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Russia Boosts 2017 Crude Oil Production To 30-Year High

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

Russia Boosts 2017 Crude Oil Production To 30-Year High

Unread postby AdamB » Thu 04 Jan 2018, 16:47:22


OPEC’s crude production held steady in December as the group approached a fresh year of output curbs in full compliance with its supply deal. The 14 members of the Organization of Petroleum Exporting Countries pumped 32.47 million barrels a day, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. Libya saw a 30,000-barrel-a-day decline to 970,000 a day following a pipeline blast, which was offset by an increase from Nigeria. Both countries were exempt from cuts last year but are now expected to join the effort with a combined limit of 2.8 million barrels a day. OPEC and its allies agreed Nov. 30 to extend their output agreement until the end of 2018 to balance the market. Production in Saudi Arabia, OPEC’s biggest member, slipped by 20,000 barrels a day to 9.95 million a day, the surveyed showed. Venezuela, which has suffered


Russia Boosts 2017 Crude Oil Production To 30-Year High
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
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Re: Russia Boosts 2017 Crude Oil Production To 30-Year High

Unread postby AdamB » Thu 04 Jan 2018, 16:50:22

Didn't these guys peak like...DECADES ago!!!???? What happens when they begin to develop 100's of billions of barrels of oil from the Bazhenov? How many more peaks might this involve!!

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Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
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Re: Russia Boosts 2017 Crude Oil Production To 30-Year High

Unread postby asg70 » Thu 04 Jan 2018, 17:37:00

I'm sure Orlov is bursting a blood-vessel over that considering that his whole schtick is that the fall of the soviet union was a test-bed for peak-oil doom.
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Russia’s oil production in Arctic may hit peak in 2020s

Unread postby AdamB » Sat 17 Feb 2018, 19:40:41

Russia’s oil production in the Arctic will reach peak levels in the 2020s, head of the state commission on natural resources Igor Shpurov said. Over 2017, he said, Russia produced in the Arctic about 76 million tonnes of oil, and the production would be growing to 2026 hitting a record of 122 million tonnes a year. “We forecast that by the mid-2020s, oil production [a year] in the Arctic zone will reach about 120 million tonnes,” he told a plenary session of the international Arctic summit in St. Petersburg. The oil production will grow due to Gazprom Neft’s developing of the Messoyakha field (Russia’s northernmost field in the Yamalo-Nenets Region – TASS) and also due to Gazprom’s growing production at the Prirazlomnaya pad – Russia’s first project on the Arctic shelf; as well as due to other projects, he explained. About 24% of the


Russia’s oil production in Arctic may hit peak in 2020s
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
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Re: Russia’s oil production in Arctic may hit peak in 2020s

Unread postby Plantagenet » Sat 17 Feb 2018, 21:12:15

AdamB wrote:
Russia’s oil production in the Arctic will reach peak levels in the 2020s, head of the state commission on natural resources Igor Shpurov said.....hitting a record of 122 million tonnes a year.


Well, nothing to worry about for 8 more years then.

Cheers!
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Re: Russia Boosts 2017 Crude Oil Production To 30-Year High

Unread postby copious.abundance » Tue 20 Feb 2018, 21:11:24

Geeze I hadn't paid attention to this one in a while.

Doomers seem to be absent from these threads.
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: Russia Boosts 2017 Crude Oil Production To 30-Year High

Unread postby asg70 » Wed 21 Feb 2018, 13:05:13

copious.abundance wrote:Doomers seem to be absent from these threads.


Peak oil doomers seem to be going the way of the passenger pigeon.
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Re: Russia Boosts 2017 Crude Oil Production To 30-Year High

Unread postby Carnot » Thu 22 Feb 2018, 10:33:08

Did anyone do the maths. 120 million tonnes per year is about 2.4 million b/d . Hmm, and it does not come on stream until the mid 2020's and the IEA expect oil demand growth to be about 1.3 m/d this year alone. Looking at the OPEC production there does not appear to be much spare capacity; if it does exist it is in Saudi Arabia and I wonder just how long it can be counted for, especially as the Saudi's are potless. A huge budget deficit and rising expectations of the population does not bode well.

Of course you can all hope that Uncle Sam can come to the rescue with more yet shale oil, but so far shale has hardly made a cent for investors. They are still waiting for those elusive profits, while the debt mountain climbs. Perhaps it is the net energy gain that is the problem with shale, or is it the ego's of certain CEO's. Probably both. Happy days ahead.

2016 Results

Top 150 US oil and gas producers

Turnover $477 billion

Net Loss
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Re: Russia Boosts 2017 Crude Oil Production To 30-Year High

Unread postby Subjectivist » Thu 22 Feb 2018, 19:36:13

The saudis are potless? Did spell check substitute the wrong word?
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Re: Russia Boosts 2017 Crude Oil Production To 30-Year High

Unread postby rockdoc123 » Thu 22 Feb 2018, 23:45:03

2016 Results

Top 150 US oil and gas producers

Turnover $477 billion

Net Loss


learn to read a financial report. There are many shale focussed oil and gas companies who have reported positive cash related net incomes. As I have said countless times here the paper accounting practices tend to downplay how much money a company is making or spending given non-cash items which are meaningless in day to day business overwhelm everything else for accounting purposes. And as I have pointed out numerous times there are many shareholders who have done quite well by investing in shale companies, even better if they sold some in 2008 on the way down and bought at the bottom.

It is interesting that you are spewing almost word for word the same rhetoric we heard from Short on Oil.
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Re: Russia Boosts 2017 Crude Oil Production To 30-Year High

Unread postby Carnot » Fri 23 Feb 2018, 05:48:51

Rockdoc,

If my rhetoric is the same as Short on Oil (whom I have never heard of ) then it is purely coincidence.

My omission was the full data set. An error on my part.

2016 Top 150 US oil and gas co's

Income +$477 billion

Net Earnings $-47 billion (Loss)

24 companies made a profit $ +14 billion

Exxon made $8 billion of the the $14 billion

Number rounded to nearest billion

A profitable business then ? Source OGJ September 2017

I do go through the financial reports. I am a petroleum chemist, not a finance engineer. But I can follow most things and oil and gas companies are about the only ones who report EBITDAX, meaning exploration and other expenses (like drilling) are not included.This is non GAAP reporting standards. How quaint. So they can report a positive cash flow, pay off interest, but not the principal. That's all right then. Kick the can down the road.

Not surprisingly many shale companies have gotten into difficulties. Some have made money, but the majority do not appear to have done well at all for investors. That is my point. 2013 was like a Klondyke rush. Reality has dawned but there are a lot of companies that will likely never pay down their debt.

Subjectivist
Potless is an English term (think about it or look it up - the true meaning involves a bodily function). The Saudi's have significantly depleted their foreign reserves defending their oil market share and fighting wars. Current budget deficit is 8.9% GDP and GDP -0.7%. Source The Economist 17 February 2018.
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Re: Russia Boosts 2017 Crude Oil Production To 30-Year High

Unread postby marmico » Fri 23 Feb 2018, 09:31:21

The Saudi's have significantly depleted their foreign reserves defending their oil market share and fighting wars. Current budget deficit is 8.9% GDP and GDP -0.7%


Poor MbS. KSA foreign assets bottomed at 2011 levels, which are 500% above 2003 levels.

http://fingfx.thomsonreuters.com/gfx/br ... -Chart.htm

Now when does Russia start fracking the Bazhenov?
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Re: Russia Boosts 2017 Crude Oil Production To 30-Year High

Unread postby rockdoc123 » Fri 23 Feb 2018, 12:05:17

I do go through the financial reports. I am a petroleum chemist, not a finance engineer. But I can follow most things and oil and gas companies are about the only ones who report EBITDAX, meaning exploration and other expenses (like drilling) are not included.This is non GAAP reporting standards. How quaint. So they can report a positive cash flow, pay off interest, but not the principal. That's all right then. Kick the can down the road.


that is completely incorrect. EBITDA which is only reported in addendums to the financial reports includes all cash expenditures and revenues, what it doesn't include is depreciation, reserve write downs etc. Many financial institutions use this number to indicate a companies ability to generate net free cashflow. EBITDAX is not used by many but and is only used when exploration expenses were one off or unusually large as a secondary means of looking at the rest of the business. Remember that the oil and gas business is expected by the investment community to not run on a large surplus of cash...everything that is made is expected to go to either reinvestment into drilling and land or dividend distribution.
What I have been saying for sometime here is that the ability for a company to continue operating is noted through the fact that revenues minus all cash expenditures are positive. Depreciation, reserve write-downs, property write-downs etc are all non-cash items that are calculated into net earnings but in fact have zero impact on the company in terms of it's day to day business. Over the past few years with dropping oil price many companies took considerable reserve write-downs which show up in their financials but as oil prices rise those reserves reappear which further distorts the companies actual financials. The analogy I always use is in the case of your own home budget do you include the depreciation on your house as an item, depreciation on your car? Of course not as those non-cash entries though important in some context have nothing to do with your ability to pay all the bills.
When shale focussed companies are looked at in that context the vast majority that did not sucumb to takeover or restructuring are doing OK and as prices rise will do much better.
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Re: Russia Boosts 2017 Crude Oil Production To 30-Year High

Unread postby rockdoc123 » Fri 23 Feb 2018, 15:22:56

OPEC talking about a long term alliance with Russia
https://www.economist.com/news/finance- ... -long-term

OPEC mulls a long-term alliance with Russia to keep oil prices stable

OIL bears beware. On February 20th Suhail al-Mazrouei, OPEC’s rotating president and energy minister of the United Arab Emirates, said the 14-member producers’ group is working on a plan for a formal alliance with ten other petrostates, including Russia, aimed at propping up oil prices for the foreseeable future. If it comes to anything, it could be OPEC’s most ambitious venture in decades.
The result will not be, he insists, a “supergroup”. The notion of Saudi Arabia and Russia joining forces as the Traveling Wilburys of the oil world may be a bit jarring. It remains an idea in “draft” form. But whatever its chances, it attempts to shift a belief widely held by participants in oil markets: that non-American oil producers are helpless against the shale revolution.
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Re: Russia Boosts 2017 Crude Oil Production To 30-Year High

Unread postby Carnot » Tue 27 Feb 2018, 14:32:50

Rockdoc. EBITDA

Hmm, I think we will have to disagree a little. EBITDA, if I my information is correct is Earnings, Before, Interest, Taxation, Depreciation and Amortisation. EBITDAX adds Exploration to the that list.

Splitting hairs I think. What my point is that should Shale resources be treated like conventional. I am not alone in this concern, as a simple search for Shale Gas / Tight Oil earnings will raise many a concern about shale oil and gas earnings, or lack off. Is it right to use methodology for long term assets, such as an offshore platform, with shale wells. A shale well, oil or gas prone, has in the main a lifetime measured in months- it is a rapidly depreciating asset in most cases, and if the well is not paid down in about 36 months it probably will not be profitable, especially for gas wells. A quick look at 5 year old wells in the Marcellus will show monthly production of gas frequently below 100 million cu ft . You do not have to be a genius to work out the revenue. Eagle Ford has suddenly gone off the boil and Permian assets are being looked at negatively on rising gas production. True some Permian assets are very good good, but these are the sweet oil spots and how long will they last? Moreover looking at a shale basin as being homogenous would be foolhardy as much depends on the existing fissures and fractures and geochemistry. That the US possess about half the drilled producing oil and gas wells globally only reinforces the low productivity. The US and Saudi Arabia have roughly the same oil production. Saudi Arabia does this will <3800 wells; the US does is with 460000. More than two orders of magnitude difference.

The amount of investment in shale wells has been far in excess of earnings. Shale producers will have to learn to live off cash flow in future as investors will be reluctant to keep pouring good money after bad.
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Re: Russia Boosts 2017 Crude Oil Production To 30-Year High

Unread postby rockdoc123 » Wed 28 Feb 2018, 23:49:52

Splitting hairs I think. What my point is that should Shale resources be treated like conventional. I am not alone in this concern, as a simple search for Shale Gas / Tight Oil earnings will raise many a concern about shale oil and gas earnings, or lack off. Is it right to use methodology for long term assets, such as an offshore platform, with shale wells. A shale well, oil or gas prone, has in the main a lifetime measured in months- it is a rapidly depreciating asset in most cases, and if the well is not paid down in about 36 months it probably will not be profitable, especially for gas wells.


Well first off most of the shale wells with high liquids content pay off in the period of hyperbolic decline which is the first 36 months, especially so at $60/bbl WTI. The investment into a single well is in the order of $7 MM even when you include tie-in costs amortized amongst a group of wells. In comparison an offshore well will cost well north of $50 MM for what is being drilled in the Gulf at this point in fact north of $100 MM is more the case. A fully loaded offshore spar to produce that deeper water production adds billions to the cost. Pay out even for high production wells is generally much more than 5 years. Secondly shale wells have a life much longer than months. The theory is proving to be correct a 3 – 4 year period of hyperbolic decline followed by a long period of exponential decline. During exponential decline rates are low but the well has already paid out and OPEX on-going is minimal, these wells are cash machines for a long period of time. It isn’t uncommon for the shale producers to have thousands of wells, but simply assume one has 500 producers that are all now in the exponential decline phase of around 24 bopd. That ends up being around $225 MM in free cashflow if you assume a netback of $50/bbl (entirely within reason when OPEX/well is very low). One simply has to look at break even prices on wells. Rystad Energy pointed out that there are areas as low as $30/bbl for liquid rich areas. There are of course areas that are still marginal at current price but that isn’t the whole industry by a long stretch. These companies are run by idiots as some on this site seem to think. If they weren’t making money or at least had a very clear path to adding value they would not be in business.

A quick look at 5 year old wells in the Marcellus will show monthly production of gas frequently below 100 million cu ft . You do not have to be a genius to work out the revenue.


Lets look at the first example I found…Enerplus. At $4.17/Mcf they netbacked $2.47. They would still be churning out close to $3 MM per well per year with very little OPEX. Those wells will almost certainly have paid out given initial gas rates are high (10 – 6 MMcf/d which amounts to say on average the first year $7.2 MM) so cashflow after the first year is all to the positive. Gas is not as bad in certain areas as some would think. The trick is to get drilling costs down and IP high through lateral length, number of stages etc.

The amount of investment in shale wells has been far in excess of earnings. Shale producers will have to learn to live off cash flow in future as investors will be reluctant to keep pouring good money after bad.


Well apparently you aren’t someone who has invested in the oil industry as you seem to be treating it like a factory producing widgets. The market looks to most of the shale producing companies as stock growth engines, not dividend generators. In order to grow those companies are not only required to hold almost no cash on hand (working capital excluded) but are encouraged to invest to grow (more wells and acquisitions). Rapid growth in a competitive environment requires leverage through debt or additional equity raise in the markets. The shale players could have chosen to grow within cashflow but they would have been left with no investors, those investors wanting to see rapid growth in land, reserves and production. And as to earnings…they are calculated based on net income which includes both cash and non cash items. Most of the non cash items are immaterial to how well an investor will do with a particular oil and gas company. People who invested in shale companies in 2005 and got out in 2014 did extremely well in the market, the reason there are any complaints has to do with the drop in commodity price and the attendant drop in share prices and the fact they haven’t returned to their highs. If you invested in some of the shale players in 2015 you would have done very well in the market. Like everything else it is timing.
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Re: Russia Boosts 2017 Crude Oil Production To 30-Year High

Unread postby Carnot » Thu 01 Mar 2018, 09:20:25

Rockdoc,

I have never said that ALL the shale resources are unprofitable. Clearly some are profitable but this does not mean that all shale resources are the same. If they were then why have so many companies not made any profit and why have so many gone bankrupt. I would evaluate a shale well in the similar to a petrochemical plant minor project upgrade. There we might spend $< 10 million and expect a payout in <3 years. The resource will exist for many more years, and will not exponentially decline in output as does a shale resource. There are similarities, but the petchem upgrade is a safer bet. Where shale differs, as you quite rightly point out is that shale producers of oil and gas hope to increase the value of the company rather than pay dividends, or hold cash. Sadly for many this has not happened either. I would not label the management as crooks, although there have been some very dubious practices by some, but is clear that some have embellished their prospects somewhat and have looked for exit strategies to benefit themselves ahead of the shareholders. Not illegal, but not very honourable either. Some might call it greed, like I do. I have not directly invested in oil and gas companies connected with shale, but some assets I do hold have shale interests, not all of them good.

Personally I never bought into the shale boom: one contributor to this blog once described the shale resource as a giant chum circle where the sharks feed on mullet ( the mullet being the investors who did not do their homework). I am not a mullet. I am too close to retirement to play risky games, and the outlook for shale remains choppy. Will drilling and completion costs continue to rise, rather than fall and what about resource quality.

In my earlier post I mad an error which I am surprised that you did not spot. I did not find 1 Marcellus gas well producing 100 million scuf per month at 5 years. There were plenty producing </= 100 000 scuf per month, which makes the revenue about the same as a row of beans. So as I stated before, and you confirmed, if at 36 months you have not paid down the cost of the well, you are probably royally stuffed. For an oil well ar a cost of $7 million that means about 135 000 bbls of oil give or take - 3750 bbls per month average. Far less than a Saudi well.
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Re: Russia Boosts 2017 Crude Oil Production To 30-Year High

Unread postby StarvingLion » Thu 01 Mar 2018, 12:31:58

Carnot is even more amusing than ShortonOil.

Lets see, the US dollar was in free fall come 2008 and was collapsing from 2001-2008. Then they invented the Shale "Revolution" which obviously isn't self funding otherwise why wait until the currency is toast. And Carnot comes in here evaluating it as an investment??? The only purpose of shale is to stave off currency collapse.

The official explanation (subprime mortgage crisis) of the 2008 Financial crisis is obviously nonsense. The real explanation is industrial decline as seen in the collapsing stock of General Electric.

The U.S. trade deficit with China was $375 billion in 2017. The trade deficit exists because U.S. exports to China were only $130 billion while imports from China were $506 billion.

U.S. trade deficit with China and Mexico is growing - Dec. 5, 2017
money.cnn.com/2017/12/05/news/economy/us-trade-deficit/index.html
There is no escaping The Oil Apocalypse and there will be no survivors.
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Re: Russia Boosts 2017 Crude Oil Production To 30-Year High

Unread postby peakoilwhen » Fri 02 Mar 2018, 05:32:11

carnot, ask rockdoc what all this hype and worry he's doing is coming to. is it..... peak oil? David called it wrong back i think in 2012, with a prediction of peak in 2013-2015. IEA said 2016 had highest oil production ever, and now they've announced 2017 topped 2016.
I wonder if he's had time to rationalise why he got it wrong by at least 2 years, and when his revised peak will be. I have reason to suspect their will be a peak in the next couple of years, except I don't think it'll be a geo peak. So David's opinion might be useful. First though, Russia has to be made to get in line or be shut out the oil market, cos the idea is to create an oil shortage, and for that they need russia to cut production rather than reap massive profit.

you have to ask him cos i think he's got me on ignore. He hates me cos I pointed out he got PO wrong last year, also i've got the correct theory of oil ( abiotic ) and he's got the shitty wrong one ( fossil ). His rage of me drove him to write an article for WUWT about this time last year on why he thinks abiotic oil is wrong.
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Re: Russia Boosts 2017 Crude Oil Production To 30-Year High

Unread postby rockdoc123 » Fri 02 Mar 2018, 14:26:51

If they were then why have so many companies not made any profit and why have so many gone bankrupt.


It’s called leveraging into a market that was at $100/bbl for 3 years and having to deal with the pain of a 50% drop in commodity price. Nothing to do with the ability of companies to make money now. The one’s who couldn’t survive have either been bought by stronger companies or have undergone restructuring. This has happened numerous times in the past, it is the way the industry strengthens itself. And as to profit once again you are trapped confusing paper accounting with cash accounting. The latter is all that counts in terms of whether a company continues to be going concern.

Where shale differs, as you quite rightly point out is that shale producers of oil and gas hope to increase the value of the company rather than pay dividends, or hold cash. Sadly for many this has not happened either. I would not label the management as crooks, although there have been some very dubious practices by some, but is clear that some have embellished their prospects somewhat and have looked for exit strategies to benefit themselves ahead of the shareholders


Complete BS. Please document your examples as to what you mean by embellishing. You do realize that a publicly traded company is required by law to disclose accurately. The SEC in the US, TSX in Canada etc are all over improper disclosure. I know this for a fact having had to deal with both over the years. By law mentioning something inaccurate in a corporate presentation or in a public presentation a press release etc is punishable by fines to the corporation, criminal charges to the Officers of the company and possible de-listing down the road.

Will drilling and completion costs continue to rise, rather than fall and what about resource quality.


It is a good thing you have stayed away from shale investments. Drilling and completion costs have been falling not rising. If you base your analysis on false pretenses you open yourself for a world of hurt in the market.

 
So as I stated before, and you confirmed, if at 36 months you have not paid down the cost of the well, you are probably royally stuffed. For an oil well ar a cost of $7 million that means about 135 000 bbls of oil give or take - 3750 bbls per month average. Far less than a Saudi well.


You didn’t read carefully. Current rates when they are in that sort of range are from wells in the exponential decline phase when the well has already paid out. IP rates in the Marcellus are generally pretty high. CHK drilled one in early 2017 that IP’d at 61.8 MMcf/d, Southwestern drilled one that IP’d at 37 MMcf/d in April of 2017, Rex drilled 2 in 2017 that IP’d at about 40 Mmcf/d. That results in an on average revenue per well somewhere between $20 and $30 million if you assume the $2.40/Mcf figure I quoted. These wells pay out in the first twelve months quite easily.
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