting any of their $13B back, or rather, they probably are but at a rate less than the internal cost of capital. You have to understand how that is working. The price of oil in Argentina is over $70/barrel by law.

    This gets oil to flow and the govt gets royalty income on flow and improves the fiscal deficit numbers. The “cost” of the declared price is either ignored or obscured, because yes, the IMF hates their attack on global money, but Argentina doesn’t care and shouldn’t care. Oil and gas is flowing. The declared price made that happen and Chevron and Exxon are okay with that. Christine is leaving for the ECB and won’t be around for the final rage over this.

      1. From the article –
        But “there is a high chance that we’ll see some wells in Vaca Muerta ultimately delivering recovery rates about 1 billion BOE,” he said.”
        Typo alert.

      2. That’s from December and we already covered it.

        Okay people, listen up. Understand money. Understand central banks.

        Shale fracking didn’t happen because of a technological breakthrough. Hydraulic fracturing was being done by the Russians in the 1950s or so, using proppant. Quote from the hydraulic fracturing wiki:

        “In the Soviet Union, the first hydraulic proppant fracturing was carried out in 1952. Other countries in Europe and Northern Africa subsequently employed hydraulic fracturing techniques including Norway, Poland, Czechoslovakia, Yugoslavia, Hungary, Austria, France, Italy, Bulgaria, Romania, Turkey, Tunisia, and Algeria.[33]”

        It’s old technology. Things started in NoDak because of $100+ oil and near 0% interest rates on the loan that paid for the well, and not in that order. The interest rates probably mattered more. The table in the article above quotes the Vaca Muerta having well costs far higher than US basins, but the numbers are quoted in dollars.

        Argentina doesn’t have to care what the cost is in dollars. They pay their people a low payscale in local currency. So an Argentina declared price of the local currency equivalent to $77/barrel and low production costs denominated also in local currency and what do you get? Right. You get oil.

        This is a peak oil blog. It’s doomster by its nature because insufficient oil kills people. There are other manifestations of doom, though, derived from scarcity. Global finance doesn’t have to survive if global finance prevents oil from flowing. Did you really think starvation would be the first sign of scarcity? It need not be. Global finance and economics can lose its shroud of counterparty trust in the blink of an eye (as shown in 2008) and that will come from scarcity as easily as from anything else.

        Not too much a conspiracy person, but one does wonder why the IMF was so angry with Argentina, and why LaGarde is leaving town.

  29. Q 4 Independence Day – What % of Expensive Global unconventional LTO “aka Shale Oil” is Produced in the USA? Any stabs at EROEI of this liquid? What would be the GOR?

  30. Remember all the excitement here about the Encana “cube” strategy? In a surprise to nobody who follows Art Berman, ShaleInfo, or many of the fine posters here it turns out that – surprise! – the strategy will yield around 300k/well (or less than half what Encana was saying just a few months ago).

    “Chief Executive Doug Suttles described the results in glowing terms, and many of the wells looked promising when they started producing in 2017. But their performance has fallen off significantly, according to a Wall Street Journal analysis of well data.

    In the company’s biggest cube development to date, 33 wells drilled from one location in West Texas are each on track to pump about 300,000 barrels of oil over 30 years. That is about half the amount of oil Encana said a typical well would pump in late 2017, according to the Journal’s analysis of production data from Rystad Energy, Shale Profile and Friezo Loughrey Oil Well Partners LLC.”

    https://www.wsj.com/articles/a-fracking-experiment-fails-to-pump-as-predicted-11562232601?mod=searchresults&page=1&pos=1

    I have a long memory. Remember all the times here when the cube strategy was held up as a shining example of cost-efficiency and the next wave of technological prowess?

    I think it was a worthwhile experiment for Encana to run, don’t get me wrong, I just also want to be sure that the limits of what’s possible, or not, in shale are kept plainly in view. A lot depends on having a clear understanding of both.

    A couple of examples from the past:

    2. A typical well from 2017 produces 600k oil in 30 years? Have I missed something?

      1. You missed a lot of BS projections regarding the Permian. I know for a fact, that there can be drops from parent and child well in the EF, depending on the spacing. Each area is different. However, the Permian is a lot worse. The oil and gas can move quicker through the formation. The cube concept was doomed from thought.

        Five years, and an EF is at a trickle. Most will expire within ten. Permian has to be worse due to the movement. That is, the formations that have the projected increase, Spreberry, Bone Springs, and especially Wolfcamp.JMO

        1. (1) these wells are not going to profitably produce for 30 years, so whatever is projected in the years past 15 is probably a zero instead. Or maybe 10 as GuyM has said. Unless oil goes to $300/bbl, I just can’t see the 20,000 foot total length laterals being economic to pump for a couple bbls/day.

          (2) Child well interference is being found to be larger and larger than initially thought in the Permian especially. If spacing moves out by 20% from what’s in current investor presentations then cut the value of the companies by 20%. That’s a reasonable first approximation. In many cases, however, the modeled 350 foot spacings are going to move to 500 feet or more, with 750 feet being a not unreasonable possibility. So maybe use -50% in some cases?

          1. I would guess more than 500, but it is sheer guesswork. Spacing for EOG in my section of the EF is 400 ft. New wells 2 an three took a noticeable hit, wells three and four were fine. Just depends on how much is lost, whether it is profitable, or not. In my area, the drop would not result in an unprofitable well. But, that’s the EF, and just in my area.

            Basing future production on past wells is not logical.

        2. Hi Chris,

          For my average Permian well the EUR for the average 2017 well is 380 kb over 16 years, the well as assumed to be shut in at 8 b/d of output. For my model (based on USGS mean Permian basin TRR) I assume the well profile is unchanged from Dec 2017 to Dec 2022 and then new well EUR starts to decrease starting in Jan 2023. The rate of decrease of new well EUR depends on the number of wells completed each month (more wells means a faster rate of decrease and fewer wells completed reduces the rate that new well EUR decreases. Economic assumptions for well cost, royalties, taxes, transport cost, LOE, natural gas revenue, discount rate, and oil prices are used to approximate the net present value(NPV) of future net revenue for each well completed (a DCF analysis). Only wells that will have a positive NPV are completed in the model.

          The model below assumes oil prices follow the EIA’s AEO 2018 reference oil price scenario. Cumulative output from Jan 2010 to Dec 2040 is 50 Gb. Peak output is 7450 kb/d in 2028.

          Well profile based on data from shaleprofile.com.
          Number of completed wells based on a TRR model with about 75 Gb or about 6 timed the North Dakota Bakken/Three Forks TRR, many analyses assume about 42k wells completed for ND Bakken/TF so I assume about 250k horizontal wells completed in Permian basin for the TRR scenario (no economic assumptions applied with 250k wells competed and TRR=75 Gb.
          When economic assumption are applied to arrive at and ERR scenario only 172k wells are completed and ERR from Jan 2010 to Dec 2079 is 58 Gb.

          1. Hi Dennis – thank you for your tireless modeling and tweaking, always with transparency. It’s truly a service to us all.

            I am wondering about “EUR” and whether that means “barrels of oil equivalent” in energy terms or takes into account the lower economic position of NGL and NG and is expressed as an economic term?

            While I think society runs on the energy figure, the companies run on the economic value. So knowing that makes more sense in terms of what the companies are likely to be able to afford to do in the future?

            Art Berman parses all that out in his presentations and I’m of a mind to use the economic EURs especially for the Permian where the logistics tend to lead to a lot more flaring and ultra-low NG prices as compared to other basins.

            The other way, of course, is to only express EUR in terms of oil, and also express the other products individually. But that makes for a lot more work, eh?

    3. Check out a long term chart of ECA share price.

      It closed yesterday at $4.92. Not much higher than the lows it hit when oil was $30s in early 2016.

      Prior to that, have to go back to 2003 to find ECA share price below $5.

      Just another example, far from the worst. Hasn’t went to $0 yet, like so many have.

    1. Thanks for the heads up on the Wed rig release Guym. Not only did US drop 4 but Canada is also 4 down. The year over year North America drop is now 151, or 12 percent of last years total.

    2. Trying to look forward with all the political noice currently affecting oil markets. I reflect a bit on how important capital (=resources) is to the whole peak oil theme. In Brazil, the complete opposite has happened compared to the shale oil frenzy development.

      Extract from an article (link below):

      “Petrobras was forced to take action due to the fall-out of the oil price crash from the second half of 2014, and the huge debt the company had built up after years of overspending cashflows to fulfil corporate investment objectives in Brazil and elsewhere.

      Another factor was a major corruption scandal which had a severe impact both on the company’s finances and investor trust.

      Since 2015, Petrobras has reduced its capital budget investments by a compound annual rate of 5% per year, with 2019 capex set to be 61% lower than in 2013 and 14% lower than in 2015.”

      And now the production in Brazil is flat with only 5-8 offshore rigs running. If they had overspent like they did in the US, production increases of 20-30% could have happened over 3-4 years. This is why it interesting to follow what is coming next, because the potential in Venezuela, Iran, Iraq and Libya with modern technology is wast. Kazakhstan have resources also, but severly land locked. So with enough investments the world can plateau oil production for a long time. That is given political stability in some of these countries. Still likely with a surprise oil shortage due to underinvestment for a couple of years going forward; but then what? Will enough resources, a larger slice of the overall pie, be allocated to energy like in the 1979-85 period? I think so. At the same time natural gas explotation will increase since resources are there, especially if price is high enough to warrant a good LNG market.

      Btw, the whole offshore service industry is crumbling due to this move from Petrobras. And the onshore service industry in the US is also crumbling due to low prices over time according to Dallas Fed report it seems. What the implications of this is coming forward is a big theme of its own.

      https://www.offshore-mag.com/regional-reports/article/16790953/petrobras-continuing-on-path-to-debt-reduction

  32. As I explained above re Argentina, there is no requirement that oil be profitable.

    If you have to have it, and you do have to have it, then you get it. Here is how the White House late night meeting will go (regardless of who is president).

    “Oil is headed to $300. We can declare some sort of emergency and require the NYMEX to set the price lower. Society cannot survive $300 oil.”

    The president considers — “Too complicated. I think we’re going to have to declare martial law and impose government control on oil production as a national security issue.”

    “But Mr. President, suppose we do take control. How does that work? Do we seize the oil companies so that we can pay the oil workers’ salaries? But those companies are losing money. How do we pay the workers?”

    “We run a higher deficit, of course. The Majority Leader and Speaker will not oppose this.”

    “Sir, the companies can tie this up for years in courts.”

    “No, that’s what martial law does. Suspends courts as desired. And if workers or oil company infrastructure refuses to work, that will become a treasonous act in a period of national emergency. Few, if any, will want to be charged with treason and sent to jail as well as face fines. They’ll continue their work. They won’t like it. It’s the end of capitalism in the oil patch, but they will likely understand.”

    “Will this be permanent, sir?”

    “Maybe, maybe not. Now I must ask you to excuse me and show the Joint Chiefs in, and please uncover that map of China’s oil ports as you leave.”

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