New High of Liquid Fuel Production?

[OilFinder2]

But . . . but . . . but . . . this wasn't supposed to happen!

LINK

Friday, December 10, 2010
New High of Liquid Fuel Production

Both the IEA and OPEC are out with their new monthly reports today. And both report that oil production in November 2010 exceeded the previous high month of July 2008 (back when oil was $140). Probably the difference is within the margin of error, and in any case the third agency (the EIA) won't weigh in for a few months. At the moment, the average index looks like pretty much a statistical tie . . . Still, a significant point: not peak monthly oil just yet. As long as there isn't a massive financial crisis in the next few months (which is what happened to the last global high in oil production) I imagine we'll clearly exceed the July 2008 peak production. In particular, the point I first made here still holds: the increases in the last eighteen months have largely come from non-OPEC production rather than OPEC, and the latter undoubtedly still have some spare capacity that can be released (at a price). Thus production can and will go somewhat higher as long as demand continues to increase, which will be true as long as the global economy doesn't hit another big pothole.

[steam_cannon]

But . . . but . . . but . . . this wasn't supposed to happen!

Thanks for the interesting article.

There have been quite a few predictions as to when the absolute peak in liquid fuel production may be reached, 2005, 2008, 2010, 2015...



What I know is we have been seeing a gradual climb again in oil prices getting into the economy crushing range of $90 per barrel. If we have been able to reach a new record in volume of liquids produced, then that is an achievement.

Though we're certainly not talking about cheap oil here or a thriving world economy.

[Keith_McClary]

IEA production figures momentarily fluctuate above IEA prediction.

[TheDude]

But . . . but . . . but . . . this wasn't supposed to happen!

May '10-Aug '08 C+C= -634.08 kb/d
July '10-July '08 NGL= 304.61 kb/d

And that's just NGLs. So this is good news if you're on the market for fuel for your barbie, as regards the ultimate peak in global production it doesn't quite mean bupkus yet.

[pstarr]

it doesn't quite mean bupkus yet.

Ha ha. Yup, It doesn't mean bupkus

[sparky]

.
The peak oil is an irreducible fact ,
the "When" "how" and "what then" is the pith of the question

That's the very bone of the peak oil proposition
I do firmly believe it will happen this generation
and we will witness its effects ,
simple answers usually come from simple minds
I'm sure the reality will be a messy surprise
there could be an extended plateau , but at what cost
politics get feral when people are hurting for too long
and democracy suck when the only redistribution on offer is pain

driving to the mall might seems the most important thing for some
That's the misjudgment of people who don't understand poverty
for me it's all about food production ,it intersect peak oil and climate
nothing else really matter that much

[TheDude]

Or to put it another way, NGL production has risen 3.75% over the July '08 level. If all liquids for Aug '08 had risen at a commensurate rate we'd be at 89966.75 kb/d. It's interesting how liquids slowly becomes more and divorced from C+C.

Kudos to IEA for skillfully presenting the exact graphs that give the least alarming outlook on the OEM page.

[steam_cannon]

Kudos to IEA for skillfully presenting the exact graphs that give the least alarming outlook on the OEM page.

Yeah that's just how they roll...


I'd take this article a bit more seriously if the oil drum guys commented on it, but even then it doesn't impress me as a game changer.

[Poordogabone]

But . . . but . . . but . . . this wasn't supposed to happen!

Actually it's no surprise, during the climb of the oil prices 2002-2008 a whole lot of investments went into finding and extracting oil. Those investments are now bearing fruits and we have now what looks like a plateau with some upticks. The investment bonanza stopped when the economic meltdown cause the price of oil to fall. The consequences of this under investment in new oil projects could come in the form of a cliff as early as 2012/13.
Also I take with a grain of salt any data about liquid fuel production. It takes fuel to produce ethanol for instance, the fuel x used to make fuel y is also counted. you can turn one barrel into many this way.

[OilFinder2]

From the same blog. We'll have to wait a few months or so, but . . .

LINK

Monday, December 13, 2010
Prospects for a New Peak in Crude & Condensate

I pointed out on Friday that there provisionally appeared to be a new peak in global liquid fuel production, at least based on reports from OPEC and the IEA, and subject to confirmation by the third agency (the EIA) and the inevitable revisions to the series.

Predictably, this led to a chorus of comments that the full liquid fuel series includes various things that aren't really oil, such as biofuels, and natural gas liquids (things like butane and propane). A more conservative definition of oil would still show a peak in the past, some suggested. There are decent arguments on both sides of what exact definition of oil one should use. If we look at one more conservative but reasonable definition - crude plus lease condensate (C&C) - we see the picture above (according to the EIA). I have shown the full liquid fuel series in blue, and only the C&C component in red.

Now, the EIA is only up to September as of today, whereas OPEC and the IEA have just released November numbers. So the big leap up in October/November is not apparent in the graph above. However, if these two EIA series behave like the ones that have been released, they will jump up by over a million barrels/day between September and November. As of September, the EIA all liquids series is 0.5mbd below it's all time peak, so it will very likely exceed it as the next couple of month's numbers come out. However, the EIA C&C number is 1.1mbd below it's all time peak, so it will be a near thing when the November numbers are out.

Still, if demand stays strong and prices up, it seems likely that supply will increase further in the next six months. If so, then it's likely that the July 2008 crude+condensate peak will also be exceeded.

[...]

[OilFinder2]

The IEA revised November's all-liquids up by 300K bpd, so if that holds we do in fact have a new all-liquids production high!

LINK

And looking at the longer-term chart, it appears we could be breaking out of the bumpy plateau.



I look forward to seeing how C&C is doing as well!!

[pstarr]

The IEA revised November's all-liquids up by 300K bpd, so if that holds we do in fact have a new all-liquids production high!

LINK

And looking at the longer-term chart, it appears we could be breaking out of the bumpy plateau.



I look forward to seeing how C&C is doing as well!!

There is so much wrong with this that I don't know where to begin or end.

First, too soon to call this any way, as IEA almost always revises downward often several times.

Second, one-month is statistical noise in a larger geologic trend, and needs to be aggregated into a significant period (one year) long before we can assign this burp as "peak-oil buster." Otherwise you are guilty of what Xeno always blames others for--multiple peaks to suit you own agenda.

Third, IEA only recently measured "all liquids" as a devise to cover up failing crude production. It is mostly a political scam (like Bakken ) It is a double-dipped measure which includes biofuels (that use equal amount of another liquid-fuel (diesel) to produce) and NGL which both have a fraction of oil's BTU and can't be used the same way.

Four, I could do this all day

[OilFinder2]

First, too soon to call this any way, as IEA almost always revises downward often several times.

Then why did November get revised up by 300K bpd?

Second, one-month is statistical noise in a larger geologic trend, and needs to be aggregated into a significant period (one year) long before we can assign this burp as "peak-oil buster."

Perhaps you didn't pay attention to the chart. Notice production has been going up since it bottomed out early in 2009. And we've been near, at or above the general mid-2008 level for at least the past few months.

Third, IEA only recently measured "all liquids" as a devise to cover up failing crude production.

What will be your excuse if when we have a new C&C production record?

[pstarr]

Third, IEA only recently measured "all liquids" as a devise to cover up failing crude production.

What will be your excuse if when we have a new C&C production record?

What leads you to believe that C&C will set a production record? The contribution of NGL's, tar sands, a biofools to the all-liquids increase is far greater than the incremental increase in conventional crude.

You will be wrong.

[Dezakin]

Third, IEA only recently measured "all liquids" as a devise to cover up failing crude production.

What will be your excuse if when we have a new C&C production record?

What leads you to believe that C&C will set a production record? The contribution of NGL's, tar sands, a biofools to the all-liquids increase is far greater than the incremental increase in conventional crude.

What difference does it make if it comes from CTL or some crazy expensive deepwater project? It all gets poured into the tank the same.

[vtsnowedin]

Third, IEA only recently measured "all liquids" as a devise to cover up failing crude production.

What will be your excuse if when we have a new C&C production record?

What leads you to believe that C&C will set a production record? The contribution of NGL's, tar sands, a biofools to the all-liquids increase is far greater than the incremental increase in conventional crude.

What difference does it make if it comes from CTL or some crazy expensive deepwater project? It all gets poured into the tank the same.

What difference? Why the price , that's what difference.Our economy is addicted to oil that is both abundant and cheap. As the share that conventional oil holds declines and expensive substitutes increase the net value we receive from burning liquid fuel declines.

[pstarr]

What difference does it make if it comes from CTL or some crazy expensive deepwater project? It all gets poured into the tank the same.

What difference? Why the price , that's what difference.Our economy is addicted to oil that is both abundant and cheap. As the share that conventional oil holds declines and expensive substitutes increase the net value we receive from burning liquid fuel declines.

Folks don't understand that net value thing and EROEI. Our debt-based monetary system and consumer economy require ever-increasing amounts of inexpensive petroleum just to pay off old debts. When the energy/dollar cost of procuring energy becomes too expensive (4% of GDP according to Hamilton) than there is not enough energy/money left over for CONSUMPTION of stuff. Then the retail economy tanks. Retail jobs support our lifestyle. I believe that this Greatest Depression was caused by peak oil.

[kublikhan]

Here's a graph of oil cost as percentage of GDP:
Modest relief on energy costs

This info is from 2001, but it generally illustrates the point pstarr was talking about with respect to energy prices(and by extension, EROEI) and the effects it has on the economy:

Prior to the embargo of 1973-74, total energy expenditures constituted 8 percent of U.S. gross domestic product (GDP), the share of petroleum expenditures was just under 5 percent and natural gas expenditures accounted for 1 percent. The price shocks of the 1970s and early 1980s resulted in these shares rising dramatically to 14 percent, 8 percent, and 2 percent respectively, by 1981. Since that time, the shares have fallen consistently over the last two decades to current levels of about 7 percent for total energy, while petroleum has fallen even further to 3.5 percent and natural gas to just over 1 percent.

Looking from the 1970s forward, there are observable, and dramatic changes in GDP growth as the world oil price has undergone dramatic change. The price shocks of 1973-74, the late 1970s/early 1980s, and early 1990's were all followed by recessions, which have then been followed by a rebound in economic growth. The pressure of energy prices on aggregate prices in the economy created adjustment problems for the economy as a whole.

In the past year, forecasters have acknowledged that higher energy prices can become a drag on the overall economy. Initially, overall CPI inflation was still very low, principally because inflation in commodities other than energy and agriculture was extremely low. However, the sustained high level of oil prices has begun to effect core inflation (minus energy and food) through continued pressure on prices of other commodities, in the United States and worldwide. And as historical events suggest, a downward adjustment in the growth of economic activity might be expected. In 1999, the inflation rate for the Consumer Price Index (All Urban Consumers) was 2.2 percent and the core inflation rate was 2.1 percent. However, during 2000 the CPI inflation rate rose to 3.4 percent, led by energy prices. Moreover, the core inflation rate also rose to 2.4 percent. The economy was no longer able to absorb the energy price rise, and higher energy prices began to affect prices of other goods and services.

Similar to the U.S., all countries stand to experience higher inflation due to rising oil prices. While the U.S. has been successful in reducing its dependence on oil from a consumption-per-unit of output perspective, this is not the case in many other countries, where oil use is key to their developing industrial and transportation sectors. Moreover, for the U.S., the net import share of total oil consumption is above 50 percent, and this share is expected to rise steadily in the future. Other countries face the same prospect. Higher oil prices have direct and dramatic effect on the trade patterns between countries. Here, trade in oil is just one side of the story. As higher oil prices get translated into higher commodity prices, there are likely to be changes in the prices of non-energy exported and imported goods which will affect trade beyond just the oil accounts.

Energy Price Impacts on the U.S. Economy

[peripato]

We need to keep a few things in perspective;

1) Data published for December in mid-January is not real data, only a rough estimate and will be revised as real data trickles in over the coming months.

2) "Liquid fuel" is, Crude Oil + Lease Condensate + Natural Gas Plant Liquids + Shale Oil + Tar Sands +
Coal-to-liquids + Gas-to-liquids + Ethanol + Biofuel, of which about 86% is Crude + Condensate (from gas fields). However, just Crude Oil figures are not available. Why, are they too embarrassing to publish?

3) IEA data is always about 1 Mb/d more than the EIA data. Why? While OPEC data for the world is a sad joke.

4) The EIA monthly data for Crude + Condensate latest is August 2010 and shows 73.349 Mb/d - smack in the middle of the bumpy plateau range and where we were in June 2004.

[peripato]

Well it does if he uses questionable data and methodology;

Stuart uses moving averages to smooth the obviously jittery data, but he is using the average of the last 3 months, not the current 3 months, ( 1 of which hasn't happened yet) which makes the MA respond slowly.

That pink ellipse in the third chart is, as he says, just fitted by eye and is therefore utterly meaningless. Moreover he is plotting volume of all liquids against the price of WTI Crude, which is a variable part of all liquids and by all appearance just plain sloppy.

Look, I like Stuart's work most times, but what is he trying to prove here? That production doesn't or can't follow price, which is set by auction bidding?