The EIA just released their Petroleum Supply Monthly where they give their estimates of US crude production as well as the crude production for all states and territories through August 2014.
There was not much movement from anyone in August. Here are the biggest movers:
Change
Total USA 61 kbd
Texas 46 kbd
GOM 21 kbd
North Dakota 18 kbd
Oklahoma -6 kbd
Colorado -9 kbd
Alaska -24 kbd
The data is in kbd with the last data point August 2014.
I have started the data in January 2009 in order to get a better picture of what is really happening.
The above chart is the combined production of both GOM and Pacific offshore.
The EIA is predicting Offshore production to reach 2 million barrels per day by 2016, I really don’t think it is going to make it. They are counting on a lot of new offshore fields that are coming on line to bring it up to that level. While that is happening, what they have underestimated is the very high decline rate of these deep water fields.
While the Petroleum Supply Monthly only has data through August the EIA’s Montly Energy Review has data through September and has USA lower 48 crude production up 155 kbd and Alaska up another 65 kbd for a total of 220 kbd. Of course that is just an estimate as the states have not yet reported their September production numbers.
This is Alaska since the opening of the Trans-Alaska Pipeline in KBD, last data point is September 2014.
US total petroleum liquids consumption has been on a bumpy plateau since 2009 at around 19 million barrels per day. The last data point is September, 2014.
North Dakota publishes a Daily Activity Report Index of all oil patch activity. It looks like this:
You can click on any particular day and get a PDF file of everything that happened on that particular day. That includes permits issued, permits cancelled, wells released from “tight hole” (confidential) status, confidential wells plugged, wells approved for “tight hole” status and a lot of other information. But one important thing you do get is “Producing Wells Completed”.
Some days there are no producing wells completed but most days there is at least one or two, and on some days they list over twenty. Confidential wells are not included in producing wells completed and some months there are a few wells listed without giving production numbers. But every month there are about 100 wells listed, give or take a few. So note: This is not all wells. It is likely about 60 to 80% of all wells completed in any given month.
Copying and pasting the data into Excel and working it into a compliable spreadsheet is a very time consuming job but I did it for the past five months, June through October. Here are the results.
The actual average numbers for the first 24 hour barrels per day for all North Dakota:
June 1,382
July 1,695
Aug. 1,196
Sep. 1,301
Oct. 1,188
I think this chart is very important. Water cut was only increasing slightly until September and October. In those two months it has jumped significantly. The actual average water cut for all North Dakota is as follows:
June 51.38%
July 51.5%
Aug. 52.02%
Sep. 54.23%
Oct. 60.73%
Or if you would like all the numbers:
This is all the wells reported in the five months examined. Billings and Burke were not included in the charts but were included in all averages.
Via Goldman Sachs, ZeroHedge gives Goldman Sachs take on the marginal shale price. Bold theirs.
Our oil forecast calls for a slowdown in US shale oil production which our North American Energy equity research team led by Brian Singer estimates will occur at $75/bbl WTI prices.
They estimate that the WTI oil price at which average wells in the Eagle Ford, Bakken and Permian Basin plays achieve an 11% IRR ranges between $70-$80/bbl. More importantly, they believe that funding gap constraints below $80/bbl WTI will ultimately drive the slowdown in production. Specifically, balancing capex with cash flow is likely to be the key constraint for shale producers, which continue to outspend their cash flow. Historically, E&Ps under our equity research coverage have spent 120% of cash flow annually, with only 2012 above this threshold when several companies which have since changed strategy were large spenders. At our pre-oil price decline capex assumption for 2015, this 120% reinvestment rate would be reached at $80/bbl WTI prices.
Based on their analysis of key shale play production growth at various oil prices, we estimate that WTI prices will need to remain at $75/bbl in 2015 to achieve the required 200 kb/d slowdown in production growth. Given the lag of 4-6 months between when rigs are dropped and when there is an impact to production as well as the impact of hedging, this price forecast implies a larger slowdown in US production growth in 2H15 to 650kb/d yoy.
Though the Bakken rig count is still around 190 the total US oil rig count continues to decline.
U.S. Oil Rig Count Declines by 13, Baker Hughes Says
Rigs targeting oil in the U.S. dropped by 13 this week after crude futures traded below $80 a barrel for the third time in a month.
Rigs drilling for crude declined to 1,582, Baker Hughes said today.
“We’re seeing the impact of lower crude oil prices,” James Williams, president of WTRG Economics in London, Arkansas, said by telephone today. “Nobody’s going to drill to break even. I’m expecting us to be below 1,500 oil rigs by the end of the year.”
On October 10 the oil rig count stood at 1,609 so the rig count is down 27 since that date.
I found this article very interesting.
Venezuela, with world’s largest reserves, imports oil
For the first time in its 100-year history of oil production, Venezuela is importing crude — a new embarrassment for the country with the world’s largest oil reserves…
“The government has destroyed the rest of the economy, so why not the oil industry as well?” says Orlando Rivero, 50, a salesman in Caracas. “How much longer do we have to hear that the government’s economic policies are a success when all we see is one industry after another being affected?”
While Venezuela has more than 256 billion barrels of extra-heavy crude, the downside is that grade contains a lot of minerals and sulfur, along with the viscosity of molasses. To make it transportable and ready for traditional refining, the extra-heavy crude needs to have the minerals taken out in so-called upgraders, or have it diluted with lighter blends of oil.
The latter tactic is what state oil company Petroleos de Venezuela SA (PDVSA) is using since it doesn’t have the money to build upgraders, which perform a preliminary refining process, and its partners have been unwilling to pony up cash because of the risk of doing business in the country.
Note: I send an email notice when I publish a new post. If you would like to receive that notice then email me at DarwinianOne at Gmail.com.
Global Oil and Other Liquid Fuels Production Update
Global conventional crude oil + condensate production (C+C) attained a value of 73 million barrels per day (Mbpd) in May 2005. Since then conventional C+C has been bumping along a jagged plateau with the all time high of 73.3 reached in July 2008, immediately prior to the Chinese Olympic Games and the financial crash. It seems possible that the peak in global conventional oil production is behind us (Figure 1).
All of the growth in global liquid fuels has come from non-conventional sources, shale oil and tar sands, that currently are only produced in N America, and from “other liquids” such as biofuel and natural gas liquids. These liquids are inferior to conventional crude oil in a number of ways such as 1) requiring the use of more energy in their production, 2) being less energy dense and 3) not usable as liquid transport fuel.
US oil production has risen about 4 Mbpd, about 2 Mbpd is from LTO. Where does the rest come from? EOR?
Ron your US consumption chart is also striking. Economic growth without oil consumption growth!?
Tight oil production pushes U.S. crude supply to over 10% of world total
U.S. tight oil production averaged 3.22 million barrels per day (MMbbl/d) in the fourth quarter of 2013, according to U.S. Energy Information Administration estimates.
However a lot of what the EIA counts as tight oil is actually conventional oil. Most of the Permian is actually conventional oil. The EIA’s “Other” catagory is mostly conventional oil.
I think those economic growth figures have been fudged a bit. However increased efficiency does allow for some growth without growth in oil consumption. However the help better efficiency gives is limited and can only help so much. Unless consumption starts to increase you can expect economic growth to slow to a crawl.
“Unless consumption starts to increase you can expect economic growth to slow to a crawl. ”
Yo, China! India! Read it. Know it. Live it.
If you want decent lives, burn oil. If you want social security, burn oil. If you want anything of the US lifestyle, get your per capita burn up.
And get more heroin, too.
Don’t forget to become morbidly obese, as well.
Correct.
That’s right! You can have horses haul food into NYC. They did it before. They can do it again!
Watcher, your forgot your smiley face. Never make really sarcastic comments without a smiley face. Someone may just think you are serious. Now you wouldn’t want that would you?
No. Not ever.
It looks like this: 😉
Ron, I only have Bakken and Eagle Ford in my chart so the Other US category accounts for a bit. That works towards the conventional C+C being a bit lower but as you say Other is mainly conventional. Need to wait another 10 years to find out what is going on 🙁
North Sea will grow between now and 2020.
Euan,
How much is the North Sea forecated to grow by 2020?
Steve
I caught you over at Zero Hedge with your cute little US map with an EROI superimposed icon. ^u^
Caelan,
So, you finally caught me “Foaming Out the Mouth” in Zerohedge. I don’t normally do that all that much, but once in a while it’s nice to get one’s feet wet.
By the way, that “lil cute icon, is also part of my logo from my website, which you can see in BRIGHT COLORS at this link: http://srsroccoreport.com/
steve
Some of us would do our fellow humans well/better by continuing to spout our particular foam here, there and elsewhere…
Oh hey, nice page, I’ve been there and recall it… More 3D-ish icon/logo, with table-reflections to boot! …Bookmarked! ^u^
The UK has a significant number of new largish projects that have already begun to come on beginning with Golden Eagle (50,000 bpd), Clair phase II (120,000 bpd), Mariner, Bentley and more. Most of it is heavy oil and has come as a result of prolonged high price.
The chart is not my own. But I agree in general with it.
Drowning in oil again
North Sea production has already stabilised. The lower production goes the easier it becomes to reverse declines. Stabilisation of the North Sea is one of the contributory factors to current price weakness.
From Drowning in Oil:
From Drowning in Oil. It looks like OPEC capacity may be rolling over.
Hi Euan,
Eyeballing your UK and North Sea charts it looks like UK North Sea output is expected to increase temporarily by about 0.5 Mb/d from 1 to 1.5 Mb/d (roughly I am estimating from your chart). Norway is expected to be flat, other countries we will assume are also flat so the expectation is that North Sea output will rise to 3.5 Mb/d by 2018 and then begin to decline again.
Do you know if these projects are on schedule? I assume once these projects begin they will go forward regardless of oil price and I believe they usually take about 5 years minimum to reach full output.
Euan,
Do you expect North Sea growth to be significant?
If you are reading this Rune it would be interesting to hear your perspective because you follow Norway’s oil output very closely.
Hi Dennis,
I have presented my view in the post
Norwegian Crude Oil Reserves and Production per 2013
As of now I do not expect much changes to my forecast. Perhaps 1% higher for 2014 than my forecast, but likely higher decline in 2015 and 2016.
This may change dependent on NPD’s reserves estimates at this year end, but as of now I do not expect much changes.
Hi Rune,
Thank you. Do you follow other countries North Sea output?
Euan Mearns is expecting an increase in North Sea output. but I suspect he means the UK portion.
I imagine any increase would be fairly small and followed by decline within a few years, but I don’t follow this as closely as Euan or you.
A bit off topic, but your most recent post on the Bakken had breakeven at $68/b, with an average well producing 320 kb over 23.5 years (shut down at 7 b/d), well cost of $9 million, royalties and taxes at 24.5% of wellhead revenue, transport costs of $12/b, OPEX at $4/b, other costs at $4/b and a discount rate of 7% I get a breakeven of $58/b rather than the $68 in your post. In the past you have used economic parameters similar to these and your average well was more productive than I had assumed. Have the economic parameters that you are using changed from what I am using above?
Hi Rune,
I was not very clear above, the $58/b that I calculated is the wellhead price breakeven, at the refinery gate the breakeven price is $70/b.
I believe the $68/b breakeven price in your post was at the wellhead, but I may have misunderstood your post.
Yes, economic growth really doesn’t need more oil.
Think about it: the majority of oil consumption is for personal transportation. A Prius (60% reduction in liquid fuel consumption), Volt (90% reduction) or a Leaf (100% reduction) gets people to work just as well as an SUV. The US could reduce fuel consumption by 40% with almost no effort, just by reducing passenger car fuel consumption. After all, a Leaf is the cheapest vehicle on the road to own.
Reductions in industrial/commercial liquid fuel consumption take a little longer: better aerodynamics and other design changes for truck can reduce fuel consumption by 40%, and freight can move to rail.
I agree entirely.
Nick G,
U.S. could do a lot of things. However, overall fuel economy is down since 2008.
Steve
Yeah, gasoline consumption has gone down by only about 1%, while Vehicle miles Traveled has gone down about 2.5% since 2008.
Which tells us that US consumers don’t think gas prices are very high, and they’re not worrying about fuel consumption. IOW, US consumers don’t feel significant pain from fuel prices.
I wish the US were taxing oil very heavily, and incentivizing more efficient vehicles: oil has very high external costs, which aren’t included in the price tag.
Oddly enough, industrial/commercial users are often more sensitive to energy/fuel efficiency: they’re big enough to have dedicated energy managers.
Finally, the point remains: the US has enormous room for easy reductions.
Nick G,
Your examination of the possibilities of growth without increased oil consumption is terribly over simplified. What do you think people do when they find driving is cheaper. Unless they take the money and hide it under their mattress it will ultimately be used for the consumption of something that involves energy and it is highly likely that energy will come from petroleum.
Not really. Manufactured goods require very little oil: factories run on electricity. Services, of course, require much less energy/oil per $.
The fact is that transportation uses most of our liquid fuels. Make transportation more efficient, and liquid fuel consumption will drop pretty much proportionately.
Finally, have you noticed that young people aren’t into cars that much (even affluent, employed young people). iPhones don’t use oil to operate, and manufacturing and transporting them takes very, very little oil.
There are a number of problems wrong with your argument. First I will concede that manufacturing runs on electricity, even though I really don’t know that it is true but it sounds plausible. That electricity is not simply zapped into existence. Even in the best case scenario where a good deal of that power is generated by solar power the infrastructure to install and maintain that power source relies on petroleum. Your second point, about making transportation more efficient and consumption will drop is a non-sequitor which says nothing about economic growth. Currently almost everyone’s waste is someone else’s income. So I can grant you that fuel consumption may fall but so may economic growth. Your last point is about I-phones not running on petroleum is even more irrelevant. So what? Horses don’t require petroleum to operate either, the point is what? I once too wish thought that if we just used the technology we had we could set everything right in the world, I still want to believe that. Unfortunately the evidence does not point in that direction.
Power generation infrastructure doesn’t use much oil. Generators, turbines, etc are manufactured, which gets us back to manufacturing using little oil. It’s true that construction uses a little oil, but it’s only a little (and of course, it doesn’t have to – work site can connect to the grid, and contractors can commute with Priuses and Leafs. They don’t, yet: it’s not in contractors culture not to drive a pickup, even when the only cargo is pretzels and beer. But, they can and they will). The Energy Return on Liquid Fuel invested is probably about 1000:1.
I agree: if the US uses less oil, countries like Saudi Arabia will lose income. So, what’s the problem again?
iPhones are an example of the answer to your question: “what will people do with all that money if they don’t waste it on oil?”. The answer is, a lot of things, like phones and videogames and Facebook and who knows what. But, whatever it is, it’s likely to use a lot less oil than cruising to the mall to try to pick up babes.
But as has been pointed out now about 15 zillion times, what’s the point of smashing in the skulls of Americans who want to burn oil if it means there is more for the Chinese and Indians to burn? What does an American have to gain by sending that oil to someone else?
Saving a ton of money
Reducing pollution
Fighting fewer oil wars
Having fewer oil recessions
And
Cutting down on bad ME war movies!!!
The US consumed about 6.89 bn barrels of oil in 2013. At $100/barrel that’s $689bn. GDP was 16.8 tr. So oil was about 4% of the economy.
There is some argument that a lack of oil is a show stopper in certain areas. But the economy does not depend on oil for the most part.
Nick
You’re completely neglecting supply chains in all this. The supply chains which feed all industry is pretty much entirely oil fuelled. Much of it by large cargo ships and aeroplane, both of which are oil only and are pushing maximum efficiency. Supply and transport is key to all industrial economies. Factories in Japan were shut down by the icelandic ash cloud a few years back, for example. You ignore the interdependence at your peril. And as for volts and leafs, yeah they’re great, but electric motors are simply not cut out for hauling freight on roads, which is where the real issues will come from.
Your point about vehicle miles travelled is also way off. Yes, it’s 2.5% since 2008, but it’s absolutely miles off where it would be had it followed the trend before 2008. That’s what’s significant, and suggest that US pocketbooks are hurting.
As for making cars more efficient, it’s been shown time and again that Jevons paradox applies here. More efficient cars = driving more miles with the same amount of fuel. Efficiency also follows a pattern of diminishing return.
I’m sorry but many of your arguments are pretty specious.
Hi Sam,
Jevons paradox does not apply very well to driving. First people buy more fuel efficient cars to save on fuel costs, clearly it is their choice whether to drive more miles with the fuel savings or to spend the savings on other things besides transportation. A rise in fuel costs will result in more long haul transport with railroads which are 4 times as fuel efficient per ton-mile as 18 wheelers. Over time the freight railroads can be electrified requiring no liquid petroleum.
Not that much freight is transported by air, mostly its people, there will be less air travel as fuel costs rise. Ships will continue to be powered by liquid petroleum at some point liquid fuel costs will rise to the point where there may be a switch to coal and if coal gets too expensive maybe nuclear. There will also be a tendency in the future to only transport what is absolutely necessary. It will be too expensive to manufacture cars in Japan and ship them to the US, the Japanese will build factories in the US and build the cars (including the parts) in the US. None of this will happen overnight, there will be a gradual transition as fossil fuel becomes more expensive.
Dennis,
In the long run I expect your right, but short term I think there will be lots of bumpy times. Production lines can fail when a single key component is no longer available. As I mentioned, a number of factories around the world were closed as a result of the icelandic air cloud. A number of bankruptcies in the airline industry could easily have a similar effect. The lack of resilience in the system could easily lead to some cascading effects if just a few key nodes were taken out.
Network failure speed tends to be a function of the speed of the network, and our global economy is faster and more tightly networked than ever. The 2009 financial crash itself nearly took out gobal trade, and that was without liquid fuel production declining.
A number of bankruptcies in the airline industry could easily have a similar effect. The lack of resilience in the system could easily lead to some cascading effects if just a few key nodes were taken out.
I don’t think we’re see the system come down as you describe. The recession continues to reduce activity. So the effects are happening already. Much economic activity may have been slowed down before the actual effects of oil reduction hits.
It’s probably not likely that all airlines will go bankrupt at the same time. And cutbacks to air travel will only truly impact relatively few people. Air travel is discretionary for most consumers.
Hi Sam,
I agree there will be bumps, I by no means expect the transition to be smooth.
I think part of what you are worried about is the JIT (just in time) nature of many manufacturing processes today.
The smart companies will take a look at the changing transportation landscape and will identify critical components that may shut down their production lines if unavailable and they will keep a couple of extra on hand. Those companies that do this well will have a competitive advantage.
They will not always do this perfectly and there will disruptions there is no doubt about it, especially over the short term.
D C,
Bulk freight does not go by air, of course–planes won’t take away from freighters.
I wonder about a lot of various supply chains, though; doesn’t UPS have one of the largest jet fleets in the world?
Not that UPS is insulated from problems of oil supply.
Hi Synapsid,
I expect fuel costs will increase and the UPS jet fleet will get smaller due to reduced demand, in fact documents will be sent over the internet, only things which cannot be produced elsewhere (rare earth metals comes to mind) will be transported and by ship and/or rail rather than plane and truck.
Again everyone thinks when I mention these possibilities that I think it will be simple. Is it possible? Yes. Will it be easy?Definitely not.
Oddly enough, fuel costs are only about 5% of the overall cost structure for companies like FedEx and UPS.
Freight transportation accounts for less than 25% of oil consumption. This kind of operation will first increase fuel efficiency, then it will reduce other costs, then it will outbid other users of the oil, easily.
That’s why passenger miles in US aviation haven’t fallen over the last 10 years, even though the price of oil has gone up by five times.
Now with the price of oil heading lower, you are going to see Americans purchase more SUV’s and BIG TRUCKS. As I stated before, overall fuel economy is about the same as it was in 2008. Interestingly, light vehicle fuel economy is even worse in 2102 than 2008.
Lastly, even the Heavy-Duty trucks show a decline in overall fuel economy since 2008.
steve
Yeah, this would be a good opportunity for the US to raise taxes on oil. Then maybe there’s be money to replenish the Highway Fund.
They could follow the lead of the Indians.
http://in.reuters.com/article/2014/10/18/india-diesel-prices-idINKCN0I70EK20141018
If the gax tax were easy to raise in America, the decade plus of nope-not-raised points to better odds of pulling four-of-a-kind in a five card draw. Worse, a quick news search turns up what looks like disapproval for linking the gax tax to inflation:
http://www.salemnews.com/news/local_news/polls-show-support-for-ending-automatic-gas-tax-hikes-is/article_4d03a8de-4d3a-5dae-b36b-6757b48f20d4.html
How about that?
Yes, decades of Koch brothers’ propaganda against government, taxes, and fuel taxes in particular, have succeeded.
Still, it’s useful to be clear on what the best public policy would be.
Nick G, your posts are really full of cornucopian bulls*&t.
You’ve constantly and deliberately understated many thing to accomodate whatever agenda you’ve got going on. For example you stated in one of your posts above that fuel costs for Fed-Ex was only 5% of their operating expenses, when in fact it’s double that.
http://www.bidnessetc.com/business/fedex-coasting-through-a-strong-period/
Then you made this outrageous statement that facilities have about a 1:1000 eroei. WTF?
I happen to build large facilities and I can tell you that the amount of diesel used to build a water treatment plant, or manufacturing plant, is absolutely staggering. The equipment involved in just building the roads to these places, to say nothing of the actual asphalt used to pave said roads, is unreal. A new 2 lane undivided road costs about $2-$3 million to build/mile. About 25% of that will be fuel related costs, so figure about $750k in fuel per mile just to build the roads to the plant. A litre of diesel is what, $1.20?..so, $750k/1.20/litre = 625,000 litres of fuel. Just for one mile of road. Concrete alone costs $210/m3 delivered, probably about $120 of that is fuel costs, if not more. So figure about 100 litres of fuel used to produce 1m3 of concrete, which is a very small amount. Even a tiny concrete pad measuring 5m x 5m x .1m deep takes over 500 litres of fuel, and thats not including digging down 2-3′ for the gravel layer or even delivering the gravel. Much less processing the gravel to make it suitable as fill. Then there’s the rebar, compaction, all the site trucks and other vehicles, and the fuel consumption soars.
Anyway this is rambling, but I came on here to say that mainly your arguments are pure BS – they very greatly understate true energy costs and are quite misleading, and I couldn’t take it any more.
Mike,
Put the keyboard down. Step away. Take a deep breath.
Ok.
Now, I took that 5% figure from FedEx disclosures, their annual statement I think. Still, let’s assume for the moment the articles correct. What happens if the price of oil doubles? Fedex costs go up by only 11%. And, according to the article their profit rises….
As for the highway construction costs, I suggest you do a little research, instead of just guessing off the top of your head.
Good grief. You guys are terrible at fuel economy! In the UK the average new car gets around 45mpg, and over 50 for diesel. That’s the positive effect of high fuel taxes for you right there.
Hi Sam,
Remember that US gallons are only 80% of a UK gallon, our fuel economy is terrible, I agree with you there. Are those averages for all UK cars on the road? Higher taxes on fuel would help, but the US is less enlightened than the UK with regard to carbon taxes.
Dennis,
Those figures are averages for all cars sold in 2013. At a rough guess, average on the road would probably be 10-15% lower than those figures.
Are the gallons UK gallons? If so and we take 10% off 45 we get 40 MPG and a US gallon is 80% of a UK gallon so that would get us to 32 MPG US.
There are lots of cars sold in the US that get good gas mileage, but we also buy a lot of SUVs amd pickup trucks that get about 20 MPG US.
We also only pay 49 pence per liter for petrol vs the 1.25 pound sterling that is common in the UK.
If petrol was $7.50/ US gal in the US, which is equivalent to the UK petrol price, then we would no doubt have better fuel economy for the average vehicle.
Have you checked out the latest EIA Weekly Report? Products supplied (Line 26) is over 20 mbod . That is the first time recently that I recall it to be over 20. Since inventories didn’t change much, usage must be going up.
http://ir.eia.gov/wpsr/overview.pdf
Your argument about the electric cars would be better if there were more of them on the road today. Do you have any numbers?
Euan
Looking at the numbers, USA GDP growth was predominantly driven by growth in exports (helped by cheaper energy and Europe’s malaise?), growth in investment in non residential assets (the rich buying assets) and a massive bump in defence spending by the government, (possibly in response to the Ebola epidemic). I suspect that this quarter might be a little bit of an outlier.
I think a lot can be explained by FED debt monetization. Check here:
http://research.stlouisfed.org/fred2/series/BASE/
would be nice to see FED monetary base and US oil/energy consumption in one graph!
Alex
Unless I missed something I think we got a little off topic. I have no doubt that there is plenty we can do in the way of greater efficiency and an over all reduction in consumption. In fact most of it will be good for us. Like we could simply eat less food or drive less and walk more or buy less stupid crap. These are all good things and it is because of these things that I hope we do reach peak oil soon. None of this however means that we can grow GDP with out in an increase in oil consumption. This is what scares me about the idea of peak oil how will we cope with a permanent contraction in so called economic growth. I live in Minot ND and when I talk to people about how nervous I am to see what happens when the oil riches future the citizens of this state have been promised doesn’t arrive I get the some line about how North Dakotans are strong and will be deal with whatever happens. I just don’t think that is true. Peak oil will be an opportunity for us to change the way we think about economics but first we have to admit that, that change will be required and rid ourselves of efficiency fairytales.
Efficiency is one part: US average MPG is twice what it was 40 years ago, and it can be doubled again. The increase in MPG over the last 40 years has been far more important then LTO.
But, just as importantly, there are better and cheaper substitutes. An electric leaf is the cheapest car on the road to own and operate.
Freight uses far less energy than trucks, and can be electrified. Ironically, if you eliminated all of the coal and oil being carried by rail in the US, that would free up more than enough room to replace all long-haul trucking.
I’d say the quickest way to grow the American economy would be to tax gas at the pump.
In money terms, the GDP is money spent on stuff made in America. That’s private consumption, government spending and net exports. (Note that Exports – Imports = Savings -Investment).
Taxing gas at the pump would cut our main import bill, which is crude oil. This is likely to be at least as effective as the LTO boom. In addition, the ban on exporting oil should be removed. It doesn’t make any sense at all.
There is more money is selling oil to people who are using it to grow their economies with it (like the Asians) than to waste it on toys. This is a point that Watcher seems to stumble on as well.
Reducing wasteful oil consumption oil will make the country richer, not poorer. It’s true in Saudi Arabia, and it’s true here as well.
Ron,
Thank you for the fine work that you publish.
John Hummel
Oil got clubbed today:
WTI: – $2/-2.47%/settle $78.57
Brent: -$1.33/-1.55%/settle $84.53
More Saudi price war and them saying they are willing to accept lower prices for some time.
Suddenly that “comforting” $75 number everyone has been quoting on shale isn’t so far away.
Sub 79, not just intraday. At the close.
They will be able to conceal the shale destruction for a few months via winter, and consequent GDP smash using the same method.
But the REAL measure will be hotel vacancies and payroll collapse, which should anecdotally be starting in about 3 weeks (the 100 day drill/completion time since the beginning of the price smackdown).
If I had a central bank of my very own (aka infinite money) I would short the big three Euro, GBP and Yen and smile as . . . as . . . I destroy an American industry . . . in retaliation for sanctions.
Has there been any talk about (any or the) connections between ebola, ISIS, Ukraine, the most recent IPCC climate change alarm, and the oil price dive (among other things) since I’ve been gone (past 3 weeks or so)?
Of course large scale centralized nation-states run on lots of oil… So what happens when the easy stuff starts to run out? What kind of reactions/responses/policies?
Ebola can scare consumption. ISIS and the Kurds are definitely selling below market price. Ukraine, not particularly oil relevant. Climate stuff similarly irrelevant to oil.
Dollar spike is the big deal. Yardstick change.
Hi Watcher,
The spike in the Dollar has been about 10%, over the June 30 to Nov 1 period, WTI has decreased by about 28% over the same period.
Exchange rates are a part of the story, but only explain about one third of the change. There has been a shift of supply and/or demand curves in the World oil market that has caused oil prices to fall 18% in real terms. The fall in prices will eventually slow down drilling for oil due to reduced profitability at the margin, the reduced output that results (probably a 6 to 9 month delay) will eventually drive oil prices higher.
There is no evidence of a supply or demand variation of powerful magnitude over the 3 relevant months. In fact we had a GDP report suggesting consumption increase.
It is amusing, though, to see such a profound confidence in the function of markets by the left wing.
Hi Watcher,
Your explanation for the change in price, as you do not seem to believe in markets? It is not just exchange rates as you keep saying, that is a part of the explanation (about 10%) of a 30% price move.
Please explain the remaining 20%.
The dollar index undercounts the yuan, and of course China is a big player in oil.
But I’m not quite sure how that addresses this sudden left wing worship of free markets.
Hi Watcher,
Yep left wing capitalist that thinks free markets are great with a little government intervention when the economy tanks and to regulate externalities.
The uneconomy seems in increasing chaos-mode as the fundamentals come home to roost and where ‘pundit’ discussions increasingly might as well be discussing the previous nights’ dreams, nightmares and drunken flights of fancy.
That nevertheless swept aside for artistic license, I seem to have caught something about Japan’s ‘war on currency’ as well as, some time ago, something about manufacturing an oil glut to spite Russia(‘s).
Whatever… 😉
Pre Asia futures (New Zealand and Australia) drop WTI another 55 cents, to $78.23.
This is getting fun.
Hello everyone,
US crude closer to $78 on Saudi’s US price cut
http://www.cnbc.com/id/102148210
U.S. crude lost 47 cents at $78.31 a barrel as of 0005 GMT. On Monday it settled down $1.76 at $78.78 after hitting a low of $78.14 per barrel, its lowest since June 2012.
Brent crude previously settled at $84.78 after falling as low as $84.18.
Top oil exporter Saudi Arabia has hiked the price of crude to customers in Asia and Europe in December, but deepened cuts to U.S. buyers in a sign it may be redoubling efforts to retain its share of the world’s biggest market.
It will be hard for it to fall further tonight. The big three currencies are reversing and depressing the dollar slightly.
North Dakota Active Rigs 03/11/2014: 186 (-7 from last week)
https://www.dmr.nd.gov/oilgas/riglist.asp
This has to be seasonally normalized. November is when everything slows.
Some curiosities from the data. Why would IPs be better June/July than the other months? Well, it’s one year’s months. Maybe they had some weather in August, which is still summer. Still, weather should only hit number of wells, not how strong the wells drilled happen to be.
Sept/Oct water cut elevation is also curious.
July, the highest month for initial barrels per well, had the fewest wells reported, 87. That is likely about half the wells actually brought on line in July. I think it likely that most of the very poor producers were put on the confidential well list.
The increasing water cut is the most interesting thing. Could have something to do with down spacing, or perhaps moving further away from the sweet spots.
I can’t see the mechanism for downspacing increasing water.
As for sweet spots, the theory would be that X% of pores hold oil and X% of pores hold this thin barely-oil, but I don’t think the imagery can tell the difference. That would be cool to know if it can, but I think it just finds pores and permeability, not what’s in the pore. So picking a sweet spot should have the same odds of water vs oil in the pores. Maybe an imaging guy will speak up.
Though let’s keep in mind those two months are the recent two months that show distinct and surprising production rollover long before winter. In that context, this month, November, for various reasons could prove to be the peak.
Or rather, last month, Oct.
Watcher, you always get something when you drill. The term “dry hole” is very misleading. If you drill in porous rock, you will never come up dry! There will always be something wet there. It may be 100%water or 100% oil or, usually, somewhere in between.
Downspacing, if you get less oil, you will get more water. As you move away from sweet spots, if you get less oil you will automatically get more water.
You will always see the water cut increase as production declines… well that is if enough pressure in the reservoir. If you have no pressure you will get nothing. But the water is there nevertheless. Pores in rock are never empty, they are always filled with either water oil or gas. And if they contain no oil or gas then they are filled with water.
You will get liquid, oil, or water, in direct porportion to the pressure in the reservoir. Except in gas wells of course but when the gas is released pressure forces water into the pores.
Hmm.
I guess this bears looking into, but I think this is not right. It is 100% right for a water driven well. You are washing the oil out of pores with water and after they are washed out the flow becomes more and more water.
But I don’t think it’s right for shale.
The pore has either water or oil in it, not from water injected but from 80 million years ago. You don’t know which before you drill (theoretically, but if the imagery can tell then clearly you don’t drill where the pores are filled with water.) So. . . . downspacing doesn’t change this. Cannibalization of wells from each other should equally cannibalize water and oil from the pores, just from the pressure difference between rock and wellbore.
But . . . interesting thought.
The pore has either water or oil in it, not from water injected but from 80 million years ago.
Not pore but pores, billions of them. And they have both oil and water. Look at the table of wells I posted. Only two wells had no water. One of those wells produced 48 barrels the first 24 hours and the other 50. The average of all the other wells were more than 50% water.
The county with the lowest production per well, Divide, had the highest water cut. And the county with the highest production per well, McKenzie, had the lowest water cut. And the county that was once North Dakota’s highest producer but is now second, Mountrail, has a very high water cut. I don’t know but I will bet that when it was North Dakota’s highest producer it has a low water cut like McKenzie now does.
I know Mountrail County is still increasing production but only slightly. However the two formally most productive fields in North Dakota, Sanish and Parshall Field, are now both in Mountrail County and both are in decline.
When oil production drops water cut rises. That’s the way it works in conventional fields as well as tight oil fields.
Interesting.
I wonder if this is even known information. Billions of pores. Well maybe millions but . . . is an individual pore filled partially with water and partially oil — or are some pores water and some oil?
If the latter, then interconnectedness aka permeability would flow them equally, some water and some oil. If the former then there’s nothing complex, each pore has a partial fill of water or oil. If water flows then so does oil.
Low production counties having a lot of water. Hmm. That might be what was in those pores. And vice versa.
I don’t even know where to find this out. In a non water driven field, why does water flow when oil peters out? Why should that be so? Should not the pores within range, as it were, of that well bore be equally emptied regardless of water or oil? If the pores are empty, why would anything at all flow?
Oooh, maybe it’s from deeper down, where the temperature didn’t allow oil to remain oil. Water from deeper down flows upwards to refill the pores. Then water cut will rise.
Maybe.
Murex Petroleum, a private company that operates mostly in Divide and northern Williams Counties (i.e. outside of the Bakken sweet spot) in North Dakota, has brought this up in the relatively infrequent instances that the company makes public statements. What they have stated is that a water zone seems to lie under the Three Forks formation within their acreage. Thus the deeper they drill into the Three Forks to downspace in that area, the greater the likelihood of the vertically-induced fractures from their horizontal wells penetrating into the water zone below and eventually bringing that water to the surface. This is a rather well-documented problem in Divide and Burke Counties at this point, but whether other areas of the Bakken might exhibit similar behavior hasn’t really been brought up anywhere that I have seen.
Here is a link to a presentation Murex gave at a conference earlier this year. Of particular relevance are the statements under “In some areas of Williston Basin, bigger is not better” on page 25.
Good data Wes, so water does flow up from lower to fill empty pores and the path of flow is the 3D frack around the horizontal bore.
Billions of pores. Well maybe millions but . . .
No, trillions of pores, or more accurately cracks, spaces between the grains of shale, which is almost a solid. They are so small you would need a microscope just to see one. A billion would not fill one barrel.
…is an individual pore filled partially with water and partially oil — or are some pores water and some oil?
Hell, you would need to talk to an oil geologist on that one but in any square foot of shale I would imagine there would be both.
Billions of pores. Well maybe millions but . . . is an individual pore filled partially with water and partially oil — or are some pores water and some oil?
The fields are all “pressure driven”. The well bore provides a relief valve for the pressure. Even when you have a down hole pump, or a nodding donkey pump, the pump creates an area of negative pressure and the pressure in the reservoir pushes the oil to the well bore.
So when you pump something out, or the pressure pushes something out, then something else must fill the void. That is never air or just empty space, it would be water.
Oilfields water out. That’s just what happens to them in their old age. Some oil fields are said to be producing “oil stained brine”.
I’ve gotten curious. All oil fields don’t have to have been underwater at one point. Here is the water source for US oil:
http://en.wikipedia.org/wiki/Western_Interior_Seaway
And that link pales in coolness to this next one:
[warning I got an avast virus warning from this next site, but hard to see how it would be a good place for a virus–I ignored it, no negative effects noticed]
http://cpgeosystems.com/paleomaps.html
I’ve gotten curious. All oil fields don’t have to have been underwater at one point.
Yes they do. Oil is formed from alga. Alga that formed in shallow seas, died and sank to the bottom where conditions did not allow it to decay. Then it was covered by sediment, and more sediment until it was so deep in the earth that the temperature rose high enough to cook it into oil.
My vague recall is the mechanism requires the microorganisms or algae to be shut off from oxygen. This doesn’t require water. A large earthquake can bury it under a few tons of rock somewhat suddenly.
I think (given California was not under the Seaway) that it was suggested Cali’s seismic history used quakes to make its oil those millions of years back. The organisms were living in lakes or streams and got buried very suddenly, or that would be the story.
But I’ll stand down in that I think you’re right in the majority. I recall an article about searching in Africa and what was desired was river inlets to the sea millions of years ago because major cataclysmic events would toss millions of tons of river sediment out over the organisms just barely offshore and bury them. The process requires a sudden oxygen shutoff, any way you can.
My vague recall is the mechanism requires the microorganisms or algae to be shut off from oxygen. This doesn’t require water.
Yes it does, alga doesn’t grow on dry land.
The organisms were living in lakes or streams and got buried very suddenly, or that would be the story.
No, that’s not the way it happens. Alga can grow in lakes but you would not get enough alga in a lake to make very much oil. And streams? Not likely because the water is cool and flowing. You wouldn’t get enough oil to fill a barrel. And if t were buried by rocks and dirt you would still have enough oxygen for decay. You would get nothing but organic rich dirt. But most importantly, your earthquake debris would not bury it deep enough. You need 7,500 feet, almost a mile and a half down, to get enough heat to turn the alga into oil. Alga, not buried deep enough becomes kerogen, a waxy solid.
There is some very ancient oil but most oil began to be formed 150 million years ago and again 90 million years ago during times of intense global warming.
Energy and Public Health: The Challenge of Peak Petroleum
Petroleum was formed by geologic processes dating from the Cretaceous and Jurassic periods, 90 to 150 million years ago, when vast amounts of zooplankton, algae, and other organic material were deposited on ocean floors. This material contained organic molecules with energy in carbon-hydrogen bonds, derived principally from photosynthesis. Over geologic time, some of these deposits were buried in sediment, pressurized by the overburden, and heated. At depths below 7,500 feet, heat and pressure decomposed large organic molecules into fragments of between five and 20 carbons, forming the liquid we know as petroleum.
I wasn’t clear. The avalanche of material would be the initial event, and it could be somewhat dry. Then you have millions of years to push it deeper and achieve the heat and pressures. The African article wanted river inlets. At some point there would be a cataclysm to send tons and tons of sediment offshore, and then time would push it deeper and deeper.
There is oxygen in water. You can slowly rot submerged material. You need a cataclysm to bury the material under lots of sediment, and then let time push it down deeper and deeper.
I remain intrigued by this perpetual water flow from an oil depleted well. It suggests permeability for water is different than for oil? If all the oil in pores “within range” of the bore’s pressure differential flows and empties, and then water flows into those pores, how does the concept of “range” work for water. Shouldn’t the well just stop flowing eventually? Anything at all?
Watcher,
Deeper ocean water can sometimes be anoxic, which allows for the organic meterial to be covered by sediment before it begins to decay.
Otherwise yeah, big cataclysms such as turbidite flows can quickly bury a large amount of organic material and give rise to a suitable environment for oil generation.
I would imagine that water can flow more easily than oil in a shale formation because it is a much smaller molecule, and can thus fit through gaps which the oil cannot.
Also, if I remember my petrophysics, the relative permeability of oil and water changes as the saturation fraction of the rock changes.
Oil formation requires a mile and half of sediment on top to form. Sediments do not build up on dry land, they only build up in the sea. Of course some sediment can build up in lakes but not very much for very long. It takes rivers draining into seas to form sediment.
If the alga were buried on land there would be enough oxygen to destroy the algae. Oil formation was never cataclysmic, oil is formed during times of intense global warming when algae blooms are prevalent in shallow warm seas. The algae dies and sinks to the bottom where it is covered by sediment, most of which is washed in by river water.
No, there is not always oxygen in water:
Petroleum Primer
Organic material is easily destroyed by exposure to air. Deposition of the material must be rapid in waters containing little or no oxygen due to water stagnation. Where water is oxygen deficient and chemical reactions take oxygen atoms away from molecules it is said to be a “reducing” condition, a requirement for the preservation of organic matter. Also, low-oxygen environments greatly decrease the number of scavengers that might otherwise consume and destroy the organic morsels. Usually the proper conditions occur in quiet marine basins, lagoons, and rapidly buried delta deposits, but similar conditions prevail in some lakes.
“I would imagine that water can flow more easily than oil in a shale formation because it is a much smaller molecule, and can thus fit through gaps which the oil cannot.”
Good discussion overall, but this probably goes back to the key issue. Permeability of rock is a number that means different things to different kinds of liquid.
Hmmm, this also can address how/why API rating in some wells / counties differ from others. Maybe sand is too small a particle to let larger molecular chains grow. Ceramic proppant might generate better quality oil.
err flow, not grow
Most oil comes from ocean life buried on the seabed…
On the definition of a “dry” well, I think 100% water would be considered dry, unless one is drilling a water well.
Basically if the amount of oil or gas produced is too low for the well to be profitable, it is called a dry hole and the well is capped.
Yes, “dry hole” and dry well” are used in exploration to describe a well where no significant reserves were found. This has been extended to business failures in general, I think.
Watcher,
I work in seismic. To my knowledge there is as yet no way to reliably image a sweet spot using imaging techniques. I’m not sure that the rock properties would change enough for that to show up. Some of the bigger processing shops are trying to figure out ways to image it but I don’t think they’re successful so far. Still flying blind AFAIK.
Sam, thanks for the information. We are always glad to have another oilman on our list. Please feel free to correct us when we get things screwed up in our oil field speculations.
+1
Thanks Sam.
Thanks Ron,
I mostly do work in marine seismic, so unconventional land isn’t really my area. I’m trying to keep abreast of the latest developments, but I have a feeling that most of the work on shale characterisation will be being done in-house at the big processing shops, and as such will likely be proprietary. Lots of them have big flashy webpages about how their various rock physics tools can help characterise frack zones, but I’m always skeptical about marketing claims, since no geophysicists get to write them.
There’s an interesting primer on seismic in shale plays here: http://www.cwp.mines.edu/images/newsevents/120201_DueyEandParticle.pdf
Thanx Sam. We often have imaging questions here. Most recently about developments enabling imaging past salt domes — which is a capability only recently possible?
But good data on it being impossible to characterize the content of pores re water vs oil prior to drill and observe cut.
Watcher,
Yes subsalt imaging is a relatively recent development, last few years maybe. It generally requires some pretty hefty compute power which has meant that it’s only really become feasible in the last few years. You generally need wide azimuth data as well, which is often more expensive to acquire. However if you have this, combined with a decent reverse time migration algorithm, you can image structural traps on the flanks of salt domes quite nicely.
Improved tomography algorithms and application of tools such as full waveform inversion are also helping. Which is useful given how appalling the geology that some of these plays are in.
The conversation about salt dome imaging was hmm I think it was about Gulf of Mexico plays, and that extended to offshore Brazil and I think offshore Saudi Arabia, which was a surprise.
Of course oil bordering salt domes is entirely different from subsalt oil. We have been drilling for oil next to salt domes for almost a century, subsalt only in the last few years.
The lube looks about right where it should be for the upward-thrusting salt dome.
I posted this yesterday, but as was very near the end of the post, I will repost as I feel it is very import article.
https://rbnenergy.com/the-battle-for-henry-hub-ominous-implications-of-natural-gas-oversupply
“More than 60 natural gas pipeline projects are in the process of reversing the continent’s gas flows to move gas out of the Northeast, and much of that production will be moved to the Gulf Coast.”
“Many producers in Northeast Pennsylvania can profitably produce gas at prices less than $2.50/MMbtu. Many wet (high BTU, high NGL content) gas producers in Southwest Pennsylvania, West Virginia and Ohio can operate profitably at prices well below $2.00/MMbtu by selling higher value NGLs (even at today’s lower NGL prices). “
That’s good data, toolguy.
The wet vs dry thing we discussed. I am always suspicious of “Many” this and “Many” that. Since this blog’s perspective is on seeing a decline, we are not interested in “many”. Or “some”. And only sometimes in “most”.
If 2/3 of wells are still just fine, but 1/3 aren’t, then the total goes down, all while there are sunny articles about Many and Most.
I look forward to articles over the next few days about how there are many wells in the Bakken that will operate just fine down to $20/barrel. And many others that will be drilled at $30.
There will be no articles covering companies shutting down, even if there are more of those than of any starting or even operating.
Watcher,
I feel you are missing a major point. You keep referring to the oil market, which is world wide and when someone stubs his toe on a rock in a sandy place, then the oil prices can change. The number of oil wells drilled in the US can then be effected.
On the other hand, the Nat gas market currently is internal to North America. It doesn’t really matter what the price of nat gas is, there will always be enough wells drilled to meet the market. Price goes up, drilled holes goes up, usage goes down. Supply goes up, price comes down, less holes drilled. Simple econ 101. Having said that, it appears your US nat gas market is about to be turned upside down. To me that is an important topic to discuss and not to be dismissed by “many” “most” and “some”.
The US had their coldest winter for a very long, and gas withdrawals were at all time records. The US gas industry has been able to make up that shortfall with increased production at $4 mcf, not a historically high price. If this winter is not as cold as last and normal levels of carry over occur, then with current production levels, I feel you are are going to see some very cheap Nat gas next summer, with the corresponding changes in drilling patterns.
One thing about the fast decline rates on all these shale wells, you don’t have to wait long to see a result, unlike the good old days where it take a decade to balance out, now we get near instant responses to market fluctuations. It is going to be an interesting show to watch.
Someone posts the occasional graph showing I think Canada nat gas storage WAY below previous norms for this time of the year. With such poor storage it seemed amazing that the price was still low.
But you would seem to have a legit point about the general speed of response of production to demand. Things will happen fast. On the oil side we happen to know pretty well that it takes 100 days from start of well to first flow. Do we know the equivalent gas number? This would inform us further about the response speed.
Any idea how many of those pipelines mentioned now and then are for NGL?
Break even cost estimates for tight oil seem to be all over the place. My own personal impression was that it took prices in the ninety dollar class to make tight oil profitable, this impression being the result of reading this forum and a couple of others and random articles in the business press.
Now it seems that maybe seventy to seventy five bucks is enough to keep the drillers working – but this may be because a good bit of the expense is sunk already and finishing up on land that has already serious money spent on it for siesmic, permitting, leasing,contracted rental of drilling rig etc is worthwhile even at say seventy bucks.
So – we won’t know what the approximate floor is until these sunk investments are worked thru and the people making the decisions are looking at whether to lease the rigs for another three months , pay for more seismic , contract with the trucking company for another few months, etc.
Is there any body here who really has a good idea how long this might take?My own wild ass guess is that it will not be less than six months or so.
And if the managers decide to cut back on new wells in a major way then what will be the feedbacks in terms of reducing the rental rates of drill rigs, the price of fracking sand, the hire of trucks, etc?
The owners of big cargo ships have been willing to hire them out for a song when the market was glutted with excess capacity. The rental rates on smaller machines such as backhoes and bulldozers also dipped quite a bit during the recent great recession.A little income is better than none if the expenses don’t change much and while I have never even seen a drill rig I am pretty sure these rigs are quite durable and that they don’t need a whole lot of maintenance or repairs until they have been used steadily for a good long while. So even a few thousand a month above routine maintenance costs coming in would probably be better than just parking a rig in a lay down yard someplace.
“Break even cost estimates for tight oil seem to be all over the place. ”
Not bad Farmerguy. Dead On. Nobody has a clue, other than me, and I already laid it out. They are in deep, deep trouble.
As best I can tell the critical parameter is just how much is the whole operative shebang as a % of GDP. Like the overall Apocalypse occurring just 6 months after $147 oil, it has been suspicious to me that the US logged winter -4% Q1 GDP as the Bakken got its winter smash and logged -58K bpd in one of those months.
If we see some sort of confirmation of tight GDP linkage to shale flow, then there WILL be subsidies and all the breakeven calculations will be crapola.
OFM
Exactly right!
I have stated the assumptions used and also pointed out they are on a point forward basis, that is, from the well is spudded and thus do not include acreage acquisition and some other listed items.
What may cause divergences are applied discount rates and those publishing the estimates seldom lists the assumptions put into the equation, so it becomes hard to make an independent verification of the estimates.
Further the well profiles for late life production are, call it scientific guesses (but I do think there is a lot of good experience put into this guessing).
The acreage acquisition costs are on the books of the companies so at some point they will kick in.
With regard to well costs, it appears that superfracks comes with a price tag
Continental Shares Fall On Higher Bakken Costs, Boardroom Shuffle
From your link:
The concern appears to stem from Continental’s disclosure that its well costs in the Bakken had climbed to $10 million per well, about $2.5 million than a year ago.
The article says they are more than making up for that in increased production per well. More sand, more oil. But there is just something wrong with this arithmetic:
Its 1.2 million net acres there hold about 11,000 more drilling spots, and the company is dedicated to figuring out how to make the most out of them.
That’s 109 acres per well or almost 6 wells per square mile. I really don’t think so.
1200 feet frack radius XY plane only X 1 mile would be 5280 ft X 1200 ft = 6.4 million square feet.
An acre is 43560 sq ft. So that well is draining 145 acres. This divides into their 1.2 million acres and gets 8,000 wells, nowhere near 11,000, but I’m sure they’ll hand wave their way in to Three Forks, sort of double dipping the same acre.
Hi Watcher,
Continental estimates their frack radius is only about 300 feet, see their most recent presentation. I have no evidence that this is anything more than hype. They also claim recovery will be 15% of OOIP if we assume 400 Gb OOIP that is 60 Gb, so there is quite a lot of BS in the investor presentation, I think 9 GB for all of the Bakken/Three Forks (including Montana) is somewhat reasonable if oil prices recover to $90/b or above, a very optimistic scenario (high prices, low well costs) might allow 11 Gb, 60 Gb is a fantasy in my humble opinion.
I frowned at 1200 when I typed it. It’s in my memory for some reason. 300 was the downspacing experiment and my recall is they declared “interference” with adjacent wells and were not going to embrace it.
600 either side would be 1200 I guess. I should not have said radius.
Mr. Likvern, I appreciate your work a great deal. If I may, an observation from 50 years of conventional oil and gas operations:
The shale oil industry is guilty of a number of creative accounting methods that I have never seen before; you are precisely correct regarding the convenient omission of leasehold acquisition in the term, “well costs.” For a typical thousand acre drilling unit I estimate bonus paid to mineral ownership, independent land work, or in-house land work allocations, curative title work and preparation of division order title opinions totals a minimum of 2,000 dollars an acre. Eventually there are multiple wells drilled in that unit. Nevertheless, leasehold costs are seemingly never included in “well costs.”
Neither, to my knowledge, is plugging and de-commissioning of the abandoned location costs, which I believe are upwards of 200,000 dollars per well with full surface restoration.
I agree with your estimates of incremental lift cost per barrel of 4.00 dollars. Most people guessing seem to want to use 3.00 dollars; yours is far more accurate. In fact, I think it could be as high as 5 dollars…and rising as the well declines and OWR decreases. Disposal of produced water in the Eagle Ford can often be as high as 5 dollars a barrel with trucking costs. Sometimes those trucks sit in line at the disposal facility for hours waiting to unload.
In the oil and gas business I am accustomed to, general acceptable accounting principles require each producing well be assessed a company “overhead” allocation, or an administrative overhead fee. That covers the cost of rent, copying, expense accounts; paper clips to jet fuel for the company jets, that sort of thing. I have no idea what that administrative overhead allocation is in the shale oil business and if it would say, I would not believe it anyway. Offshore, for instance on one producing platform, Exxon might charge BP and Anadarko, its two working interest partners in the platform, $45,000 dollars per month in administrative overhead costs. One might imagine what the overhead costs are for EOG or CHK, for instance, given the number of employees it has.
Which all brings me to the internal rate of return numbers shale oil companies publish in press releases and annual reports. I think those rates of return are the window into individual well economics and consequently, whether an entire shale play is going to work in the long term. And you are precisely correct, how do we know? How do companies risk 10 million dollars per shale well, borrowed money at that, for what appears to be the “hope” of 3% annual rate of return over 20 years? And for the record, that hope is based on the company’s EUR numbers. Are those reported internal rates of return numbers before depreciation and direct intangible drilling cost deductions, before depletion, or after? After, I suspect. And what about company overhead allocations, etc.?
I don’t think we get anywhere near the full skinny from the shale oil business. We sure didn’t from the shale gas business.
Mike
Mike,
Appreciate your feedback.
I have seen several numbers for acreage acquisition cited from a few hundred dollars/acre upwards to 10,000 dollars/acre.
1) With regard to acreage costs (acreage acquisition) I think this is also a hard one for the oil companies as this is a cost that has to be handled in time and space. By that I mean I do not know how the rules for depreciation for these costs are, how they become distributed (discounted) over time.
Further, what volumes (number of wells) will be allocated these costs. The final answer will not be known before the end of the day.
2) Unit operating costs should be expected to come up as the flow declines, and for a tight oil well the effect of this becomes watered down due to discount effects.
3) Produced water (brine) (water to oil ratio) has seen a steady increase and this needs to be disposed of at dedicated disposal sites. This will add to the operating costs and it is possible to make good estimates on it, but these will also be subject to uncertainties with regard to how waiting time etc. is accounted for.
4) Then there are General and Administration as you point out should be allocated each well (or each unit produced and sold).
The internal rate of return (IRR) is as good as the data used to produce them, in other words they are expectations/projections. The final number will not be known before the end of the day some years down the road.
Mr. Likvern, the point I wanted to make is that, for the reasons I explained, I believe that actual incremental lifts costs per barrel is higher than $4.00 for LTO wells. Based on Mr. Patterson’s OWR data I suggest produced water costs may be close to 3.00 dollars per oil barrel alone. There are then chemical costs, gas processing costs, surface maintenance costs, down hole maintenance costs (replacing a DHP at 9000 feet can cost 80,000 dollars; twice a year), gauging fees or gauging allocation, and the big unknown, administrative/overhead allocations per well.
You are correct, sir; down the road all these unknowns, or half truths, about costs and rates of return will sort themselves out and we will know. Not until then. Incremental lift costs are important to me only from the standpoint of decline curve analysis and EUR’s per well. Trying to determine the LTO “break even” price for oil, forgive me, a waste of time. Every company, for a host of reasons, is going to have its own internal cash flow requirements, depending largely on debt load and overhead; producing oil wells seldom, if ever, get shut in because of product price volatility.
Thank you again for your work.
Mike
Hi Mike,
Thank you for this comment.
I do my analysis in a similar way to Mr Likvern, in fact I learned it from him, though the errors in my analysis are my fault alone.
Along with $4/b for OPEX I include $4/b of “other costs” and because I do not include income from associated gas (about $3/b) the “other costs” would amount to $7/b if the natural gas were included in the analysis. I use a 7% real discount rate(calculations are done in real (or inflation adjusted) dollars which if we assume a 3% rate of inflation is equivalent to a nominal discount rate of 10%.
What are your land costs and G and A costs on a per barrel basis (approximately), would $7/b cover it?
Howdy from S. Texas, Dennis:
I could quote you my numbers, sir, but they would not be a representation of the numbers you should use in your LTO work. My company is small, my overhead allocations would represent that. Ernst and Young surveys the country for administrative overhead charges based on the depth of the well, but I think they are low.
Allow me to address just one part of the incremental lift cost per barrel of oil equation: produced water. If an average Bakken well makes 250 BOPD the first year of production I believe that well is also going to make 160 BWPD, first from flowback frac water, then a gradual transition to interstitial water. Including disposal fees of $0.50 and 4-5 hour turn arounds per load of water with vacuum trucks, at $ 125 dollars an hour, that is $2.82 per incremental barrel of oil.
I can make real life arguments for incremental lift costs possibly being as high as 10 dollars per barrel in some places in the country, but 7 dollars is more reasonable than 4 dollars, IMO.
Mike
We’re seeing water cuts in IP data up around 50%. The oil flow dies fast. I think the water does, too. Only Ron’s most recent work of the last two months in NoDak showed a water cut jump. Seemed less sharp an increase until recently.
Your 4-5 hour quote on truck turn around for water disposal is pretty powerful data. That’s to empty the onsite tank, of course, but that is a LOT of time on the road servicing just one well. Good data.
CLR’s Selling and General Admin expense as of Dec 31, 2013 was $472 million. This was a 37% increase from 2012. Projecting to the end of this year at the same rate would have 2014 G&A at 646 million.
I did that because CLR hype says they will hit 200,000 bpd company oil production by the end of this year. That would be all fields, not just the Bakken.
So G&A is 646 mill / (200K X 365) = $8.9/b
Hi Mike,
What about OPEX and other costs in the Eagle Ford? That’s right in your neighborhood, would the guesses you gave for the Bakken apply to the Eagle Ford as well? I understand you don’t necessarily have great estimates, but your experience would likely mean that your guesses would be much better than mine.
I have driven by a few oil wells, read some books, learned from people like Rockman and Doug Leighton, but my guess is that you have forgotten more than I know about oil.
Hi Mike,
Another point is that the average first year output of Bakken wells is about 240 b/d, since average water per b of oil is about 1/3 we would have 80 b/d of water for the first year, I don’t think the 24 hour IP gives a very good picture of water cuts.
So This would reduce water handling from $3/b to $1/b and OPEX would be $5/b including water handling.
Note that upon re-reading your comment I understand where you got the $7/b, that is your initial guess of $4/b plus $3/b for water.
Please correct me if I still have this wrong. Basically if the water cut is 1/1 water handling would be $3/b, but if it is 3 b oil to 1b of water it would be reduced to $1/b.
Hi all,
I made a mistake here. Mike used 160 BWPD to estimate an extra $2.80/b of costs for water disposal and I thought he was using 240 BWPD.
So if my estimate of about 80 BWPD for 240 BOPD is correct the water disposal costs would be about 1/2 of Mike’s estimate or about $1.50/BO.
This would raise OPEX to $5.50/b and other costs would be $3.50/b (this is really $6.50/b but I deduct the natural gas income of about $3/b), transport costs to Cushing are $11/b and royalties and taxes are 27.5% of wellhead revenue, assumed well cost is $10 million.
Hi Mike,
We are interested in average lift costs, in your response to Rune you said OPEX of $4/b was reasonable, looking at the Continental Resources(CLR) 2013 annual report G+A was about $4/b, OPEX was about $8/b (so Mike was conservative in his estimate of lift costs).
If we look at the income statement and deduct depreciation, impairments and taxes from the total operating costs we get about $14/b for OPEX and all other costs, interest expense was almost $7/b so total costs would be $21/b (not including production taxes) when these are added the total costs are $30/b. My calculations use OPEX plus other costs of $11/b and royalties and taxes of 27.5% (not including income tax which is only paid on income). In 2013 the average Bakken crude price received by CLR was $89.5/b, we will assume transport costs of $12/b and weelhead revenue of $77.5/b so royalties and taxes are $21/b for a total of $32/b which compares fairly well with the 2013 CLR annual report, where we got $30/b.
Clearly these numbers will fluctuate over time.
A drop in the oil price from $89.5/b to $75/b will cause gross income to drop by 16%, but net income by 25%, based on the simplified assumptions of my calculations (OPEX and other costs at $11/b, transport costs of $12/b, and royalties and taxes at 27.5% of wellhead revenue.)
On water cut, when we look at cumulative barrels of oil to cumulative barrels of water for wells which started producing from Jan 2008 to August 2013 the average is 4 b oil per 1 b water. For Sept 2011 to Aug 2013 (12 to 36 months of output data) the oil water ratio drops to about 3 b oil to 1 b water so the water cut may be increasing based on this view point.
A better way to look at it is to look at the first 12 months of oil and water output. This is very revealing.
For first 12 months of output(well start date range)
wells (1/2008 to 12/2011) — 48 b oil/ 1 b water(2892 wells)
wells (1/2012 to 8/2013)——3 b oil/ 1 b water(3080 wells)
That is a big difference.
Data from NDIC gathered by Enno Peters.
Any mistakes in analysis are by me, Enno just gave me some raw data.
Thank you Enno you are the man!
Hi Mike,
I now get where the $7/b estimate for lift costs comes from.
I think it is $4/b for the oil plus $3/b for the water see my comment above, I did them out of order somehow.
OK, I understand where you were going, Dennis. I know you want me to help you with incremental lift costs but it is not easy. Your deal is Bakken and I don’t know anything much about N.D except that it use to be pretty up there before they covered it in shale wells. Different companies in different counties with different reservoir characteristics are all going to have different costs. Nothing is fixed. After 50 years I can guess pretty well what those shale guys costs are, the truth of the matter is I would not operate a shale well if you gave me the damn thing. My produced water cost estimates per barrel of oil I feel reasonably confident in, though some of those bigger companies in sweet spots may have their own personal disposal systems. I was stunned by Ron’s OWR data; I knew Bakken wells made water but, yikes.
One other thing, in Texas, for instance, in the EF, 22.5% royalty burden is a good number. You know this; oil severance tax is 4.6%, natgas is 7%, though there may be some exemption for that if that gas is qualified as “tight” gas and anything from shale is tight as a tick. But I’ll say this, ad valorem taxes (property taxes) often gets left out left out of the economic equation, I’ll bet. I am paying mine for 2014 this very day: right at $1.00 per incremental barrel. It makes me what to start day drinking.
Mike
Thanks again Mike,
I realize that every well is different and am just trying to get average figures in the ballpark. So for oil royalties and taxes are about 27% and for natural gas about 30%? That is higher than I realized and property taxes tend to be $1/b on average?
Interesting. Would your earlier estimate (which I may not remember correctly) of roughly 7b/d being the average level for abandonment for a shale oil well be correct for the Eagle Ford (which I think is in your neighborhood so you may know someone who works those fields)?
Mike, that was the water cut from a partial list of wells. Confidential wells were not included and some wells did not report oil and water at all. And it was the water cut for the first 24 hours of operation.
Enno Peters’ data shows the Bakken water cut, through June, for wells drilled in 2014 at about 40%.
Also check out FreddyW.s post from yesterday.
Freddy’s Water Cut Post
Hi Rune,
I asked this question above, but I realized that you are using royalties and taxes at 27.5% of wellhead revenue, I think you may be using a well cost of $10.5 million, is that correct? With OPEX at $4/b, other costs at $4/b, royalties and taxes at 27.5%, transport costs at $12/b, discount rate at 7%, and well cost of $10.5 million/well, I get a wellhead breakeven at $68/b ($80/b at refinery gate).
The most recent Continental Resources (CLR) investor presentation suggests well costs will rise to $10 million per well, but that there will also be an improvement in new well EUR due to enhanced completion techniques. So far we have not seen much increase in new well EUR, I imagine well costs will increase but the well saturation in the sweet spots will leave EUR flat to declining within the next 12 months.
At a $10 million well cost, my analysis suggests a wellhead breakeven oil price of $65.5/b.
Norway: Braced for a new wave of investment
Politicians are discussing big changes to Oslo’s $860bn sovereign wealth fund that would see it pull out of fossil fuels
Richard Milne, FT.com, November 3, 2014 7:18 pm
$77.39. Freefall. The currency reversal has undone itself to nearly flat.
Goodbye Bakken. Fun while it lasted, but look at the bright side. They’ll get out before the winter.
Interestingly enough, according to the WSJ Saudi Arabia cut their price for oil delivered to the US, but raised their prices for oil delivered to other customers, e.g., in Asia. I guess this sort of makes clear who is in the Saudi’s crosshairs. Incidentally, one point to remember is that this is the lower oil consumption time of year in Saudi Arabia, which temporarily frees up more oil for export.
Hey Jeff,
I posted the same thing above but from a CNBC article. I go back to my head scratching from our previous posts on this. Why are they doing this? They can’t really affect things for a long period of time, can they? They are acting as if it is 1984 and they can flood the world in oil to bring down an empire. I would guess prices will climb again next spring and the drillers will be back in full swing. In the meantime they have no real spare capacity and they are blowing through their resources at depressed prices (even if they charge the Asian markets more, their overall price structure must still be significantly depressed).
Best,
Tom
I’m going have to slightly revise my cyclical annual oil price observation. Provided that we see at least a 10% year over year decline in annual oil prices, we have not seen, since the late Nineties, two consecutive years of declining annual Brent crude oil prices. For example:
1997/1998, $19 to $13
2000/2001, $29 to $24
2008/2009, $97 to $62
So far, a cyclical pattern of higher highs and higher lows. In order to show a 10% decline in the annual Brent price from 2013 to 2014, Brent would have to average about $72 in the fourth quarter of 2014.
I am willing to bet my last can of beans that the cyclical pattern of higher highs and higher lows will hold up indefinitely-although the period of time that a low lasts might grow somewhat longer- even as much longer as a couple of years if the economic flu gets bad enough world wide.
Let us remember courtesy of Matt Simmons that rust and depletion never sleep and that inflation only catnaps-this last being my own modest addition to that quote which should never be forgotten..If my arguments about printed money basically slowly driving inflation higher and higher are wrong why are cokes a dollar instead of a nickel as they were when I first proudly put an EARNED nickel of my very own up on the counter for my first purchase with money truly my own?
The old long dead man known locally as ” Sharpjaws” for his emaciated face and all around stick like build often remarked in my hearing that he would always be just fine if he could clear just one penny from each vehicle that passed the store- this at a time and place when I could walk the mile to that store more times than not without a car passing me in either direction.
While information and biology technology are fast moving the industries that supply the oil industry are all basically mature and we thus will not be seeing any sharp reduction in shipping costs or mining costs or the cost of manufacturing steel or the components made out of the steel such as diesel engines and shafts and gears and beams and pipe.
We are on an irreversible cultural path towards more cultural dependency on government regardless of what happens today at the polling places.Taxes are going to go up over time. More money is going to be printed.
The cost of paying for the materials and machinery needed to produce oil is almost for sure going to go UP FASTER overall than advancing seismic and drilling tech can push the cost of production DOWN.This has been the pattern in the past and there is no reason I can see that it will not continue to be the pattern indefinitely well into the future.
Hi Glen,
It is very difficult to “print” exactly the right amount of money so that there is no inflation. Generally in a modern economic system a small amount of inflation of 2 to 4 % is a good thing, generally if inflation is below this we are in a depression or recession.
Let’s say you are 75 years old and earned your first nickel at the age of 5.
The math is pretty simple. If inflation was 3 % per year for 70 years the price would have increased by a factor of 8. Today a dollar buys a 16 ounce Coke and I bet that Coke for a nickel was the old 10 oz bottle, so to adjust let’s call it 8 cents for a 16 oz Coke when you were 5, 3% inflation would have only brought the price up to 64 cents, the actual “Coke inflation rate” based on my assumptions is 3.7% inflation over the last 70 years. Lately inflation has been quite modest, in the 70s and 80s inflation was quite high in comparison.
As oil costs go up we will try to find substitutes and we will use oil more efficiently. There will be less vehicle miles driven, less air travel, and more goods moved by rail and more people using public transportation, there will be some use of electric cars for local trips, though I am not sure if society will be able to afford this. The sooner we build out wind, nuclear, and solar and electrify rail and upgrade our grid, the better. A lot of employment could be created in the process.
The sooner we build out wind, nuclear, and solar and electrify rail and upgrade our grid, the better. A lot of employment could be created in the process.
I wish the money in politics would catch on to this. It’s funding activities that make only a few people rich, and even for them, they are leaving money on the table by insisting on policies that support declining industries rather than moving more money into industries needed for the future.
We can pump up military spending, for example, but far better would be to channel more military spending into alternative energy technology rather than weaponry.
Mac,
You know that about 2% inflation is standard operating procedure for the federal reserve, right?
So, if oil prices are 6% higher after three years, it doesn’t really tell you anything about the oil industry. After adjusting for inflation, oil prices would be at the same level.
Ambrose Evans-Pritchard, on the strengthening dollar:
http://www.telegraph.co.uk/finance/economics/11206596/Dollar-smashes-through-resistance-as-mega-rally-gathers-pace.html
I have always had a pretty high opinion of Evans-Pritchard. He may not always be right but he always has something to say worth listening to.
Now if I am vindicated in my predictions made over the last couple of years about a big republican surge in Washington things are going to change in significant ways in American energy politics.
The Keystone will likely get built, the coal industry will get some breathing room, the natural gas industry will be allowed to export, ditto probably the oil producers, etc. The support for wind and solar and other renewable industry will decline substantially and these industries are probably going to be in deep trouble insofar as subsidies are concerned.
The republicans may be in power in all three branches in ‘ 16 and if so then there is a good possibility some new nukes may make it thru the permitting process.If so once started they will probably be finished.
Now this scenario does not bode well for the environment in the short term but it may paradoxically actually be better for the environment over the longer term.
I say this for a couple or three or four reasons. First off the repuglicans are not likely to be able to actually repeal a whole lot of environmental law and such regulations as they do roll back are hardly going to matter in terms of the big picture. We might as well burn coal cleanly in the US since it is going to be burned elsewhere no matter what and wind is a planetary sort of thing. Chinese co2 is in your lungs at this instant.
Second the growth of the renewables industries is dependent above all else on the cost of renewables falling far enough to be dollar cost competitive with coal and oil and nuclear power. Unaccounted costs to the environment are not what drives business decisions.We will see a slowdown in the deployment of renewables in the US with the repuglicans in control- a major slowdown probably.But this is not going to stop these industries from continuing to grow in other countries and as they mature the cost of renewables is going to continue to fall.
Now here is a thought worth pondering:
A great many of us including some people a lot smarter and better educated than yours truly believe that renewables are never going to be able to shoulder the fossil fuel load- which is certainly true in the short to medium term but I am not so sure about that over the long haul.THE LONGER BAU STANDS the longer the renewables industries have to mature and the longer the public has to ponder the realities of climate change and the environmental costs of development and pollution across the board.
I believe that the energy storage problem and the oil shortage problems are economically and technically solvable – GIVEN TIME ENOUGH.Whether this time will be available depends mostly on the continuation of business as usual long enough for the technologies to mature and for us to adapt and adopt new lifestyles and economic polices.
If nothing else a repuglican take over may mean that business as usual is a little safer than otherwise for another few years.Those years may make the difference. I am not actually CLAIMING that bau is safer in repuglican hands but I think there is a good case to be made for this argument.
Now if the repuglicans do take over and Old Man Business As Usual remains more or less upright for another few years and the costs of renewables indisputably falls below the cost of fossil fuels in dollars and cents is is going to be highly amusing to listen to conservative mouthpieces brag about how the free market has solved the energy problem.No doubt every last one of them will forget that the renewables industries have been forced greenhouse agriculture style into unnaturally fast growth for the last couple of decades by means of subsidies.
I usually think of people such as our Nick as being overly optimistic because of the danger of economic collapse in the short or medium term preventing his rosy scenarios from coming to pass in the longer term. BUT-and this is a VERY BIG BUT INDEED- if Old Man Business As Usual survives long enough there is really no reason to suppose he will be vindicated by what actually happens in terms of efficiency, conservation and changing lifestyles.
We CAN get by just fine with cars that go only a hundred miles on a charge if we need to. We CAN put the money we are spending on jet fuel and vacations into making our homes more energy efficient and nicer places to be and stay at home more.
We CAN start baking our bread and making our beer locally again rather than hauling them hundreds of miles -flour takes up less space on a truck and water is one of the heaviest of all cargos.There’s more than enough water to brew beer even in Arizona and Nevada.
And while I may be wrong I have a very strong gut feeling that birth rates are going to continue to fall and fall far faster than even the most optimistic forecasters have been willing to predict.
If I am right about this then we will be needing a lot less new infrastructure and the skilled labor and part of the materials that would have gone into the construction of said infrastructure can and will be diverted into upgrading existing homes and business and public buildings etc so that we will need less energy per capita.
Such a future scenario IS possible. Not saying it is going to come to pass.
WWIII and a runaway climate are also entirely possible futures.Possibly more likely futures.
We are cursed to live in interesting times.
I have not changed my mind about a major human die off.I just don’t see it coming to pass within the next half century or so in the US or Western Europe or similarly situated countries.
Most of what we used to call the Third World is going to be a hell hole in my opinion well before fifty years have passed.I just can’t bring myself to believe the resources are available to prevent collapse over a large part of the globe.
the natural gas industry will be allowed to export, ditto probably the oil producers, etc.
The natural gas industry is currently allowed to export all the gas they possibly can and oil companies can export any product except crude. The problem with natural gas exports is the expense of building the liquefaction plants. They are enormously expensive to build and if the companies cannot see a good profit they will not be built.
there is a good possibility some new nukes may make it thru the permitting process.
Two new permits were issued in 2012. Permits are not the primary problem anymore, expense is. The damn things just cost too much to build. Of course safety regulations have increased the cost dramatically. TVA’s Bellfonte and Watts Bar plants have been under construction for decades. Cost overruns and low demand have slowed them down. When everything else is so much cheaper it is just hard to justify nuclear plants.
TVA Indefinitely Delays Bellefonte Nuclear Project
But the TVA’s second Watts Bar reactor under construction near Spring City, Tenn., has seen its own share of delays. Last year, the TVA admitted the project would cost nearly double the $2.49 billion price estimated in October 2007 (when it decided to complete the project) and take much longer than the projected 60-month completion timeframe. Work on Watts Bar 2, like Bellefonte, was stopped in 1985 for declining demand, though it was considered about 80% complete with a total investment of about $1.7 billion. The TVA now anticipates the reactor will be online between September and December 2015. Watts Bar 2 is a 1,150-MWe, Westinghouse-designed pressurized water reactor of the same type as Unit 1.
For electric power the levelized cost of wind is below that of nuclear and coal for new power plants according to EIA estimates. Natural gas is cheapest at current natural gas prices.
See http://www.eia.gov/forecasts/aeo/electricity_generation.cfm
especially table 1 reproduced below
The republicans may be in power in all three branches in ‘ 16 and if so then there is a good possibility some new nukes may make it thru the permitting process.If so once started they will probably be finished.
I don’t see anything on the horizon to pull the world out of continuing recession given the way things are going. So if the Republicans control everything in 2016, they are likely to face the same problems as currently exist. What I fear most isn’t austerity, which is what conservatives talk, but a return to “debt doesn’t matter” thinking of the Bush years. An expansion of debt and a further reduction of taxes. And what concerns me about that is that the money won’t go to anything productive. Maybe they will declare war on the entire world and ask the same National Guard troops to fight it.
I don’t have an issue when politicians say there are problems. I have an issue when they accuse the wrong people of the cause of the problems, which then prevents them from finding a workable solution.
If politicians blame regulations for loss of oil (as in Alaska) they make no progress toward a peak oil world. That’s why I hope a plateau in the Bakken serves as a wake-up call. You can throw all the regulations out the door, but if the geology and the supply aren’t working with you, you have to face that.
Ron,
I believe Watts Bar is one of the Nuclear reactor that is down stream of of the leakig Boone Lake Dam, that has just popped a sink hole.
http://www.tva.gov/lakes/boh_r.htm
“TVA is accelerating the annual drawdown at Boone Lake so that engineers can conduct more detailed study and investigation of a sinkhole”
There are many more much more dramatic references out there, but I thought I would tone it down, but the potential is there for some issues if it goes the way of the La. sinkhole from last year.
Abandoning and capping 8727 Bakken wells at a cost of 200 grand each is not going to happen. The hydrocarbons expended to do such an insane project would be one complete waste. More used to abandon what’s available to extract would be pure madness.
Such insane notions complete the flight over the cuckoo’s nest.
Peak Oil manages to hide the truth, take it out back behind the barn and shoot it? Apparently, the first casualty of Peak Oil is the truth? Peak Oil manages to threaten is own credibility and Doubting Thomases have to question Peak Oil’s real agenda. It’s beginning to look like a real mess and it ain’t oils fault, it’s humanity’s stupidity, which is obviously boundless.
Shooting messengers is a first order of business?
Social costs of carbon are an asset, a valid argument for renewables, yet renewables are completely dependent on hydrocarbon systems, furthermore, benefits of hydrocarbons are completely discounted? It provides zero economic benefit. It’s insane.
http://www.americaspower.org/sites/default/files/Social_Cost_of_Carbon.pdf
Abandoning and capping 8727 Bakken wells at a cost of 200 grand each is not going to happen.
Why? If the state requires it, how will they avoid doing it? If they go bankrupt perhaps. But other than that the companies must do what the state regulations tell them to do.
Ron,
Well, we all know Shale Economics are LOUSY to say the least. Look at what’s
happening in Wyoming where the state had to clean up the mess of 100’s soon to be 1,000’s of abandoned Coal Bed Methane wells after the price of natgas plummeted.
Coalbed methane bust leaves thousands of orphaned gas wells in Wyoming
http://www.hcn.org/issues/45.22/the-coalbed-methane-bust-has-left-orphaned-gas-wells-across-wyoming
Anyone who has a functioning BRAINSTEM realizes most of shale companies are going to go bankrupt. They are loaded with debt already. So who is going to pay for the 100,000+ shale wells that will be abandoned?
LOL…steve
Anyone who has a functioning BRAINSTEM realizes most of shale companies are going to go bankrupt. They are loaded with debt already. So who is going to pay for the 100,000+ shale wells that will be abandoned?
That’s why I hope the economics become really evident before Colorado sacrifices quality of life in the suburbs to fracking companies that don’t produce a lot of income and then leave the communities to clean up the mess. It’s a state that doesn’t need short-term income like some other states, so it shouldn’t be bullied into doing anything hurts agriculture, tourism, housing, etc.
Well, as I keep hinting, shale may have quietly, off the measurement radar screen, risen to be such a large % of GDP that they have become, altogether now, Too Big To Fail.
In which case there will be subsidies and defaults (bankruptcies) won’t be permitted. But we have the Lehman precedent in play in that if the folks in charge don’t know this is so (because they are off the measurement radar, always remember Bernanke COULD have saved Lehman and would have if he’d understood the extent of their swaps) then the subsidies won’t flow and another Apocalypse looms.
And the cleanup costs are the mechanism, I propose, for a permanence to the industry’s destruction (assuming government doesn’t step in and subsidize).
If NoDak has to step in and cleanup from the many LLCs that fold from this price event then you can bet your bottom dollar that there WILL be legislation passed that requires escrow this and escrow that for any attempt to restart production after a price rise. The obstacles to restart will be much higher than they were in 2008. $120/b may not suffice. We may need $200/b to put up all the required money and assurances NoDak will have to have to get underway again — even though NoDak knows tax revs would flow.
And that doesn’t even address what difficulty will exist to get financing for restart — from people who were just defaulted on.
There is escrow for Decommissioning of Nuclear Facilities from operating costs, which much went poof during the 2008 Financial meltdown, so much for Transparency.
I looked this up somewhat recently. Plug and Abandon price seemed to be $80K, not $200K.
The NoDak regulations are pretty clear. If the well reports 0 flow for some period of time (which I don’t recall, it wasn’t 5 yrs, more like 1 or less) then regulations required it be plugged. Of course, a company can report flow even if there is no flow and pay royalty and tax on that (non-existent) flow to avoid the $80K.
Watcher, my estimate of plugging and abandonment a typical LTO wells could be as high as $200,000.00 and I stand by that. I don’t know where you “look things up,” I assume on the internet and from public shale oil company sites.
The well has to be plugged in accordance with regulatory standards; that will require cutting and recovering some production casing, setting balanced cement plugs in columns of heavy mud, perforating and squeezing other casing with cement, setting other balanced plugs, cutting and capping concentric stings of casing below ground and placing steel caps. Groundwater must be thoroughly protected and no expense is spared to insure that.
After plugging the wellbore, the fun begins. Production lines have to be removed, tanks, separators, heater treaters, and other production facilities, all of which is subject to Federal NORM standards, will have to be disposed of. When these shale wells start to fall by the weigh side, there will be no selling equipment to offset abandonment costs; an operator will not be able to sell a 400 bbl. tank on Ebay. An operator won’t be able to give that stuff away. If that iron is “hot,” disposal fees are astronomical.
A typical LTO location (pad) and roads into that location can cost up to a million dollars; all that crushed rock has to be scraped up, picked up and hauled away…to somewhere. The soil will then be tilled and re-seeded, cattle guards removed, fences removed and or re-built. If you were a surface owner with all this abandoned crap everywhere on your place (a farmer in N.D.?), would you not want your land restored to it’s original state? Of course you would. Most mineral leases will have very specific provisions in them covering land restoration.
A company cannot report “flow” to avoid plugging costs, that is not correct. Not for long anyway, and damn sure not in Texas. Every barrel of oil produced and sold to intermediary trucking companies, then to pipelines, and ultimately to end refinery users must be accounted for. If an operator creates imaginary barrels that cannot be accounted for, his next change of clothes is going to be stripped pajamas. Down here, TA wells must be periodically pressure tested for casing integrity; there are often minimum royalty provisions in a lease. Its cheaper to plug the damn thing than it is to drag it out.
If a well does not produce in Texas we don’t have long to get it plugged down here, and all the equipment removed, or operators face significant fines. If land is not restored, there is significant civil liability to surface owners. Bond requirements are much higher in Texas that N.D. and often require personal guarantees by responsible parties. There is a State fund that covers the cost of plugging orphaned wells; fees to that fund come from the oil industry itself thru drilling permits. If you are an oil operator in Texas, as I am, its best not to mess with Texas. If North Dakota does not have the same standards as we do in Texas, shame on ’em.
Whomever said somewhere above that all these stinkin’ shale wells will never be plugged and abandoned, at whatever the cost, does not live in the real world. Of course they will be plugged. Given public sentiment toward the oil industry, frac’ing, water faucets on fire, methane emissions and climate change? Gimme a break.
The way things work in the real oilfield, for instance what things cost, is actually wayyyyyyyyyyy different than what people read about on the internet.
Mike
Mike, thanks for the information. Being an actual oil patch worker, you are a very valuable asset to this blog. Please keep posting.
Ron
Thank you, sir. I’ll try to squeeze some things in when I can.
I appreciate what you do as well. Its very important.
Mike
Hi Mike,
Thanks. I am under the impression that once a well has been completed and assuming that the well produces enough oil that it can meet overhead costs plus a reasonable return, that even if an oil company goes bankrupt that the well is unlikely to be abandoned.
Wouldn’t the worthwhile wells, producing at say 20 b/d or more be sold off to smaller companies who will operate them until they are no longer worth operating? In an earlier post you estimated that this would be at around 7b/d, though it might be higher if the water cut is 3 b oil per barrel of water. In fact I use 7b/d as my cut off for well abandonment for the average well. If we assume the average well produces 1 b of water for every 3 barrels of oil throughout its productive life (and this may tend to go up as the well reaches its abandonment level of output) would an efficient oil man (someone running a tight budget) be able to make such a well work? I get OPEX $7/b, royalties and taxes at $19/b assuming $80/b at refinery gate and $12/b transport cost for a wellhead price of $68/b, let’s say other overhead is $15/b, so total costs would be 7+19+12+15=$53 and revenue would be $80/b for a net of $27/b. Note that it is clear you wouldn’t buy a well producing at 7 b/d, I am thinking you buy a well producing 50 b/d and am wondering at what point would you be likely to cap the well, assuming 1b oil to 1 b water at the tail end of the well’s life.
Mike, thanks!
I am much aware the P & A (Plugging and Abandonment issue), but decided to let it be for several reasons.
I take it your figures for costs involved are more reflective of the real world.
For shales this may become an issue; We do not know the economic life for shale wells. If it is “short” then P & A becomes a big issue as it comes early and vice versa.
One way to get around it may be that operators at some stage sell their wells and let the new owners’ shoulder the P & A issue.
I’ll have to refind the $80K estimate. Again. I will start with NoDak studies because I think that’s where it came from.
It’s useful to note that my recall is we got into P&A expense during a discussion of how low a flow should still be considered likely to continue for computing a well’s lifetime production. At a certain slow flowrate there is apparently quite a salt encrusting problem in NoDak, but the incentive to declare flow to avoid P&A expense would be there, etc.
Your comments that in Texas one can absolutely NOT avoid P&A expense by falsely declaring flow is important. If your 200K number is better than the 80K number in whatever NoDak study that was then this prohibition from falsely declaring flow is even more powerful — and significantly raises the costs on companies. Though if they want to declare bankruptcy and they are a small LLC, that’s just one more expense they dodge by so doing and place on the state.
This would increase escrow demands the state might impose after shale industry destruction should the price rise again and people want to restart the industry.
This link is Texas relevant and says “thousands to hundreds of thousands of dollars”
http://www.liftek.biz/canyouafford.html
This next link is Pennsylvania and quotes “A shallow well in good condition can sometimes be plugged with cement for a few thousand dollars. But costs typically run into the tens of thousands, and a price tag of $100,000 or more isn’t unusual. ” :
http://www.propublica.org/article/deteriorating-oil-and-gas-wells-threaten-drinking-water-homes-across-the-co
Neither of those was the source of my 80K quote. I recall it being embedded in study text as somewhat typical. I’ll look more for it specifically. Pretty clear that 200K is not unreasonable.
http://fortune.com/2014/10/21/what-happens-when-you-get-drunk-and-kill-putins-friend-with-your-snowplow/?xid=tab_rss
RIP
FACTBOX BREAKEVEN OIL PRICES FOR U.S. SHALE: ANALYST ESTIMATES
http://www.reuters.com/article/2014/10/23/idUSL3N0SH5N220141023
“A sharp decline in oil prices over the past four months has called into question the sustainability of North American shale production.”
GOLDMAN SACHS (Oct. 10)
BASINS BREAKEVEN OIL
PRICE PER BARREL
BAKKEN CORE, $70-$80
PERMIAN DELAWARE,
UTICA,
EAGLE FORD OIL & $80-$90
WET GAS
BAKKEN NON-CORE $90-$110
BERNSTEIN RESEARCH (Oct. 20)
“We estimate that about a third of U.S. shale oil production
is uneconomic at $80 per barrel WTI. We disagree with other
estimates, including those cited by the IEA, which suggest the
vast majority of shale oil production is robust at such prices.
Our expectation is that (the) oil price will revert back to a
level where a much smaller portion of production is uneconomic.”
Goldman has no clue. Nor do most others. The analysis here by frankly any of the regulars is likely superior to what Goldman has. And . . . of course . . . those price quotes never seem to mention that Bakken producers don’t get the full price of WTI. There’s a significant discount for quality or transport.
You may be right (probably are) BUT whatever these guys say has an effect AND why would the price differential make any difference if everyone is already be aware of this? Assuming everyone is already aware………..
I’d trust Bernstein Research… they were on top of the high depletion rates long before the other analysts recognized the fundamental problems with shale.
“We estimate that about a third of U.S. shale oil production is uneconomic at $80 per barrel WTI.”
This seams like a reasonable conclusion based on stuff I’ve read here and elsewhere. Of course my qualifications to have any opinion on this have asymptotically approached zero over time.
A third of LTO would be 600K bpd. That’s a lot.
Wait, more than that.
Thanks for the link Wes, this is interesting. Everyone has a different opinion of the break even price. And I don’t know if this is price the drillers are getting or the WTI market price. I suspect the former however.
ROBERT W. BAIRD EQUITY RESEARCH (Oct. 14) "We estimate $73 as the weighted average breakeven point for U.S. supply." SHALE FIELD BREAKEVEN OIL PRICE PER BARREL Eagle Ford Liquids Rich $53 Wolfcamp North Midland $57 Bakken Core $61 Niobrara Extension $64 Eagle Ford Oil $65 Niobrara Core $68 Wolfcamp South Midland $75 Bakken Non Core $75 Texas Panhandle $81 Mississippi Lime $84 Barnett Combo $93 UBS INVESTMENT RESEARCH (Oct. 14) BASIN BREAKEVEN OIL EAGLE FORD $43.34 MIDLAND NORTH WOLFCAMP $52.56 MIDLAND SOUTH WOLFCAMP $62.74 DELAWARE BONE SPRING $64.67 BAKKEN $72.75 DELAWARE WOLFCAMP $74.86 UINTA-VERTICAL $78.16 MISSISSIPIAN LIME $85.54 DELAWARE AVALON $88.83 UTICA-HORIZONTAL $111.48The descent has systemic origin. What consultant can expect new contracts if he releases information saying things are going to fail?
FYI to all, WTI threatening to go sub $76. Momentum is starting to show up.
I would never ever go so far as to say that any truly large bank has no clue as to the cost of doing business in any large and important industry.If they are willing to put the accountants on the job they are certainly possessed of sufficient data to come up with pretty decent answers, at least in respect to the present and near term. They do after all know damned near everything about the business of damned near everybody these days because almost every dime in circulation passes thru their doors and they certainly have the ability to track the flow into and out of any industry.
Now as to whether they actually publish the numbers their accountants come up with rather than the numbers they think will best serve their own interests……….
I often use the term banksters when commenting about banks.
Nobody unless I have missed their comment has said anything here recently about the reduction in capex over the last year or so by most or all of the big oil companies.Most of this reduction came well before prices started falling to any serious extent.
Maybe they had it all figured out and knew that a combination of economic flu and current ( at that time) production would be enough to result in a serious collapse in prices.If they did it is obvious to me that they would have kept this information to themselves to the best of their ability so as to not spook the market even worse.
Farmerguy, Goldman commissions such studies to ATTRACT MONEY. The prop trading desk will pay zero attention to such numbers — if GS is even allowed to prop trade anymore. They aren’t going to in any way rely on their own results. They exist only to impress potential clients, from whom they make money.
Insofar as oil companies or big banks having analysts who can predict the future of markets more than a few months to a couple of years ahead….I am about as confident of my own opinion as any put out by any economist. Economists and their ilk have a spectacular record of being wrong often enough to leave them with pretty close to zero ”long term” credibility in my estimation.
And we have this: Is US Shale Oil a Ponzi Scheme at $75 per Barrel?
This was a question my dear friend and mentor Rick Rule of Sprott asked the Energy Panel at the New Orleans Investment Conference.
A good question, I think, because there’s a lot of misinformation in the media about shale, and for many years in these missives I have been trying to bring the facts to light.
For example, on August 6, 2013, in an article titled “The Coming Shale Writedowns,” I wrote:
Not all shales are equal. Some shales are deeper than others; and some are dry gas, while others are gas with liquids. In North America, billions of dollars have gone into developing all types of shale formations to extract as much natural gas, natural-gas liquids, and oil as possible. ….
Remember, not all shale formations are the same, similar to how not all gold deposits are the same.
The growth of US and Canadian oil production from shale has been very impressive. To put it in context, the graph below, using data from the US Energy Information Administration (EIA), shows how important it’s been for the two countries.
However, the oil price has averaged US$87.50 per barrel since 2009, which fueled the exploration and production of many shale formations.
I’m a big believer in technology, and it’s been advancing in the oil patch at an extraordinary rate—such that today’s unconventional extraction methods will be considered conventional tomorrow.
So back to the question: is shale oil a Ponzi scheme at $75 per barrel?
My answer is no. Though there are some shale formations that don’t work at such a low oil price, there are formations—and specific sections within those shale formations—that are very profitable even at $75/bbl.
The best companies in the field use advanced technologies to unlock the oil from the shale and increase their margins, and that’s where the growth seen in the above chart comes from.
Ah yes, the descent of quoted breakeven levels gets aggressively underway. Hell, we’re seeing it in our own comment threads.
Oooh, first hint of pressure.
WH just said they have not decided to add to the SPR.
When the price gets high there are usually hints of threats to do an SPR release, and if it gets higher the release is done. But the timing re the election is not good for now. Too late.
I would rather see the US constantly maintain the SPR with as much oil as the tanks can possibly hold, regardless of the current oil price, up or down. So by all means, buy some to fill up the tanks and quit “monitoring” global and domestic supply. The first word in SPR is “Strategic”, not “economic” and we still import a good chunk of our oil from unfriendly places.
I am one hundred percent with HVAC man on filling up the SPR.
History ain’t over folks. All sorts of things can and might happen to interrupt oil deliveries.A big enough reserve gives us breathing room to get the deliveries on track again and if that can’t be done the reserve will still help cushion the shock as we move to rationing which would be absolutely necessary if the tankers don’t arrive.
I, too, think we should be stockpiling oil. And luckily there isn’t going to be political pressure right now to sell off the reserves we already have to lower fuel prices.
Interesting takes on SPR’s role and Saudi behavior, mostly posturing, probably. Russia angle is another intriguing twist. What is real?
http://www.foxbusiness.com/markets/2014/11/05/us-returns-fire-in-saudi-arabia-oil-war/
Hi. I have attached a graph showing the production profile for an average well in Bakken ND depending on completion year. The main reason month zero is lower is because the wells have only produced for 1/2 month on average. As you can see they are quite similar. First 18,5 month cumulative oil production are as follows:
2009: 92.000 barrels
2010: 107.000 barrels
2011: 111.000 barrels
2012 105.000 barrels
2013: 114.000 barrels
For some reason, in Drilling Deeper, Hughes has higher numbers in his profile and EUR. For 2010-2014 I get a 4 year cumulative production of about 180.000 barrels. If about 57% of the EUR is produced (page 52) the first years I get about 316.000 barrels of EUR. His number is 378.000 barrels (page 57). If I would have included Richland and older wells, my number would have been even lower. If you look at the average cum oil production number for wells that are 4 years old in this page https://www.dmr.nd.gov/oilgas/bakkenwells.asp, you get about 175.000 barrels. So my profile seems to be correct.
Here a graph with the average water cut profile depending on year as you were discussing it. I think it looks a bit strange. The water cut depends more on which year it was completed than for how long it has been producing. Perhaps its because they are moving away from the sweet spots? Or maybe I have done someting wrong. But I have not been able to find anything wrong with my data at least.
I am not surprised at all by your chart. It’s exactly what I would expect. The only surprise is that 2012 and 2013 are so close together. But everything else is just as one would expect.
And thanks a million for posting this.
Freddy, or anyone else, I am looking for the source of your water data. The only water data I can find is what I get from the daily well by well statistics. That is, of course, incomplete and time consuming. Please tell me where you found this data.
Hi Ron,
Send an email to Enno Peters and he can send you his data.
I got my data from these reports:
https://www.dmr.nd.gov/oilgas/mprindex.asp
Its of course alot of work to collect the data from there also. So I created a program which does that for me.
The impact of peak oil related economic collapse on the population is often discussed on this site. The nearest reference to that future event might be the collapse of the state run economies behind the Iron Curtain (Eastern Europe after AD 1989). The below graph shows the population of these countries. BP data show the consumpion of oil decreased with 50% between 1990 and 1995. There seems to be a causal relation: collapse of the political and economical system -> drop in oil consumption and population decline. So the USSR and its sattelite states lost 18.000.000 people so far. That is minus 5% in a 25 year time frame with a reduction of oil consumption of 50%.
I think the most negative dooms day folks underestimate how much oil consumption can go down without a massive die-off of population.
We know that peak oil doesn’t mean immediate end of oil. So there is going to be a period where there is “less oil” but not “no oil.”
People will make the transition. It might an ugly transition, but it doesn’t have to be a massive die-off transition.
Recession is our friend when it comes to oil consumption.
I always view oil as being like blood in a human. If you take 1 pint out, the person might feel a bit drowsy, but they can still function perfectly adequately. 2-3 pints and the person might feel nauseous, faint or go into shock. 4 pints and you’re dead.
I would expect the same nonlinear response dynamics from the global economy, depending on how quickly production declines and how quickly adaptations to infrastructure can be made.
IS STRING INTERACTION THE ORIGIN OF QUANTUM MECHANICS?
This is cool stuff: Instead of using quantum mechanics to validate string theory, the researchers worked backwards and used string theory in an attempt to validate quantum mechanics. You can skip the math and go to Section 4 (Outlook) to get the gist of this paper. My wife thought there might be people on Ron’s Blog who would find this interesting. If not, it’s easily deleted. Of course this is “off Topic” but perhaps not more so than Pulsars or Singularities.
http://www.sciencedirect.com/science/article/pii/S0370269314007862
“String theory was developed by demanding consistency with quantum mechanics. In this paper we wish to reverse the reasoning. We pretend that open string field theory is a fully consistent definition of the theory – it is at least a self-consistent sector. Then we find in its structure that the rules of quantum mechanics emerge from the non-commutative nature of the basic string joining/splitting interactions. Thus, rather than assuming the quantum commutation rules among the usual canonical variables we derive them from the physical process of string interactions. Morally we could apply such an argument to M-theory to cover quantum mechanics for all physics. If string or M-theory really underlies all physics, it seems that the door has been opened to an explanation of the origins of quantum mechanics from the physical processes point of view.”
Interesting, but it begs the question: what is the origin of string or M-theory?
String theory grew out of research by Heisenberg in the 1940s. Edward Witten, at the Institute for Advanced Study in Princeton, NJ, and others, in the 1990s, showed that the different superstring theories were different limits of an 11-dimensional theory called M-theory which led to discussions of what string theory might eventually be expected to predict, and importantly, how cosmology can be incorporated into the theory.
Thanks Doug,
I wasn’t clear in my question. What I meant was, if string theory can explain quantum mechanics what explains string theory in a causal sense? Is it even possible for science to answer where the laws of science come from?
“Is it even possible for science to answer where the laws of science come from?” Maybe someday; maybe never. In any case, probably too soon to ask. Perhaps you could get your great great grandchildren to ask. 😉
Hi Doug,
It quickly devolves into philosophical questions which probably cannot be answered. A set of self consistent statements are applied using logic to create theories, these are compared with observations, the observations continue to be “improved” over time along with the theories which often affect what we choose to observe. What is “true” is an age old question along with what “exists” in the real world, epistemology and ontology are difficult subjects, ones that are interesting, but they tend to raise more questions than they answer.
The universe appears paradoxical.
If so, then perhaps to finally know ‘everything’ is to know ‘nothing’, and/or that the universe both exists and does not.
“Is all that we see or seem
But a dream within a dream…” ~ Poe
Hi Dennis,
To physicists that’s too pessimistic a view. However, as someone said: until we manage to learn how gravity and quantum mechanics manage to dance together, major progress in understanding has stalled. String theory may eventually be the way past this dilemma or it might be something else.
Then perhaps Caelan has it nailed: “Is all that we see or seem; But a dream within a dream…” Personally, I don’t think so.
They made me Anonymous again.
And also, you can be both known (Doug) and Anonymous (dream).
Halliburton CEO Expects Shale to Reverse Oil Price Slump
By David Wethe, Bloomberg, Nov 3, 2014 7:00 PM ET
Paraphrasing…
“Our customer’s wells deplete so fast that they have to keep coming back to us to buy our products. So, the decline in our stock price will be temporary”
I like this hashtag that is making the rounds on Twitter
#ShaleFAIL
For all you EV naysayers… Watcher. : )
http://youtu.be/phU0XTuduMM
For more background… A Day at the Belt Sander Races
Sorry aws, may get back to this but not soon.
So let’s look at physics.
Ohm’s law tells you how much power flows through a piece of wire. P = I^2 * R(esistance)
Now you can go look up the melting point of copper and do your own calculations for temperature moderation from convection or you can use the trusty tables.
https://en.wikipedia.org/wiki/American_wire_gauge
Home Depot does their own gauge rating, but in the specs you can find wire diameter (as well as current flow permitted, let’s not undercut the drama) and from it match up to the wire gauge table.
A hefty 12 gauge cord will melt in 10 seconds at 235 amperes flowing through it. 235 amps * 120 volts is 28 kilowatts. 745 watts/1 horsepower –> 38 lousy horsepower melts that cord in 10 seconds, and the insulation between conductors probably melts a helluva lot sooner than copper (which means they will short together).
I can’t plow any 5000 acre fields by end of growing season with 30 horsepower. My 20 horsepower lawn tractor would not do any trips to Yellowstone at 5 mph before winter arrives.
The new Triple-E Maersk container ships have 2 engines. Those bad boys are 43,000 horsepower. Each.
Watcher,
It was a video of a super modified belt sander at a belt sander race. Lighten up! : )
Electric happening now with Bikes. Pike’s Peak Uphill Run PV Powered Electric dusts Dino Bikes.
https://www.youtube.com/watch?v=KuoSp2tFtGI
New for 2015 – http://www.zeromotorcycles.com
Singapore says oil down 11 pennies just above $77. Dollar up again against the big three.
Update of price likelihoods for tomorrow. API inventories reported tonight with a drawdown at Cushing of 600K barrels. The official NYMEX report on the same thing is tomorrow, Wednesday. This happens each week — two WTI inventory reports. The official drawdown expectation is about 1.2 million barrels for tomorrow, so the API report was less of a drawdown than expected.
Add that to a early Europe surge in USD and we have the WTI price presently falling under $77 at $76.70.
The read on how the change of Congress will play for somewhat near term need for shale subsidy is difficult. The ideology of subsidizing the most conservative of businesses is not going to be comfortable for such a now overwhelmingly GOP Congress, but on the other hand the largesse would be going only to red states.
This is the kind of complex reality that has unfolded to render ridiculous, in retrospect, the talk in 2009 of a Permanent Democrat Majority. Nothing ever goes smoothly, and in a world of inexorable joule deficit there are no policies that can succeed. None. This will prove true for the GOP, too. Failure for everyone is inevitable.
Elections probably give the Keystone Pipeline a veto proof majority in Congress next year:
http://www.politico.com/story/2014/11/keystone-pipeline-2014-elections-112567.html?hp=l19
Does it continue to make economic sense to build Keystone? Tar sands aren’t proving to be the profitable business some have thought it to be.
Will the private money be there to construct Keystone once it is approved?
Also, of course, some people have said that once Keystone is built, fuel prices will go up. I wonder how that will set with consumers.
The Keystone pipeline exists now and moves oil.
The Keystone XL is what in the works to be built.
The Keystone XL is what in the works to be built.
I figured people would know what I was talking about.
The welfare state will eventually prevail simply because of demographic realities assuming that democracy survives. The repuglithans took over last night and will take the White House in ’16 unless they run a child molester.
But they are already locked into a socialist trend that they cannot reverse simply because the old folks such as yours truly are already mostly dependent on our handouts in the form of lower property taxes highly subsidized health care and that old supposedly earned old age benefit aka social security aka as welfare for old people.I am certainly wide enough awake to think of my own benefit as a welfare check.
Depleting resources are going to force up the cost of living faster than efficiency can push it down and automation and free trade are going to continue to cause us enormous problems with employment and wages.So the younger folks are going to be looking hard at that fabled one percent and voting themselves some bennies comparable to what the graybeards such as yours truly currently enjoy….
We may have new names for our politicians but barring unforeseen events I am firmly convinced they will all be Euro style politicians in a couple more decades at the longest.What we call a rhino today will be a hard core conservative by then and a liberal democrat by todays standards will be a hard core socialist by then.Really hard core conservatives in economic and social terms will be a fringe only and a very small one at that unable to win a state wide office except at long odd intervals.
Now as to what will happen politically over the next few years here- there will be a big fall off in renewables subsidies and a big increase in defacto subsidies for fossil fuels. Ocare is with us to stay with some sharp tweaks possible.There will be no repeal of legislated environmental law, still too many dimocrats in congress for that but there will be some roll back of bureaucratically written law since the bureaucrats can read the writing on the wall as well or better than most people.
The Keystone will get built and it won’t matter a hoot to the environment since the oil would find its way to market in any case.
But building it will be good for the US in terms of our actual physical security. I am glad to think that when the shit hits the fan the only good short term route for that oil to world markets will be thru this country giving us some leverage.One more or one less pipeline is of no concern in terms of the overall US environment- especially not if it is a brand new line built to the latest standards.
Research and development in renewable energy will continue apace even as deployment slows due to subsidies being reduced or canceled. But in my estimation the renewables industries are getting pretty damned close to dollar cost parity and will still grow exponentially starting in a decade or so without subsidies.It will be fun then to hear all the hard core ” free market ” people crowing about how free markets solved the energy crisis while utterly forgetting that renewables got a ten or twenty year leg up due to subsidies.
Republicans winning in 2014 is not conducive at all to them winning in 2016. Maaaaybe if they suddenly come up with real policies rather than opposition screeching, but that’s gonna happen…
The bigger problem is that this is not a good election to win. The various thing wrong with the world will not kite out another two years. If I was the GOP, I would vastly prefer to blame Obama/Dems for them and win the Presidency in 2016 rather than share blame.
Let’s see…
— Europe in deflation.
— Russia facing full-blown economic crisis between that/oil/sanctions.
— China’s finance/real estate bubble is popping.
— Shale industry is going to implode from oil glut, accelerating Peak Oil for real.
You can add the Western US’ water reserves collapsing and a pandemic if you want, if those situation don’t improve. Right now we’re doing that “no rain in winter” thing again.
You want to be in charge for that? Even if you are US President, you can’t fix most of them.
For current and future elections, the “Winners” should demand an immediate recount.
That’s what I have been thinking. I see nothing on the horizon to correct world trends unless there is a big shift to renewables and having a lot of jobs created as a result.
Therefore, I think world recession will continue. There just aren’t being jobs created. US companies are sitting on cash because they see reduced demand. Giving them more tax breaks won’t encourage them to spend because they aren’t spending now.
So the more control the Republicans get, the more the problems happen on their watch. Though I do expect them to blame whatever goes wrong on Obama, some minority group, and the Democrats.
Peak Oil and lack of water are two things the Republicans can’t do anything about and I am curious who they plan to blame for those.
But yes, whoever ends up President in 2016 will have shit to deal with. The Middle East won’t be better. The economy won’t have turned around. Natural disasters are likely to increase.
What I am most afraid of, though, is another Bush, where once the Republicans get into office, they start spending like mad. But on stuff that won’t actually improve the country. I think they will throw government money to their friends, but it won’t actually result in much of a make-work program. Just more debt.
One thing I hope will happen is that the Republicans will quit complaining about stuff they don’t really want to follow up on.
I don’t see Ebola being a big issue for them now because they won’t want to spend government money to deal with it. I think they will quit saber rattling because they won’t want to send huge numbers of troops back to the Middle East.
No one other than old warmongers like McCain and Lindsey Graham and Dianne Feinstein is gonna vote for troops for fighting ISIS. This ain’t 2003; we *know* people will die and probably in ugly ways.
Nice that Scott Brown lost when running an ISIS/Ebola campaign. Dude has no serious positions on anything, let alone that stuff. Worthless suit.
Not holding my breath for Republicans growing an energy policy beyond “the oil industry is wrong, drill baby drill in Alaska.”
I wonder what happens when the energy companies privately tell the politicians that they can no longer get oil out of the ground profitably. Eliminate all regulations and the geology still doesn’t cooperate.
For the history of the world, the “let me do what I want” folks always had new areas to conquer. Overfish. No problem, we’ll go elsewhere. Cut down all the trees. No problem. There are other forests.
But water and oil aren’t unlimited. Curious what the conservatives will do when they hit a wall. Well, I guess I do know. They’ll blame someone who had nothing to do with the problem. Blame, panic, no solutions.
I am also curious what happens when the oil and the ag folks collide even more on water. It’s been an issue so far, but obviously not enough to keep the ag folks from voting for politicians who support heavy development of fracking.
Anon you have strong and pertinent arguments and the only way to know what is going to happen is to wait and see. The counter arguments are good too and that is what makes gambling interesting.
The first counterargument is that the repuglithans will still be able to focus attention on Obama and the remaining democrats refusing to allow them to fix things.
The second one is that the economy may and probably in my opinion will get a little better over the next couple of years and the repugs will be better imo able to claim credit for that improvement than the dimocrats.
More people in my opinion are still thoroughly pissed about Ocare, gay marriage , porous borders than otherwise and that sort of people are not going to forget their grievances which right or wrong they blame on dimocrats.
So- I remain of the opinion that the repuglithans will barring bad luck win the WH in 16.
I am not happy about this since the environment is my primary concern in terms of politics these days. There is an excellent – in fact bullet proof – conservative case for sound environmental policy across the board but unfortunately the repugs are conservatives in name only and are so deep in the pockets of big biz that it is going to take a few Pearl Harbor type environmental disasters to get their attention.
It may be that we see a couple of these events within the next year or two. If so they will bring about a great deal of suffering wherever they happen but in the end ENOUGH SUCH EVENTS will be the best possible thing that could happen since once climate change is undeniably real to the man on the street we will then see some action on the political front to deal with it. Hopefully this action will not be entirely too little and too late.
Hi OFM,
Democrats have some members which are pretty far left, but if you look at mainstream Democratic views and compare them to mainstream Republican views from the 80s, they are not very different, the entire political spectrum in the US has moved to the right, and someone with Reagan’s views would be called a RINO by many of today’s Republicans.
It’s mostly fun to examine the memes destroyed.
2008’s meme of hatred of Iraq involvement and all things Bush proved meaningless as Lehman and TARP and outright suspension of the campaign by McCain to return to Washington and address the financial disaster elevated to replace Iraq as all important for the election. Exit polls made clear Iraq was not the most important issue in deciding the vote that year. This was just 4 months after Hillary was backstabbed for the nomination, because she was not anti Iraq enough.
Key anti-Hillary nomination ammo by the Obama team was the absolute, unequivocal closure of Guantanamo within 90 days of taking office. What was to be done with the prisoners was not important and not addressed and not questioned. Last I looked, 6 yrs into the Administration, Guantanamo is still open and still populated.
I believe the 90 day limit was defined also as anti-Hillary ammo for removing “every single US military troop in Iraq AND Afghanistan”. That extended to years post inauguration, and then people who were members of US military services suddenly became something other than that as an advisory staff was retained there indefinitely, and lately increased. “They aren’t combat troops.” Oh, well.
2009 then arrived with inauguration and widespread declarations of a Permanent Democrat Majority and how now all things good would unfold forever. Oh, well.
Hi Dennis,
I must agree with your comment in general.
But I am nevertheless convinced that overall demographic trends combined with an anemic future economy virtually guaranteesa big swing of the pendulum back towards the left.The boomers are just now beginning to figure out that they are now tax eaters rather than tax payers once that old SS check and Medicare kick in.
AND OF COURSE since we paid taxes all our lives we feel entitled now to every thing we can get from our kids and grand kids and great grand kids yet to be born.
AND while the younger generation is still mostly as always interested in itself and not very prone to actually going out and donating time and money directly and personally to help out those less fortunate than themselves they do still want the unfortunate folks looked after- so they tend to vote for politicians who are in favor of such things to a substantial extent.
I don’t think the repuglicans can turn things around economically over the long term any more successfully than the dimocrats.
But the economy is cyclical and I think it has good shot at doing well enough between now and ’16 for the repuglicans to get the credit for the improvement since so many people both right and left are tired of Obama.
But the economy is cyclical and I think it has good shot at doing well enough between now and ’16 for the repuglicans to get the credit for the improvement since so many people both right and left are tired of Obama.
I don’t see lots of jobs coming back. Companies try to eliminate as many of them as possible. And without jobs, consumers don’t spend unless they are encouraged to rack up more debt. Now it is possible they will forget the last crisis, but I’m guess that people who don’t expect to be employed won’t charge more items than they absolutely have to.
The irony for the Republicans is that by making bankruptcy harder to do, people have to be more cautious about going into debt. And without debt, they can’t spend.
And I posted an article here that says the housing market is still depressed. That was always something that helped to get the economy going again.
Yo FarmerGuy, re GOP win of WH in 2016.
Obamacare was not what the Pelosi wing wanted. They wanted a far more centralized single payer system. They, the Democrats, could not even get that through their own caucus — in the House. Let alone the Senate. The talk of the need to raise taxes . . . it never happened with the overwhelming Dem majority. They could not even get it through the Dem caucus. The millionaire’s tax increase only occurred last January, as part of the fiscal cliff deal. The GOP held the House then.
A GOP win of all branches in 2016 will have a similar result. The most right wing of policies won’t even get through the GOP caucus. Filibuster won’t even be an issue.
Wave elections like last night reflect policy dissatisfaction. Never policy advocacy. The new folks in seats will very quickly get used to the luxury and power and start calculating this and that and firebrands fairly quickly get their wetted fingers raised into the wind. If their district doesn’t want something, they aren’t voting for it, no matter what ideology says.
Wave elections like last night reflect policy dissatisfaction. Never policy advocacy. The new folks in seats will very quickly get used to the luxury and power and start calculating this and that and firebrands fairly quickly get their wetted fingers raised into the wind. If their district doesn’t want something, they aren’t voting for it, no matter what ideology says.
I pretty much expect to see frequent turnover from now on. The problems we face aren’t easily fixed, so people’s lives are likely to continue on their current downward course. Voters will want to blame someone, so each election will be their opportunity to vote someone out and vote someone else in.
You see a lot of this in Europe. Spain has Socialist government. Economy collapses. Center-right Popular Party sweeps into power with huge majorities. Popular Party fails to fix economy while dabbling in right-wing social policy and service cuts. *Hard* left parties are now positioned to swamp the Popular Party in the next general election.
France has the reverse where they sacked Sarkozy’s government for Socialists, but the economy is still bad so people are now considering the sorta-fascist National Front.
Well, let’s not go overboard declaring results meaningless.
Dissatisfaction with policy is dissatisfaction with policy. You can, if you’re left wing, desperately cry out “it is not a mandate!!!”. But what you can’t do is pretend the policies in place can be continued. Obviously they are rejected.
So whereas one can say NO MANDATE, one also has to say the policies in place were rejected. There is just no avoiding that.
In terms of global upheaval, the upcoming Greece election is the one to watch, because those swaps are still out there, and probably more have been written on the Troika sponsored loans.
The firebrands in Greece are poised to win and their lead policy goal is to reject and probably default on those EU / IMF / ECB loans. That may prove to be an utterly intolerable precedent. Beyond the outrage of last election when the EU explicitly told the Greek populace that if they voted for Syriza the EU would cut them off and let them die (how’s that for keeping your hands out of sovereign affairs?), this time the reality of those loans at risk for default may cause a lot more EU pressure than just words.
The equivalent would be the US Federal government telling Tennessee that if they voted in Democrats to state legislature majorities, they would have their interstate highways cut off and no food would be allowed in.
But what you can’t do is pretend the policies in place can be continued. Obviously they are rejected.
But the newly elected party may not actually generate new policies or new policies that work. So replacing politicians does not necessarily mean replacing policy or getting better results from new policies.
Yes, the voters are unhappy. But they are likely to be unhappy at each election. They are likely to be unhappy with whomever is in office because politicians and economists haven’t been very good at creating workable solutions.
I saw this recently. Housing not looking good. While I suppose one could say that there’s nowhere to go but up, which would bode well for the next president, I think things are going to stay squashed. There just aren’t going to be the jobs to put income into people’s pockets. Transforming the country into a renewable energy stronghold would do that, but the Republicans won’t do that until the campaign money shifts that way.
http://www.citylab.com/housing/2014/11/the-next-housing-crisis-may-be-sooner-than-you-think/382311/
Brent is scraping 82 and 1/2.
Coincidentally, the Russian ruble has dropped 10% in a month…
Big news out . . . possible sabotage of Saudi pipeline. Saudi’s say accidental fire. Oil price spiked on the news.
Someone check CLR executive travel itineraries.
As the Fed & Member Banking Cartel continue to RIG the paper price of silver lower, the U.S. Mint totally sold out of Silver Eagles. And this wasn’t a paltry amount. A Reported 2 million Silver Eagles were sold in less than 2 hours. Total Global daily mine supply is 2.2 million oz.
You know this is a big deal with Reuters Covers the SELLOUT of Silver Eagles.
http://srsroccoreport.com/u-s-mint-silver-eagles-sold-out-reported-2-million-sold-in-2-hours/u-s-mint-silver-eagles-sold-out-reported-2-million-sold-in-2-hours/
Funny, the BRAINDEAD ANALYSTS on CNBC state that we are seeing a Commodity driven deflation. Oh, is that so. So, I gather Silver (being an important industrial metal) being down more than three times in percentage terms compared to Copper seems quite fair…. LOL
You just can’t make this stuff up…
steve
Ron,
Sorry… I may the graphic size smaller. Don’t know why the damn thing shows up so large here.
steve
LOL… You may the graphic size smaller? LOL
But it’s impressive… I have a hi-res screen, so everything appears smaller than usual, so the larger the better sometimes.
Like the Rethuglicans have had a leg to stand on. They only have to do one thing and one thing only. Repeal the Affordable Care Act. They also need to buy a one way train ticket, not an airline ticket, go home, and never go back to Warshington. With any luck, they’ll hold their breaths until they expire. A blessing in disguise. The same for those jackasses in the Democrat camp.
Throw all of these bums out on their ears. They’re nothing but useless eaters. The Demonrats, sp, must do the same and spare the American people the misery of doing it themselves. If they do, the gratitude expressed by the poor, broke tax slave will be immeasurable.
For your information, social security is not an entitlement, deductions from wages paid funded the Federal Insurance Corporation of America, FICA. It is money earned and deposited to insure the pension funds to be solvent. The money does not belong to the US gov at all, they’re just thieves who think it is theirs. Typical behavior of criminals. the same goes for those so-called Republicans. They are a disgrace to their party. Anybody with a single solitary brain cell inside their skulls can see that.
The money belongs to those who paid the premiums to fund the retirement when the time comes.
It does not belong to the US gov, it belongs to those who paid those premiums to fund the pensions when they retire.
The US gov is broke, no money at all, the debt is what speaks volumes.
The price of gas will drop like a rock if these nutjobs just stop what they are doing, i.e. making life a hellhole for everybody else.
Repeal the Affordable Care Act.
The thing is that people like parts of it, such as not being denied insurance for pre-existing conditions.
Being forced to buy insurance is a bummer, but that’s the way insurance works. Same with auto and property insurance. People who don’t need it subsidize people who do. And to make sure the system works, you require people to have auto insurance, and property insurance if they have a loan on the property.
My understanding is that health insurance was going down the tubes anyway because it was becoming unaffordable for many people and companies, and that the ACA was actually a way to help insurance companies survive. My guess is that if the country tried to get rid of the ACA, it would be the insurance companies themselves that would ask for it to continue.
The ACA was something the Republicans could campaign about, but when push comes to shove they might find that they can’t get rid of it. They could blame the Democrats for standing in the way of getting rid of it (e.g., Obama veto, not having the votes to overturn the veto), but if they could do it, I doubt that they would.
When my wife was born in 1955 the total bill paid by blue cross for a 3 day hospital stay was 44.50 usd.
The insurance industry is in the business of ripping people off constantly.
The whole enchilada needs to be dismantled. It is a lost cause now.
The game is over.
Oh God yes the health care system in this country is a mess. The ACA isn’t what I wanted, but at least Obama did something. Health care in the US was going to collapse on its own anyway, so I don’t fault him for trying to get something going. The Republicans could improve the ACA … if they were committed to driving down overall health costs, but I don’t think they will actually do anything toward that end.
Nixon on healthcare:
https://www.youtube.com/watch?v=RmHTte8jRLk
From an outsider point of view, for the US to have affordable health care, your had better get rid of most of your lawyers.
The other thing I see, by tying your health care to the employer, the employee does not see the cost, but expects the best care. Once the employee is paying the bills, their expectation of health care may change. Does every hospital patent require a separate room? Other countries have have wards where groups of patients are attended to in an open floor plan.
US DEBT CLOCK.ORG
http://www.usdebtclock.org/
I don’t know if it’s relevant to your comment but according to a popular Debt Clock on the web, the unfunded US Prescription Drug liability is over $20 trillion and the Medicare liability is over $80 trillion (both are increasing like they’re in a race). I don’t know anything about the American Medical system but this seems like an astronomical issue.
The Watcher Imperative on such things . . . stop worrying about numbers representing whimsically created pieces of paper.
If numbers threaten to generate widespread starvation, the numbers will be changed govt order, and no one will be allowed to complain. Anyone damaged by this will be denied access to the courts, or shot, and maybe both.
Dollars will never be the mechanism of Apocalypse. They can be changed by decree.
Oh, don’t confuse yourself with imaginings that a wave election rejecting things will result in those things being left alone. THAT won’t happen.
Repeal will be a top priority. “Replace” will be the finesse, not “partial repeal”. Without an outright repeal, way too many of those newly elected GOP folks would get primaried from the right.
The replace part will be the finesse process.
Repeal will be a top priority. “Replace” will be the finesse, not “partial repeal”. Without an outright repeal, way too many of those newly elected GOP folks would get primaried from the right.
But members of both parties say the GOP can’t repeal it. If a majority votes for repeal, Obama will veto. And if he vetoes, there aren’t 60 senators who will vote to overturn his veto.
The ACA debate was always just to get the GOP elected, not to actually undo it.
They will go through the motions. It won’t happen. They will blame Obama and move on.
Oh of course it will be vetoed. But the GOP has to pass a repeal bill. Period.
If the GOP takes the presidency in 2016 and holds both houses, that bill will be re-submitted, and it will pass and be signed.
The point is there is no way to dilute the opposition to it, certainly not in 2 years with the various barbs and gutting of spending that will be done over those 2 years to prevent support for it from building.
If the GOP wins the presidency, it’s gone. The only finesse will be in the replacement, which will come in a largely separate vote.
Health insurance companies have done very well on the stock market after the ACA was passed. I think when push comes to shove, they will make sure the GOP doesn’t kill all the money coming their way.
Take this to the bank. The ACA is here to stay although it may be repealed and resurrected all in the same piece of legislation and renamed so as to give the repuglicans more credit for it.
Most of us here know what a ratchet wrench is. It has a little lever that sets it to work in either direction, clockwise or counterclockwise.Entitlements in this country work like a ratchet wrench with a missing reversing lever.Once passed they are impossible to repeal since they create enormous one issue constituencies in a hurry.
So – The ACA HAS ALREADY CREATED IT’S ONE ISSUE CONSTITUENCIES.
We are not going back to the old system. There will be a good bit of sidewise movement crabwise but not much crawfishing.
If there was any one issue other than the economy in general that cost the dimocrats the election it was the ACA, and in truth the ACA cannot really be considered separately from the economy.
But in the long run it is going down in history as another huge victory for the Democratic Party.It had a hell of a lot to do with losing yesterdays battle but over the years it will work very much in the favor of the Party and for that matter of the run of the mill people of this country.
The overall trend towards socialism is not reversible to any real and long term extent since it is the result of changing demographics and culture.
In some respects this is a very bad thing in others a very good thing.Overall it is in the best interests of the poor and working classes and maybe the middle class as well.The one per centers will have to be satisfied with a few less zeros on their bank statements but otoh they are not going to miss any meals or run short of money for shopping trips for MUFFY and BUFFY.
The downside is that expectations for such things as universal education which are met thru government spending tend to create a constituency not only of the getters but of the givers as well with the givers in the end winding up getting more than giving.
Our kids get a so called education in most cases these days. The teachers used to give it to them but nowadays the schools exist mostly to make sure the teachers get their paychecks and bennies with the education of the kids not even a close second in terms of importance as things stand politically.
The ACA does next to nothing to control the cost of health care- it just creates what is basically a new entitlement for people who did not have insurance.The lawyers love it the insurance companies and pharmaceutical companies love it and the doctors and hospitals will learn to love it as well because they are going to continue to consolidate until they have the ability to put prices where they want prices to be.This is the mid term scenario.
In another generation or so the trend to socialism may actually force some serious European style efficiencies in terms of US health care.
AND FOR WHAT IT IS WORTH- the repuglicans do have a few good ideas about controlling costs without cutting coverage but I am getting sleepy again and going back to bed.
Well, I’m gonna have to jaw drop if indeed oil heads up immediately, and I mean IMMEDIATELY, with the election being done.
It’s nice to sneer at conspiracies, until coincidences start to apply stress.
This will be near and dear to the carbon dioxide people who post rather a lot here. It’s from . . . get this . . . the New York Times:
“The turnout surge among minority voters that was crucial to Democrats in 2012 wasn’t easily replicated, notwithstanding efforts to use Ferguson and Trayvon Martin as rallying points. That amazing Democratic get-out-the-vote operation, staffed by geniuses and whiz kids, turned out to matter a lot less to who voted, and for whom, than more old-fashioned indicators like the president’s approval ratings. And nobody, but nobody, cared how many millions liberal billionaires spent trying to make climate change an issue.”
One more time, being careful to understand that it is mis-written:
“And nobody, but nobody, cared how many millions liberal billionaires spent trying to make climate change an issue.”
It’s not that nobody cared about the money spent. They don’t care about the issue. It doesn’t even reach the edges of the radar screen.
“They don’t care about the issue.” Precisely. Which is exactly why Ron’s gloomy pessimism is right on the mark and all the dialogue about green this, lower fertility rates that, sustainable paths, etc. is a wast of paper, time and words — Because They Don’t Bloody Well Care.
Pretty much. And that means you seek victory or you die.
If one needs conscience balm about such things, find it in the knowledge that there doesn’t have to be war. All they have to do is surrender and you’ll let them live. Sort of.
It’s not that nobody cared about the money spent. They don’t care about the issue. It doesn’t even reach the edges of the radar screen.
It’s understandable. People don’t want to change their lifestyles to accommodate something that doesn’t affect them immediately.
Even with the issue of changing weather patterns, there hasn’t been an emphatic statement from the scientific community that these are due to global warming.
I think it’s better to sell reduction of carbon use as an economic issue.
If peak oil soon hits the Bakken, we can start pointing out that fracking won’t save us.
If investors start backing away from investing in tar sands, we can point out that it’s turning out to be less attractive than originally conceived.
If millennials lose interest in auto purchases, we can suggest that spending more on roads makes less sense that building out public transportation.
If the Tiny House Movement continues to pick up, we can show how owning big houses isn’t “cool” anymore.
We can also suggest that there would be far more jobs in changing the country to renewable energy than there will be jobs in established gas, oil, and energy generation.
“Even with the issue of changing weather patterns, there hasn’t been an emphatic statement from the scientific community that these are due to global warming.”
What? Where have you been? There has been an endless stream of warnings, dire predictions, gloomy forecasts. How can you say that?
What? Where have you been? There has been an endless stream of warnings, dire predictions, gloomy forecasts. How can you say that?
Oh, I follow the discussions very closely. Whenever there is a particular weather event, like a hurricane, or even the current droughts, and the news people ask scientists if that particular event was caused by global warming, the scientists never go that far. They won’t say that any particular weather event can be blamed on global warming. They talk about trends, but not particular current events.
I wish they would say that California is losing water because of global warming, but they won’t go that far. They talk about shifting weather patterns, but not specific events.
This is as close as they have come and this is really recent.
http://www.edf.org/blog/2014/10/02/how-scientists-linked-california-drought-climate-change
Here’s a more detailed look at that report. This is last month. This is as strong a statement as has come out about current weather and global warming. Scientists haven’t wanted to attribute specific weather events to global warming without some fairly definitive proof. So it has been hard to yell to the public that they better get their acts together or their lives could be affected by extreme weather NOW.
But the more scientists are willing to attribute bad weather happening now to global warming, perhaps the easier it will be to get the public to care.
http://www.weather.com/news/science/report-human-caused-climate-change-2013-weather-extremes-20140929
Weather is weather, climate is climate. Climate change contributes to weather variability, not specific weather conditions. Climate change contributes to changing weather patterns, not specific weather. Do you expect scientists to attribute climate change to specific weather events? Never happen. You cannot attribute a hurricane or a hot day or a cold month to climate change. Once you do something like that you loose credibility; deservedly so.
I understand. But weather impacts people more than climate, particularly future climate, so you get their attention more over weather events than something they perceive off in the future.
At any rate, there are issues I think you can get people to care about. Global warming is, not surprisingly, low on their list of priorities.
I think the economic issues of not moving toward alternative energy technologies might grab their attention more than having them make changes for the future. And as more people drive efficient cars, add solar to their homes, move into smaller houses, take public transportation, these are testimonial opportunities.
Have people talk about how their lives have improved by using less energy. Talking about the sacrifices we need to make isn’t nearly as strong a selling point.
Latest from the Carbon Tracker Initiative.
Ninety percent of future oil sands projects at risk from eroding oil price
Yes, I’m wondering if the money for Keystone will fall away
Hey guys I wouldn’t want anybody to think I am RELIGIOUS about peak oil but I do believe that oil does deplete and that every well eventually must run dry or at best produce a barrel or two a day-I am under the impression that conventional stripper wells may continue to produce a few barrels for centuries.
But it seems patently ridiculous to me to assume that oil prices can stay down very long. There is certainly plenty wrong with the world economy but most of what is wrong is in my estimation due to financial mismanagement and resource shortages.Mismanagement is sort of self correcting after a while- witness the housing bubble. People quit building so many and some old ones will rot down and the increasing population will eventually restore balance in housing markets.
But the case for oil is different being a fungible resource that gets to be more expensive to produce from year to year and that gets used up immediately.
The cheap to produce oil is either gone or else in pretty damned short supply.
The price will go back up pretty soon unless the world economy continues to tank.
I used to be a short term doomer and long term optimist. Nowadays I am some what of a short term optimist and a long term doomer as far as the world is concerned.
Nobody has presented any good arguments to my knowledge why the Chinese for instance can”t quit building unaffordable houses for speculation and start building more modest but useful housing that is affordable to the actual people who are building the houses and the people who work in the factories making the junk they send us.
The people in places such as Greece voted themselves enough easy living in the socialist mode to make it an easy choice to depend on the government for easy living policies rather than earn a living. The pendulum swung too far to the left. It will eventually swing back to the right.The people there will learn to produce well enough to compete with other countries or else they won’t. They can spend their days working on energy efficiency or bitching about the price of oil. They WILL do what they have to do , eventually, just like a spoiled kid forced to leave home and pay his own bills; or else they will revert to a standard of living commensurate with what they do produce- a MUCH lower standard of living.
Change is a constant. Nobody is going to make a very good living very much longer producing wine because good wine is too easily produced in vast quantities in too many places. No country is going to be able to depend mostly on tourism forever unless we go back to trains and ships-which of course we may well do.
Most of the western world and most of the developing world will get back to growth -slow and sporadic but growth nevertheless for a while yet , maybe for a decade or two yet.Maybe even longer.
The demand for oil will pick up as business picks up because efficieny measures take a long time to offset oil demand.I believe in battery powered personal transportation but I sort of doubt I will be driving long enough to buy a really cheap used Volt or Leaf.
Oil will go up again and the average price at the next high will probably be higher than the average this last price cycle. When it goes down again the average price will be higher at the bottom of the cycle than it was this time.
The less of the stinky stuff there is the more useful it becomes and the more people will pay for it. It will not continue to come to market at the current prices in the current volume.Economists are pretty dumb about some things but they are right about the price of essential commodities going up when the supply declines for any reason.
Watcher says:
“… Maybe sand is too small a particle to let larger molecular chains flow. Ceramic proppant might generate better quality oil.”
Ummm, proppants are sized for the well.
Commonly they are spec’d like 40/70,
meaning the sand/ceramic fits thru a #40 sieve, but is stopped by a #70.
Sieve sizes are “larger the number, smaller the hole”.
example sizes are in this page from a company that makes a machine to analyze frac sand size and shape
http://www.horiba.com/scientific/products/particle-characterization/applications/frac-sand/
Sand might crush and the fines limit fluid conductivity, but then they have coated sand for that.
But 70 mesh is 210 micro-meter (.21 milli-meter), and oil molecules are measured in a few 10’s of nano-meters for big ones – that’s 4 orders of magnitude difference.
Good info. I recall reading that the China ceramic was replaced with sand because the cost difference was overwhelming the superior flow that ceramic provided. Just speculating that they never examined any difference in nature of flow.
Oil Explorer Warns of Fracking’s Unintended Consequences
By Justin Scheck and Daniel Gilbert, Corporate Intelligence Blog, WSJ, Nov 5, 2014
http://news.nationalgeographic.com/news/energy/2014/11/141105-ways-us-election-results-could-reshape-energy/
The author is one Wendy Koch but it seems safe to say she is not part of the Koch brothers outfit.
The Bakken is not going to be abandoned and oil companies are not going to go broke pumping the oil out of the ground and shipping it at 55 mph by train to the refineries. It is not going to happen… at all. It is all accounted for and the bills of lading are checked… three times. The owners of the oil, transporter, receiver all have a copy after delivery is completed. To the penny.
Warren Buffett is not going to give away any railroad services.
It was Rockman over at TOD who said it all. ‘Don’t mess with Texas means don’t mess with the Texas Railroad Commission. You’ll be hauled away in handcuffs.’ Words to that effect, I can’t remember the exact order. You won’t be selling oil under the table, it won’t pay to do it that way.
After you open your Handbook on Chemistry and Physics, go to the history of the science of the Sun. You will learn that there are 77 known elements on the face of the sun. Whether the elements are from outside sources like comets and asteroids slamming into the Sun or the elements have been formed by the heat from the Sun’s massive energy output, I don’t know. Hydrogen to Helium to the rest of the elements have to have a source, so the suns throughout the Universe seem to be the real origin of those physical entities. Hydrogen nuclear engine vortexes whirling around in space with tremendous heat given off will produce something more than just light and heat, the elements are the result. The entire earth is a result of the sun’s energy.
Here’s my question: Was the Sun originally a blackhole?
“Most of the things worth doing in the world had been declared impossible before they were done.”
― Louis D. Brandeis
Kind of an endorsement for renewables, the sun’s energy, really, just immediate, not waiting a hundred million years to tap it.
It just has to be done right, which seems impossible, but it all takes time.
Dismantling all of those wind towers will take some time. Abandoning wind towers comes first before oil wells are abandoned. A complete waste of resources to build wind towers that do nothing for 22 1/2 hours each day.
Sometimes, you have to learn a lesson the hard way and mankind has done plenty of that, so it is nothing new.
“Here’s my question: Was the Sun originally a blackhole?”
No the Sun was never a Black Hole. In fact it is a relatively insignificant garden variety star consisting mostly of hydrogen and helium. There are some minor amounts of heavier elements: oxygen, carbon, and iron, etc. present. It will pass through various phases before becoming a white dwarf. But before then it will expand and envelope the earth. I thought everyone learned at least this minimal amount of science by grade 10.
So all of those clouds of gases gaining mass, not emitting any light, pre-star mass until the gravity is great enough to form a new star, is not a black hole, it is a dark nebula. I see.
First we get rid of the oil, using far cheaper electricity from any source, including wind.
…Then we send Nick to get some groceries in his spanky-new EV, knowing full well that the directions we give him are via a road that will likely wreck his EV and/or have it get stuck. ^u^
If you rewind the universe far enough, then it crunches into some kind of ‘singularity’ I guess– maybe something like a black hole. Maybe the universe is the other side of a black hole, a fractal bud in the cosmic layers of universes.