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The United States' creeping energy revolution

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The United States' creeping energy revolution

Unread postby TheAntiDoomer » Mon 23 Dec 2013, 09:33:14

http://www.albawaba.com/business/us-oil ... di--542385

The US Energy Information Administration, the statistical arm of the US Department of Energy, last week released an early version of its Annual Energy Outlook 2014 – the AEO2014 Reference case (the complete AEO 2014 is to be released only in September next year only) - underlining in rather bold headlines that the United States will continue to grow less (and less) dependent on foreign oil as tight oil boom adds to supply and more efficient vehicles reduce demand - a double squeeze indeed on the total consumption of the world’s largest energy consumer.

US oil production, which slipped to as low as 5.1 million barrels a day in 2006, topped 8 million in the first week of December. Now crude oil production in the United States is expected to rise faster than projected earlier - to a near historic high by 2016, said the EIA, sharply raising its annual output forecasts further as shale oil development transforms the US energy balance - at a rather breakneck speed. The forecasts show that shale will help oil output in the world’s largest consumer increase by 800,000 barrels a day every year until 2016, when it will total 9.5 million b/d, just below a 1970 record of 9.6 million. However, in contrast to the IEA forecast of considerable downward trend immediately after and OPEC getting back into strides, the EIA projects that the US output will still be above nine million - until at least 2025.

Despite that, for the economy overall, energy use per dollar of production will fall by 43 percent between 2012 and 2040, as the economy's less energy-intensive services sector grows.
We are in the midst of a virtual energy revolution – who can dare deny?
"The human ability to innovate out of a jam is profound.That’s why Darwin will always be right, and Malthus will always be wrong.” -K.R. Sridhar


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Re: The United States' creeping energy revolution

Unread postby Lore » Mon 23 Dec 2013, 09:39:34

TheAntiDoomer wrote:We are in the midst of a virtual energy revolution – who can dare deny?


Virtual, is about right as in imaginary.
The things that will destroy America are prosperity-at-any-price, peace-at-any-price, safety-first instead of duty-first, the love of soft living, and the get-rich-quick theory of life.
... Theodore Roosevelt
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Re: The United States' creeping energy revolution

Unread postby ROCKMAN » Mon 23 Dec 2013, 10:21:21

Since it's the holidays I'll be generous and allow the "energy revolution" despite that it's really a price revolution. The production increase is just a nice side effect. All the oil patch can do is repeat ole Marie A's line: Let them eat cake. Or in our case: Let them burn wood.
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Re: The United States' creeping energy revolution

Unread postby TheAntiDoomer » Mon 23 Dec 2013, 10:28:31

LOL ROCKMAN. you're a nut. How do you have so much time to spend here for a being such a busy fracker?
"The human ability to innovate out of a jam is profound.That’s why Darwin will always be right, and Malthus will always be wrong.” -K.R. Sridhar


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Re: The United States' creeping energy revolution

Unread postby americandream » Tue 24 Dec 2013, 16:16:56

TheAntiDoomer wrote:LOL ROCKMAN. you're a nut. How do you have so much time to spend here for a being such a busy fracker?


Skills management thus time management.

Can't speak for Rockman (although I would imagine its the same), but in my case, I take my social networks along with my two vocations, tax consulting and day trading.

The better at what you get to do, the more time you can create.
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Re: The United States' creeping energy revolution

Unread postby americandream » Tue 24 Dec 2013, 17:09:39

ROCKMAN wrote:Since it's the holidays I'll be generous and allow the "energy revolution" despite that it's really a price revolution. The production increase is just a nice side effect. All the oil patch can do is repeat ole Marie A's line: Let them eat cake. Or in our case: Let them burn wood.


Price revolution as in not based on fundamentals (oil reserves) but technicals (price action)? I use the latter which is sometimes profit taking and nothing to do with reality.
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Re: The United States' creeping energy revolution

Unread postby ROCKMAN » Wed 25 Dec 2013, 10:45:16

Anti - Can't deny the nut part...I strive to such perfection. LOL. "How do you have so much time to spend here for a being such a busy fracker?" First, not a frac'er these days...actually never done a lot. As far as posting a lot, due to my immobility I'm stuck in a chair most of my waking hours. Add to that I'm watching the company ops 24/7 I always have the laptop within reach. Actually right now watching a Woody Allen documentary, cruising PO.com and Rig Zone and occasionally amusing my wife while sharing my breakfast with the dogs. So yes...the Rockman is master multitasker. LOL. And then there's the magic of smart phones: I just back early this morning from a well site in La. From 6 am to 8 pm I had mucho dead time and no TV. So time to post whatever. Would have posted more but typing on the phone sucks. LOL.

So as long as I can so easily reach out and occasionally irritate some folks on the www...why the hell not? LOL.
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Re: The United States' creeping energy revolution

Unread postby ROCKMAN » Wed 25 Dec 2013, 10:45:46

ÌAnti - Can't deny the nut part...I strive to such perfection. LOL. "How do you have so much time to spend here for a being such a busy fracker?" First, not a frac'er these days...actually never done a lot. As far as posting a lot, due to my immobility I'm stuck in a chair most of my waking hours. Add to that I'm watching the company ops 24/7 I always have the laptop within reach. Actually right now watching a Woody Allen documentary, cruising PO.com and Rig Zone and occasionally amusing my wife while sharing my breakfast with the dogs. So yes...the Rockman is master multitasker. LOL. And then there's the magic of smart phones: I just back early this morning from a well site in La. From 6 am to 8 pm I had mucho dead time and no TV. So time to post whatever. Would have posted more but typing on the phone sucks. LOL.

So as long as I can so easily reach out and occasionally irritate some folks on the world wide web...why the hell not? LOL.
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Re: The United States' creeping energy revolution

Unread postby JV153 » Wed 25 Dec 2013, 13:37:32

I'm suspicious of what EIA includes as oil in their reporting these days, but I'm quite sure that US oil production won't hit 9.5 mbarrels/day by 2016 or by 20xx. Btw, the low in 2005..2008 was in part due to hurricanes Rita, Katrina and Ike, which damaged off-shore rigs and shut down Louisiana and Texas oil refineries.
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Re: The United States' creeping energy revolution

Unread postby John_A » Wed 25 Dec 2013, 15:44:17

JV153 wrote:I'm suspicious of what EIA includes as oil in their reporting these days, but I'm quite sure that US oil production won't hit 9.5 mbarrels/day by 2016 or by 20xx.


The basis for the EIA number comes from first resource estimates, then well and field level results aggregated up, and then the cost competitiveness between various projects (for oil, gas, coal, renewables, etc etc) and then expected demand in relation to GDP growth and the price relationships between the various power and fuel generation types, commercial and residential efficiency and so on and so forth.

Upon what is your estimate based?

ASPO was apparently offered both the model (NEMS) and inputs that they may decide how to do it better and then from ASPO there was then....silence. Apparently their method of just assigning random declines to production just doesn't stack up, or their expertise in model building to figure out these types of issues is lacking, when compared to the DOE's statistic and analytic arm.
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Re: The United States' creeping energy revolution

Unread postby ROCKMAN » Thu 26 Dec 2013, 20:11:20

Again I'll note my amazement over the focus on such metrics (whether they prove correct or not) compared to a very simple and unarguable measure: the price of oil and it's effect on economies. Again is the US better for the increase in oil production since it came coupled with a tripling of oil cost? Is the US better off since we're importing less oil than we were 5 years ago but we're sending more $'s to foreign countries for our imports then we were 5 years ago?

Such enthusiasm is like complimenting someone for their weight loss thanks to their cancer. Neither situation is very good. Except for the oncologists and geologists, of course. LOL.
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Re: The United States' creeping energy revolution

Unread postby americandream » Thu 26 Dec 2013, 21:05:44

ROCKMAN wrote:Again I'll note my amazement over the focus on such metrics (whether they prove correct or not) compared to a very simple and unarguable measure: the price of oil and it's effect on economies. Again is the US better for the increase in oil production since it came coupled with a tripling of oil cost? Is the US better off since we're importing less oil than we were 5 years ago but we're sending more $'s to foreign countries for our imports then we were 5 years ago?

Such enthusiasm is like complimenting someone for their weight loss thanks to their cancer. Neither situation is very good. Except for the oncologists and geologists, of course. LOL.


Thats a hard one since capital deregulated post WTO. America and American capital are not one and the same thing any longer. Nowadays, American money may just as likely be earning from the booming Chinese economy than from America.

If you mean American workers, then yes, they aren't any the better. If anything worse off for losing their jobs as well to outsourciong.
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Re: The United States' creeping energy revolution

Unread postby ROCKMAN » Fri 27 Dec 2013, 09:02:52

ad - "If you mean American workers". I do. I may not point it out but when I refer to economies having difficulties with the price of oil I'm not referring specifically to businesses. It’s all about folks having to make it paycheck to paycheck. Luckily I’m more towards the top of the income pyramid. But it’s that huge chunk of the population that occupies the lower half that directly suffers from high energy prices. I can easily handle $100. Many can handle $200 oil. But we are the vast minority.

The majority of Americans were better off financially a half dozen years ago when we were producing less domestic oil and importing more oil then they are today. Again, it’s really simple: they don’t care how much oil production has increased in this country: they care about how much they have to fork over for their oil consumption. And that has increased. And a few do care how much of our wealth we transfer to foreign countries for oil. And that number has also increased.

Folks can babble all day about proven shale oil reserves, increased domestic oil production and decreases in imported oil volumes all they want. It doesn’t change the fact that the average US consumer is in worse financial condition with regards to oil today they have been in many years.
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Re: The United States' creeping energy revolution

Unread postby AndyA » Fri 27 Dec 2013, 14:10:55

If the price was right, you could recombobulate petroleum from air and water. We are not going to run out of oil because of geological constraints. Smart people like Rockman have realised this. A more likely case could be made for how much of the economy we can devote to energy extraction. How much is anyone's 'guess' but for now we obviously have spare capacity to devote to energy extraction.
The economists are right to say that technology creates reserves, but I think they fail to accurately account for diminishing returns, or the 'power law'.
The doomers dismiss LTO because it fails to fit their ever more narrow minded definition of oil, and continue to expect TEOTWAWKI 'any minute now'. Despite the fact that US oil production by any reasonable definition has surged, and at whatever rate it does eventually peak, it will surely make hubbert linearization look like an ignorant model. Though it has proved reasonable in the past.
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Re: The United States' creeping energy revolution

Unread postby ROCKMAN » Fri 27 Dec 2013, 14:36:13

Andy – valid points. But the only ones who might look ignorant are the folks who misinterpreted Hubbert’s work. First, in his original work he clearly points out that his model applied only to the known trends which had developed to a rather mature stage at the time of his projection. He specifically said his model couldn’t take into account any future trends. His model didn’t apply to the shales, the Deep Water GOM or any other trends that didn’t exist at the time. Hubbert's model is till looking rather accurate today if you don't add in those trends that weren't included in his original work. And for folks who don't want to read his original report he also clearly points out the back side of the curve won't be symmetrical. In fact, he bluntly states he 's not sure what it would look like.

But his approach would work just fine on both the shales and the DW GOM…in another 15 or 25 years. That’s why his model worked so well for predicting the peak OF THOSE MATURE TENDS his model applied to: he was working with a 25+ year old statistical trend. Likewise by 2025 or so someone should be able to project a fairly accurate model for Peak US shale and Peak DW GOM. It really isn’t a very complicated model if one understands the basis: a long known production history. Without that any such projections are just do-do IMHO. LOL.
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Re: The United States' creeping energy revolution

Unread postby americandream » Fri 27 Dec 2013, 17:15:22

ROCKMAN wrote:ad - "If you mean American workers". I do. I may not point it out but when I refer to economies having difficulties with the price of oil I'm not referring specifically to businesses. It’s all about folks having to make it paycheck to paycheck. Luckily I’m more towards the top of the income pyramid. But it’s that huge chunk of the population that occupies the lower half that directly suffers from high energy prices. I can easily handle $100. Many can handle $200 oil. But we are the vast minority.

The majority of Americans were better off financially a half dozen years ago when we were producing less domestic oil and importing more oil then they are today. Again, it’s really simple: they don’t care how much oil production has increased in this country: they care about how much they have to fork over for their oil consumption. And that has increased. And a few do care how much of our wealth we transfer to foreign countries for oil. And that number has also increased.

Folks can babble all day about proven shale oil reserves, increased domestic oil production and decreases in imported oil volumes all they want. It doesn’t change the fact that the average US consumer is in worse financial condition with regards to oil today they have been in many years.


You've probably discussed this elsewhere so forgive me for asking. I get the pricing issue. However as an oil man, what are your thoughts on global reserves. What do you sense or have perhaps picked up in your travels (as in industry speak as opposed to Hubberts models), if that info isn't too sensitive.
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Re: The United States' creeping energy revolution

Unread postby AndyA » Sat 28 Dec 2013, 02:05:34

Thanks Rockman, I always value your insights. I'm pretty ignorant about Hubbert linearization tbh, though I'd guess as about as informed as the average person who has thought about PO. Basically he produced two well published charts, one of the US, another of the world. Showing discoveries, and actual production. His hypothesis based on known data at the time was that there was a 40 year delay between discovery and peak production, from that he forecast US CO peak and a global peak, adding in some undiscovered resources. I was debating whether or not to include him in my post based on my limited understanding, shouldn't have. I should have said something about how doomers should be more open to accepting new data, instead of blindly following forecasts made using limited data decades ago. Clearly the geological PO meme can't explain the increase in US production.
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Re: The United States' creeping energy revolution

Unread postby AirlinePilot » Sat 28 Dec 2013, 02:21:03

Andy,

There aren't many folks here who expect things to go sideways "any minute". Most of us are just really interested in what the future holds and are concerned about how we may have to deal with that.
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Re: The United States' creeping energy revolution

Unread postby Pops » Sat 28 Dec 2013, 07:48:22

Here is a picture of the creepy US energy revolution from the most optimistic source around, the EIA,

Image
http://www.eia.gov/forecasts/aeo/source ... m#oilprice

ROCK I gotta laugh when you say such "metrics" as production, reserves, etc don't matter: that it's all about price. It's like saying "metrics" like the angle and duration of sunlight don't matter when discussing the seasons, it's all about temperature.

LOL - might as well send people to GasBuddy.com for information on the future of hydrocarbons.
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Re: The United States' creeping energy revolution

Unread postby ROCKMAN » Sat 28 Dec 2013, 14:49:05

Pops - You exactly correct. Remember I'm referring to the public. Of whom I doubt 90%+ could tell you how much oil the US is currently producing or how much we're importing. Most probably couldn't make a decent guess what WTI, oil sand production or Eagle Ford oil sold for last week. But I bet 99%+ can tell you to the penny what they paid the last time they filled up the car. Even from your point of view what metric will have the greatest impact on the US economy in 2014: how much oil we produce from the Eagle Ford and Bakken, how much oil ships thru the Keystone pipeline system, etc. Or how much the US economy pays for oil this year? What do you worry more about: the N Dakota rig count or what you'll pay for energy in the next 12 months? If both numbers go up 15% from 2013 will you happy?

Again, some folks seem very pleased with the increase in the US oil production MERTIC while ignoring the price METRIC. Somehow they feel they are better off that now the economy is spending much more for energy (both domestic and imported). Like the cancer patient feeling they look much cooler with a bald head. I suppose it's nice to see some silver lining in a situation that's degrading your life. Kinda like an alcoholic who sees his problems slowly slip way with each drink. Bottoms up folks...lots more of that liquid libation on the way. LOL. After all the really important METRIC for him is the number of booze bottles he has in the cupboard and not what's happening to his life.

Hopefully a happy and sober New Year for all. But not likely.
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