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PeakOil is You

PeakOil is You

Is fast crash likely? Pt. 6

General discussions of the systemic, societal and civilisational effects of depletion.

Re: Is fast crash likely? Pt. 6

Unread postby rockdoc123 » Tue 14 Nov 2017, 11:53:50

The Saudi fields reached a water cut of 50% 17 years ago.


Please give us your reference for that 50% number. According to presentations from Aramco Ghawar which is arguably the field which has produced the longest was at a controlled water cut of ~35% in 2008 and more recent suggestions from the government is that it is now ar 40% and stable. And as I and Rockman have pointed out time and again fields can produce up well beyond 90% water cut. So what is your point?

It shouldn't be surprising that they can no longer pump enough oil to cover the Kingdom's costs.


they have a 2.5 MMbpd spare capacity they could turn to if they were as thick as you appear to be, (spare capacity being defined as by EIA). Why in the world would they pump more of their oil at low prices when they see a price recovery in the near future? At the current rate of production along with their announced changes to the budget going forward as published in their latest budget notice (reduced subsidies, higher taxes on foreigners etc) they will be budget neutral in 2 years time and that was based on a $55/bbl Brent price which we are now above. This without even contemplating the IPO which will generate cash into the new corporation that would build their federal reserves to the largest in the world. The seizure of funds which MBS has suggested were gained through corruption pretty much wipes out the budget deficit for the next several years. They are hardly in trouble but I'm sure they appreciate you worrying about them.

Venezuela is just the first of governments that will fail, and fail the people that they were intended to serve. Some hopeless dreams that our innate cleverness will salvage our desire for ever more material do-dads are just that - dreams. Depletion does not take vacations!


Either you haven't a clue about the situation in Venezuela or you are being purposefully obtuse. The situation has zip to do with depletion and all to do with oil field and government budget mismanagement. There are a number of exceptional opportunities in Venezuela to not only increase oil production but also make new discoveries given PDVSA has done essentially nothing since Chavez effectively nationalized the industry step by step between 2007 and 2009. Arguably when Venezuela opened up much of its acreage and fields to foreign participation in the mid to late nineties it gathered more attention amongst E&P companies than any other open round had in a decade. But during the time between the award of blocks and Chaveziation of the industry, not a lot was accomplished for various reasons. The fact of the matter is that oil and gas E&P is a capital-intensive business and requires considerable reinvestment to maintain production let alone increase it. What Chavez did was to take cash flow from oil production and invest it solely in social programs with almost no reinvestment in the oil fields or country infrastructure maintenance. As a consequence oil production has continued to drop and there has been no new drilling in areas that have always been seen as attractive. The oil is still there, with proper management there is a long life left in many of the heavy oil fields as well as other conventional plays.
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Re: Is fast crash likely? Pt. 6

Unread postby donstewart » Tue 14 Nov 2017, 12:39:06

A little more on Energy Cost of Energy
If you examine Tim Morgan's graph, you will find that, over the next 10 years, the ECOE increases from around 8 percent to around 15 percent. I am going to round that to doubling, just for the purposes of illustration.

Now take the basic premise of Kuznets when he invented the National Accounts, or the position of Tim Jackson in Utah or Tim Morgan or BW Hill, that economic activity is basically a function of energy. Tim Jackson's work tells us that there is no 'decoupling' of economic activity from energy consumption, up to the present time. Then if energy costs of energy double, then economic activity will decline by half. Which means that it is virtually impossible to invest money now which will even pay you back in 2028, much less give you a return. Which is why your pension contribution is most likely not going to pay off. Which is not to deny that central banks cannot create enough inflation (see the example of Venezuela) to let you be paid in currency which has lost its value. (Whether society and the economy and the energy industry could survive such a collapse is an issue I will just sidestep.)

I think I posted this before, but I doubt anyone looked at it:
https://peerj.com/preprints/789v1.pdf
Development of soil microbial communities for promoting sustainability in agriculture and a global carbon fix

David Johnson has demonstrated successfully that proper attention to soil microbes, along with adequate irrigation water if you are in the desert in New Mexico, gives a self-sustaining agricultural output which is approximately double or even more current levels of production.

We should be careful not to claim that the method doesn't use fossil fuels, because it does. A conventional or walk behind tractor to pull a flail mower and some discs is very helpful, especially for larger tracts of land. Nevertheless, the basics of the operation are to use the microbes and plants to manufacture carbon, which is the energy we need to live. But we have to stop doing much of conventional agriculture, because conventional agriculture destroys fungi...which are the missing link in productivity.

Investing now in some land and the knowhow will pay you better wages in 2028 than it did in 2017. If you are young and expect to be around still active in 2028, you might give this some thought and do some arithmetic.

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Re: Is fast crash likely? Pt. 6

Unread postby Yoshua » Tue 14 Nov 2017, 13:07:49

asg70 wrote:#ThanksChavez


Venezuela is running out of economically oil to produce...maybe Chavez understod it...maybe he didn't...but this is the faith that awaits us all...we are running out of energy.
Last edited by Yoshua on Tue 14 Nov 2017, 13:37:43, edited 1 time in total.
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Re: Is fast crash likely? Pt. 6

Unread postby shortonoil » Tue 14 Nov 2017, 13:29:47

Please give us your reference for that 50% number.


Look up Campbell and Leharrere's conversations with Aramco reservoir engineers during the 2000 WEO conference. Campbell's comment was that, "it raised some eyebrows"! Bet it did!
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Re: Is fast crash likely? Pt. 6

Unread postby Yoshua » Tue 14 Nov 2017, 13:52:56

The strange thing is that I just can't believe in a collapse of our civilization. I can only accept the logic behind the coming collapse. I know that I will die one day, but I believe that I will live forever. I just can't grasp the idea that one day the lights will turn off and that everybody will starve to death.
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Re: Is fast crash likely? Pt. 6

Unread postby rockdoc123 » Tue 14 Nov 2017, 14:14:17

Look up Campbell and Leharrere's conversations with Aramco reservoir engineers during the 2000 WEO conference. Campbell's comment was that, "it raised some eyebrows"! Bet it did!


And since then Aramco had kept water cut at 35% to 40% for over a decade. So what is the problem? Reservoirs produce at much higher water cuts for extended periods.

Using Campbell as a reference for anything whatsoever to do with Saudi Arabia is a huge mistake. Since he ever looked at it they have drilled hundreds of MRC wells, embarked on the megaprojects, installed billions in water and gas handling capacity, used 4D seismic to identify unswept oil for infill drilling and have amalgamated all of their drilling, completions, production etc into the Smart Fields system they've developed with their huge computing capacity. It's a bit like comparing a model T Ford to a Lamborghini Huracan
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Re: Is fast crash likely? Pt. 6

Unread postby shortonoil » Tue 14 Nov 2017, 14:15:18

The strange thing is that I just can't believe in a collapse of our civilization. I can only accept the logic behind the coming collapse. I know that I will die one day, but I believe that I will live forever. I just can't grasp the idea that one day the lights will turn off and that everybody will starve to death.


Admittedly, it is a huge psychological barrier. For that reason alone it makes it difficult to be optimistic. But, advancements in science follow no predefined schedule. Like the discovery of the transistor they just seem to show up one day. Maybe another Newton or Maxwell will appear to save out bacon. In the meantime it would probably a good idea to read some of Don's posts.
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Re: Is fast crash likely? Pt. 6

Unread postby BahamasEd » Tue 14 Nov 2017, 16:46:18

Well, that didn't last long...

Here's a daily version of my MAP chart for this year, a nice little spike and then a fall back below the MAP for today. We'll see what happens the rest of the year.
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ETP spike daily 14 nov17.png
ETP spike daily 14 nov17.png (55.11 KiB) Viewed 1122 times
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Re: Is fast crash likely? Pt. 6

Unread postby shortonoil » Tue 14 Nov 2017, 18:12:49

Here's a daily version of my MAP chart for this year, a nice little spike and then a fall back below the MAP for today. We'll see what happens the rest of the year.


The Russians now control the price of oil. If they reject the OPEC cut extension, the price goes down; an versa, versa.

Someone should tell Trump, the congress and the door man that the Russians would be good people to deal with. THEY HAVE THE OIL!!!

How are Washington DC brains constructed?
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Re: Is fast crash likely? Pt. 6

Unread postby AdamB » Tue 14 Nov 2017, 19:35:07

Yoshua wrote:High oil prices will kill the economy.


They didn't last time.

Yoshua wrote:Low oil prices will kill the oil industry.


They didn't last time.

Got any claim that hasn't been discredited by reality in just this century?
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
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Re: Is fast crash likely? Pt. 6

Unread postby shortonoil » Tue 14 Nov 2017, 20:42:09

Yoshua wrote:
High oil prices will kill the economy.


They didn't last time.
Yoshua wrote:Low oil prices will kill the oil industry.


Low oil prices will definitely kill Saudi Arabia. The Saudis are the Russians biggest competitor for world market. Getting rid of ones competitor on the cheap is usually called good business.

How do you sing bye, bye with sweat dreams to a camel?
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Re: Is fast crash likely? Pt. 6

Unread postby creedoninmo » Tue 14 Nov 2017, 21:35:48

Jim Rickards is saying that every time the Chinese devalue their currency the American stock market falls. Rickards says that the Chinese are currently devaluing their currency to the max or lower. We shall see what happens.
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Re: Is fast crash likely? Pt. 6

Unread postby StarvingLion » Tue 14 Nov 2017, 21:37:06

The Oil Industry is full of retards. There probably is lots of oil left. Certainly nobody around here has any technical ability whatsoever.

The Oil Industry is full of computer dunces and oil price guessers and finanshual experts.

Admit it, there probably is only 1 person here who is pro-oil at all.

Where are all the experts that were supposed to flock to The Internut?
America cannot afford combustion.
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Re: Is fast crash likely? Pt. 6

Unread postby StarvingLion » Tue 14 Nov 2017, 21:39:34

creedoninmo wrote:Jim Rickards is saying that every time the Chinese devalue their currency the American stock market falls. Rickards says that the Chinese are currently devaluing their currency to the max or lower. We shall see what happens.


Blah blah blah
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Re: Is fast crash likely? Pt. 6

Unread postby AdamB » Tue 14 Nov 2017, 22:15:03

shortonoil wrote:
Yoshua wrote:
High oil prices will kill the economy.


They didn't last time.
Yoshua wrote:Low oil prices will kill the oil industry.


Low oil prices will definitely kill Saudi Arabia.


They didn't in 1986 through 2002. They didn't in late 2008 through 2009. They haven't since 2014.

Do you ever make a point that can't be contradicted by history and reality in like 10 seconds of googling?

Or a point that you haven't already claimed the opposite of back in the days when you said peak oil was Bushes fault, and would only result in skyrocketing prices?
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
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Re: Is fast crash likely? Pt. 6

Unread postby Cog » Wed 15 Nov 2017, 10:47:39

Yoshua wrote:
asg70 wrote:#ThanksChavez


Venezuela is running out of economically oil to produce...maybe Chavez understod it...maybe he didn't...but this is the faith that awaits us all...we are running out of energy.


Chavez was a communist. Like all communists he knows how to wreck an economy but little more than that.
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Re: Is fast crash likely? Pt. 6

Unread postby shortonoil » Wed 15 Nov 2017, 11:47:37

creedoninmo said on page 20:

Jim Rickards is saying that every time the Chinese devalue their currency the American stock market falls. Rickards says that the Chinese are currently devaluing their currency to the max or lower. We shall see what happens.


The only way that the Chinese can extend their Ponzi scheme is probably by devaluation. With a Debt to GDP ratio of 320% they probably don't have much choice. It will also be interesting to see how their devaluation will affect interest rates:

Image

Interest rates represent the time value of money. As growth slows interest rates go down; there being less economy to produce a demand for it. Unless of course central banks take currency out of circulation, which would be the opposite of what has been happening to date. Devaluation is a defacto destruction of some of an economy's currency; that economy's buying power for imports declines, and the cost of goods produced from those imports increases. The FED is attempting to raise rates along with a Chinese devaluation. Interest rate increases could soon get out of hand.

That of course would be disastrous for the already over stressed petroleum industry. A 2 point rise in interest rates would probably sink the deeply indebted shale industry, and shelve most new projects coming up. CapEx would decline even further. Demand would fall, and prices would decline even more.

Petroleum's declining ability to power the economy is winding its way through the economic structure it supports. The central banks power is an illusion in the face of the thermodynamics that enable them. Of course if they don't understand that, they are likely to finally kick the props out from under the corner of this mile high Ponzi scheme we have invented.
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Re: Is fast crash likely? Pt. 6

Unread postby onlooker » Wed 15 Nov 2017, 18:20:39

http://news.goldseek.com/GoldSeek/1510754580.php
U.S. SHALE OIL PRODUCTION UPDATE: Financial Carnage Continues To Gut Industry
By the way Short I think you have just dispelled the naysayers carrying on about how the oil price is breaching the MAP . Well, I think they need to once again get their facts straight haha
“"If you think the economy is more important than the environment, try holding your breath while counting your money"”
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Re: Is fast crash likely? Pt. 6

Unread postby pstarr » Wed 15 Nov 2017, 18:27:39

onlooker wrote:http://news.goldseek.com/GoldSeek/1510754580.php
U.S. SHALE OIL PRODUCTION UPDATE: Financial Carnage Continues To Gut Industry
By the way Short I think you have just dispelled the naysayers carrying on about how the oil price is breaching the MAP . Well, I think they need to once again get their facts straight haha

I've seen it elsewhere? Perhaps at SRSRocco (same guy, Steve D'Angelo?). Another good catch
A few minutes into the Bloomberg video, both Pioneer Resources Chairman, Scott Sheffield, and Continental Resources CEO, Harold Hamm, explain how advanced technology will revolutionize the shale oil industry and bring down costs. I find that statement quite hilarious as Continental Resources and Pioneer continue to spend more money drilling for oil and gas then they make from their operations. As I stated in a previous article, Continental Resources long-term debt ballooned from $165 million in 2007 to $6.5 billion currently. So, how did advanced technology lower costs when Continental now has accumulated debt up to its eyeballs?
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Re: Is fast crash likely? Pt. 6

Unread postby onlooker » Wed 15 Nov 2017, 18:37:28

P, I can already hear Rockdoc's footsteps coming to try and post some contradictory information. I am not buying it. The Net is now littered with articles and sources all pointing to the ever worsening economic status of so called Shale miracle.
“"If you think the economy is more important than the environment, try holding your breath while counting your money"”
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