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Economics vs. ETP

Discuss research and forecasts regarding hydrocarbon depletion.

Re: Economics vs. ETP

Unread postby onlooker » Sat 09 Dec 2017, 10:22:09

There are of course doomers here that would argue that the planet can not support 7.5 billion people regardless of what transition we make to alternative power sources -----
I wholeheartedly believe that. Some tough questions for our entire species
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Re: Economics vs. ETP

Unread postby Yoshua » Sat 09 Dec 2017, 11:43:12

Saudi Arabia has been producing an increasing amount of energy to try to maintain their crude exports.

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Re: Economics vs. ETP

Unread postby Yoshua » Sat 09 Dec 2017, 11:56:22

Saudi Arabias nat gas production and consumption has doubled since 2000 and count for 40% of Saudi primary energy consumption.

Image

Add to this all the technology, machines and steel they are importing for their megaprojects and the energy consumption is starting to be high.

And since Saudi Arabia's largest share of exports is crude oil that needs to be refined and distributed before the net energy of Saudi Arabia's petroleum production can be calculated, then Saudi Arabia might all ready be close to the energy half way point...EOR would certainly push them over the energy half way point.
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Re: Economics vs. ETP

Unread postby AdamB » Sat 09 Dec 2017, 12:39:32

Yoshua wrote:Saudi Arabia has been producing an increasing amount of energy to try to maintain their crude exports.

Image


A wonderful graph showing 3 peak oils for Saudi Arabia. Anyone like to guess at how many more might be possible?
Plant Thu 27 Jul 2023 "Personally I think the IEA is exactly right when they predict peak oil in the 2020s, especially because it matches my own predictions."

Plant Wed 11 Apr 2007 "I think Deffeyes might have nailed it, and we are just past the overall peak in oil production. (Thanksgiving 2005)"
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Re: Economics vs. ETP

Unread postby AdamB » Sat 09 Dec 2017, 12:44:05

pstarr wrote:Folks don't understand the money we shove down the drill pipe in our need for oil.


If by "folks" you mean peak oilers and the citizen at large, you are correct. As you so ably demonstrate on a near daily basis, peak oilers don't want to understand...anything really...when it comes to the resource economics of extracting oil and natural gas.

pstarr wrote:Out of sight, out of mind. The idiots think oil grows on trees lol


As you represent the type, it is nice to see you confirm the suspicions of those of us who are very well aware of the size of the AFE for any particular well, or the economics of an entire drilling program.
Plant Thu 27 Jul 2023 "Personally I think the IEA is exactly right when they predict peak oil in the 2020s, especially because it matches my own predictions."

Plant Wed 11 Apr 2007 "I think Deffeyes might have nailed it, and we are just past the overall peak in oil production. (Thanksgiving 2005)"
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Re: Economics vs. ETP

Unread postby rockdoc123 » Sat 09 Dec 2017, 12:55:05

Folks don't understand the money we shove down the drill pipe in our need for oil. Out of sight, out of mind. The idiots think oil grows on trees lol Here's another example Yoshua (not dissimilar to the $100 of billions spent by SA getting at the last drops). It's all about net-energy losses in the energy producing system. Money, wealth, technology thrown away down the drill hole.


the industry certainly knows simply because they have to pay for all of energy that goes into a well including all of this technology you speak of. The fact that a profit can be made on a barrel of oil is instructive that there is much less energy going into drilling and producing than comes out.
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Re: Economics vs. ETP

Unread postby Yoshua » Sat 09 Dec 2017, 13:02:22

"In 2014, primary energy production for Saudi Arabia was 27.59 quadrillion btu. Though Saudi Arabia primary energy production fluctuated substantially in recent years, it tended to increase through 1995 - 2014 period ending at 27.59 quadrillion btu in 2014."

https://knoema.com/atlas/Saudi-Arabia/P ... production

"In 2014, primary energy consumption for Saudi Arabia was 10.21 quadrillion btu. Between 1995 and 2014, primary energy consumption of Saudi Arabia grew substantially from 3.83 to 10.21 quadrillion btu rising at an increasing annual rate that reached a maximum of 10.82 % in 2000 and then decreased to 4.28 % in 2014."

https://knoema.com/atlas/Saudi-Arabia/P ... onsumption

For some reason the energy consumption in Saudi Arabia is increasing at very high rates.
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Re: Economics vs. ETP

Unread postby shortonoil » Sat 09 Dec 2017, 13:10:00

There are of course doomers here that would argue that the planet can not support 7.5 billion people regardless of what transition we make to alternative power sources -----


Image

Without an economy the planet is not going to support any people, at least there won't be enough to make it worth counting them. The central banks, in an effort to support their fiat currencies, have pumped up assets values all across the planet. Bit Coin at $20,000; -- Whow! $250 trillion in debt, double -- Whow! This effort has benefited a few, and left 99% out in left field. However, it is the 99% that burns most of the oil!

This asset expansion policy now seems to have hit oil. The price of oil is more than the economy can afford; at least 99% of it can't. It hasn't yet reached the rich nations, except that the average US household is growing debt 60% faster than its income. They are still eating three meals a day, with an able supply of junk food thrown in for good measure. The Bangladesh farmer is not quit so well off. He needs 2 gallons of gasoline to grow enough food to feed his family, but can only afford a gallon and a half. His family now eats two meals a day, and no junk food. They slowly grow weaker.

20 million people are now facing famine. Nigerians displaced by Boko Haram in northern Nigeria, Somalia and Yemen. And this week, the United Nations declared famine in a patch of South Sudan.

The UN has a definition of famine:

"Famine is a rare and specific state. It is declared after three specific criteria are met: when one in five households in a certain area face extreme food shortages; more than 30 percent of the population is acutely malnourished; and at least two people for every 10,000 die each day."


What the New York times, and the UN doesn't tell us is that this all stems from Middle Eastern and North African oil wars. The fight for the last few dollars generated from ever increasing production costs, and a falling price. The developed nations aren't paying much attention, and probably won't until the Dow falls 15,000 points. Without oil that the economy can afford, 7.4 billion will be quit a few more than the planet can support!
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Re: Economics vs. ETP

Unread postby Yoshua » Sat 09 Dec 2017, 13:15:12

Kashagan's cost of $50 billion equals 1 billion barrels of crude. As long as cost isn't a problem, then Kashagan is a nice cash hole...
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Re: Economics vs. ETP

Unread postby rockdoc123 » Sat 09 Dec 2017, 13:24:35

The price of oil is more than the economy can afford; at least 99% of it can't.


why then is global oil demand ever increasing? Seems to me if they can't afford it there would be no demand.

except that the average US household is growing debt 60% faster than its income.


not according to all the data out there.

US household debt as a % of GDP decreased steadily from 2008 to 2016 according to FRED
Likewise, US household debt to income decreased steadily for 2008 to 2016. It is now at a level last seen in 2004.
Also according to FRED US household debt service payments as a percentage of disposable income decreased from a high in 2008 of 13% to 10% in 2016. That is lower than has been seen in the last 35 years.
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Re: Economics vs. ETP

Unread postby rockdoc123 » Sat 09 Dec 2017, 14:22:58

1 billion barrels that doesn't reach the productive consumer society. One billion barrels that should have been spent on hospitals, education etc. etc. * We count the oil produced as if it were oil used. It is not used, not for money, capitalistic or social gain. It is used to get more oil. Does anyone understand this yet? Or am I swimming in a sea of idiots **


Given that Kashagan has somewhere in the order of 30 - 50 Gbbls in place and recovery could be up to 10 Gbbls one has to ask what the issue is with spending a billion bbls to get back 10? A 10:1 return on equity seems like not too bad a deal.

No, I think you are swimming in the idiot sea....not too many of you in there though :roll:
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Re: Economics vs. ETP

Unread postby shortonoil » Sat 09 Dec 2017, 15:36:05

Saudi Arabias nat gas production and consumption has doubled since 2000 and count for 40% of Saudi primary energy consumption.

Image

As was posted here (¾ down the page by shortonoil):

is-fast-crash-likely-pt-7-t73825-240.html

it appears that it is now the energy from NG that is permitting petroleum production to continue at its present level. Once NG peaks so also will oil, and it appears that NG production has ceased to increase. Peak petroleum production is most likely imminent.

https://www.bp.com/en/global/corporate/ ... ction.html
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Re: Economics vs. ETP

Unread postby kublikhan » Sat 09 Dec 2017, 16:16:59

pstarr wrote:In recent weeks, word has dribbled out that Kashagan—one of the largest supergiant oil finds of the last half-century—may lie dormant through the summer (paywall) and perhaps longer. But this is the first concrete report that the gravity of the problem means that Kashagan will produce no oil through at least 2016 and possibly 2017.
That article is over 3 years old. It's predictions did not come true. Kashagan restarted production last year.

The Kashagan reservoir is about 4,200 m (13,780 ft) below the seabed and has a high pressure of about 11,168 psi, according to operator North Caspian Operating Co. (NCOC). NCOC and partners—Eni, KazMunayGas, Royal Dutch Shell, Total, ExxonMobil, CNPC and Inpex—restarted production in late 2016. By year-end 2017, Kashagan production is set to increase to about 370,000. With transportation infrastructure in place, Johnston said Kashagan could reach up to about 1.8 MMbbl/d without much trouble. “Kashagan on its own could be a global game-changer. An increase of 1 MMbbl/d to 1.5 MMbbl/d in the next year or two could create global crash”
Kashagan: An Oil Market Game-Changer In The Making?

pstarr wrote: * We count the oil produced as if it were oil used. It is not used, not for money, capitalistic or social gain.
If that is true, why does society continue to see an increasing gain from oil? IE, more vehicles, more miles traveled, etc? Society needs oil to fuel those vehicles and travel those miles. How are we doing that if the oil is not reaching society?
The oil barrel is half-full.
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Re: Economics vs. ETP

Unread postby Yoshua » Sat 09 Dec 2017, 18:08:16

"Unconventional gas will help meet Saudi Arabia’s own energy demand, and is the preferred fuel for power generation and water desalination because of its increased efficiency and cleaner burning qualities compared to other fossil fuels.
The resulting increase in the total gas share of the Kingdom’s energy mix will expand the volumes of higher value diesel and crude oil available for export."

http://www.jobsataramco.eu/people-proje ... as-program

Saudi Arabia has an energy problem since they are going down the tight gas hole to meet their energy demand.
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Re: Economics vs. ETP

Unread postby Cog » Sat 09 Dec 2017, 19:28:27

Uh building nuclear reactors to produce electricity and saving your oil/gas for export makes a lot of sense in my book if your major export is oil/gas.
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Re: Economics vs. ETP

Unread postby onlooker » Sat 09 Dec 2017, 19:32:21

Cog wrote:Uh building nuclear reactors to produce electricity and saving your oil/gas for export makes a lot of sense in my book if your major export is oil/gas.

Actually, I agree. The question is can they really do it
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Re: Economics vs. ETP

Unread postby shortonoil » Sat 09 Dec 2017, 22:03:18

Saudi Arabia has an energy problem since they are going down the tight gas hole to meet their energy demand.


Chesapeake has probably never turned a dime on its shale gas. Its debt just keep growing year after year. If it is true for a company as large as they are it is probably also true of most other producers. David Hughes estimated their cost at $8.00 per MM several years ago. Shell pulled out completely, and EXXON gave up on the effort. If this is part of MBS's Vision 2030 it is as ill founded as the rest of it. Shale is the process of trying to squeeze hydrocarbons out of a brick. Decline rates are horrific, and capital return rates are almost zero. It is the last gasp of a civilization that is totally beholding to high ERoEI oil. Now that it is gone the world is rapidly going broke attempting to replace it. When the world's $250 trillion in debt blows up there will be no one there to pick up the tab.
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Re: Economics vs. ETP

Unread postby rockdoc123 » Sat 09 Dec 2017, 22:42:13

Chesapeake has probably never turned a dime on its shale gas. Its debt just keep growing year after year

Once again, you don’t have a clue about the shale gas/oil business. CHK has been following their plan all along, got sent sideways a bit by the drop in price but still sticking to it. The plan all along was to acquire as much acreage as possible using debt. Then to drill as many wells as possible (given the timelines required) to prove up the best part of the acreage. Then to sell off the less attractive pieces of the acreage that they had acquired. Their debt was halved in the last few years and they are now at the stage where they have the acreage they want and still have options to sell more less attractive acreage and can continue to develop their core areas. In 2016 CHK had revenues of $3.3 billion and production costs of $2.6 billion which means on a cash basis they ended up with $700 MM in cash income. Why you dimwiths keep on this idea that they are seeing losses is because DD&A and impairments put them in the negative. As I have said time and again it is the cash accounting items that matter in terms of understanding how well a company is doing

Shell pulled out completely, and EXXON gave up on the effort


Because Shell was late to the game and ended up with crappy acreage. Exxon has better places to deploy their capital, one of those being shale in Argentina where the size of the prize is much larger. The big players cannot access enough acreage in the US to make sense with the size of reserve replacement they need which is why they look elsewhere. Surprisingly enough Exxon replaced their production by 170% last year at a cost of $15/boe. I don’t think they are too worried.

Decline rates are horrific, and capital return rates are almost zero.


You know nothing about this subject. Decline rates are steep in the first number of months as the propped fractures are depleted and then stabilize at a rate which equates to the microcracked matrix support to the larger propped fractures. And payout in all of these wells is generally within the first year so you are wrong on the capital returns. I’ve run scoping economics on many shale opportunities and invariably they are delivering > 50% rate of return.

No matter how many times you are corrected on this nonsense you just return to regurgitate it once again. :roll:
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Re: Economics vs. ETP

Unread postby Yoshua » Sun 10 Dec 2017, 16:18:10

Kuwait is receiving help from BP to give its giant Burgan oil field new life through EOR. Kuwait is also developing its Northern field which contains heavy oil. Kuwait's nat gas consumption has doubled since 2000 to 20bcm while its production has peaked and is now down at 15bcm, the difference comes from LNG imports.

Kuwait claimed it self to be the No.1 low cost producer in the world with 100Gbbl of crude reserves. Well...it sounds as if they might have exaggerated their greatness a little bit.
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Re: Economics vs. ETP

Unread postby Yoshua » Sun 10 Dec 2017, 17:03:07

This tread is called Economics vs. Etp. But if the energy isn't there, the economy won't be there either.

"Kuwait, which hosted the 38th summit of the Gulf states last week amid the ongoing Qatari crisis, cannot keep overlooking the serious economic challenges at home. Facts surrounding its public finance partly explain the need for immediate economic reforms.

Projected expenditure and revenues for fiscal year 2017-18 amount to $65.2 billion and $43.6 billion, respectively, and which would impose a sizeable deficit of $21.6 billion. (Kuwait runs its financial year from April to March, the only one to do so with within the GCC.) Chances are the final results would tilt towards the government’s advantage, as the budget was prepared using an average oil price of $45 per barrel, clearly below prevailing prices. Oil prices are hovering around $55 thanks to moves by Opec members as well as Russia to curtail output."

But, sure, fair enough, Kuwaitis enjoys socialism that Venezuelans only can dream about.
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