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The Coming Oil Flood

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

Re: The Coming Oil Flood

Unread postby agramante » Wed 25 Feb 2015, 21:10:51

It seems to me that the Saudi definition of "spare capacity" has changed over the years. In the 80's, they dramatically slowed their extraction rate, partly to bolster prices, and partly to preserve their fields. Even despite the increasingly high water cut they were able to open the taps back up again and increase production in fairly short order--on a scale of days to weeks. Now, their definition of "spare capacity" involves bringing new wells on line within a few years. In other words, it's not spare at all. I think OPEC's current claims of spare capacity are fictitious. We have almost no way to confirm or deny their claims, but there is that remarks in the Wikileaks cache from a few years ago of the Saudi oil minister saying they were producing flat-out--something entirely at odds with the official line.
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Re: The Coming Oil Flood

Unread postby Pops » Wed 25 Feb 2015, 21:31:16

Actually I believe they converted a lot of fields to MRC wells.

And they have been producing around 10mmbopd since 2005 (except for the dip around 09) and only made that for perhaps a year in 79


Image

But I'm interested in reading your source for believing they have no spare capacity. rocdoc says he thinks they did everything they had planned to make 12.5
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Re: The Coming Oil Flood

Unread postby rockdoc123 » Wed 25 Feb 2015, 22:17:54

Now, their definition of "spare capacity" involves bringing new wells on line within a few years. In other words, it's not spare at all.


No they use the same definition as the EIA which is the ability to have it turned on in 30 days at minimal expense.
All of the billions were spent on the megaprojects from 2006 - 2010 and after they were completed was when Saudi Arabia announced they had reached their goal of a 12.5 MMB/d spare capacity.

I don't think there is any reason to doubt their spare capacity as a volume. They spent the money and there is independent confirmation of that from various Western firms who were contracted. I think the question that needs to be asked is what is the percentage of different product sitting in spare capacity. The megaprojects brought on a lot of light oil and super light oil (Shaybah) and also some heavier crudes (Safaniyah) and some with higher % sulphur. Various refineries like certain types of crude. As a consequence when Libya production first fell off the table due to the post Gaddafi unrest KSA stepped in but because they did not have enough of the correct blend of crude (Libyan crude is relatively sweet and quite light a combination that is tuned perfectly for their European customers). They were able to orchestrate swaps so they could come up with the right volume of light crude (swapping some of their heavier or more sour blends for lighter sweeter blends) but that might not always be possible. KSA has specific markets for it's different crudes...they aren't all fungible which to my mind might create a problem in the future without investment in upgraders etc.
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Re: The Coming Oil Flood

Unread postby Keith_McClary » Wed 25 Feb 2015, 22:38:45

rockdoc123 wrote:All of the billions were spent on the megaprojects from 2006 - 2010 and after they were completed was when Saudi Arabia announced they had reached their goal of a 12.5 MMB/d spare capacity.

I don't think there is any reason to doubt their spare capacity as a volume.
Their old fields might have declined a bit.
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Re: The Coming Oil Flood

Unread postby sparky » Thu 26 Feb 2015, 01:47:19

.
Probably they did , but their production so far is holding , so one must look at this thing as a fact
they produce anything between 9 to 10 millions barrel per day and at a pinch could throw a couple millions more on the market .
a major concern is their internal consumption ,which is rising , relentlessly

Don't forget production is misleading , exports is the crux of the matter !
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Re: The Coming Oil Flood

Unread postby Pops » Thu 26 Feb 2015, 10:28:09

pstarr wrote:It just seems to me (and my good friend Mr. Occam) that unless the answer it quite transparent, the methods reproduceable, and the theory testable (falsification and all that) then this over-capacity thing is much over-rated. I have to go with a world recession


Image

[BofA Guy] cited fresh American Petroleum Institute (API) data which showed U.S. crude inventories climbed by a larger-than-expected 8.9 million barrels in the week ended Feb. 20, for a total of around 437 million barrels squirreled away. Around 50 million to 100 million barrels of crude oil may be gathering dust in floating storage by the end of the second quarter, compared with around 110 million barrels in April 2009, during the global financial crisis, he estimated.

As much as 80 percent of the commercially available storage in the U.S. may already be utilized, Premasish Das, downstream analyst at IHS Energy Insight, told CNBC last week.

...
Others are also concerned about how quickly space could run out. “Within around two months, [onshore storage will] be completely exhausted,” Ivan Szapakowski, a commodity strategist at Citigroup, told CNBC last week. “The only remaining storage globally will then be floating storage, tankers.”

Citigroup is forecasting oil prices to fall toward $20 a barrel before recovering.

Oil is already getting stashed offshore. Tanker prices and lease rates have doubled over the past 18 months, Gaurav Sodhi, a resources analyst at Intelligent Investor, told CNBC last week.

“Clearly, someone is going out there and leasing a lot of offshore storage and those lease rates are much higher. That suggests to me that there’s a massive supply of oil sitting on the ocean,” Sodhi said, noting each tanker can hold around 1 million to 2 million barrels each. “That sort of storage is going to take a while to unwind.”
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Re: The Coming Oil Flood

Unread postby Pops » Thu 26 Feb 2015, 14:06:21

Sorry I didn't lable it

But no that chart is IEA demand AKA consumption, still rising. It is not the same as production which is higher yet - leaving .... an oversupply. It doesn't matter how you frame it, consumption is higher than when China was growing over 10% and production is higher as well, just saying it isn't so changes nothing. Trot out some alternate authority that says consumption is declining otherwise you are just plugging your ears and chanting
"DoomDoomDoomDoom..."

That there is over production of oilish stuff right now, doesn't "debunk" PO any more that 150 years of increasing production did. Oil is still finite, it will still peak and it will still decline.
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Re: The Coming Oil Flood

Unread postby ralfy » Thu 26 Feb 2015, 21:41:00

We can probably see this in light of oil consumption for the U.S., EU, and Japan compared to the rest of the world:

http://ourfiniteworld.com/2013/04/11/pe ... e-problem/

and then wonder what would happen if both trend lines continue.
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Re: The Coming Oil Flood

Unread postby dashster » Sun 28 Jun 2015, 10:26:04

Publication is a about month away - July 31, 2015.

In the last decade, oil experts, geologists, and policy makers alike have warned that a peak in oil production around the world was about to be reached and that global economic distress would result when this occurred. But it didn't happen. The "Peak Oil" Scare and the Coming Oil Flood refutes the recent claims that world oil production is nearing a peak and threatening economic disaster by analyzing the methods used by the theory's proponents. Author Michael C. Lynch, former researcher at Massachusetts Institute of Technology (MIT), debunks the "Peak Oil" crisis prediction and describes how the next few years will instead see large amounts of new supply that will bring oil prices down and boost the global economy.

This book will be invaluable to those involved in the energy industry, including among those fields that are competing with oil, as well as financial institutions for which the price of oil is of critical importance. Lynch uncovers the facts behind the misleading news stories and media coverage on oil production as well as the analytic process that reveals the truth about the global oil supply. General readers will be dismayed to learn how governments have frequently been led astray by seeming logical theories that prove to have no sound basis and will come away with a healthy sense of skepticism about popular economics.
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Re: The Coming Oil Flood

Unread postby Keith_McClary » Sun 28 Jun 2015, 11:03:24

dashster wrote:Publication is a about month away - July 31, 2015.

"large amounts of new supply that will bring oil prices down"
I'll be interested to see what he has to say about expensive Arctic oil projects.

BTW, he was a "visiting scholar" at a think tank affiliated with MIT.
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Re: The Coming Oil Flood

Unread postby ennui2 » Sun 28 Jun 2015, 11:09:43

Michael Lynch wrote a lot of editorials around the 2008 oil panic days to try to debunk peak-oil. There may be a kernel of truth in what he's saying but he is a cornucopian and I would not expect the future of oil supply to turn out as rosy as he predicts (nor do I think it's as gloomy as peakers predict). The fact that he's writing an anti-peak oil book at a time when it's already fallen off the radar of public consciousness is all you need to know about the axe he has to grind. Apparently he feels the need to beat a horse that is already dead as far as the public is concerned.
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Re: The Coming Oil Flood

Unread postby Pops » Sun 28 Jun 2015, 11:16:46

Everyone has an ax to grind, a few get royalties, hard to imagine them changing axes.
The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves -- in their separate, and individual capacities.
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Re: The Coming Oil Flood

Unread postby ROCKMAN » Sun 28 Jun 2015, 14:10:03

Pops - "...hard to imagine them changing axes." So true but still amazing to watch them amass followers. So the world is saved because we've discovered a previously unknown source of oil (the Bakken and Eagle Ford Shale were first produced more then 50 years ago) that can now be exploited by the "few" techs of frac'ng (which started over 50 years ago), horizontal drilling (common over 20 years ago) and pad drilling (a concept developed many decades ago).

Obviously the "flood" will continue to wash over us at $60/bbl thanks to such "new" field discoveries and technologies. Thank Dog this biblical "flood" doesn't require high priced oil. LOL.
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Re: The Coming Oil Flood

Unread postby Outcast_Searcher » Sun 28 Jun 2015, 14:51:01

ennui2 wrote:Michael Lynch wrote a lot of editorials around the 2008 oil panic days to try to debunk peak-oil. There may be a kernel of truth in what he's saying but he is a cornucopian and I would not expect the future of oil supply to turn out as rosy as he predicts (nor do I think it's as gloomy as peakers predict). The fact that he's writing an anti-peak oil book at a time when it's already fallen off the radar of public consciousness is all you need to know about the axe he has to grind. Apparently he feels the need to beat a horse that is already dead as far as the public is concerned.

Well, if that let's him say "I was right all along", and lets him sell more books now (and likely in the mid-term future), it's hardly surprising to me that he'd do that. He's just acting in his own self interest.

I agree that he's a cornucopian. And, as a moderate I also expect the truth to be somewhere between "all doom all the time" and "hurrah, we're all saved". After all, it's not like growing demand from Chindia, etc. has gone away, not to mention first world consumers driving more and buying stupid gas guzzlers once gasoline is "cheap". It's also not like KSA is practicing financial sanity re their national budget by pumping madly to keep oil prices low, and burning through a significant part of their sovereign wealth fund (and perhaps their irreplacable oil fields), IMO.

I'll be very interested to see if Lynch has credible data the world hasn't managed to connect the dots on yet, or whether he will do a lot of "technology will improve at rate "X" hand waving.
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: The Coming Oil Flood

Unread postby copious.abundance » Tue 30 Jun 2015, 02:20:12

Here's a link to the book on Amazon. Order now and get your copy early! :)

http://www.amazon.com/The-Peak-Scare-Co ... 1440831866

I might read it myself. :)
Stuff for doomers to contemplate:
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
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Re: The Coming Oil Flood

Unread postby sparky » Tue 30 Jun 2015, 08:31:41

.
the big known unknown is Iran , if they get back into the world market on any reasonable terms ,
they can crank up their production to 5 millions barrels a day within three years ,
without breaking a sweat
so what if the price tank to 50$ , do you see them doing any favor to the gulf sheiks ?? !!
they would be hungry for cash with the major international oil companies grovelling for access
( as they already do )

This would require some lifting of sanctions , the coming weeks are going to be fascinating
such an array of interests , such double speak , such diplomatic poker ,
I'm just creaming my pants :razz: :razz: :razz: :razz: :razz:
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Re: The Coming Oil Flood

Unread postby sparky » Wed 01 Jul 2015, 01:49:52

.
From the OPEC official site
http://www.opec.org/opec_web/en/data_graphs/330.htm

the Islamic Republic of Iran account for a whooping 157 Billions barrels of proven reserve
considering they got to 6 millions barrel/day before the revolution with a pretty fast rise ,
the kibosh on their exports , degradation of their industry through sanctions , and lack of modern drilling tech
it would seems the figure of 5 millions B/d is quite reasonable as a target
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