THE T. Boone Pickens Thread (merged)

[FatherOfTwo]

I just posted another article about his views on PO. He was asked straight out if he agreed with Simmons' view that the Saudi fields are on the verge of decline, and he said he did. He also said something that gave me a chill:

"The majors, they talk about plenty of oil and that they can produce more, but if you look at ExxonMobile, ChevronTexaco, BP (British Petroleum), all the production (is) going down every year. They don't replace and they don't add to production, but they say there's plenty of oil around.

"Now why would they say that? One of the chief economists with one of the major oil companies... I was at a conference where he was... we were talking and I asked, why do they say that? And he said, can you imagine what would happen if one of these major oil company's CEO's got up and made a speech and he said, 'We're running out of oil'? I said there'd be panic and he said, 'That's right. They're not going to make the statement. They're going to say there's plenty of oil around"

http://www.evworld.com/view.cfm?section ... toryid=846

A chill is an understatement. Unless he's nuts and gets his kicks out of making stories up (which is extremely unlikely in my opinion) well, what can you say but Oh F*&k!

[pstarr]

I just posted another article about his views on PO. He was asked straight out if he agreed with Simmons' view that the Saudi fields are on the verge of decline, and he said he did. He also said something that gave me a chill:

"The majors, they talk about plenty of oil and that they can produce more, but if you look at ExxonMobile, ChevronTexaco, BP (British Petroleum), all the production (is) going down every year. They don't replace and they don't add to production, but they say there's plenty of oil around.

"Now why would they say that? One of the chief economists with one of the major oil companies... I was at a conference where he was... we were talking and I asked, why do they say that? And he said, can you imagine what would happen if one of these major oil company's CEO's got up and made a speech and he said, 'We're running out of oil'? I said there'd be panic and he said, 'That's right. They're not going to make the statement. They're going to say there's plenty of oil around"

http://www.evworld.com/view.cfm?section ... toryid=846

That comment scared the shit out of me for a few minutes. Like I was going to wake up in a different world. I'm better now thanks.

pete

[FatherOfTwo]

That comment scared the shit out of me for a few minutes. Like I was going to wake up in a different world. I'm better now thanks.

pete

The magnitude of the problem is really dumbfounding, isn't it? Even though I'm well aware of the problem, and have been for long enough that I now consider it be part of my "fabric", comments like that still slap me across the face and punch me in the stomach... having a sneak peek at the future can be all too surreal.

[threadbear]

Before you guys rush out and change your pants, please be cautious. This is EXACTLY how a corporation would behave if they wanted to simply maximize profit. Peak oil is a reality --and a smokescreen. The two aren't mutually exclusive. The problem, though urgent, is made worse by consciously constraining supply.

The situation is roughly analgous to the way "Big Electricity" treated California just after Bush's win, a few years back. It was a low snow pack year so there was a genuine problem with supply. The producers responded by further constraining supply.

Peak oil is real geological problem. It's also a corporate ethics problem. If my estimation is correct, oil will be more expensive, but shouldn't go above 65.00 per barrel (unless the dollar plummets) until real geological crisis time, which could be next year. It could also be ten years away.

[JBinKC]

First thing I don't believe T Boone is a member of the Forbes 400.

I respect T Boone but he made a timing mistake on natural gas as he overleveraged Mesa Petroleum by buying up most of the Hugoton field in the mid 80s on a bet that natural gas prices would rise. Unfortunately, for him the cash flow couldn't keep up with the huge debt so he lost a big chunk of the property and a sizble chunk of his net worth.

As for his comments I respect the long term intentions as I do believe within a decade's time we will see a peak but I am the believer that the huge spread in light and heavy crudes indicate we are not at a supply juggernaut quite yet.

[FatherOfTwo]

..but I am the believer that the huge spread in light and heavy crudes indicate we are not at a supply juggernaut quite yet.

Let’s give a simple example of how that may not be the case.
a) 100 barrels of light sweet crude is refined per day by 20 LSC (light sweet crude) refineries.
b) 10 barrels of heavy sour crude is refined per day by 2 HSC (heavy sour crude) refineries.

100 barrels of light sweet crude are globally produced per day. But 12 barrels of heavy sour crude are produced.

Our 2 HSC refineries are running at full capacity and can’t take on the additional sour crude… leading to a depressed price for sour crude. Our 20 LSC refineries are also running at capacity, but there isn’t an excess of light sweet crude on the market just waiting to be refined.

Maybe this is an overly simplistic example, or maybe the real world facts don’t support this example. But this example does show how a spread in prices between light and heavy crudes isn’t sufficient, in and of itself, to prove that we are not at a supply juggernaut yet. Saudi Arabia has already said that the US doesn't have the refining capacity for the extra sour that they are providing...

[Newsseeker]

T. Boone Pickens: "Let me tell you some facts the way I see it. Global oil production is 84 million barrels a day. I don't believe you can get it any more than 84 million barrels. I don't care what Abdullah, Putin or anybody else says about oil reserves or production. I think they are on decline in the biggest oil fields in the world today and I know what's it like once you turn the corner and start declining, it's a tread mill that you just can't keep up with.".

Pickens says 84 million is tops. I have seen other figures generally indicating that 90 million will be about as high as it goes. What do people think?

[gt1370a]

Here's what I think. I've heard a lot of stuff lately about no spare refinery capacity, no spare shipping capacity, etc. Now why would those all be peaking around the same time that Hubbert's methodology predicts a production peak? Coincidence? I think that since the US peaked in 1970 and everyone realized the geological phenomenon of peaking, the companies did calculations based on certain mathematical fits, past production, and an assumed reserves of ~2 trillion barrels, saw that production would peak ~2005 at ~84 MB/day, and said "Ok, we'll build infrastructure to support that." So, whether there is any more production capacity or not, the producers sure aren't acting like it. Have you read about any oil companies spending their record profits on exploration or refineries? Most of them are just buying back stock.... so, geological or not, we probably won't get much above 84 MB/day based on infrastructure. Unless the industry changes course drastically...

[linlithgowoil]

i see what you are saying (2nd post), although others may say that the current lack of infrastructure is due to very low oil prices up until recently and relatively lowish demand growth compared to recently.

i think we can get beyond 84 million barrels. i wouldnt be surprised if we touch 90 before hitting the decline edge of the plateau around 2008. it is amazing what new recovery technologies can do with regards to flow rates - with enough effort, you can improve and maintain flow rates very well nowadays - but we all know, of course ,that this leads to a steeper decline when you do hit the inevitable peak.

[bobcousins]

I don't think anyone here will have a more informed opinion than Mr Pickens.

[Leanan]

T. Boone Pickens is on CNN's In the Money right now. He's predicting $3/gallon gas by the end of the year.

They're trying to figure out how high gas will have to go before "demand destruction" kicks in...

[turmoil]

did they figure it out?

[MicroHydro]

Look at the traffic jams in nations where oil already costs over $5 a gallon, and you can get a clue. Oil need to go a lot higher.

[Claudia]

Look at the traffic jams in nations where oil already costs over $5 a gallon, and you can get a clue.

On average, people in those countries (i.e., Europe) still drive about half as much as Americans. Our traffic jams are on six-lane highways with 1-hour commutes. I think $5 gasoline will have a noticeable effect.

[Sys1]

Especially when all oil directly related services/stuffs will be affected by high price energy...

[BitterSweetCrude]

did they figure it out?

This made me laugh.
I'm guessing another $0.25 a gallon. What's that, $70 oil?

[lateStarter]

As long as it just keeps creeping up, it won't have a major impact until companies start laying people off. I don't know at what price point that process will begin. Most average americans are already stretched pretty thin, so a large spike could lead to all sorts of interesting household discussions like: "should we pay the mortgage this month or the gas credit cards, and how much can we cutback on food expenses this week"?

[Leanan]

did they figure it out?

Not really. They hyped it, but didn't even discuss it directly.

Pickens definitely sounds like a peak oiler, though.

...we whistled through $50 a barrel pretty fast, and didn't seem to cause any problems. I don't know whether we can whistle through $60 and beyond. I don't know. But I do believe this -- that the fourth quarter this year is maybe going to be the most interesting quarter that I have ever experienced in my 50 years in the oil industry. I think we're coming up on a brick wall very fast. If the projections for 86 million barrels a day demand holds up, I don't see how we can service 86 demands with 84 supplies.

The whole transcript is here:

http://transcripts.cnn.com/TRANSCRIPTS/ ... tm.01.html

[dinopello]

The classic thing about this transcript is that after the interview with Pickens, who basically is saying the world can't supply any more oil (and we all know what the consequences of that are, or at least that it is very not good) they lead into the commercial with this teaser:

And chasing fame. The paparazzi love Paris Hilton, but what does she do to deserve that attention. We'll look at what it takes to make a celebrity these days.

[turmoil]

they lead into the commercial with this teaser

just shows to go ya...

thanks for posting the transcript Leanan!