[ennui2]

I see things differently.

No kidding.

Hawaii is part of the US, is a unique tourist destination, winter residence for the wealthy. So it is an exception. Over population and lack of resources account for much of the poverty and sorrow in the world. Oil is just another want in the world, but one that is intimately tied into every other want.

Greece is also a tourist destination and it's hotter than most in the Mediteranean.

You connect dots where dots don't need connecting. Sometimes a cigar is just a cigar.

[ennui2]

Kub meet Ennui, reformed doomer and fellow denialist.

You pretty much forfeit the debate the moment you fall back to slapping labels onto people like this. Make your case or stay out of the debate.

Earth to Kub and ennui3: we've peaked.

And oil is comfortably cheap. If this is peak oil doom, bring more of it.

[kublikhan]

Pstarr, your ability to stare at facts and then deny them never ceases to amaze me.

During the last 10 years(2005-2015), world crude oil production increased from 73,866,000 bpd to 79,570,000 bpd. An average annual increase of 570,000 bpd. For the 32 years prior that(1973-2005, as far as this source goes back), world crude oil production went from 55,679,000 bpd to 73,866,000 bpd. An average annual increase of 568,000 bpd. Clearly, we've peaked. Right pstarr. Just like the recession from 2008 never ended. Despite the fact that the world gdp is growing at a rate of over 3%.

World Crude Oil Production

[kublikhan]

Your adorable pstarr. You resort to mocking and labeling and I response with facts. Then when I call you out on denying the facts you complain I bruised your ego. A story about glass houses and stones comes to mind.

If you had even taken the trouble to look at the facts I just linked to instead of assigning me homework to do, you would have noticed I was not posting about total liquids. Just C&C:

Notes: • Data are for crude oil and lease condensate; they exclude natural gas plant liquids.

And as far as your whole supply-demand-price point goes, lets look at the facts again. First let's look at world GDP growth during the era of cheap oil:
world real gdp average annual growth 1992 - 2001 = 3.1%

now lets look at world gdp after oil has "peaked":
world real gdp average annual growth 2005 to 2014 = 3.6%

So this higher price point has resulted in GDP growth being higher than during the era of cheap oil. And this includes the era of massive money destruction that occurred in 2008/2009.

Global Growth Tracker

GDP - real growth rate

WORLD ECONOMIC OUTLOOK

Money Supply

[kublikhan]

Yes. And last I checked ethanol was not a part of C&C. If you did want to look at total oil supply, it rose even more than C&C: from 85 mb/d in 2005 to 93 mb/d in 2015. I realize total oil supply includes items that are not petroleum such as biofuels and thus didn't want to use that metric and used C&C instead. Now you are saying even that is not strict enough, we should not be including lease condensate anymore either. Well I and apparently Westexas both failed to get authoritative numbers for crude minus lease condensate. Sure we can play guessing games and try to estimate, but it's just guess work. So I am sticking with using C&C.

International Energy Statistics

Oil Market Report

[kublikhan]

But distillate production did increase. From 2005-2015 US distillate production increased more than gasoline. And more than the prior 10 year period. The distillate yield has been increasing, not decreasing. It went from 2 - 1 gasoline to distillate to 1.5 - 1 gasoline to distillate.

4-Week Avg U.S. Refiner and Blender Net Production of Distillate Fuel Oil
year US Distillate production _increase
1995 3,270,500 mb/d
2005 3,965,250 mb/d 694,750 mb/d
2015 4,859,000 mb/d 893,750 mb/d

year US gasoline production _increase
1995 7,663,250 mb/d
2005 8,642,000 mb/d 978,750 mb/d
2015 9,439,500 mb/d 797,500 mb/d

4-Week Avg U.S. Refiner and Blender Net Production of Distillate Fuel Oil

Global data stops at 2010 but shows the same trend of a larger increase in distillates than gasoline:

World Distillate Fuel Oil Production by Year
2005 23,935,530 mb/d
2010 25,445,270 mb/d 1,509,740 mb/d

World Motor Gasoline Production by Year
year production increase
2005 21,032,550 mb/d
2010 22,298,270 mb/d 1,265,720 mb/d

Distillate Fuel Oil Definition: A general classification for one of the petroleum fractions produced in conventional distillation operations. It includes diesel fuels and fuel oils. Products known as No. 1, No. 2, and No. 4 diesel fuel are used in on-highway diesel engines, such as those in trucks and automobiles, as well as off-highway engines, such as those in railroad locomotives and agricultural machinery. Products known as No. 1, No. 2, and No. 4 fuel oils are used primarily for space heating and electric power generation.

World Motor Gasoline Production by Year

World Distillate Fuel Oil Production by Year

Since 2001, distillate yields have followed an upward trend. The recent uptick in distillate yield can partly be explained by the significantly higher price margins over the cost of crude oil for distillate relative to gasoline. It can also be explained by growing distillate exports.

Refineries in the U.S. still average about 1.5 times as much gasoline as distillate from each barrel of oil refined, down from about 2 times from the 1990s to 2004. In response to market conditions, refiners took steps to maximize distillate yield and production.

Distillate yields at U.S. refineries are rising

[Pops]

Yeah but...

It isn't as simple as either of you paint. "Oil" extraction didn't peak in '05 and production of light sweet crude hasn't continued merrily upward. All new additions can be accounted for by tar sands and LTO from north America, ditto the falling price. Distillate increase is because of x-heavy & tar sand; and LTO makes the gasoline and lighter stuff.

Syncrude says their upgraded "whole crude" product is 34 API, dilbit itself is down in the 20 range. Mix in some LTO, around 45-50, and you wind up with something like WTI, which is 38-40, I think.


Courtesy of crudeoilpeak.info

There is little or no reporting of condensate and no actual definition for that matter, I read one oilman say the cutoff is as high as 60api. In fact, "conventional" oil as defined by the EIA is a production process, not a product:

Conventional oil and natural gas production: Crude oil and natural gas that is produced by a well drilled into a geologic formation in which the reservoir and fluid characteristics permit the oil and natural gas to readily flow to the wellbore.

So I think we're stuck with looking at motor fuels production, maybe using their total energy as the baseline?


This is a good paper [PDF] Implications of light tight oil growth for refineries in North America
http://benergypartners.com/Facts_About_Crude_Oil.html
http://www.cdnoilsands.com/energy-marke ... fault.aspx

[Pops]

[Pops]

BTW, to add further confusion

Crude oil: A mixture of hydrocarbons that exists in liquid phase in natural underground reservoirs and remains liquid at atmospheric pressure after passing through surface separating facilities.

I suppose it is a simple matter (for someone) to figure out how much of the stuff coming out of a particular well at a particular time was " in liquid phase in natural underground reservoirs" but I'm not all that sure how much it matters (or if anyone actually sits down and figures it).

[kublikhan]

Yeah but...

It isn't as simple as either of you paint. "Oil" extraction didn't peak in '05 and production of light sweet crude hasn't continued merrily upward. All new additions can be accounted for by tar sands and LTO from north America, ditto the falling price. Distillate increase is because of x-heavy & tar sand; and LTO makes the gasoline and lighter stuff.

I don't think it is as simple as you paint either. As I and pstarr mentioned, refineries can tune their ratios of gasoline:distillate production. US refineries have traditionally tuned their output to produce nearly twice as much gasoline as diesel. This ratio was flipped in Europe. European refineries produced twice as much distillate as gasoline. There is even season changes in the ratios. In the US, gasoline production is cranked up for the summer driving season. In the winter, distillate production is cranked up for heating oil. Refineries also respond to foreign demand. When global demand for distillates started picking up, US refineries started altering their ratios to produce more distillates. This paper has a good summary, although the second part of it gets rather technical. Still, they have a nice graph on page 5 showing the different distillate ratios used by the US, European, and rest of the word refineries. Small adjustments in the gasoline:distillate ratio can be done with simple operation changes or minor upgrades. Larger adjustments in the ratio require significant capital investments.

With growing demand pressure from the middle distillate market, refineries in the United States and Europe may see incentives to respond to the increased middle distillate demand trend with both short-term operational flexibility and some long-term processing additions or modifications. In addition, U.S. refiners should see growing economic opportunities for diesel exports, adding incentive to produce more middle distillate fuels and less gasoline, even with a slower economic outlook than previously expected.

Refiners are finding ways to shift yield to more middle distillate. refiners have chosen a variety of options to provide greater middle distillate yields. The paths include simple distillation cut-point changes; better separation efficiency around those cut points; changing conversion process operating variables; using catalysts with better distillate selectivity; and other options involving small capital investments. Also, several recent major U.S. refinery expansions (planned and recently operating) have incorporated hydrocracking units rather than FCC units. In discussions with industry experts, PI and EIA explored what refiners are doing, the extent of change possible with modest investment, and the constraints on making changes.

Distillation Unit Changes for Increased Distillate Production
A refinery’s middle distillate production can be increased by expanding the boiling point range of middle distillate material from primary distillation and from downstream conversion units to capture all the material that will meet middle distillate product specifications.

Outside the United States, favorable taxes for diesel have provided an incentive to maximize diesel production, and refiners have worked to capture all middle distillate boiling range material in middle distillate products by implementing more precise distillation processes.5 The non-U.S. refiners may have 10 to 14 trays between the flash zone and the distillate draw, whereas U.S. refiners may have only 2 to 5 trays. Furthermore, the vacuum distillation units used by non-U.S. refiners are also designed or revamped to produce diesel from the vacuum column’s top-side draw, enabling added middle distillate recovery from the vacuum unit.

FCC Unit Changes for Increased Distillate Production
The first thing that refiners point out when discussing increasing distillate yield on the FCC unit is that the yield of LCO (the distillate product stream from the FCC unit) can be increased by reducing FCC reactor temperature, which reduces conversion. More recently, however, new catalyst formulations with better cracking capabilities for heavy, high-boiling-point materials enable refiners to make modest distillate yield increases without increasing slurry oil production. A recent paper6 on strategies for maximizing FCC LCO described a diesel catalyst and the use of recycling a heavy oil fraction. Recycle of heavy catalytic cracking gas oil was common practice in FCC operation in the pre-zeolytic catalyst years of the 1960s, but it has disappeared since then. The paper indicated that, in cases using recycling and a diesel catalyst with good bottoms cracking characteristics, slurry-oil volumes remained constant, and the LCO-to-gasoline yield ratio increased.

Increasing Distillate Production at U.S. Refineries – Past Changes and Future Potential

Here's another report on refiners making new investments to increase distillate production:

US refiners aim to maximize distillate output to work attractive export arbitrage opportunities, but may leave high-priced hydrocracker investments to competitor Valero Energy, who wants to be the first North American refiner to produce as much distillate as gasoline. Valero plans to implement a one-to-one gasoline-to-distillates ratio by around 2015, after more than $3 billion worth of projects go live to increase the company's distillate production.

Hydrocracker projects are under way at the company's 180,000 b/d Meraux, Louisiana, 290,000 b/d Port Arthur, Texas, and 270,000 b/d St. Charles, Louisiana, refineries. Hydrocrackers allow for the reprocessing of various feedstocks into higher value products and give a relatively large yield of low sulfur distillates like jet fuel and diesel.

Historically, US refiners have had a two-to-one output ratio for gasoline and diesel, respectively. "We are changing our portfolio to make more diesel. [By 2015] our whole system will be about one-to-one of gasoline to diesel ratio."

Refiner Phillips 66 distillates production is also moving closer to 50% of its total refinery output. Marathon is investing to increase its distillate output at its 490,000 b/d Garyville, Louisiana and 206,000 b/d Robinson, Illinois, refinery, to increase distillate output.

US refiners maximize distillate production, exports

I suppose it is a simple matter (for someone) to figure out how much of the stuff coming out of a particular well at a particular time was " in liquid phase in natural underground reservoirs" but I'm not all that sure how much it matters (or if anyone actually sits down and figures it).

I don't think it really matters either.

[kublikhan]

The main argument for the 2005 peak (of conventional inexpensive oil) is the unprecedented price rise and resulting mortgage crisis and financial collapse. There are those (Pops and ennui come to mind) who want to believe that somehow speculation caused the rapid price rise of petroleum, and unrelated were two separate issues: bad mortgages and corrupt banksters both caused by excessive debt.

When I ask either to explain how future-contracts speculation (in an transpartent market) crash economies I get silence from ennuie and gobbledygook (sic) from Pops. I just don't see how short-term contracts between two individuals, (in which one wins the other looses balancing out the private deal) affect the price of oil at the terminal?

IMHO speculation's effect on oil prices is transient and can pull prices down just as fast as up, as we have seen. But the underlying fundamentals of supply and demand are the more important factor. In the oil run up we had tight supply and rising prices. Now we have a growing supply overhang and falling prices.

And no one has satisfactorily why debt by itself is bad.

Mckinsey puts out good reports on the debt issue:

Some of the growth in global debt is benign and even desirable. To some extent, this reflects healthy financial system deepening, as more households and companies gain access to financial services. Moreover, debt in developing countries remains relatively modest, averaging 121 percent of GDP, compared with 280 percent for advanced economies. There are exceptions, notably China, Malaysia, and Thailand, whose debt levels are now at the level of some advanced economies.

More concerning is the continuing rise of debt levels in advanced economies. Despite the tightening of lending standards, household debt relative to income has declined significantly in only five advanced economies—the United States, Ireland, the United Kingdom, Spain, and Germany. Meanwhile, a number of countries in northern Europe, as well as Canada and Australia, now have larger household debt ratios than existed in the United States or the United Kingdom at the peak of the credit bubble.

It is clear that deleveraging is rare and that solutions are in short supply. Given the scale of debt in the most highly indebted countries, the current solutions for sparking growth or cutting fiscal deficits alone will not be sufficient. New approaches are needed to start deleveraging and to manage and monitor debt. This includes innovations in mortgages and other debt contracts to better share risk; clearer rules for restructuring debt; eliminating tax incentives for debt; and using macroprudential measures to dampen credit booms. Debt remains an essential tool for funding economic growth. But how debt is created, used, monitored, and when needed discharged, must be improved.

Debt and (not much) deleveraging

[Pops]

That's a good link Kub but 2010 was a long time ago...

I'm no chemist but I'm pretty sure crude is still distilled to get various products, heavier crude can be split to make lighter stuff but not vice versa – at least not economically

[Pops]

Point being, refiners may not want 75% diesel from Dilbit and they may not want 25% diesel from LTO, but combining the 2 can get you the proportions you want.

But no matter what you do you aren't going to get 75% Diesel from +45 LTO