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Page added on March 23, 2019

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Flashback: Peak Oil

Business

Figure it was an early Christmas present for folks who still fret over America’s energy security.

On November 28, 2018, the U.S. Department of the Interior released its confirmation of huge new oil and gas reserves in West Texas and running west across New Mexico and into Arizona. Officials said that formations in the Delaware Basin of Texas and New Mexico’s Permian Basin — in particular, the Wolfcamp Shale — could now be seen to contain “our largest continuous oil and gas assessments ever released.”

Even before that announcement, industry analysts at Rystad Energy in July 2018 pegged the global reserves scoreboard: U.S., 264 billion barrels of oil; Russia, 256 billion, and Saudi Arabia, 212 billion. Add the new numbers for the Delaware and Permian basins, score U.S. reserves now at more than 310 billion.

Hurray for our team. And a standout on the team you could boast as a hometown favorite.

Beginning in 2009, Birmingham-based Energen Corp. became a pioneer in exploration of shale oil in the region outlined in the Department of the Interior assessment.

“In July 2013, the company announced that tests on several Wolfcamp wells in the Permian Basin produced positive results and stocks that month rose 7.5 percent, to $60.74,” we reported in the January 2014 issue of Business Alabama, “Energen’s Third Act Gushes.”

A global glut of supply drove oil prices down over the next three years, but producers kept on pumping, including Energen.

With stock prices down, corporate raider Carl Ichan targeted Energen in 2017 and in 2018 precipitated a sale to another, slightly larger player on the Permian/Delaware range — Midland, Texas-based Diamondback Energy. The acquisition became official Nov. 29, one day after the Department of the Interior’s new peak assessment.  

Chris McFadyen is the editorial director of Business Alabama.



10 Comments on "Flashback: Peak Oil"

  1. Cloggie on Sat, 23rd Mar 2019 1:19 pm 

    The more you look, the more you find.

    Today, my 40-year-old 60 Watt bathroom TL-light broke down.

    I bought a new one, now in LED-technology, not cheap. Power consumption: 3 Watt.

    Just saying.

  2. Big Yawn on Sat, 23rd Mar 2019 1:24 pm 

    Yeah… USGS classifies this as ‘undiscovered’ and ‘technically recoverable’.

    from USGS General Definitions:

    undiscovered – Resources postulated, on the basis of geologic knowledge and theory, to exist outside of known fields or accumulations. Included also are resources from undiscovered pools within known fields to the extent that they occur within separate plays.

    technically recoverable – Those resources producible using currently available technology and industry practices. USGS is the only provider of publicly available estimates of undiscovered technically recoverable oil and gas resources.

    So — still need to _find_ the sweet spots and then attempt _profitable_ extraction. Pretty much the same old issues.

  3. Antius on Sat, 23rd Mar 2019 1:57 pm 

    It is amazing what can be achieved if interest rates are set to zero. In the short term it makes almost anything possible. Unfortunately, it destroys real returns on investment and burns the future.

  4. Davy on Sat, 23rd Mar 2019 2:11 pm 

    “It is amazing what can be achieved if interest rates are set to zero. In the short term it makes almost anything possible.”

    There is more to it than rates it is also the monetary easing giving liquidity opportunities to special interest groups. It is globally with carry trades and so forth.

  5. Robert Inget on Sat, 23rd Mar 2019 2:55 pm 

    Huge Draw this Wednesday. Houston Ship Channel closed due to Cancer causing smoke.

    https://www.bloomberg.com/news/articles/2019-03-22/wall-collapse-at-houston-fire-site-prompts-take-cover-alarm

    Oil byproducts from a damaged storage facility contaminated the Houston Ship Channel and created a cloud of cancer-causing benzene over the waterway, the latest mutation of one of the worst Gulf Coast chemical disasters in more than a decade.

    The U.S. Coast Guard is forbidding vessel traffic on a stretch of the key industrial shipping route after a wall collapse and fire at Intercontinental Terminals Co.’s already-damaged chemical storage complex on Friday. A mix of toxic gasoline ingredients, firefighting foam and dirty water flowed from the site into the channel, and a benzene plume above the water poses a threat to ship crews, said Coast Guard Capt. Kevin Oditt.

  6. Robert Inget on Sat, 23rd Mar 2019 3:05 pm 

    Even though several Southern US refinery fires will limit gasoline and diesel production, oil draws
    will still be substantial.

    It all gets back to Venezuelan heavy crude being
    out of circulation.
    (Additional Canadian heavy currently unavailable due to pipeline, and choo choo train shortages)

  7. Robert Inget on Sun, 24th Mar 2019 10:23 am 

    Bury your heads under Alberta’s oil sands.
    (60 Min. 2006)
    The Oil Sands Of Alberta. There are 175 billion barrels of proven oil reserves here. That’s second to Saudi Arabia’s 260 billion but it’s only what companies can get with today’s technology.
    (KSA simply can’t keep pumping 10.5 M B p/d)

    NEVER mention facts of Venezuela’s Orinoco’s oil-stash;
    https://www.bing.com/images/search?q=orinoco+oil+reserves&qpvt=Orinoco+oil+reserves&FORM=IGRE

    Enviro and Political reasoning may prevent most of this oil from sneaking into your fuel tanks.
    (yes yours)
    Last week because of massive electrical outages
    Venezuelan exports to the US were zero.
    At least that was the excuse. This week’s EIA report will either bring $62 oil or $55 WTI.

    It’s worth noting, some of President Trump’s sanctions on North Korea have been lifted but not on Venezuela. IOW’s Venezuela once again is being pushed harder into Russian and Chinese arms.

    Canada, America’s #1 importer, mandated a cutback in crude exports
    until Canada’s oil industry can Net more than $49
    USD per barrel. Unreasonable?
    IOW’s it’s not Just Pipe Line constraints.
    (since PLs are at limits, some choo choo trains are refilling Wash State refineries).

  8. Dredd on Sun, 24th Mar 2019 10:30 am 

    Peak sea level is dependent on peak oil to some degree (Countries With Sea Level Change – 3).

  9. Antius on Mon, 25th Mar 2019 8:01 am 

    An interesting article from Kurt Cobb.

    http://resourceinsights.blogspot.com/2019/01/has-us-shale-oil-entered-death-spiral.html

    It looks as if investor patience with shale is finally running out – these companies are raising very little money through bonds or equities, meaning that their only source of investment is operating revenue. This does not appear to be sufficient to maintain existing production, far less expand production. With the global economy essentially stagnant and poised for a plunge; oil prices are likely to remain weak for the next several years.

    When US shale (tight oil) production peaks, then global liquids production will have peaked, unless some other country is prepared to subsidise oil production from shale on the scale that Wall Street / US federal reserve have been prepared to do.

    In spite of all the reassurances, propaganda and denial; 2020 could turn out to be the all-time ‘peak liquids’ year. That is about exactly where institutions like The University of Uppsala predicted the peak would occur a decade ago. In practical terms of course, we have already reached peak diesel and peak fuel oil. And oil company profitability has been on the slide for years. Given the declining EROI of new oil production, we have probably passed the peak in net energy terms. But all-time liquids peak will be psychologically important, because it will be difficult at that point to hide the truth with any amount of smoke and mirrors.

  10. Robert Inget on Mon, 25th Mar 2019 6:10 pm 

    Once again power in Venezuela has been cut-off.
    No currency earning crude oil can be exported. From hospitals to refineries everything shuts down during long black-outs.

    Iraq underwent such interment electrical cuts for years and survived. I believe the Venezuelans will too.

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