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A personal overview of the peak oil theory

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

Re: A personal overview of the peak oil theory

Unread postby rockdoc123 » Thu 28 Nov 2019, 23:15:44

However the coming years play out, energy wise, the abundant, cheap US hydrocarbons will 100% exert a crushingly large influence on world affairs.
Garownteed.


If the US and Canada could combine their gas and ship it from LNG terminals on the Gulf, East and West Coasts we could easily give Russia, Australia and Qatar a run for their money in terms of garnering some greater amount of market share. The reserves here are very large, infrastructure (outside of enough LNG terminals) is largely in place and lifting costs are quite low.
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Re: A personal overview of the peak oil theory

Unread postby coffeeguyzz » Fri 29 Nov 2019, 00:04:10

2 huge new power projects in Vietnam - Thi Vai and Son My 2 - will produce over 5,000 Megawatts combined ... 1/3 all of New England's daily use.
Both will use state of the art Combined Cycle Gas Plants fueled by Floating Storage and Regasification Units ... with the Thi Vai plant supplied by the yet-to-be built Magnolia LNG plant in Looeezzeeannah.

The Port Kembla, Australia terminal is set to be handled with an FSRU and Cheniere has been contracted to supply the LNG. (Yes, American LNG is on track to be exported to Oz).

Asian LNG prices are in the $5/mmbtu range with one Chinese shipment sold on spot couple weeks back for sub 4 bucks per.
One monumental aspect to all this is that US LNG is pegged to Henry Hub pricing while the Russian, Qatari and Algerian sales are pegged to Brent.

If history and human entrepeneurship are any guide, there will continue to be a massive shift towards natgas for fuel while historical suppliers see a greatly endangered revenue stream.
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Re: A personal overview of the peak oil theory

Unread postby Tanada » Fri 29 Nov 2019, 15:16:22

coffeeguyzz wrote:Boy, this is one of the better oil related threads that I have read in quite some time.
Remarkable how much can be learned when varying, even opposing views, can be presented in an adult, informative manner.

To somewhat address the financial aspects of the unconventional world that both Adam and wildbourg were touching upon ...
A huge factor - somewhat overlooked or even dismissed - is an emerging reality that operators are on the cusp of having economically viable operations at $2.50 HH and $55 WTI.

This is something I would not have thought possible a few years back.

For those quick to regurgitate the "They going broke! Funny money rules! Ponzi!", you clearly have not been following along.
Sure, the poster boy of all that ails - Chesapeake - may not be around in current form by end of 2020, but its MASSIVE footprint will be carved up and taken over by others - and run profitably - for years to come.

The cost to produce oil/gas in the unconventional industry has plummeted these past few years ... and continues to drop.
That big decline in rig count?
~55% offline of legacy rigs while only 10% of the Super Specs are idled (H&P the source of that from a few weeks ago).

Marathon claims $4.9 million to D&C a Bakken well with a recent 4 well pad costing $4.5 per.
EOG says its Bakken wells now average $5 milluon.
EQT is shooting to operate in a $2 HH world and - if they cannot - they will come close.

Russian pipeline gas is being undercut in Turkey by US LNG.
Likewise, Algeria is cutting back on European bound gas - via pipe - due to cheap LNG.

However the coming years play out, energy wise, the abundant, cheap US hydrocarbons will 100% exert a crushingly large influence on world affairs.
Garownteed.


The thing that remains to be seen is how the rest of the world reacts. If Russia/Quatar et al try the KSA strategy of 2014 or suppressing prices to compete it will clearly fail as the USA production is already significantly undercutting their prices. However if the Russians et al follow the OPEC 1979 model of restricting their production in the face of super cheap USA production just how much of the world can the USA supply before we hit the wall and prices have to rise to draw in more production/export? Not only that, how are American consumers going to react when they discover that so much LNG is being exported that domestic prices are double what they are today?

I personally realize we are in a supply glut situation forcing prices in North America very low. However 99% of the population from wealthiest magnate to poorest welfare recipient is totally oblivious to that fact of life. I can clearly remember how things went in 2003-2006 when Natural Gas prices shot up again and again topping out around $11/CCF before the shale fracking "miracle" suddenly dropped the price like a hot rock.

With the USA LNG exporters now starting to move into competition in the world market how quickly with the North American glut being dissipated and where will domestic and world prices settle out?

Even more interesting to me, if domestic prices double or triple what will that do to the competitiveness of Natural Gas vs Coal for power stations? Sure most existing and building plants have long term supply contracts at a set price, but more plants are built every month because demand is still rising as it has been for well over a century now. If Coal is suddenly cost competitive again because of LNG export this might be a good time to invest in coal mining companies that have suffered a lot of losses in the last decade. Their balance sheets are about to get a serious boost.
I should be able to change a diaper, plan an invasion, butcher a hog, design a building, write, balance accounts, build a wall, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, pitch manure, program a computer, cook, fight efficiently, die gallantly. Specialization is for insects.
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Re: A personal overview of the peak oil theory

Unread postby rockdoc123 » Fri 29 Nov 2019, 15:32:10

With the USA LNG exporters now starting to move into competition in the world market how quickly with the North American glut being dissipated and where will domestic and world prices settle out?


I believe there is an EIA study on this topic. As I remember 5 years out some of the natural gas glut is removed and they predict prices to rise to $5/Mcf. Even with the new LNG terminals being commissioned there still isn't enough potential egress for LNG when you consider North America as a whole.
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Re: A personal overview of the peak oil theory

Unread postby Tanada » Fri 29 Nov 2019, 15:50:52

rockdoc123 wrote:
With the USA LNG exporters now starting to move into competition in the world market how quickly with the North American glut being dissipated and where will domestic and world prices settle out?


I believe there is an EIA study on this topic. As I remember 5 years out some of the natural gas glut is removed and they predict prices to rise to $5/Mcf. Even with the new LNG terminals being commissioned there still isn't enough potential egress for LNG when you consider North America as a whole.


Is TO $5 or BY $5? The last four years have been floating between $2 and $4 for the most part so if $5 is the new average that would be a range between $3-$6. However if it is a rise BY $5 that would be a range between $7-$9 like it was from 2005-2009 with spikes up t $11 and lows around $5.50 on occasion.
I should be able to change a diaper, plan an invasion, butcher a hog, design a building, write, balance accounts, build a wall, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, pitch manure, program a computer, cook, fight efficiently, die gallantly. Specialization is for insects.
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Re: A personal overview of the peak oil theory

Unread postby wildbourgman » Fri 29 Nov 2019, 16:23:48

In an earlier post coffeeguyzz commented about companies in the shale plays less Chesapeake being on the cusp of profitability. One thing I would point out about that is they are also cutting drilling rigs and frack spreads. So lets see if this is two ships crossing in the night, are they only close to being profitable when they don't drill and complete? Can they be profitable and maintain production for extended periods of time? Can this boom bust rig count and employee count be tamed while being profitable?

As far as natural gas, I've been a bull on that sector but I don't have much to show for it.

My predictions are that oil prices will take a drastic downward turn during the next recession and this will at least equal the last downturn in the oilfield circa 2016 as for as rig count and layoffs.
I think that Guyana and surrounding countries might be the lone bright spot if this happens. I'm very bullish Guyana and their neighbors from the data I've seen and heard about.
I'm still bullish natural gas long term and I think this could be a very good industry for economic development and jobs for the future of the United States as well as other countries.
Last edited by wildbourgman on Fri 29 Nov 2019, 16:27:38, edited 1 time in total.
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Re: A personal overview of the peak oil theory

Unread postby rockdoc123 » Fri 29 Nov 2019, 16:27:07

Is TO $5 or BY $5? The last four years have been floating between $2 and $4 for the most part so if $5 is the new average that would be a range between $3-$6. However if it is a rise BY $5 that would be a range between $7-$9 like it was from 2005-2009 with spikes up t $11 and lows around $5.50 on occasion.


Won't rise that much as it would now be playing on a global market that is continually getting more supply. I mentioned on a thread here somewhere the study that the company I was at years ago had conducted on the global LNG market. The results of the analysis were that once you bring all of that LNG into the market there is enough to eliminate local seasonal shortages and you approach a global commodity price of around $6/Mcf. Natural prices tend to be regional in the US and Canada but overall since the spike in January 2019 they have stuck in a window below $3/Mcf and above $2/Mcf. $5/Mcf across the board would make a lot more gas economic (i.e. Permian basin) and pretty much any producer in North America would be happy getting $6/Mcf. The high spikes above that we saw a decade ago in the US and more recently every winter in the UK and Europe has to do with spiking demand and limited supply. The limited supply will all disappear with a globally traded market.
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Re: A personal overview of the peak oil theory

Unread postby coffeeguyzz » Fri 29 Nov 2019, 17:32:55

Tanada
You raised several good points.
Addressing just a couple ...
rising prices due to potential global curtailment in production ... the flaring issue alone offers a huge source of readily available natgas. There exist numerous micro LNG processes to capture onsite field gas and liquify it.

EDGE and REV in NEPA are using LNGo and Galileo hardware and doing this right now. (As an aside, near Elba Island capacity is in the works in nearby Wyalusing by New Fortress who is building a 2.1 mtpa plant right in the middle of the woods for well under 1 billion dollars!)

The Barnett shale, located right in Texas, is assessed at 52 Trillion cubic feet recoverable and is presently hardly even drilled due to low pricing.
The Mancos - at 66 Tcf and over 4,000 feet thick in a somewhat small footprint - could potentially be the most profitable gas play of all if they had both pipelines and a market.

Tanada, there is simply SO much gas globally that it is hard to see supply restrictions having long term impact.
Heck, even some African nations are plunging in using FLNGs to capture local offshore resources.

Regarding coal ... you may be aware of the controversy-sparking report - just released - describing China's massive buildout of ~150 Mw capacity of coal plants.
That is the equivalent of 150 huge, 1,000 Mw plants (3 per EACH US state, for context).
Apparently, these new plants are using HELE technology which will capture virtually all emissions sans CO2. (Sorry, Greta, but Ol' Mama Gaia's flora offspring be luvin' it).
HELE technology is behind the furious buildout of coal burners all throughout Asia which has a copious supply, not to mention Australia's output.

Potential vulnerable players in this dizzyingly rapid turn of events, Tanada?

High cost producers.

This includes regulation hobbled coal burning plants in the west, legacy nukes, Australian LNG (eye watering costs for Curtis Island and the magnificent Prelude projects), and - above all, perhaps, for myriad reasons - those regimes who have heretofore relied upon artificially high hydrocarbon pricing to sustain their very existence.

Interesting times be a'comin'.
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Re: A personal overview of the peak oil theory

Unread postby rockdoc123 » Fri 29 Nov 2019, 17:49:04

This includes regulation hobbled coal burning plants in the west, legacy nukes, Australian LNG (eye watering costs for Curtis Island and the magnificent Prelude projects), and - above all, perhaps, for myriad reasons - those regimes who have heretofore relied upon artificially high hydrocarbon pricing to sustain their very existence.


at the same time we have Qatar with its 30 TCF able to ship LNG pretty much anywhere in the world at a breakeven of about $2/MMBTU. Once this all pans out various countries will have their own select markets (eg: US to Trinidad, UK and Western Europe, Algeria to southern Europe, Australia to Japan, Canada to China etc.) but everyone will have to get their prices in line due to competition meaning you aren't going to see those $14/MMbtu spikes again.
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Re: A personal overview of the peak oil theory

Unread postby coffeeguyzz » Fri 29 Nov 2019, 19:41:09

Wildbourg
You have identified a crucial component in all this stuff ... the cost of producing a barrel of earl, a thousand cubic feet/gallons of marshmellow-cooking natgas/propane.
This is the specific area of my interest as operational and economic factors have always piqued my curiousity.

Recent innovations include in-basin sourcing of proppants, widespread - and evolving - use of High Viscosity Friction Reducers (dramatically lowering water costs - both for frac'ing and disposal), cutting edge perf hardware, various monitoring sensors to greatly enhance real time fracturing management, continued improvement in diversion products - both near wellbore and far field - that enable the frac geometry to be more effectively managed (well spacing and percentage of primary recovery come into play here), on and on.

EOR is in the nascent stages of effective implementation.
Contrary to negative prognosis from just a few years back, injected gas is being controlled and monitored in Liberty's Stomping Horse EOR project. Results expected to be announced this coming summer.

Fact is, wild, that the little operators are starting to adopt Big Boy techniques in shallower plays in Ohio, eastern Colorado, West Virginia.
Jury is out if they will succeed, but I would never bet against these tenacious, resourceful individuals.

On a different note ... more in your area of op ...
I was just scanning some of the specs for Transocean's new ultra deep rig.
Beyond impressive.
Dual stacks rated at 20,000 psi ... 3 million pound hookload.
I can only imagine the salaries to be paid to the Pushers and Company men on that rig.
Chevron's suit expects the cost of producing oil in the deep Gulf to be on the order of $16/$20 per. Now THAT is a viable business model that could foreshadow robust Gulf development for decades to come.
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Re: A personal overview of the peak oil theory

Unread postby sparky » Fri 29 Nov 2019, 22:46:04

.
In the first post I , somewhat inaccurately, wrote
" Hubbert considered conventional fields and conventional crude "
well , that was my personal thinking

however if one take "conventional "crude oil as a liquid hydrocarbon under normal temperature and pressure
and the conventional fields as onshore and near on shore , excluding extra heavy and fracking
how much production is there today ?
fracking is around 6 M/b/d , Canadian sands around 3 M/b/d
I don't know how much come from floating platforms but would 50M/b/d be too hight ?

this would leave the "conventional " crude around 40 M/b/d
not too far from a depleting scenario
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Re: A personal overview of the peak oil theory

Unread postby rockdoc123 » Fri 29 Nov 2019, 23:52:36

this runs into the tired old problem of misuse of terms conventional and unconventional.
As has been pointed out here numerous times there is really no unconventional oil. There are unconventional reservoirs and there are oils that are challenged to produce for one reason or another but the term unconventional doesn't describe it.

As an example. The oil that is extracted from the Permian basin tight shales that have permeability in the nanodarcie range is almost identical to Brent crude (based on assay) that is produced from sandstone reservoirs in the UK North Sea that have permeabilities in the hundreds of darcies.
Heavy oil is produced in Colombia and many other places under cold flow without any additional energy being required. It is all about viscosity not API. The viscosity of low API oils in Colombia are around 65 cp compared to the same range of API of oils in parts of the Alberta oil sands where viscosity is 4000 cp or higher.

What some would like to call "unconventional" in the oil sands has been producing since the seventies which means it is hard to imagine that this is somehow something we didn't know how to do. In reality, every reservoir is somewhat different and requires different techniques to produce. There are reservoirs in Egypt, as and example, that flow with no problem most of the year but during the winter months (yes, Egypt has colder months, I know I lived there) it is basically a gel.

When applied to tight reservoirs the term unconventional is really indicating the reservoir, not the hydrocarbon in it. This is generally the source rock for the "conventional" oil that has produced for decades. It is the difference between a reservoir with high permeability that has been the recipient of oil from the source rock versus the source rock itself that has permeabilities that are extremely low and require fracking to release the hydrocarbons.

Sorry for the rant but the confusion seems to continue.
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Re: A personal overview of the peak oil theory

Unread postby AdamB » Sat 30 Nov 2019, 00:56:33

sparky wrote:not too far from a depleting scenario


Sparky, depleting is what oil and gas has been doing since the day production began. That scenario is the same one that has been going on since Drake, so what do you mean, "not to far from"? We're there, and been there since before you and and I were born. Likely to be continuing after you and I are gone.
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
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Re: A personal overview of the peak oil theory

Unread postby sparky » Sat 30 Nov 2019, 01:04:24

.
@ rocdoc , indeed your point about not confusing the product with the geology is valid
however that wasn't what I was driving at

it was more of an inquiry in Hubbert prognosis of the foreseeable oil industry at the time with what he knew at the time
within those parameter , tight oil and tar sands were not included , neither did he seems to foresee the offshore production
( I take the near offshore with rigs on footing to be some kind of "wet feet" onshore )

then it might be of some interest in considering the onshore production of "classic" oil fields
the numbers which I mentioned above would indicate the approximate validity of his prediction
both for the US and by extension for the rest of the world

depletion is very real , it was successfully held in check by new techs and new provinces
this lead to the logical question .....what next ??

is there new technologies and new provinces which can compensate for the current production depletion
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Re: A personal overview of the peak oil theory

Unread postby AdamB » Sat 30 Nov 2019, 01:09:11

sparky wrote:.
is there new technologies and new provinces which can compensate for the current production depletion


There are 300+ billion of other assessed tight oil, 500+ of yet to find, 500+ of global reserve growth, and 500+ of Venezuelan extra heavy. Plus probably another couple hundred of Canadian resources, not yet reserves.

Nothing new required by the looks of it, enough to allow continued production throughout the century in the diminishing demand scenario that folks are expecting. The world is quite a bit different than the old WEEZ ALL GONNA DIE!!! days of the oil doomers.
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
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Re: A personal overview of the peak oil theory

Unread postby ralfy » Sat 30 Nov 2019, 22:41:12

I recall one recent study that argued that renewable energy will save the day, but it referred to a total energy use for the global population that's half of what we need for business as usual.
http://sites.google.com/site/peakoilreports/
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Re: A personal overview of the peak oil theory

Unread postby asg70 » Sun 01 Dec 2019, 10:30:22

ralfy wrote:it referred to a total energy use for the global population that's half of what we need for business as usual.


While your sentence is awkwardly worded I get what you're saying. Population is ultimately the spoiler for any attempt at sustainability. As long as population grows, we'll never get there.

HALL OF SHAME:
-Short welched on a bet and should be shunned.
-Frequent-flyers should not cry crocodile-tears over climate-change.
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