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Economics vs. ETP

Discuss research and forecasts regarding hydrocarbon depletion.

Re: Economics vs. ETP

Unread postby ROCKMAN » Mon 04 Dec 2017, 14:17:01

looker - Since the old thread is locked I'll respond to your post here. Honestly I care little to see your critique of the model. Or anyone's else's for that matter. But you've looked at the model so I ask the same simple questions. First, is the model predicting anything? If yes what did it predict for 2017 and when was that prediction made? With the endless arguments about the validity of the model it's becoming rather absurd that no one, pro or con, has been willing to answer such basic questions. I'm starting to see the debate as nothing more then arguing over how many angels can fit on the head of a pin.
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Re: Economics vs. ETP

Unread postby onlooker » Mon 04 Dec 2017, 14:35:17

First, thanks Rock for bringing the discourse back to a more factual basis rather than emotional and also for your thoughtful questions. I must preface that I am not an physics engineer or someone who can interpret the Etp model in the nitty gritty of its technical points. Now to your questions.

Well, I think we can get a little confused by the use of the word predict. If by predict one means asserts that something for sure will happen at some future date, well I do not think that the Etp is doing that. What it tried to do is to take the production history and do some regression analysis and mathematical formulations to assess different correlations and comparisons with regard to the interaction of prices , production and the physical properties of the Oil sources ( API, I believe it is called. ) that were being exploited and then establish projections of the oil price and how the Industry would be expected to fare. Anyway, I know I am over my head but I give it a shot. Specifically, with all the data the the Etp Model accumulated it is then able to formulate a so called MAP, maximum affordable price. This is the price at which the Economy lurches into a tailspin as this price does not allow for sufficient economic activity or net energy to enter into it. According to Short, the actually WTI price has been remarkably faithful to this limitation and has not breached it hardly at all. As for 2017, well perhaps someone else can tell you what the MAP is for the end of this year. Hope that helped. Hey at least I am trying and not hurling insults haha.
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Re: Economics vs. ETP

Unread postby ROCKMAN » Mon 04 Dec 2017, 15:06:43

looker - I don't mean to be harsh but you say the model doesn't predict anything and then you say: "...and then establish projections of the oil price...". You have to pick one or the other...they both can't be true. Did it pick a price for 2017 or not. If it did what is the number and when was it calculated?
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Re: Economics vs. ETP

Unread postby onlooker » Mon 04 Dec 2017, 15:15:10

the-etp-model-q-a-pt-11-t73460-440.html
The projected MAP for the end of trading Dec 31, 2017 is $54.As for when this projection was made, you would have to ask Short
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Re: Economics vs. ETP

Unread postby Cog » Mon 04 Dec 2017, 15:24:32

And it predicts a lower value for Dec 31st, 2018 and so on. What is the predicted value by end of 2018 from the model? That is what Rockman is wanting to know. As well as the rest of us. I know this is has been posted in one of the countless ETP threads somewhere.

I know pstarr at some point said the ETP model would have the price of oil going to zero in a few years. Not that that will happen but just to remind him.
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Re: Economics vs. ETP

Unread postby onlooker » Mon 04 Dec 2017, 16:09:09

Rockman, Cog, from that same linked thread. $41 is the projected MAP as of Dec 31, 2018
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Re: Economics vs. ETP

Unread postby vtsnowedin » Mon 04 Dec 2017, 16:33:13

If you peak back through the threads you can find at least one version of the MAP curve. On this side of the curve it is actually a straight line sloping down at a dollar a month $55 Dec. 1 2017 $54 Jan1 2018 and on down into the "dead state"
WTI is down almost a buck today to $57.42 as I write this.
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Re: Economics vs. ETP

Unread postby rockdoc123 » Tue 05 Dec 2017, 00:54:04

Any other questions?


Yeah, why didn't you post the actual income statement that proceeds it and explains what the cash flow really is?

It is rather sad that someone who writes a financial blog that comments on oil and gas companies doesn't actually understand how to interpret oil and gas company filings nor how these companies normally deploy capital strategically. Unless of course you do actually understand and you are simply trying to mislead your readers.

Evidence of that assertion is apparent in your comment:

It is also quite amazing that the United States second largest natural gas producer spent $1.3 billion more in drilling and completion costs than they received from cash from operations


Incorrect because when you look at cash items (excluding DD&A) their cash from operations exceeded Exploration expenses by $247 MM. Adding cash income from the sale of properties no longer considered as core operating areas resulted in a healthy free cash flow of ~$1259 MM. This has been something that CHK continues to do as part of their long-term strategy.
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Re: Economics vs. ETP

Unread postby marmico » Tue 05 Dec 2017, 10:07:46

We arrive at their Free Cash Flow by subtracting the Capital Expenditures from the Cash From Operations.


CHK free cash flow was +$262 million in Q32017.

https://ycharts.com/companies/CHK/free_cash_flow
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Re: Economics vs. ETP

Unread postby rockdoc123 » Tue 05 Dec 2017, 11:23:19

I am surprised that you don't understand CASH FLOW STATEMENTS. The Consolidated Statements of Operations which provide Net Income, do not include CAPITAL EXPENDITURES. To understand how well a company is doing, we must find out their FREE CASH FLOW. We arrive at their Free Cash Flow by subtracting the Capital Expenditures from the Cash From Operations


Listen dipshit…..you are including non-cash items in the Cash from Operations calculation. Companies do this now because they are trying to adhere to new accounting principles and also because DD&A and impairments are used in their calculation of Taxable Income. When evaluating oil and gas companies the first thing you do is look at cash only free cash flow calculation. That is revenues from all sources (production, sales of properties etc) minus expenses (exploration expenses, operating expenses, G&A and acquisitions). Simply put is the amount of cash coming in versus the amount going out. It doesn’t include non-cash items such as DD&A which generally includes depreciation on plants, equipment etc nor impairments which usually includes reserve write-downs as a product of average oil price over the year. DD&A and impairments are important elements if a company is contemplating a sale as it would ascribe current day value to some assets, impairments, however, are simply a snapshot of reconciliation year on year with reserves changing categories regularily both downwards and upwards due to annual price swings. Do you figure out your home budget by including the non-cash depreciation on your car or your house? Of course not you simply calculate income minus expenses.

LOL... you are such a child. What am I selling?? LOL, the truth.


No what you are selling is an uneducated view of oil and gas company financials based on your inability to understand their accounting systems, reporting requirements and capital deployment strategies. Lord help the poor bloke who listens to your advice.
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Re: Economics vs. ETP

Unread postby Cog » Tue 05 Dec 2017, 13:53:35

I do not want our fine website to be overrun with flatearthers, zero point energy schemes, ten things they don't want you to know about scammers, and your charlatans of all types. This place is for those who can express their opinions without hawking their wares like a fish monger or carnival barker.
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Re: Economics vs. ETP

Unread postby jawagord » Tue 05 Dec 2017, 18:59:42

We don't understand ETP in Canada just economics, to paraphrase Sarah it's steam baby steam!

Husky Energy approves two new $350-million heavy oil facilities

A year after it committed $1 billion to build three steam-assisted heavy oil extraction plants in western Saskatchewan, one of Canada’s largest energy companies says its board has approved two more of the facilities at a combined cost of $700 million.

Husky Energy Inc.’s decision to green light the plants — to be built at Westhazel, near Mervin, and Edam — is part of its broader strategy to approve two plants per year “for the foreseeable future,” according to a spokesman.

“That can’t continue endlessly, of course, but we do have a good pipeline of projects that we have on the horizon and we have outlined spending plans to bring forward two per year going forward,” Mel Duvall said Monday.

Each of the 10,000-barrels-per-day plants is expected to create between 250 and 300 construction jobs, plus around 30 full-time permanent positions once they begin production, which is expected in 2021, Duvall said.

The Calgary-based company currently has four “thermal” plants under construction — Rush Lake 2, Dee Valley, Spruce Lake North and Spruce Lake Central — plus an additional four operating in the province: Rush Lake, Edam East, Edam West and Vawn.

http://calgaryherald.com/news/local-new ... c3d0b236c7
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Re: Economics vs. ETP

Unread postby vtsnowedin » Tue 05 Dec 2017, 19:02:43

pstarr wrote:
I have a great deal of respect for shortonoil,
That just means you are as stupid as he is. I'd love to see the poll where you determined that "most" on this board respect him and his opinions.
If that is really true I would have to move elsewhere.
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Re: Economics vs. ETP

Unread postby ROCKMAN » Tue 05 Dec 2017, 19:41:21

looker - I do appreciate your effort but you link didn't open. And as far as all the others who have responded NO ONE seems to answer the basic question: if the model predicts the price of oil as some you say why cannot one of you post a link several years old that shows the model? Seems with all the ETP "experts" here that should be easy. Just saying it predicted $X/bbl is meaningless. If you have a chart from several years back just post the f*cking link. Everyone here is capable of reading a chart...we don't need you to "hold or hand". LOL.
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Re: Economics vs. ETP

Unread postby EdwinSm » Wed 06 Dec 2017, 04:36:26

Some figures that have been posted for the ETP model (I am too lazy to look back through 100s of posts so saved the data to my computer, so sorry for no link).

Here is the output for the Maximum Affordability function for WTI by year:

2016...$65.94
2017....54.18
2018....46.16
2019....26.88

and


Year MAP EIA
2010 118.44 87.48
2011 112.14 71.21
2012 104.58 94.05
2013 96.18 97.98
2014 87.36 93.26

2015 77.28 48.67
2016 65.94 43.33
2017 54.18
2018 41.16


- - - -
According to these figures I find that the model was broken in the years 2013 and 2014. When I first pointed this out someone recalculated the MAP for a point around mid-year to make it fit, but it seems to me that an important part of ETP is only taking the end of year price.

To ETP supporters, are the figures I posted correct, and if not please post corrected figures.

ps. I know it is not the end of the year, but it looks like for this year (2017) the EIA average price for the year will be less than $54.18 so the model looks like it will hold for this year.
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Re: Economics vs. ETP

Unread postby Outcast_Searcher » Wed 06 Dec 2017, 13:51:16

Yoshua wrote:
The Etp Model predicts that the oil industry will consume 57% of the energy content in a barrel of crude oil to produce (extract, refine and distribute) the barrel to the economy in 2017.

How does this square with the fact that for first world countries specifically, and globally generally, economies are becoming far more efficient in terms of energy produced per dollar of GDP? (Using constant dollars, not playing the "ignore inflation" game that short tries to get away with).

For example:

https://yearbook.enerdata.net/total-ene ... -data.html

...

If the world were about to reach the limits of such efficiency, so badly that the global economy were going to be dragged under by the weight of the costs -- there would be clear signs of that. The energy intensity would be going solidly up, not proceeding down, as usual.

Just stating the same thing endlessly, when it is easily demonstrated as clearly false in a variety of ways, doesn't buy ETPers any credibility points.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Economics vs. ETP

Unread postby Cog » Wed 06 Dec 2017, 15:05:57

The only thing shorty needs to predict is how he is going to pay off his wager to VT when he loses on December 31st, 2017. Tick tock man.
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Re: Economics vs. ETP

Unread postby jawagord » Wed 06 Dec 2017, 19:09:45

Yoshua wrote:A scientific theory must be predictive. The thermodynamic laws are predictive. The Etp Model is based on the thermodynamic laws. The Etp Model must be predictive. If it isn't, then it is flawed.

The Etp Model predicts that the oil industry will consume 57% of the energy content in a barrel of crude oil to produce (extract, refine and distribute) the barrel to the economy in 2017.

The Etp Model is looking at the full life cycle of oil production.

To fight rising energy costs, the oil industry will cut its energy costs. Exploration and development of new fields will go first. The oil industry will start to cannibalize on its existing reserves until they are exhausted. The cannibalization of the existing infrastructure will continue until it collapses beyond repair...

Human behavior will respond to falling net energy. The economy will respond. The financial system will respond. The problem is just that we are against the laws of physics...it will take freaking magic to beat the laws of physics.

So let's hope and pray that the Etp Model is flawed.


Well of course it is flawed! We use oil as a feedstock to produce fuels and lubricants and it's not the sole input.

The equation for Refined Products = Crude Oils+Electricity+Natural Gas+Facilities+Labour. The crude and gas mix is variable depending on the quality and cost of the crude and the other inputs.

In Canada we have about 1 million energy workers, and with "crappy EROI" tar sands those men and women manage to produce all the fuels and electricity used by 36 million other Canadians (and we use a lot) and supply the energy needs of a whole passel of Americans, at a price much to the chagrin of Rockman et al. For the world economy what is important is the price of refined fuels and how many people it takes to produce them, those factors will tell us when we are running out, not ETP.

https://www.eia.gov/dnav/pet/pet_pnp_ca ... _nus_a.htm
https://www.nrcan.gc.ca/sites/www.nrcan ... ergy_e.pdf
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Re: Economics vs. ETP

Unread postby radon1 » Thu 07 Dec 2017, 04:01:21

So, with the ETP trash duly thrown out to the trash bin given the oil price dynamics, the trickster is now up with a new "report" to show us the "truly real truth"?
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Re: Economics vs. ETP

Unread postby Cog » Thu 07 Dec 2017, 09:11:49

Its new AND improved ETP. Like laundry detergent.
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