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The Export Land Model

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

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Re: The Export Land Model

Unread postby kublikhan » Sun 01 Apr 2012, 15:35:31

Note that Saudi Arabia showed a very sharp increase in net exports from 2002 to 2005, as global crude oil prices doubled from $25 in 2002 to $55 in 2005. In response to the first crude oil price price doubling, we did of course see a substantial increase across the board in total liquids production (inclusive of biofuels), in total petroleum liquids, in crude + condensate (C+C), and in Global Net Exports (GNE) and in Available Net Exports (ANE).

In response to the second Brent crude oil price doubling (2005 to 2011), we have so far seen a very slow rate of increase in total liquids production (up 0.5%/year from 2005 to 2010), virtually flat total petroleum liquids and virtually flat C+C production (through 2010), and a 1.3%/year and 2.8%/year respective decline rate in GNE & ANE (through 2010). GNE fell from 46 mbpd (million barrels per day) in 2005 to 43 mbpd in 2010, while ANE fell from 40 mbpd in 2005 to 35 mbpd in 2010.

annual "Gap" charts follow, showing the gaps between where we would have been at the 2002 to 2005 rates of increase, versus the actual data in 2010.
Image
Perhaps oil prices could be rising because of a declining supply of net oil exports?
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Re: The Export Land Model

Unread postby AirlinePilot » Sun 01 Apr 2012, 21:30:00

US total petroleum liquids production (BP) increased from 7.2 mbpd (pre-hurricane) in 2004 to 7.5 mbpd in 2010 (and probably to about 7.7 mbpd in 2011). From 2004 to 2010, despite increasing net exports from Canada, the combined net oil exports from the seven major net oil exporters* in the Americas and the Caribbean fell from 6.2 mbpd in 2004 to 4.8 mbpd in 2010, down 1.4 mbpd, a decline of 23% in six years.

So, just the regional decline in net exports, from 2004 to 2010, was about five times the size of the increase in US production. The 2005 to 2010 decline in Global Net Exports (GNE) was about 10 times the size of the recent increase in US production, and the 2005 to 2010 decline in Available Net Exports (ANE) was about 17 times the size of the recent increase in US production.

*Canada, Colombia, Venezuela, Mexico, Argentina, Ecuador, Trinidad & Tobago
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Re: The Export Land Model

Unread postby dissident » Sun 01 Apr 2012, 23:01:59

http://www.theglobeandmail.com/report-o ... le2191152/

According to the above article the increasing US total liquids production is a threat to Canada's oil sales. This is so idiotic it is surreal. The only way that the Canadian exports would be threatened is if the US was self sufficient in oil production or for some odd reason decided to boycott Canada and import more from Saudi Arabia or elsewhere. These token US "oil" production increases are being touted as proof that peak oil is a silly notion. Innumeracy is a sad thing to behold.

The export land model tells us that the crunch will come much faster than it would appear based on depletion of existing oil fields alone. This point is completely alien to the media coverage of anything related to oil. Absurd pieces such as the one above, which are basically focused on domestic production and not even consumption, are what makes up the public information space. People have to come to "fringe" internet sites such as this one to get any information at all about how serious things are. As far as the economy is concerned it is the net export figure that matters and not global production. So even though not a single economist can be seen saying this in the MSM, we are already past peak. Somehow it is hard to believe that the global economic crisis since 2008 is merely a coincidence.
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Re: The Export Land Model

Unread postby ragged » Sun 08 Apr 2012, 21:43:52

I thought this was a good article:

The Economist: Keeping it to themselves Gulf states not only pump oil; they burn it, too: http://www.economist.com/node/21551484

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Yet these calculations do not take account of the region’s growing thirst for its own oil. Between 2000 and 2010 China increased its consumption of oil more than any other country, by 4.3m b/d, a 90% jump. It now gets through more than 10% of the world’s oil. More surprising is the country that increased its consumption by the second-largest increment: Saudi Arabia, which upped its oil-guzzling by 1.2m b/d. At some 2.8m b/d, it is now the world’s sixth-largest consumer, getting through more than a quarter of its 10m b/d output.

Saudi Arabia is not the only oil-producer that chugs its own wares. The Middle East, home to six OPEC members, saw consumption grow by 56% in the first decade of the century, four times the global growth rate and nearly double the rate in Asia (see map).


The third reason for rising Gulf consumption is the inefficiency of domestic energy markets. Some 65% of Saudi electricity is generated using black gold, even as successive price shocks and the relative inefficiency of oil generation have seen it all but phased out in rich countries. Oil is used with such profligacy because domestic consumption is massively subsidised. According to the International Energy Agency, global oil subsidies added up to $192 billion in 2010. OPEC countries accounted for $121 billion of the total.

Saudi Arabia has the cheapest fuel in the Gulf and dirt-cheap electricity, too. This has alleviated poverty but it has also encouraged an American-style driving culture (for men) and limited public transport. Only a third as many Saudis own cars as Americans; as they get richer many more will take to the desert highways.
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Re: The Export Land Model

Unread postby Keith_McClary » Sun 08 Apr 2012, 22:20:55

dissident wrote:http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/us-oil-production-a-threat-to-canadian-energy-industry/article2191152/

According to the above article the increasing US total liquids production is a threat to Canada's oil sales. This is so idiotic it is surreal.
The point is, the only pipelines run south.
Mr. Wuori pointed to the current discount of nearly $25 (U.S.) per barrel applied to oil traded in the landlocked central parts of North America.

“That’s an example of just how serious price degradation can be when you have too much supply and not enough outlet,” said Mr. Wuori, for whom the coming changes provide further reason for Canada to pursue other markets. Enbridge, the country’s largest transporter of crude, is a major proponent of such plans, with its $6.6-billion Northern Gateway pipeline that would bring oil sands crude to the Pacific coast for export to Asia and California.
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Re: The Export Land Model

Unread postby Keith_McClary » Wed 28 Nov 2012, 13:59:23

Blast from the past (I didn't pay $2.95 for the remainder of the 721 words).
The Washington Times: Oil and Iraq's future‎
$2.95 -
Washington Times - Apr 17, 2003
With an export potential of 7 million barrels per day achievable within about six years, Iraq could be generating about $64 billion per year at a price of
...
With the coalition of the willing having vanquished Saddam Hussein's regime in Iraq, it is now up to the "coalition of the drilling" to provide the resources to underwrite Iraq's political and economic development after decades of repression and economic mismanagement. Let there be no doubt: Iraq's immense oil and gas reserves 112 billion barrels of proven oil reserves; at least another 100 billion barrels of potential oil ...

Complete Article, 721 words ( )
This assumes $25 oil.
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Re: The Export Land Model

Unread postby Keith_McClary » Thu 06 Jun 2013, 00:20:19

gollum wrote:What isn't discussed much, is the tendency that net exporters will probably have to hoard their oil when it becomes apparent the oil will be worth more in the future as peak oil becomes more apparent.

It seems Iraq is in no hurry to spend money ramping up production:
Though Iraq could, in that scenario, theoretically pump as much as nine million bpd, Shahristani said that between five and six million bpd “would generate enough revenues to meet our needs.”
...
“We thought in Iraq that there is no point at this stage to invest very large sums to develop the fields for a much higher production capacity if we are not going to use that capacity and produce the oil, that we cannot market because there is not sufficient demand for it.”
Meaning not sufficient demand at a high enough price.
http://peakoil.com/production/iraq-in-t ... ergy-firms
Is this "hoarding"?
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Re: The Export Land Model

Unread postby ROCKMAN » Thu 06 Jun 2013, 06:32:49

Keith - That position probably goes a long way towards explaining the Iraq position on trades with third parties on developing their oil infrastructure. The Iraq terms appear to allow only a very thin margin for those third parties and thus there’s little interest by anyone except the Chinese. China imports the majority of Iraq oil today and dominates forward projects. Not having to focus strictly on the bottom line China can play the long game of commodity access and not worry too much about quarterly profits.
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Re: The Export Land Model

Unread postby Tanada » Thu 06 Jun 2013, 10:12:59

ROCKMAN wrote:Keith - That position probably goes a long way towards explaining the Iraq position on trades with third parties on developing their oil infrastructure. The Iraq terms appear to allow only a very thin margin for those third parties and thus there’s little interest by anyone except the Chinese. China imports the majority of Iraq oil today and dominates forward projects. Not having to focus strictly on the bottom line China can play the long game of commodity access and not worry too much about quarterly profits.



Indeed, and it seems to me that KSA was following the same strategy until 1986 or so when the USA convinced them to start pumping flat out and crash the world oil price. If they had stayed the course and never pumped more than say 4 MMbbl/d how much better off would they be today than they were in the 1990's when the world had a temporary oil glut? To my way of thinking long term goals and stability are far more valuable than fleeting bubble profits.
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Re: The Export Land Model

Unread postby ROCKMAN » Thu 06 Jun 2013, 11:10:16

Tanada - It also seems to go along with the development of those refinery JV's with China et al. I wish I had a better handle on the profit margins the KSA would make by selling refined products instead of oil. In theory they could produce less oil but still have the same revenue stream by capturing some of the product profit. Not only might this save oil sales for the future but might also increase oil prices as they remove a certain volume from the market place. And then there would be the potential for reducing their cash outflow by using their own refined products and eliminating at least some of the imports. OTOH they’ll be paying for a portion of the refinery build out. One has to assume the KSA sees some financial benefit to the effort but difficult to guess the magnitude.
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Re: The Export Land Model

Unread postby Tanada » Thu 06 Jun 2013, 13:19:31

ROCKMAN wrote:Tanada - It also seems to go along with the development of those refinery JV's with China et al. I wish I had a better handle on the profit margins the KSA would make by selling refined products instead of oil. In theory they could produce less oil but still have the same revenue stream by capturing some of the product profit. Not only might this save oil sales for the future but might also increase oil prices as they remove a certain volume from the market place. And then there would be the potential for reducing their cash outflow by using their own refined products and eliminating at least some of the imports. OTOH they’ll be paying for a portion of the refinery build out. One has to assume the KSA sees some financial benefit to the effort but difficult to guess the magnitude.


I also see another aspect of the deals that I have not heard you comment on. By refining close to home and shipping out the valuable products instead of the crude itself each of these deals will provide lower over all shipping costs to the owners. If you have a 1 MM/bbl freight tanker and you ship all crude oil then you are spending X to deliver the crude to the recipient. If you take that same tanker and divide it up so that you are shipping Gasoline, Kerosene (jet fuel/Diesel-1) and Diesel fuel (diesel-2, heating oil) in the proportions your refinery produces you are saving the cost of shipping all the asphalt, heavy oil, oil coke and so on along with it. With a proper design you can use some of the heavy oil like bunker fuel or diesel-4 to power tour tank freighter and you can stack up the petroleum coke and sulfur in some convenient pile until you have enough to be worth filling a regular freighter up and sending off to an end user for that as well. That all adds up to lower cost more efficient shipping. Also for any of the refinery end products like the petroleum coke the USA has a use for you have a new sales stream because our refineries won't be making enough if we are importing finished product.
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Re: The Export Land Model

Unread postby ROCKMAN » Thu 06 Jun 2013, 15:27:34

Tanada - I know even less details about the shipping end than refining. But I think in many cases, especially with the KSA, the buyer has to arrange and pay for transport. Maybe the same with products…just not sure. I am sure it’s a matter always open for negotiation. And this is where some aspects get even harder to read. The KSA now owns 50% of a huge refinery, Motiva, in Texas. The assumption has been that the KSA would ship their oil to the plant which, as you point out, they would have to pay for along with RDS. But then the obvious market would be the US except that now a lot of products are being exported for the US. And someone will have to pay for that transport. But maybe that wasn’t the original plan or it was but now the dynamics have changed. The KSA would spend a good bit less transporting their oil to the Red Sea refinery JV with China. From there it’s a short haul to the EU markets.

So what of Motiva? It is capable of refining the Canadian oil sand production also. And given that this is foreign produced oil there’s virtually no restriction to exporting the products made from it or even the oil itself. Again, that may not have been the original plan. And if the KSA had known China would be taking the approach to refinery JV’s today they might not have partnered on Motiva. But right now with lower US consumption of products and an international market that’s willing to pay a fair amount for fuel it seems like those dynamics are firmly in place. Today it doesn’t seem to make much sense to ship Saudi oil to Texas, refine it and then ship some/all of the products overseas. The oil patch doesn’t handle change very well especially on a time scale of 5 years or less. And today 5 years seems like a long time for any part of the dynamic to hold static.
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Re: The Export Land Model

Unread postby westexas » Sun 07 Jul 2013, 11:13:31

Following are links to my first and most recent articles on net oil exports. The ECI ratio article is not yet updated with 2012 data (working on it right now). In the January, 2006 Oil Drum article, I introduced the Export Land Model (ELM), which of course is just a simple mathematical model, and in the February, 2013 article, I introduced the ECI concept.

Hubbert Linearization Analysis of the Top Three Net Oil Exporters
January, 2006
http://www.theoildrum.com/story/2006/1/27/14471/5832

The Export Capacity Index (ECI)
February, 2013
http://peak-oil.org/2013/02/commentary- ... ity-index/

Here are the net export numbers for the (2005) Top Three net exporters (EIA) for 2002 to 2005 (Saudi Arabia, Russia, Norway, EIA total petroleum liquids):

2002: 15.3 mbpd
2003: 17.2
2004: 18.1
2005: 18.6

In 2005, these three net exporters accounted for 41% of Global Net Exports of oil (GNE, Top 33 net exporters in 2005, EIA). As noted above, in early 2006, I wrote my little essay that introduced the ELM concept, focusing on net exports from Saudi Arabia, Russia and Norway. This was my first, and fairly crude, effort at trying to use the logistic (HL) approach to try to model future net exports, and I was too pessimistic regarding short term Russian production (and I was too pessimistic to a lesser degree regarding short term Saudi production), but Russian net exports stopped growing in 2007, and Saudi net exports have remained below their 2005 rate for seven straight years.

At the time I wrote this 1/06 essay, Top Three net exports were increasing at 6.5%/year, as global annual (Brent) crude oil prices doubled from $25 in 2002 to $55 in 2005. At a 6.5%/year rate of increase in net exports, combined net exports from the top three would approach 30 mbpd in 2012.


Here is an excerpt from the 1/06 article:
As predicted by Hubbert Linearization, two of the three top net oil exporters are producing below their peak production level. The third country, Saudi Arabia, is probably on the verge of a permanent and irreversible decline. Both Russia and Saudi Arabia are probably going to show significant increases in consumption going forward. It would seem from this case that these factors could interact this year produce to an unprecedented--and probably permanent--net oil export crisis.


In the following seven years from 2005 to 2012, annual crude oil prices doubled again, from $55 in 2005 to $112 in 2012, with one year over year decline in 2009. In response, here are the combined net exports from Saudi Arabia, Russia and Norway (EIA):

2006: 18.0 mbpd
2007: 17.6
2008: 17.9
2009: 16.6
2010: 17.2
2011: 17.4
2012: 17.3

When we plug in some CNE (Cumulative Net Export) estimates, I estimate that Saudi Arabia, Russia and Norway may have collectively already shipped about 30% of their combined post-2005 CNE.

Incidentally, top three production increased at a pretty rapid clip from 2002 to 2005 (5.9%/year). Even if we assume about 3%/year, which is consistent with what Yergin was predicting for the increase in global production in this time frame, top three net exports would have been close to 23 mbpd in 2012, assuming the same (2005 to 2012) rate of increase in consumption (3.7%/year). The actual rate of increase in production was basically zero, as top three production went from 23.6 mbpd in 2005 to 23.8 mbpd in 2012. Note that the above CNE estimate assumes perpetually flat production, which does not seem to be a likely outcome. When we plug in a more realistic production decline number, the post-2005 CNE estimate will fall significantly.
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Re: The Export Land Model

Unread postby John_A » Sun 07 Jul 2013, 12:19:50

I think I asked this in another thread, but this appears to be the correct place to do so.

How did the meeting go with EIA where you were able to show this method off? Are they going to use any piece of it in their future models, and if so, why not? Based on the reports published at the website from ASPO it would seem that a full investigation of the modeling system used by EIA is in the works by ASPO members, do you know if this has proceeded substantially enough to know where fitting this time series data can be plugged in for the more econometric pieces of that model? Rockman seems to like the idea of a price path forward upon which to base future production estimates, and the EIA does that but I haven't noticed any correlation between ELM output and price.
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Re: The Export Land Model

Unread postby dohboi » Sun 07 Jul 2013, 13:52:16

Good to see that WT is hear discussing his important insights and theories.

At neven's forums, we were discussing the future of food, and it struck me that one might be able to set up something like an ELM for food that might be useful in seeing where the biggest crunches were going to come the fastest. Of course, in that case, you have elements like major flooding and drought (both predicted to increase dramatically under GW) that may be hard to model. But the general trends of amount of food grown, amount of food exported and amount of food consumed internally for each major producing (and consuming?) country might be worth looking in to.

Do you know of anyone trying to apply your model to food in that way? I'm not sure I have the mathematical or graphing chops to do it myself--in fact, I'm sure I don't.
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Re: The Export Land Model

Unread postby pstarr » Sun 07 Jul 2013, 18:13:20

The data is there, CIA Facts. It is an interesting question. I don't know of any food and oil exporters. Brazil is a food exporter, but now a net oil importer (in spite of their deep water/pre-salt bonanza). The US certainly not. Maybe Russia?

But given that food==oil, wouldn't the basic ELM model cover that? Modern agriculture is wholly dependent on oil. So as a countries access to oil declines, it access to food also does so.
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Re: The Export Land Model

Unread postby SeaGypsy » Sun 07 Jul 2013, 18:55:54

The USA may not be a net exporter, but it is in the top 3 grain exporters. When things get tight, it's not $20 jars of fake caviar that matter, but basics- grain being primary. Australia supplies grain equivalent to the requirement of about 70 million outside it's borders, beef to another 20 million; exports more than 4 times as much coal and iron ore as it uses- yet still manages a negative trade balance. How much of the leakage is low priority spending dependent on high disposable income? The principle of ELM should certainly apply to agricultural products, but the modeling will be even more complicated. Of course there is also an inter-relation when you have ELM (oil) hit dependent food importers. Then we have the complications of likely climate disruption into the mix.
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Re: The Export Land Model

Unread postby Pops » Mon 08 Jul 2013, 09:42:53

I think basic ELM is like a measure of the food dribbling out of the side of the producers mouth, if you have more than you can use, you waste it, or at least use it for less than it's optimum purpose. Like the difference in how lobster is treated in Maine and in Missouri, especially if the lobster in Maine gets a subsidy. wt has more finely honed measures but that is the basic idea

The thing about food is, modern calorie farming is super energy and labor efficient so super cheap, modern eating on the other hand isn't. Modern eating is totally dependent on oil. Processing, packaging, marketing, transporting various ingredients here and there to get to manufacture a predigested MRE suitable for our microwaving pleasure is where all the energy and costs go, the calorie producer gets only a very small portion.

So the basic ELM of food or oil is perhaps only viable up to a point on the cost scale isn't it? KSA in fact is seeing the distortions and talking about it publicly. Here from May 8th, 2013

Saudi Arabia should cut energy subsidies that are burdening public finances, the economy minister and the head of the state-run utility said, a move that would also tackle the issue of erosion of crude exports.

Rock-bottom prices for gas, power and gasoline have turned the world’s 20th biggest economy into its sixth-biggest consumer of oil, producing less than $3.70 of economic output for every kilogram of oil equivalent that it used in 2010, compared with the global average of $6.20, according to World Bank data.

“This has become an increasingly important issue as these subsidies have become increasingly distorting to our economy. This is something we are trying to address,” Economy and Planning Minister Mohammed Al-Jasser said yesterday.

“Rationalization of subsidies, particularly on fuels for non-targeted participants”, is needed to improve Saudi productivity, he told a financial conference in Riyadh.

more here,
http://www.albawaba.com/business/liftin ... ies-490266
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Re: The Export Land Model

Unread postby TheDude » Tue 09 Jul 2013, 20:16:08

Pops wrote:http://www.albawaba.com/business/lifting-oil-subsidies-490266


That article states that "Nearly 40 percent of Saudi electricity is still produced by burning oil." The newest data I could find when I looked into this subject a few years back was for 2006, at 52.3% - the previous numbers from the same source (World Bank) were at 51.9% in 1990. Don't see how the WB could be that far off the mark, and seriously doubt they've shaved that much consumption off even in 7 years, their exports would be much more robust I'd think.

My back-of-the-napkin calc suggested about 415 kb/d used for power in 2006 - a real rough estimate, converting Twh to barrels I think, did the work some time ago. Some news sources mentioned really steep levels in the AC happy summer months, >1 mb/d. You see very sharp seasonality for sure - they burn raw crude when demand peaks. A transition to NG is quite feasible of course, if you have the gas literally on tap. Forget how much associated gas has come on line of late - and of course that presents its own problems when KSA has to shut in to meet quotas.
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Re: The Export Land Model

Unread postby Subjectivist » Tue 09 Jul 2013, 20:30:14

TheDude wrote:
Pops wrote:http://www.albawaba.com/business/lifting-oil-subsidies-490266


That article states that "Nearly 40 percent of Saudi electricity is still produced by burning oil." The newest data I could find when I looked into this subject a few years back was for 2006, at 52.3% - the previous numbers from the same source (World Bank) were at 51.9% in 1990. Don't see how the WB could be that far off the mark, and seriously doubt they've shaved that much consumption off even in 7 years, their exports would be much more robust I'd think.

My back-of-the-napkin calc suggested about 415 kb/d used for power in 2006 - a real rough estimate, converting Twh to barrels I think, did the work some time ago. Some news sources mentioned really steep levels in the AC happy summer months, >1 mb/d. You see very sharp seasonality for sure - they burn raw crude when demand peaks. A transition to NG is quite feasible of course, if you have the gas literally on tap. Forget how much associated gas has come on line of late - and of course that presents its own problems when KSA has to shut in to meet quotas.


When I read Mathew Simmons book about KSA I got the distinct impression that they were converting as much of their electricity production to gas as possible so that they could export more oil.
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