Permian Basin Update, February 24, 2022

322 thoughts to “Permian Basin Update, February 24, 2022”

1. Dennis

   A great effort and a lot to digest. I note that the last chart seems to confirm the current DPR info that the yearly increase from the Permian is in the 700 kb/d/yr to 800 kb/d/yr range. Future production will be directly related to the completion relate, well quality and a company’s willingness to ramp up production or drilling just to maintain current production.

   1. Ovi,

      Thanks.

      If prices are high for a limited time (say from now until 2035 or so), producers risk leaving oil in the ground by choosing to go slowly (400 completions per month rather than 800 completions per month). Once the oil price drops to under $60/bo, the decrease in new well EUR will make the rest of the play (the part that has not been developed) unprofitable. If oil producers want to make money, they will ramp up output while oil prices are high.

      There is a myth that OPEC plus has lots of spare capacity, when this myth is finally laid to rest, there may be a realization thatt we are in for high oil prices long term, at that point the ramp up in the Permian will gain some steam.

      1. Dennis

         As the OPEC commitments ramp up through May, we will have a better idea of their real capacity.

         1. Ovi , OPEC is now what NATO is today . Mr Perry Mason ” Immaterial , irrelevant and inadmissible ” .Today’s OPEC is no more than TRCC . It is peak supply and not peak demand .

            1. HIH,
               Ha-Ha you’re really dating yourself with the Mason reference, unless you are like me…..mid sixties in age and just now catching him on reruns (Me-TV). The wife and I stay up till 11:30 pm just to watch. Good old shows are the best. Have you ever figured out what is Lt. Tragg’s “mark”.

               1. Yeah , JAM in your age group . Agree ,they don’t make them like old anymore . Lt Tragg??Is he from “The Nero Wolfe mysteries ” series .? This is another worth watching . Enjoy and be well .

         2. Ovi,

            Yes I agree. Perhaps the larger tight oil producers are waiting to see what OPEC can produce, before making a decision on ramping output more quickly. I imagine these CEOs have teams of petroleum engineers and economists that can provide excellent analysis of the industry, so none of this would be news to them.

            1. Dennis , all the CEO’s , petroleum engineers , financial wizards , computer champions COMBINED cannot triumph over the laws of physics, geology and the fundamentals of running a profitable business operation . They have more than enough info . The problem is that they know their operation is a loss making venture but they will never admit this .”It is difficult to get a man to understand something when his salary depends upon his not understanding it.” Courtesy Upton Sinclair .

               1. Hole in head,

                  I think there are a lot of smart people in th oil industry, I give them more credit than you.

                  In any case they know more than me.

               2. Dennis , of course one has to be smart to pull off a $ 700 billion Ponzi . Yes they are smart but more like Bernie Madoff and Ken Lay . 🙂 .

2. “I’m a former Moscow correspondent. Don’t let Vladimir Putin fool you: Russia’s invasion of Ukraine is only about one thing.

   To understand the Kremlin’s motivations in regard to its smaller, and relatively impoverished, neighbor, the key fact to know is that Russia supplies 40% of Europe’s heating-fuel supplies — namely, natural gas.

   Any crimp on Russia’s ability to access the European market is a threat to its economic security.

   To get it there, Russia relies mostly on two aging pipeline networks, one of which runs through Belarus and the other through Ukraine. For this, Russia pays Ukraine around $2 billion a year in transit fees.

   Russia is a petrostate and relies on oil and natural-gas sales for about 60% of its export revenue and 40% of its total budget expenditures. Any crimp on Russia’s ability to access the European market is a threat to its economic security.”

   https://www.msn.com/en-us/news/world/i-m-a-former-moscow-correspondent-don-t-let-vladimir-putin-fool-you-russia-s-invasion-of-ukraine-is-only-about-one-thing/ar-AAUbFJ3?ocid=msedgntp

   1. Huntingbeach

      Not sure how current your Russian info is but here is a question. What is the chance that the Oligarchs supporting him might decide to topple or replace him.

      1. Ovi , he has toppled the oligarchs a long time ago . Their best bet was when Medvedev was President but Putin undercut them by being Prime Minister and diffusing their efforts . I am not an expert on Putin but what I understand is that he reads and re reads ” The Art of War ” by Sun Tzu and a book by a German General Karl Von Clausewitz supposed to be a strategist above Montgomery , Zhukov , Patton etc . His role model is Peter the Great just like for all Brit leaders is Churchill , for India Gandhi/ Nehru , for China Mao/ Deng . However even he cannot do anything against an assassin’s single bullet , though being ex KGB he knows how the ball rolls . Best of luck to Mr Putin .
         P.S : The oligarchs don’t support him it is vice versa .

         1. hole in head
            I won’t talk about the ongoing war. There are different opinions about it. It has been going on since 2014, it’s just that it has entered a more active stage. I want to write about Putin. The main thing is his merit.
            From 1991 to 2000 (when Putin came), life was constantly deteriorating. There was famine. There was no work. Constant murders of oligarchs (of course they ordered each other) Organized crime appeared. Money was directly stolen from the budget: transfers transferred to “their banks” to finance the regions they disappeared no one knows where. Taxes were not paid by large companies, or rather they were paid ten times less than necessary.
            With the advent of Putin, everything changed. The oligarchs who did not agree to pay taxes ran away or went bankrupt. Life improved. Organized crime disappeared. People in the country have never lived so well. President Putin, therefore, enjoys the support of the majority of citizens. And this one cannot be changed …..

            1. “Organized crime disappeared. ”
               As did opposition media and leaders.

               1. “Organized crime disappeared. ”
                  As did opposition media and leaders.
                  —-
                  Hickory. You are using unreliable information. Of the four all-Russian news radio channels, one is sharply anti-government (anti-Puitn), one is neutral and two are pro-government. As for TV, I can say there are anti-government ones, you can watch any of more than 400 channels, including CNN.

               2. And yes, Hickory
                  , in today’s world, censorship has lost its meaning with the Internet, you can choose information at your discretion. Which is what most citizens do, depending on their beliefs. In Russia, I think the Internet is the cheapest in the world, like cellular communications. Let’s say I pay for unlimited Internet + cellular communications + internet in the house $7 per month.

               3. Mearsheimer on Ukraine

                  https://www.mearsheimer.com/wp-content/uploads/2019/06/Why-the-Ukraine-Crisis-Is.pdf

            2. Alexander,

               Yes my understanding is that Hitler was also supported by many Germans for many of the same reasons. He appears a psychopath from afar.

               1. D Coyne. Yes, of course, Denis may seem like you are writing the truth. But I don’t agree with you. Hitler wanted to destroy other peoples. Putin wants to stop the war in eastern Ukraine, secure the borders of Russia. And yes, I know for sure that the Western media publish false information.

               2. Putin wants to stop the war in eastern Ukraine, secure the borders of Russia.

                  Bullshit! Putin started the war in eastern Ukraine. If he wanted to stop it he could just pull his storm troopers out.

                  And yes, I know for sure that the Western media publish false information.

                  You know nothing but what your Minister of Propaganda tells you. If any Russian media published the truth about Putin, they would be thrown in prison. Damn! How can anyone support what Putin is doing? And yes, Putin is even worse than Hitler. Putin wants his empire back. Nothing could be more obvious than that.

                  And when you tell us Putin just wants to secure his borders because he fears a Ukraine invasion you then you are here to spread Russian propaganda that you know are damn lies.

               3. Ron Patterson. Everything that I want and can say, you will consider propaganda. Therefore, I will not write. I believe that Putin is right, but nevertheless he made a mistake, did what your leadership wanted. Now we will live in a new world. The only thing I want: so that a world war does not start with clear consequences. And a video: people are trying to leave the Ukrainian military: https://www.youtube.com/watch?v=Lx9KPVHQs5E

            3. Yep–
               Russia lost 85% of its GDP, and it was desperation
               (the USA lost 20% during the depression of the 30’s)

               Putin turned that around

               This was unexpected by my analysis (current)

               I do have a degree in Russian History from University of California, but it has been a while.

               1. Alexander , on the same page as you regarding Mr Putin . He bought Russia back from the abyss into which Yeltsin and the oligarchs had pushed it .

            4. Alexander

               Andrey Bezrukov suggested that Russia will need to became an autarky.
               Have you heard any discussion about this in Russia?

               1. Seppo Korpela. I have never heard or read about discussing or changing the political system in Russia. In general, there are many political movements in Russia. For example, in St. Petersburg and Moscow, there is the most opposition to the Putin government. My youngest son works in St. Petersburg in To an Israeli company as a programmer, so everyone there is against the war in Ukraine and dislikes Putin. In the provinces, support for Putin is more than 90%. There are marginal groups that are pro-communist and even monarchist, but they don’t talk about them seriously.

               2. Alexander, I am not saying that the political system will be changed as such, but slowly the country might drift to autarky as resources are depleted in the rest of the world. Shifting toward autarky can take place slowly one decision at a time.

                  I have hard time seeing such for example in Saudi Arabia because they are based on oil and gas, and without grains. But Russia could get by on its own resources, unlike Europe and the USA. When I gave my talk in India, I had some discussions with some of my friends there and we agreed that India’s fall will be much less than that in USA. The future will be painful to everyone and how to soften the blow should be in our minds right now.

               3. Seppo , not only Andrey but many others . The baseline argument is that when resources are limited there has to be a rationing otherwise the rich ( oligarchs ) will corner all the resources and the rest will be left to fend for themselves . This argument is a result of the increasing inequality that is now prevailing . I see an increasing trend towards to autarky as LTG is coming into play .

               4. Seppo , when you talked with the guys at IIT they were the creme de la creme and brightest of the bright . They all are going to be in Seattle , New York , etc after they finish their courses . Now let me give the other side . 800 million which is 66% of the population live( survive ) on 5 Kg of wheat/ rice + 1kg of chickpeas provided free PER FAMILY PER MONTH by the govt . That works out to 1200 calories per person per day . I never make statements I can’t support . India will not fall far. Yes , because their is nothing below to fall down to . The next step down is starvation .
                  https://www.globalhungerindex.org/india.html

   2. VERY long time reader here and greatly appreciate all of your posts and comment discussions…

      China demand for hydrocarbons of any and all types is voracious. How rapidly can Russia move ‘unsold’ production from Europe markets to East Asia (China)? Can an Arctic tanker route temporise until Pipelines for NG and oil are laid?

      1. ThisNannupLife. There is one railway route to the east of Russia (Trans-Siberian Railway), it is loaded at 100% (mainly coal to China). There is a project for the Railway in Chukotka (300 km for 40 million tons of high-quality coal).
         The proposal of the Vostok pipeline project (from Yamal, through Mongolia to China) was rejected by the People’s Republic of China for unclear reasons for an indefinite time, despite the announcements of the Russian Federation.
         Thus, I think it is impossible to reorient energy flows in the foreseeable future from west to east.

         1. Thank you for this. Which will raise the question of whether Russia will even threaten to turn off the West flowing taps. Having just emerged from a damaging COVID caused one shut in do they really want to shut in again?

            1. ThisNannupLife

               The game is played. There will be no return. Russia, at best, will repeat the fate of North Korea. I hope we will not bring things to war. A little propaganda: Putin hoped that his military would be greeted with flowers, which happened in the east, but not in the north. And yes, the military have an order not to use artillery and heavy weapons in cities, this order is strictly enforced, like the other one: Do not destroy water pipes, infrastructure and power plants. There is light and water in all cities. If you are shown the opposite, this is Western propaganda.
               Sincerely
               Alexander

               1. West Korea!

         2. Alexander,
            I don’t know how this will all go, except for poorly.
            And that includes for Russia.
            Anything that Putin had hoped to gain by invasion will be dwarfed by the loss of
            economic activity experienced by the country as a result of isolation,
            and also dwarfed by the severe loss of respect and trust for the country.
            It is sad for the Russian people, to have a leader who has made such decisions.

            Nato will be much more unified as a result of this action, and the neighboring country citizens are going to be much more unified in their distrust and disdain for the Russian state.
            Someday Russians will realize that the sooner Putin is gone, the better will be the future prospects of their country, and for all of the neighboring citizens. (not so good for Lukashenko)

            Many leaders in the west are thinking that Putin has become mentally unfit recently.
            Are people starting to worry about this in Russia too?

            1. My contrary view “Anything that Putin had hoped to gain by invasion will be dwarfed by the loss of
               economic activity experienced by the country as a result of isolation,
               and also dwarfed by the severe loss of respect and trust for the country.”
               2/3 of the world’s population (India + China) abstained in the UN . The five eyes + Europe is not the world . He cannot be isolated because he has critical minerals plus he controls critical minerals thru his supporting countries Uranium in Kazakhstan (43 % of the world’s supply), Potash via Belorussia (15% of the world’s supply , gas via Turkmenistan . It is not NK which is a one trick pony .
               When did he or any top Russian General say that the war was going to be blitzkreig ? Unlike Cheney, Rumsfeld , Wolfowitz etc who said that their shock and awe tactic will subjugate Iraq in a week . Bush put up “the mission accomplished ” sign two weeks later and the US is still bogged there 20 years later .
               Now to financial matters . We underestimate that this was not war gamed and that there is no plan B .
               1. Moscow stock exchange fell by 45 % . Nothing happened . No Panic . Why ? First MOEX is where the big boys play hedge funds , investment banks etc . There are no day players or Robinhood and Schwab type platforms . These players are suave and if they exit they will suffer a loss just like BP . To cut a long story short it is the Foreign Institutional Investor who is losing money and not the ordinary Russian on the street . The FII’s will come back when the crisis is over .
               2. Rouble devaluation ; Rouble devaluation is a problem but can and will be calmed down as long as their are no physical shortages of basic goods . Transfer of Roubles from the saving account to under the mattress of the Russian civilian is not going to kill the financial system . The FX can be handled via capital controls . The banks can make a rule that anyone can buy/sell upto $5000or $ 10000 on his personal account . This will pacify all those small holders of Fx and bring confidence .With $ 600 billion reserve this is achievable and will calm the market . All commercial transactions say transfer of funds for imports / finance etc will be screened . As I write they have already taken the first steps.
               To expect that events were not going to be disruptive would be clumsy and stupid . I do not expect the war to be long . All parties want an end except those who will profit from the chaos . The problem for Putin right now is who to negotiate with on the other side ? . He will not negotiate with the US on this . Today is Day 5 of the war . On Day3 the Russkies paused their operation as there was talk that negotiation are underway and then Zelensky relented .
               https://www.zerohedge.com/markets/russia-central-bank-bans-selling-russian-securities-foreigners

               1. A joke going on the net :
                  Putin : I have
                  Aluminium
                  Fertiliser
                  Oil
                  Gas
                  Nickel
                  Wheat
                  Palladium
                  Titanium
                  The West :We have
                  Windmills
                  SolarPanels
                  CRT
                  WOKEISM .
                  😉 , 😉

               2. Western banks with exposure to Russia :
                  Raiffeisen 35 %
                  OTP 7%
                  UniCredit 6%
                  Soc Gen 4%
                  Citi 2 %

               3. What would I do ,if I was Putin (Which I am not ) ? Sell oil and gas against gold and roubles . Set an artificial price for both just like was in USSR times . Set the price where it is beneficial to the Russian Federation . Then see the rats and cockroaches run .
                  All currencies are FIAT and the gold price manipulated at LBMA . He won’t be doing anything new .

               4. SWIFT sanctions are bogus checkout the list of banks . Second tier banks like the S&L banks in USA , cooperative banks in UK , Spaarbanken in Benelux and Landens bank in Germany .All international banks will not be affected .

                  “The central bank said the debit and credit cards of sanctioned banks, which it listed as VTB (VTBR.MM), private lender Sovcombank, Novikombank, Promsvyazbank and Otkritie Bank, would keep working in Russia without restrictions.

                  “Cards from these banks will not be able to be used with the ApplePay and GooglePay services, but standard contact or contactless payment with these cards is available in full throughout Russia,” the central bank said.
                  For a better prespective watch this video
                  https://www.youtube.com/watch?v=YMrVu4IafOg&t=248s&ab_channel=DifferenceFramestheWorld

               5. Another interesting fact . Zelensky has dual citizenship Israeli and Ukranian . How many countries in the world allow the top office to be held by such persons ? Answers ?.
                  P.S ; I am not anti Semitism or anything . It could well be India – Ukrainian or German- Ukrainian or Japanese – Ukrainian citizenship ,

               6. Thank you so much for your support in a difficult moment! Hole in Head. But I see the situation worse than you. I have in touch some of the military who are taking part in the hostilities. They are very dissatisfied. They are not allowed to use artillery and tanks because of civilians , the loss of only the killed Russian military is more than 500 people. Despite the fact that three groups of 15-20 thousand people invaded Ukraine + the East Ukrainian Corps with Russian officers of 30-35 thousand people. Of these, well-trained infantry is not more than half. Recruit conscripts in Russia – there is no sense they are not prepared, cannon fodder + this will lead to protests of mothers. This is not enough for a vast territory. Ukrainian troops make up 250 thousand people, half of them are prepared for hostilities. With superiority in aviation and technology, it is possible to win, but to establish control over the territory I think it’s impossible. My assumptions, at best:
                  Achieve autonomy or independence of the rebellious east. Stop shelling of Donbas. Peace treaty with Ukraine in March. + Limited contacts on imports and exports. And yes, restrictions on the arms race.
                  Thanks again for your support. Regards
                  Alexander

               7. Discussion of Russian military logistics:
                  https://warontherocks.com/2021/11/feeding-the-bear-a-closer-look-at-russian-army-logistics/
                  Explains why they run out of fuel and food.

               8. And yes. Be sure that Russia will hold out no matter what sanctions. Unlike you, we are ready to eat only grass and walk on foot, if only the Motherland lives …

            2. Thank you, Hickory. I agree with you almost everything, except that “Putin has become mentally ill.” Yes, of course, I think that he did not count on the result that he received.
               The conflict in Ukraine began before the annexation of Crimea. In 2013, anti-Russian sentiment began to be promoted in Ukraine. This is absurd. To ban the language. I can only imagine why this is necessary. Now Putin has decided that the moment has come to solve this problem. I guess he miscalculated. Now Russia will repeat the fate of North Korea. I guess you should not hope for Putin’s departure, an even worse replacement will come.
               We all have to live with this.
               I am sorry. I do not want war. But I will not betray the Motherland, like my sons and most fellow citizens. I hope for peaceful coexistence with Europe and the World, and not for a new arms race. Yours faithfully
               Alexander

               1. Alexander , ” I think that he did not count on the result that he received. ”
                  According to who ? The Western Media ? I don’t remember Putin , Shoigu or Gresamov saying they will mop up Ukraine in a week . Now another question ? Now days with the smartphone everyone is a cameraman . I don’t see much clips of fighting between Ukies and Russkies . OR even of Russkies firing at random on the public . MSM needs a crisis to sell . Yes , they termed the 6th January incident as ‘” revolution ” and ” invasion ” . They need “event , incident and accident ” .
                  Your , “I am sorry. I do not want war. But I will not betray the Motherland, like my sons and most fellow citizens. I hope for peaceful coexistence with Europe and the World, and not for a new arms race.” With you 100% on this .
                  An old quote ” In times of war , truth is the first causality ” . Sifting through the fog of war is a challenge specially in this era of 24/7 news circus . Be well and with sympathies .

               2. But I will not betray the Motherland,..

                  Your Motherland is being run by a Madman!

               3. Alexander.
                  An additional note- we all know that the Russian forces are generally displaying a large measure of restraint in using only a small portion of the weapon systems at their disposal, and avoiding the wholesale destruction of cities and peoples.
                  Thus far. The world is watching.
                  Still, over 500,000 people have fled to neighboring counties for safety.

               4. Ron Patterson,Hickory

                  I regret that everything is developing this way, I have no influence on events. Nevertheless, I cannot act differently. I am against any military conflicts, against the buildup of nuclear weapons – this is the main evil that should not be allowed.

               5. Hole in Head

                  https://www.youtube.com/watch?v=0QpcA0Tx3X0&t=0s

               6. Side note, I think I remember a country electing a leader that some deemed unfit for office and possibly insane… I just can´t remember which…

               7. Laplander,
                  “I remember a country electing a leader that some deemed unfit for office and possibly insane”

                  And I certainly remember it very well, having voted against him a few times in the recent past.
                  And yet most who elected him would do it again.
                  Its the biggest danger to the democracies of the world, as I see it.
                  He would flush civil society down the toilet for his own gain.

               8. That made me laugh Laplander

               9. https://www.rand.org/pubs/research_reports/RR3063.html
                  Russia is sinned against as well as sinning. That link is to a Rand report from 2019 entitled “Extending Russia”. What it proposed was that the US do a rerun of Star Wars and cause Russia to spend too much on defense thus harming its economy. On page 16, the authors complain that:

                  Significantly, Russian leaders seem committed to keeping defense spending under about 5 percent of national GDP. If this is the case, then the United States will find it hard to persuade Russia to substantially increase defense spending unless it convinces the Kremlin that new threats to Russian security demand a change to this policy.

                  On page 4 they note:

                  In fact, a risk discussed throughout this report is that Russia could respond to certain U.S. measures in ways that harm the interests of the United States or its allies or in ways that reduce stability.

                  Which is what happened. One thing this war has shown is that the Russian army is amateur hour. Running out of fuel. Running out of food!

               10. In my post of 1:10 yesterday I outlined that Putin has already “war gamed ” the financial sanctions of SWIFT and assets . He has acted accordingly and instituted capital controls , etc . However he got hit below the belt with the clamp on USD based Russian assets of the govt (not of the oligarchs) overseas . This is illegal and I think the Chinese must be thinking about their horde of USD assets .This has whittled his cash ammo , but he will manage . What is interesting is that these were nuclear options and you can use this card only once . Well , it’s gone . The next option for NATO is to send its troops on the ground . Mr Putin has not yet even opened his briefcase and he is keeping his powder dry .
                   Alexander , fighting a war with one hand tied behind your back is difficult . Russia is not only fighting a hot war but also an information war in which the opponents are better armed . However I think since the MSM is now so discredited nobody believes them . Social Media is where the battle is . I am encouraged by what I have seen . In my country (India) an election has been won by a regional party which beat the hell out of the biggest political party in the world(300 million members) ,richest political party in the world and 100% control of MSM . The resources of the regional party were 5% than those of the national party . Social media is a game changer . Despair not .

               11. David , a question for you . “Which is what happened. One thing this war has shown is that the Russian army is amateur hour. Running out of fuel. Running out of food! ”

                   Did you see the extraordinary footage of a line of Russian tanks and armored vehicles all blown up and twisted on a quiet road in broad daylight?

                   Who destroyed them, and how? And in or around those vehicles, did you see any DEAD RUSSIAN BODIES? I didn’t. I would think there were quite a few. Where did they go? Who took them away, and why? Were these Russian vehicles operated by remote control from Moscow?

                   Of course, as in every recent war, US TV reporters, “on the ground” in the Ukraine, are doing stand ups in stone quiet areas where nothing at all is happening, and these “reporters” are relaying press updates originating from New York and Washington. That’s standard. “We’re sending you to Kiev/Kyiv on the midnight flight, Fred. Don’t forget your helmet. We’ll feed you AP dispatches through your earpiece and you just repeat them…”
                   Epstein didn’t kill himself and there was no Russiagate .

               12. Putin is isolated . Says who ?. The MSM . Question why not even a choo from any friends in the ME . Where are the Saudis ,Kuwaitis, Jordanians ,Egyptians etc all US protectorates. They know which side the bread is buttered . Now the cherry on the cake .
                   https://www.timesofisrael.com/bennett-declined-ukrainian-request-for-military-aid-report-says/
                   https://uk.news.yahoo.com/hungary-not-allow-lethal-weapons-142334201.html

               13. Another joke . Putin is shivering .
                   https://indianexpress.com/article/sports/vladimir-putin-stripped-of-black-belt-over-ukraine-invasion-7795484/
                   ROFL

               14. “Which is what happened. One thing this war has shown is that the Russian army is amateur hour. Running out of fuel. Running out of food!”
                   —
                   I think you are wrong. Time will tell. Most likely everything will end before the end of March. The “desert storm” in Iraq lasted longer. Russia is of course a poorer country than the United States and it has less armed forces, they save on them, but do not save on “nuclear forces” containment.”
                   The question arises: why did this happen?. I want to remind you before the War in Ukraine, about ten days ago, Putin and his Foreign Minister Lavrov expressed their “concerns” about Ukraine’s entry into NATO. They simply were not heard, or rather sent far away.
                   Now it’s worth considering what will happen next, but of course Russia will turn into a semblance of North Korea and only after 20 years will be able to return to its current level, it will work on “import substitution.” But what will happen in the world during this time? How will it replace oil and gas and wheat from Russia. Of course, he can do it ….
                   +https://www.youtube.com/watch?v=1vdiEABLFoo

               15. Hole in Head. Thank you, I have long understood where your homeland is. I’m worried if they will be able to sow wheat in Ukraine this year?
                   Will the war interfere? Ukraine is on the 4th place in the export of wheat.
                   Fertilizers have become very expensive and the harvest around the world in 2022 may be less.

               16. https://www.indianpunchline.com/india-shouldnt-miss-world-war-pointer/
                   An answer to your question : Why did this happen ?
                   The author retired as Foreign Secretary of India (he reports only to the Foreign Minister/Prime Minister) . Very interesting view . Would Russia be the next Yugoslavia had Putin not moved . Another one . Several theories .
                   https://nakedemperor.substack.com/p/why-did-putin-invade-ukraine-now?utm_source=url

               17. “Putin is isolated . Says who ?” – Hole in the Head.

                   Answer – says Putin. Just look at the size of the tables he uses for meetings, How far apart were Vlad and Macron when they sat facing each other at that vast white round table? And the long narrow rectangular table that Lavrov and Vlad sat at so far apart they had to use microphones to speak to each other. What’s the point – does Putin fear visitors will infect him with covid? Or assassinate him? or is he sending the message that he is faraway anbd innaccessible. Self fulfilling prophecy – he wants to make others feel subordinate and faraway and innaccessible and separate from himself the Great Man, and in consequence he cuts himself from contact with other men and really does become isolated, remote, separate from all the worshipping minions .

               18. Mike G , isolated . Here is a picture 5days ago . Yes , he isolates himself from idiots like Macron the midget who struts around the stage signifying nothing . The guy goes around Europe with a puffed chest when his popularity rating in France is 16 % . Putin is 68% even today . For your information
                   1. Khersan fallen
                   2. Mariopal under absolute control
                   3. Next in line Odessa
                   4 . Eastern front ” cauldron” almost complete . This is where most of the Ukie army is .
                   5 . Kiev closed from all sides . The Russians have however opened up one corridor to allow citizens to leave .
                   6. Russian Navy in 100 % control of the Sea of Azov and the air space . The Western media asks ” Where is the Russian Air force ? ” Answer they are at base eating popcorn . Why should they waste fuel when there is no enemy aircraft ? they don’t get paid to shoot vultures and eagles .
                   Yeah , Biden said Ukraine is winning .

                   

               19. The West has gone crazy . Sanctioning cats . Read this . I don’t make the news , only report it . Pussies .
                   https://indianexpress.com/article/world/russia-ukraine-invasion-sanctions-cats-7798494/

               20. Putin is the cowedly crazy pussy. Killing innocent citizens. You, his useful idiot.

                   In political jargon, a useful idiot is a derogatory term for a person perceived as propagandizing for a cause without fully comprehending the cause’s goals, and who is cynically used by the cause’s leaders.[1][2] The term was originally used during the Cold War to describe non-communists regarded as susceptible to communist propaganda and manipulation.[1] The term has often been attributed to Vladimir Lenin, but this attribution has not been substantiated.[3][4]

                   https://en.wikipedia.org/wiki/Useful_idiot

               21. HinH Wrote: The guy goes around Europe with a puffed chest when his popularity rating in France is 16 % . Putin is 68% even today .

                   Bullshit! I don’t believe that for a goddamn minute. HinH Where do you come up with such bullshit? You know there was no recent survey in France about Putin’s popularity. And if there was he would not come close to 68%. You just made that shit up. Do you take us for damn fools? Are you a fucking shill for Putin? It sure sounds like it.

                   Putin is definitely isolated. Russia is becoming isolated. Russia definitely cannot survive for very long with the sanctions the rest of the world has placed on them.

               22. Ron , regarding Russia surviving . The difference is in the keywords ” Strength ” and “Resilience ” . Who is more resilient ? You know the answer or better we will just let it play out . ” This too shall pass “

               23. Dear. You have isolated yourself from Russian news agencies. You listen only to what matches your political preferences, thus cutting yourself off from the opportunity to conduct an objective analysis. Your news agencies are biased. Listening to Ukrainian Joseph Goebels, you receive unreliable information.

3. Given the day rates of deepwater oil rigs it might be expected that oil price would have a big effect on the number of rigs operating but, at least in GoM that doesn’t seem to be the case (there is a relatively small positive trend in the years shown but most comes from pre-2015). Even allowing for a delayed effect there is only minor impact (delaying the WTI price by 1-2 months gives the best correlation but it is only slightly better than no delay). So far in February (not shown) as prices have gone to average around $100 rig numbers have dropped to twelve total. A part of the impact is that as prices rise demand for rigs may increase but so too do the day rates. However I think the bigger impacts are that geology trumps economy and that short term prices are less important than the overall expected price profile over the 20 to 30 years of a projects life (and especially for high-risk, high-cost exploration wells).

   

4. From that Saputra/Kilari/Patzek paper there are almost half a million vertical wells in the Permian – I had no idea the numbers were that big. No wonder methane leakage is higher than expected. I don’t see how it would be possible to monitor all these even as they are producing and still less as they are plugged and abandoned – assuming they all will be, which I find increasingly doubtful as material and labour resources get scarcer and social conditions continue to deteriorate over the next decade or two. I’m not clear on the economics but those wells are only expected to produce another 2 billion barrels total by 2050 so I’d have thought P&A costs might be a large portion of the (undiscounted) remaining revenue.

   1. George,

      There is a mistake in the Saputra et al paper on the number of horizontal wells in the Permian basin. In the body of the text they give one number(around 55k), but if you add up the data in their charts it is closer to the shaleprofile estimate of about 32k (June 2021) horizontal wells completed in the Permian basin. I emailed the author, but got no response.

      1. The Saputra paper you linked to is for vertical wells in the Permian. It’s not clear to me how this is relevant to your analysis of horizontal wells. Before I have to read the entire paper, I want to make sure you linked to the correct one. Or are you only looking at part of the paper, and if so, which pages.

         Thanks!

         1. I found this forecast from another Seputra et al paper on horizontal Permian wells that differs substantially from your “Permian Best Guess” forecast:

            https://www.mdpi.com/1996-1073/15/1/43

            I was unable to load the graph, but they gave production maxing out at under 5M/day until trending downwards at around 2035. A much more reasonable assessment, although still overly optimistic, and the paper is well worth the read.

            1. Stephen Hren,

               I agree the paper is excellent, it is the same one that I intended to reference, but I chose the wrong one, thanks for the correction. This has now been corrected in the post.

               From the paper:

               Based on the historical drilling rate, we choose 400 wells per month as a base for future drilling schedule.

               They get 54.4 to 62.4 Gb for Permian ERR and as I noted in my post, if I assume a 400 well per month drilling rate (as they did) I get about 51 Gb for the Permian ERR (slightly lower than Saputra et al, 2022. Note also their assumption for wells drilled is about 189.6 thousand total wells drilled (where I have corrected the mistaken estimate of 53700 horizontal wells completed as of June 2021). If we add up the number of wells in figure 6 of the paper we get 34902 wells, fairly close to the shaleprofile.com estimate (33923 wells as of November 2021).

               My mean TRR scenario (75 Gb) has at most 182 thousand wells. Much will depend on the future price of oil. If the mean TRR scenario is roughly correct, the ERR is likely to be at least 50 Gb, at minimum in a very low oil price scenario the ERR might be as low as 40 Gb, but this is not very likely unless WW3 is around the corner. Hopefully communication between the US and Russia will remain open.

            2. Stephen Hren – is this the chart you meant?

               

               1. Yes that’s it thanks!

                  Dennis, thanks for the corrections. My understanding of the USGS reserves is that they treat much of the acreage as more homogeneous than it is in fact proving to be. As drillers gets pushed out of core areas they will be engaging in ever increasingly risky returns, as production is likely to vary greatly and be lesser generally due to the fact of being “child” wells (as LTO survivor has described). Add on to this the volatility in oil prices and I would be very shocked to see things develop in the manner you have laid out, even if the resource base is as large as you think, which I also doubt highly. I am seeing your predictions for the Permian run often twice what other knowledgeable folks are saying, which is an extreme outlier on the optimistic end. I worry you are instilling a false sense of complacency in your readers. You are way out on the tail end of the bell curve of possible outcomes. In sum, I remain utterly unconvinced.

               2. Stephen , correct . Utterly unconvinced . Couldn’t have put it better .

               3. Stephen Hren,

                  Not true, they divide the plays into different assessment units and some are more productive than others, also if one looks at the F95 estimates this is likely the core areas and it is highly unlikely thatthe ERR will be less than the 45 Gb of the USGS estimates. Read the USGS reports, they are brief and I linked to the correct documents in this case.

                  If we simply isolate the best assesment units the mean TRR estimate is about 57 Gb. Fairly close to the Saputra et al, 2022 estimate. Note that the chart above assumes a 400 well completion rate. Their model also makes the assumption that only core areas are developed first and then producers move on to non-core areas. I think the fact that some non-core wells have been completed suggests that ther will be a gradual transition where there is mix of core and non-core development that gradually shifts from core to non-core as core areas run out of space. For a different perspective we can look at the shaleprofile .com supply projection.

                  https://public.tableau.com/shared/MSG9RRGHP?:display_count=y&:origin=viz_share_link&:embed=y

                  See link above, output projected at 6694 kb/d in Dec 2029 assuming a 388 well per month completion rate.

                  My model has a TRR=75 Gb, high oil price scenario at 5710 kb/d in Dec 2029 with an assumed 400 well per month completion rate. In any case the 400 well per month rate of well completion will be exceeded by mid 2022, so it will be impossible to see if the projections would be correct.

               4. Stephen Hren,

                  We will see. Most I my scenarios in the past have proven to be underestimates.

                  Consider these older posts

                  https://peakoilbarrel.com/future-us-light-tight-oil-lto-update/

                  and

                  https://peakoilbarrel.com/us-light-tight-oil-lto-update/

                  This second scenario missed the future pandemic, but proved too low at the end of 2019 and in early 2020.

                  EIA estmates are for ERR of 122 Gb for reference case and 159 Gb for high oil supply case. My high estimate is somewhat lower than the reference case and my best guess is 57% of the reference scenario.

                  My best guess is about 11% higher than the Saputra estimate, which seems to me to be close to the lower bound of what is likely for the Permian, the EIA estimate for the Permian is about 73 Gb which seems about right. I think the EIA estimates for the rst of US tight oil are too high.

               5. Stephen Hren,

                  Also check out my post on Permian from Jan 2021 particularly figure 9 in that post, note that I also underestimate Permian output for 2021 in those scenarios. Despite what many here seem to believe, my past estimates have generally been conservative, except for estimates in 2019 and earlier missing the future pandemic, I did not anticipate the pandemic before 2020, nor will I be able to forecast future crises in advance (my crystal ball is out for repair).

                  https://peakoilbarrel.com/permian-basin-the-death-of-tight-oil-has-been-greatly-exaggerated/#more-29970

                  Note that if I assume no wells are completed after June 2021 (similar to the Saputra base case), the ERR estimate for my model is 13.1 Gb, quite similar (and slightly lower) than that paper’s estimate. For Data from Jan 2010 to June 2021 compare to my model the correlation coefficient is 0.9983, I am always amazed that such a simple model produces such good results. Future results will not be as accurate because it is impossible to accurately forecast future completion rates or the rate of increase or decrease of new well EUR (I assume it decreases, but have been making the assumption that EUR will decrease next year for the past 10 years, I have been consistently wrong about that, but at least it has levelled off in Pemian and Bakken and we are seeing some decrease in the Eagle Ford.)

                  

            3. The EIA has remaining Permian oil reserves at end of 2020 of 16Gb. Production to date is about 9Gb, giving 25Gb ultimate recovery. With 6Gb reserves are non-productive, all of which would be approved new developments that are not yet online That leaves 19Gb as the base case recoverable reserves, which is more than estimated in that paper that indicates a total of just under 13Gb. The 25Gb is less than the 32, 54 or 63 that the Sapruta paper indicates for core, non-core and other respectively. The Permian tight oil development is earlier than the other three main basins but it is already showing signs that cumulative revisions are trending negative. This is a pattern that seems to continue in the other basins so that ultimate reserves gradually decline towards the end of life. To get to the Sapruta estimates the Permian will need significant discoveries to be added for several years. I don’t believe the companies don’t know almost exactly what their holdings in core are (although probably an overestimate because ultimate recoveries per well seem to be lower than originally thought) and new discoveries are really just FID decisions allowing resources to become reserves. I can see 32Gb being achieved (i.e. base and core) but I’m not sure that the non-core totals will be easily achieved.

               

               1. George Kaplan,

                  Looking at UK North Sea proved and 2P reserves, the ratio was about 1.7 for 2P/1P historically. Proved reserves are not a good estimate for ultimate recovery.

                  If we take the 16 Gb of proved they might be 27 Gb of 2P reserves, plus 9 Gb would be 36 Gb and this is 2020 reserves which were based on a very low oil price. Higher prices will tend to increase reserves. There are also possible reserves and contingent resources which over time may be moved into probable or proved reserve categories.

                  My guess is that the Saputra estimate may prove conservative.

         2. Stephen,

            I mistakenly chose the wrong link, sorry. I meant to reference the paper you cite below.

            1. It is above rather than below.

   2. George.

      I will give you a real world example on P & A from late summer 2021 to now with regard to the time it has taken.

      We plugged 6 vertical wells. 5 were 900-1,000’ and the other was 1,500’. We approved the project in September. Three wells were plugged in late October and three were plugged in late December, early January. The surface casing was cut off at 4’ below the surface and metal swedges were welded on late January, and the wells were buried and surface restored.

      We still are waiting on an electrician to remove the electric boxes from the well sites (service has been disconnected). We are still waiting on the service company who will dismantle and restore the surface of the small tank battery, consisting of one oil separator, two stock tanks and one water tank (and electric box there also).

      The small injection pump, rods, tubing and down hole pumps, pumping units, electric motors and other salvageable equipment has all been removed and taken to our shop for future use.

      Winter weather can be a problem. We hope the remaining work will be finished by April.

      The landowner has been very good. Did not own minerals so happy to see the wells plugged. Likely won’t hear complaints from mineral owners, given there were over thirty splitting 1/8 royalty interest in very little oil production. Two of the wells were injection. One a water supply well. Three producers each averaging just 1/4 BOPD each.

      I estimate there are 1-2 million of these types of wells in the USA, no telling how many additional ones that were improperly P & A.

      Ours are among the simplest in the USA to P & A. I can’t estimate how long it would take to plug everything in the USA.

      If there wasn’t a labor shortage, our project would have taken a week. But everyone working on it also works on keeping existing wells going. The rig used is also used to repair tubing leaks and down hole pump repairs. The company handling equipment removal and land restoration does all kinds of heavy equipment work, and not just for oil and gas.

      We have zero complaints about the service companies. We know our job is back burner since it isn’t producing oil. Companies are scrambling to keep production going and re-activate wells still shut in due to April 20, 2020.

      There used to be crews that did nothing but plug wells. Those don’t exist here at this time.

      I will also say to date state regulators have been great. Easy to work with when you are doing something voluntarily. They now seem to understand there is a labor shortage. They are now short handed too, with regard to inspectors.

      Production in our little field actually went up in 2021 compared to 2020 despite just two new wells being completed in a field of over 2,000 active wells. But 2021 was the third lowest production in the field ever, with discovery year 1905 being the lowest, followed by 2020.

      1. SS – Thanks for the details. Is there a scenario where things improve? The most important variable should be price, but it’s gone up faster and higher than most expected and seems to have had quite minor impact in many key areas. Out of interest: 1) Does well P&A require a drilling rig or just work over equipment (or neither) and does it vary from well to well? 2) Are there any issues with NORMs (naturally occurring radioactive material – usually scale that absorbs radon) in the equipment? 3)Does the operator/owner have to provide some sort of bond, lien or other guarantee to ensure the P&A costs are coveed?

         1. George.

            1. Work over rig and pump.

            2. We have very little NORM issues. Thankfully. All iron coming out of holes is tested, rare to find in our shallow sandstones. Deeper wells is a different story.

            3. Operators post a bond. Amount is not adequate to P & A. I think this is pretty much the case in most states onshore lower 48.

            Also, I made an error. Not a swedge welded on top of the hole but a steel plate. Swedge is on T/A wells above surface.

            Also, our wells are so shallow and mostly have 4 1/2” producing string, so we just cement from top to bottom if there is adequate cement behind the casing. We plugged 1980’s era wells with good cement records, so that’s how that went.

            My understanding is deeper wells and especially horizontal wells are much more involved.

            1. Thanks – a couple of other things: who picks up the liability for P&A f the operator goes bust? I’d assume it’s a state responsibility but is there also federal support available? Where is the data on the wells’ design and condition at abandonment kept? Is that part of responsibilities of RRC or ND resource and minerals division (for example) or does EPA (or other) have a role? Who monitors the plugged wells and is this specifically funded (like the bonds for P&A) or is it just funded as part of general state or federal tax income?

               1. George.

                  The P & A of bankrupt companies falls on the state.

                  Operators pay an annual well fee, per well, which funds plugging of wells by the state. So even though bonding is way too low, there is another mechanism by which the state raises funds to plug abandoned wells. This fee raises millions annually.

                  The state hires contractors to plug the wells. They are the same contractors private companies hire to plug wells.

                  Well inspectors monitor plugged wells. If a well starts leaking, there will form a wet spot on the surface. The state will hire a pit to be dug, and a tank truck to periodically drain the pit until the well is plugged.

                  Leaking wells are almost always 100 year old wells that were improperly plugged. A lot of those merely had fence posts shoved down them. Plugging rules weren’t established until the Great Depression. The leaks are caused by a combination of improper plugging or not being plugged, along with being in a water flood.

                  Another thing to explain. Much of our field has been drilled twice, or even three times. Many wells were plugged in the 1960’s and early 1970’s properly, but when this was done companies didn’t go back and drill out and re-plug wells that were P & A prior to the Great Depression. This is because wells were also not required to be permitted until the Great Depression. There is a record of almost all of the pre-permit wells, but there were some never recorded.

                  Then the Arab Embargo came. Most of these old leases were leased again, drilled again and put under water flood again. Over time, the re-injected water would find the old improperly plugged holes.

                  If a well beings to leak within an operators lease, even if the well is not on the operators bond, the operator is liable for plugging the well. We have plugged many of these types of old wells over the years. Our pumpers locate these or sometimes farmers will locate them. Usually a wet spot covering a small surface area measuring a few feet across is what is observed. When this happens, we are required to shut in all injection within 1/4 mile until we plug the well.

                  Because most of our field has been re-leased, most leaking wells are not plugged by the state, but by the operators. The state only plugs wells where there isn’t an active oil and gas lease and the operator is no longer in business.

                  We also own farmland where there were leases 100 years ago that were long ago abandoned. We have had old wells begin to leak. Even though we didn’t have to, we have plugged these ourselves at times. The state only plugs so many wells a year, and we didn’t want to wait. It’s not cheap, but we wanted to control the process. The state has let wells leak a long time (years) before getting around to plugging them.

                  The US Coast Guard can get involved in these matters if a leaking well threatens to go into a navigable water way. This jurisdiction is actually very broad, as a leak into any stream of any size leads to a navigable water way. The Coast Guard has gotten involved a couple times in our field in egregious situations. That was many years ago when there were some non-local operators. Almost all operators here are now local, and won’t just let things get that bad. The state EPA also is much more strict and doesn’t let things get that bad either. Last time I recall the Coast Guard getting involved was over 20 years ago.

                  Biden Administration has legislation to provide federal funds to states to plug abandoned wells. Will be interesting to see how these funds are administered.

5. Updated scenario for trying to match the World’s 800 kb/d annual increase in oil demand (40 year trend) with a smoother ramp up in completion rate, ERR=74 Gb, 180 thousand total horizontal wells completed after December 2009 in Permian basin. Rate of average annual increase in output from June 2022 to June 2029 is 692 kb/d for Permian basin in this scenario.

   

6. In the post I discussed two different high oil price scenarios, the first high price scenario in the post I will call high price scenario 1 and the sceond which was discussed I will call high price scenario 2. The comment above linked below
   https://peakoilbarrel.com/permian-basin-update-february-24-2022/#comment-735644

   uses high price scenario #1.

   In the chart below both scenarios are shown for easy comparison.

   

   1. I modified the 75 Gb TRR scenario presented in an earlier comment (2/26/22/ 8:04 AM EST) where the ERR was 74 Gb using high oil price scenario 1 by usig high oil price scenario 2 and adjusting the completion rate accordingly (so that all wells completed would have DCF > well cost for prices and costs assumed). The ERR is reduced to 50 Gb and total wells completed decreases to 118 thousand wells (2010 to 2032), the earlier scenario had 180 thousand wells completed from 2010 to 2040, bottom line is that future oil prices will have a significant impact (in this case a change of 24 Gb of tight oil output).

      

7. For the high oil price scenario 2 Permian scenario presented above (2/26/22, 8:56 AM EST) with an ERR of 50 Gb, we combine this with our standard US minus Permian scenario and find the US tight oil ERR is 79 Gb with an average annual rate of increase from June 2022 to June 2028 of 722 kb/d. Decline for this scenario after 2032 is steep as determined by the assumed steep decrease in oil prices. Note that this scenario may also be unrealistic and might be thought of as a lower bound to US tight oil output with the upper bound at the ERR=103 Gb based on high oil price scenario 1.

   

8. Comparison of 79 Gb and 103 Gb US tight oil scenarios, the average of the two is shown, but the future price after Jan 2032 will determine where the output path will be, if anyone would like to suggest alternative future oil prices, I could run the model with those.

   These scenarios are based on the Permian scenarios with a maximum completion rate of 800 wells per month. The completion rate starts at 400 per month in Jan 2022 and increases by 5 wells per month each month until 800 wells per month is reached 80 months later (September 2028), this corresponds with an average annual increase in completion rate of 11% over that 80 month period.

   

   1. Thank you for putting so much mental effort into this project Dennis. Truly impressive.
      Of course no one knows what specific assumptions to make on all this, and the fact that you are the first to acknowledge these uncertainties is appreciated and is due respect.

      Everything i see points to a high price scenario, driven by global demand on one hand and depletion on the other, being the big theme of the whole situation for this decade.
      The countervailing forces against a high price scenario of Iranian exports, unpredictable recession/depression (lower demand), and the rate of implementation of electric transport being big wildcards .

      And of course there is the unpredictability of international affairs.
      https://www.reuters.com/business/energy/ukraine-crisis-will-disrupt-crude-coal-lng-flows-even-without-sanctions-russell-2022-02-25/

      1. Thanks Hickory.

         Yes a great deal of uncertainty, I agree with your assessment, nice concise summary. No doubt there are many unknown unknowns yet to be added to the list. The interesting thing to me is that there might under the right oil price scenario and adequate supply of tubing , rigs, labor, etc and lack of output increase from the rest of the World (say flattish output for World minus US crude plus condensate) be enough tight oil supply to keep oil prices from crazy levels ($150/bo or more in 2020$), at least through 2028, also demand may increase a slower rate than 800 kb/d per year as EVs gain market share and reduce demand, especially after 2025 or so. In any case these scenarios will no doubt be far from the mark, especially the best guesses, though I think Permian output will be in the wide range between my lowest and highest scenario, as a WAG maybe 4 in 5 odds Permian output will be in that wide range (40 to 115 Gb ERR and peak output between 6000 and 18000 kb/d, some time from 2027 to 2037).

         Of course I could just say there will be a peak in the future at some ERR and output level, but this narrows it a touch.

         1. “but this narrows it a touch”

            good one.

   2. One more scenario using a high oil price 3 scenario where high price 3 is the average of the high oil price 1 and high oil price 2 scenarios. This new price scenario is plugged into the Permian model and then combined with the rest of US tight oil, the resulting model has ERR=94 Gb, the new average in the chart is the average of all three scenarios.

      

9. Although sanctions are not directly targeting Russia’s oil, there will be major headwinds for their oil and gas industry as the political and financial situation deteriorates for them. They are already struggling to meet their quotas. Peak Russian production looks to be in the rear view mirror.

   https://oilprice.com/Latest-Energy-News/World-News/Sanctions-Or-Not-Russian-Crude-Is-Getting-Hit.html

10. Dennis, while increasing lateral length is one component of increasing individual well productivity, have you also incorporated what appears to be a far meatier component? Found this top level bit of work buried in other EIA publications, check out the second chart which breaks out a lateral length increase component from better completion designs/efficiency. I bumped into this phenomena back in 2011 or so with the early Bakken development, so I’ve got no doubt it exists, but it looks to have continued after I stopped paying attention to it a decade ago. This EIA blurb seems to confirm the idea.

    https://www.eia.gov/naturalgas/weekly/archivenew_ngwu/2022/01_27/

    I would also venture that this particular work would indicate that using an average well profile would underestimate resources going forward, if newer development sits on the high side of the average consistently. Which appears to certainly be the case in the Marcellus.

    1. Reservegrowthrulz,

       Yes the estimate will be too low if well productivity per lateral foot continues to increase, but data suggests this is not the case in the Permian basin, since 2018 when normalized for lateral length, average well productivity has been either flat or decreasing.

       So this might be happening in the Marcellus, but not in any of the tight oil plays since 2018.

       1. Well now you’ve got me curious, and I’ll have to run off and check. I seem to recall calculating out improvements in the Bakken formation post 2017, but I can’t recall if I normalized for LL or completion type, or some of the obvious knock on effects of aging acreage involving solution gas drive reservoirs.

          Also, do you do gross level estimates without formation and formation bench level differentiation? The EIA DPR drives me bananas because they just add everything up and make blanket statements, and then the press picks it up and broadcasts it and every oil ignorant “analyst” and bloggers trumpet it through their platforms and suddenly most of the world is dumber because of it.

          1. Reservegrowthrulz,

             Yes the analysis is by basin (Permian, Eagle Ford, Bakken, Niobrara, and the rest of US tight oil), the focus here being on the Permian. Teasing out the formation and bench data takes a lot of work with the data I have to work with, which is basically what I find at the blog at http://www.shaleprofile.com and USGS and EIA data.

             Basically I take the basinwide wellprofile as from the page linked below, I have to pick each data point off the chart manually, a data download is thousands of dollars per year, too rich for me.

             https://public.tableau.com/shared/K3GKQ4CRY?:toolbar=n&:display_count=n&:origin=viz_share_link&:embed=y

             1. “I have to pick each data point off the chart manually”

                Dennis, Have you looked at this chart digitizer app? I have used this on occasion over the years and it works very well. It is being maintained so it’s llikely getting even better.

                https://automeris.io/WebPlotDigitizer/

                1. Thanks Paul,

                   It does not work well at shaleprofile.com, it may have been designed to make collecting the data difficult as the website makes money by subscriptions to download the data.

                   A cool tool though.

             2. My operative example of the value of tearing down to the appropriate component part comes from a decade ago when doing lifecycle analysis of layer caked discrete accumulations, specifically in the Permian. The research was designed to establish the cause of anomalous field level declines, to underpin some reserve growth models,

                Basin-wide means you can’t even figure out the magnitude or frequency of the signal noise, and in the Permian, that is a biggy.

                1. Reservegrowthrules,

                   I do not doubt the analysis would be better, without access to data, I cannot proceed.

11. This top-down analysis of future tight oil estimates using USGS technically recoverable resource, NOT RESERVE, estimates as a crutch, is actually quite lazy, and purposefully misleading to the American public. I would personally be very concerned about how misleading, save the fact that I don’t believe a lot of people read this shit anymore, thankfully.

    Well productivity in the Permian Basin is now declining at an alarming rate (if you don’t have ALL the data, what sort of analysis is that?); WOR, GOR and costs are all going up in 2022. The economics used to determine profitability are mostly wrong, the intent is to make the reader believe higher prices fixes everything. “Type” curves after 14 years of data should be ignored by even the most casual observer; the use of DCA and “ARP” DCA methods are irrelevant without knowing how “best fit” use was determined. To the casual reader that all sounds very impressive; don’t be fooled. Many large independents in the Permian Basin in 2021 drilled the worse wells they have EVER drilled.

    Most of the Permian Basin has already been developed on 330 foot spacing, even less; an indication of how sweet the cores are and how bad wells are outside these core areas; anybody can research that simply by looking at New Mexico and Texas Field Rules, what is allowed and what’s not, including what has already occurred.

    No Permian operator wants to move out into the vast unknown, if they did they already would have started at $65/$4. Instead they keep drilling infill shit on 330’s with 40 acre tolerances. Google that. Google field rules for Phantom (Wolfcamp) or SandBone (Bone Springs) or Sprayberry Trend Fields, for instance. Do the damn work, if you must, don’t put any credence in this analysis. Pressure depletion is real; children make 30 % less than mother and father. We have already seen the best the Permian Basin has to give up.

    The USGS TRR stuff is totally irrelevant. Our nation is at a precarious time at the moment, near war perhaps; conservation and awareness of limited tight oil resources in our country is the order of the day. Flaring, crude oil and LNG exports need to stop, NOW! As does the sort of analysis that suggests tight oil abundance for the next decade. It is a grave disservice to Americans and should be ignored.

    https://www.oilystuffblog.com/forumstuff/forum-stuff/midland-basin-usgs-assessment as a

    1. Hi Mike S . Thanks for making the omelette . Nobody made one without cracking some eggs . 🙂

    2. Note that I use 1320 foot spacing based on input from LTO survivor and assume wells are shut in at 20 bopd based on input from someone who knows far more than me.

       My understanding is that the spacing rules of say 330 feet are a minimum, is that correct? I do not believe an operator has to space their wells that tight if they do not believe it is profitable to do so. I think LTO survovor told me that 330 foot spacing is a disaster and that if he were to have continued in the tight oil business he would have chosen to use 1320 foot spacing, that is the basis for my spacing choice.

       I fit the arps hyperbolic to the data from shale profile using solver in excel so that the sum of the square of the residuals is minimized, when the annual decline rate of the hyperbolic reaches 12.5% I assume exponential decline of the tails at 12.5% per year.

       Spreadsheet linked below has fit for the average 2016 well

       https://peakoilbarrel.com/wp-content/uploads/2022/02/hyperbolic-well-permian2016c.xlsx

       The data used is the first 32 months from the average 2016 Permian well, the analysis was from a while ago, currently there is data through 60 months (with complete 12 months of output data from all wells completed from Jan to Dec 2016), some of that fata from 35 months to 60 months is plotted to show whether the fit matches data.

       

    3. Mike, thanks for the reality check, your hard work in this area is much appreciated to countenance what is amounting to be a vanity project from Dennis.

       Dennis, it’s time to try and get your work published by a peer-reviewed journal rather than taking the easy route of posting on your blog. You use a very limited number of sources for your analysis and I don’t think it would stand up to more rigorous review. The Bakken and the Eagle Ford are already in decline, yet you somehow think the Permian will produce cornucopian miracles and save the world from peak oil. Higher prices do not solve problems of geology, as Mike succinctly stated.

       1. Stephen,

          My analysis is not that far from the Saputra paper (best guess about 11% higher). I would agree that analysis is far better than my own, the USGS does very good analysis despite what many claim.

          If you like lower estimates, then focus on the F95 scenarios and lower completion rates.

       2. Guys

          I think it’s time to stop criticizing Dennis’ work and learn to appreciate it for what it is. To ask him to publish in a Peer reviewed paper is a bit much.

          Dennis is very clear on the data he uses and the methodology and assumptions. He tries to cover a reasonable number of scenarios. So if you want to challenge those assumptions, scenarios, fine. Dennis gives his reasoning and refute if necessary.

          He has put a lot of time and effort into his model. His methodology in curve fitting and forecasting is tried and true and to some extent assumes business as usual. That does not mean the projections are correct but it does put some bounds on the possible outcome. Many times he has responded to requests for different scenarios. What more can you ask. Let’s be thankful for his efforts.

          1. Agree—
             Dennis makes this site happen, and backs his views.
             Not all of us agree, but——-

          2. Completely agree Ovi.

             Dennis has been outstanding at adjusting the input assumptions.
             Who else among us has been so willing to take into account others opinions , views, and especially important- facts presented.

          3. “… it is time to stop criticizing …” Really? That seems to be straight out of Putin’s playbook. I stopped reading it seriously (or pretty much at all) a long time ago. I think it is absolute some whee between useless and misleading rubbish, (along with every other ex-industry type who posts here, I think). I gave up arguing because Dennis has a tendency to put words in your mouth, pick any straw man that’s going and always has to have the last word no matter how trivial. It’s all dressed up to look impressive but is not at all and depends entirely on picking a single URR and then fitting a bell curve. Really any bell curve will do they all look pretty much the same within an error bar. The number that matters is the URR so the important arguments are with however came up with that number and that is never Dennis, plus he cannot argue for or against the number because he has no real expertise in how it was arrived at..

             1. George

                There is a difference between criticism and commenting and questioning and having a civil dialogue.

                I find some of the language used quite distasteful and personal. There is no need for personal attacks. Question all the info. Quote alternative facts and question why they are being ignored. On this site that is all part of a good discussion to come to a better understanding for all of us.

             2. George Kaplan,

                It is correct that I start with information from those who know more than me and work from there.

                In this case I start with TRR from F95 to F5 and apply output data to estimate average well profiles and make assumptions about future oil prices, costs, and completion rates to arrive various scenarios.

          4. Ovi,

             I agree asking for a peer reviewed paper is a bit much, I do not really have the credentials to get in the door on that.

             I do appreciate the criticism and thank everyone, especially Mr Shellman for their comments. These make the models better and point out errors in my thinking. I wish I had access to all data in the World, I do not and my time is limited.

          5. Well, I think Dennis can take the criticism. As far as peer review is concerned, he once told me that an article I posted had not been peer-reviewed. I agreed because I don’t think I ever posted a news article that had been peer-reviewed. But I can take the criticism and I think he can too.

             But I have stopped criticizing his charts. I simply got tired of telling him that his charts are almost always based on URR. And I have told him more than once that URR data is not worth a bucket of warm spit. Of course, he disagrees.

             But let’s be fair. Dennis always disagrees with my predictions. And I always disagree with his. So we are even. 🤣

             1. Ron,

                The charts are based on URR, output data, and economic data rather than only output data. More information may give better results. But assumptions about the future are generally wrong as we choose a single set of assumptions (or many sets in my case to give range of scenarios, note there is a range of TRR from 45 to 115 Gb with ERR raging from 40 to 115 Gb) out of an infinite number of possible sets of assumptions. Odds of success are pretty much zero.

                1. Dennis, I don’t really care. The Permian is a bit player in this drama. I think you are way overestimating her production but I really don’t give a flying fart. The Permian makes only a tiny bit of difference. The whole show is about world production, not the Permian. Why are we making such a fuss about this bit player in this world drama?

                   Peak oil is in the rearview mirror. That is my point. Your URR calculations will not change that point. The Permian is only a distraction. There are, of course, other distractions. They are Canada, Brazil, Norway, and… err… OH Guyana, how could I forget Guyana? They are up to 121,000 barrels per day. They will save the world from peak oil.

                   Sorry Dennis, forgive my sarcasm. But world oil production, or the lack of it, is the crisis that will collapse civilization as we know it, long before your renewables can come to the rescue. So I can hope you can understand why I really don’t give a shit about the Permian.

                2. Ron,

                   For World output I use estimates of World URR from Laherrere, Steve Mohr, and others as well as discovery data from Laherrere and output data from the EIA to model future output based on the past rate of development of discoveries and past extraction rates.
                   Tight oil is responsible for nearly all of the increase in World crude output since 2005, it will continue to be important for marginal supply through 2030. For a high completion rate scenario in Permian (800 new wells per month maximum) with peak US tight oil output of around 12 Mb/d in 2028, we get something like the scenario below. Output falls sharply after 2030 to match falling demand as the World moves to electricity for land transport. LTO and extra heavy (XH) oil on right axis and total crude and conventional oil (crude plus condensate minus LTO minus XH) on left vertical axis.

                   

                3. Dennis, yes tight oil has been responsible for almost all the increase in world oil production since 2005. That should tell you something. Tight oil might still reach new heights. But the heyday of increases by one million barrels per day per year is in the past.

                   But even that does not matter. Declining oil production in the rest of the world will swamp any increase in the US and the few nations that still may increase production. You are overestimating production by nations that can still increase production and underestimating the decline in production by other nations.

                   As to URR, that is what is really throwing your predictions off, way, way, off. If you would just totally ignore what anyone says about URR, you just might make some accurate predictions.

             2. Ron,

                When I have made inaccurate predictions in the past it was in part due to underestimating URR.

                Jean Laherrere’s estimate for World URR in 2018 was about 3000 Gb (includes 200 Gb of extra heavy oil). Future decline rates will depend in part on oil prices and the remaining resource as well as the speed that resources are developed. We will see how it plays out and whose estimate of future output is correct (although you don’t really have a future scenario that I have ever seen). Basically you have claimed the current peak is the final peak and that is it. We will see.

       3. “Higher prices do not solve problems with geology”. Didn’t the peak oilers say exactly that back 15 years ago? Demonstrating that THEY didn’t know anything about geology? Or…more particularly, discovery process modeling, the resource to reserve conversion ratio, and..OH YEAH…source rocks as reservoir rocks? The kind some of us cut our teeth on in the 80’s and were amazed McPeaksters, even the PhD geology component, didn’t know the first damn thing about?

          You don’t pay attention to the USGS for their TRR numbers…you pay attention to the fact that they knew reserve growth was a critical component of future production by 1975 when they began using Hubbert’s equation, they had a geologic definition of continuous accumulations resources back in the 80’s, decided it was worth quantifying in the mid-90’s, built methods to do these dispersed kind of resources, all while Art Berman and Colin Campbell were wandering around in the dark because..apparently, they couldn’t be bothered to read the SCIENCE on the topic? OF GEOLOGY?

          It takes 5 nanoseconds to go from understanding source rocks as reservoir rocks, and its century+ long history, to begin to wonder…just a little….what price WOULD it take to unleash that resource? And gee….it is a McPeakster who can’t think that thought, even AFTER someone tells them the history of shale development in the US.

          1. Certainly true that I did not expect so much tight oil would be produced back in 2013. Of course the EIA also had it wrong on tight oil back in 2014 or so.

             1. Dennis, I for one appreciate your efforts. Though I’m a lowly amateur, I’ve been reading this stuff for 20 years. In that time I’ve seen most analysis go either from here to infinity and beyond or from here to hell in a handcart. With the results generally a foregone conclusion based on the analyst. I may be unique but gigabarrels or whatever large number in table form has little meaning for me, visuals such as your charts, and your description of the parameters, provide give me a starting place from which to make decisions—surprisingly I actually do things based on what I read.
                So, thanks for the work.

                1. Thanks Pops.

                   My analysis is too technical and in the weeds for some and not rigorous enough for others.

                   For those who prefer more rigor there is a book I co-authored with Paul Pukite and Dan Challou.

                   https://www.amazon.com/Mathematical-Geoenergy-Discovery-Depletion-Geophysical/dp/1119434297

                   Also can be found at many university libraries

                   https://mainecat.maine.edu/search~S0?/apukite%2Cpaul/apukite+paul;T=geoenergy/1%2C2%2C0%2CB/frameset&FF=apukite+paul;T=geoenergy&1%2C2%2C/indexsort=-

             2. Everybody had it wrong. The reason those of us doing it in the 80’s and 90’s figured it wouldn’t happen was because no one ever wanted to put the leases back together to get drilling units. But it certainly wasn’t because the oil and gas wasn’t there. The USGS was doing Devonian estimates of 1000 TCF in-place back after the Eastern Regional Gas Shales project was over….certainly the research was being done, and when I was involved in Appalachian Basin reserve studies and development projects at the consulting firm level I could even tell you how we used the history of old Devonian wells completed one way, versus another when we crossed the Ohio River. And the EIA didn’t know then, and doesn’t know now, any more about geology and the production derived from it than Art Berman does across the same time frame. Or ASPO. But they tackle the problem from a more engineering/analytic perspective, and there is no problem discussing the potential of these reservoirs in that manner, as they develop. Doing it basically the same way you are doing it Dennis. Add stuff up, project forward declines, assume it works for some price path, until some underlying limiter kicks in (USGS TRR, area, geology, etc etc). Straight up numbers games.

                1. Reservegrowthrulz,

                   I do not just assume it works for some price path, I look at the last month of my scenario (where prices are on a downward path) and do a DCF analysis based on my assumed cost parameters, average new well EUR is also assumed to be decreasing at that point as core areas will be running out of space and technological advances will not be able to overcome the poorer quality prospective volume of rock.

                   You are correct this is mostly adding up numbers to arrive at a projection.

          2. Here is an early guess by me from 2013, very far from the mark, but note the AEO 2013 tight oil estimate,

             https://peakoilbarrel.com/when-wil-us-light-tight-oil-lto-peak/

             I had the tight oil URR at 20.5 Gb at that point in time, and 17.6 Gb up to 2040 vs the EIA’s estimate of 24.5 Gb through 2040, at the time I thought this estimate was too optimistic. I was wrong, and have been so on many occasions. I have udpated my expectations as I got new information.

             Post was also published at my own blog

             https://oilpeakclimate.blogspot.com/2013/12/when-will-us-ltolight-tight-oil-peak.html#more

             

    4. @Mike

       The “funny” part of US oil companies not earning enough money is most of it is self-induced. This boom-bust cycle ensures companies pay moon high prices in the boom cycles, making many calculations obsolete. Utility companies must make their new equipment they buy on credit to money in shortest time. When then pressure depletion and other things I don’t understand come on top, the financial disaster isn’t far away.

       Not compared to big fields in other countries – where there is a longer plan of investing, and therefore most time better cost control.

       So – I think Shale companies could still (until they completely run out of good acres) earn lots of money at current prices, when they would have no ideas of “growth” – so not straining the supply chains of pipes, trucks, tools, labor, tacos, canned bear – all the stuff you need to get the oil. Every boom attitude gets a big +xx% sticker fast on everything, eating up all the profit.

       It’s like construction last year here – a +100% price sticker on much thing construction because everybody wants to build. And craftsmen with full order list not taking new orders( A friend wanted to spend 100.000€ on his house – no chance. He still has the money). I paid 200€ for a few boards you got for 60 2 years ago – and I think the economic laws in a “Drill baby drill” frency are the same.

    5. Mike,

       There is an infinite amount of data, nobody has all of the data. The main message is one of uncertainty. There is a large range of potential outcomes depending on new well productivity, oil prices, natural gas prices, the price of NGL, costs of inputs to oil production, regulations, taxes, and no doubt a long list of factors I know nothing about.

       Perhaps you could provide a better analysis, I have never seen any projections by you.

       I have three different scenarios with low oil prices and a maximum completion rate of 400 new wells per month (columns J, M and N of my scenario spreadsheet), the average of those three scenarios (two assume TRR of 45 Gb and one uses the TRR=75 Gb assumption), no doubt you believe this is also much too high.

       

12. George

    You will recall the announcement by Total that they were pulling out of a GOM project to pursue better opportunities.

    https://totalenergies.com/media/news/press-releases/namibia-totalenergies-makes-significant-discovery-offshore-block-2913b

13. Will Russia’s invasion of Ukraine affect Russian oil exports? Most definitely says this report. Bold Mine.

    Russia faces major disruptions to oil, commodities flows without SWIFT

    LONDON, Feb 27 (Reuters) – Russian exports of all commodities from oil and metals to grains will be severely disrupted by fresh Western sanctions, dealing a blow to Russia’s economy and hurting the West with a spike in prices and inflation, traders and analysts said.

    The United States and its allies on Saturday moved to block certain Russian banks’ access to the SWIFT international payment system in further punishment to Moscow as it continues its military assault against Ukraine.
    SNIP
    SWIFT, or the Society for Worldwide Interbank Financial Telecommunication, is a secure messaging system that facilitates rapid cross-border payments, transferring trillions of dollars a year in what has become the principal mechanism for financing international trade.
    SNIP
    At least 10 oil and commodities traders, who spoke to Reuters on condition of anonymity, said flows of Russian commodities to the West will be severely disrupted or totally halted for days if not weeks until some clarity is established on exemptions.

    “You can still use internal systems of international banks having branches in Russia, but it will be quite a mess,” said a banker with a large Western bank with exposure to Russia, asking not to be named due to the sensitivity of the issue.

    1. Ron

       Not all banks have been cut from SWIFT. Maybe Rosneft’s bank is still on SWIFT.

       1. Ovi, of course not all trade will be halted, just some of it. That is enough to add to the damn mess Putin’s war has caused.

          1. And the news is that the Antonov 225, Mira, heavy lift aircraft has been destroyed, while Hostamel a/p was under attack.
             This is a great loss for the international engineering community. Capable of single lifts of 150t, it carried large generator and other massive components across the world.
             Why was it parked in the Ukraine, ffs? Ok, maybe laid up for essential maintenance. Even so, every effort should have been made to get it elsewhere a few weeks ago.
             A great loss, imo.

             1. Agree . Absolutely avoidable .

                1. I can’t be sure but there are reports that one or more engines were disassembled for maintenance work and not enough time to put the plane back together.

14. Chart below has data from USGS for the best benches of the Permian Basin (mean estimate).

    Total TRR when adding about 5 Gb produced through Dec 2017 is about 62 Gb from 119.6 thousand wells completed after Dec 2017 and the 15,732 horizontal tight oil wells completed before Jan 2018 for a total of roughly 135 thousand wells. Total acres developed in this scenario would be about 36 million net acres (of 39 million total prospective acres in these benches, total net acres for the mean USGS estimate is about 50.5 million acres. If we assume 50% of the remaining 14.5 million net acres are developed due to high oil prices. That would add another 40 thousand wells (assuming 360 acreas per well) that might be completed, adding perhaps 6.5 Gb and bringing the total ERR to 68.5 Gb.

    Link to spreadsheet below

    https://peakoilbarrel.com/wp-content/uploads/2022/02/permian-usgs-data-2.ods

    

15. Iraq Shuts Down Two Oil Fields, Further Curtailing OPEC Output

    (Bloomberg) — Iraqi oil production was suspended from two fields in the country’s south with a combined capacity of 480,000 barrels-a-day.

    The shutdowns curtail the ability of OPEC’s second-largest producer to pump oil after several member nations undershot their targets in recent months. That’s hampered the group’s attempts to ramp up production halted during the pandemic, and fanned the surge in global prices.

    Thiqar Oil Co. said it halted work at the Nasiriya field because of protests that prevented its staff from reaching the site on Saturday. The field is able to produce as much as 80,000 barrels of crude daily.

    The West Qurna-2 field stopped producing on Feb. 21 for an upgrade that will increase its capacity. The field is scheduled to resume pumping on March 14, though the companies that run it are trying to restart output sooner. West Qurna-2 can produce as much as 400,000 barrels-a-day currently, which will be increased by 50,000 barrels through the upgrade.

    https://www.bnnbloomberg.ca/iraq-shuts-down-two-oil-fields-further-curtailing-opec-output-1.1729155

    1. Tks OVi . Water availability is now an ongoing issue in the ME . They have a choice , go thirsty or go hungry ( no USD to import food because they cannot export oil ) . FUBAR

16. “BP offloads its nearly 20% stake in Russia’s Rosneft”

    https://www.cnbc.com/2022/02/27/bp-offloads-stake-in-russias-rosneft.html

    1. Hicks , they off load 20% when the Moscow exchange is down 45 % and the rouble is crashing from 65 to 83 . They booked a loss of $ 25 billion which is more than the net profit they made in 2021 . Genius . In a week’s time when all this has blown over (it will , Ukies and Russkies to meet on Belarus ) they will be begging to get back . I have said earlier the future is ” not to the strong but to the resilient ” . Russians have that . They can survive on potatoes for 6 months , can the public in the EU and USA ?
       P.S ; No critique of you . Just my POV , different from CNBC . Tks for the link .

       1. HIH,

          Well said! I am afraid this is a terrible decision by BP, under pressure from a noisy UK public and Gov.

          1. Qui bono, i.e., who bought?

             1. It would be a nice little earner for China.

    2. There are also rumblings this may percolate through to other private oil companies with stakes in Russia. I guess the state will have discounted buybacks and pocket the extra cash, but this doesn’t bode well for their investment if they don’t have the foreign expertise I presume the likes of BP and Total were giving.

       1. Kleiber , foreign expertise ? Was not the FSU producing oil before the IOC ‘s entered ? Also techonology when transferred to another nation is then owned by the nation ( politically speaking not legally speaking ) . Remember all the talk during Trump years of companies coming back to USA and return of all tech from China ? Well , nothing happened . The Japs set up a fund ( I think it was $10 billion , not sure ) to bring the Japanese companies in China back to Japan . Result , nulla , nada , nil . Once you have transferred the technology it is gone , just like oil , once its burnt it’s gone . There is no going back . Now coming specifically to the oil industry , all new tech is in offshore and shale , no great new tech in conventional on shore . Russkies have no need for the first two (offshore and shale ) and they have all that is needed to run their onshore conventional operations .
          P.S ; Please do not post about Bazhenov shale . Waste of time .

          1. Sakhalin project has the most advanced long reach drilling and Arctic platform design, courtesy of ExxonMobil. Similar technology would be needed on recent offshore discoveries. Russia doesn’t have a way to make high quality duplex and super-duplex steels for HPHT developments or cryogenic metals for LNG plants. They can produce fake material certificates but in my experience aren’t very good at it – the ones I’ve seen used Cyrillic number threes on a supposedly western document. In general LNG plants need specialized equipment that would have to come from outside (maybe China has capability now but it didn’t a decade ago).

             1. Thanks George for this info . The problem is that new offshore is now prohibitive as far as costs and ROI are concerned . There is also the ESG factor . In my opinion Guyana (FID done long time ago) may well be the last offshore project that comes online . Namibia maybe , but I wouldn’t bet on it . So Russia have the designs from Exxon . Exxon does not make steel ,they were outsourcing from whosoever . Russkies could do the same if needed . Sanctions or no sanctions .

                1. I didn’t say EM made steel. Each of those sentences are examples of how he west helps Russia. They are not dependent on each other. It would take years for for them to develop a foundry capable of making the steel and then another years to design and build the high pressure equipment – it will never happen.

                2. George , a misunderstanding . I never said Russia will put up a foundry to make the HPHT steel, what I said was that they can use the same source of supply as EM wherever in the world it is located . Sanctions or no sanctions .

                3. China will step in to deal with any shortfalls in production capacity or equipment and materials. They’re already looking at deals to bypass a lot of the Western suppliers and buyers should energy become the weapon, which it may voluntarily by the corporate world, even if gov’ts don’t ban buying valuable oil and gas from Russia.

                4. Kleiber wrote: China will step in to deal with any shortfalls in production capacity or equipment and materials.

                   Just how are they going to do that? China imports more oil than any other nation in the world. Russia will still export oil to China, and that will help him a lot. But I cannot understand how China will make up for any shortfalls in oil production. Could you please explain what you meant by that statement?

                   The below data is from 2016. Their net oil imports are a lot closer to 10 million bp/d today.

                   

17. For those that prefer lower future oil output I have included a scenario with an ERR of 66 Gb (about 19 Gb has already been produced from Jan 2000 to Dec 2020) and adding proved plus probable reserves (assuming 2P/1P is about 1.7) gives an ERR estimate of about 52.5 Gb (assuming no future upward revisions or additions to reserves), if oil prices remain high the reserve estimates are likely to increase. Also for comparison are the EIA’s AOE estimates for tight oil including the reference case (EIA’s best guess) and the high and low oil supply cases with ERR of 91, 121, and 159 Gb (assumes linear ramp down from 2050 to 2060 in tight oil output to calculate the ERR).

    

18. OPEC+ trims 2022 oil market surplus forecast in latest data

    OPEC+ revised down its forecast for the 2022 oil market surplus by about 200,000 barrels per day (bpd) to 1.1 million bpd, according to a base scenario in a technical committee report seen by Reuters on Sunday.

    Data from a separate JTC report seen by Reuters on Sunday showed the group produced in January 972,000 bpd less than the targets outlined by the deal, compared with 824,000 less in December.

    https://www.deccanherald.com/business/business-news/opec-trims-2022-oil-market-surplus-forecast-in-latest-data-1085648.html

    1. Jokers , they cannot even meet their own targets and talk of surplus forecasts . There is no surplus . Still searching for those 51 VLCC that are supposed to be parked offshore Khorramshahr .

19. An older forecast by Rystad (pre-pandemic) from Sept 2019

    https://www.rystadenergy.com/newsevents/news/press-releases/us-shale-to-grow-to-14.5-million-bpd-by-2030/

    Peak tight oil output in Rystad’s base oil price forecast is 14.5 Mb/d in 2030.

    

    1. Dennis , file 13 .

       1. Yes we should only look at things that confirm already held views.

       2. Hole in head,

          I would agree that 14.5 Mb/d seems too be too high, it would require quite a high ramp up in completion rate which may not be realistic.

          another chart from that same Rystad piece for US tight oil.

          Peak is about 15 Mbpd in 2031 or 2032

          

    2. Tried to create a scenario similar to the Rystad scenario in chart above with a higher maximum Permian basin completion rate of 1100 new wells per month (reached in March 2031) then completion rate is flat until December 2033 followed by rapid decline to zero completions in July 2037 (no wells completed in Permian after that date). Most of my high completion rate scenarios for the Permian basin had a maximum completion rate of 800 new wells per month.

       Peak for US output is about 14.4 Mb/d for this scenario in 2032/2033 with rapid decline after 2035, output is 4500 kb/d in Dec 2040. ERR is 104 Gb (about 15 Gb less than the EIA reference scenario), this would be the upper bound of what I think is a reasonable estimate with the lower scenario on the chart (ERR=74 Gb) being a reasonable lower bound. My guess would be somewhere between these scenarios in the 84 to 94 Gb range with peak between 10 and 12 Mb/d from 2030 to 2032.

       

20. “The Biden administration won’t sanction Russian crude oil because that would harm U.S. consumers and not Vladimir Putin, a U.S. State Department official said Friday.

    “The sanctions will not target the oil flows as we go forward,” Amos Hochstein, the State Department’s senior energy security adviser, said in an interview on Bloomberg Television.”

    Unfortunately, this is a two way street.
    Putin could take 10% of oil off the market.
    Lets hope not—–

21. Brent futures are up about $5 from last weeks closing price. Seems sanctions on Russian central bank and removing certain banks from SWIFT is positive for oil price.

    Still about $2.80 away from top of the pin bar candlestick from last week. And a move above it doesn’t necessarily negate it.

    Russia’s currency will likely get hammered this week. They are self sufficient in regards to food and energy. But economically they are absolutely dependent on exports as they don’t have the demographics or population to sell their own production to. They pretty much like China. If something happens to their ability to export they are screwed.

    Their income from exports is denominated in mainly Euros. And right now Russia’s biggest problem is they accept Euro’s as payment for food and energy exports. But they don’t have access to European markets without accepting Euro’s as payment.

    Ukraine situation will likely go on for months as both sides dig in. Not something I see going away anytime soon.

22. This is how the Ukraine crisis is affecting this site.

    Usually near the 25 of the month, Ron and I access the official Russian energy site to get the latest production. We have been cutoff and this is what we get. The site is inaccessible. The black progress bar stops there since the site does not respond.

    

    1. POD in play . Unintended consequences .

23. Is there any way that the early days of peak oil (this decade) isn’t going to be a huge hit to financial well-being of all the worlds citizens, and the budgets of the cities and countries?
    No, there is no scenario where a massive chunk of the personal and global purchasing power is going to escape this period without getting chopped down hard.
    Think $100 buck oil is expensive?
    Right now a person in the US could work minimum wage for an hour and buy 2 1/2 gallons of gasoline!
    That is not going to last.
    The days of cheap clothes and cheap food and cheap wood are gone folks.
    No matter who you elect.

    1. Fifty years ago minimum wage was $1.65 and a gallon of gas $.35. Depending on the type of vehicle, mileage has doubled to tripled. Two years later, gasoline was $.60 and bellbottoms cost a tank of gas.

       EV’s should be a lower cost future. Currently if your not driving 10 over the speed limit, someone is trying to get to the stop light before yourself. $90 oil isn’t slowing anyone down. I’m not really buying people are hurting, just ignorant. American gasoline is cheap and wasted.

       1. Commenting as an outsider who has visited the US a couple of times over my life, it appears your urban planning promotes this waste. It’s like your cities and towns have been designed to make people as car-dependent as possible.

          1. It is true, the urban planning in the United States is absolutely dreadful. It literally is a ponzi scheme, in that city and state governments finance their budgets through expansion and land sales. Developers often pay for the initial capital outlay, but property taxes are not nearly enough to maintain the infrastructure that has already been built.
             In their defense, the USA also has an enormous amount of land, but that doesn’t fully excuse them from not following the Nordic model for infrastructure and urban planning.

             1. The funny thing is: I come from Germany, where is much much less space. I drove 3000 miles on a vacation through the USA, mostly on country roads.

                Wide wide land

                And I felt caged after short time- nowhere to go beside to drive with the car on the road.
                Here are public access laws: Everyone may use the ways between fields, forests may not be locked and are developed by forest ways / hiking trails. You can go litterally everywhere by foot (or bike). Of cause damaging or littering is forbidden, and most people are well-behaved.

                For the USA people here a picture from a small wine town:
                https://www.alamy.de/stockfoto-blick-uber-die-stadt-schriesheim-weinberge-und-das-rheintal-auf-die-richtige-strahlenburg-auch-strahlenberger-schloss-104452524.html

                The small access roads you see in the wineyards are walked every weekend from lot’s of people (it’s very romantic, lot’s of picknicks, too), or you can take a jog between the fields in the background in the picture.

                So there is less space, but everyone may use it. I would never do jogging beneath a road here – in the USA I had to do it, or drive to a park first.

                But some things are the same: The towns got lots of money in the 70s and 80s from selling ground, and the property taxes are barely enough to keep everything working. They slowed giving out new ground – much building now is compacting as you can see at the town structure. A medium sized house there is almost a million €.

                1. Ah it would be great to talk to you. I’m living in the USA with an opportunity to move to Germany. I have dual citizenship and grew up in Germany but am worried about energy prices and future unknowns. Government debt much higher in USA but also has more resources. I feel like Germans are culturally more willing to do with less in a world experiencing resource decline (abgehärtet), but perhaps lack security. Anyway, struggling with whether to move!

          2. A lot of vertical transmission of covid in apartment towers in Hong Kong via the plumbing. Single residences safer now.

       2. a gallon of gas $.35
          Actually, in some places $.25

24. I called today my heating oil supplier.

    This stuff is very expensive now (but less then nat gas…) – and in short supply. He’ll call back if I get some… I want to fill up just in case, don’t think the situation get’s better this year.

    So time for the wallstreet magic from HHH with this chart shooting star or like to down prices and create supply.

    1. Pin bar and pin bars are more reliable than shooting stars. Odds are oil is going to head lower at least in short to medium term.

       Oil not being cut off in Russia and more oil from Iran.

       The fact that a pin bar followed a couple of days after a shooting star means there is those that are in the know that have put money on a short term reversal and or they exited their longs.

       1. The iranian oil will be needed to just replace the massive SPR releases of the last months. They can’t be sustained for long time – draining all SPR without a real crisis isn’t really good. And most need to be refilled.

          A disruption of russian gas and oil can come every time now. When cut off from the $ system Putin can do it as a weapon – when he can’t spend the $ anyway let’s see how the west can live with 10 mbd oil and a lot of gas less. Perhaps he delivers some oil to China just to not piss off Xi completely. But then the SPR will be badly needed.

          1. “let’s see how the west can live with 10 mbd oil and a lot of gas less”

             Europe gets about 5 Mbpd from Russia, with Germany, Netherlands and Poland making up about 1/2 of that.
             Or should I say- ‘had been getting…’

             see fig 8 from
             https://crudeoilpeak.info/russian-oil-production-update-nov-2021

25. Ron

    I think that 700,000 kb/d increase is 70,000 kb/d.

    The second half would have been slightly under 11,039 kb/d.

26. Russian oil production update Nov 2021 BY MATT – FEBRUARY 28, 2022 POSTED IN: RUSSIA, UKRAINE

    Some good articles here and great graphs. Also, an article stated that Russia has likely passed peak oil.

    Russian oil production might never recover to pre-coronavirus levels, the country’s Energy Ministry has forecast, according to the Kommersant business paper.

    1. As usual- great article from Matt.

       The BP graph is startling. to see just how big their move to exit the position in Rosneft is.
       “Fig 4: BP’s share in Rosneft oil production (876 kb/d in 2020, 42% of 2,107 kb/d)”

       Yes, that is 42% of BP crude oil and NGL production 2020

27. This article came out on February 11.

    Russia’s oil output edges higher in early February, sources say

    MOSCOW, Feb 11 (Reuters) – Russia’s oil and gas condensate output increased to 11.07 million barrels per day (bpd) over Feb. 1-10, from an average of 11 million bpd in January, two sources familiar with the data said on Friday.

    Then this article came out today:

    Russian oil output edges up to 11.05 mln bpd in Feb -sources

    Feb 28 (Reuters) – Russian oil production has increased to 11.05 million barrels per day (bpd) from the start of February,..

    Production was up 70,000 barrels per day, average, for the first ten days of the month. But by the 28th, that average increase had dropped to 50,000 barrels per day. That means for the last 18 days of the month the average increase had to be well below 50,000 bp/d. I don’t know how much of this was caused by sanctions if any.

    1. 50k difference at an 11m production I would count as random fluctuation. There are more months needed to see a real trend.

       There are countries where 100k fluctuations at 2m production are normal, as Norway.

       1. I am not looking for a trend Eulenspiegel. I am just trying to figure out when Russian production will reach the level their Deputy Prime Minister said they could.

          Novak: Russia To Resume Oil Output To 90% Of Pre-pandemic Level Feb 02, 2022

          Russia will be able to resume its oil production to 90% of the levels it was producing prior to the pandemic, Russian Deputy Prime Minister Alexander Novak said in an interview aired on Russian television on Wednesday.

          Novak attributed Russia’s ability to ramp up its oil production to the decision made by OPEC+ earlier on Wednesday. That decision saw the group agree to ease production cuts by another 400,000 bpd.

          “For Russia, it means that in March it will be able to additionally increase by 100,000 barrels per day again. It will enable us to restore the level of reduced volume by 90%,” Novak said.

          That will put them at 11.1 million barrels per day or 200,000 bp/d below their pre-pandemic level. They reached 11 million bp/d in January and increased by another 50k bp/d in February. They have another 50K to go to reach the level they said they could obtain.

          There is no trend to look for. They are just trying to make it to the level they hope to reach.

28. Eulen, he should do what I posted at 1:29 am . This will also expose how much gold really is in Fort Knox . The last ‘fraud ‘ audit was held in 1953 and the FED has since then stalled all moves to audit the gold .

29. From Occidental 10K

    The Permian Basin

    The Permian Basin extends throughout West Texas and Southeast New Mexico and is one of the largest and most active oil basins in the United States, accounting for more than 41% of total United States oil production in 2021. Overall in 2021, Occidental’s share of production in the Permian Basin was approximately 487 Mboe/d.

    Occidental manages its Permian Basin operations through two business units: Permian Resources, which includes unconventional opportunities, and Permian EOR, which utilizes EOR techniques such as CO2 floods and waterfloods. Occidental has a leading position in the Permian Basin, producing approximately 9% of total oil in the basin throughout 2021. By exploiting the natural synergies between Permian Resources and Permian EOR, Occidental is able to deliver unique short- and long-term advantages, efficiencies and expertise across its Permian Basin operations.

    Permian Resources unconventional oil development projects provide very short-cycle investment payback, averaging less than two years. These investments contribute cash flow, while increasing long-term value and sustainability through higher return on capital employed. Occidental’s oil and gas operations in Permian Resources include approximately 1.5 million net acres. In 2021, well design processes, technologies and logistics improvements drove increased operational efficiencies, which helped lower the overall well cost while improving recovery. Overall in 2021, Permian Resources produced from approximately 6,000 gross wells and added 222 MMboe to Occidental’s proved reserves through development and extensions of proved area.

    The Permian Basin’s concentration of large conventional reservoirs, favorable CO2 flooding performance and the expansive CO2 transportation and processing infrastructure has resulted in decades of high-value enhanced oil production. With 35 active CO2 floods and over 50 years of experience, Occidental is the industry leader in Permian Basin CO2 flooding, which can increase ultimate oil recovery by 10% to 25%. Technology improvements, such as the recent trend toward vertical expansion of the CO2 flooded interval into residual oil zone targets, continue to yield more recovery from existing projects, and Permian EOR produced from approximately 14,100 gross wells in 2021.
    Significant opportunities also remain to gain additional recovery by expanding Occidental’s existing CO2 projects into new portions of reservoirs that have only been water-flooded. Permian EOR has a large inventory of future CO2 projects, 26 which could be developed over the next 20 years or accelerated, depending on market conditions. In addition, OLCV continues making progress towards supplying anthropogenic CO2 for the purpose of CCUS in Occidental’s Permian EOR operations.

    In 2021, Occidental spent approximately $1.1 billion of capital in the Permian Basin, of which approximately 93% was spent on Permian Resources assets. Also in 2021, Occidental divested of certain non-strategic assets in the Permian Resources business unit, as well as acquired additional working interests in certain assets in our Permian EOR business unit. In 2022, Occidental expects to allocate approximately $1.7 billion to $1.9 billion, or almost half of its worldwide capital budget to the Permian Basin.

    1. From Chevron 10K Permian 2/24/22

       Chevron is one of the largest producers in the Permian Basin with a production outlook of more than one million barrels of net oil equivalent production per day by 2025. The company’s advantaged portfolio of development areas in west Texas and southeast New Mexico is comprised of stacked formations enabling production from multiple geologic zones from single surface locations. Chevron has implemented a Permian factory development strategy utilizing multi-well pads to drill a series of horizontal wells that are subsequently completed concurrently using hydraulic fracture stimulation. Top tier drilling and completions performance has enabled year-over-year capital expenditure efficiency improvement and cycle time reduction generating higher returns throughout Chevron’s Permian portfolio. Chevron’s Permian operations have also demonstrated continual progress on its lower carbon and water goals, consistently ranking among the best Permian operators for methane emissions intensity, routine flaring, and water handling (utilizing 99 percent brackish or recycled sources). In 2021, Chevron’s net daily unconventional production in the Permian Basin averaged 284,000 barrels of crude oil, 1.1 billion cubic feet of natural gas and 148,000 barrels of NGLs. Conventional production averaged 10,000 barrels of crude oil, 39 million cubic feet of natural gas and 2,000 barrels of NGLs per day.

       Capex

       The company estimates that 2022 organic capital and exploratory expenditures will be approximately $15 billion,

       In the upstream business, approximately $8 billion is allocated to currently producing assets, including about $3 billion for Permian Basin unconventional development

30. The EIA has just posted its US production data. December production is down by 206 kb/d. The main declining contributors are New Mexico -61, ND -25, GOM -81 and Texas -16.

    Was there a bad weather event in December that caused the drop in NM and GOM?

    The full report will be up on Thursday.

    

    1. Thanks Ovi for the update . Boring but must be repeated till the non believers turnaround . Nov 2019 @ 12,866 is peak US oil production .

       1. Hole in Head,

          Of greater interest to me is the centered 12 month peak in October 2021, which is 12539 kb/d, this will be the peak until it isn’t, likely by 2024, note also that the US centered 12 month average output at the World peak in November 2018 was 11462 kb/d, the current centered 12 month average (June 2021) is 11134 kb/d only about 330 kb/d below US output at the World peak, the World peak is likely to be surpassed by 2024 or 2025.

    2. Ovi, your peak numbers, Nov. 19 thru Mar 20, don’t match the numbers in the EIA’s just released Petroleum Supply Monthly

       Nov-19……12,966
       Dec-19……12,910
       Jan-20…….12,785
       Feb-20……12,826
       Mar-20……12,816

       1. Ron

          The data base I use is the three month updated info and it doesn’t go beyond six months. If I change the older ones the sum of states don’t add up correctly.

          I get both the US data and the LTO data at this site. I will find a way to sort this out.
          Thanks

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

          1. Ovi,the reasons the states don’t add up correctly is their data has been revised also.

             1. Ron

                I realize that. I have fixed the US total chart.

    3. I took a quick look at this and for L48 onshore, all of the decrease in Dec 2021 is equal to the decrease in conventional output in Texas and New Mexico (I found this by deducting Eagle Ford, Austin chalk and Permian tight oil output) from New Mexico and Texas output for November and December. The decrease in conventional for Texas plus New Mexico from November to December was very close to the L48 onshore decrease over those months. Not sure why this would happen, but maybe it is the shortage of labor and other supplies in the industry that the oil pros have been telling us about.

       1. Not sure why the GOM is down. I was expecting about 1.8, and it was closer to 1.7.

          1. Jack/St. Malo/Julia had some sort of shutdown and lost 50% for the month (70 kbpd)

             1. George,
                That explains a lot of the shortfall.
                You must go about digging into the BSEE production data differently than I do. I go to the “Production by lease” option, and there the production data isn’t complete through December. A few fields are updated through December but Jack, St Malo and Julia are not.
                I know there are other options to get this data, and I suspect one of them is complete through December.

                1. Yes it was an educated guess, maybe a bit arrogant, but there are only 122 kbpd from leases that reported in Nov and not in Dec and more than half of that is from Jack related leases. There is no other major shortfall from a single source that I can see and most the biggest drop from any other single lease is about 7 in one for Atlantis (I should have added an “as far as I can see”).

                   Actually come to think of it why would have the leases shut down and not the others – so I withdraw the comment. It’s likely just a statistical blip, unless sign of general accelerating decline in older fields.

31. So, with Shell and BP calling it quits in Russia, and maybe the US majors close behind, what happens to Russian oil production overall?

    Sounds like BP is going to just give Rosneft back the 20% it owns. That’s a heck of a big slug of BOPD. Can Rosneft keep production up without Western major/service company help?

    Not too sure many USA hands will be motivated to go to Russia for quite sometime anyway, seeing as how all of us here in the States are fighting over them.

    People forget one of the big reasons USA developed the heck out of shale is it is located lower 48 onshore. All these guys who’d been at the ends of the earth got to come home.

    I have a good friend who has worked for COP (formerly Conoco) forever (1980s). He and a bunch of other engineers got led out of a hotel at gunpoint in Caracas one time. Another he was given 24 hours to get out of Libya, and rode a boat all the way to Italy with nothing but what he could fit in two suitcases.

    Compared to that, 110 F in the Permian or EFS, or -20 F in the Bakken is a cake walk.

    Gotta think this might hurt Russian production long term?

    1. Maybe TotalEnergy to come. What is he feeling in USA for ExxonMobil staying on at Sakhalin Island?

       1. Total announced no new capital for Russian projects.

          No word from XOM yet. Ukrainian foreign minister has called them out.

          1. EM now saying it will pull out of Sakhalin-1. I worked on a small study for the project and it’s quite complicated for a nominally simple offshore oil and gas project. I met only a couple of junior Russian engineers who were shadowing EM counterparts. All the design decisions were made by EM or it’s contractors. That was in the design phase, I’d assume that through the operation phases the running is almost wholly Russian controlled but I think that major maintenance or brownfield developments would be difficult especially as the specialist parts (e.g. for turbines, compressors, high spec valves etc.) will not be available.

    2. SS , I have addressed the question of technical expertise in my post of 27/2 @ 2.37 pm in response to Kleiber who asked the same question . BP and Shell succumbed to political pressure and sold their holdings . A big loss for BP $ 25 billion write down which is more than the net profit of 2021 . Selling when MOEX is down by 45 % and the ruble is devalued from 60 to 90 is a big hit . The question is what are they doing with the funds in Russia ?. Putin has banned transfer of all funds by foreign entities received thru sale of securities . Moscow stock exchange is shutdown . They cannot get their money out . Stuck for now . Second question ? Who purchased these shares ? Russian entities ? Gazprom , Rosneft ?? Answers

32. Look at the oil price chart from 1997 (the year I got my first oil production) until now.

    Ridiculous volatility.

    To think I’m still standing after this nonsense.

    Mikey’s been at it way longer. Tough SOB, that dude. He should write a book.

    John S should too, for that matter. He could relay some pretty good stuff too, I’ll bet.

    What a freaking ride, and it isn’t close to being over. Feel like I’m maybe in the bottom of the 5th inning?

33. Speaking of which, coal prices went up $60 today per short ton, at least the chart I saw. From $30s during 4/2020 to $253 today.

    Grain through the roof too. Hate to think what happens if USA has a drought even close to 2012. Just a couple years ago corn was below $3 locally, beans below $7 locally. Wheat and milo also low. Basis was much wider locally also.

    Don’t see much grain on the ground around here, which is unusual considering we are just ending February.

    1. Coal closed at $274.50 today. Which is higher than the price spike in October of 2021. Intraday high was at $286

       I still believe oil will have a technical pullback before going higher. Should drop and find support somewhere in the $80’s .

       But let’s not kid ourselves. Where energy and food prices are going is going to absolutely wreck the global economy.

       If oil is going to go higher and negate all the bearish daily candlesticks which 4 out of last 5 days the candlestick has a long wick on top of it. It needs to breakout higher soon or it will pullback here.

       1. Triple H.

          The volatility in the commodity space makes my head hurt.

          For another example, look at lumber.

          I’d like to know where the lumber companies are finding loggers. That’s some hard work.

          I foresee more volatility in commodities as time goes by. I have posted I see average annual prices ranging from $35-$115 WTI from now till 2030. That might be too tame?

          1. Globally half the baby boomers will have retired this year. Those who have the majority of the wealth will be liquidating their assets over next decade. Not sure who they are going sell to at current prices.

             We have a demographic problem we have never had to deal with. There is going to be a whole lot less capital chasing returns. Which is deflationary.

             But at same time nobody has population to replace these highly skilled high valued workers that are retiring. So wage inflation is guaranteed.

             China’s wage inflation is off the charts currently and they are no longer cost competitive. China’s population likely peaked in 2004 and will half by the year 2050. Much sooner than the half by 2100 that most expected.

             I expect wild swings in prices to continue. Right now we are just in the up swing. Down swing will come when prices go high enough to get rejected by consumers.

             1. I think global population it pretty much at peak. The expected growth is to come from Africa. Which i my opinion it won’t materialize.

                Africa’s farmland is subpar and only reason it is as good as it is today is because the last 60 years or so Africa has had access to imported fertilizers. Fossil fuel inputs.

                Africa is facing a coming famine as those inputs go away.

          2. Shallow sand,

             Unless there is a severe recession, oil supply may not be able to keep up with demand until 2035. So for the period from 2022 to 2035, my guess would be $75 to $150/bo in 2021 US$ for WTI. My best guess for the long term 5 year average price of WTI over that period is $100/bo+/-10 (2021$) between 2024 and 2033. Chart below has centered 5 year average price of WTI from 1988 to 2019.

             

          3. SS – something happened in 95/96, which doesn’t necessarily show up clearly in the price signal but caused big upsets in the industry. There was a huge labour shortage, similar to today. In the North Sea contractors would leave projects and move next door for an extra pound an hour; job adverts would go unanswered, let alone unfilled, for months. OPEC lost control of prices, it had been trying from the mid 80s, and successfully until then, to keep them below $20-25 to keep the oil sands and deepwater developments from proceeding and had also kept a lot of small and medium sized conventional projects from proceeding. Suddenly all those went through FID and a lot of supply came on line, which dumped prices to $10 in 99/00, and since then it’s been chaos. I don’t know if the original issue started with the first gulf war but the timing would be about right.

             There is one obvious difference now to previous price spikes in the the industry is continuing to contract rather than immediately expand. Another is that oil and gas prices seem more in step than seen before. If there is a fuel price linked recession it is likely to be longer lasting as there won’t be a flood of oil coming along from projects started during the spike.

          4. The Fed balance sheet ballooned by 3 trillion during the Coronavirus stimulus era. This is what drove inflation until very recently. Commodities have been ramping since May 2020. They started to roll over in November and I believe would have continued down in the face of 1) slowing economic growth in Q1 and Q2 2022 and 2) Fed Major Hawkishness. The inflation siren was going off too strongly.

             Then Russia/Ukraine hit and I believe commodity runs since then are mainly a result of this. Russia besides energy is #1 exporter wheat & Fertilizer, #2 wood (2019), Ukraine is responsible for 16% global corn exports, 12% wheat. Demographics or whatever crud people are talking about are irrelevant. And so are most of anyone’s “charts” in isolation. Volatility is driving now. As I said a couple of weeks ago, and every day confirms it, this set up is looking increasingly like 2008. Even if the Russa/Ukraine war ended TOMORROW, the pie is baked and sitting on the window sill. Next 4 months are going to be unpleasant from a broad economic perspective.

       2. Chart technic don’t work good in these times with lot’s of external shocks – since it is crystallized knowledge of all market participants resulting in the flow of the chart.

          Think Lehmann – when nobody knows the default it before, it’s not in the chart. When insider know it 2 weeks before, it’s in the chart and can be read there.

          And I think no wall street shark knows what Putin does next, or how the battle is fought out – so prices are in a random work.

          Charts work best in calm or medium turbulent times, when the gun smoke settles all the signs are important again. Most propably the oil price will fall on short time scale when things are more clear again and no really bad scenario plays out.

          1. Yeah I agree with unpredictability because anything can happen from day to day with the situation in Ukraine. Have to keep stop losses tight here no matter if your long or short the market. Not a great place to take a position.

34. World Bank President is an expert on gas . Give him an axe and a shovel and we will see what, where and when he will find the gas .
    https://oilprice.com/Energy/Natural-Gas/World-Bank-There-Will-Be-Alternatives-To-Russian-Gas-In-Five-Years.html

35. Shell follows BP out of Russia as oil companies abandon Putin

    London (CNN Business)Shell is getting out of Russia and ditching its joint ventures with Gazprom, including its involvement with the moribund Nord Stream 2 natural gas pipeline.

    The UK-based oil company said Monday it would dump its 27.5% stake in the Sakhalin-2 liquified natural gas facility, its 50% stake in a project to develop the Salym fields in western Siberia and its 50% interest in an exploration project in the Gydan peninsula in northwestern Siberia.

    “We are shocked by the loss of life in Ukraine, which we deplore, resulting from a senseless act of military aggression which threatens European security,” Shell (RDSA) CEO Ben van Beurden said in a statement.

    Shell’s move follows BP’s (BP) announcement Sunday that it was abandoning one of Russia’s biggest foreign investments by exiting its 19.75% stake in Rosneft and associated joint ventures. Analysts said Monday that BP could take a hit of more than $26 billion as it walks away from its business in the country.
    SNIP
    ExxonMobil (XOM), which has been active there for more than 25 years, has reduced its presence since Russia annexed Crime in 2014. But its subsidiary, Exxon Neftegas Limited, still has a 30% stake in Sakhalin-1 — a vast oil and natural gas project located off Sakhalin Island in the Russian Far East. It has operated the project since 1995 on behalf of a consortium that includes Japanese and Indian partners, as well as two affiliates of Rosneft.

36. I have been watching oil prices tick up on Bloomberg. WTI is at $101.14 right now. It was below $100 just a few minutes ago. But the latest tick was down from $101.33.

37. I have bolded two sentences in this report. other than the title. I agree emphatically with both of them.

    Pierre Andurand: Oil Markets Are Worse Off Than Many Traders Realise

    Popular hedge-fund manager Pierre Andurand is cautioning that the oil markets are worse off than many traders believe, according to the Wall Street Journal.

    When asked why oil prices aren’t higher than they are given the grave situation in Ukraine, one manager of a $1 billion hedge fund has a frightening answer: it’s because traders just haven’t realized just how bad things are yet.

    Andurand compared what’s happening now with the Russia/Ukraine crisis to the ostrich effect that took place during the early stages of the Covid-19 crisis: no one wants to believe how bad things are.

    Regardless of what some believe, though, Andurand, chief investment officer at Andurand Capital Management, is banking on crude oil prices staying high, or even rising higher.

    But that hasn’t stopped Andurand from believing that there is still room to sanction Russian oil.

    Assuming that Russia exports 6.5 million barrels of oil per day, 2 million make their way to China and will keep making its way to China—sanctions or no sanctions. That leaves 4.5 million barrels per day. But if Urals keeps selling at a massive discount, China may increase its purchases, up to an additional 1.5 million barrels per day. The remaining 3 million barrels per day that flows to countries that would likely adhere to sanctions, is what the market would be short. Gulf producers could increase oil production by 1.5 million barrels, Andurand estimates, leaving 1.5 million barrels per day to be made up with coordinated SPR releases.

    Whether Gulf producers could make up that shortfall or not is debatable, however, with OPEC+ not fulfilling its pledges under its production cut agreement. Estimates are that the group is still underproducing by a significant margin, and the speculation is that that is precisely because it cannot produce more.

    By Julianne Geiger for Oilprice.com.

38. WTI over $102 this morning.

    1. Now 106. Despite a coordinated SPR release.

       https://oilprice.com/Energy/Energy-General/Oil-Prices-Soar-Despite-News-Of-Strategic-Petroleum-Reserve-Release.html

       1. I m trying to figure out who is coming in after these almost daily price spikes we are having and selling creating these long wick candlesticks.

          Someone is selling into strength trying to keep price from closing anywhere near the intraday high.

          1. Perhaps just day traders closing their winning positions before the end of day?

             There’s a lot of trading going on.

    2. HHH, Eulen — a question . Since Russian bonds are now valued at zero who got the margin call for loans taken out by whosoever ( investment funds , banks , pensions etc) against these bonds ? I am sure they would have been covered by CDS / CDO ‘s . Did the insurance companies pay ? If so any idea about the amount involved ?

39. OPEC’s Feb oil output boost exceeds target for first time in months -survey

    LONDON, March 1 (Reuters) – The increase in OPEC’s oil output in February exceeded the rise planned under a deal with allies for the first time since September, a Reuters survey found, as higher Saudi Arabian and Iraqi supply combined with fewer outages in smaller producers.

    The Organization of the Petroleum Exporting Countries (OPEC) pumped 28.39 million barrels per day (bpd) in February, the survey found, up 420,000 bpd from the previous month and above the 254,000 bpd increase called for under the supply deal.

    OPEC and its allies, known as OPEC+, are gradually relaxing 2020 output cuts as demand recovers from the pandemic. OPEC+ meets on Wednesday and is expected to confirm previously agreed plans despite the surge in oil prices to a seven-year high above $105 a barrel after Russia’s invasion of Ukraine.
    SNIP
    The biggest rise in February of 90,000 bpd came from Saudi Arabia, OPEC’s top producer, the survey found.

    No. 2 OPEC producer Iraq managed to boost exports, despite some field shutdowns. The United Arab Emirates and Kuwait followed through on their higher quotas, and Nigerian output edged higher after recovering from outages.

40. Likely outcomes
    -Russia will take and hold roughly the eastern 2/3rds of Ukraine and all the ports. It will be catastrophic for the citizens and very messy (red) for the Russians. An authoritarian puppet government will be installed [something like Belarus]. It will not be easy to hold. It, along with sanctions, will be a major strain on Russian economy, indefinitely.

    -Cyberwarfare will be a big focus of the conflict for the first time at big scale, as the Russian best tactic of revenge on countries opposed to the Ukraine invasion. This may not be immediately apparent, but will be a very long lasting war. Russian attempts to alter the outcome of democratic process in Europe and N.America will be escalated. Once again- the attempt will be to undermine the trust in the process and to tilt the table in favor of the least competent candidate- like in happened in the US in 2016. Targets will also include all sorts of economic sectors. Western nations will also join this fight directed at Russia.

    -Something like 90% of Russian grain exports go through the Bosporus Straits/Dardanelles, and all of the Ukrainian exports do. The two biggest importers of wheat from these countries are Egypt and Turkey.
    Two articles on this, with good maps/charts to glance at
    https://www.politico.com/news/magazine/2022/02/27/russia-weaponizing-food-supply-chains-00012130
    https://www.aljazeera.com/news/2022/2/17/infographic-russia-ukraine-and-the-global-wheat-supply-interactive

    -Commodity exports aside from food from Russia also will be an economic weapon or penalty deployed. This includes roughly 5 Mbpd of crude and NGL’s, and important amounts of fertilizer, steel, and other base metals/ores.

    -The net economic effects for everyone will be a push towards stagflation [Stagflation refers to an economy that is experiencing a simultaneous increase in inflation and stagnation of economic output]. The result is an acceleration in loss of purchasing power in probably all countries. Of course this makes central banks job of attempting to maintain stability of labor supply and economic growth much much harder.

    I think these are high probability outcomes. Perhaps frankly obvious.
    I wonder
    -how some important players will react (actions rather than words)- China, India, Turkey
    -how this will affect the Iran nuclear negotiations and sanctions
    -which additional countries will be the first to be destabilized by the economic hardships of the disruptions resultant from this invasion
    -what will happen to the residual western 1/3rd of Ukraine? Will it be Russian, or an indefinitely contested zone (new capital Lviv)
    -and the big one Will this spin out of control and outright armed conflict spill beyond Ukraine

    –

    1. Hicks , I am in agreement with you on most of the conclusions . Ukraine post end of operations is a major issue , specially rump Ukraine . Will it become a protectorate of EU like Bosnia , Kosovo , Montenegro ? Who will pay for this new addition when EU and ECB are technically financially bankrupt . Wheat exports from Ukraine and Russia are a major factor . I think ,not sure it is 30million metric tonnes . There are no surplus stocks anywhere . China has in storage 60% of the world’s wheat and it is not for sale . Already price rise protests in MENA , Turkey etc .

       1. Hole in HeadIf the war in Ukraine does not end before April, then there will be no sowing of wheat and sunflower. This will become a problem.

          1. The war is already a big problem for the civilians in Ukraine and the families of all the Russian soldiers whom will not return alive.

             Putin has already lost in the longer run, he has managed to unite the west in a way that many though was impossible. Short term, no way he will take over 2/3rds of Ukraine. His army is stuck and the logistics have some issues to say the least, massive losses both material and soldiers, etc.. So now Putin turns to what the read army can actually do, turn Ukrainian cities into new Grozny.

             Interesting that you use the word war. Putin calls it peace keeping mission. I though you supported him in this?

             1. Jeff.As for me, I do not support any military conflicts. I am better prepared to lose than risk the lives of my children. But since I am a citizen of Russia, I consider it right for myself to support my government in everything, or if I do not agree with it, just keep silent. I consider what happened to be terrible. + I observe that Ukrainian troops have been shelling the rebellious republics from 2014 until today. Yes, I naturally know that Russia supported them (the rebellious republics) militarily and economically. And yes to autonomy proposals ( Minsk agreements) Ukraine did not go.

                1. There’s the difference between our countries. In the USA, I have not only the right, but the obligation to speak out if I believe my government is wrong. I did not agree with Vietnam or Iraq, etc. I spoke out. I did not fear being put in prison or executed by the government….Yet.

                2. Mr Johnson , you are living in a world of illusion . You have no rights , you have owners . Here is George Carlin to wake you from the illusion if you are interested in waking up . Adios Amigos .
                   https://www.youtube.com/watch?v=m9-R8T1SuG4

                3. There’s the difference between our countries. In the USA, I have not only the right, but the obligation to speak out if I believe my government is wrong. I did not agree with Vietnam or Iraq, etc. I spoke out. I did not fear being put in prison or executed by the government….Yet.
                   —-
                   AugJohnson. Thank you. I did not know that in the USA there is an obligation to express my opinion. I am not obliged to express it. But I can freely say everything that I think about Putin and the war. Believe me, we are not punished for this, for example Today I saw three cars with large “No War” signs and one with the letter “Z” which stands for Russia’s northern grouping of troops in Ukraine.

                4. AugJohnson. I remembered an old joke from the times of the USSR: American: I can go to the White House and say Ronald Reagan is a fool, Russian: I can also go to Red Square and say Ronald Reagan is a fool. Fortunately, now everything is not so.

             2. Hi Jeff , I thought “Baghdad Bob ” died in Dubai after fleeing Iraq . Obviously he is alive and you have a direct line to him . Go back to your conversation with him and give my best wishes . I pray he lives long ,guides and advises you thru life . 🙂

                1. Hole in Head
                   Your true colors are flying loud and clear- a troll for fascism and authoritarianism.
                   You on the payroll or is it just volunteer work.
                   The more you speak, the more you belittle yourself. Its hard to get smaller.

                2. Hicks , prove any info I have provided till today as incorrect or false . As , Nietzsche says ” No one likes to hear the truth because it breaks there illusions . ” Not my fault .
                   P.S : The quote is not for you but persons like Jeff and AugJohnson etc . You are fair and I like your posts . If I am labelled a troll so be it , but prove me wrong . Shooting the messenger is no argument .

    2. I’m not sure the West will allow Russia to annex 2/3 of Ukraine. If at some point some western countries decide to unleash their air power, this would devastate the Russian armor columns and stop the invasion dead in its tracks. The only reason this hasn’t been done yet is the worry about Putin’s threat of nuclear war, and the possibility that supplying Ukraine with enough weapons will in itself grind the invasion to a halt. In my opinion, Putin gamble has failed and he now looks like a broken man. The World is currently the closets its been to nuclear war since the Cuban missile crisis.

       1. Frugal , western airpower ? Gandhi when asked about western civilization said ” It is a good idea ” . NATO is a useless talking club now . Yes , they are s*** scared of the nuclear missiles but then so is the world . There is a ” fat boy ” named Kim Jong , everyone is scared of him too . That it is what nuclear is meant to do .
          As to supplying weapons . Questions to who ? To grandma and grandpa ? the Ukie army is so depleted of manpower that they are freeing criminals if they are willing to fight . They are ready to issue visas to anybody and anyone who is ready to fight . Giving high tech weapons to a layman is akin to giving a razor to a monkey . He is more likely to slash his own face . Your ” Putin’s gamble has failed ” . Says who ? The same media that sold you the Iraq war , lockdowns, masks and vaccines . Human memory is real short .
          Your “The World is currently the closets its been to nuclear war since the Cuban missile crisis ” .Agree 100% . Despair not . An old Chinese saying ” This too shall pass ” . Be well .
          https://www.politico.eu/article/eu-promise-to-supply-fighter-jets-to-ukraine-gets-grounded/

       2. Frugal, Putin has no intentions of annexing any part of Ukraine. With the exception of the eastern regions, Ukrainians are now unfriendly to Russia. Therefore, after the disarmament of the Ukrainian army, Russia will help restore peaceful life in Ukraine and withdraw its troops. Russia needs a good neighbor, such as Finland, and not the annexation of territories at all. But after the eight-year war, Donbass will not return to Ukraine. Maybe Kharkiv, where more Russians live, will join him. But even in this case, there will be no direct connection, it will be a long process of bringing people closer together.

          1. Frugal, Putin has no intentions of annexing any part of Ukraine. With the exception of the eastern regions,

             But of course. Putin is a saint and just wants to disarm the Ukrainians so they will not attack Russia. You are buying your dear leader’s propaganda, hook, line, and sinker. Putin is the epitome of pure evil. He wants his empire back and doesn’t care how many war crimes he has to commit to do it. He is killing men, women, children, and tiny babies and smiling while he is doing it.

             He may kill half of Ukraine but Russia will be driven into a deep recession because of the sanctions the rest of the world placing on them. Russia will never be economically prosperous again until they get rid of the Devil they have for a leader.

             1. Ron, you are full of emotions, and they will never give an objective picture. I do not know a single person who was killed by Putin or on his orders. But I know in Donetsk a monument to the dead children of Donbass. The Ukrainian military and nationalists have been shelling Donetsk with mortars and heavy guns for 8 years. In total, 13 thousand people died there, including 149 children. Their names are carved on a granite slab:
                https://pbs.twimg.com/media/FHq0cWeXoAU2O6U.jpg

                1. I do not know a single person who was killed by Putin or on his orders.

                   Of course, you don’t. You live in Russia and you only get the news that Putin will allow to be shown. He is not showing the carnage in Ukraine. We see it here on our TV because we are a free country. I saw yesterday, the deaths of children. But there have been thousands of civilians killed. And they were killed on Putin’s orders. What the hell did you think, that he would tell them to take the country but not to kill anyone?

                   Alex, you live in an unfree country where and only get the news that Putin will allow you to hear. And you seem to be proud of that. You have been brainwashed.

                   In total, 13 thousand people died there, including 149 children.

                   That is total bullshit. Putin is feeding you lies and propaganda about the Ukrainians.

                2. Ron, you are convinced of your rightness, although you have no proof of it. Information in Russia is more versatile than in the USA. I can easily take it from your sources. For example, the news from CNN: https://edition.cnn.com/specials/europe/russia . Here is the BBC in Russian https://ok.ru/bbcrussian She’s lying here. as if the Zaporozhye nuclear power plant is burning, in fact, the fire is outside of it. By the way, Russian troops, together with Ukrainian ones, are now guarding the Chernobyl nuclear power plant precisely in order to prevent such provocations. Of course, your media doesn’t write about it either. And none of your agencies knows about the dead children of Donbass. They don’t want to know about it. Finally, I have enough acquaintances abroad, a daughter in France, nieces in England and the USA, and I can always get any necessary information from them. You are not giving me the opportunity to answer you now, so I am answering you in the wrong place, but under my comment.

             2. Alex, it is all over the news here that the fire was in a building not connected to the nuclear plant. We get the truth here, you get bullshit in Russia.

                I just heard on the news here that the Russian parliament had just passed a bill that would send anyone in Russia to prison for 15 years for spreading “fake news”. That means that if you tell the truth you will go to prison for 15 years. Perhaps you should just stop posting. For even if you lie you could accidentally say something they regard as the truth about Ukraine and go to jail.

                1. Ron, thank you for coming back to the dialogue. I understand your indignation, because the question is incredibly complex.
                   “Alex, it is all over the news here that the fire was in a building not connected to the nuclear plant.”
                   Yes, of course. the frightening news lasted only 3 hours, and then it was refuted by Ukraine, our media, and your media. This is just an example that I accidentally caught my eye. I don’t see any malicious intent here, it’s just that journalists often scare people for the sake of sensation.
                   “I just heard on the news here that the Russian parliament had just passed a bill that would send anyone in Russia to prison for 15 years for spreading “fake news”. ”
                   I don’t like this law either, naive teenagers or women can suffer from it. We have one such case in Russia: 15-16-year-olds, inspired by calls to overthrow the government, staged a “conspiracy”, wrote leaflets and prepared to throw a bottle of gasoline into the FSB building. It was a game for them, but the head was sentenced to 5 years in prison (the rest were released). The whole country is outraged by this verdict, now it is being protested by lawyers.
                   But you are not informed enough. This is not a law, but only an article in the Criminal Code No. 207.3. It is called “Public dissemination of deliberately false information about the use of the Armed Forces of the Russian Federation.” That is, not for any fake, but only a fake about the army. And not just for a stupid word, but for its public dissemination. This is punishable by a fine of up to $15,000 or up to 3 years in prison.
                   Now imagine this situation. Ukrainian soldiers and nationalists are now locked up in cities where there are many civilians. Yesterday, at the talks, representatives of Ukraine and Russia agreed to whitewash safe corridors for people to exit and cease fire. Let’s say there was an evil idiot who mounted a fake video in which Russian troops allegedly fired at civilians leaving. The fake spread on the networks and people were afraid to come out. In the subsequent hostilities, some of them will die. At the same time, more Russian soldiers will die, because they will not be able to use heavy weapons due to the presence of civilians. In such cases, which resulted in the death of people, the fake will be punished by imprisonment for up to 15 years.
                   No wonder they say – the devil is in the details.

41. Bizarre headline from CNN Business-
    “All bets are off if Putin slashes the West’s oil supplies”

    The way this reads, it seems to consider the Russian oil exports an entitlement to western consuming nations.
    Of course Russia will look for other buyers.
    “”Russia’s energy supplies are very much at risk, either due to being withheld by Russia as a weapon or wiped off the market due to sanctions,” Louise Dickson, senior oil market analyst at Rystad Energy, wrote in a report Monday.

    https://www.cnn.com/2022/03/01/business/oil-ukraine-russia-putin/index.html

    1. I think Russia will not impose an embargo on oil supplies to Western countries. This will have only a short-term effect, and then the West will switch to other suppliers. Many in Russia demand that Putin stop gas supplies to Europe, this would affect its industry and population. But Putin won’t do that. If buyers regularly pay for oil and gas, they will regularly receive both. But gas prices have risen so much in Europe that it cannot buy it. Putin does not like quick decisions at all, he always plays a long game.

42. Marco Rubio inferred on CNBC that US shale can ramp up to replace Russian crude oil exports. If only Biden would allow it.

    Wow! Enno needs to give Marco a free 3 month subscription to shaleprofile. Think Marco could get a clue if he spent an hour looking at it?

    1. And take a magic wand to create lot’s of trucks, truck drivers, pipes, expensive electronics, engeneers and roughnecks out of thin air.

       They can be glad if they get it at flat line – supply chaos incoming.

       For example, VW had to stop electric car production because the wiring is build in – Ukraine. It’s not high tech, but seeking a new supplier, setting up the production, doing quality trials will take time.

       Imagine you ordered a new rig, and an important part is now on the way from the German manufacturer to China where the electronic should have been installed – on the “new silk road”, in the middle of Russia. Full stop.

       1. Repeating myself, on the same theme:

          If the Antonov 225 ‘Mriya’ has indeed been lost, then there will be many large engineering constructions, generators and the like, that can no longer be transported efficiently to their destination.
          Years of specialist disruption.

    2. “US shale can ramp up to replace Russian crude oil exports. If only Biden would allow it.”

       Even before Biden was prez, the ability to ramp up oil production (and supply Europe in addition to the US)
       is a myth I have heard often.
       John Sullivan (R- Pennsylvania) just told the BBC the same thing, as well as the idea that if Keystone Pipeline had just been pushed through we would be swimming in oil.

       1. Hickory,
          I’m amazed how uninformed many Republicans are about US energy. I guess they all listen to Fox news and Sean Hannity too much. Truth is, as I’m sure this audience knows, US oil production is higher than it was when Trump left office, and the EIA thinks US production may even exceed 2019 levels in 2023 or so,, during Biden’s term. Not sure if that will happen,, but we’ll see.

          Also, US natural gas production is at an all-time high.

          Listening to Fox news, you’d think the US energy industry has been decimated by Biden – and that if Biden would just tell US energy executives to drill more, all our energy problems will go away.
          It’ll be interesting to see how much energy mis-information is given at the Republican response to the SOTU tonight.

          1. Being poorly informed, or misguided, is widespread and goes beyond and across party lines.

             But it is extremely troublesome and embarrassing when it occurs in elected leaders.

          2. Bob

             After the GOP spoke, I heard an oil reporter say that there are 9000 leases available for bidding.. She said at this time Biden’s policy is not holding back production.

             All of us here know that.

             Politics these days appears to be about creating and spreading alternative facts.

    3. Marco has a clue: say whatever it takes to be reelected. Reality has lost its luster in certain quarters.

43. From API
    Crude -6.1 million +2.796 exp
    Gasoline -2.5 million
    Distillate +400,000

    Let’s see what EIA gives tomorrow.

44. Brent at $107/bo, wow, this is at 5:24 pm EST on March 1, 2022 for the Brent front month futures contract.

45. WTI higher than brent. What does that mean?

    1. Different contracts. WTI is April and Brent is May.

       Also WTI is actively trading while Brent closed almost two hours ago. The price could move a lot in that much time.

       Edit: Brent just opened back up after two hours down. Brent May is now $1.20 above WTI April. That is more like it.

       WTI only closes for one hour on weekdays. Apparently Brent closes for two hours.

46. Brent above $110.00 and coal above $300

47. Here is a screenshot of IEA presentation yesterday. They are counting on demand to decrease as a result of electric cars. Where have I heard that before.

    

    1. Hi Seppo,

       They must be wrong because I agree, if there were no constraint on oil supply (I do not believe this will be true), my modelling of demand for oil based on a medium EV transistion (half of World light ICE vehicle fleet replaced by EVs by 2040 and half of heavy duty ICE fleet replaced by 2049) suggests demand for oil would peak in 2030 or 2031, if we assume demand for non-land transport uses for oil remains unchanged (a simplifying assumption of my model as it was focused on gasoline and diesel fuel (non-jet fuel).

    2. Here is what the Brits think on EV’s . 90% have no intention to buy a EV .
       https://notalotofpeopleknowthat.wordpress.com/2022/02/28/90-have-no-intention-of-buying-electric-cars/

       1. Hole in head,

          Prices of EVs will fall and people may chnage their mind. Did you get a smart phine when they first came out? They seemed like a waste of money to me when I first saw one in 2007, now I own one and don’t know many who do not. I felt the same way about cell phones when they were first introduced.

          Those who claim they will never buy an EV have probably never driven one, there was a time when a horse and buggy was preferred to automobiles, people like what they are familiar with. When more EVs are available and more charging infrastructure is in place and people become familiar with EVs and their pros and cons, opinions may change. For now the average annual growth in plugin vehicle sales (EVs and plugin hybrids) from 2015 to 2021 has been about 37%, higher oil prices and a greater selection of models might increase this rate of growth for a couple of years (in 2021 the rate of growth was 47%), but then the rate of growth will slow as ramp up in battery production capacity may limit rates of growth.

          1. Dennis 2007 is not 2022 . A lot of water has flown thru the Elbe and Rhine . Prices falling ?? Are you asleep ? How about prices rising ? Here is an example .
             https://techcrunch.com/2022/03/03/rivian-ceo-walks-back-price-hike-for-any-customers-who-pre-ordered-before-march-1/?guccounter=1#:~:text=Rivian's%20price%20change%20means%20that,jump%2C%20from%20%2470%2C000%20to%20%2484%2C000.
             Yes , who wants to buy a truck with a base price of $ 75000 . ? Answer none . I know it from the horse’s mouth . My nephew is no:3 at Rivian who put together the Rivian deal with Amazon . I will not disclose his name ,but you know from ever since this blog was established I always post what I am confident of supporting . You are on the wrong track . EV after shale is the next Ponzi and it will collapse real fast , I have earkier posted on their share price performance . The problem is that I am always early to the wedding party . I make forecasts . Tomorrow the sun will rise in the East and set in the West . All of us will go to work . Now let me add the Ukie/ Russian war . Macron / Sholtz told Putin why are you worried about Ukraine joining NATO , it is not that it is going to happen tomorrow ? His answer was Ok , what about the day after tomorrow ? A long time ago could be 30 years ago I visited my lawyer (India) . He had a calendar with a quote that Is etched in my head and will never forget ” Only those who can see the invisible can do the impossible ” . I make an effort , no more .

          2. Dennis , again on the wrong track . See HHH has to say . The energy cost will kill Europe . Please make it your daily ritual to visit Tom Morgan’s site on ” Surplus Energy Economics ” . Someone said the same about EV infrastructure some time ago . MY request was simple ” Tell me how many tonnes / miles of copper is required for establishing this infrastructure .? Well , I am still waiting for an answer . If you don’t understand LTG , I ( anyone ) else can do nothing . You can play your banjo but the banjo just ran out of air .

48. RRC shows texas gas collapsing despite fake data from EIA.

    1. Mark in,

       RRC data for most recent 12 months is never very complete, so the RRC data tells us very little. If you don’t like the “fake EIA data”, here is Texas shale gas from shaleprofile, see link below.

       https://public.tableau.com/shared/RW23FYSJD?:display_count=y&:origin=viz_share_link&:embed=y

49. Russia’s Feb oil output rises, trading paralysed by sanctions

    March 2 (Reuters) – Russia’s oil and gas condensate output rose in February to 11.06 million barrels per day (bpd), according to Reuters calculations based on an Interfax report on Wednesday, while trading has been stalled due to sanctions over Ukraine.
    SNIP
    In April 2020, Russia agreed to reduce its oil production by more than 2 million bpd, an unprecedented voluntary cut, along with other leading oil producers and the OPEC. Its oil and gas condensate production stood then at over 11.3 million bpd.

    Russian Deputy Prime Minister Alexander Novak, in charge of Moscow’s ties with OPEC+, had said the country would recover its oil production by May 2022, a view challenged by some analysts, who said it would be difficult to restore oil wells, shut as part of efforts to curb output.

    And now it has gotten worse. This month, March, Russian oil production will drop well below 11 million barrels per day. And I doubt it will ever reach 11 million bp/d again.

    1. They have little storage so will have to shut in again, must be causing havoc with reservoir management.

    2. Just as the Pandemic resulted in a temporary unexpected drop in global oil and gas demand,
       this Russian invasion will result in an unexpected dent in the Russian ability to keep
       up the pace of oil production, due to economic isolation/sanctions.
       The lagtime until the effect is apparent, and how big the dip will be bears watching.

       European shift toward electric vehicles and nuclear/wind/coal will be accelerated.

       Yes Phillip- ““The future is dirty”
       When a town doesn’t have clean(ish) fuels they will burn every bit of coal they can drag to the furnace, and take an axe to every tree within 30 miles, and beyond.

50. Brent and WTI are at $111 and $110 but coal is at $400 !!!

    Coal will be the biggest story of the day. Apparently China can’t import coal from Russia at these prices. Probably can’t import from anywhere at these prices. Which will mean power outages in China if these prices stick around for any amount of time.

    1. I wonder why. I’ll take a shot at it. Significant amount of Russian natural gas is being disrupted and used as a fuel for European power plants. Pipeline and LNG capacity is not large enough to replace it from other sources, and the hunt is on for alternatives. Coal is making a comeback in Europe for coal power plants. I don’t remember who said it: “The future is dirty” but I am beginning to believe that whole heartedly.

    2. TTF Gas is up 965.92% year on year. Just wow.

       1. Yep that is amazing. This is not showing up in electricity bills yet though, and I’m not sure why. I think there are fixed price contracts that have not expired yet, but when they do I would expect a dramatic increase.

          1. Possibly a good moment to put in double or triple glazing, as well as an AAA fridge.
             But the horror, it would cost almost as much as a trip to côte d’azur…
             Edit: but if you lived in Sweden you´d get a government refund of 180ish E for 2000 kWh use a month, no need for improvements so I´m not complaining… /s
             Edit 2: on the “flip” side everyone and his grandmother has turned into preppers here, so all bad things come with some good…

51. Offramp-
    Another scenario to consider. The Russian army consolidates occupation of the eastern and southern portion of Ukraine and announces annexation, ceasefire and withdraw from the remainder of Ukraine. It will leave Kyiv under Ukrainian control, but will keep Odessa and all of the southern coast/ports.
    It will not be a negotiated offramp. It will be unilateral. And the warning of renewed invasion will be issued if NATO expansion is considered.
    Eventually sanctions will be relaxed and business customers will return.

52. Brent futures up to $114/b as I write this. wow.

    1. If a ceasefire happens tomorrow prices likely fall big. But if ceasefire can’t be reached might as well add another $10 to price.

       Gasoline is currently $3.49 today where I’m at. But I won’t be surprised if I see $3.89 tomorrow.

       1. HHH , seems like the FED is dithering . I think zero or max 0.25 % . No way 0.5% . Let inflation run wild .

          1. I don’t see 0.5% only 0.25 per hike.

             I have no doubt they can crash prices with interest rates. Even at a clip of 0.25% ask yourself at what level of interest rate does yield curve invert forcing them to cut?

             There is always a choice though if there is political will to crash markets prices can come down. It’s just assumed that crashing markets is politically undesirable.

             Where energy and food prices are going. The markets are going to crash anyway. Wages aren’t keeping with inflation. And everyone is bridging gap with debt. This can go on for a little while . Then the people default in mass and something similar to 2008 happens again.

             Government debt really isn’t the problem. It’s privately held debt that is the problem. And you can’t transfer all of that privately held debt to central bank balance sheet.

             Letting inflation run too hot is a problem. People always assume debts can just be repaid with cheaper dollars. But when the people default in mass dollars disappear in mass and aren’t paid back at all.

             In long run inflation is deflationary in an over indebted economy.

             The people eventually run out of room. Run out of balance sheet to continue borrowing to pay these high prices. The higher prices go the closer we get to another 2008.

53. https://www.marketplace.org/2022/03/02/theres-an-oil-market-crisis-even-without-sanctions-on-russian-exports/?utm_medium=Link&utm_source=FB&utm_campaign=social-030222-0630pm-theres-an-oil-market-crisis-even-without-sanctions-on-russian-exports%2F&fbclid=IwAR3UpjFaKNhUCU-KSIbfv77T6rQfGXZtFlPaAWu6OU0_dLG9i2HN2MGplno

54. There’s at least some silver lining in this black cloud.

    It’s going to have the same effect on the transition to electric vehicles as pouring gasoline on a campfire.

    Ford is splitting into two divisions, one for electric, one for oil.

    Dennis may have reason to revise his EV modeling.

    1. In the wake of the Russian invasion of Ukraine, Germany announced it was changing course “in order to eliminate our dependence on imports from individual energy suppliers,” German Chancellor Olaf Scholz said on Sunday. Germany will build two LNG import facilities, at Brunsbuettel and Wilhelmshaven, and look to speed up the installation of renewable energy capacity to have 100-percent renewable power generation by 2035.

       https://oilprice.com/Energy/Natural-Gas/Europe-Can-Survive-Next-Winter-Without-Russian-Gas.html

       BRENT CRUDE $117.2

       1. But we’ll continue to close the last 3 nuclear plants – not postponing this a few years.

          But slowing the coal exit.

          And 100% renewable until 2035 – I’d like to get the stuff they are smoking. It’s only 13 years, and still no storage besides a few old pumped hydro out of the nuclear age and some lab examples. They need the storage, and the huge extra power to fill it despite the processing losses when they want the 100%. They have to bridge intense heating and electricity production for round about 4 weeks every winter, without meaningful wind and sun.

          They can have 100% neweable during sunshine or a good breeze, yes that’s possible. But no way to replace the NatGas we now need every winter in such short time (It isn’t possible with a nuclear renaissance, too).

          The only possibility to get more energy independend in short time: Buy big in Texas, and use our own fracking gas. There are known shales.
          The green will run amok.

          1. Eulenspiegel: “The only possibility to get more energy independend in short time: Buy big in Texas, and use our own fracking gas. There are known shales.”

             With all due respect, sir, the above is a world-class bad idea. You are right, there are “known shales,” and they’re not for sale at a reasonable price. The sweet spots, unless there’s a miraculous discovery, have all been found. Some people stumbled into them; most acquired them early, after having a cadre of crackerjack geologists look them over and advise them where to buy. Many bought too high; most of those have gone broke.

             I’m not German, so I’ll try not to come off as a jerk. When a chancellor (or a president) makes a big energy decision, there’s usually something influencing that. Gerhard Schroeder made the decision in 2005 to tie Germany to Russian pipeline NG that was mostly transferred via a pipeline that traversed Ukraine. I’m not making accusations of wrongdoing but Mr. Schroeder is a board member of Gazprom and also head of the investment committee of Nord Stream 2 (which bypassed Ukraine). Mr. Schroeder may be as clean as Caesar’s wife but, in the total context, it smells bad. The later decision to rid Germany of nuclear and switch to wind and solar–even though those aren’t really Germany’s best commodities–was not well-thought-out either.

             But Germany is strong and industrious and resilient. The United States has natural gas coming out its ears–mostly as a by-product of shale oil (which is getting gassier) but also from dry gas fields. In fact, the U.S. has flared and vented enough methane into the troposphere to power Germany–and that’s a very sad commentary. The LNG train removes 99% of impurities and transport fuel is free, using the boil-off gas hovering above the liquified NG. No country should use pipeline NG these days if LNG is available–it’s just so much cleaner. Get the terminals built; the price will come down and stabilize. It’s a business, just as your car business, and it will charge whatever the market will bear, but that won’t be as painful when you have in place a smooth process.

             Just as it’s easy for an “outsider” to see my flaws and idiotic decisions, it’s easier for an outsider to see what went wrong. Heck, anyone could see this coming. You’ve got great wind and solar farms, you’re just missing reliable wind and sun. Battery storage per scale is coming. The two LNG terminals your government is planning are perfect. Grab some SMR’s (small modular reactors)–they’re safe and powerful. The world is moving toward hydrogen, so it’s not prudent to go in only one direction. Get a big basket of diversified energy and Germany won’t miss a beat–or Mr. Putin.

             The surefire way to compound your problem is to “buy big in Texas,” unless Pioneer or Occidental decides to forfeit their last remaining drilling sites. Better to buy “a bigger windmill,” which, loosely translated, means big lithium-ion storage batteries. Please don’t shout at me, for America wants to see a prosperous Germany/Europe free of Mr. Putin’s evil clutches. Becoming J. R. Ewing is not the answer you’re looking for.

          2. LNG terminals- “Get the terminals built;”

             How long will that take, at best effort? Anyone have knowledge on that?
             And any idea if the equipment could be adapted for handling offshore wind produced hydrogen in the future?

             It looks like any big new energy system is easily a decade (or 2) long project, whether it is nuclear plants, LNG terminals (?), offshore wind at scale, or large scale storage.

             With that in mind it looks like Germany keeping its nuclear plants and coal burning capacity is necessary at least until these new systems are online. And maybe someday a responsible and dependable government may emerge in Russia after Putin.

             1. FSRU’s (Floating Storage Regasification Units) are the immediate answer. You’re right, it takes a long time to build an LNG terminal, but there are dozens of FSRU’s operating and they act, in all aspects, exactly as a land-based unit.

                For example, four FSRU’s could tether off Germany at the exact places they plan to build LNG terminals. The LNG tanker comes in, off-loads its hold, which is immediately regassified and fed into the pipeline to a utility plant. From the turbines comes electricity that is a whole lot cleaner than that generated from NG “straight from the ground” which Germany has been using while pretending to be worried about the environment. Come on, Ms. Merkel has a PhD in quantum chemistry: she knew that she was burning crap.

                Plain NG contains quite a bit of impurities: lead, mercury, zinc, lithium, salt, water. These depend on the area. Siberian NG (due to the “Siberian Traps”) contains its fair share of impurities. Those are all removed in an LNG train. If you are really serious about producing the cleanest electricity possible, you use LNG, not pipeline NG.

                And it can be had very quickly. Call for the floating units. They’re used mainly for third-world utility plants but can be used anywhere.

                1. Gerry , interesting . Always something new to learn here . Tks .

                2. FSRUs still take 18+ months to build assuming there is a suitable LNG tanker available for conversion, and up to twice as long if built from scratch. And that assumes suitable dockyards are immediately available and there are no equipment supply line issues or labour shortages.

                3. Thanks Gerry.

                   example
                   -https://excelerateenergy.com/capabilities/fsru/

             2. yes, floating units would be a good stopgap. But they still need to build pumping and pressure stations, the gas will be injected into the EU wide net not just a power plant.

                Building them conventionally would take 5-10 years – lengthly call for bids, enviroment surveys, appeals from enviromental groups and so on, making projects like the Berlin airport an international laughingstock with 14 years build time.

                They need an emergency order to build fast.

                ( 2 villages from here a big gas pipeline is build – some interconnection, about 20 inches diameter. 2 years and counting of traffic chaos, still not finished ).

    2. OFM,

       I have fast and slow EV transition models, perhaps the transition will be quick, but battery production is likely to be a limiting factor or perhaps the inputs to that process.

       Below is a range of scenarios for an EV transition, low demand is the fast EV transition and high demand is the slower EV transition with the average simply the average of low an high scenarios. The supply curve is World C plus C supply in a World with no EV transition, in reality the supply curve will fall to match the demand curve as oil prices fall. The fall in oil prices would begin between 2028 and 2032 for the given scenarios.

       

55. https://twitter.com/JavierBlas/status/1499305444451487749
    BREAKING: European natural gas benchmark TTF surges to €199.99 per MWh, a new all-time high. In crude oil terms, natural gas is trading at what’s ~$360 per barrel of oil equivalent!!!

    1. Factories in Europe will start closing their doors for a month or two or until prices come back down at these prices and it isn’t just gas it coal now too.

       1. Spot market electricity prices are at 30-40 cents again. That’s before taxes and other stuff.

          Calm wind, some sun:
          https://energy-charts.info/charts/power/chart.htm?l=de&c=DE&stacking=stacked_absolute_area

          So expensive gas and hard coal is needed (the brown coal is cheap).

    2. Wow . In Belgium all electricity vendors have sent out notices that all fixed rate contracts will expire automatically on their due date and be replaced by variable rate contracts . The customer has no choice . Let me see what my new bill is like but still a few months to go .

56. Russian oil seems to be selling at an eighteen dollar discount compared to Brent.
    The industry outside Russia doesn’t want to deal with the bad publicity.

    I’m wondering how far this aversion to Russian crude might go.

    Any and all opinions are welcome and thanks in advance.

    1. OFM: “I’m wondering how far this aversion to Russian crude might go.”

       In my opinion, this aversion/sanction is worldwide except China and India, and likely permanent. Europe will very quickly adapt to LNG, which as I’ve said above is very clean–especially compared to Siberian pipeline gas–and doesn’t have to be shuttled into a single destination (Lubmin, in the case of Nord Stream 2), but rather can be offloaded anywhere you want it. Germany already has a terrific European distribution system set up, so it can continue to be the purveyor of energy, just as before.

       People all over the world are starting to get educated about the troposphere whose air they breathe. Lots of people will come to understand that LNG has been cleaned up and pipeline gas reflects the toxic elements and impurities that are peculiar to a particular region. In the case of Siberia, lots of contaminants were created by the volcanism that created the Siberian Traps and also the vast natural gas deposit. Why make a big deal about EV’s over ICE vehicles if you’re burning trash NG straight from the ground of Siberia?

       As time goes by, and LNG delivery becomes smoother and is run by a “consortium” of countries–Australia, Qatar, UAE, KSA, USA all have lots of LNG–then the price will come down and equilibrate. A diversified band of sources is just a much more reassuring energy supply than dealing with a crazy bastard like Putin, even (Germany is finding out the hard way) when a former chancellor (Gerhard Schroeder) is on the Board of Directors of Gazprom and head of the Nord Stream 2 project.

       China will likely buy all of Russia’s natural gas and oil–at a discount. India too. And that’s it. China and India are a big enough market to take all of Putin’s product, but doing so will get the evil eye of the world upon them. Putin has become–overnight–a pariah. Unfortunately, the Russian people will pay a price.

       This is history repeating itself: Stalin waged the Holodomer in the mid-thirties, starving some 20-30,000 Ukrainians to death each day. These were the farmers whose efforts earned them the title of breadbasket of Europe. That was pre-everything that allows for widespread dissemination of information. Ukrainians now live in every country in the world–due to the diaspora that occurred after the Holodomer. The world is angry and indignant and Germany will figure out very quickly that it’s better to wean off Russian oil and gas quickly and hold onto the help and appreciation of the world, rather than face the condemnation of the world.

       Just my opinion.

57. Ron , here are the facts for yourself to check out . Both are results from British media . Like I said before , I don’t make the news only report it . Just some further clarifications to clear the fog .
    1. I get paid by know one for posting . I am quite capable of paying my own bills .
    2. I don’t support fascism , authoritysim , communism , Trumpism or any other ism .
    3. I support truthism . If the word exists . I also don’t support lies , hypocrisy and double standards and will expose these and I feel all should do the same .Correct information is a must to come to correct conclusions .
    4. I do not support war , see my exchange with Alexander and Hicks . Only the war profiteers ( bankers , MIC etc ) profit , the rest suffer and no exclusion . In my exchange with Hicks I have commented how a war 10000 kms is going to bankrupt the sugarcane farmer in India for no fault of his and how MENA countries and Africa are going to suffer and be destabilised because all Ukraine and Russian wheat is off the export market .
    5 . My question ? What would you do if someone said there is abiotic oil . Definitely you will try to rectify and correct his ignorance and misinformation . I do no more than you would do .
    6 . MSM is too pervasive and as I have said ” In war , truth is the first casualty ” . I sift thru the fog of war to provide the best info .
    https://www.dailymail.co.uk/news/article-10568223/Russian-trust-Putin-SURGED-invasion-Ukraine.html
    P.S ; I know I am sarcastic at times but at my age ( past expiry date and waiting to meet our maker) it can be excused

    1. Ron , I am trying to post a JPEG bar chart of Macron ratings but am not able to . How can I do that .

       1. You cannot post a Jpeg in the comments section. Try making it a gif. Or just post the URL.

          I misunderstood your post. Or rather you were sloppy in posting. You said: The guy goes around Europe with a puffed chest when his popularity rating in France is 16 % . Putin is 68% even today .

          You should have said: “Putin popularity in Russia is 68%.” The way you wrote it it seems as if your implying that is his popularity in France.

          At any rate: Macron’s popularity creeps up thanks to approving older folk 09/09/2021

          French President Macron’s popularity has got a bit of a boost since the school year started last week, with a poll on Wednesday putting his approval rating at 40 percent. However a majority of French are still dissatisfied with the head of state, whose Prime Minister, Jean Castex, saw his popularity take a dip.

          40% is one hell of a lot higher than 16%.

          1. The 16 % figure I gave is from December 2021 and was influenced by his handling of the Covid crisis . Especially after he said in an interview ” I am going to make life unbearable for the those who don’t get vaxxed ” . This had the same effect as when Hillary called all opposing her ” deplorables ” . I will see how to post the image . I am glad that our misunderstanding is cleared .

             1. Just post the URL.

                1. I hope this will do . Only 25% will vote for Macron as on 1st March 2022 . Yes leading but not a sign of a popular sitting President .
                   https://www.politico.eu/europe-poll-of-polls/france/

                2. Hey, 25% out of a field of 13 ain’t all that bad. La Pen started out at 26% and has now slipped to 17%. He, La Pen, is now in second place. Macron started out at 24% and is now at 25% and is leading the field.

                   But none of this really matters. One thing we know for sure is whomever is the next president of France, they will be deeply anti Putin.

    2. There are 3 types of fertilizer. All 3 are in short supply between what going on in China and the situation in Ukraine.

       These fossil fuel inputs won’t make it in volume where they need to be before planting season.

       This will hit Africa the hardest. But Middle East will likely see a much worse Arab spring due to food insecurity.

       1. Have you hugged your bag of NPK lately?
          (Ht to old TOD followers, and Toto)

          1. Laplander , who was it that said this ? I asked this question earlier but there was no response . Just to add there was Memmel who use to post a lot about the exhaustion of the KSA oil fields . Wonder if he is a silent lurker . If yes please join the conversations . We could do a lot of help to clean the ” smoke and mirrors ” . By the way silent lurker request goes also to Rockman and West Texas . You are missed by the old TOD guys .

             1. Full poster name was Totoneila, some say his real name is Paul something from Arizona? but who knows…Anyway, a powerfull statement!
                It should in full read, for new readers and if I remember correctly “have you hugged your bag of NPK today”
                But I agree, were some good old days at TOD, at least we got Darwinian and some more here : )
                I sure miss Leanan though…

                1. Yeah , Leanan . He was good too . Good night . Time to hit the sleep button . As Ed Murrow would say ” Good night and good luck ” .

                2. “I sure miss Leanan though…”

                   I don’t. Total control freak as a moderator. Many comments of mine would get deleted.

                3. BTW, memmel was Mark Emmel, a SW dev guy who was likely talking into a dictation translating app and then posting it w/o editing. Rambling nonsense and why I was often muted by Leanan when I complained about him. OFM also is long-winded but his writing is erudite and polished.

    3. There is a challenge for us all, to avoid confusing solid facts with our opinions.
       Presenting opinion as fact is a false narrative. Very few of us are perfect in that regard.
       I have very little tolerance for false narrative after coming to understand how it can lead
       to war, to genocide, to coup, to loss of democracy and to loss of civil society.
       Beware of manipulation.

58. Yergin-
    “This is going to be a really big disruption in terms of logistics, and people are going to be scrambling for barrels,” Yergin said. “This is a supply crisis. It’s a logistics crisis. It’s a payment crisis, and this could well be on the scale of the 1970s.”
    https://www.cnbc.com/2022/03/03/the-world-could-be-on-the-brink-of-an-energy-crisis-rivaling-the-1970s-says-ihs-markets-yergin.html

59. Geo politics at work or how NATO members watch their own interest . This is a case of ” Sultan ” Erdogan of Turkey the second largest contributor of manpower to NATO . he was under pressure to apply the Monteaux Convention which gives Turkey the right to stop in and out traffic from the Black Sea thru the Strait of Bosphorus .
    What did the ” Sultan ” ? He allowed the Russian fleet to enter the Black Sea and then implemented the Montreux Convention . Result , the Russian fleet is in the Black sea carrying out assaults on Odessa and other coastal cities and is planning an amphibious landing . In the meanwhile no other ships can now enter the Black sea . The Russians have their port and base of Sevastopol in Crimea to supply the Black sea fleet . Russia now controls 100 % of the Black Sea and the Sea of Azov thus denying access to everyone to the Ukrainian coast lines .Interesting is that the while the Convention covers the entry into the Black Sea it states that ships in the sea can leave for their home base even when the Convention is in force . NATO members will always put their own interests first . It took really the tightening of thumbscrews to bring Germany in line with the sanctions . What goes on behind the scenes is always interesting .

60. Looks like we may see a Russian decline in output similar to Venezuela—-although sanctions don’t prevent oil and gas sales, maintaining output will be really difficult without maintenance gear. How much could China supply?

    https://oilprice.com/Energy/Energy-General/US-Wants-To-Degrade-Russia-As-Oil-Gas-Power.html

61. A new thread updating US production has been posted.
    https://peakoilbarrel.com/december-us-oil-production-unexpectedly-drops/

    A new Non-Petroleum thread has been posted that outlines possible scenarios for how each decade from the 40s to the 90s could evolve. It is the first of three parts.
    https://peakoilbarrel.com/collapse-a-decadal-scenario/

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