[ralfy]

I could buy a "Goldilocks" like idea if it could span the history of the business like Rockman's POD. She cherry picks information way too hard from only the recent price runup, whereas if it works using the same information on both sides of a runup and crash like POD can handle from, say, 1965 to 1985, it would have more validity. Or at least as much as POD.

FWIW, more details are given here for the earlier period:

https://sites.google.com/site/sociology ... -to-growth

[SamInNebraska]

It's the other way round: "regardless of other factors" ignores "all that other stuff."

This is a UK press thread, which is why I referenced the ideas of Monibot. He seems to be falling right in line with the IEA stated non-peak idea of ever more resources (and flow rate) then ever expected.

Nothing to do really with one bad predictor of peak or another, or the validity of Rockman's POD idea over some of the less rigorous ideas like Gail's.

[ralfy]

This is a UK press thread, which is why I referenced the ideas of Monibot. He seems to be falling right in line with the IEA stated non-peak idea of ever more resources (and flow rate) then ever expected.

Nothing to do really with one bad predictor of peak or another, or the validity of Rockman's POD idea over some of the less rigorous ideas like Gail's.

Re: Monbiot's views:

http://www.davidstrahan.com/blog/?p=1576

http://www.davidstrahan.com/blog/?p=1570

Re: the claim that the IEA sees even more flow rate, especially that which will ensure business as usual:

http://www.youtube.com/watch?v=YK730U0Q4NU

Re: the claim that Gail's views are not rigorous, it's actually the other way round. What she presented is an example of POD.

[ROCKMAN]

ralfy - Yep...the Rockman gets too much credit. I just put 3 letters of the alphabet together. Gail and a lot of other folks put the flesh on the bones.

[dorlomin]

Peak oil lives, but will kill the economy

"Global production of crude oil and condensates... has essentially remained on a plateau of about 75 million barrels per day (mb/d) since 2005 in spite of a large increase in the price of oil. Even more important, the global net oil exports from oil-exporting countries (oil production minus internal consumption) have peaked and are in decline."

The Eos paper goes on to point out that while "total oil production has plateaued, production of oil from older existing fields has been in decline, dropping roughly 5% annually, corresponding to a loss of 3-4 mb/d." Although production from unconventional oil and gas has balanced this decline, they are "difficult and expensive" with "very low energy return on investment (EROI)." In simpler terms, "it takes energy to get energy, and more is required to produce energy from unconventional sources."

On shale gas, study authors James Murray and Jim Hansen find that:

"There is no doubt that the nation's shale gas resources are immense, but the contention that the United States has a 100-year supply of natural gas is unfounded. The upper limit of supply is likely closer to 23 years using present- day rates of consumption."

"The increased price of oil leads to a sudden loss of demand (demand destruction) followed by a decrease in the price of oil (countering the initial increase that set this cycle in motion). If the price decreases enough, production of the expensive unconventional resources is no longer profitable."

"A 4% growth in GDP would require an annual increase in oil supply of 3%, and that would amount to an increase in oil production of 17 mb/d over the next 5 years. Because production of conventional oil appears stuck on a plateau of 75 mb/d, it is likely that economic growth may be difficult unless there is a transformation away from the historical relationship between energy use and economic growth."

Gets it.

[dorlomin]

http://www.telegraph.co.uk/finance/comm ... shale.html

Yet claims of a 100-year bonanza in the US are wishful thinking. "The upper limit of supply is likely closer to 23 years using present day rates of consumption," said the Eos report.
Kevin Norrish from Barclays said US drillers have already tapped the "best plays" for shale, with newer Utica ventures in the north east of the US and Canada coming up short. The biggest productivity leaps may already have happened. "We expect a steep slowdown in the rate of tight oil production growth from the middle of this decade onward," he said.
Barclays is defiantly holding to a Brent crude forecast of $184 in 2020, betting that spare capacity in global output will prove thinner than supposed, and that oil shocks will come back to haunt us.
We should think of shale as one-generation play for the US, enough to ensure American superpower primacy into the middle of the century. Whether the rest of the world can follow suit in any meaningful time-frame is an open question. Boston Consulting Group said there were 110,000 shale wells in the US and Canada by the end of last year, and just 200 in all other countries combined.
Argentina, Poland and Ukraine may try to get going after 2015 but they have almost no service infrastructure, and all score badly on "ease of doing business". Australia may do better from 2017 onwards.
China has the world's biggest reserves on paper. It is itching to start but much of its shale is in the north-west desert where there is no water, and frackers have yet to find a viable extraction process without water. Not one of the 19 drilling awards issued by the Communist authorities in January went to companies with oil and gas experience. They were mostly power utilities or coal miners.

We all love a fresh narrative but consensus has swung too fast from the 2008 oil panic to the energy complacency of 2013, and done so on slender evidence. As matters stand, peak cheap oil remains an incontrovertible fact. To Oil Drum, a fond farewell.

[ROCKMAN]

d - "We should think of shale as one-generation play for the US". Good point but in reality all the great plays I can think of were developed in such a one generation (say 25 years) cycle. But that's just the development of those plays. Production rate declines from the older grand plays were much lower than we're seeing in the shales. IOW nearly full development of the shale plays will take about as long as it did for older plays (assuming oil prices stay high) but the productivity will fall off much quicker. Consider that the 3rd largest oil producer on the planet, the USA, is doing so for the most part with very old wells that average less than 10 bopd. The shales have given us a nice boost but they are not the bedrock of US production. And never will be IMHO.

[Beery1]

The shales have given us a nice boost but they are not the bedrock of US production.

Though they are the bedrock of the current cornucopian pipe dream.

[John_A]

The shales have given us a nice boost but they are not the bedrock of US production.

Though they are the bedrock of the current cornucopian pipe dream.

Well, that and the objective results anyway.

http://www.eia.gov/todayinenergy/

[ROCKMAN]

With respect to the shales and Bakken I can't fault the cornies too much. They have added a nice boost no one expected until oil prices boomed. The cornies do have a tendency to equate their value to a typical conventional reservoir production profile. But not everyone has a background in reservoir engineering...thank Dog.

What seems a bit odd is how the cornies don't seem to pay much attention to the DW GOM. Maybe because there's no impressive rig count numbers. It may not happen very often but bringing 100k to 300k bopd at once is a lot more impressive than n 800 bopd Bakken well.

[John_A]

With respect to the shales and Bakken I can't fault the cornies too much. They have added a nice boost no one expected until oil prices boomed. The cornies do have a tendency to equate their value to a typical conventional reservoir production profile. But not everyone has a background in reservoir engineering...thank Dog.

What seems a bit odd is how the cornies don't seem to pay much attention to the DW GOM. Maybe because there's no impressive rig count numbers. It may not happen very often but bringing 100k to 300k bopd at once is a lot more impressive than n 800 bopd Bakken well.

I mentioned it elsewhere, but recent information from "money" seems to indicate they don't want anything to do with even the potential of oil all over the beaches and their name attached to the well and rig which did it. So they stay out of the GOM, pump it into tight formations, and activity languishes in the GOM as a result.

[davep]

Please note that the previous post was posted from an IP address used by both John_A and SamInNebraska. John_A has used the SamInNebraska sockpuppet previously to evade a one-week suspension. As a result, the sockpuppet is permanently banned and John_A has been given a two-week holiday.

We specifically told John_A not to use sockpuppets during his previous suspension, or he would incur an increased suspension. He did and he has.

We don't normally discuss such matters openly, but given the attitude of these "two" posters, it is worth highlighting that we can track such trolls and their attempts at evading bans. Thanks to Pops for spotting this one.

[SeaGypsy]

Lol! Line up, line UP! One Sock Per Troll ONLY- any trolls found stealing socks will get a smack and have their excess sock/s taken away!

(Without mod privileges this fairly obvious. Are we sure it's not Shorty the proxy master?- Forgot to hit hidemyass )

[ROCKMAN]

Apparently I missed John’s silly comment when posted. Since it has popped up and folks might see it I figured I should offer some facts.

John: “So they stay out of the GOM, pump it into tight formations, and activity languishes in the GOM as a result.”

How badly is the GOM “languishing”? From

http://www.worldoil.com/April_2013_Regi ... exico.html

“The Gulf of Mexico is now returning to pre-Macondo activity levels. By all the leading indicators—leasing, permitting and discoveries—the Gulf of Mexico is experiencing a new wave of resurgence. The activity is led by majors, including Shell, BP and Chevron, and large independents, such as McMoRan, Noble and Anadarko. A new slate of IOCs is also increasing their stakes, and some have become operators, such as Petrobras, Statoil, Total and Eni, who see the Gulf of Mexico as a safe harbor for their oil and gas investments. The lagging indicator of crude oil production in the Gulf of Mexico is also heading in a positive direction.

LEASING: In late March 2013, the government held a 39-million-acre lease sale for the Central Gulf of Mexico. A total of 52 operators bid more than $1.2 billion for 407 leases. The highest bid in the sale was $81.8 million. The Obama administration is planning to hold four additional lease sales in the Central Gulf over the next five years.

PERMITTING ACTIVITY: Permits to Drill were steady for the shallow-water area (<500 ft) from 2011 to 2012 with 170 permits for new and revised new wells granted in 2011 and 171 granted in 2012. For deep water, the permits increased from 165 in 2011 to more than double to 395 in 2012.

PRODUCTION: There are 14 major oil development projects underway today. Based on the existing inventory of exploratory prospects for the deepwater operators and continuing successes on the shelf, there will be strong E&P activity in the Gulf of Mexico for decades to come. There still remain, however, the tantalizing prospects of treasures in the unexplored acreage in the Eastern Gulf along the West Florida shelf.

[dorlomin]

http://www.theguardian.com/environment/ ... crash-risk

The role of energy crisis in sparking recession is ignored by conventional economic models. However, American economist Prof James Hamilton of the University of California has modelled the link between oil prices and US recessions – including the 2008 crash – in a study for the US Congressional Joint Economic Committee. Prof Hamilton concluded that the collapse of the housing bubble was triggered by the post-2005 oil price shocks which escalated cost of living and induced sweeping consumer debt-defaults.

If the views of oil industry insiders like Jeremy Leggett are correct – who says that as industry reserve estimates are being systematically exaggerated we could face the risk of a major oil crash over the next five to six years – then the UK's unsustainable growth trajectory could unravel sooner rather than later.

[ROCKMAN]

D - I've always found it odd that so many refuse to see the link between high oil prices and recessions. Not just the most recent but you've probably seen the chart linking almost every price spike with economic pull backs. And we never exaggerate reserves...we just choose the more optimistic assumptions when doing the analysis. So it's typically those assumptions that can be bat sh*t crazy. LOL.

But again there seems to be undue focus on "reserves" numbers as forecasters of our economic future. Those metrics won't determine the price of oil to any significant degree. Never have and never will IMHO. How much proven energy the industry says is "proven" in the ground isn't dictating the price of oil today. That's determined by the supply/demand dynamic. And demand is determined by economic activity and supply by production rate. And nether of those metrics depends on the accuracy of the reserve estimates.

[ROCKMAN]

Pstarr - it's only a scam if someone buys into it. Unfortunately there are more than a few talented wolves on Wall Street skilled at selling it to the sheep that wander around there. LOL.

[dorlomin]

The farming lobby has wrecked efforts to defend our soil
In an extraordinary coup, farmers' unions and the UK government have torpedoed the European soil framework directive

The age of climate warfare is here. The military-industrial complex is ready. Are you?

Scientists vindicate 'Limits to Growth' – urge investment in 'circular economy'

US shale boom is over, energy revolution needed to avert blackouts


In a sane world, that is how all newspapers would look.

[collapsenik]

Pstarr - it's only a scam if someone buys into it. Unfortunately there are more than a few talented wolves on Wall Street skilled at selling it to the sheep that wander around there. LOL.

So Rockman, does it matter how talented Wall Street wolves are if sheep refuse to believe their estimates? I mean, haven't you ever purchased a producing well before and if so, didn't you include an estimate of value of the production itself, rather than just the tangible equipment?

Sort of like a diamond ring, there is what you sell it to a newly wed couple for, and then there is what someone at a pawn shop would pay. They might set a price for the ring somewhere below the value of the gold in it (based on simple weight) and the cut and clarity of the diamond.

I don't understand why if someone buys a well they don't do the same, there is the value of the surface equipment, any net tubular profit after salvage, any intangible value such as future potential of the lease perhaps, and then…there is production. Certainly you can't say that the value of existing production is ZERO, any halfwit can carry oil in a bucket to someplace that it can be purchased, or pipe natural gas around the block, and sell it.

So how do you value that production when you buy a well? And if you don't call it reserves, what do you industry folks call it?