252 thoughts to “Open Thread Petroleum, May 1, 2019”

  1. FYI: Partial admission that the US is in Syria over Oil:

    https://www.zerohedge.com/news/2019-04-30/us-troops-syria-long-haul-atop-lot-oil-resources-top-pentagon-official

    “A high level Pentagon official has admitted that US forces will be in Syria for “the long haul” and coupled his statement by declaring the territory contains “a lot of the oil resources and arable land.”

    “Even with the Islamic State’s territorial caliphate now long gone, major oil and gas sites like al-Omar oil field in Deir Ezzor province in Syria’s east remain controlled by the SDF and its US backers, something which Damascus has repeatedly condemned before the United Nations as an illegal violation of its sovereignty. ”

    RNC Congressmen demonizes Russia claiming Russia installed Nuclear Missiles in VZ

    https://www.foxnews.com/world/rep-diaz-balart-russia-put-nuclear-missiles-in-venezuela

    “Rep. Mario Diaz-Balart, R-Fla., appeared on “Tucker Carlson Tonight” Tuesday and made a case for backing opposition to disputed Venezuelan President Nicolas Maduro and suggested that Russia had installed nuclear missiles in the South American nation.”

    [Just another excuse to roll in US troops to control VZ if necessary if Guaido Coup fails; Remember the USS Main, Gulf of Tonkin, Saddams WMD’s, and so on. Same Propaganda to start more wars, just different day]

  2. Quick off topic question, are there no more “Open Thread Non Petroleum” threads?

    Just curious.

    Thanks.

    1. When the top post is not on Oil or Natural Gas, then comments that would go in the Open Thread Non-Petroluem can be under that post.

        1. You can sort of blame me for no “Open Thread Non Petroleum” threads for the past three weeks. I floated doing something on commercial EVs with Ron and Dennis and they agreed. It turned out that the volume of material is so large that I had to break it down into parts, with the first part just being a recap of a piece I contributed at TheOilDrum.com ten years ago.

          I am working on part 3 (legacy commercial EVs) to be followed by part 4 (emerging commercial EVs) and possibly part 5 (future commercial EVs). The amount of activity in the commercial EV space is significant. It is probably more so, when you consider that the number of commercial vehicles manufactured is a fraction of the number of cars and pick-up trucks/SUVs made. It is proving challenging to put this together because, new announcements are coming out almost daily. Once I’m done, you will see the return of “Open Thread Non Petroleum” threads, unless somebody else has something to contribute apart from my once monthly reports on the EIA’s Electric Power Monthly.

          As Dennis has already said feel free to post anything you want under whatever the non-petroleum thread is.

  3. Somewhere around 2010 to 2012, I recall a lot of discussion regarding the fate of the trans Alaska pipeline if Alaska’s crude production fell below 500 kb/d. Note that at its peak, the pipeline transported over 2 Mb/d. As I understood at the time, the flow rate of the crude in the pipeline at rates below 500 kb/d during winter would be slowed to a point that its viscosity downstream could increase to the point it could not be pumped.

    I have been tracking the production in Alaska and it now appears that production only exceeded 500 kb/d for two weeks in January. Looking at the attached chart, peak production in Alaska is dropping at approximately 16 kb/d/yr.

    Does anyone have any update/knowledge on whether any modifications were made to the pipeline so that it could operate at rates below delivering 500 kb/d during winter?

      1. Thanks Lightsout. Very Informative presentation. I wonder how difficult it would be to add another heat addition station.

    2. Ovi —

      The last month (time) when the the Alyeska Pipeline or TAPS averaged over 500,000 Barrels per Day was in April 2017.

      https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=manfpak2&f=m

      The plan, when the rate drops to 350,000, is to transfer oil in batches. This is expected to be in roughly 10 years, depending on a host of variables such as:

      TRUMP ADMINISTRATION HITS PAUSE ON OFFSHORE OIL PLANS AFTER ALASKA COURT RULING

      “A recent federal court decision appears to have struck a blow to President Donald Trump’s plans to expand offshore oil and natural gas drilling across the U.S. continental shelf, with the aim of turning the US into an energy-exporting behemoth. In his first interview since being confirmed to Trump’s Cabinet, Interior Secretary David Bernhardt told the WALL STREET JOURNAL that a recent ruling by a district court in Alaska has stalled plans that at one time called for opening up most U.S. continental-shelf waters to oil and gas companies.”

      https://www.adn.com/business-economy/energy/2019/04/25/trump-administration-hits-pause-on-offshore-oil-plans-after-alaska-court-ruling/

  4. They could store oil in the summer and therefore still pump above 500 kb/d in the crucial months in winter for years to come.

      1. COP net income from Alaska operations was $384 million, US Lower 48 including GOM $193 million, international $1.256 billion, all for Q1, 2019.

        I would like to see Lower 48 broken down further. Wondering what is was sans GOM?

      2. Longtimber, they would just have to store the difference as they are not far away from 500 k/bd yet. Of course that would only give them a couple of years kicking down the can.

  8. US crude oil production and exports have both increased, and also crude storage capacity too.

    2019-04-29 (Reuters) Crude storage capacity is up 17 percent across the nation to 573.6 million barrels since 2015, according to the U.S. Energy Information Administration.
    Operators are expanding 23 storage terminals in Texas and seven in Louisiana, according to market data provider TankTerminals. Texas terminal operators are projected to boost capacity 7 percent by the end of 2019 to 393 million barrels, TankTerminals data shows.
    https://uk.reuters.com/article/us-texas-energy-tank-violations/u-s-oil-storage-industry-fines-soar-on-air-water-violations-idUKKCN1S508Z

    1. The motivation behind the relentless increase in production budgets has never focused on what I have thought is most likely — namely, debt covenants.

  10. I took at look at oil stock levels for the World from 1981 to 2017 using data for oil and biofuel production in tonnes vs consumption in tonnes. I arbitrarily set the World stock level in 1980 at 500 million tonnes of oil (we don’t have this data, I just set it so the mean stock level came close to about 60 days of forward supply (which is roughly the current OECD level). I used the data from BP’s 2018 Statistical Review of World Energy
    https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy.html

    The average stock level (crude plus petroleum products) in days of forward demand from 1990 to 2010 was 57.4 Days, in 2017 it was 62.4 days, their may be a lot of oil stored in India and China and some other large consumers that are not reflected in the OECD data.

    1. That’s the weakest year open pattern in total production besides the glut period price collapse. And prices right now ain’t bad. Probably a mix of capital constraints and lesser prospects.

      If Karnes goes into actual decline, Eagle Ford is going to see aggregate production drop quickly. The other counties aren’t played out, but they’re definitely maxed out on what’s economical to drill. None have come close to challenging prior peak from the beginning of 2015. And the article points out that those four and a half thousand 2014 wells that drove that have now declined 92%.

  12. Trump’s tweet is getting a little more credit than it deserves in some circles. Price was bid up into technical resistance in the weeks prior to a US/China trade deal announcement. Market is pulling back on news that that a deal might be forthcoming in next 2 weeks. This whole situation has the potential to implode markets. Make no mistake about that. China actually needs the trade deficit to widen a lot further to their advantage as they need physical dollars to service all the USD debts they have.

    People taking profits and money off the table at technical resistance before major news.

    Oh, Dennis i responded to your nonsense on the last oil thread earlier. Just i case you didn’t see it.

    1. wait, what?

      Chinese national debt is about 5.2 Trillion USD equiv, which does not mean denominated in USD. That’s owed to all their creditors, including themselves. Of that number about 1.7T is owed to foreign creditors. All of them, including the two SARs at HK and Macau. If the point here is scarcity of USD, they are on FX with fixed yuan peg and can pay whatever in yuan.

      US national debt is about $22T counting all creditors including American institutions. Of that $22T, about $1.13T is owed to China. This is far in excess of the reverse.

      I don’t think something is clear here.

      1. Corporate debt is what matter watcher. And i just assumed everybody would understand the only way corporate China can get dollars is through the sell of goods. Sure China’s government can sell US treasuries to help with the lack of dollar liquidity in China. But their economy will also implode if they do. US isn’t lacking Chinese currency the debt is denominated in USD not the other way around.

        And that yuan peg will be broken when China is forced to devalue.

        China could sell every last US treasury they own and it doesn’t matter to the US because all that means is someone else is buying the debt. Our cheap stuff would just get manufactured somewhere else besides China. China is the Mark here.

        This trade situation is going to get ugly real quick. Which i was eluding to in my post above when i said the price move in oil had little to do with Trump’s tweet and everything to do with people taking money off the table due to trade tensions.

        I think it pretty clear that the US plans to try to contain China through economic means. Probably never was any real intentions of reaching an actual deal. Guess we will see as this thing unfolds.

        The Yuan got crushed at market opening by the way. Due to Trump’s Tariff hikes. Dollar was only slightly down which was due to some Japanese Yen carry unwind because this is a risk off event. But what is important is where markets close tomorrow afternoon. I haven’t checked where WTI and Brent are in pre-market yet. But if i was just to take a guess i’d say they are probably down big.

        1. HHH, Just curious, have you ever lived outside of the US? Not visited, actually lived? Because if you have, you might discover that the US is no longer the center of the Universe! There are almost 8 billion people on the planet. Only 350 million of whom live in the US. BTW, I have lived in a few other countries and the Chinese have a significant presence in all of them. I’m going to go out on a limb and say they have been building economic and trade relationships with every nation on the planet and have a long term plan to survive when the US dollar implodes! Trust me, it will! The Chinese have been around as a civilization for 5,000 years. The US only declared its independence a mere 243 years ago… The US isn’t going to contain China!

          1. Who let Fred out of his cage? 🙂

            I was just trying to discuss how the trade war was affecting price of oil and correct Watchers little mistake as corporate China’s dollar denominated debt which is well over $1trillion USD and they can’t print dollars. What is corporate USA’s exposure to the chinese yuan? Zero.

            All i have to add is if your bullish on oil you’d better pray for a quick resolution to this trade war.

            1. Who let Fred out of his cage?

              It had a Made in China electronic lock on it… It already had a built in back door! All I had to do was call Huawei customer support and have them reset my password to 123456SetMeFree!

              我怎么帮你？

        5. HHH Wrote:
          “China could sell every last US treasury they own and it doesn’t matter to the US because all that means is someone else is buying the debt. Our cheap stuff would just get manufactured somewhere else besides China. China is the Mark here.”

          Not so sure about that. China exports a lot of goods to the rest of the world, Europe, Latin America, Asia, Even Japan imports a lot of goods from China.

          My guess even if the Yuan starting rising in value, US consumers will still continue to buy Chinese made goods. Despite the US tariffs, US consumers are still buying mostly Chinese imports. US companies are not adding product, just raising prices.

          HHH Wrote:
          “The Yuan got crushed at market opening by the way. Due to Trump’s Tariff hikes. ”

          Probably not, and if the value of the Yuan falls it just offsets the rising tariffs.

          I think the biggest issues China faces is demographics & war with the USA. US is gobbing up all of the Oil nations. Sooner or later China is going to have to fight the US in order to retain access to foriegn energy exports. Recall the Japanese attacked the US when it basically blocked off its access to resource imports.

      2. Watcher Wrote “US national debt is about $22T counting all creditors including American institutions. Of that $22T, about $1.13T is owed to China. This is far in excess of the reverse.”

        That is just Federal gov’t debt. it does not include Corp, Mortgages, Credit Cards, Auto Loans, Student loans, State & Local gov’t debt. Ditto for the the China Debt number.

        I believe China has a lot of GSE debt as well as consumer debt. Also China owns US Federal Debt via proxies like Belgium which holds about $1.4T in US Federal bonds.

        China purchases US debt to prevent the Yuan from appreciating so it can keep prices for export low.

  13. Opec is cutting production, US production is slacking, demand is growing – and according the business news the oil market is still in a big over supply. US inventories are raising.

    Something doesn’t add up here at all – either production numbers are wrong, or something with storage.

    1. We tend to look at US inventories and extrapolate that to the rest of the world but in reality we don’t have real good data on inventories around the world. Energy News occasionally posts charts on inventory levels from some major trading hubs. Maybe he can add some color here but even that data is delayed. Also…the latest inventory build here in the U.S….what type of oil is building? I am assuming it is light(not heavy). Possibly oil that doesn’t have a market because we are over supplied on light.

    2. Eulenspiegel,

      Maybe supply and demand don’t outweigh a major trade war between the two countries that use the most oil.

      1. Maybe supply and demand don’t outweigh a major trade war between the two countries that use the most oil.

        Shit! You guys simply do not understand. Major trade wares affect supply and demand. Major trade wars have a dramatic effect on supply and demand. Supply and demand cause the price of oil, or any other commodity for that matter, to increase or decrease.

        Everything affects supply and demand! And supply and demand affects the price of oil. And nothing else affects the long term price of oil other than supply and demand. End of fucking story.

        1. Ok, has supply or demand materially changed in the last two weeks? Because price sure changed direction. This price move is purely money leaving the market. Not due to supply and demand.

          I’m not saying a trade war can’t affect supply and demand. Just saying supply and demand can be overridden by other factors.

          1. This price move is purely money leaving the market. Not due to supply and demand.

            Errrr… what part of supply and demand don’t you understand? Supply leaving the market is most definitely supply and demand. Money leaving the market the market is demand leaving the market.

            Good God man, this is not rocket science.

  14. COLUMN-Oil market will tighten sharply when U.S. refineries return from maintenance: Kemp

    By John Kemp
    LONDON, May 3 (Reuters) – U.S. commercial crude oil inventories have been rising in recent weeks, which some observers have interpreted as evidence the global oil market is adequately supplied and blame for a sudden decline in oil prices.

    But this narrative cannot explain the steep backwardation in futures prices for global grades such as Brent, which is usually associated with a market that is significantly under-supplied.

    In fact, U.S. commercial inventories have been rising much less than normal for the time of year – even though refiners are undertaking heavy maintenance, which would otherwise have resulted in a larger stock build.

    Refiners have been undertaking more maintenance than normal to avoid autumn and winter shutdowns in the run up to the introduction of new IMO marine fuel standards (“U.S. refiners planning major plant overhauls in 2nd quarter”, Reuters, April 19).

    The limited increase in U.S. commercial crude stocks despite heavy spring maintenance tends to confirm that the global market has tightened significantly since the start of the year and will tighten even more in the second half.

    U.S. commercial crude stocks had increased by almost 30 million barrels by April 26 compared with the end of last year, according to the latest weekly data from the U.S. Energy Information Administration.

    The stock build was much larger than the 12 million-barrel increase at the same point in 2018 but well below the 10-year average increase of 45 million barrels and otherwise the smallest seasonal build since 2011.

    The United States produced an estimated 211 million barrels of domestic crude oil in the 17 weeks to April 26, which was more than offset by a reduction in net oil imports of 239 million barrels, according to the EIA.
    However, U.S. refiners cut their crude consumption by almost 28 million barrels compared with 2018, which more than accounted for the faster rise in stocks compared with last year.

  15. I have been following this site and posts by Ron and Dennis for sometime now. According to Dennis one of probable URR for C+C is 3100 GB.(I have posted the chart below for reference).This chart shows that by 2050 we will have a C+C of 60 million b/d. Even by the most optimistic scenario given by this bloomberg article electric vehicles can only displace about 8-10 million barrels of oil by that time. Wouldn’t that create a serious crisis for the civilization?

    https://www.bloomberg.com/news/articles/2019-03-19/how-much-oil-is-displaced-by-electric-vehicles-not-much-so-far

    1. It would be more of a squeeze than that. For one thing a 2025 peak in production is unrealistic. Maybe in a perfect world where no one has geopolitical outages, several year lead times to start production in new finds or shark-fin declines. More likely lower that by a couple million bpd and bring it closer to present. So very near peak currently and likely to decline by 2025.

      Bigger problem than exact peak is that demand, as per the Bloomberg article, has been growing at around 1.5Mbpd a year. That would need to stop within the next two years. We may actually be seeing this in the inventory picture in Ron’s article.

      1. Hi ProPoly,

        So i assume you think peak is around now rather than 2025?
        I think Dennis’s ~ 2025 peak is quite reasonable but who knows. It seems to me either scenario is catastrophic as GDP will start to decline shortly after the terminal decline starts. Again just my opinion, i have no idea what the future holds.

        1. Iron Mike,

          In 2005 to 2009 when World C+C output was relatively flat, World GDP continued to grow, the economy may slow a bit, but it will adjust.

          1. Sorry Dennis i disagree with that. Consumption and price play an important role not just production. Oil prices reached all times highs in that period, therefore the demand for oil must have been great.
            Thinking more about it, it is actually a very complex topic. Is it possible to send you an email Dennis ? I’d like you to see this paper regarding the topic.

            Have a read of this:
            http://www.prienga.com/blog/2018/5/14/oil-consumption-as-a-percent-of-world-gdp#commenting

            1. Peakoilbarrel@gmail.com

              I have read that paper in the past. The world can run at 5% oil spend for a while in my opinion. Consumption will equal supply, oil prices will rise and people will move to EVs because they will be better and cheaper. Feel free to disagree, prices of EVs will come down as they scale up.
              ICEVs will not be able to compete by 2025.

            2. Dennis, prices of EV’s will not come down because you cannot build a battery for less than the cost of materials. Teslas’s model 3 is a prominent example of attempting EV automotive construction at a ‘mass market’ price, and failing dramatically. Model 3 base cost is no longer $35k (a big ask in any car market) but rather North of $50k for a reasonably accessorized model. I don’t fault Elon for this, he was way over ambitious and the only way to ‘control’ costs is by moving production over to China. Those EVs will only increase in cost, not decrease. To make matters worse, fully 7 million regular car loans (for vehicles worth far less then model 3’s) are in default so things will not improve per your cornucopian outlook.

              The Chinese factory that Elon is building will probably be able to deliver Model 3s for $35k landed in North America, for awhile. The US Tesla factories will be re-tasked to build high end electric vehicles for the upper middle class and higher, and will represent a very small segment of either the EV or ICE market.

            3. “prices of EV’s will not come down because you cannot build a battery for less than the cost of materials.”

              However you can reduce the amount of materials used to provide a given capacity and improve the efficiency of the manufacturing process, to get lower costs. See this comment and the following discussion.

            4. islandboy wrote:

              “You can reduce the amount of materials used to provide a given capacity and improve the efficiency of the manufacturing process, to get lower costs. ”

              not when you trying to sqeeze out the last bits of efficiency. To get more efficiency often requires more unfront investment, better (more costly materials). For instance, you can reduce the weight & materials in car by replacing steel with highs strength alloys which are significantly lighter, but considerable more expensive.

              Imagine a Supply demand graph, but subsititue demand & supply with efficiency and material\manufacturing costs.

              The only way Tesla can reduce causes is going with cheaper, less efficient materials, or reduction in battery capacity.

              Also supply and demand factor in, EV Lithium still use cobalt and as the demand for Lithium batteries rise (cell phones, Cordless tools, & other portable devices not just EV’s), so do the costs of Cobalt.

              Tesla is likely go go bust in the next 2 years unless its nationalized like GM\Chrysler was. Way too many lawsuits hitting Tesla over accidents, battery fires, etc. Consider that J&J lost $4.69B to a small Talc lawsuit & Monsanto losing about $1B to handful or people over cancer related to Round up.

              Tesla is facing billions in lawsuits that it very likely going to lose.

            5. @ TechGuy, I take it you did not read the comment I linked to. I was trying not to clutter this oil thread with non-oil material but, since it seems you can’t be bothered to follow a link, here’s the link to the article on which the comment is based:

              The Reason Tesla Spent $218 Million On Maxwell Technologies

              Maxwell claims to have demonstrated that its proprietary electrode can enable an energy density of over 300 Wh/kg, and predicts that it can achieve over 500 Wh/kg. Of course, the energy density of Tesla’s batteries is top secret, but it’s widely believed to be the best in the industry. Tesla owner Sean Mitchell, who discusses some of the possible reasons that Tesla bought Maxwell in a recent video, estimates that the energy density Maxwell is talking about would represent an improvement of between 15 and 50 percent compared to Tesla’s current batteries.

              Below is an excerpt from my comment with my take on the article:

              So my reading of this is that Maxwell has developed a technology that Tesla is satisfied can be slip-streamed into the manufacturing of their current products, buying them an improved energy density, improved charging times and improved cycle life, while actually improving their manufacturing efficiency and thereby reducing costs. I have seen no mention of any downsides to this and apparently there is little risk in adopting this technology in the short term. If anything, it appears it will make the batteries less rather than more dangerous.

              On the lawsuit front, have you ever seen the process for engaging “autopilot” in a Tesla? You basically have to acknowledge that you understand that you must pay attention and be ready to take control of the vehicle at all times (accept a disclaimer). Also, if the car senses that the driver’s hands are not on the steering wheel it will warn the driver and if it does not get an adequate response will deactivate “autopilot” such that it cannot be reactivated without stopping the vehicle and shutting it off and then turning it back on (essentially rebooting it). Basically Tesla doing a CYA. I suspect the law suit being brought by the family of the Apple employee will not succeed.

            6. Its not just about the Auto pilot: Lots of incidents of the Front wheels coming off, and being linked to problems with the autopilot. People getting locked inside (trapped). Door handles that don’t function (especially in emergency situations).
              Then there are all the pending OSHA, worker safety violations. Consider most of the key people left Tesla, after it starting cooking the books. In the past few months about a dozen key execs left the company.

              Second, I did not start this non-oil thread. You go blame me, even though my comment is below yours, Dennis & Mike Sutherland. Please identify the text in your post above were it discuss oil production and not EV.

              This is the typical case of redirection, when you cannot argue the points you change the topic to SuperCaps & accuse me of being off topic.

            8. Battery cell price for Tesla is down to 100$ / Kwh at the moment.

              So 5000$ for the 35000$ base modell is battery – the rest are other things.

              A less complicated engine and no shifting gear, no starter gives some $ less – so let’s say the car would be 2500$ more expensive as a comparable ICE car in production prices.

            9. Mike,

              The Tesla Model 3 Standard plus is pretty well appointed (relative to other cars in its price range), the price is $36,950 and has a range of 240 miles.

              The price will come down over time, in 6 years (2025) a car with similar features and performance will be $30k, a lesser car (performance of a Toyota Corolla), will be $25k.

              See https://www.tesla.com/model3/design#battery

            10. >Dennis, prices of EV’s will not come down because you cannot build a battery for less than the cost of materials.

              What materials are you talking about? Take lithium. Tesla uses 714 gm/KWh, acording to this:

              https://www.researchgate.net/post/What_is_the_content_of_pure_lithium_eg_kg_kWh_in_Li-ion_batteries_used_in_electric_vehicles

              So an 80 KWh battery needs roughly 57 kilos of lithium. A kilo of lithium costs about $18, according to this:
              https://www.metalary.com/lithium-price/

              So an 80 KWh battery has about $1000 worth of lithium in it.

        2. I don’t see who is net growing C+C that much, particularly crude. The current dynamic is the Permian vs. its own conventional decline, its large horizontal legacy decline, other USA conventional decline and everyone else. The other US LTO plays are at best flat. Russia has no growth and expects to be in significant decline by 2025. Mexico is terminal. Venezuela will take more than five years to fix. Lead time in Canadian projects is huge and a lot was scrapped in the glut bust.

          One can add a few million bpd in the Persian Gulf and still be short of breaking even because of all the rest of the world stuff that is terminal.

          1. Yes, to me that is apparent using a few fingers and toes. And, I really don’t think OPEC will get close to 3 million barrels. And we are nowhere close to the 11.3 million barrels EIA is estimating. They need to stick with pot, it’s safer and makes you less delusional than what they are using.

            1. GuyM,

              Your estimate of US output? Output can increase in Brazil and Canada, Iran can increase output, Libya could produce more once the civil war is over. US tight oil could increase by as much as 4 Mb/d over the 2019 to 2025 period, if oil prices rise.

              Also as far as decline in Non-OPEC minus Russia minus US from Jan 2015 to Jan 2019 the trend has been an annual decline of 231 kb/d over that period. The trend in World demand has been an annual increase of 800 kb/d since 1982, so over the 2019-2025 period we would need about an annual increase of 1030 kb/d or a total of 6180 kb/d, I think it will be a little less than this so prices will increase and demand will grow more slowly than 800 kb/d. Increases from Iran (1000 kb/d), Brazil+Canada (1500 kb/d), and the US (3500 kb/d) over the next 5 to 6 years will allow World output to keep growing until at least 2023 and possibly until 2025 or later. There are many more optimistic than me who believe my estimates are too conservative and of course many here who believe my estimates are too optimistic.
              We will see over the next few years, at minimum a plateau at about the 2018 level is possible (doubtful it will fall below that before 2025 in my view). In fact with a plateau type scenario at 2018 World C+C output levels the plateau could be extended to 2030.

            2. We will see over the next few years, at minimum a plateau at about the 2018 level is possible (doubtful it will fall below that before 2025 in my view).

              I am betting it will fall below that in 2019.

              We will see an uptick of about one million barrels per day when Iran comes back in full production. That will likely be in January or February 2021 when the new Democratic President takes office. Other than that I don’t see those great increases you think are coming.

              And I have serious doubts that the increased Iranian production will bring us back up to those lofty 2018 levels. 😉

            3. Hi Ron,

              US tight oil output in chart below. About an average annual increase of 1500 kb/d from Jan 2017 to March 2019. I am proposing an average annual increase of perhaps 800 kb/d over the next 5 years, but it might be anywhere from 600 to 900 kb/d, much will depend on the price of oil and the state of the World economy, both are impossible to predict.

            4. much will depend on the price of oil and the state of the World economy, both are impossible to predict.

              Well, I would think it would mostly depend on the state of the oil patch.

            5. Hi Ron,

              I would say the oil patch has only a small influence on the World economy, there are many factors which affect the World economy and often the oil patch will be affected by the World economy (especially demand for oil which depends on economic activity) more than the reverse.
              Basically you have the causation arrow pointed in the wrong direction.
              World economy —>oil patch

            6. I would say the oil patch has only a small influence on the World economy,…

              Two points. First, I was not speaking of the world economy, I was speaking about shale oil production. After all, that was the subject of both your chart and your post.

              Second, the oil patch has everything to do with the world economy. The world runs on oil, at least for the time being. When people finally realize that world oil production is in decline, and will decline forever, then just watch what effect it has on the world economy.

              Of course that will be about a decade in the future. That is the psychological effect as well as the physical effect peak oil will have on the world economy. All that will hit several years after the actual peak. But the effect the oil patch has on shale oil production is hitting right now.

            7. Ron,

              The part of my comment that you highlighted was part of your comment, it specifically referred to the World economy which affects the demand for oil and thus the oil patch, do you believe that economic activity has no affect on the amount of oil that is consumed?

            8. Of course, the economy has an effect on consumption. However, the amount of oil produced also affects the amount of oil consumed, especially if production is falling while the economy wants to expand.

              In the next few years, nothing will affect oil consumption more than the oil that is produced.

              That’s why I said the oil patch has a lot to do with it. Do you agree?

            9. Good grief. What a difference a week makes. Bubba (oil majors) are taking over the US shale industry, as fast as they can. In strictly linear projections, US oil could expand by 4 million barrels in six years. That would, largely, require more exports. So, Bubba is going to spend 70 to 80 billion on upgrading US refineries, and other end users, so they can wind up exporting this stuff, so that it plays out quicker??!!

              Decline curves are not linear. But, your right in that demand rise will not happen like the past few years due to prices, and 800 would be about a high. Canada will take years to start any kind of a significant incline, and Brazil is just a dream. The logistics there will take care of that. I agree with Ron that Iran will be reversed, but in about two years.

              We may have a higher peak in a few years, but it may take a micrometer to measure it. Demand increase/decrease will not be measurable, because it can not get higher than supply. But demand’s reluctance to die, will lower inventories until they are bare.

            10. GuyM,

              So what do you think will happen with US tight oil output, I suggest an 800 kb/d average annual rate of increase from 2019 to 2024. Let’s say the increase is half that and we get 2000 kb/d over 5 years, we will also assume the rest of the World output is flat.
              What would you expect for an oil price in 2024 under that scenario?
              Essentially at current prices (say $70/b for Brent crude) the World would be short by about 400 kb/d on supply each year (over a 5 year period this is a 700 MMb draw on stocks). The independents will be willing to produce and export quite a bit of oil, the majors might expand their refinery upgrades if they believe it profitable to do so, or they will export the oil that is beyond their capacity to refine.

              I see the potential for $100/b oil in 2022, that kind of price might change oil company capital spending.

            11. It’s a new ball game, and it depends on how fast the bigger fish eat the small. Hypothetically, if the feeding frenzy happened real fast, there could be next to nothing in growth. That’s assuming a magical increase to accept 2.5 million now being exported to be consumed by US refineries. I know that is impossible, but what lies in between?

              I don’t argue that your expected increase is not realistic, all things being equal. But, I don’t think all things will remain equal. Just my guess. Ok, I will make a really off the wall wag. Production will climb over 2 million barrels over the next five years, then decrease as exports are cut down.

            12. Guym,

              I have three US tight oil models low, medium and high with the medium scenario simply being the average of the low and high scenarios. The low scenario has tight oil output increasing by about 700 kb/d total from Feb 2019 to June 2025 (from 7500 kb/d to 8200 kb/d). The high scenario has tight oil output increasing to 11,000 kb/d by June 2025, an increase of about 3500 kb/d over roughly 6 years. My medium scenario has tight oil increasing to about 9600 kb/d by June 2025 or by 2100 kb/d over 6 years. This is roughly the same as your WAG, if we assume US non-tight oil output is relatively flat over this period due to rising oil prices.

              Note that the medium scenario is my best guess and includes the assumption that majors will increase tight oil output at a more moderate pace relative to independents. The low case is somewhat like an assumption that majors take over all tight oil production and the high case that the rate of development continues at the 2017-2018 pace from 2020 to 2025.

              Obviously we don’t know if any of these scenarios will represent the future, but I think somewhere between my low and high scenarios will be right.

            13. Guym,

              I am well aware that the wells do not decline linearly.

              Chart below shows the well profiles I use for the Permian Basin (wellpro6 is the average 2017 Permian well profile, the others are for earlier years from 2010 to 2016). I assume in my models there is no change in the Permian well profiles from 2017 to 2023, after that the well profiles decrease (they move back towards wellpro1 as the sweetspots get drilled up over 2023 to 2050).

              If chart is too small, clicking on it will pull up a bigger chart.

            14. Who was taking about Permian decline rates? I was referring to the decline rate, overall, posted by Ron on a previous post by IEA.

            15. GuyM,

              This is just representative of tight oil decline rates, you said decline curves are not linear, I didn’t know what you were referring to, as you have wells in the Eagle Ford, I thought you were talking about the steep decline of a typical tight oil well. As 65% of the US tight oil output in the US comes from the Permian and it is the largest tight oil resource, I thought it might be relevant. My bad. 🙂

              Can you clarify what you meant when you said:

              “Decline curves are not linear.” Are you talking about the total output curve for a region, I didn’t interpret correctly and I am still not sure what you mean.

            16. The world decline, before the addition of new oil, as depicted by IEA, and posted by Ron on a previous post.

            17. GuyM,

              Got it now thanks. My expectation is that investment in oil production will continue. Those IEA charts showing oil decline assume no new investment in oil production after 2018, which seems unlikely. The chart looks like about 8% exponential decline, which as you said is nonlinear.

              https://www.iea.org/weo2018/fuels/

              Link above has chart (just before natural gas section)

      2. Propoly,

        If one assumes supply is equal to demand (in the long run this is axiomatic), from 1982 to 2018 World C+C demand rose at an average rate of 800 kb/d each year, the 1.5 Mb/d is an “all liquids” rate which is unlikely to continue (much of that is lower energy biofuels and NGL). My scenario is quite conservative being midway between the USGS conventional crude estimate (3000 Gb) and a Hubbert linearization estimate for C+C minus tight oil minus extra heavy oil (2400 Gb). The midpoint is 2700 Gb, I use a 2800 Gb URR for conventional, a reasonable 91 Gb for tight oil and a very conservative 200 Gb for extra heavy oil in the scenario.

        I assume extraction rates do not increase or decrease (they have been relatively steady from 2010 to 2020). I am confident that the peak will be between 2022 and 2026, with 2024 as my current best guess, roughly a 70% probability it will be in this range with an equal probability it will be before 2022 or after 2026.

    2. Ravi
      Take a look on this video:
      https://www.youtube.com/watch?v=duWFnukFJhQ
      Transition from ICE vehicles to electric vehicles will be very steep. There will be no coexistence of ICE cars and EV cars in a few years from now. Most probably you won’t buy in future a CRT television set or a Nokia mobile phone. Neither an ICE car, if an EV car is better in every feature.
      By the way, I don’t think Tony Seba is right on the price of oil in the future, of 25$/bbl , even if world oil consumption shall be cut in half in a few years.

      1. Alex,

        If supply is too high we will see prices fall until demand rises and supply falls to match.

          1. Oil prices fell in 2014 to 2016 while money was printed, and obvious counter to the argument that prices can’t fall.

      2. Alex,
        I agree that EVs will eventually get better than ICE in all aspects but my point was that there is a limit to how much oil can be displaced at all by EVs. Please look at the reply I have posted to Dennis’s comment.It contains data and source that elaborates on the point I was trying to make.

        1. Dood, all aspects pretty much start with filling the tank. You can do that in 2.5 minutes. And that tank lasts as long as the car, with 100s of fills over the car lifetime. The tank isn’t the item that fails.

          Good luck becoming superior in those aspects.

            1. Your first link is an article that says the headline is completely bogus. It says that claims need to be grounded in reality if people are going to believe other EV stories.

              And about that problem of needing to replace the “tank” every so many years, which mostly never takes place on a normal, proper car.

            3. I think he is talking about the battery but, your point still stands.

            4. It was just an attempt to show what people’s aspirations are. I am fully aware of the challenges involved in pumping 50 kWh or more into a battery in ten minutes. (300+kW, 500+A @ 600V) but, everybody is working on improving every metric of EV batteries.

              I am planning on acquiring a 2014 Nissan EV with a 24 kWh battery. Nissan offered upgraded models with 30 kWh since 2014 and then 40 kWh for the 2018 model year. What do you think my chances are of getting a 2014 vintage 24 kWh battery, assuming it needs replacing in 3 or 4 years time? I am counting on being able to get my hands on a 40 kWh out of a wreck and that, by then some enterprising folks will have figured out how to “upgrade” the firmware or something like that so the 2014 will accept the 40 kWh battery and operate like a 2018 (150 mile range). Some folks in New Zealand have already figured out how to get used Nissan EVs, imported Japan, to “speak English”!

              If the rest of the vehicle is still in good shape, it will be good as new.

          2. Tesla batteries last about 500,000 miles, typically the engine fails on ICEVs by that time.

        2. Ravi,
          Eventually the On Road Freight may also go to use EV . Together, they may cut oil use by 70% . The chemical industrial use is not mentioned there , but I suppose it is quite small. Even if Tony Seba’s time frame is much too optimistic, this can be achieved in less than 30 years. In the meantime, the oil price may go up and down, depending on demand vs. supply. This may entail some economic hardship from time to time, but not an existential problem for civilization.

    3. Bloomberg is wrong. Plugin cars have been growing at 58% per year while oil prices have been low. As more models become available from more car companies this rate might continue until 100% of new car sales are plug in vehicles. Once that occurs passenger vehicles are quickly replaced. For commercial vehicles the same will take place.
      It is possible in an optimistic scenario that demand falls below supply by 2026. A more realistic scenario has this occur by 2035. In th mean time demand will be constrained by supply and oil prices will rise to reduce demand to match supply.
      Lots of slack in system it is doable.

      1. Hi Dennis,
        I agree with you that EVs will pick up pace much faster than most projections but that is not the issue that I was trying to point out.The problem is that there is only a limited amount of oil that EVs can displace.Please take a look at the graph that I posted.The source is the following page.

        https://www.maritime-executive.com/article/transport-uses-25-percent-of-world-energy

        Lets take US as an example which has the highest vehicle ownership per capita. In US the Transportation sector consumes 70% of the oil that is consumed.(Source -EIA)

        https://www.eia.gov/energyexplained/index.php?page=oil_use

        As you can see from the graph about 60% of that transportation is passenger transport.Even if all the vehicles sold in US are EVs it would only displace about 45-50% of oil consumed.As of now it is extremely difficult to use battery powered trucks and impossible to electrify airplanes or ships.
        Assuming this ideal scenario across the world (although that is far from the case as you can see from the graph) only 40-50% of oil can be displaced even if all vehicles are electrified.

        1. Ravi, have you read Electric Commercial Vehicles, a ten year update part 2? There is a considerable amount of work being done to electrify commercial vehicles. Back in my 2009 piece, I made the point that electrification actually makes more sense for short haul commercial vehicles than it does for private passenger cars. It seems that it has not escaped the CV industry.

          The ECV 10y update starts with a section on Chinese government policy actions on EVs and the results. Here’s an example of a link from the post:

          Chinese electric buses making biggest dent in worldwide oil demand

        2. Ravi,

          I expect on road freight and rail to also switch to electricity especially as oil prices rise.

      2. “… this rate might continue until 100% of new car sales are plug in vehicles.”

        If world oil consumption keeps growing, which will make world GDP grow, then EV sales may go up. But if oil consumption rate drops, and world population becomes poorer, then EV sales will decline.

    4. Ravi,

      The Bloomberg estimate for the uptake of EVs is very conservative. Oil prices will rise from 2023 to 2040 or so and the ramp up in EV sales will be very rapid. Note the total savings from EVs and fuel efficiency was 13 Mb/d to 2040. That combined with higher prices will keep demand down.

      1. Dennis,

        As I mentioned before I agree with you 100% that bloomberg article is conservative.My point is –

        The backbone of Industrial civilization is group of heavy-duty machines like tractors,trucks,freight ships,mining machines,excavators and many others all of which require diesel to operate and cannot be electrified.(For a complete list refer this link)

        http://energyskeptic.com/2017/off-road-vehicles-and-equipment-need-diesel-fueled-engines-for-power-mobility-and-efficiency/

        These machines perform everything that we need to run our civilization INCLUDING MANUFACTURE OF ELECTRIC VEHICLES.

        As I explained in my previous comment electric vehicles can only replace 40-45 million b/d of oil.(The part represented in blue in the attached image is the only replaceable oil)

        According to your graph oil production will fall to 40 million barrels by 2070.Even if EVs have shaved of 40 million barrels of the demand we still need a MINIMUM of 60 million b/d of oil to run the heavy machines.If we cannot produce this then we have to reduce our consumption which means less computers,less iphones,less ELECTRIC VEHICLES,less SOLAR PANELS,less food,lesser air travel, less everything COMPARED TO TODAY at a time when we will have 11 Billion people.

        The above scenario is a recipe for collapse because according to you oil and natural gas will be in terminal decline by then. It is energy(FOSSIL ENERGY) ,after all that powers the economy not money.

        From above logic it is clear that at best the Electric Vehicles are band aid because they will free up some of the oil in the short term(for a few decades) but not the solution because we cannot electrify the machines without which civilization ceases to exist.

        1. The backbone of Industrial civilization is group of heavy-duty machines like tractors,trucks,freight ships,mining machines,excavators and many others all of which require diesel to operate and cannot be electrified.

          That is a basically a false statement, there is no reason they can’t be electrified! And even if it weren’t, it totally ignores the possibility of completely new paradigms for non fossil fuel based structuring of civilization.

          The future is already here and is distributed on multiple levels and that includes manufacturing with locally produced and resourced materials. Fossil fuels and petrochemicals are not needed! Renewables, smart grids, EV to grid battery storage, 3D printing, architecting materials at the nano to macro scale, genetically modifying organisms to produce biopolymers, etc will basically eliminate the need for all that heavy machinery and long distance transport. The 2oth century is over.

          Cheers!

          1. Fred why don’t you just admit you are a closet cornucopian lol
            There is nothing wrong with it.

            1. Call me whatever you want. For starters, I rarely even post on this side. But you miss my main point which is, that most people still don’t understand that the oil age is over and its time to move on.

              BTW the definition of ‘Cornucopian is:

              A cornucopian is a futurist who believes that continued progress and provision of material items for mankind can be met by similarly continued advances in technology. Fundamentally they believe that there is enough matter and energy on the Earth to provide for the population of the world.

              For the record I believe that humanity is in deep ecological overshoot and that the current population cannot be sustained at present numbers, regardless of technological advances. So I doubt that I’m what you could call a true ‘Cornucopian’ on that score alone. As for the other things I mentioned I’m just reporting facts. You or anyone else, can look them up, all the information is readily available.

              Cheers!

            2. Yes Fred the oil age is over, meanwhile the world consumes ~ 100 million barrels of oil per day.

              I think you are calling the oil age being over a little too early. As the data shows, the demand for oil is still increasing and strong.

            3. Iron Mike.

              It appears that electric vehicle manufactures still haven’t figured out how to profit from their products. I assume someday they will, but it seems this would be critical to widespread adoption.

              I live in fly over land. I see just one plug in vehicle on a regular basis in our small town. A $100K Tesla Model S owned by a family that also owns and drives 3 ICE vehicles.

              We have close family in a major midwestern city. We travel there and back several times a year. A lot on interstates. On these trips I drive in a lot of heavy traffic. Seeing a plug in is rare, but I do see one on occasion, particularly plugged in if we go to a mall. My suburban relatives know no one who owns an EV. My highly educated, highly compensated, liberal brother in law says he loves them, but when it was time to trade he didn’t buy one, says there are too many unknowns and he doesn’t want to risk his young family having issues with one. Also, he felt the M3 was way too expensive for its size.

              I trade trucks about every 7-8 years. I can afford that, most people honestly cannot. I get pretty good trade in for my trucks, and have since I first traded one in almost 20 years ago. I was glad I was in it while sitting in a traffic jam (due to black ice) on the interstate with the temperature at -15 F. The thought crossed my mind how I’d feel in an EV at half charge or less in the same scenario.

              I also seem to note that primarily men are interested in EV. Is there any truth to my anecdotal views on that? We always hear about Elon’s fan bois. Are there many fan girls?

              I am fully aware that EV’s are coming. I suppose there are many here who think that time is soon. I am sure I have some bias due to still owning an interest in the shallow stripper wells I do, which continue to pump out the same small amounts of oil they have for decades.

              In my view it is going to take one heck of an effort to transform the entire US fleet to EV, especially when so few people in fly over country appear to have the desire to own an EV car. Lots of SUV’s and trucks around here, as well as in the midwestern cities I travel to. Most folks here that can pay $35K + for a vehicle buy a truck if male or an SUV or crossover if female.

              Think we will just hold onto our stripper wells for now. City people tend to take the food and fuel for granted. That’s going to bite them someday, can’t keep commodities at discount prices forever IMO.

            4. Thanks for your input shallow sand. Very interesting points you raised.

            5. Shallow Sand, most people in the world live in dense town/suburban areas and urban areas now. That number seems to be increasing. So although more rural folk are reluctant to make changes, most of the change will occur within the tighter urban-town regions. Places that need to reduce local pollution, reduce noise and can easily take up cars-as-a-service rather than ownership.
              What happens in the US is not very important anymore since it only has less than 5 percent of global population. The US citizens will be dragged into the future by global changes and global pressures. As well as peak oil.

              Plans to abandon ICE cars are happening in a number of countries already.
              Meanwhile, banning or reducing cars in many cities is already underway.
              https://www.businessinsider.com/cities-going-car-free-ban-2017-8

            6. Gone Fishing.

              I don’t necessarily dispute what you are arguing. I am just stating what I see where I am and travel to.

              I agree anecdotal evidence must be treated carefully.

              My urban contact is primarily in the Midwest.

              I do question that battery powered tractors, combines, semi trucks, etc are an easy answer.

            7. Shallow sand,

              At least in the US the total fuel used on the farm is a very small percentage of fuel use. Most of the C+C consumed is from road use (probably 70%), with another 20% or so in ships and air transport. Rail can be electrified and shorter haul trucking can also be electrified, even long haul trucks might eventually be electrified as diesel fuel becomes expensive and the costs of batteries falls. I am thinking here of a 30 year transition (to about 2050) when most road fuel use is gradually eliminated, there will still likely be a need for oil for air and water transport along with petrochemical input (though I think much of that input is from natural gas and NGL rather than crude).

            9. Lol Road to hell. Really? According to you peak oil is a non-issue since electrification and technology will save us.

              Ecological overshoot, environmental destruction and climate change is your main issue. Which is the topics you and I agree on.

            11. According to you peak oil is a non-issue since electrification and technology will save us.

              I guess you just hear what you want to hear. I believe nothing of the sort!

              I believe overpopulation, ecological overshoot, climate change and peak oil are existential threats that may well end civilization as we know it and ultimately cause our extinction as well.

              I have said a million times that electrification, renewables, EVs etc… are not silver bullets.

              Which doesn’t mean that radical paradigm change on technological, economic, political and social levels is not already occurring or that such changes are not going to accelerate.

              I stand by my point that the fossil fuel age is for all practical purposes over. Which BTW, also doesn’t mean that we stop burning them over night. Even the Titanic took a little while to sink after it hit the iceberg.

            12. Iron Mike,

              Over the next 5 years, oil supply (crude plus condensate at about 83 Mb/d in 2018) will become constrained and oil prices will rise which will curb demand to available supply. Surely you are correct that the “Oil age” is not over, but alternatives that are cheaper than oil for land transport will fall in cost while land transport powered by liquid fuel will become relatively expensive. In 40 years, ICEVs for personal and commercial land transport will be about as common as horses are for those uses today.

              I can remember seeing my first computer at a Christmas party at my Dad’s work in 1966 and learning to program in high school. It is difficult to imagine the technological progress that will occur over the next 50 years, generally I have underestimated the pace of progress.

            13. Dennis,

              I have definitely underestimated technological progress, even though being younger than you.
              You’d assume there has to be a limit to technological progress, one example being moores law which no longer applies in todays world.
              You and i don’t pretend to know what the future holds. Even a 1 year prediction is hard to make in this world. EV’s and general electrification will happen, but it is not going to be easy and whether the world at large can afford the change remains to be seen. I have big doubts.

            14. Iron Mike,

              We are in agreement that there are certainly physical limits an I am not proposing there are no limits. My expectation is that human population will peak in 2070 and then decline.

              See

              http://blog.iiasa.ac.at/2014/09/23/9-billion-or-11-billion-the-research-behind-new-population-projections/

              I also agree the energy transition will not be easy, just possible with good policy. My hope is that good policy will be implemented, but it is by no means a given. Perhaps 50/50 odds.

        2. Ravi, while challenging electrification “of heavy-duty machines like tractors,trucks,freight ships,mining machines,excavators and many others” is not impossible. See the following case a a haul truck that hauls it’s load down hill and then goes back up the hill empty:

          World’s Largest Battery Powered Dump Truck is Being Developed

          In this case the truck should get enough charge coming down the hill fully loaded to drive it back up the hill empty. Resulting fuel costs will be zero. I invite you to read the series of posts I am putting together, “Electric Commercial Vehicles, a ten year update”. Following the current non-petroleum thread, the series will continue with part three next week. Part three will deal with electric vehicles that have been available from before the 2009 ECV article but, were overlooked.

        4. Ravi,

          Mining equipment can be electrified as can most commercial vehicles, the transition will take time, but as fossil energy becomes expensive other types of energy will be substituted. The mistake you are making is assuming it must happen overnight. There will be a gradual decline in fossil fuel output until demand starts to fall below supply, then fossil fuel prices will start to fall and supply will begin to fall rapidly as cleaner types of energy crowd fossil fuel from the energy market, some fossil fuel will still be used as inputs in steel, plastics, and petrochemicals depending upon the price relative to substitutes.

    5. Hi Ravi,
      I believe your points are absolutely valid, including-

      -“by 2050 we will have a C+C of 60 million b/d. Even by the most optimistic scenario given by this bloomberg article electric vehicles can only displace about 8-10 million barrels of oil by that time. Wouldn’t that create a serious crisis for the civilization?”

      -“From above logic it is clear that at best the Electric Vehicles are band aid because they will free up some of the oil in the short term(for a few decades) but not the solution because we cannot electrify the machines without which civilization ceases to exist.”

      Sure we can argue over the details. Nonetheless, the electrification ‘bandaid’, and massive downsizing are the only tools we have to manage the combined scenario of oil depletion and massive population overshoot.
      The sooner we do both on an unprecedented scale, the less painful it (transition) will be.
      It will be (and already has been- just ask those who have been through colonization or who have had their continents taken over) a chaotic and tragic scramble.

      1. 60 mbd will be enough – just not as comfortable.

        Public transport can be installed in all urban reagions and suburbans and expanded where it already exists. Farmers will look more at the fuel usage and perhaps use smaller engines. Long distance haul per truck will get more expensive – does anybody really needs mineral water from the opposite side of the continent.

        Ride sharing gets easy with apps.

        Smaller cars will get more common, too. Especially when fuel is not only expensive, but on cards in many countries.

        And not every vacation and not every business meeting in another country is necessary.

        That’s all possible without new technology.

        So reducing fuel spending by 50% in the western countries is not really that hard. There’s a lot of luxury that’s nice but not necessary.

        1. Yes indeed Eulenspiegel. These are good examples of the downsizing I mentioned. Additionally, most air travel is entirely unnecessary. Much of the entertainment, sports, consumer goods production and transport (ex fashion and cosmetic industries) could be scaled back massively without a significant disruption to the overall affairs/well-being of humanity.
          If pressed (and I surely believe we will extremely hard pressed by a lack of cheap energy), we can get by with much less fuel.
          It will require a change in thinking by humanity, to intentionally downsize.
          Not sure if we are up to the task.

          1. That’s what I think. Few of us actually need to fly anywhere, therefore much of commercial air travel could be eliminated.

            Passengers vehicles can be downsized or eliminated without a huge loss of quality of life. Some people will choose to downsize and others will find it a necessity.

            Many of the consumer goods shipped vast distances are unnecessary to most of us. We can get by with much less.

            1. Much of what I buy seems to be made in China, electronics included. It’s these devices that reduce my need to travel. China is 8,000 km from the UK.

            2. But you likely don’t need to replace them every year or two.

              As for clothes, furniture, toys, etc., we don’t need so many Christmas stuff.

              Most of us would do fine with significantly less stuff. Nor do we need as many food choices as we have. We can survive with more of our food locally grown. We won’t have the year round selection, but we don’t need it.

            3. I didn’t check my post. I don’t know where the Christmas came from. It was probably supposed to be consumer stuff.

            4. The tourism industry should be first on the chopping block. Nobody needs to fly anywhere just to have a look.

            5. Eliminating commercial flight will not reduce fuel use. It might even increase emissions.

            6. Hey! You are talking about the lifeblood of some national economies there! See:

              Jamaica Poised to Generate Record US$3.3B in Tourism

              Jamaica recorded 8.6% increase in tourism earnings in 2018

              The tourism minister also highlighted that the increase in earnings has had a great impact on the local economy, primarily to the small and medium tourism enterprises.

              Earnings of US$3.6 Billion Expected from Tourism

              There are some places in the world where a huge portion of the economic activity depends on tourism but for the record I want to add that I am not a big fan of tourism being the mainstay of any economy. In my neck of the woods, tourism businesses tend to charge tourists prices three times as high as what businesses catering to locals charge, when the prices local residents pay includes a profit margin and I suspect overheads are not that much higher. That means businesses involved in tourism do much better than the average business but whenever there’s a downturn they cry like babies.

            7. So for all your posts about solar you are still totally committed to BAU……Interesting position.

            8. I am all in when it comes to renewables and EVs but, I can’t say the same for 99.9999% of the rest of the folks in my neck of the woods!

              As for Peak Oil, the only other people that I know of that are aware are people I have talked to about it and maybe people who might have noticed the term in one of it’s rare appearances in the press. I wouldn’t exactly say it’s on anybody’s radar around here!

  17. From Rigzone, bold mine.

    Iran Warns OPEC Collapse Is Likely

    (Bloomberg) — Iran’s oil minister warned that OPEC is in danger of collapse as some nations seek to undermine their fellow members, an apparent reference to Saudi Arabia’s pledge to fill the supply gap created by U.S. sanctions on Iranian exports.

    “Iran is a member of OPEC for its interests and any threat from member states won’t go unanswered,” Bijan Namdar Zanganeh said after a meeting with OPEC Secretary General Mohammad Barkindo in Tehran on Thursday, according to the oil ministry’s Shana news agency.

    His comments come as U.S. President Donald Trump tries to cut the Islamic Republic’s oil exports to zero, backed by a promise from Saudi Arabia and its Gulf allies to increase production to ensure the squeeze doesn’t create a supply shortage.

    Those countries boosted production last year as the first round of American sanctions hit Iran, without splitting the Organization of Petroleum Exporting Countries. This year, however, Iran is under even greater pressure, with fewer options to keep its economy afloat.

    Zanganeh had already censured “two neighboring states” for voicing readiness to fill the gap of Iranian barrels in the market. “I told Mr. Barkindo that OPEC is in danger by the unilateralism of some members and the organization faces the risk of collapse,” he said on Thursday, stopping short of naming names.

    The lost barrels, along with supply disruptions in Venezuela and elsewhere, have raised the question of whether OPEC’s biggest producers have a big enough supply buffer to keep the market in balance. Zanganeh last month accused Saudi Arabia and the United Arab Emirates of exaggerating their surplus oil capacity.

    Discord between OPEC’s Gulf members has shaken the organization in the past year. Qatar announced its exit in December after more than five decades of membership after its neighbor Saudi Arabia targeted the nation with an economic blockade.

    “Qatar’s departure broke the seal. Iran’s would be much more serious, but no longer unthinkable,” said Derek Brower, an analyst at RS Energy Group. “Iran thinks two members are conspiring with the U.S. against it — a good enough reason for Tehran to consider it’s position.”

    Infighting between OPEC members caused Qatar to leave OPEC, and could very likely cause Iran to leave also. If Saudi Arabia increases production to make up for the Iranian loss, this would really piss Iran off. I am not at all sure that Saudi could increase production that much but nevertheless, I doubt they would do that even if they could. Yes, Saudi Arabia hates Iran’s guts but they need them to remain in OPEC to prevent OPEC from collapsing altogether.

    1. Given Iranian cooperation with the Russians in Syria, and the influx of Iranian troops into Iraq during the ISIS campaign, it is a very credible scenario to envision a Russian/Iran/Qatar/Iraq counter to KSA. We are seeing an oblique manifestation of it in Libya.

      Best also to remember that the Qatar royal family is much more Shiite than Sunni.

      1. Watcher, the subject of my post, and the link I posted, was the possible collapse of OPEC. What’s your opinion on that subject? Is OPEC about to collapse? How far will Saudi Arabia go in order to prevent the collapse of OPEC?

    2. OPEC has been a significant influence in production and hence on oil price in the past. This year, they are a factor, but not enough to keep oil prices from rising. Depletion marches on, and demand will continue to pressure next year, and probably for awhile. OPEC will become less of a factor. If SA is not aware of that by now, they are not as sharp as I imagined.

      I mean, what possible benefit would retaining the structure of OPEC be, if there is not enough, or never will be enough oil in the future?

      Besides, if there is no OPEC, what kind of threat is NOPEC??

      Trump calling on OPEC to increase production, is like breaking both of your dog’s back legs, and trying to teach it to fetch.?

      Point is, OPEC’s existence is probably limited to how much pressure is put on it, for the short term. Long term, I don’t see where it could provide that much value. OPEC+ is already among the walking dead. The only question, this year, is when will they stop withholding output. Not that withholding is needed, now; but how far up are prices going to go, before they declare their last hurrah? My bet is that they really drag their heels for the last hurrah. They will have everyone moaning, Trump tweeting madly, legislatures preparing bills, before they declare OPEC as a thing of the past.

      1. OPEC has been a significant influence in production and hence on oil price in the past. This year, they are a factor, but not enough to keep oil prices from rising.

        Errr… OPEC is not trying to keep prices from rising, they are actively trying to make prices rise. That’s what their latest quota system, that was put in force in January, was all about.

        OPEC was created in an attempt to keep oil prices high. They have, from time to time, cut production in order to force oil prices high. To my knowledge, they have never, in the history of their existence, tried to increase production in order to force oil prices lower. And I doubt they ever will.

        1. Agree. They like to make noise that they support lower oil prices. To be believed by the really, really stupid. They did increase production a few years ago to lower prices, but their real intent was to damage unconventional. Which, they had to give up on, because they did not count on how much could be borrowed.
          More recently, they increased it due to the expected sanction cuts expected, but got burned badly on that one.
          Prior to that, I don’t recall a period of time that they increased production to make prices lower, and people happy, and I am 71 years old.

        2. I would not be at all surprised to wake up one day and find that OPEC has been disbanded.
          If Iran, for example, decides to fight the USA on its own terms, it could withdraw in favor of an alliance with Russia, or a more direct relationship with customers like China and India. Other small players (Iraq/Qatar. perhaps) would likely come along. That oil trade would not be conducted in USA dollars. Perhaps in Renminbi.

          1. The dollar’s continued dominance in oil prices is questionable, I agree. Of course, if that happens, it’s going to be higher in dollars. As will most everything.

        3. 100% Ron. OPEC wants nothing more than high oil prices. As any oil exporting country, high oil prices bodes well for their GDP.
          OPEC operates more or less like a cartel with a talent for propaganda. It is really hard to believe a word they say, regarding anything.
          They actually always have publicly state that they don’t control oil prices. That’s how full of shit they are:
          OPEC isn’t a cartel, doesn’t fix oil prices: Barkindo
          https://finance.yahoo.com/news/opec-does-not-fix-oil-112047014.html

          UAE: OPEC Doesn’t Control Oil Prices, the Market Does
          https://www.albawaba.com/business/uae-opec-doesnt-control-oil-prices-market-does-1236276

          It is becoming more and more obvious that they don’t seem to have the same stranglehold as they once did. And if Iran was to leave, i think they will be close to disbanding. It is similar to Spain or Italy leaving the Eurozone. It will have a major impact on the organisation.

  20. Personally I think there is too much focus on EVs and how soon they will be adopted. If people cut back on driving ICE vehicles or drive much more fuel efficient ones, petroleum use in those vehicles goes down. The goal is to reduce, either by choice or necessity, the use of petroleum. How that will be accomplished can take a variety of forms.

    A big factor in the US will be an aging population. Those over 65 drive about half the miles per year as those 20-54.

    https://www.fhwa.dot.gov/ohim/onh00/bar8.htm

    2. They switch to larger cars. SUVs. They’re safer. Car wrecks in those are more survivable for the elderly. So you can presume a reduction in fuel efficiency to go with less driving.

      1. 65+ do buy SUVs, but they also buy EVs. You can see the data at this article.

        Whenever I try to post the URL, the post doesn’t appear.

        But typing this into Google should bring it up. Hedges is the site.

        “New Car Buyer Demographics 2019.”

    3. Boomer II, sure we could build high mpg cars, the Apterra was an extreme example at 300 mpg. Even 150 mpg for a more practical car would be a big advantage and comparable to EV’s that run mostly off of the grid.
      However, people don’t accept them yet since they have to be extremely aerodynamic and in general have less power than the current car types. Put a rack on the roof and a luggage carrier, that could drop the mpg in half.
      The downside is that unless they are hybrids, the ICE will do poorly at slower speeds such as rush hour and city traffic, where the EV excels.
      Of course driving less is a big winner since no tech changes were made or capital had to be expended. Ride sharing is also a big boon, either EV or ICE.

      We will probably see all these changes soon.

  21. Approximately 1 million bpd outage in Russia due to the contamination problem and resulting export restrictions. Expected to be over May 7th but no one is sure.

    https://uk.reuters.com/article/uk-russia-oil-output/russia-to-cut-oil-output-by-about-10-percent-in-coming-days-as-exports-suffer-sources-idUKKCN1S91RU?rpc=401&

    That will impact their May production figures and there may be issues with April as well, at least with their net exports. Article restates the this was caused by an EOR chemical, organic chloride.

    1. Yeah, I am not completely sold on the idea it was vandals. Or, were they trying to keep production from a dying field?

        1. I have no idea of “unprecedented event” but sounds really suspicious….
          I’m pretty sure folks putting product into a pipeline have some QA specs they have to meet to start transfer.
          Last tally I heard was 1.5 million barrels of tainted crude that has to be reprocessed or sold at horrendous discount to clear out?
          But it is Eastern Europe- may have had some Vodka influence involved??

            1. name-Thank you for the clarification.
              Hmmm, that’s around 3.55million barrels equiv??
              I am reading up on the ripple effect ramifications of this.
              Absolutely scary- crippled the pipeline system, dozens (?) of vendors, buyers, etc for weeks/months?
              A fragile system indeed….

        2. This chlorine is used to squeeze out the last barrels in an empty field – so my theory is that either

          – someone got greedy and used more than usual, to get more out
          – Normally this oil is thinned with chlorine-free oil until under the safe limits. Something got wrong here.

          Or a combination of both. In any case, somebody has problems with his field and should close it for good.

          2. Or if it is political, which would not surprise me at all.

            The backwardation on Brent this is causing and the bad timing for the US (shale investments can not turn on a dime) is not entierly random IMO. The Saudis are following it up with increasing prices to Asia (mark-ups). The backwardation in Brent is now +80 cent first month/second month, which speaks volumes about oil that needs to be replaced in storage in Europe. You can’t have a market of paper barrels run wild without a physical market supporting it. Not for long anyway. Just my opinion. I expect oil prices to go high this summer/autumn (i don’t know how high) because OPEC+ want it, and that it is well overdue needed to support crude production.

  22. https://www.bloomberg.com/news/articles/2019-05-05/aramco-cuts-oil-prices-to-u-s-as-trump-tightens-iran-sanctions
    So the President will get cheaper oil as he demand,. other will pay for that it seems. Todays news tells Trump will increase again custom on Chinese gods 10 – 20%. Next step will ve to add custom on other products that not hace this today. I believe this shows there are no trade deal and it will end like before when he left North Korea. This might have some negative impact on world growth and oil price . Might be WTI in 50 range will be 2019 , 2020 senario abd that will not leave much dividend, payback of loan for US shale investors, banks…

  23. Commodities tanking on Trumps China tweets.

    6th year of low grain prices, and this one could see some BK’s as wet weather has kept farmers out of the fields.

    Al late crop, a hot and dry patch at the wrong time and a lot of folks are going to go down.

    Another farm bailout?

    1. Price of ethanol is pegged to the price of gasoline. Which very well could go much lower depending on what happens with this trade war. Might be good for consumers but for farmers not very good news.

      Trump can’t deal with China the way he wants to without there being an enormous amount of collateral damage. Who gets bailout an who don’t is a good question.

      Volatility in the markets is what is being created here and big banks love volatility.

      Both WTI and Brent are down over 2% and this pre-market. Depending on what US equity markets do tomorrow during actual trading hours. This 2% could change to 4% down by close.

      It wouldn’t surprise me at all to see US equities have a daily limit down and trading gets shut down for the rest of the day at some point tomorrow.

      1. Game of Thrones episode – Carnage of the Mad King

        “Trump can’t deal with China the way he wants to without there being an enormous amount of collateral damage”

        Definition of bully – a blustering, browbeating person especially : one who is habitually cruel, insulting, or threatening to others who are weaker, smaller, or in some way vulnerable

        8 Keys to Handling Adult Bullies

        1. Keep Safe

        2. Keep Your Distance and Keep Your Options Open

        3. Keep Your Cool and Avoid Being Reactive

        4. Know Your Fundamental Human Rights

        5. Utilize Assertive and Effective Communication

        6. Talk About Your Experience

        7. In Serious Situations, Proactively Deal with the Problem Early On and Formalize Your Communication

        8. Set Consequences to Compel Respect

        https://www.psychologytoday.com/us/blog/communication-success/201611/8-keys-handling-adult-bullies

        Winter is coming

        1. I like the line from the sitcom “Mom”.

          “Don’t ever turn your back to crazy.”

      2. A limit down day would be the best wake up call for Trump not doing too much silly things.

        He is very listening to stock prices – much of his reputation of “MAGA” is tied to economy growth. And a stock crash cratering all the baby boomers 501k is the last thing he needs in his agenda.

        1. Retirement savings are thin for boomers, to the point most are still more in stocks than they should be for age. Between needing more growth and how poor cash & bond yields are. A significant market decline will hurt people (and their opinion of the economy) far faster than a recession usually does

          1. ProPoly Wrote:

            “Retirement savings are thin for boomers, to the point most are still more in stocks than they should be for age. Between needing more growth and how poor cash & bond yields are. A significant market decline will hurt people (and their opinion of the economy) far faster than a recession usually does”

            Gov’t will just do more QE to bailout, reinflate stock prices. Perhaps next time, Fed will start buying corp. debt which will enable more stock buybacks. If you left all your money in stocks during 2008-2009 you still be up. This time won’t be different.F ed will be much quicker to respond with QE & the correction won’t repeat the 2008-2009 crash.

        2. Eulenspiegel,

          Well i agree it would be a wake up call. A much needed wake up call. But what we got was a bounce and price on all 3 major US equities. They all retraced 3/4 of the gap down during pre-market hour last night during normal trading hours today.

          Which isn’t a big shocker this market has an unreal bid underneath it. Never seen anything like it in 25 years of trading.

          Weekly chart set up is still very bearish for all 3 US equity markets and both WTI and Brent though. Weekly close this coming friday is pretty important. Price retraced 3/4 of the gap down and even if price retraces 100% of the gap down if it closes near lows this coming Friday which is 4 trading days away then there will be much more downside to this move.

        3. Eulenspiegel:
          “A limit down day would be the best wake up call for Trump not doing too much silly things.”

          He’s just matching the EU tax model: 20% Corp tax rate & 25% VAT (ie Tariff).

          Even if tariffs are cut, they come back after the 2020 election. Obama was trying to introduce a VAT, before it got push back. Trumpet just did it without anyone realizing its a VAT.

          https://www.wsj.com/articles/tariffs-on-chinese-goods-to-remain-in-place-for-period-of-time-trump-says-11553101862

          “President Trump said the U.S. expected to keep tariffs on Chinese goods in place for a “substantial period of time,” even after a deal.”

          “And a stock crash cratering all the baby boomers 501k is the last thing he needs in his agenda.”

          Pointless at this point since Midwest farmers are going bankrupt at the fastest pace in history. Trump needs them to win in 2020, and I suspect few farmers will be supporting Trump in 2020. At this point, he is just setting the stage for the next administration to sweep in with high taxes: elimination of deductions on personal taxes & VAT or national sales tax. US gov’t is running a budget deficit of about $1T and federal expenditures are going up: entitlements, pensions, and increase defense spending to secure US access to foreign energy imports.

          Nothing import really happens with elections: More taxes, more wars, more BS no matter who is in office. Washington DC is Looney tunes all the time.

          1. I predict if corn and soybean prices are this low at harvest farmers will get another payment like last year.

            This time, however, the corn payment will be higher. It was just 1 cent per bushel last year, hardly worth the effort.

            The soybean payment, however, was substantial, $1.65 per bushel.

            To put the soybean payment in perspective, a farmer who sold 50,000 bushels of soybeans (1000 acres at 50 bushels per acre) received $82,500. It was a real difference maker.

            Trump needs the farm support. Farmers are mostly very conservative right now and the last thing the Donald wants is for there to be a switch to the Dems as they go broke.

            So he will save them again this year.

      3. Threatening the Chinese doesn’t work. Even if they back down, they reverse later, that’s been the case for decades.

    1. Yeah, this one is really odd. Guess is that there is a bigger fish yet to gobble Oxy, but no indications of who. While Oxy has by far the largest land area in the Permian, they are very conservative on drilling. Whether with Oxy or Chevron, the amount of development of Anadarko’s property will likely slow.

    1. Excellent graphs he posts.
      And as he says, and as it is clearly displayed-
      “Therefore, growth since 2005 has basically come from US shale oil and Iraq’s Basra oil.”
      All the rest combined shows decline.

    1. China’s number is curious on that map given their relentless decline.

    2. OPEC Share of World Oil Reserves

      According to current estimates, 81.89% of the world’s proven oil reserves are located in OPEC Member Countries, with the bulk of OPEC oil reserves in the Middle East, amounting to 65.36% of the OPEC total.

      OPEC produces 39% of the world’s oil from 82% of the world’s oil reserves? Non-OPEC nations produce 61% of the world’s oil from just 18% of the world’s oil reserves? I find it absolutely astonishing how otherwise normally intelligent people can continue to believe that bullshit, year after year.

      A country produces oil according to the oil they have to produce. If only one country was an exception, one might understand that. But it’s every damn OPEC country in the Middle East. They are all exceptions to that rule.

      Yet even many people who post here take OPEC’s words as truth. Hell, OPEC member nations tell bigger lies than Donald Trump.

      1. According to this article from 2011:

        WikiLeaks cables: Saudi Arabia cannot pump enough oil to keep a lid on prices

        US diplomat convinced by Saudi expert that reserves of world’s biggest oil exporter have been overstated by nearly 40%

        And:
        However, Sadad al-Husseini, a geologist and former head of exploration at the Saudi oil monopoly Aramco, met the US consul general in Riyadh in November 2007 and told the US diplomat that Aramco’s 12.5m barrel-a-day capacity needed to keep a lid on prices could not be reached.

      2. (82% OPEC reserves/39% OPEC production)/(18% Non-OPEC reserves/61% non-OPEC production) = 7.1

        So non-OPEC produces 7 times more oil per barrel of reserves than OPEC.

        This is a mind blowing number. Mind you OPEC reserves include the massive Orinoco field which hardly produces anything.

        Please someone check that my logic and the above formula is correct.

        1. Yes, the OPEC reserves include the Orinoco heavy oil. But the Non-OPEC reserves also include the Canadian oil sands. So it’s a wash.

          So yes, as you say: So non-OPEC produces 7 times more oil per barrel of reserves than OPEC.

          Why in God’s name has anyone not noticed this before? It is because of “appeal to authority”. Well, that’s a psychological concept, but a valid one. BP has just accepted OPEC’s word for everything and BP is an authority. So therefore we must appeal to authority.

          But now we are mixing psychology with the physical world of oil production. But when the history of peak oil is written, this will be the explanation of why no one was really prepared for peak oil.

          But i digress…. bye now.

          1. ” BP has just accepted OPEC’s word for everything and BP is an authority” L F Buz Ivanhoe noted this phenomenon during the Twentieth Century. See the Hubbert Center Newsletter.

    3. I look at that map and I see 12 countries who clearly have plenty of oil to export if they keep their shit together- Ven, SA, UAE, Kuwait, Iraq, Iran, Russia, Canada, Libya , and Qatar. And Nigeria/ Kazak, both of which did not get labeled. OK, a few other smaller ones too.

      So the choices for the other 94% of humanity-
      1. Cozy up to the exporters, do their bidding
      2. Capture their oil, and keep it
      3. Wean yourself off the stuff

      Any country who is not working extremely hard to wean themselves off fast is leaving themselves in a very bad position. ‘Free’ smooth International trade can collapse any day. I can’t think of any country that is doing a good job of the transition. Perhaps Norway, but for them it is mostly just good fortune (oil and hydroelectric) rather than pioneering decision making.

  28. Texas production. March may show an uptick in Texas production. Don’t be fooled. EIA numbers are way off current. Permian may be trying to hold on, but they will be far offset by Eagleford drop. As in, dropping like a rock. Permian will do good to hold what it has. Karnack say, Texas production will be down for 2019. Hence, U S production will be down for 2019. Karnack say investors need to be kinder to Oil Companies, or stuff will continue to hit fan. Oil will not increase. Karnack never wrong.

    1. Karnack never wrong.

      Just who the hell is Karnack. I never heard of him/her/it. I googled it and got:

      Karnack is a rural unincorporated community in northeastern Harrison County near Caddo Lake in the eastern region of the U.S. state of Texas. The town is named after Karnak, Egypt.

      2. Karnack, the magnificent. Created by Johnny Carson. Or, an as yet, unsupported wag by GuyM.

  29. Crude oil production, February: 74,283 kb/day -436 m/m
    Average 2018: 74,710
    Average 2017: 72,864
    The country list is on the chart: https://pbs.twimg.com/media/D59SjJFXoAAx2sn.png

    For the countries that have already reported their crude oil production for March: -456 m/m
    The country list is on the chart: https://pbs.twimg.com/media/D59SqZOWkAAFD5J.png

    Numbers for April, May, June will include lots of maintenance, outages & sanctions: Kazakhstan, North Sea, Russia etc

    Statistics Canada, February: 4,544 kb/day +26 m/m
    Average 2018: 4,555
    Average 2017: 4,202
    Chart https://pbs.twimg.com/media/D59HZSOXoAAHtxb.png
    Crude oil inventories https://pbs.twimg.com/media/D59HrvMX4AEhDEw.png
    Exports https://pbs.twimg.com/media/D59IebJWAAA6Kle.png
    Electricity Generation https://pbs.twimg.com/media/D5-BBEOWAAAlJia.png
    Coal Production https://pbs.twimg.com/media/D5-BLSRXsAAJDmk.png
    Press release (units: cubic metre per month)
    https://www150.statcan.gc.ca/n1/daily-quotidien/190506/dq190506a-eng.htm

  31. Pioneer sold their remaining Eagle Ford assets to become a “pure play” Permian company, their words. Eagle Ford production is very marginal and current cash only $25 million, so mostly selling acerage contingent on commodity prices.

    Interesting is that they expect their Permian production to be flat in the first half of the year. Q1 averaged 320k bpd, Q2 range is 313-328.

    https://www.cnbc.com/2019/05/06/reuters-america-update-2-pioneer-natural-profit-beats-takes-permian-pure-play-tag-with-asset-sale.html

    1. Flat, by design. There under the gun by their investors, too. EOG seems to be one of the companies not listening to the noise, but their growth plans are fairly conservative.

      1. GuyM,

        EIA estimates 11.68 Mb/d in Feb 2019 for US output. What is your estimate?
        For Texas they have 4890 kb/d in Feb 2019. At times you say the EIA estimates for Texas aren’t too bad and other times you say they are terrible. For L48 output (excluding GOM) EIA has 9.56 Mb/d in Dec 2018 and 9.48 Mb/d in Feb 2019 and they expect 10.52 Mb/d by Dec 2019. I agree the Dec 2019 L48exlGOM forecast is likely too high, but around 10 Mb/d seems reasonable.

        Chart below is US L48 excluding GOM and tight oil production

        1. The 11.68 is not just an estimate, it’s within the arena I take as good numbers, the monthly oil production numbers. I’ve banged on those forever, and they still come out close. STEO is usually hogwash. They say 12.24 by May. That’s 560k barrels higher in three months??? In my limited area of the woods, Texas, I see declines in completions since then. Maybe the increase comes from New York or California???

          For normal years, about a 550k increase over a year, could be reasonable. The year is far from over, but it’s not looking so healthy, so far. However, there is lots of stuff than can change that. Who knows?

          1. GuyM,

            I don’t take their month to month guesses too seriously (in the STEO), currently they are forecasting about a 750 kb/d increase annually from Dec 2018 to Dec 2020.

            Chart below has US C+C 2017-2019, annual increase was 1600 kb/d over those 26 months. So the STEO is forecasting a rate of increase that is less than half that of the previous two years, seems pretty reasonable to me.

            1. currently they are forecasting about a 750 kb/d increase annually from Dec 2018 to Dec 2020.

              Yes, but they are predicting the lions share of that gain in 2019. That is they are predicting a US increase in production of 1,200 kb/d in 2019 and a gain of 350 kb/d in 2020. (Dec. to Dec. in each case.)

              Note: This is C+C, not Total Liquids.

              Obviously, they are expecting a slowdown in the oil patch in 2020. That slowdown just may come about a year earlier than expected.

            2. Ron,

              I agree, 2019 is too high, but I still think the overall change from Dec 2018 to Dec 2020 will be about right (2019 increase will be less than STEO, but 2020 increase will be greater).

              It is doubtful their forecast will be precisely correct, nor will anyone’s, but the overall increase from Dec 2018 to Dec 2020 seems pretty reasonable. I agree that the expected increase in 2019 will be less than the 1.2 Mb/d the EIA currently forecasts, about 700 kb/d this year and 850 kb/d next year seems more reasonable if Brent oil prices gradually rise to $85/b (2018$) over the May 2019 to Dec 2020 period as I expect (with lots of volatility along the way). Basically I expect the centered average 5 week Brent spot price may reach $85/b some time before Dec 31, 2020.

            3. Dennis, the EIA clearly sees the slowdown in the shale oil patch coming. They think it will hit next year, 2020. The EIA has a history of being overly optimistic. Yet… yet, in this case, you think they are being pessimistic. You see shale production increasing in 2020 over 2019. That just seems very strange to me.

              However, I will just have to leave it at that. We will both just have to wait and see.

            4. Ron,

              I expect oil prices will be higher towards the end of 2019, profits for tight oil producers will be higher, there will be a higher well completion rates (higher capital spending budgets) in 2020 as a result and the rate of increase in tight oil output will increase a bit (I am assuming 700 kb/d in 2019 and 800 kb/d in 2020, this is essentially no change in the rate of increase). In the end we don’t know as we don’t know future oil prices and how they will affect investment decisions. The main point is that in the end the output in Dec 2020 may be pretty close to the EIA estimate. That estimate is neither pessimistic or optimistic, it is realistic. The path that output will take from March 2019 to Dec 2020 is impossible to predict, a straight line guess is as good as any.

            5. I understand Dennis, hope springs eternal in the shale oil patch, for some folks anyway.

              I agree that oil prices are about to spike. World oil production is currently falling like a rock. Brent prices are in backwardation, meaning traders also expect prices to rise. However, I do not believe, as you do, that this will automatically cause a dramatic increase in oil production. The effect will be feeble at best. Well, in my opinion anyway.

            6. Hi Ron,

              I also do not expect a dramatic increase, I actually expect the recent rate of annual increase of 1.6 Mb/d to slow to about half of the previous rate (0.8 Mb/d) and continue to slow over time to near zero by 2024.

              We’ll see.

          2. An interesting stat in the latest EIA Short-Term Energy Outlook.

            USA Total Liquids
            Dec. 2018… 19.12 (million barrels per day
            Dec 2019…. 21.05
            Difference…..1.93

            Non-OPEC Total Liquids
            Dec. 2018… 65.06 (million barrels per day
            Dec 2019…. 66.99
            Difference…..1.93

            The EIA is predicting that US total liquids will increase by almost two million barrels per day while the rest of Non-OPEC stays absolutely flat.

            They are predicting that OPEC Total Liquids will be down 1.36 million barrels per day, December to December, leaving a total World Total Liquids increase of .57 million barrels per day, December 2018 to December 2019.

            Any and all increase in World total liquids production, they say, will come from the USA.

            1. Attached are the changing monthly STEO projections for February, March and April for the lower 48 production. Today’s projection, April, has added 230 kb/d day by year end 2019 to the March projection and close to 300 kb/d in 2020. The April projection also shows an increase of 960 kb/d from Dec 18 to Dec 19. For Dec 19 to Dec 20, the increase is only 420 kb/d, less than half of the 18 to 19 increase. Any speculation/ideas for the lower increase for 19 to 20. The G of M drops by 70 kb/d from Dec 19 to Dec 20.

            2. Thanks, Ovi.

              You notice that the April 19 STEO has the lowest production numbers for Jan. Feb. and April 2019 but the highest numbers as they move into the second half of 2019 and all of 2020.

              I don’t know what to make of this except that I find it rather amusing.

            3. I found it insulting to my intelligence (not an exceptionally difficult task), but now that you mention it, I can imagine some Lewis Carroll feel to it.

            4. GuyM,

              Disagree on your intelligence, you’re one of the smartest around IMHO.

            5. Ron, it looks like the STEO has aligned their Jan and February production with the monthly EIA numbers.

              As an aside the weekly EIA production numbers announced today have been reduced by 100 kb/d from 12.3 Mb/d to 12.2 Mb/d.

        2. How are they adding 100k+ net non-Gulf when their own drilling productivity reports have the Permian at less than half that growth? With Eagle Ford and Bakken not growing. Doesn’t add up even before taking out legacy decline elsewhere.

          1. Drilling productivity reports are not worth looking at, use the tight oil production estimates by play at page inked below for decent estimates.

            https://www.eia.gov/petroleum/data.php

            For Dec 2018 to March 2019 the increase in tight oil output has been 190 kb/d or 63 kb/d for the average monthly increase, the STEO expects 175 kb/d for the monthly L48onshore average increase in April and May, I agree that seems too high, probably 100 kb/d for a monthly increase would be about right. Note that the average monthly increase in US tight oil output from June 2018 to Dec 2018 was about 155 kb/d, but the Feb 2018 to May 2018 monthly rate of increase was 142 kb/d. Perhaps they use the 2018 increases as a guide to 2019 and then add 20% for good measure, I would make it 70% of the previous year’s increase, despite my pollyannish attitude. 🙂

            1. And the US production from Nov 2019 to Feb 2019 is down by over 100k bpd. March may be a little higher, but April and May will bring it down, again. US production is flat, and will probably stay that way for the rest of the year. Increases in the Permian will largely be offset by declines in the EF, Bakker, Montana, Okla., and the rest of Texas. GOM is not expected to look healthier.

              Up to January, production was limited by prices. After the first of the year, production is limited by investor complaints, and probably some loan covenants.

            2. GuyM,

              I believe South LaGeo said there’s some stuff coming online in the GOM that might increase output there, tight oil besides the Permian might be flat for the rest of the year, but Permian output will probably continue to increase. I would say a 500 to 700 kb/d increase in US output from Dec 2018 to Dec 2019 is likely. US output often is lower in Jan and Feb relative to Nov and Dec, the bigger increases especially for L48 onshore tend to be May to Oct most years.

  33. Wow, the Dow is down 500 points.
    Dow 30
    25,930.47
    -508.01(-1.92%)

    Maybe this 10 year bull is about to crash?
    who knows—-

  35. I am surprised that there isn’t more discussion here of the Anadarko deal. It seems to me that they are doing what I expect the other majors to do as they can.

    They are selling international assets and look to be taking a mostly cash deal from Occidental. Seems like a way to get out of the business when you can still get some money.

    1. I still think Occidental is being posed as the middle size fish. Or, they are prepping for it. The vast majority of the independents, including EOG, are shale dependent. There is probably not too many of the employees of these companies, who do not realize their company has a limited lifespan. Enter, stage left and right, the majors. Everyone from the CEO to geologist and roughneck, should be anticipating a bid.

      1. So Occidental is buying Anadarko, for cash, to sweeten the prospect of being bought it itself.

        Now this is a really interesting scenario. It’s like musical chairs or a Ponzi scheme. Each company (e.g., Anadarko, Occidental) is looking for a buyer. Those companies left standing (or, more accurately, the executives) must have an exit plan, too. I suppose the plan is to keep selling up so everyone who can get out does get out, and maybe the final buyer is the government.

        1. The Wall Street Journal has an article today suggesting that the CEO of Occidental will do just about anything to make this deal happen.

          “If it succeeds, CEO Vicki Hollub will win accolades and Occidental will ward off growing threats from the giants in one of the world’s biggest oil fields. If not, Occidental could itself be vulnerable to a takeover. …

          David Katz, president and chief investment officer of Occidental shareholder Matrix Asset Advisors,, which expressed concerns to Occidental’s board, said, ‘Vicki Hollub seems committed to getting this done at any cost.’ He said her ‘obligation should be to maximize value, not to maximize the empire. We urge the company to consider selling rather than buying.’”

          1. It’s really confused as to why, other than it benefits a bigger fish. You have a big fish (Oxy) that’s going to eat a big fish (Anadarko), yet a huge barfing condition will soon follow. Anadarko is too big for Oxy to consume, comfortably. Oxy is not big in trying to drill more wells, now. Anadarko will cause huge indigestion. Pretty confusing, unless a bigger fish is using Oxy for bait. And Oxy is one of those companies limited by time.

            1. Anadarko seems to be the smart one here.

              Occidental (or at least the CEO) seems to be willing to pay Berkshire an excessive amount for this deal. I wonder what Berkshire’s exit strategy will be.

            2. ” I wonder what Berkshire’s exit strategy will be.”
              They have an outstanding record of buying solid assets/companies at a good price, and selling them higher.
              Its a bet that oil prices will be going up from here, simply.
              That seems highly likely.
              They are very good at ‘highly likely’.

            3. I think it was hinted at in the story. Much bigger deal expected in a couple of years. Details unknown.

            4. What intrigues me is that Anadarko sees an opportunity here to cash out. While people expect that Buffett will extract money from Occidental, he said he got involved because Occidental asked him. And Anadarko didn’t.

              Presumably Berkshire sees the future and thinks Occidental will generate money for Berkshire, but are the terms so harsh that it doesn’t matter the future of the company or the price of oil? Berkshire calculates it will more than get its money back within a reasonable period of time, but does it matter beyond that to Berkshire what happens to the company or the industry?

              Most of Berkshire’s money and income has been tied to banking and insurance. I’ll have to see what it has done in the past with commodities.

            5. Buffett put it very simply. If oil prices go up OXY can make a lot of money.

              $100 oil they will make a lot, especially on their CO2 projects in the Permian, and in Oman, where they own a decent chunk of flowing BOPD.

              It’s a bet on oil going up, plus getting 8% interest for loaning them $10 billion. They go with preferred stock for the favorable dividend tax treatment.

              It is only a bad deal if oil stays here or below long term. Assuming a 10-15 year cycle, by 2025-2030 oil will surely rocket up.

            6. It’s a good deal for Berkshire, but not a good deal for Occidental.

              “The 8 percent yield on the preferreds is way above Oxy’s pre-bidding dividend yield of 4.7 percent and equivalent to a pre-tax cost of debt of about 10 percent, roughly triple the company’s bond yield. That’s before counting the warrants, equivalent to 9 percent dilution on the pro forma share count, plus the redemption premium.

              This wasn’t a bet on Oxy, the Permian shale basin or even oil prices; Buffett could have just bought stock in the open market for that. This was about extracting as much as possible from a company that really needed the promise of a big slug of cash.”

              https://www.bloomberg.com/opinion/articles/2019-05-08/chevron-vs-occidental-for-anadarko-what-will-winning-mean

            8. According to Buffett, he is betting on oil prices and the Permian.

              Also, Berkshire might have bought Anadarko directly, if asked. Which seems odd.

              “Asked why Berkshire wouldn’t just buy Anadarko itself, Buffett said, ‘That might have happened if Anadarko came to us, but we wouldn’t jump into some other deal that we heard about from somebody else coming to us seeking financing.’

              Later in the interview, longtime investing partner and vice chairman Charlie Munger responded to the question as well, saying, ‘Nobody asked us to.’”

              https://www.cnbc.com/2019/05/06/buffett-says-occidental-petroleum-investment-is-a-bet-on-oil-prices-over-the-long-term.html

  36. Don’t think I saw report here that the Russians have found the source of contamination and it appears to have been an effort by some small company oil executives to steal a lot of oil.

    They filled the pipeline with contaminated oil and the actual oil that was intended to go into that pipeline went elsewhere. They intended to sell it for personal profit. I think the report said three out of four of them have been arrested and the fourth is being pursued.

    No accusations by the Russians of any CIA involvement.

  37. 2019-06-08 (Bloomberg) China’s crude imports climbed to a record last month as it stocked up on Iranian oil before exemptions from U.S. sanctions expired. +10.8% y/y
    Bloomberg chart https://pbs.twimg.com/media/D6BXqEIXoAAjSnp.jpg

    Saxo Bank import summary
    https://pbs.twimg.com/media/D6Bfj0_XsAAdLb3.png
    y/y change https://pbs.twimg.com/media/D6Bf-CkWwAAuGH5.png

    2019-06-08 (Bloomberg) China bond defaults so far this year total $5.8 billion, 3.4 times the total for the same period in 2018
    Bloomberg chart https://pbs.twimg.com/media/D6AS_BlU0AAeoE8.png

  38. U.S. Petroleum Balance Sheet – Line13 Adjustment: big swing back to -ve.
    http://ir.eia.gov/wpsr/overview.pdf

    The SPR released 0.9 million barrels in the week

    US crude oil imports from Saudi Arabia were down to a new multi-year low of 311 kb/day last week
    Bloomberg chart https://pbs.twimg.com/media/D6DVVH6WwAIsffc.jpg

    Oilytics chart summaries
    https://pbs.twimg.com/media/D6DVgXBXoAMWv7v.jpg
    https://pbs.twimg.com/media/D6DXLw_WAAA7RO7.jpg
    Twitter account: https://twitter.com/OilyticsData

    1. ok, that’s enough chops on this side of the tree. Stand back! Timberrr! Oil prices are still tied to the Dow. Damned if I understand that, but history is that it disconnects after awhile. There is going to be a long spring maintenance, so gasoline stocks should continue to drop.

    1. Where is this from? Can you provide a link so i can read some more about it and how those figures came about?

      Interesting

    2. The Data is from September 2015. Put at least minus one percent to get remaining reserves for every additional year since. If this reasoning is correct, Ghawar should be at 13,41% RR and going offline soon.
      However, Cantarell is pretty high, at 32,56% (2015), only half of the relatively new Kashagan. A bit strange, isn’t it?

      1. Cantarell is offshore. Not conducive to extracting everything one believes might be recoverable. There’s also the issue of the massive nitrogen injection that was done there. How many unintended consequences did that have? We know it caused production to explode but then crash to well less than a fifth of the boosted peak.

        Whatever the reason, field is more or less done.

      2. Yes i noticed the date, i was wondering where it was published so i could perhaps read comments from the author on how numbers where reached, if there were an estimate on decline rates for specific fields that is not visible in that image etc.

        I also entertained myself with the quick -1% per year, but then it is the question if a field will be shut in before or after 0 is reached witch probably comes down to how accurate the original total reserve estimation where, so more or less a guess but we can probably say its safe to say it is about to dry up in some fields on that list.

        1. 1% is a benign estimate; obviously no oil field will produce 100 years.
          I only wonder that until now, we haven’t seen the repeition of Cantarell drama anywhere else.

    3. In other words, it is the last moment for a war with Iran, as oil supplies are yet relatively plentiful. USA – and the West – are in a situation a bit like Japan in 1941.
      The low US imports from Saudi Arabia – maybe to free exports to Asia.

      1. I am interested what “13,4% or 12%” in the side note does refer to. “3,5 mb day” of what?

        I have counted a bit, and came to the figure of 1,5% depletion per year as a reasonable one. That means that most of those fields will be dry by 2030, with Seneca Cliff in just 2-3 years…if the current flow rate until then be more or less constant.

        Trump is floating the idea of 2 years term extension. Looks like he wants to manage the crisis.

        1. That seems to be a calculation of Ghawar only, its on same row also.

          Estimating 3.5 m barrels production per day probably since that date, 4 years = today.

          And they have deducted 4 year production from the 18466 estimated remaining reserves (18.5 in calculation) but a bit confusing as it should have been 18.5 – 5.1. and they reach conclusion of 13.4 GB of remaining reserves or 12% of reserves remaining.

    1. Actually, they went both up and down, at least in few cases I checked:
      Rumaila 33333 now, then (1978) 21000 max.
      Samotlor 6619 now, then (1978) 15000 max

      Norway went up too.

      1. Those exceptions were more recent discoveries. Samotlor was discovered in 1966. They are relatively trivial compared to Ghawar.

  41. I’ll start a new thread on the Occidental deal since the replies were running out of space.

    “Occidental Petroleum boss Vicki Hollub really wants to buy rival oil driller Anadarko Petroleum. And her Wall Street adviser, Bank of America boss Brian Moynihan, is right there behind her. He personally called in one of his own shareholders, Warren Buffett, to help finance Occidental’s $38 billion hostile offer a little over a week ago. The lender’s investment bank has been losing ground for a decade, so it’s understandable that Moynihan is keen to help.

    Bank of America bought Merrill Lynch just over 10 years ago, creating a business that on paper would have boasted the biggest share of global investment-banking fees, according to Refinitiv data, at nearly 9 percent. The bank has steadily lost market share since, and last year trailed Goldman Sachs, JPMorgan and Morgan Stanley. In terms of advising on announced mergers, Bank of America was the No. 2 consigliere in 2014 – this year so far, it’s sixth. If a rival bid for Anadarko from oil major Chevron prevails over Occidental’s, it would fall to seventh, behind Credit Suisse.”

    https://www.breakingviews.com/considered-view/bank-of-america-brings-high-ma-hopes-to-oil-patch/

    2. https://oilprice.com/Latest-Energy-News/World-News/Chevron-Bows-Out-Of-Anadarko-Fight-Oxy-Jet-Trip-Suggests-Shell-Might-Step-Up.html

      Oxy visiting Total and Shell? The trips do not confirm my suspicion that Oxy was setting itself up to be gobbled by a bigger fish, but it does raise the possibility of who may be in the running. If so, that would put the majority of Permian acreage controlled by the majors, fairly quickly. And raises my opinion on Oxy management. They see the end game. However, I think the Total trip was on the proposed sale of Anadarko’s African area.

      1. It would be interesting to see Oxy doing its best to set itself up for a purchase, and Berkshire and Bank of America in on the plan.

    1. GuyM,

      If we focus on new drill oil completions, there have been more from Jan to April in 2019 than in 2018 (2237 vs 2229).

      1. Add recompletions, and it’s not. A lot post an initial completion, when it’s not even fraced yet. Then a recompletion after they decide to complete it. See it all the time.

        1. GuyM,

          I guess I assumed a completion was “complete” and that a horizontal fracked well was producing when it was completed. I assumed the recompletions were wells that had been refracked or had other major maintenance that required recompletion. Not an oil guy so I am probably wrong.

          Also we don’t know the horizontal vs vertical well split, if the 10% decrease was mostly vertical wells, then it would be less significant than a 10% reduction in horizontal well completions.

          In any case you are right, for all oil completions there is a decrease.

  43. New Petroleum Open Thread and Electric Commercial Vehicles, a ten year update – Part 3 top threads posted

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