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Page added on July 8, 2018
THE ENERGY CLIFF APPROACHES: World Oil & Gas Discoveries Continue To Decline
As the world continues to burn energy like there is no tomorrow, global oil and gas discoveries fell to another low in 2017. And to make matters worse, world oil investment has dropped 45% from its peak in 2014. If the world oil industry doesn’t increase its capital expenditures significantly, we are going to hit the Energy Cliff much sooner than later.
According to Rystad Energy, total global conventional oil and gas discoveries fell to a low of 6.7 billion barrels of oil equivalent (Boe). To arrive at a Boe, Rystad Energy converts natural gas to a barrel of oil equivalent. In 2012, the world discovered 30 billion Boe of oil and gas versus the 6.7 billion Boe last year:
In the article, All-time low for discovered resources in 2017, Rystad reports, it stated the following:
“We haven’t seen anything like this since the 1940s,” says Sonia Mladá Passos, senior analyst at Rystad Energy. “The discovered volumes averaged at ~550 MMboe per month. The most worrisome is the fact that the reserve replacement ratio in the current year reached only 11% (for oil and gas combined) – compared to over 50% in 2012.” According to Rystad’s analysis, 2006 was the last year when reserve replacement ratio reached 100%.
The critical information in the quote above is that the world only replaced 11% of its oil and gas consumption last year compared to 50% in 2012. However, the article goes on to say that the last time global oil and gas discoveries were 100% of consumption was back in 2006. So, even at high $100+ oil prices in 2013 and 2014, oil and gas discoveries were only 25% of global consumption.
As I mentioned at the beginning of the article, global oil capital investment has fallen right at the very time we need it the most. In the EIA’s International Energy Outlook 2017, world oil capital investment fell 45% to $316 billion in 2016 versus $578 billion in 2014:
In just ten years (2007-2016), the world oil industry spent $4.1 trillion to maintain and grow production. However, as shown in the first chart, global conventional oil and gas discoveries fell to a new low of 6.7 billion Boe in 2017. So, even though more money is being spent, the world isn’t finding much more new oil.
I believe we are going to start running into serious trouble, first in the U.S. Shale Energy Industry, and then globally, within the next 1-3 years. The major global oil companies have been forced to cut capital expenditures to remain profitable and to provide free cash flow. Unfortunately, this will impact oil production in the coming years.
Thus, the world will be facing the Energy Cliff much sooner than later.
85 Comments on "THE ENERGY CLIFF APPROACHES: World Oil & Gas Discoveries Continue To Decline"
Outcast_Searcher on Sun, 8th Jul 2018 1:58 pm
“And to make matters worse, world oil investment has dropped 45% from its peak in 2014.”
And oil prices had fallen nearly 75% from 2014 to early 2016. They’re still down a good 25%.
Calm down and give it some time. The markets, price signaling, and the profit motive still work.
If oil gets to a sustained price of, say, $125 (signalling strong demand and potential fear of future shortages) and there is STILL a big shortage of new discoveries over time, be sure and get back to us.
MASTERMIND on Sun, 8th Jul 2018 2:14 pm
Outcasts
Oil discoveries peaked in the 1960’s and we have discovered less oil every decade since..And we have consumed more oil than we have discovered since 1984..Even when the oil price was well over 100 dollars..
https://imgur.com/a/6dEDt
The End of the Oil Age is Imminent!
Recently, the HSBC oil report stated that 80% of conventional oil fields were declining at a rate of 5-7% per year. This means that there will be an oil shortage of ~30 million barrels per day by 2030 and ~40 million barrels per day by 2040.
http://www.scribd.com/document/367688629/HSBC-Peak-Oil-Report-2017
What is mentioned far less often is that annual oil discoveries have lagged annual production since the 1980s.
https://imgur.com/a/6dEDt
Now, this problem has nothing to do with the recent decline in the oil price, which started in 2014. This has been an on-going problem for the past 30 years. Now, the IEA is predicting oil shortages by ~2020 due to declining exploration.
https://www.wsj.com/articles/iea-says-global-oil-discoveries-at-record-low-in-2016-1493244000
Here, the IEA blames this problem on the low oil price. But, this problem started in the 1980s. The problem is geological: we are running out of conventional cheap oil. Shale and tar sands are not the answer, either. Those resources are far too expensive, compared to conventional oil, because the global economy is based on cheap conventional oil. Expensive oil is not a replacement for cheap oil.
Based upon the HSBC report and the IEA, the End of Oil Age will start around ~2020: there will be a dramatic economic depression due to exhaustion of cheap oil. This will cause a global economic collapse.
Cloggie on Sun, 8th Jul 2018 2:15 pm
Oil prices through the roof shortly.
The wine will taste excellent in Houston, Moscow and Riyadh.
OK, skip Riyadh.
MASTERMIND on Sun, 8th Jul 2018 2:18 pm
Clogg
When the global economy collapses due to those high oil prices..Well see how you like eating boiled rat for dinner..
LMFAO!
MASTERMIND on Sun, 8th Jul 2018 2:20 pm
Financial catastrophe resulting from resource depletion and a debasement of value of fiat currencies. Then a 12-month window of tyranny and government lockdown on citizens, followed by a 6-month window of absolute carnage and death. Then, a period of about 6 months of slow die-off and that’s pretty much that. Oh, and starting sometime within the next 5 years or so..
https://imgur.com/a/pYxKa
https://imgur.com/a/rBtIrfg
MASTERMIND on Sun, 8th Jul 2018 2:21 pm
I emailed Professor Douglas B Reynolds PhD, Oil and Energy Economics, University of Alaska.
http://uaf.edu/files/som/REYNOLDS-Doug-2016-CV.pdf
And I asked him if our upcoming oil shortage will cause a global economic collapse?
https://imgur.com/a/rBtIrfg
He replied;
“Yes, it will be like that, but may be worse with other extenuating circumstances such as war or the decline of international trade. Hyperinflation as happened in the Soviet and Post Soviet economy is a certainty.”
https://imgur.com/a/rktmHdt
MASTERMIND on Sun, 8th Jul 2018 2:23 pm
‘Peak Oil’ and the German Government
Military Study Warns of a Potentially Drastic Oil Crisis
The team of authors, led by Lieutenant Colonel Thomas Will, uses sometimes-dramatic language to depict the consequences of an irreversible depletion of raw materials. It warns of shifts in the global balance of power, of the formation of new relationships based on interdependency, of a decline in importance of the western industrial nations, of the “total collapse of the markets” and of serious political and economic crises.
The study, whose authenticity was confirmed to SPIEGEL ONLINE by sources in government circles, was not meant for publication.
http://www.spiegel.de/international/germany/peak-oil-and-the-german-government-military-study-warns-of-a-potentially-drastic-oil-crisis-a-715138.html
MASTERMIND on Sun, 8th Jul 2018 2:39 pm
The American dream is fading for many as home prices continue to rise in the U.S.
https://twitter.com/tictoc/status/1016030482729963526
Don’t worry we can just blame Russia or illegal immigrants!
MASTERMIND on Sun, 8th Jul 2018 2:41 pm
Sheep will go insane when they learn we are running out of oil..And they will start a stampede!
I would hate to be an elite!
print baby print on Sun, 8th Jul 2018 2:47 pm
Recently, the HSBC oil report stated that 80% of conventional oil fields were declining at a rate of 5-7% per year. This means that there will be an oil shortage of ~30 million barrels per day by 2030 and ~40 million barrels per day by 2040.
Something is wrong here or I am very bad in math ( which I am) I read for the last 10years+ about 5-7% depletion rate that would mean no oil at the elephants at all but it still gushing
MASTERMIND on Sun, 8th Jul 2018 3:03 pm
Many States Are Likely Unprepared For Next Downturn
Revenues—largely dependent on taxes—haven’t fully recovered from the last recession, while pensions and Medicaid costs mount.
Many U.S. states have been slow to improve their finances nine years into the economic expansion. That raises a risk they won’t be prepared when another downturn hits, making them susceptible to big spending cuts that make that next recession worse.
State governments have been grappling with tepid revenue growth and heavy pension and Medicaid costs.
In many places that has resulted in smaller reserves. Measured as a share of spending, 21 states had smaller rainy day funds in 2017 than they did in 2008, according to data from the National Association of State Budget Officers compiled by the Tax Policy Center. Rainy day funds help states preserve spending levels when their revenues plunge. Those reserves are especially important because, unlike the federal government, states don’t run budget deficits in downturns.
Most states rely primarily on income and sales taxes to fund their budgets. That makes them particularly vulnerable during recessions, when layoffs result in lost incomes and scaled-back purchases. At the same time, recessions put pressure on state spending as demand for government services, such as unemployment insurance and Medicaid, soars.
In previous recessions, the federal government stepped in with spending to keep states afloat. That may be harder to do next time because federal debt is rising rapidly.
“There are levers that all the states could think about in terms of preparing for the next economic downturn,” Federal Reserve Bank of Boston President Eric Rosengren said in an interview with The Wall Street Journal. “It doesn’t seem like there is that much movement in that direction right now in many states.”
North Dakota had only 1.5% of its expenditures in a rainy-day fund in the 2017 fiscal year, down from 16.6% in 2008. Oklahoma’s rainy day fund had 1.6%, down from 9.3%. New Jersey emptied its rainy day fund in 2009 and has yet to begin refilling it.
There are some important exceptions. California’s rainy day fund was empty in 2008 but in 2017 held 8.5% of the state’s expenditures. Voters there passed a measure in 2014 requiring the state government to set aside money every year into the fund. That effort helped to drive overall state rain day funds to 6.8% of spending in 2017, up from 4.8% in 2008, according to NASBO.
Many states governments have seen their bond ratings downgraded during this expansion for not taking the appropriate measures to get their fiscal houses in order. Eleven states have lower bond ratings than they did in 2010 while only five have higher ratings, according to Moody’s Investors Service. Fitch Ratings lists seven states with worse ratings and six with better ones since the recession. And analysts at S&P Global rate 12 states lower than in 2010 and 10 states higher.
“It’s very important in our view that during the good times the states should be building up their fiscal resilience and that really stands out as an area that’s been lacking throughout this recovery,” said Gabriel Petek, managing director at S&P Global Ratings.
State budgets faced their biggest test in decades in 2009, when revenues fell 11% following the financial crisis and the recession. Employment and consumer spending have improved since then but governments haven’t made a full comeback.
Year-to-year growth in quarterly state tax revenues has averaged about 4% in this expansion, compared with about 6% in the last two economic expansions, according to data from the U.S. Census.
State revenues have been held back by sluggish wage growth and by changes in people’s consumption patterns. Households are shifting spending away from brick-and-mortar stores, which collect state sales taxes, to shopping online, which until recently largely escaped those taxes. A Supreme Court decision last month paved the way to allow states to tax online purchases, which could boost their finances, but it hasn’t been much of a factor so far.
Other factors are at play. Oil-producing states, which rely on severance taxes, were hurt by the sharp fall in oil prices in 2015 and 2016. And some states, such as Kansas or Oklahoma cut taxes during the expansion, slowing revenue growth.
An aging population is also putting pressure on state Medicaid budgets and pension funds. State pension contributions were 78% higher in 2017 than in 2010, according to census data. And state Medicaid payments were 59% higher in 2016 than in 2010, according to the Centers for Medicare and Medicaid Services.
A trade war could further pinch budgets in agricultural states, whose exports are targets of retaliatory tariffs by U.S. trading partners.
Some state governments got a reprieve through the GOP’s 2017 tax law changes, which limited some deductions, raising state taxable income and boosting their revenues this year.
But Mr. Petek warned it could be short-lived.
“Some of these longer-term pressures are definitely not going away,” he said.
https://www.wsj.com/articles/many-states-are-likely-unprepared-for-next-downturn-1531073292
MASTERMIND on Sun, 8th Jul 2018 3:04 pm
Print
That study is only talking about depletion..If you add into it increased world oil demand over the next twenty years..The world would need to discover and bring online around six new Saudi’ Arabia’s worth of oil at the least..
Goodluck!
GregT on Sun, 8th Jul 2018 3:04 pm
“I would hate to be an elite!”
Ever been to New Zealand MM? I can assure you that there isn’t much to hate.
Super rich Americans buying land in New Zealand as ‘bolthole’ from apocalypse
https://www.stuff.co.nz/business/88705064/super-rich-americans-buying-land-in-new-zealand-as-bolthole-from-apocalypse
GregT on Sun, 8th Jul 2018 3:15 pm
Media baron Murdoch’s son is building a central B.C. family retreat
“This is not an investment property. And if you look at the timing … it exists apart from whatever the trends are of the moment.”
https://www.theglobeandmail.com/news/national/media-baron-murdochs-son-is-building-a-central-bc-family-retreat/article34426625/
Duncan Idaho on Sun, 8th Jul 2018 3:44 pm
Well, after Tengiz, oil elephants have vanished.
And that was 2000. 11% replacement rate last year.
MASTERMIND on Sun, 8th Jul 2018 3:47 pm
Greg
I read that Peter Theil that tech billionaire who endorsed Trump..Bought a doomsday mansion in New Zealand that has its own “Panic Room” built inside…
LmFAO
GregT on Sun, 8th Jul 2018 3:55 pm
Michelle Pfeiffer Linked to $28.8m BC Luxury Estate Listing
Remote 340-acre Bute Inlet property is priciest new listing of last week, #REWCAP analysis reveals
https://www.rew.ca/news/michelle-pfeiffer-linked-to-28-8m-bc-luxury-estate-listing-1.23057319
My bother in law was one of the builders of this particular elite American retreat MM. It has it’s own hydro electric, is in the middle of nowhere, and is completely off grid. All of the meat a person could ever want, can be caught right from shore.
MASTERMIND on Sun, 8th Jul 2018 4:00 pm
Greg
Don’t you think people will come and find that place..When shit hits the fan?
MASTERMIND on Sun, 8th Jul 2018 4:02 pm
Woman exposed to nerve agent in Amesbury dies – UK police
https://www.rt.com/uk/432342-woman-novichok-amesbury-police/?utm_source=browser&utm_medium=push_notifications&utm_campaign=push_notifications
Putin just murdered an innocent British woman..
HIT HIM HARD!
GregT on Sun, 8th Jul 2018 4:07 pm
MM,
I know exactly where it is, and I can assure you that people would have an extremely difficult time finding it.
Like many of these places all up and down the BC coast, they are only accessible by boat, or by floatplane, and the BC coastline would take many lifetimes to explore.
GregT on Sun, 8th Jul 2018 4:10 pm
And besides MM,
What would be the point in trying to find it anyways?
MASTERMIND on Sun, 8th Jul 2018 4:10 pm
Greg
I would be most worried about the government or other rich people..Coming to take it and use for their own means..
MASTERMIND on Sun, 8th Jul 2018 4:14 pm
Greg
what would be the point? I guess that you could live their in a post collapse world according to you at least..Assuming all the nuke plants dont melt down and explode..And that is a huge assumption..
GregT on Sun, 8th Jul 2018 4:17 pm
“I would be most worried about the government or other rich people..Coming to take it and use for their own means..”
For what means MM?
MASTERMIND on Sun, 8th Jul 2018 4:20 pm
Amesbury incident: Dawn Sturgess dies after being exposed to novichok
https://www.independent.co.uk/news/uk/home-news/amesbury-salisbury-nerve-agent-dawn-sturgess-woman-dies-exposure-a8437776.html
The UK and the US have to do something now!
See you in hell Putin!
Say what you want about the deep state..But they get the job done!
LMFAO!
MASTERMIND on Sun, 8th Jul 2018 4:22 pm
Greg
What do you mean for what means? To stay alive..
It could be used to house soldiers, political leaders, other wealthy elites..etc..
GregT on Sun, 8th Jul 2018 4:22 pm
“Assuming all the nuke plants dont melt down and explode..And that is a huge assumption..”
The closest nuke planets upwind from the BC coast are in Japan MM, one of which already melted down and exploded. Surprise surprise, everybody is still here. Imagine that.
MASTERMIND on Sun, 8th Jul 2018 4:23 pm
If the shit doesn’t hit the fan now, May will be known forever as a complete dud. She has to do something..
GregT on Sun, 8th Jul 2018 4:24 pm
“It could be used to house soldiers, political leaders, other wealthy elites..etc..”
You have quite the active little imagination MM.
MASTERMIND on Sun, 8th Jul 2018 4:24 pm
Greg
That is because there were tons of people and resource to cool down that plant in Japan..Because BAU is still in place..If BAU goes down there won’t be any people to help or resources to save the day..
GregT on Sun, 8th Jul 2018 4:25 pm
There are thousands of these retreats all up and down the BC coast MM. Many are owned by elite Americans.
onlooker on Sun, 8th Jul 2018 4:26 pm
https://medium.com/s/futurehuman/survival-of-the-richest-9ef6cddd0cc1
Survival of the Richest
Their money will become worthless. They will be more trapped than protected. It is about being about a amicable,productive, useful member of a community
GregT on Sun, 8th Jul 2018 4:27 pm
Fukushima has not been contained MM.
Cloggie on Sun, 8th Jul 2018 4:29 pm
Putin just murdered an innocent British woman..
HIT HIM HARD!
https://goo.gl/images/t6GZZC
http://www.unz.com/ishamir/the-singapore-helsinki-express/
So there is a force that pushes for war consistently, at least since 1914 till our days. This force coincides with the main vector of American politics, and since 1991, with the Western politics at large. It has a strong Jewish component based in media and universities; a new Church of the West trying to embrace the world. Its wars are ‘crusades’ (מצווהמלחמת, ‘wars for faith’ Joshua-style). That’s Jewish drive for world domination. Jews are shy of admitting that, but once, Jews will admit and recognise it; especially as their drive is intertwined with the American drive for world domination (called Manifest Destiny), and the British ‘White Man’s Burden’.
Every Eurasian and Muslim should recognize that as long the axis Washington-NYC-London hasn’t been destroyed, this drive for Anglo-Zionist world domination will continue to exist and that eventually WW3 is inevitable and that we should prepare for it and develop a taste for it, a certain lust, in order to maximize our chances of winning the inevitable confrontation. The Anglo-Zionists have long picked Russia as their favorite target, because it is seen as the weakest. The Chinese know it and won’t sit idle by because they know they would be next.
The good news is that time is acting against the Anglos, as they are descending into third world status too early to accomplish their goals.
May the best win.
MASTERMIND on Sun, 8th Jul 2018 4:33 pm
Buzzfeed: Republicans shouldn’t be able to go out in public without the fear of being assassinated..
https://imgur.com/a/mKc2dRB
LMFAO!
MASTERMIND on Sun, 8th Jul 2018 4:38 pm
Clogg
I predicted this..I told you a false flag was coming! And you didn’t listen..
If May doesn’t do anything she will go down in history as a lame duck..
HIT EM HARD!
Cloggie on Sun, 8th Jul 2018 4:47 pm
I predicted this..I told you a false flag was coming! And you didn’t listen..
If May doesn’t do anything she will go down in history as a lame duck..
HIT EM HARD!
I don’t need criminals like you to explain fokking Anglosphere to me. Everything is a lie there:
– “Europe stumbled into WW1” (it was Britain all along)
– Lusitania “unprovoked” German brutal act
– Pearl Harbor “unprovoked”
– WW2 German war guilt (US setup from the beginning)
– Holohoax
– JFK murder
– “Diversity is our strength”
– 9/11 “Arabs with box-cutters”
– “Syrian uprising”
– Euro-Maidan as “spontaneous overthrow Ukrainian government”
For people like you, lying is seen as a higher form of art, necessary to bring a relative small tribe to victory over the rest of the planet. Well that’s the plan.
And then there was meteoric rising China, Putin, the internet, European populism, Trump, Brexit, alt-right, losing all the wars in Iraq, Afghanistan, Syria, Ukraine.
That’s too much on your plate, buster. You are toast.
Cloggie on Sun, 8th Jul 2018 4:51 pm
Buzzfeed: Republicans shouldn’t be able to go out in public without the fear of being assassinated..
https://imgur.com/a/mKc2dRB
LMFAO!
Oh yeah, thanks millimind, I almost forgot the impending CW2 that will make WW3 superfluous. After all, a country cannot declare/fight WW3 if it no longer exists. That makes sense, right, millimind?
MASTERMIND on Sun, 8th Jul 2018 5:03 pm
Clogg
You know more than all the history books..
Putin is going down hard!
MASTERMIND on Sun, 8th Jul 2018 5:11 pm
Rights Groups Demand Israel Stop Arming neo-Nazis in the Ukraine
https://www.haaretz.com/israel-news/rights-groups-demand-israel-stop-arming-neo-nazis-in-the-ukraine-1.6248727?utm_source=dlvr.it&utm_medium=twitter
Duncan Idaho on Sun, 8th Jul 2018 5:12 pm
Like many of these places all up and down the BC coast, they are only accessible by boat, or by floatplane, and the BC coastline would take many lifetimes to explore.
BC, the size of California, has roads reaching the coast on only 3 spots.
While I’ve spent more time in Alaska, BC is the place!
Cloggie on Sun, 8th Jul 2018 5:13 pm
“Putin is going down hard!”
Only in your feverish mind.
You must hurry up, pall, before it is too late:
https://documents1940.wordpress.com/2018/06/11/cw2-brewing/
Oh and thanks for the links contained in that post, a few I got from you.
Keep em coming!
MASTERMIND on Sun, 8th Jul 2018 5:25 pm
‘Where are the babies, Mitch?’: McConnell pursued from restaurant by angry crowd
https://www.msn.com/en-us/news/politics/where-are-the-babies-mitch-mcconnell-pursued-from-restaurant-by-angry-crowd/ar-AAzLjm7?ocid=ob-tw-enus-677
HAhA! The people are rising up against the elites!
onlooker on Sun, 8th Jul 2018 5:29 pm
https://medium.com/s/futurehuman/survival-of-the-richest-9ef6cddd0cc1
Survival of the Richest
You can run but you can’t hide
Duncan Idaho on Sun, 8th Jul 2018 5:30 pm
‘Where are the babies, Mitch?’: McConnell pursued from restaurant by angry crowd
How did the Repugs pick such a goofy looking idiot to lead them?
Davy on Sun, 8th Jul 2018 5:40 pm
stupid blind lying liberals are going to lose an election they could win but with such behavior normal people will desert them in droves.
MASTERMIND on Sun, 8th Jul 2018 5:46 pm
Davy
Who is the lying liberals? Be specific
You are going full blown paranoid nutjob now..
MASTERMIND on Sun, 8th Jul 2018 5:47 pm
Davy
Are you getting scared the elites are being challenged now?
Davy on Sun, 8th Jul 2018 5:50 pm
mm, you are the perfect Republican spoiler and you are free. Your type will do so much more damage than Trump could do being Trump.
JuanP on Sun, 8th Jul 2018 5:56 pm
MM “Putin is going down hard!”
I really enjoy the fact that you dislike Putin and want him gone, Attomind. I can’t help but smile every time I think of how he annoys you. I expect Putin to remain in power until he completes his term and retires (if he chooses to). You remind me of all those Miami Cuban losers who died waiting for the Revolution to end. LOL! Long live Putin! Long live Russia!