Plato Oil as Hubert Peak in condition of rising oil prices

News Casino Capitalism Recommended Links Energy Bookshelf Oil glut fallacy Hubbert peak theory Lump of energy problem
Media disinformation about Plato oil and Hubert peak Great condensate con  Energy returned on energy invested (ERoEI) A note of ERoEI decline Paper oil, Minsky finacial instability hypothesis and casino capitalism Secular Stagnation Energy disinformation agency and friends
Russia oil production Deflation of the USA shale oil bubble MSM propagated myth about Saudis defending this market share Iran return to western oil markets fearmongering Big Fukushima Debate  The fiasco of suburbia  
Energy Geopolitics USA-Russia Gas War Bakken Reality Check Junk bond bubble on Nov 4   US military energy consumption
All wars are bankers wars Fiat money, gold and petrodollar How Oil Exporters Reach Financial Collapse   Financial Quotes Financial Humor Etc

Plato Oil is the moment in time when, on a global scale, the maximum rate of oil production (per year) is reached. The moment after which oil production, by nature, must decline at the same price level and the same volume can only be achieved only at higher price level. Since Earth is a closed system, next to this production event, there must be an equal demand event: Peak Oil Consumption. As higher price level tent to put economy in recession Peak oil consumption is achievable only on relative low (say below $100 per ballel price levels).  

Peak can be achieved at different time for each country on the earth that produces oil. Some some of which are already   beyond peak oil production That leads to the assumption the world as a whole soon reaches if not reached the plato oil production and from this point absolute number can only slowly decline. On consumption side while some countries like China and Arab countries (as well as other countries with rapidly growing population) still experience significant growth in oil consumption, some countries are already well beyond Peak Oil Consumption by now. That's probably true for several European countries with very low population growth.

See also Hubbert peak theory

April 27, 2016 | OilPrice.com

An extensive new scientific analysis published in Wiley Interdisciplinary Reviews: Energy & Environment says that proved conventional oil reserves as detailed in industry sources are likely "overstated" by half.

According to standard sources like the Oil & Gas Journal, BP's Annual Statistical Review of World Energy, and the US Energy Information Administration, the world contains 1.7 trillion barrels of proved conventional reserves.

However, according to the new study by Professor Michael Jefferson of the ESCP Europe Business School, a former chief economist at oil major Royal Dutch/Shell Group, this official figure which has helped justify massive investments in new exploration and development, is almost double the real size of world reserves.

Wiley Interdisciplinary Reviews (WIRES) is a series of high-quality peer-reviewed publications which runs authoritative reviews of the literature across relevant academic disciplines.

According to Professor Michael Jefferson, who spent nearly 20 years at Shell in various senior roles from head of planning in Europe to director of oil supply and trading, "the five major Middle East oil exporters altered the basis of their definition of 'proved' conventional oil reserves from a 90 percent probability down to a 50 percent probability from 1984. The result has been an apparent (but not real) increase in their 'proved' conventional oil reserves of some 435 billion barrels."

Global reserves have been further inflated, he wrote in his study, by adding reserve figures from Venezuelan heavy oil and Canadian tar sands – despite the fact that they are "more difficult and costly to extract" and generally of "poorer quality" than conventional oil. This has brought up global reserve estimates by a further 440 billion barrels.

Jefferson's conclusion is stark: "Put bluntly, the standard claim that the world has proved conventional oil reserves of nearly 1.7 trillion barrels is overstated by about 875 billion barrels. Thus, despite the fall in crude oil prices from a new peak in June, 2014, after that of July, 2008, the 'peak oil' issue remains with us."

The study referred to here is: Overview A global energy assessment,

See also: Where did all the oil go? The peak is back

 


Top Visited
Switchboard
Latest
Past week
Past month

NEWS CONTENTS

Old News ;-)

[Dec 13, 2018] Multipolar World Order In The Making Qatar Dumps OPEC

Dec 13, 2018 | www.zerohedge.com

Besides that, Saudi Arabia requires the organization to maintain a high level of oil production due to pressure coming from Washington to achieve a very low cost per barrel of oil. The US energy strategy targets Iranian and Russian revenue from oil exports, but it also aims to give the US a speedy economic boost. Trump often talks about the price of oil falling as his personal victory. The US imports about 10 million barrels of oil a day, which is why Trump wrongly believes that a decrease in the cost per barrel could favor a boost to the US economy. The economic reality shows a strong correlation between the price of oil and the financial growth of a country, with low prices of crude oil often synonymous of a slowing down in the economy.

It must be remembered that to keep oil prices high, OPEC countries are required to maintain a high rate of production, doubling the damage to themselves. Firstly, they take less income than expected and, secondly, they deplete their oil reserves to favor the strategy imposed by Saudi Arabia on OPEC to please the White House. It is clearly a strategy that for a country like Qatar (and perhaps Venezuela and Iran in the near future) makes little sense, given the diplomatic and commercial rupture with Riyadh stemming from tensions between the Gulf countries.

In contrast, the OPEC+ organization, which also includes other countries like the Russian Federation, Mexico and Kazakhstan, seems to now to determine oil and its cost per barrel. At the moment, OPEC and Russia have agreed to cut production by 1.2 million barrels per day, contradicting Trump's desire for high oil output.

With this last choice Qatar sends a clear signal to the region and to traditional allies, moving to the side of OPEC+ and bringing its interests closer in line with those of the Russian Federation and its all-encompassing oil and gas strategy, two sectors in which Qatar and Russia dominate market share.

In addition, Russia and Qatar's global strategy also brings together and includes partners like Turkey (a future energy hub connecting east and west as well as north and south) and Venezuela. In this sense, the meeting between Maduro and Erdogan seems to be a prelude to further reorganization of OPEC and its members.


LetThemEatRand , 9 hours ago link

It's crazy to think of all of the natural gas burned off by the world's oil producers. I think of those oil platforms that have a huge burning flame on top. This is the kind of **** that reminds us that the people who control the world care not for the people who live here. Can't make a buck from it? ******* burn it.

The Dreadnought , 8 hours ago link

Right fuckin' A

Koba the Dread , 7 hours ago link

Consider though that those oil producers are only in it for the money; it's not an avocation with them. I imagine if there was a way to salvage the natural gas, it would be done. Mo Muny would dictate it.

Ms No , 9 hours ago link

This could be the beggining of a level 5 popcorn event. It started a year or two ago and when I saw it everybody laughed. Well look at it now. Saudi wants to defect. They have had nothing but problems with the House of Sodomy for quite some time now.

I wonder what Mossad and the CIA are planning.

serotonindumptruck , 8 hours ago link

A False Flag operation to block the Strait of Hormuz?

Brazen Heist II , 8 hours ago link

They are planning on removing Salman junior if he doesn't stop embarrassing their sorry asses

Ms No , 9 hours ago link

If this leads to war in the Persian Gulf Edgar Cayce called it. The empire will burn that place down before losing it. They may fail but something is going to go down.

Are the Sauds still full heartedly pushing the Zionist mission in Yemen?

"...submissive allies as Saudi Arabia"

Is that what they call it now?

jmarioneaux , 9 hours ago link

I feel something big is coming with Iran.

PeaceForWorld , 6 hours ago link

As an Iranian-American I have been waiting for something big to happen with Iran. I am really tired of waiting. I hope that Iran will grow some balls and fight the coalition. I know that there are 80 million lives in danger, including my mom going back to Iran for a short term. But this has been like a long torture and unending nightmare.

TeraByte , 9 hours ago link

There is no multipolarity yet, but a bipolar hype of the world dominance run by US and its vassals. An awakening will be harsh, when these realize their emperor goes naked.

[Dec 08, 2018] Iran nuclear deal Trump s oil gamble comes at just the wrong time by Ambrose Evans-Pritchard

This article is from May 2018 but it read as if it was written yesterday.
Notable quotes:
"... He estimates that sanctions will cut Iran's exports by up to 500,000 barrels a day later this year. "It could well be much more in 2019," he said. ..."
Dec 08, 2018 | smh.com.au

"U.S. political pressure is clearly a dominant factor at this OPEC meeting, limiting the scope of Saudi actions to rebalance the market," said Gary Ross, chief executive of Black Gold Investors and a veteran OPEC watcher. channelnewsasia.com 10 May 2018

Donald Trump could hardly have chosen a more treacherous economic moment to tear up the "decaying and rotten deal" with Iran. The world crude market is already tightening very fast. Joint production curbs by Opec and Russia have cleared the four-year glut of oil. There is no longer an ample safety buffer against supply shocks. The geopolitical "premium" on prices has returned. Tensions run high:

The Maduro regime in Venezuela is entering its last agonies, and the country's oil industry is imploding. North America has run into an infrastructure crunch. There are not yet enough pipelines to keep pace with shale oil output from the Permian Basin of west Texas, and it is much the same story in the Alberta tar sands. The prospect of losing several hundred thousand barrels a day of Iranian oil exports would not have mattered much a year ago. It certainly matters now.

World leaders respond to President Trump's move to reimpose economic sanctions on Iran while pulling the United States out of the international agreement aimed at stopping Tehran from obtaining a nuclear bomb.

Oil price shock is looming

It is the confluence of simmering political crises in so many places that has driven Brent crude to $US77 a barrel, up 60 per cent since last June. "We believe an oil price shock is looming as early as 2019 as several elements combine to form a 'perfect storm'," said Westbeck Capital. It predicts $US100 crude in short order, with $US150 coming into sight as the world faces a crunch all too reminiscent of July 2008. The fund warns that the investment collapse since 2014 is about to deliver its sting. Declining fields are not being replaced. Output from conventional projects has until now been rising but will fall precipitously by 1.5 million barrels a day next year. By then global spare capacity will be down to a lethally thin 1 per cent. US shale cannot plug the gap. "The mantra after 2014 of lower for longer has lulled oil analysts into a torpor," Westbeck said. Needless to say, a spike to $US150 would precipitate a global recession.

The US might hope to weather such a traumatic episode now that it is the world's biggest oil producer but it would be fatal for oil-starved Europe. Such a scenario would test the unreformed euro to destruction. Britain, France and Germany may earnestly wish to preserve the Iran deal but they can do little against US financial hegemony and the ferocity of "secondary sanctions". The US measures cover shipping, insurance, and the gamut of financial and logistical support for Iran's oil industry.
In the end, there are infinitely greater matters at stake than barrels of oil.
Any European or Asian company that falls foul of this will be shut out of the US capital markets and dollarised international payments system. The EU has talked of beefing up the 1996 Blocking Regulation used to shield European companies from extraterritorial US sanctions against Libya. But this is just bluster. No European company with operations in the US would dare flout the US Treasury. "A choice for corporate Europe between the US and Iran is unequivocally going to fall the way of the US," said Richard Robinson from Ashburton Global Energy Fund.

Rise in oil prices turns malign

He said Europe will have to slash its imports from Iran by 60 per cent because groups such as ENI or Total will refuse to ship the oil, whatever the strategic policy of the EU purports to be. This dooms the nuclear deal (JCPOA) since Iran will not abide by the terms if the EU cannot deliver on its rhetoric, let alone come through with the $US200 billion ($251 billion) of foreign investment coveted by Tehran.

David Fyfe from oil traders Gunvor said we do not yet have enough details from Washington to judge how quickly companies will have to act. He estimates that sanctions will cut Iran's exports by up to 500,000 barrels a day later this year. "It could well be much more in 2019," he said.

Late last year it was still possible to view rising oil prices as benign, the result of a booming world economy. This year it has turned malign. Global growth has rolled over. The broad IHS index of raw materials has been falling since February.

Europe's catch-up spurt fizzled out in the first quarter. Japan's GDP probably contracted. The higher oil price is itself part of the cause.

$US500 billion extra 'tax'

Even at current levels, it acts as an extra $US500 billion "tax" this year for consumers in Asia, Europe and America. Not all of the windfall enjoyed by the petro-powers is recycled quickly back into global spending.

One cause of the slowdown is the credit squeeze in China, which is ineluctably feeding through into the real economy with a delay. Proxy indicators suggest that true growth has fallen below 5 per cent.

My own view is that monetary tightening by the US Federal Reserve - and declining stimulus from the European Central Bank - is doing more damage than widely presumed.

Higher US interest rates are pushing up borrowing costs for much of the world. Three-month dollar Libor rates used to price $US9 trillion of global contracts have risen 76 basis points since January.

The Fed is shrinking its balance sheet, draining international dollar liquidity at a quickening pace. If the Fed is not careful, it will tip the US economy into a stall.

Ominously, we are seeing the first signs of a US dollar rally, tantamount to a "short squeeze" on Turkey, Argentina and Indonesia, among other emerging market debtors.

Toxic combination

The combination of a slowing economy and an oil supply shock is toxic, even if the "energy intensity" of world GDP is now half the level of 30 years ago.

Opec and Russia can of course lift their output cap at any time, though that alone will not restore the full 1.8m barrels a day of original curbs. Venezuela is now in unstoppable free-fall.

The Saudis have pledged to uphold the "stability of oil markets" and to help "mitigate the impact of any potential supply shortages". Kuwait and Abu Dhabi could add a little. Yet cyclical forces may be moving even beyond their control.

In the end, there are infinitely greater matters at stake than barrels of oil. Trump is throwing US power behind Saudi Arabia in the epic Sunni-Shia battle for dominance over the Middle East, and behind Israel in its separate battle with Iran.

What can go wrong?

Both conflicts are on a hair trigger. Israel attacked an Iranian air base in Syria last month and killed seven revolutionary guards. This is a dangerous escalation from proxy conflict to direct hostilities. The JCPOA nuclear deal may be all that restrains the Iranian side from lashing out.

Saudi Arabia's impetuous young leader Mohammad bin Salman is itching to settle the score of all scores with Iran, the Iranian revolutionary guard are in turn itching to launch a one-year dash for nuclear weapons, and Trump is itching for regime change. What can go wrong?

The Daily Telegraph, London

[Nov 29, 2018] If The Saudi s Oil No Longer Matters Why Is Trump Still Supporting Them

Notable quotes:
"... Washington Post ..."
"... Wall Street journal ..."
"... Everyone knows it's the US presence in the Middle East which creates terrorists, both as proxies of and in resistance to the US imperial presence (and often one and then the other). So reading Orwellian language, Pompeo is saying the US wants to maximize Islamic terrorism in order to provide a pretext for creeping totalitarianism at home and abroad. ..."
"... The real reason is to maintain the petrodollar system, but there seems to be a conspiracy of silence never to mention it among both supporters and opponents of Trump. ..."
"... everyone knows why the usa is in the middle east.. to support the war industry, which is heavily tied to the financial industry.. up is down and down is up.. that is why the usa is great friends with ksa and israel and a sworn enemy of iran... what they don't say is they are a sworn enemy of humanity and the thought that the world can continue with their ongoing madness... ..."
"... The importance of oil is not to supply US markets its to deny it to enemies and control oil prices in order to feed international finance/IMF ..."
Nov 29, 2018 | www.moonofalabama.org

Russ , Nov 28, 2018 3:28:31 PM | link

Why are U.S. troops in the Middle East?

In an interview with the Washington Post U.S. President Donald Trump gives an answer :

Trump also floated the idea of removing U.S. troops from the Middle East, citing the lower price of oil as a reason to withdraw.

"Now, are we going to stay in that part of the world? One reason to is Israel ," Trump said. "Oil is becoming less and less of a reason because we're producing more oil now than we've ever produced. So, you know, all of a sudden it gets to a point where you don't have to stay there."

It is only Israel, it is no longer the oil, says Trump. But the nuclear armed Israel does not need U.S. troops for its protection.

And if it is no longer the oil, why is the U.S. defending the Saudis?

Trump's Secretary of State Mike Pompeo disagrees with his boss. In a Wall Street journal op-ed today he claims that The U.S.-Saudi Partnership Is Vital because it includes much more then oil:

[D]egrading U.S.-Saudi ties would be a grave mistake for the national security of the U.S. and its allies.

The kingdom is a powerful force for stability in the Middle East. Saudi Arabia is working to secure Iraq's fragile democracy and keep Baghdad tethered to the West's interests, not Tehran's. Riyadh is helping manage the flood of refugees fleeing Syria's civil war by working with host countries, cooperating closely with Egypt, and establishing stronger ties with Israel. Saudi Arabia has also contributed millions of dollars to the U.S.-led effort to fight Islamic State and other terrorist organizations. Saudi oil production and economic stability are keys to regional prosperity and global energy security.

Where and when please has Saudi Arabia "managed the flood of refugees fleeing Syria's civil war". Was that when it emptied its jails of violent criminals and sent them to wage jihad against the Syrian people? That indeed 'managed' to push millions to flee from their homes.

Saudi Arabia might be many things but "a powerful force for stability" it is not. Just ask 18 million Yemenis who, after years of Saudi bombardment, are near to death for lack of food .

Pompeo's work for the Saudi dictator continued today with a Senate briefing on Yemen. The Senators will soon vote on a resolution to end the U.S. support for the war. In his prepared remarks Pompeo wrote:

The suffering in Yemen grieves me, but if the United States of America was not involved in Yemen, it would be a hell of a lot worse.

What could be worse than a famine that threatens two third of the population?

If the U.S. and Britain would not support the Saudis and Emirates the war would end within a day or two. The Saudi and UAE planes are maintained by U.S. and British specialists. The Saudis still seek 102 more U.S. military personal to take care of their planes. It would be easy for the U.S. to stop such recruiting of its veterans.

It is the U.S. that holds up an already watered down UN Security Council resolution that calls for a ceasefire in Yemen:

The reason for the delay continues to be a White House worry about angering Saudi Arabia, which strongly opposes the resolution, multiple sources say. CNN reported earlier this month that the Saudi crown prince, Mohammed bin Salman, "threw a fit" when presented with an early draft of the document, leading to a delay and further discussions among Western allies on the matter.

We recently wrote that pandering to the Saudis and keeping Muhammad bin Salman in place will hurt Trump's Middle East policies . The piece noted that Trump asked the Saudis for many things, but found that:

There is really nothing in Trump's list on which the Saudis consistently followed through. His alliance with MbS brought him no gain and a lot of trouble.

Trump protected MbS from the consequences of murdering Jamal Khashoggi. He hoped to gain leverage with that. But that is not how MbS sees it. He now knows that Trump will not confront him no matter what he does. If MbS "threws a fit" over a UN Security Council resolution, the U.S. will drop it. When he launches his next 'adventure', the U.S. will again cover his back. Is this the way a super power is supposed to handle a client state?

If Trump's instincts really tell him that U.S. troops should be removed from the Middle East and Afghanistan, something I doubt, he should follow them. Support for the Saudi war on Yemen will not help to achieve that. Pandering to MbS is not MAGA.

Posted by b on November 28, 2018 at 03:12 PM | Permalink

Comments Pompeo: "Saudi Arabia has also contributed millions of dollars to the U.S.-led effort to fight Islamic State and other terrorist organizations."

Everyone knows it's the US presence in the Middle East which creates terrorists, both as proxies of and in resistance to the US imperial presence (and often one and then the other). So reading Orwellian language, Pompeo is saying the US wants to maximize Islamic terrorism in order to provide a pretext for creeping totalitarianism at home and abroad.


lysias , Nov 28, 2018 3:35:15 PM | link

The real reason is to maintain the petrodollar system, but there seems to be a conspiracy of silence never to mention it among both supporters and opponents of Trump.
Ross , Nov 28, 2018 3:41:42 PM | link
There is really nothing in Trump's list on which the Saudis consistently followed through. His alliance with MbS brought him no gain and a lot of trouble.

He did get to fondle the orb - although fuck knows what weirdness was really going on there.

james , Nov 28, 2018 3:47:06 PM | link
thanks b... pompeo is a very bad liar... in fact - everything he says is about exactly the opposite, but bottom line is he is a bad liar as he is thoroughly unconvincing..

everyone knows why the usa is in the middle east.. to support the war industry, which is heavily tied to the financial industry.. up is down and down is up.. that is why the usa is great friends with ksa and israel and a sworn enemy of iran... what they don't say is they are a sworn enemy of humanity and the thought that the world can continue with their ongoing madness...

oh, but don't forget to vote, LOLOL.... no wonder so many are strung out on drugs, and the pharma industry... opening up to the msm is opening oneself up to the world george orwell described many years ago...

uncle tungsten , Nov 28, 2018 3:49:24 PM | link
Take a wafer or two of silicon and just add water. The oil obsession has been eclipsed and within 20 years will be in absolute disarray. The warmongers will invent new excuses.

https://www.youtube.com/watch?v=_Lk3elu3zf4

karlof1 , Nov 28, 2018 4:33:18 PM | link
A hypothetical: No extraordinary amounts of hydrocarbons exist under Southwest Asian ground; just an essential amount for domestic consumption; in that case, would Zionistan exist where it's currently located and would either Saudi Arabia, Iraq and/or Iran have any significance aside from being consumers of Outlaw US Empire goods? Would the Balfour Declaration and the Sykes/Picot Secret Treaty have been made? If the Orinoco Oil Belt didn't exist, would Venezuela's government be continually targeted for Imperial control? If there was no Brazilian offshore oil, would the Regime Change effort have been made there? Here the hypotheticals end and a few basic yet important questions follow.

Previous to the 20th Century, why were Hawaii and Samoa wrested from their native residents and annexed to Empire? In what way did the lowly family farmers spread across 19th Century United States further the growth of its Empire and contribute to the above named annexations? What was the unspoken message sent to US elites contained within Frederic Jackson Turner's 1893 Frontier Thesis ? Why is the dominant language of North America English, not French or Spanish?

None of these are rhetorical. All second paragraph questions I asked of my history students. And all have a bearing on b's fundamental question.

A. Person , Nov 28, 2018 5:20:13 PM | link
b says, "And it its no longer the oil, why is the U.S. defending the Saudis?"

The US has a vital interest in protecting the narrative of 9/11. The Saudis supplied the patsies. Mossad and dual-citizen neocons were the architects of the event. Hence, the US must avoid a nasty divorce from the Saudis. The Saudis are in a perfect blackmailing position.

Tobin Paz , Nov 28, 2018 5:50:19 PM | link
Maybe Trump is unaware, but the fracking boom is a bubble made possible by near zero interest rates:

U.S. SHALE OIL INDUSTRY: Catastrophic Failure Ahead

Of course, most Americans have no idea that the U.S. Shale Oil Industry is nothing more than a Ponzi Scheme because of the mainstream media's inability to report FACT from FICTION. However, they don't deserve all of the blame as the shale energy industry has done an excellent job hiding the financial distress from the public and investors by the use of highly technical jargon and BS.

Oil is the untold story of modern history.

NOBTS , Nov 28, 2018 6:08:53 PM | link
S.A. is a thinly disguised US military base, hence the "strategic importance" and the relevance of the new Viceroy's previous experience as a Four Star General. It's doubtful that any of the skilled personnel in the SA Air Force are other than former US/Nato. A few princes might fancy themselves to be daring fighter pilots. In case of a Anglo-Zio war with Iran SA would be the most forward US aircraft carrier. The Empire is sustained by its presumed military might and prizes nothing more than its strategically situated bases. Saud would like to capture Yemen's oil fields, but the primary purpose of the air war is probably training. That of course is more despicably cynical than mere conquest and genocide.
Pft , Nov 28, 2018 6:08:56 PM | link
Trump is the ultimate deceiver/liar. Great actor reading from a script. The heel in the Fake wrestling otherwise known as US politics. It almost sounds as if he is calling for an end of anymore significant price drops now that he has got Powell on board to limit interest rate hikes. After all if you are the worlds biggest producer you dont want prices too low. These markets are all manipulated. I cant imagine how much insider trading is going on. If you look at the oil prices, they started dropping in October with Iran sanctions looming (before it was announced irans shipments to its 8 biggest buyers would be exempt) and at the height of the Khashoggi event where sanctions were threatened and Saudi was making threats of their own. In a real free market prices increase amidst supply uncertainty.

Regardless of what he says he wants and gets now, he is already planning a reversal. Thats how the big boys win, they know whats coming and when the con the smaller fish to swim one way they are lined up with a big mouth wide open. Controlled chaos and confusion. For every winner there must be a loser and the losers assets/money are food for the Gods of Money and War

As for pulling out of the Middle East Bibi must have had a good laugh. My money is on the US to be in Yemen to protect them from the Saudis (humanitarian) and Iranian backed Houthis while in reality we will be there to secure the enormous oil fields in the North. Perhaps this was what the Khashoggi trap was all about. The importance of oil is not to supply US markets its to deny it to enemies and control oil prices in order to feed international finance/IMF

psychohistorian , Nov 28, 2018 6:35:06 PM | link
@ Pft who wrote: "The importance of oil is not to supply US markets its to deny it to enemies and control oil prices in order to feed international finance/IMF"

BINGO!!! Those that control finance control most/all of everything else.

Augustin L , Nov 28, 2018 6:37:43 PM | link

Saudi Arabia literally owns close to 8% of the United States economy through various financial instruments. Their public investment funds and dark pools own large chunks from various strategic firms resting at the apex of western power such as Blackstone. Trump and Pompeo would be stupid to cut off their nose to spite their face... It's all about the petrodollar, uncle sam will ride and die with saudi barbaria. If push comes to shove and the saudis decide to untether themselves from the Empire, their sand kingdom will probably be partitioned.
Pnyx , Nov 28, 2018 7:02:31 PM | link
The oil certainly still plays an important role, the u.s. cannot maintain the current frack oil output for long. For Tronald's term in office it will suffice, but hardly longer. (The frack gas supplies are much more substantial.)

Personal interests certainly also play a role, and finally one should not make u.s. foreign policy more rational than it is. Much is also done because of traditions and personal convictions. Often they got it completely wrong and the result was a complete failure.

Likklemore , Nov 28, 2018 7:07:15 PM | link
Let us watch what Trump does with this or if the resolution makes it to daylight:

Senate advances Yemen resolution in rebuke to Trump

The Senate issued a sharp rebuke Wednesday to President Trump, easily advancing a resolution that would end U.S. military support for the Saudi-led campaign in Yemen's civil war despite a White House effort to quash the bill.

The administration launched an eleventh-hour lobbying frenzy to try to head off momentum for the resolution, dispatching Defense Secretary James Mattis and Secretary of State Mike Pompeo to Capitol Hill in the morning and issuing a veto threat less than an hour before the vote started.

But lawmakers advanced the resolution, 63-37, even as the administration vowed to stand by Saudi Arabia following outcry over the killing of journalist Jamal Khashoggi.

"There's been a lot of rhetoric that's come from the White House and from the State Department on this issue," said Sen. Bob Corker (R-Tenn.), chairman of the Foreign Relations Committee. "The rhetoric that I've heard and the broadcasts that we've made around the world as to who we are have been way out of balance as it relates to American interests and American values." [/]
LINK TheHill

But Mattis says there is no smoking gun to tie the Clown Thug-Prince to Kashoggi's killing.
TheHill

And Lyias @ 2 is a bingo. Always follow the fiat.

Soon, without any announcements, if they wish to maintain selling oil to China, KSA will follow Qatar. It will be priced in Yuan...especially given the escalating U.S. trade war with China.

2019 holds interesting times. Order a truckload of popcorn.

Midwest For Truth , Nov 28, 2018 7:29:46 PM | link
You would have to have your head buried in the sand to not see that the Saudi "Kings" are crypto-Zionistas. Carl Sagan once said, "One of the saddest lessons of history is this: If we've been bamboozled long enough, we tend to reject any evidence of the bamboozle. We're no longer interested in finding out the truth. The bamboozle has captured us. It's simply too painful to acknowledge, even to ourselves, that we've been taken. Once you give a charlatan power over you, you almost never get it back." And Mark Twain also wrote "It's easier to fool people than to convince them that they have been fooled."
karlof1 , Nov 28, 2018 7:59:31 PM | link
Gee, not one taker amongst all these intelligent folk. From last to first: 1588's Protestant Wind allowed Elizabeth and her cronies to literally keep their heads as Nature helped Drake defeat the Spanish Armada; otherwise, there would be no British Empire root to the USA, thus no USA and no future Outlaw US Empire, the British Isles becoming a Hapsburg Imperial Property, and a completely different historical lineage, perhaps sans World Wars and atomic weapons.

Turner's message was with the Frontier closed the "safety valve" of continental expansion defusing political tensions based on economic inequalities had ceased to be of benefit and future policy would need to deal with that issue thus removing the Fear Factor from the natives to immigrants, and from wide-open spaces to the inner cities. Whipsawing business cycles driving urban labor's unrest, populist People's Party politics, and McKinley's 1901 assassination further drove his points home.

Nationwide, family farmers demanded Federal government help to create additional markets for their produce to generate price inflation so they could remain solvent and keep their homesteads, which translated into the need to conduct international commerce via the seas which required coaling stations--Hawaii and Samoa, amongst others--and a Blue Water Navy that eventually led to Alfred T. Mahan's doctrine of Imperial Control of the Oceans still in use today.

As with Gengis Khan's death in 1227 that stopped the Mongol expansion to the English Channel that changed the course of European history, and what was seen as the Protestant Wind being Divine Intervention, global history has several similar inflection points turning the tide from one path to another. We don't know yet if the Outlaw US Empire's reliance on Saudi is such, but we can see it turning from being a great positive to an equally potential great negative for the Empire--humanity as a whole, IMO, will benefit greatly from an implosion and the relationship becoming a Great Negative helping to strip what remains of the Emperor's Clothing from his torso so that nations and their citizens can deter the oncoming financialized economic suicide caused by massive debt and climate chaos.

Vico's circle is about to intersect with Hegel's dialectic and generate a new temporal phase in human history. Although many will find it hard to tell, the current direction points to a difficult change to a more positive course for humanity as a whole, but it's also possible that disaster could strike with humanity's total or near extinction being the outcome--good arguments can be made for either outcome, which ought to unsettle everyone: Yes, the times are that tenuous. But then, I'm merely a lonely historian aware of a great many things, including the pitfall inherent in trying to predict future events.

robjira , Nov 28, 2018 8:08:58 PM | link
"The suffering in Yemen grieves me, but if the United States of America was not involved in Yemen, it would be a hell of a lot worse." And I'll bet Pompeo said that with a straight face, too. lmfao

And as for "...keep[ing] Baghdad tethered to the West's interests and not Tehran's," I'm guessing the "secretary" would have us all agree "yeah, fk Iraqi sovereignty anyway. Besides, it's not like they share a border with Iran, or anything. Oh, wait..."

p.s. Many thanks for all you have contributed to collective knowledge, b; I will be contacting you about making a contribution by snail mail (I hate PayPal, too).

imo , Nov 28, 2018 8:25:35 PM | link
"... a powerful force for stability in the Middle East."

"Instability" more like it.

Paid for military coup in Egypt. Funding anti-Syrian terrorists. Ongoing tensions with Iran. Zip-all for the Palestinians. WTF in Yemen. Wahhabi crazy sh_t (via Mosque building) across Asia. Head and hand chopping Friday specials the norm -- especially of their South-Asian slave classes. Ok, so females can now drive cars -- woohoo. A family run business venture manipulating the global oil trade and supporting US-petro-$ hegemony recently out of goat herding and each new generation 'initiated' in some Houston secret society toe-touching shower and soap ceremonies before placement in the ruling hierarchy back home. But enough; they being Semites makes it an offence to criticize in some 'free' democratic world domains.

karlof1 , Nov 28, 2018 8:52:24 PM | link
Likklemore @14--

Instead of the "rebuke to Trump" meme circulating around, I found this statement to be more accurate:

"'Cutting off military aid to Saudi Arabia is the right choice for Yemen, the right choice for our national security, and the right choice for upholding the Constitution,' Paul Kawika Martin, senior director for policy and political affairs at Peace Action, declared in a statement. ' Three years ago, the notion of Congress voting to cut off military support for Saudi Arabia would have been politically laughable .'" [My Emphasis]

In other words, advancing Peace with Obama as POTUS wasn't going to happen, so this vote ought to be seen as an attack on Obama's legacy as it's his policy that's being reconsidered and hopefully discontinued.

Peter AU 1 , Nov 28, 2018 9:44:50 PM | link
Trump, Israel and the Sawdi's. US no longer needs middle east oil for strategic supply. Trump is doing away with the petro-dollar as that scam has run its course and maintenance is higher than returns. Saudi and other middle east oil is required for global energy dominance.

Energy dominance, lebensraum for Israel and destroying the current Iran are all objectives that fit into one neat package.

Those plans look to be coming apart at the moment so it remains to be seen how fanatical Trump is on Israel and MAGA. MAGA as US was at the collapse of the Soviet Union.

Pft , Nov 29, 2018 1:15:05 AM | link
As for pulling out of the Middle East Bibi must have had a good laugh. Remember when he said he wanted out of Syria. My money is on the US to be in Yemen before too long to protect them from the Saudis (humanitarian) and Iranian backed Houthis, while in reality it will be to secure the enormous oil fields in the North. Perhaps this was what the Khashoggi trap was all about.

The importance of oil is not to supply US markets its to deny it to enemies and control oil prices in order to feed international finance/IMF .

james , Nov 29, 2018 1:57:51 AM | link
@16 karlof1.. thanks for a broader historical perspective which you are able to bring to moa.. i enjoy reading your comments.. i don't have answers to ALL your questions earlier.. i have answers for some of them... you want to make it easy on us uneducated folks and give us less questions, like b did in his post here, lol.... cheers james
b , Nov 29, 2018 2:33:04 AM | link
This came faster than assumed:

Yemen war: US Senate advances measure to end support for Saudi forces

The US Senate has advanced a measure to withdraw American support for a Saudi-led coalition fighting in Yemen.

In a blow to President Donald Trump, senators voted 63-37 to take forward a motion on ending US support.

Secretary of State Mike Pompeo and Defence Secretary Jim Mattis had urged Senators not to back the motion, saying it would worsen the situation in Yemen.

...

The vote in the Senate means further debate on US support for Saudi Arabia is expected next week.

However, correspondents say that even if the Senate ultimately passes the bipartisan resolution it has little chance of being approved by the outgoing House of Representatives.

That is quite a slap for the Trump administration. It will have little consequences in the short term (or for Yemen) but it sets a new direction in foreign polices towards the Saudis.
jim slim , Nov 29, 2018 4:04:44 AM | link
Pompeo is a Deep State Israel-firster with a nasty neocon agenda. It is to Trump's disgrace that he chose Pompeo and the abominable Bolton. At least Trump admits the ME invasions are really about Israel.
mina , Nov 29, 2018 4:14:20 AM | link
duterte...idris deby...so many democrats visiting Netanyahu lately!!
Rhisiart Gwilym , Nov 29, 2018 4:49:48 AM | link
@Uncle Tungsten, 5:

Take a look at some of the - informed - comments below the vid to which you linked. Then think again about an 'all electric civilisation within a few years'. Yes, and Father Christmas will be providing everything that everyone in the world needs for a NAmerican/European standard of living within the same time frame. Er - not.

'Renewables' are not going to save hitech industrial 'civilisation' from The Long Descent/Catabolic Collapse (qv). Apart from any other consideration - and there are some other equally intractable ones - there is no - repeat NO - 'renewable' energy system which doesn't rely crucially on energy subsidies from the fossil-hydrocarbon fuels, both to build it and to maintain it. They're not stand-alone, self-bootstrapping technologies. Nor is there any realistic prospect that they ever will be. Fully renewable-power hitech industrial civilisation is a non-deliverable mirage which is just drawing us ever further into the desert of irreversible peak-energy/peak-everythig-else.

Rancid , Nov 29, 2018 5:58:26 AM | link
@16 karlof1. I also find your historical references very interesting. We do indeed seem to be at a very low point in the material cycle, it will reverse in due course as is its want, hopefully we will live to see a positive change in humanity.
Russ , Nov 29, 2018 7:24:10 AM | link
John 28

For example we know Tesla didn't succeed in splitting the planet in half, the way techno-psychotics fantasize. As for that silly link, how typical of techno-wingnuts to respond to prosaic physical facts with fantasies. Anything to prop up faith in the technocratic-fundamentalist religion. Meanwhile "electrical civilization" has always meant and will always mean fracking and coal, until the whole fossil-fueled extreme energy nightmare is over.

Given the proven fact that the extreme energy civilization has done nothing but embark upon a campaign to completely destroy humanity and the Earth (like in your Tesla fantasy), why would a non-psychopath want to prop it up anyway?

bob sykes , Nov 29, 2018 7:37:37 AM | link
It is still the oil, even for the US. The Persian Gulf supplies 20% of world consumption, and Western Europe gets 40% of its oil from OPEC countries, most of that from the Gulf. Even the US still imports 10% of its total consumption.
y , Nov 29, 2018 7:47:36 AM | link
Peter AU 1 | Nov 28, 2018 9:44:50 PM | 20
b | Nov 29, 2018 2:33:04 AM | 23
USD as a world reserve currency could be one factor between the important ones. With non US support the saud land could crash under neighbours pressure, that caos may be not welcomed.
Guerrero , Nov 29, 2018 10:16:10 AM | link
Posted by: karlof1 | Nov 28, 2018 7:59:31 PM | 16

"Vico's circle is about to intersect with Hegel's dialectic and generate a new temporal phase in human history. Although many will find it hard to tell, the current direction points to a difficult change to a more positive course for humanity as a whole..."

Yes!

Humble people around where I live have mentioned that time is speeding up its velocity; there seems to be a spiritual (evolutionary)/physical interface effect or something...

Tolstoy, in the long theory-of-history exposition at the end of War and Peace, challenges 'the great man' of History idea, spreading in his time, at the dawning of the so-called: European Romantic period of Beethoven, Goerte and Wagner, when the unique person was glorified in the name of art, truth, whatever (eventually this bubble burst too, in the 20th C. and IMO because of too much fervent worship in the Cult of the Temple of the Money God. Dostoyevki's great Crime and Punishment is all about this issue.)

Tolstoy tries to describe a scientifically-determined historical process, dissing the 'great man of History' thesis. He was thinking of Napoleon Bonaparte of course, the run-away upstart repulican, anathema to the established order. Tolstoy describes it in the opening scene of the novel: a fascinating parlor-room conversation between a "liberal" woman of good-birth in the elite circles of society and a military captain at the party.

...only tenuously relevant to karlofi1's great post touching upon the Theory of History as such; thanks.

Now as to the question: ¿Why is Trump supporting Saudi Arabia? Let me think about that...

[Nov 24, 2018] Oil and commodity markets were used as a finishing move on the Soviet system.

Nov 24, 2018 | www.zerohedge.com

RioGrandeImports, 21 seconds ago link

Oil and commodity markets were used as a finishing move on the Soviet system. The book, "The Oil Card: Global Economic Warfare in the 21st Century" by James R. Norman details the use of oil futures as a geopolitical tool. Pipelines change the calculus quite a bit.

[Nov 24, 2018] Peak Oil Drastic Oil Shortages Imminent, Says IEA

Nov 24, 2018 | peakoilbarrel.com

Fred Magyar x Ignored says: 11/22/2018 at 11:34 am

https://cleantechnica.com/2018/11/22/peak-oil-drastic-oil-shortages-imminent-says-iea/

LOL!

Peak Oil & Drastic Oil Shortages Imminent, Says IEA

Ron Patterson x Ignored says: 11/22/2018 at 1:59 pm
LOL!

Sorry Fred, but that joke just went right over my head. Why am I not laughing?

Fred Magyar x Ignored says: 11/22/2018 at 4:18 pm
Twas a sarcastic laugh at the expense of the IEA
George Kaplan x Ignored says: 11/23/2018 at 2:21 am
That discovery chart shows the problem well, I hadn't seen it before. The big blip in deep water discoveries in the 2000s from improved technologies and higher prices contributed greatly to the subsequent glut and price collapse – and now what's left? There hasn't been much of an uptick in exploration despite the price rally, offshore drillers continue to go bust, leasing activity still fairly slow – the tranches get bigger as the last, less attractive bits are released but lease ratio falls, Permian dominates all news stories. Why would the recent decline curve turn around? And the biggest surprise might be that gas is just as bad as oil, so the recent boost in supplies from condensate and NGL might also have run its course.
Survivalist x Ignored says: 11/23/2018 at 9:33 am
So we need to bring on approx 40 million barrels a day by 2025 to stay flat?
Should be an interesting 7 years!
George Kaplan x Ignored says: 11/23/2018 at 12:31 pm
I tracked FIDs for oil through 2017, I've been a bit less diligent this year so may have missed some, but for greenfield conventional plus oil sands I have for the remainder of 2018 through 2025: 400, 1770, 1170, 800, 985, 70, 250, 400 kbpd added – about 6 mmbpd total, nothing after 2025, plus another 1 mmbpd from ramp ups from this year. Only pretty small projects could get done now before 2022, and there aren't many of those left. Anything else would need to come from brownfield (in-fill), LTO or new discoveries (including existing known resources that become reserves once a development decision is made).
Hugo x Ignored says: 11/23/2018 at 5:34 am
GDP and Energy consumption

The link between GDP and energy consumption is very clearly shown in the graph.

https://ourfiniteworld.com/2012/10/25/an-economic-theory-of-limited-oil-supply/comment-page-2/

High economic growth matched high growth in energy consumption and recessions saw fall in energy consumption.

Since 90% of the energy consumed comes from burning the stored energy in coal, oil, gas and wood. It is hardly surprising that during high economic growth CO2 emissions increase also.
Those who not not wish to see this link, obviously think Peak Oil is not a problem. GDP growth will continue even though oil becomes more scarce.

If oil production falls by just 1% per year, taking into account new vehicle production. The world would have to produce 90 million electric cars each year in order to prevent oil prices from destroying other users such as the aviation industry.

This year 1.5 million fully electric cars were made and according to several people here peak oil is no more then 4 years away.

Fred Magyar x Ignored says: 11/23/2018 at 5:46 am
Since 90% of the energy consumed comes from burning the stored energy in coal, oil, gas and wood. It is hardly surprising that during high economic growth CO2 emissions increase also

I have a hunch that we are about to see some major changes to that paradigm.

Hugo x Ignored says: 11/23/2018 at 7:40 am
Fred

I hope you are correct, but I have done some calculations on what is needed.

According to reports around $1.7 trillion was invested in energy supply in 2017. $790 billion on oil, gas and coal supply. $320 billion was spent on solar and wind.
During 2017 oil consumption increased by 1 million barrels per day. Gas consumption increased by 3% and even coal consumption went up.

The world needs to spend about $2.5 trillion per year on wind, solar and batteries in order to meet increased energy demand and reduce fossil fuel burning by about 1% per year. This obviously depends on GDP growth being about average.

Since recent scientific observations have discovered that Greenland, the Arctic and Antarctica melting much faster than anyone thought. The shift needs to be a minimum of 2.5%. Thus a spending of around £4 trillion per year is needed.

I do not see any country spending a minimum of 12 times more on solar and wind in the next 3-5 years. It would take every country doing so.

Hickory x Ignored says: 11/23/2018 at 12:21 pm
Agreed Hugo. The world is only making token moves towards installation of the necessary wind and solar.
This coming decade will see everyone scrambling to get the equipment built and installed.
Looks like centralized planning (China) is going to beat 'the market' on being the primary supplier. Our 'free' market has tariffs on PV imported. Brilliant.
Does having a 5 (or 10 yr) plan make you communist?
Or just smart.
GoneFishing x Ignored says: 11/23/2018 at 12:44 pm
"The world needs to spend about $2.5 trillion per year on wind, solar and batteries in order to meet increased energy demand and reduce fossil fuel burning by about 1% per year. This obviously depends on GDP growth being about average."
1% per year? You have got to be kidding.
The global oil consumption for transport is about 39.5 million barrels of oil per day. Using PV to drive EV transport would mean an investment of 2.2 trillion dollars in PV to provide global road transport energy.
So what do we use next year's money for?
.
HuntingtonBeach x Ignored says: 11/23/2018 at 5:14 pm
"The global oil consumption for transport is about 39.5 million barrels of oil per day"

39.5 million is only gasoline in the world. Add diesel and jet fuel and you get to about 75 million barrels a day for transportation or about 75% of oil produced.

GoneFishing x Ignored says: 11/23/2018 at 6:51 pm
I was specifically talking about road transport.
Argue with these guys.
https://www.statista.com/statistics/307198/forecast-of-oil-consumption-in-road-transportation/

Did you get the point? That Hugo overstated the cost of renewables to replace fossil fuels by a huge amount and understated their effect by another huge amount.
We have a couple of people that consistently do that on this site.

Hickory x Ignored says: 11/24/2018 at 12:33 am
You may have just been talking about transport energy, but the others of us were having some back and forth about fossil fuel replacement in general.

[Nov 17, 2018] OPEC Plus Putin's move to control energy market with Saudi partnership (Video)

Nov 17, 2018 | theduran.com

The Express UK reports that Russia and Saudi Arabia's 'long-term relationship' will not only survive, but grow, regardless of geopolitical turmoil and internal Saudi scandal as the energy interests between both nations bind them together.

... ... ...

But IHS Market vice chairman Daniel Yergin said the decision was unlikely to jeopardise the relationship between the two allies.

The Saudis have faced significant international criticism in the wake of the killing of journalist Jamal Khashoggi at the Saudi consulate in Turkey.

Speaking to CNBC, Mr Yergin made it clear that Moscow and Riyadh would continue to be closely aligned irrespective of external factors.

He explained: "I think it's intended to be a long-term relationship and it started off about oil prices but you see it taking on other dimensions, for instance, Saudi investment in Russian LNG (liquefied natural gas) and Russian investment in Saudi Arabia.

"I think this is a strategic relationship because it's useful to both countries."

Saudi Arabia and Russia are close, especially as a result of their pact in late 2016, along with other OPEC and non-OPEC producers, to curb output by 1.8 million barrels per day in order to prevent prices dropping too far – but oil markets have changed since then, largely as a result.

The US criticised OPEC, which Saudi Arabia is the nominal leader of, after prices rose.

Markets have fluctuated in recent weeks as a result of fears over a possible drop in supply, as a result of US sanctions on Iran, and an oversupply, as a result of increased production by Saudi Arabia, Russia and the US, which have seen prices fall by about 20 percent since early October.

Saudi Arabia has pumped 10.7 million barrels per day in October, while the figure for Russia and the US was 11.4 million barrels in each case.

Mr Yergin said: "It's the big three, it's Saudi Arabia, Russia and the US, this is a different configuration in the oil market than the traditional OPEC-non-OPEC one and so the world is having to adjust."

BP Group Chief Executive Bob Dudley told CNBC: "The OPEC-plus agreement between OPEC and non-OPEC producers including Russia and coalition is a lot stronger than people speculate.

"I think Russia doesn't have the ability to turn on and off big fields which can happen in the Middle East.

"But I fully expect there to be coordination to try to keep the oil price within a certain fairway."

Markets rallied by two percent on Monday off the back of the Saudi decision to cut production , which it justified by citing uncertain global oil growth and associated oil demand next year.

It also suggested waivers granted on US sanctions imposed on Iran which have been granted to several countries including China and Japan was a reason not to fear a decline in supply.

Also talking to CNBC, Russia's Oil Minister Alexander Novak indicated a difference of opinion between Russia and the Saudis, saying it was too soon to cut production, highlighting a lot of volatility in the oil market.

He added: "If such a decision is necessary for the market and all the countries are in agreement, I think that Russia will undoubtedly play a part in this.

"But it's early to talk about this now, we need to look at this question very carefully."

[Nov 16, 2018] "Peak oil consumption" for the next five to ten years remains a myth.

Nov 16, 2018 | peakoilbarrel.com

likbez says: 11/16/2018 at 1:42 am

Shallow sand mentioned EV as a sign that oil consumption might go down.

I view EVs as inefficient natural gas powered cars, or worse. And the key problem is its lithium battery. See http://www.epa.gov/dfe/pubs/projects/lbnp/final-li-ion-battery-lca-report.pdf

The cost of producing a large lithium battery is high and it is "perishable product", which will not last even 10 years. The average life expectancy of a new EV battery at about five (Tesla) to eight years. Or about 1500 cycles (assuming daily partial recharge, which prolongs the life of the battery) before reaching 80% of its capacity rating. https://www.quora.com/What-is-the-cycle-lifetime-of-lithium-ion-batteries

Battery performance and lifespan begins to suffer as soon as the temperature climbs above 86 degrees Fahrenheit. A temperature above 86 degrees F affects the battery pack performance instantly and often permanently. https://phys.org/news/2013-04-life-lithium-ion-batteries-electric.html

It is also became almost inoperative at below freezing point temperatures. For example it can't be charged.

So they need to be cooled at summer and heated at winter. Storing such a car on the street is out of question. You need a garage.

And large auto battery typically starts deteriorating after three years of daily use or 800 daily cycles.

Regular gas, and , especially, diesel cars can last 20 years, and larger trucks can last 30 years.

Recycling of lithium batteries is problematic
http://users.humboldt.edu/lpagano/project_pagano.html

In a way EVs can be called "subprime cars." Or "California cars", if you wish (California climate is perfect for this type of cars)

Switching to motorcycles for personal transportation can probably help more in oil economy aria then EVs.

That also suggest that "peak oil consumption" for the next five to ten years remains a myth.

[Nov 16, 2018] Oil, Power, and War A Dark History by Matthieu Auzanneau

Notable quotes:
"... Finally, unlike Yergin and other historians of the oil industry, Auzanneau frames his tale of petroleum as a life cycle, with germination followed by spring, summer, and autumn. There is a beginning and a flourishing, but there is also an end. This framing is extremely helpful, given the fact that the world is no longer in the spring or summer of the oil era. We take petroleum for granted, but it's time to start imagining a world, and daily life, without it. ..."
Nov 16, 2018 | www.amazon.com

Similarly, the real story of oil is of fortunes lost, betrayal, war, espionage, and intrigue. In the end, inevitably, the story of oil is a story of depletion. Petroleum is a nonrenewable resource, a precious substance that took tens of millions of years to form and that is gone in a comparative instant as we extract and burn it. For many decades, oil-hungry explorers, using ever-improving technology', have been searching for ever-deteriorating prospects as the low- hanging fin its of planet Earth's primordial oil bounty gradually dwindle. Oil wells have been shut in, oil fields exhausted, and oil companies bankrupted by the simple, inexorable reality of depletion.

It is impossible to understand the political and economic history of the past 150 years without taking account of a central character in the drama -- oil, the magical wealth-generating substance, a product of ancient sunlight and tens of millions of years of slow geological processes, whose tragic fate is to be dug up and combusted once and for all. leaving renewed poverty in its wake. With Oil, Power, and War, Matthieu Auzanneau has produced what I believe is the new definitive work on oil and its historic significance, supplanting even Daniel Yergin's renowned The Prize, for reasons I'll describe below.

The importance of oil's role in shaping the modern world cannot be overstated. Prior to the advent of fossil fuels, firewood was humanity's main fuel. But forests could be cut to the last tree (many were), and wood was bulky. Coal offered some economic advantages over wood. But it was oil -- liquid and therefore easier to transport; more energy-dense; and simpler to store -- that turbocharged the modern industrial age following the development of the first commercial wells around the year 1860.

John D. Rockefeller's cutthroat, monopolist business model shaped the early industry, which was devoted mostly to the production of kerosene for lamp oil (gasoline was then considered a waste product and often discarded into streams or rivers). But roughly forty years later, when Henry Ford developed the automobile assembly line, demand for black gold was suddenly as explosive as gasoline itself.

Speaking of explosions, the role of petroleum in the two World Wars and the armament industry' in general deserves not just a footnote in history books but serious and detailed treatment such as it receives in this worthy volume. Herein we learn how Imperial Japan and Nazi Germany literally ran out of gas while the Allies rode to victory in planes, ships, and tanks burning refined US crude. Berlin could be cut off from supplies in Baku or North Africa, and Tokyo's tanker route from Borneo could be blockaded -- but no one could interrupt the American war machine's access to Texas tea.

In the pages that follow, we learn about the origin of the decades-long US alliance with Saudi Arabia, the development of OPEC, the triumph of the petrodollar, and the reasons for both the Algerian independence movement and the Iranian Revolution of 1979. Auzanneau traces the postwar growth of the global economy and the development of consumerism, globalization, and car culture. He recounts how the population explosion and the Green Revolution in agriculture reshaped demographics and politics globally -- and explains why both depended on petroleum. We learn why Nixon cut the US dollar's tether to the gold standard just a year after US oil production started to decline, and how the American economy began to rely increasingly on debt. The story of oil takes ever more fascinating turns -- with the fall of the Soviet Union after its oil production hit a snag; with soaring petroleum prices in 2008 coinciding with the onset of the global financial crisis; and with wars in Iraq, Syria, and Yemen erupting as global conventional oil output flatlined.

As I alluded to above, comparisons will inevitably be drawn between Oil, Power, and War and Daniel Yergin's Pulitzer-winning "The Prize", published in 1990. It may be helpful therefore to point out four of the most significant ways this work differs from Yergin's celebrated tour de force.

The most obvious difference between the two books is simply one of time frame. The Prize's narrative stops in the 1980s, while Oil, Power, and War also covers the following critical decades, which encompass the dissolution of the Soviet Union, the first Gulf War, 9/11, the US invasions of Afghanistan and Iraq, the global financial crisis of 2008. and major shifts within the petroleum industry as it relies ever less on conventional crude and ever more on unconventional resources such as bitumen (Canada's oil sands), tight oil (also called shale oil), and deepwater oil.

Finally, unlike Yergin and other historians of the oil industry, Auzanneau frames his tale of petroleum as a life cycle, with germination followed by spring, summer, and autumn. There is a beginning and a flourishing, but there is also an end. This framing is extremely helpful, given the fact that the world is no longer in the spring or summer of the oil era. We take petroleum for granted, but it's time to start imagining a world, and daily life, without it.

Taken together, these distinctions indeed make Oil, Power, and War the definitive work on the history of oil -- no small achievement, but a judgment well earned.

Over the past decade, worrisome signs of global oil depletion have been obscured by the unabashed enthusiasm of energy analysts regarding growing production in the United States from low-porosity source rocks. Termed "light tight oil," this new resource has been unleashed through application of the technologies of hydrofracturing (tracking) and horizontal drilling.

US liquid fuels production has now surpassed its previous peak in 1970, and well-regarded agencies such as the Energy Information Administration are forecasting continued tight oil abundance through mid-century.

Auzanneau titles his discussion of this phenomenon (in chapter 30), "Nonconventional Petroleum to the Rescue?" -- and frames it as a question for good reason: Skeptics of tight oil hyperoptimism point out that most production so far has been unprofitable. The industry has managed to stay in the game only due to low interest rates (most companies are heavily in debt) and investor hype. Since source rocks lack permeability, individual oil wells deplete very quickly -- with production in each well declining on the order of 70 percent to 90 percent in the first three years. That means that relentless, expensive drilling is needed in order to release the oil that's there. Thus the tight oil industry can be profitable only if oil prices are very high -- high enough, perhaps, to hobble the economy -- and if drilling is concentrated in the small core areas within each of the productive regions. But these "sweet spots" are being exhausted rapidly. Further, with tight oil the energy returned on the energy invested in drilling and completion is far less than was the case with American petroleum in its heyday.

It takes energy to fell a tree, drill an oil well, or manufacture a solar panel. We depend on the energy payback from those activities to run society. In the miraculous years of the late twentieth century, oil delivered an averaged 50:1 energy payback. It was this, more than anything else, that made rapid economic growth possible, especially for the nations that were home to the world's largest oil reserves and extraction companies. As the world relies ever less on conventional oil and ever more on tight oil, bitumen, and deepwater oil, the overall energy payback of the oil industry is declining rapidly. And this erosion of energy return is reflected in higher overall levels of debt in the oil industry and lower overall financial profitability.

Meanwhile the industry is spending ever less on exploration -- for two reasons. First, there is less money available for that purpose, due to declining financial profitability; second, there seems comparatively little oil left to be found: Recent years have seen new oil discoveries dwindle to the lowest level since the 1940s. The world is not about to run out of oil. But the industry that drove society in the twentieth century to the heights of human economic and technological progress is failing in the twenty-first century.

Today some analysts speak of "peak oil demand." The assumption behind the phrase is that electric cars will soon reduce our need for oil, even as abundance of supply is assured by fracking. But the world is still highly dependent on crude oil. We have installed increasing numbers of solar panels and wind turbines, but the transition to renewable is going far too slowly either to avert catastrophic climate change or to fully replace petroleum before depletion forces an economic crisis. While we may soon see more electric cars on the road, trucking, shipping, and aviation will be much harder to electrify. We haven't really learned yet how to make the industrial world work without oil. The simple reality is that the best days of the oil business, and the oil-fueled industrial way of life, are behind us. And we are not ready for what comes next.

[Nov 14, 2018] Oil, Power, and War A Dark History by Matthieu Auzanneau

Notable quotes:
Oil, Power, and War is a story of the dreams and hubris that spawned an era of economic chaos, climate change, war, and terrorism -- as well as an eloquent framing from which to consider our options as our primary source of power, in many ways irreplacable, grows ever more constrained.
Nov 14, 2018 | www.barnesandnoble.com

In this sweeping, unabashed history of oil, Matthieu Auzanneau takes a fresh, thought-provoking look at the way oil interests have commandeered politics and economies, changed cultures, disrupted power balances across the globe, and spawned wars. He upends commonly held assumptions about key political and financial events of the past 150 years, and he sheds light on what our oil-constrained and eventually post-oil future might look like.

Oil, Power, and War follows the oil industry from its heyday when the first oil wells were drilled to the quest for new sources as old ones dried up. It traces the rise of the Seven Sisters and other oil cartels and exposes oil's key role in the crises that have shaped our times: two world wars, the Cold War, the Great Depression, Bretton Woods, the 2008 financial crash, oil shocks, wars in the Middle East, the race for Africa's oil riches, and more. And it defines the oil-born trends shaping our current moment, such as the jockeying for access to Russia's vast oil resources, the search for extreme substitutes for declining conventional oil, the rise of terrorism, and the changing nature of economic growth.

We meet a long line of characters from John D. Rockefeller to Dick Cheney and Rex Tillerson, and hear lesser-known stories like how New York City taxes were once funneled directly to banks run by oil barons. We see how oil and power, once they became inextricably linked, drove actions of major figures like Churchill, Roosevelt, Stalin, Hitler, Kissinger, and the Bushes. We also learn the fascinating backstory sparked by lesser-known but key personalities such as Calouste Gulbenkian, Abdullah al-Tariki, and Marion King Hubbert, the once-silenced oil industry expert who warned his colleagues that oil production was facing its peak.

Oil, Power, and War is a story of the dreams and hubris that spawned an era of economic chaos, climate change, war, and terrorism -- as well as an eloquent framing from which to consider our options as our primary source of power, in many ways irreplacable, grows ever more constrained.

The book has been translated from the highly acclaimed French title, Or Noir .

[Oct 31, 2018] Angry Bear " Business As Usual Running on Empty

Oct 31, 2018 | angrybearblog.com
  1. likbez , October 31, 2018 1:03 am

    The key question not addressed by the author is how long the period of "plato oil production" (the last stage of the so called "oil age", which started around 1911) might last -- 10, 20 or 50 years. And the oil age is just a very short blip in Earth history.

    Let's assume that this means less the $100 per barrel; in the past, it was $70 per barrel that considered the level that guarantees the recession in the USA, but financial system machinations now probably reached a new level, so that might not be true any longer. The trillion dollars question is "How long this period can be extended?"

    It is important to understand the US shale oil is not profitable and never will be for prices under $80 or so. At prices below that level, it actually produces three products, not two – oil, gas and junk bonds.

    I view it as a very sophisticated, very innovative gamble to pressure oil prices down and get compensation for the losses due to large amount of imported oil (the USA export mainly lightweight oil which is kind of "subprime oil" often used for dilution of heavy oil in countries such as Canada and Venezuela, but imports quality oil).

    If the hypothesis that Saudis and Russians are close to Seneca Cliff (Saudi prince recently said that Russian are just 10-15 years from it) and that best days of the US shale and Gulf of Mexico deep oil is in the past if true, then "Houston we have a problem".

    That means that in 20 years, or so the civilization might experience some kind of collapse, and the population of the Earth might start rapidly shrinking.

[Oct 24, 2018] Any guess what the price of crude would be today if we had no fracking in N. America? Wild guess is all I've got, but I'm saying $142

Notable quotes:
"... US tight oil output was about 6200 kb/d in August 2018 according to the EIA, not that the DPR includes oil from the region of tight oil plays that is conventional oil, also it is a model that is not very good so I ignore the DPR ..."
Oct 24, 2018 | peakoilbarrel.com

Hickory x Ignored says: 10/22/2018 at 9:49 pm

Any guess what the price of crude would be today if we had no fracking in N. America?
Wild guess is all I've got, but I'm saying $142 (and much lower economic growth over the past 9 yrs- maybe even flat averaged for the whole period).
Any other speculations on this?
ProPoly x Ignored says: 10/23/2018 at 6:36 am
USA LTO is ~7.5 million bpd. That exceeds global spare capacity over demand as-is today by at least four times. So if the world was still trying to consume what it is today, we would be several million short and would have been short by seven figures for several years.

I think we would have found out if there really are any huge but uneconomical fields out there by now as the panic from that set in a few years ago. A shortage on that scale means arbitrary prices pending demand cap/destruction.

Dennis Coyne x Ignored says: 10/23/2018 at 10:26 am
US tight oil output was about 6200 kb/d in August 2018 according to the EIA, not that the DPR includes oil from the region of tight oil plays that is conventional oil, also it is a model that is not very good so I ignore the DPR .

WAG on oil price with zero LTO output is $120/b in 2017$, plus or minus $20/b.

Energy News x Ignored says: 10/22/2018 at 1:12 pm
Canada (offshore), Hebron is expected to produce around 150,000 barrels a day, from about 40,000 barrels a day now.

2018-10-22 (The Globe and Mail) It's been one year since ExxonMobil's long-awaited Hebron platform off the southeast coast of Newfoundland started pumping crude from its first well. It took four years, $14 billion, 132,000 cubic metres of concrete and a few thousand workers to bring it online, and so far, it's churning out about 40,000 barrels a day, with the crude bound for markets in the U.S. Gulf states, Europe and much of eastern North America. Eventually, Hebron will drill 20 to 30 wells, and is expected to produce around 150,000 barrels a day.
With an expected reserve of 700 million barrels of recoverable crude, the Hebron project is expected to operate for 30 years. As Newfoundland's fourth offshore platform, it will play a key role in the province's plan to double overall production to more than 650,000 barrels a day by 2030.
https://www.theglobeandmail.com/business/article-why-hebron-has-a-leg-up-on-albertas-oil-sands/

George Kaplan x Ignored says: 10/23/2018 at 1:28 am
Hebron is already at 70 kbpd and has been for a few months. I thinks its expected annual average for oil only is 135 and it will take a year or so to get there as the coming wells will be less productive that the first ones. In the mean time the three other platforms are in decline (Terra Nova was originally due to be taken off line next year – not sure what the latest thinking is). They dropped about 35 kbpd last year but that may accelerate as Hibernia is coming off a secondary plateau.
Energy News x Ignored says: 10/23/2018 at 6:18 am
Yes a more realistic impression of the situation than just reading the article 🙂

[Oct 24, 2018] OPEC has difficulties increasing production. Never worry, as IEA says peak oil is just a figment of our imagination

Oct 24, 2018 | peakoilbarrel.com

ProPoly x Ignored says: 10/19/2018 at 9:22 am

OPEC is, for reasons many expected (involuntary declines in Venezuela and elsewhere), having difficulty delivering on their promised output hike.

https://www.reuters.com/article/us-opec-oil-exclusive/exclusive-opec-allies-struggle-to-fully-deliver-pledged-oil-output-boost-internal-document-idUSKCN1MT1G0

Guym x Ignored says: 10/19/2018 at 11:30 am
Yeah, that's going to get a lot worse. It's counting Iran production, and not what it can sell. A lot in floating storage, and being stored close to China and elsewhere. US is the only one with an increase, and that increase is on a hiatus until new pipelines come on, regardless of the EIA overstated production numbers. So, we would be short before any demand increase, or non-OPEC declines. But, never worry, as IEA says peak oil is just a figment of our imagination 🤡
Survivalist x Ignored says: 10/21/2018 at 12:40 am
"The Saudi government said it would take another month to complete a full investigation, which would be overseen by Mohammed.
Mohammad will find that Mohammad had nothing to do with the issue."

Perhaps an anti-KSA Boycott, Divestment, Sanctions (BDS) Movement will get started. Consumers and competitors might find the idea appealing.

Nice ideas for new KSA flag designs at this link here (I most like the chainsaw instead of the current sword design- reminds me of Scarface- Mo Bin Clownstick™ is about as legitimate and sophisticated as a coke runner):
https://www.moonofalabama.org/2018/10/saudis-admit-khashoggi-murder.html

The Sultan is playing his hand well (drip drip drip Turkish Int. leaks to the news with an intensifying puke factor- one recent read that Khashoggi was dismembered alive and dissolved in acid). Has Mo Bin Clownstick™ met his match?
https://lobelog.com/the-geopolitics-of-the-khashoggi-murder/

Watcher x Ignored says: 10/21/2018 at 2:51 am
I can't help but wonder about all those guys he threw into a hotel prison and shook down for billions of dollars. They can afford a lot of media with the money they had remaining.
Survivalist x Ignored says: 10/21/2018 at 5:45 pm
The House of Saud appears to be fragmenting quite severely.
Saudi Arabia's missing princes
https://www.bbc.com/news/magazine-40926963
Energy News x Ignored says: 10/20/2018 at 2:22 pm
The last article he wrote before his death

Jamal Khashoggi: What the Arab world needs most is free expression
By Jamal Khashoggi – October 17, 2018 – Washington Post
https://www.washingtonpost.com/amphtml/opinions/global-opinions/jamal-khashoggi-what-the-arab-world-needs-most-is-free-expression/2018/10/17/adfc8c44-d21d-11e8-8c22-fa2ef74bd6d6_story.html ?

Lightsout x Ignored says: 10/21/2018 at 3:43 am
China demand for diesel only appears to be heading in one direction. Should please Watcher!

https://mobile.twitter.com/PDChina/status/1053843063003525120?p=v

Dennis Coyne x Ignored says: 10/22/2018 at 1:59 pm
Shallow Sand,

No, not familiar, did you mean article linked below?

http://ieefa.org/ieefa-u-s-more-red-flags-on-fracking-focused-companies/

Link to full report

http://ieefa.org/wp-content/uploads/2018/10/Red-Flags-on-U.S.-Fracking_October-2018.pdf

From the report:
The $3.9 billion in negative cash flows in the first two quarters of 2018 represented an improvement over the first halves of 2016 and 2017, when red ink totaled $11 billion and $7.2 billion, respectively.

These 33 companies have had positive net income since 2017Q4 and long term debt reached its peak for these companies in 2018Q1 at 138 billion with a gradual decrease to 126 billion in 2018Q2. As prices continue to rise debt will gradually be paid down,

When I look at that report I see an improving situation for these companies. I would prefer it if they broke the data into two groups, oil focused and natural gas focused companies. There has been a better recovery in oil prices than natural gas prices though it looks like we might see a spike in natural gas prices if we have a colder than normal winter.

Energy News x Ignored says: 10/22/2018 at 5:27 am
India's crude oil imports, the average for the first 9 months of 2018 is up +279 kb/day compared to first 9 months of 2017
Seasonal chart: https://pbs.twimg.com/media/DqGtWDoX4AAYDwJ.jpg
India's crude oil refinery processing, the average for the first 9 months of 2018 is up +231 kb/day compared to first 9 months of 2017
Seasonal chart: https://pbs.twimg.com/media/DqGttFOW4AAr0Uy.jpg
Energy News x Ignored says: 10/22/2018 at 5:57 am
Saudi Arabia spare capacity, there seems to be a consensus that Saudi Arabia can produce 11 million b/day. I guess that producing above that level would be subject to maintenance, outages and natural decline? (Also I'm guessing that the Khurais field expansion might not be ready until later in 2019?)

2018-10-22 Saudi Arabia Energy Minister Al Falih speaks to TASS
Saudi Arabia now in October is producing 10.7 million b/day.
And is likely to go up, in the near future, to 11 million b/day on a steady basis.
Our total production capacity is currently 12 million b/day.
And that could be increased to 13 million b/day with an investment of $20 to $30 billion.
Interview with TASS: http://tass.com/economy/1026924

Reuters summary of interview
https://www.reuters.com/article/us-oil-opec-saudi/saudi-arabia-has-no-intention-of-1973-oil-embargo-replay-tass-idUSKCN1MW0JU

Energy News x Ignored says: 10/22/2018 at 10:53 am
Exxon in Brazil holds potential 41 billion barrels based on preliminary studies

2018-10-18 RIO DE JANEIRO and HOUSTON (Bloomberg) -- In a single year, Exxon Mobil has gone from being a tiny bit player in Brazil to the second-largest holder of oil exploration acreage, trailing only state-controlled Petroleo Brasileiro.
The last 24 concessions the U.S. giant bought with its partners may hold 41 billion bbl, based on preliminary studies, according to Eliane Petersohn, a superintendent at Brazil's National Petroleum Agency, or ANP. While the existence of the oil still needs to be confirmed, along with whether its extraction will be cost-effective, it's a huge figure -- almost double Exxon's current reserves.
The Irving, Texas-based company is betting big in particular on Brazil's offshore, where a single block is currently producing more than all of Colombia and profitability compares to the best U.S. tight oil, according to Decio Oddone, the head of ANP.
It should take six to eight years for oil to start flowing if economically viable deposits are discovered, according to ANP.
https://www.worldoil.com/news/2018/10/18/exxon-makes-major-bet-on-brazil-as-petrobras-eases-its-grip

GuyM x Ignored says: 10/22/2018 at 12:41 pm
Other than the plethora of constraints in the Permian, I think this is going to develop into a bigger obstacle of shale growth for awhile. Especially, for those mostly Permian players for the next four quarters.
https://oilprice.com/Energy/Energy-General/US-Shale-Has-A-Glaring-Problem.html

Almost 30% of gross production may go to service debt.
https://www.oilystuffblog.com/single-post/2018/10/19/Deep-The-Denial

I think huge shale growth is possible, but only way north of $100 a barrel. At the current price, it is close to max.

[Oct 18, 2018] Germany Clashes With The US Over Energy Geopolitics

Notable quotes:
"... This is Naked Capitalism fundraising week. 1018 donors have already invested in our efforts to combat corruption and predatory conduct, particularly in the financial realm. Please join us and participate via our donation page , which shows how to give via check, credit card, debit card, or PayPal. Read about why we're doing this fundraiser and what we've accomplished in the last year, and our current goal, extending our reach . ..."
"... By Tsvetana Paraskova, a writer for the U.S.-based Divergente LLC consulting firm. Originally published at OilPrice ..."
"... As long as NATO exists, Washington will continue to use it to drive a wedge between the EU and Russia. Merkel foolishly went along with all of Washington's provocations against Russia in Ukraine, even though none of it benefited Germany's national interest. ..."
"... She did indeed go along with all the provocations and she sat back and said nothing while Putin railed against US sanctions. Yet Putin didn't blame Germany or the EU. Instead he said that the Germany/EU is currently trapped by the US and would come to their senses in time. He is leaving the door open. ..."
"... What US LNG exports? The US is a net importer of NG from Canada. US 2018 NG consumption and production was 635.8 and 631.6 Mtoe respectively (BP 2018 Stats). Even the BP 2018 Statistical Review of World Energy has an asterisks by US LNG exports which says, "Includes re-exports" which was 17.4 BCM or 15 Mtoe for 2018. ..."
"... Natural gas negotiations involve long term contracts so there are lots of money to exchange ensuring business for many years to come. Such a contract has recently been signed between Poland's PGNiG and American Venture Global Calcasieu & Venture Global Plaquemines LNG (Lousiana). According to the Poland representative this gas would be 20% cheaper than Russian gas. (if one has to believe it). Those contracts are very secretive in their terms. This contract in particular is still dependent on the termination of liquefaction facilities in Lousiana. ..."
"... IIRC, the US is pushing LNG because fracking has resulted in a lot of NG coincident with oil production. They've got so much NG coming out of fracked oil wells that they don't know what to do with it and at present, a lot of it just gets flared, or leaks into the atmosphere. ..."
"... So they turn to bullying the EU to ignore the price advantage that Russia is able to offer, due to the economics of pipeline transport over liquefaction and ocean transport, and of course the issues of reliability and safety associated with ocean transport, and high-pressure LNG port facilities compared to pipelines. ..."
"... Trump will probably offer the EU 'free' LNG port facilities financed by low-income American tax-payers, and cuts to 'entitlements', all designed to MAGA. ..."
"... It seems we have been maneuvering for a while to raise our production of LNG and oil (unsustainably) in order to become an important substitute supplier to the EU countries. It sort of looks like our plan is to reduce EU opposition to our attacking Russia. Then we will have China basically surrounded. This is made easier with our nuclear policy of "we can use nuclear weapons with acceptable losses." What could go wrong? ..."
"... The United States should lead by example. Telling Germany not to import Russian gas is rich considering the U.S. also imports from Russia. https://www.forbes.com/sites/rrapier/2018/07/12/russia-was-a-top-10-supplier-of-u-s-oil-imports-in-2017/ ..."
"... I just love the fact that Trump is publicly calling out Merkel on this; she has been nothing but two-faced and hypocritical on the Russia question. ..."
"... She was one of the ones who pushed the EU hard, for example, to sanction Russia in the wake of the coup in Ukraine (which she had also supported). And then she pushed the EU hard to kill off the South Stream pipeline, which would have gone through SE Europe into Austria. She used the excuse of 'EU solidarity' against 'Russian aggression' to accomplish that only to then turn around and start building yet another pipeline out of Russia and straight into Germany! The Bulgarians et al. must feel like real idiots now. It seems Berlin wants to control virtually all the pipelines into Europe. ..."
Oct 18, 2018 | www.nakedcapitalism.com
This is Naked Capitalism fundraising week. 1018 donors have already invested in our efforts to combat corruption and predatory conduct, particularly in the financial realm. Please join us and participate via our donation page , which shows how to give via check, credit card, debit card, or PayPal. Read about why we're doing this fundraiser and what we've accomplished in the last year, and our current goal, extending our reach .

Yves here. It's not hard to see that this tiff isn't just about Russia. The US wants Germany to buy high-priced US LNG.

By Tsvetana Paraskova, a writer for the U.S.-based Divergente LLC consulting firm. Originally published at OilPrice

The United States and the European Union (EU) are at odds over more than just the Iran nuclear deal – tensions surrounding energy policy have also become a flashpoint for the two global powerhouses.

In energy policy, the U.S. has been opposing the Gazprom-led and highly controversial Nord Stream 2 pipeline project , which will follow the existing Nord Stream natural gas pipeline between Russia and Germany via the Baltic Sea. EU institutions and some EU members such as Poland and Lithuania are also against it, but one of the leaders of the EU and the end-point of the planned project -- Germany -- supports Nord Stream 2 and sees the project as a private commercial venture that will help it to meet rising natural gas demand.

While the U.S. has been hinting this year that it could sanction the project and the companies involved in it -- which include not only Gazprom but also major European firms Shell, Engie, OMV, Uniper, and Wintershall -- Germany has just said that Washington shouldn't interfere with Europe's energy choices and policies.

"I don't want European energy policy to be defined in Washington," Germany's Foreign Ministry State Secretary Andreas Michaelis said at a conference on trans-Atlantic ties in Berlin this week.

Germany has to consult with its European partners regarding the project, Michaelis said, and noted, as quoted by Reuters, that he was "certainly not willing to accept that Washington is deciding at the end of the day that we should not rely on Russian gas and that we should not complete this pipeline project."

In July this year, U.S. President Donald Trump said at a meeting with NATO Secretary General Jens Stoltenberg that "Germany is a captive of Russia because they supply." Related: The Implications Of A Fractured U.S., Saudi Alliance

"Germany is totally controlled by Russia, because they will be getting from 60 to 70 percent of their energy from Russia and a new pipeline," President Trump said.

Germany continues to see Nord Stream 2 as a commercial venture, although it wants clarity on the future role of Ukraine as a transit route, German government spokeswoman Ulrike Demmer said last month.

Nord Stream 2 is designed to bypass Ukraine, and Ukraine fears it will lose transit fees and leverage over Russia as the transit route for its gas to western Europe.

Poland, one of the most outspoken opponents of Nord Stream 2, together with the United States, issued a joint statement last month during the visit of Polish President Andrzej Duda to Washington, in which the parties said , "We will continue to coordinate our efforts to counter energy projects that threaten our mutual security, such as Nord Stream 2."

The United States looks to sell more liquefied natural gas (LNG) to the European market, including to Germany , to help Europe diversify its energy supply, which is becoming increasingly dependent on Russian supplies. Related: High Prices Benefit Iran Despite Lost Oil Exports

The president of the Federation of German Industry (BDI), Dieter Kempf, however, told German daily Süddeutsche Zeitung last month, that he had "a big problem with a third country interfering in our energy policy," referring to the United States. German industry needs Nord Stream 2, and dropping the project to buy U.S. LNG instead wouldn't make any economic sense, he said. U.S. LNG currently is not competitive on the German market and would simply cost too much, according to Kempf.

The lower price of Russian pipeline gas to Europe is a key selling point -- and one that Gazprom uses often. Earlier this month Alexey Miller, Chairman of Gazprom's Management Committee, said at a gas forum in Russia that "Although much talk is going on about new plans for LNG deliveries, there is no doubt that pipeline gas supplies from Russia will always be more competitive than LNG deliveries from any other part of the world. It goes without saying."

The issue with Nord Stream 2 -- which is already being built in German waters -- is that it's not just a commercial project. Many in Europe and everyone in the United States see it as a Russian political tool and a means to further tighten Russia's grip on European gas supplies, of which it already holds more than a third. But Germany wants to discuss the future of this project within the European Union, without interference from the United States.


Alex V , October 18, 2018 at 4:43 am

Thankfully liquefying gas and then reconstituting it uses no additional energy, and transportation into major harbors is perfectly safe.

Capitalism inaction!

Quentin , October 18, 2018 at 6:23 am

Maybe the US thinks it will also have to go out of its way to accommodate Germany and the EU by offering to construct the necessary infrastructure in Europe for the import of LNG at exorbitant US prices. MAGA. How long would that take?

disillusionized , October 18, 2018 at 7:03 am

The question is, is it inevitable that the EU/US relationship goes sour?

Continentalism is on the rise generally, and specifically with brexit, couple this with the geographical gravity of the EU-Russia relationship makes a EU-Russia "alliance" make more sense than the EU-US relationship.

Ever since the death of the USSR and the accession of the eastern states to the EU, the balance of power in the EU-US relationship has moved in ways it seems clear that the US is uncomfortable with.

To all of this we must add the policy differences between the US and the EU – see the GDPR and the privacy shield for example.

I have said it before – the day Putin dies (metaphorically or literally) is a day when the post war order in Europe may die, and we see the repairing of the EU-Russia relationship (by which I mean the current regime in Russia will be replaced with a new generation far less steeped in cold war dogma and way more interested in the EU).

NotReallyHere , October 18, 2018 at 1:23 pm

"The post war order in Europe will doe and we see the repairing of the EU/Russian relationship "

I think you mean the German/Russian relationship and that repair has been under way for more than a decade. The post war order is very very frayed already and looks close to a break point.

This Nord Stream 2 story illustrates more than most Germany's attitudes to the EU and to the world at large. Germany used its heft within the EU to 1 ) get control of Russian gas supplies into Central Europe (Germany insisted that Poland could not invest in the project apparently and refused a landing point for the pipeline in Poland. Instead it offered a flow back valve from Germany into Poland that the Germans would control) 2) thumb its nose at the US while outwardly declaring friendship through the structures provided by EU and NATO membership.

Even Obama suspected the Germans of duplicity (the Merkel phone hacking debacle).

It's is this repairing relationship that will set the tone for Brexit, the Ukraine war, relations between Turkey and EU and eventually the survival of the EU and NATO. The point ? Germany doesn't give a hoot about the EU it served its purpose of keeping Germany anchored to the west and allowing German reunification to solidify while Russia was weak. Its usefulness is in the past now, however from a German point of view.

Seamus Padraig , October 18, 2018 at 2:01 pm

Putin dying isn't going to change Washington. As long as NATO exists, Washington will continue to use it to drive a wedge between the EU and Russia. Merkel foolishly went along with all of Washington's provocations against Russia in Ukraine, even though none of it benefited Germany's national interest.

Come to think of it, maybe Merkel dying off would improve German-Russian relations

NotReallyHere , October 18, 2018 at 4:49 pm

She did indeed go along with all the provocations and she sat back and said nothing while Putin railed against US sanctions. Yet Putin didn't blame Germany or the EU. Instead he said that the Germany/EU is currently trapped by the US and would come to their senses in time. He is leaving the door open.

Germany won't lose if NATO and the EU break up. It would free itself from a range increasingly dis-functional entities that, in its mind, restrict its ability to engage in world affairs.

Susan the other , October 18, 2018 at 3:02 pm

I think you are right. Russia and Germany are coming together and there's nothing we can do about it because "private commercial venture." Poetic justice.

And the economic link will lead to political links and we will have to learn a little modesty. The ploy we are trying to use, selling Germany US LNG could not have been anything more than a stopgap supply line until NG from the ME came online but that has been our achilles heel.

It feels like even if we managed to kick the Saudis out and took over their oil and gas we still could no longer control geopolitics. The cat is out of the bag and neoliberalism has established the rules. And it's pointless because there is enough gas and oil and methane on this planet to kill the human race off but good.

NotReallyHere , October 18, 2018 at 5:00 pm

@Susan

That exactly right. and Gerhard Schroder has been developing those political relationships for more than a decade. The political/economic links already go very deep on both sides.

if the rapprochement is occurring, Brexit, the refugee crisis and Italy's approaching debt crisis are all just potential catalysts for an inevitable breakup. Germany likely views these as potential opportunities to direct European realignment rather than existential crises to be tackled.

JimL , October 18, 2018 at 7:08 am

What US LNG exports? The US is a net importer of NG from Canada. US 2018 NG consumption and production was 635.8 and 631.6 Mtoe respectively (BP 2018 Stats). Even the BP 2018 Statistical Review of World Energy has an asterisks by US LNG exports which says, "Includes re-exports" which was 17.4 BCM or 15 Mtoe for 2018.

Ignacio , October 18, 2018 at 7:49 am

The US produces annually about 33,000,000 million cubic feet and consumes 27.000.000 million according to the EiA . So there is an excess to export indeed.

Synoia , October 18, 2018 at 3:23 pm

Leaving 6,000,000 million to be exported, until the shale gas no longer flows. How farsighted.

Ignacio , October 18, 2018 at 7:42 am

Natural gas negotiations involve long term contracts so there are lots of money to exchange ensuring business for many years to come. Such a contract has recently been signed between Poland's PGNiG and American Venture Global Calcasieu & Venture Global Plaquemines LNG (Lousiana). According to the Poland representative this gas would be 20% cheaper than Russian gas. (if one has to believe it). Those contracts are very secretive in their terms. This contract in particular is still dependent on the termination of liquefaction facilities in Lousiana.

I don't know much about NG markets in Poland but according to Eurostat prices for non-household consumers are very similar in Poland, Germany, Lithuania or Spain.

PlutoniumKun , October 18, 2018 at 10:36 am

Gas contracts are usually linked to oil prices. A lot of LNG is traded as a fungible product like oil, but that contract seems different – most likely its constructed this way because of the huge capital cost of the LNG facilities, which make very little economic sense for a country like Poland which has pipelines criss-crossing it. I suspect the terminals have more capacity that the contract quantity – the surplus would be traded at market prices, which would no doubt be where the profit margin is for the supplier (I would be deeply sceptical that unsubsidised LNG could ever compete with Russia gas, the capital costs involved are just too high).

Watt4Bob , October 18, 2018 at 8:26 am

IIRC, the US is pushing LNG because fracking has resulted in a lot of NG coincident with oil production. They've got so much NG coming out of fracked oil wells that they don't know what to do with it and at present, a lot of it just gets flared, or leaks into the atmosphere.

IMO, the folks responsible for this waste are as usual, ignoring the 'externalities', the costs to the environment of course, but also the cost of infrastructure and transport related to turning this situation to their advantage.

So they turn to bullying the EU to ignore the price advantage that Russia is able to offer, due to the economics of pipeline transport over liquefaction and ocean transport, and of course the issues of reliability and safety associated with ocean transport, and high-pressure LNG port facilities compared to pipelines.

This doesn't even take into account the possibility that the whole fracked gas supply may be a short-lived phenomenon, associated with what we've been describing here as basically a finance game.

Trump will probably offer the EU 'free' LNG port facilities financed by low-income American tax-payers, and cuts to 'entitlements', all designed to MAGA.

PlutoniumKun , October 18, 2018 at 10:39 am

Just to clarify, fracked gas is not usually a by-product of oil fracking – the geological beds are usually distinct (shale gas tends to occur at much deeper levels than tight oil). Gas can however be a byproduct of conventional oil production. 'wet' gas (propane, etc), can be a by-product of either.

Synapsid , October 18, 2018 at 11:14 am

PlutoniumKun,

It's common for oil wells both fracked and conventional to produce natural gas (NG) though not all do. The fracked wells in the Permian Basin are producing a great deal of it.

Natural gas does indeed form at higher temperatures than oil does and that means at greater depth but both oil and NG migrate upward. Exploration for petroleum is hunting for where it gets captured at depth, not for where it's formed. Those source rocks are used as indicators of where to look for petroleum trapped stratigraphically higher up.

Steve , October 18, 2018 at 8:53 am

It seems we have been maneuvering for a while to raise our production of LNG and oil (unsustainably) in order to become an important substitute supplier to the EU countries. It sort of looks like our plan is to reduce EU opposition to our attacking Russia. Then we will have China basically surrounded. This is made easier with our nuclear policy of "we can use nuclear weapons with acceptable losses." What could go wrong?

Watt4Bob , October 18, 2018 at 9:02 am

What could go wrong?

I wonder what the secret industry studies say about the damage possible from an accident at a LNG port terminal involving catastrophic failure and combustion of the entire cargo of a transport while unloading high-pressure LNG.

They call a fuel-air bomb the size of a school bus 'The Mother of all bombs', what about one the size of a large ocean going tanker?

Anarcissie , October 18, 2018 at 10:46 am

Many years ago, someone was trying to build an LNG storage facility on the southwest shore of Staten Island 17 miles SW of Manhattan involving very large insulated tanks. In spite of great secrecy, there came to be much local opposition. At the time it was said that the amount of energy contained in the tanks would be comparable to a nuclear weapon. Various possible disaster scenarios were proposed, for example a tank could be compromised by accident (plane crashes into it) or terrorism, contents catch fire and explode, huge fireball emerges and drifts with the wind, possibly over New Jersey's chemical farms or even towards Manhattan. The local opponents miraculously won. As far as I know, the disused tanks are still there.

Wukchumni , October 18, 2018 at 10:55 am

This was a fuel-air bomb @ Burning Man about a dozen years ago, emanating from an oil derrick of sorts.

I was about 500 feet away when it went up, and afterwards thought maybe we were a bit too close to the action, as we got blasted with heat

https://www.youtube.com/watch?v=Wyc6LTVxhJA

The Rev Kev , October 18, 2018 at 10:56 am

Does this page help Watt4Bob?

https://www.laohamutuk.org/Oil/LNG/app4.htm

Watt4Bob , October 18, 2018 at 2:53 pm

That last one was a doozy as they say!

Nigeria 2005;

A 28-inch LNG underground pipeline exploded in Nigeria and the resulting fire engulfed an estimated 27 square kilometers.

Here's one from Cleveland;

On 20 October 1944, a liquefied natural gas storage tank in Cleveland, Ohio, split and leaked its contents, which spread, caught fire, and exploded. A half hour later, another tank exploded as well. The explosions destroyed 1 square mile (2.6 km2), killed 130, and left 600 homeless.

Synoia , October 18, 2018 at 3:54 pm

The locals in Nigeria drill hole in pipeline to get free fuel.

The Nigeria Government has been really wonderful about sharing the largess and riches of their large petroleum field in the Niger delta. Mostly with owners of expensive property around the world.

The Rev Kev , October 18, 2018 at 9:05 am

I am trying to think of what might be in it for the Germans to go along with this deal but cannot see any. The gas would be far more expensive that the Russian deliveries. A fleet of tankers and the port facilities would have to be built and who is going to pick up the tab for that? Then if the terminal is in Louisiana, what happens to deliveries whenever there is a hurricane?

I cannot see anything in it for the Germans at all. Trump's gratitude? That and 50 cents won't buy you a cup of coffee. In any case Trump would gloat about the stupidity of the Germans taking him up on the deal, not feel gratitude. The US wants Germany to stick with deliveries via the Ukraine as they have their thumb on that sorry country and can threaten Germany with that fact. Nord Stream 2 (and the eventual Nord Stream 3) threaten that hold.

The killer argument is this. In terms of business and remembering what international agreements Trump has broken the past two years, who is more reliable as a business partner for Germany – Putin's Russia or Trump's America?

Ignacio , October 18, 2018 at 10:20 am

Apart from cost issues, If American companies rely on shale gas to keep or increase production will they be able to honor 20 year supply contracts?

PlutoniumKun , October 18, 2018 at 10:37 am

I find it impossible to believe that a gas supplier would keep to an artificially low LNG contract if, say, a very cold winter in the US led to a shortage and extreme price spike. They'd come up with some excuse not to deliver.

The Rev Kev , October 18, 2018 at 10:40 am

Good question that. Poland has just signed a 20 year agreement with the US so I will be curious how that works out for them. Story at - https://www.rt.com/business/441494-poland-us-gas-lng/

jsn , October 18, 2018 at 12:16 pm

Trumps argument appears to be that Germany as a NATO member relies on US DOD for defense, to pay for that they must buy our LNG.

jefemt , October 18, 2018 at 9:25 am

My recollection was that there was a law that prohibited export-sales of domestic US hydrocarbons. That law was under attack, and went away in the last couple years?

LNG with your F35? said the transactional Orangeman

Duck1 , October 18, 2018 at 2:51 pm

The fracked crude is ultralight and unsuitable for the refineries in the quantities available, hence export, which caused congress to change the law. No expert, but understand that it is used a lot as a blender with heavier stocks of crude, quite a bit going to China.

oh , October 18, 2018 at 10:01 am

The petroleum industry has been bribing lobbying the administration for quite a while to get this policy in place, The so called surplus of NG today (if there is), won't last long. Exports will create a shortage and will result in higher prices to all.

vidimi , October 18, 2018 at 10:43 am

also, if Germany were to switch to American LNG, for how long would this be a reliable energy source? Fracking wells are short lived, so what happens once they are depleted? who foots the bill?

John k , October 18, 2018 at 12:48 pm

We do. Shortage here to honor export contracts, as has happened in Australia.

Big Tap , October 18, 2018 at 2:02 pm

The United States should lead by example. Telling Germany not to import Russian gas is rich considering the U.S. also imports from Russia. https://www.forbes.com/sites/rrapier/2018/07/12/russia-was-a-top-10-supplier-of-u-s-oil-imports-in-2017/

Seamus Padraig , October 18, 2018 at 2:14 pm

I just love the fact that Trump is publicly calling out Merkel on this; she has been nothing but two-faced and hypocritical on the Russia question.

She was one of the ones who pushed the EU hard, for example, to sanction Russia in the wake of the coup in Ukraine (which she had also supported). And then she pushed the EU hard to kill off the South Stream pipeline, which would have gone through SE Europe into Austria. She used the excuse of 'EU solidarity' against 'Russian aggression' to accomplish that only to then turn around and start building yet another pipeline out of Russia and straight into Germany! The Bulgarians et al. must feel like real idiots now. It seems Berlin wants to control virtually all the pipelines into Europe.

So, three cheers for Trump embarrassing Merkel on this issue!

Unna , October 18, 2018 at 2:24 pm

Putting money aside for a moment, Trump, as well as the entire American establishment, doesn't want Russia "controlling" Germany's energy supplies. That's because they want America to control Germany's energy supplies via controlling LNG deliveries from America to Germany and by controlling gas supplies to Germany through Ukraine. This by maintaining America's control over Ukraine's totally dependent puppet government. The Germans know this so they want Nord Stream 2 & 3.

Ukraine is an unreliable energy corridor on a good day. It is run by clans of rapacious oligarchs who don't give one whit about Ukraine, the Ukrainian "people", or much of anything else except business. The 2019 presidential election may turn into a contest among President Poroshenko the Chocolate King, Yulia Tymoshenko the Gas Princess, as well as some others including neo Nazis that go downhill from there. What competent German government would want Germany's energy supplies to be dependent on that mess?

It has been said that America's worst geopolitical nightmare is an economic-political-military combination of Russia, Iran, and China in the Eurasian "heartland". Right up there, if not worse, is a close political-economic association between Germany and Russia; now especially so since such a relationship can quickly be hooked into China's New Silk Road, which America will do anything to subvert including tariffs, sanctions, confiscations of assets, promotion of political-ethnic-religious grievances where they may exist along the "Belt-Road", as well as armed insurrections, really maybe anything short of all out war with Russia and China.

Germany's trying to be polite about this saying, sure, how about a little bit of LNG along with Nord Stream 2 & 3? But the time may come, if America pushes enough, that Germany will have to make an existential choice between subservience to America, and pursuit of it's own legitimate self interest.

Synoia , October 18, 2018 at 3:33 pm

The Empire fights Back.

Study a map of the ME, and consider the silk road Terminii.

Synoia , October 18, 2018 at 3:30 pm

It's hard to make NG explode, as it is with all liquid hydrocarbons. It is refrigerated, and must change from liquid to gaseous for, and be mixed with air.

I've also worked on a Gas Tanker in the summer vacations. The gas was refrigerated, and kept liquid. They is a second method, used for NG, that is to allow evaporation from the cargo, and use it as fuel for the engine (singular because there is one propulsion engine on most large ships) on the tanker.

Watt4Bob , October 18, 2018 at 5:31 pm

I dunno, there are other opinions .

[Oct 09, 2018] The Next Pillar Of Oil Demand Growth

Oct 09, 2018 | www.zerohedge.com

Authored by Nick Cunningham via Oilprice.com,

The debate about peak oil demand always tends to focus on how quickly electric vehicles will replace the internal-combustion engine , especially as EV sales are accelerating. However, the petrochemical sector will be much more difficult to dislodge , and with alternatives far behind, petrochemicals will account for an increasing share of crude oil demand growth in the years ahead.

[Oct 05, 2018] Putin on Venesuella

Oct 05, 2018 | en.kremlin.ru

Ryan Chilcote: President Putin, let's get back to geopolitics. When you were talking about oil – and when everyone talks about oil and disruptions on the market, they don't just talk about Iran, they talk about Venezuela – you mentioned Venezuela at the beginning of our conversation. Last year, I interviewed President Maduro, the President of Venezuela, here. Venezuela is an ally of Russia. Russia has a lot of oil interests in Venezuela. Oil production in Venezuela is not going well, and politically, things are going very poorly, as you know. Millions of people are leaving the country. There's hunger. There is a lot of talk in the United States, and not only in the United States, in Central and South America, that perhaps it's time for President Maduro to go. Do you agree with that?

Vladimir Putin: This is up to the people of Venezuela, not anyone else in the world.

As for various means of influencing the situation in Venezuela, there should be no such thing All of us influence each other in one way or another, but it should not be done in a way that makes the civilian population even worse off. This is a matter of principle.

Should we rejoice that life is extremely difficult for people there and want to make things even worse with a view to overthrowing President Maduro? He was recently targeted in a terrorist attack, an assassination attempt. Shall we condone such methods of political resistance too?

I think this is absolutely unacceptable. This and anything like it. The people of the country should be given a chance to shape their destiny themselves. Nothing should be imposed from the outside.

This is what has emerged historically in Venezuela. What has emerged historically in the Persian Gulf has emerged there, and the same in Europe, America and Southeast Asia. Nobody should go in there like a bull in a china shop without understanding what is taking place there, instead thinking only that the bull is one of the largest and smartest animals. It is necessary to take a look and give people a chance to figure it out. I have a very simple outlook on this.

[Oct 05, 2018] Russian Energy Week International Forum: Vladimir Putin addressed the plenary session of the second Russian Energy Week Energy Efficiency and Energy Development International Forum.

Oct 03, 2018 | en.kremlin.ru

Indeed, we have now met with the Secretary General and spoke about our cooperation in detail. I would like to draw your attention to the fact that probably for the first time in history all participants in the agreements honoured their commitments in full. I believe Russia made a commitment to reduce production by 30,000 barrels, and we did this, just like all other participants in this agreement.

The market is now balanced. The current growth of oil prices is by and large not a result of our efforts but triggered by attendant circumstances, expectations of decisions on Iran – incidentally these decisions are absolutely illegal and harmful to the world economy. The fall in oil production in North Africa is also linked with political circumstances – a civil war and so on. The reduction in Venezuela is also taking place for domestic political reasons and in connection with the restrictions it has introduced. This is what it is all about.

As you said, President Trump considers this price high. I think he is right to some extent but this suits us very well – $65–$70–$75 per barrel. This is quite enough to ensure the effective performance of energy companies and the investment process. But let us be straight – such prices have largely been produced by the activities of the US administration. I am referring to expectations of sanctions against Iran and political problems in Venezuela. Look what is happening in Libya – the state is destroyed. This is the result of irresponsible policy that is directly affecting the world economy. Therefore, we must work closer with each other, not only in the energy industry but also in the political area so as to prevent such setbacks.

As for increasing production – we have already increased it by 400,000 barrels as we agreed with our partners. We can raise it by another 200,000–300,000 barrels per day if need be. Ryan Chilcote : President Putin, is it right for the President of the United States to be so actively trying to manage the price of oil? We're coming up on elections in the United States, he's concerned about the price of gas. A gallon of gas in the United States costs almost $3. Traditionally, voters punish the party in power when prices rise ahead of elections. Is he doing the right thing, or actually should he step out of the oil market and let the market dictate what happens?

Vladimir Putin : I have already said this and want to repeat it again: we had a very good meeting with the President of the United States in Helsinki. But if we had talked about the issue we are discussing now, I would have told him: Donald, if you want to find out who is guilty for the increase in prices, you should look in the mirror. That's the truth. We have just spoken about the geopolitical factors behind the price hikes. They exist and really play a role in the market. It is better not to interfere in these market processes, not to try and get some competitive advantage by using political instruments and not to try to regulate prices as the Soviet Union did. This does not end well. After all, when talking about our negotiated actions with OPEC we do not use non-market instruments. We are merely matching supply and demand in the market, no more than that. Everything else today has to do with geopolitical factors that influence prices.

As for gas prices, they are calculated on the basis of oil prices. Oil prices are produced by the market whereas gas prices are linked to oil prices. Gas prices fluctuate depending on oil prices with a small time lag of five to six months. That is all.

What is happening in the United States? The United States is one of the world's biggest producers of both oil and gas. We know everything about new technology that is being countered by environmentalists. I agree with them, this production is often carried out using barbarous methods we do not use.

Who is trying to exert pressure on the administration? I do not know. Let us talk about the energy industry. Please do not involve me in domestic political processes and squabbles in the United States. It is for you to figure out or else we will be accused again of meddling in the domestic political life of the US.

Ryan Chilcote: When I spoke about the price of gasoline in the United States, a gallon of gasoline, I meant the price of petrol, of "benzin," not "gaz."

Vladimir Putin : As you understand, this is the price of the end product and this applies to oil products. This price is not simply formed from the primary price of oil or gas if we are talking about gas fuel. State policy also exerts an influence on the final price for consumers. And what about taxes? Why do some European countries double prices on our gas before it reaches the final consumers? This is all state policy.

So it would be best not to point your finger at energy producers all the time. You should figure out what economic policy is being pursued in a country and what is being done to make sure the product reaches the customers at affordable prices. That is all. Ryan Chilcote : President Putin, let me ask you about this EU initiative. What do you make of it?

Vladimir Putin : (commenting on the EU initiative to protect European companies in connection with US sanctions against Iran) It is a bit delayed but better late than never. It is delayed because quite recently the President of France speaking, I believe, in New York directly announced the need to enhance the economic sovereignty of the European Union and reduce its dependence on the United States. This is certainly right.

And how can it be otherwise if, as I have already said, someone is trying to gain competitive advantages in business by using political instruments? I think nobody will like this but this is happening and we are seeing this today.

This is why Europe is thinking about some new opportunities in connection with these circumstances, for instance about dollar-free settlements that incidentally will undermine the dollar. In this context – I have said this many times but would like to repeat it again – I believe that our American partners are committing a huge strategic mistake and undermining confidence in the dollar as today's only reserve currency. They are undermining confidence in it as a universal instrument and are really biting the hand that feeds.

This is strange, even surprising, but I think this is a typical mistake made by any empire when people believe nothing will happen, that everything is so powerful, so strong and stable that there will be no negative consequences. But no, they will come sooner or later. This is the first point.

And the second point, Europe wants to fulfil its international commitments – this is how we understand our European partners – in this case, as regards Iran's nuclear deal, and sees in it, as we do, an element of stability in global affairs, in global politics, which, in one way or another, is reflected in the global economy, as we have already noted.

< >

Ryan Chilcote: President Putin, I'd like to go back to Iran for a second. One of the things that the United States would like to see Iran do is to obviously withdraw from Syria. The US national security advisor just last week said that the United States is going to now stay in Syria as long as Iran and its proxies are there. Russia has been very clear. Russia says that the US military's presence in Iran is illegal. What can you do about the US being in Syria?

Vladimir Putin : There are two options available to remedy the situation.

The first is that the United States must obtain the mandate of the UN Security Council to have its armed forces on the territory of another country, in this case Syria, or receive an invitation from the legitimate Syrian government to deploy its troops there for whatever reason. International law does not allow the presence of any country on the territory of another country for other reasons.

Ryan Chilcote: What can Russia do to change the US' position? The US says it's going to stay, that Iran has to leave, and the US will stay until Iran pulls out of Syria. So what can Russia do?

Vladimir Putin : As we are all well aware, in this particular case the United States (just read the UN Charter to see that my point is correct, and this is not news to anyone) is violating the UN Charter and international law by its presence on the territory of another country without the authorisation of the UN Security Council, without a corresponding resolution and without the invitation of the government of that country. There is nothing good about it.

We have been operating on the premise that we nonetheless cooperate with our US partners in fighting terrorism and ISIS in Syria. But as ISIS gradually ceases to exist in Syria, there is just no other rationale, even outside the framework of international law.

What, in my opinion, can be done and what should we all strive to achieve? We must strive to ensure that there are no foreign troops from other countries in Syria at all. This is what we need to achieve.

Ryan Chilcote : Including Russian forces, of course.

Vladimir Putin : Yes, including Russian, if the Syrian government so decides.

Ryan Chilcote : You just struck a deal with President Erdogan on Syria. Do you think that that's going to hold?

Vladimir Putin : How is that related to oil?

Russian Energy Week International Forum.
Russian Energy Week International Forum.

Ryan Chilcote : It's in a very sensitive geopolitical area.

Vladimir Putin : Maybe it is related, since Syria also produces energy resources and influences the market situation one way or another.

In this sense, yes, we need a stable Syria, no question about it. I am not even talking about other aspects related to international security and fighting terrorism.

This is a very good deal (between Russia and Turkey in this particular case), because it prevented more bloodshed. As you may recall, it includes our agreement to create a demilitarised zone 15–20 kilometres deep, a de-escalation zone near the city of Idlib, known as the Idlib zone. I would like to note that along with our Turkish partners we are now working to implement these agreements. We can see it and are grateful to them for their efforts, and we will continue to work with them on this matter with the support of Iran.

Ryan Chilcote : Let's return to energy, or at least more directly to energy, President Putin, and talk about Nord Stream 2. That's the pipeline that Gazprom wants to build between Russia and Germany. Again, the President of the United States has said his opinion about this. He says that Germany is effectively a hostage already of Russia, because it depends on Russia for so much of its energy and gas supplies, and that it's vulnerable to "extortion and intimidation" from Russia. What do you make of that?

Vladimir Putin : My response is very simple. Donald and I talked about this very briefly in Helsinki. In any sale, including the sale of our gas to Europe, we are traditionally the supplier, of pipeline gas I mean. We have been doing this since the 1960s. We are known for doing it in a highly responsible and professional manner, and at competitive prices for the European market. In general, if you look at the characteristics of the entire gas market, the price depends on the quantity and on sales volumes. The distance between Russia and Europe is such that pipeline gas is optimal. And the price will always be competitive, always. This is something all experts understand.

We have a lot of people here in this room, in the first row, who could easily be seated next to me, and I would gladly listen to them, because each one is an expert, so each of them can tell you that. And so Nord Stream 2 is a purely commercial project, I want to emphasise this, warranted by rising energy consumption, including in Europe, and falling domestic production in European countries. They have to get it from somewhere.

Russian gas accounts for around 34 percent of the European market. Is this a lot or a little? It is not insubstantial, but not a monopoly either. Europe certainly can and does actually buy gas from other suppliers, but American liquefied gas is about 30 percent more expensive than our pipeline gas on the European market. If you were buying products of the same quality and you were offered the same product for 30 percent more , what would you choose? So, what are we talking about?

If Europe starts buying American gas for 30 percent more than ours, the entire economy of Germany, in this case, would quickly become dramatically less competitive. Everyone understands this; it is an obvious fact.

But business is business, and we are ready to work with all partners. As you know, our German partners have already begun offshore construction. We are ready to begin as well. We have no problems with obtaining any permits. Finland agreed, and so did Sweden, Germany, and the Russian Federation. This is quite enough for us. The project will be implemented.

< >

Ryan Chilcote : President Putin, did you want to jump in here?

Vladimir Putin: (following up on the remarks by CEO of Royal Dutch Shell Ben van Beurden) We understand the realities and treat all our partners with respect. We have very good, amiable long-term relations with all our partners, including the company represented by my neighbour on the left. This company is working in the Russian market and working with great success, but we understand everything very well and understand the realities. We are carrying out the project ourselves. We do not and will not have any problems here. That is to say, they may arise, of course, but we will resolve them.

Some things are beyond the realm of political intrigue. Take supplies to the Federal Republic of Germany. Not everyone knows that the decision was made there to shut down the nuclear power industry. But that is 34 percent of its total energy balance. We are proud of the development of the nuclear power industry in the Russian Federation, although the figure for us is just 16 percent. We are still thinking about how to raise it to 25 percent and are making plans. Theirs is 34 percent and everything will be closed down. What will this vacuum be filled with? What?

Look at LNG [liquefied natural gas ] which is sold by our various competitors and partners. Yes, LNG can and should be in the common basket of Europe and Germany. Do you know how many ports built in Europe are used for LNG transfer? Just 25 percent. Why? Because it is unprofitable.

There are companies and regions for which it is profitable to supply LNG and this is being done. The LNG market is growing very fast. But as for Europe, it is not very profitable, or unprofitable altogether.

Therefore, in one way or another we have already seen Nord Stream 1 through and its performance is excellent. Incidentally, our gas supplies to Europe are continuously growing. Last year, I believe, they amounted to 194 billion cubic metres and this year they will add up to 200 billion cubic metres or maybe even more.

We have loaded practically all our infrastructure facilities: Blue Stream to Turkey, Nord Stream 1 is fully loaded. Yamal-Europe is fully loaded – it is almost approaching 100 percent, while the demand is going up. Life itself dictates that we carry out such projects.

Ryan Chilcote : President Trump's position on American LNG exports is perhaps a little bit more nuanced. His point is that instead of buying Russian gas, even perhaps if it's a bit more expensive, the Germans and other European allies of the United States, because the United States is paying for their defence, should be buying American gas even if there is, I guess the argument suggests, a little bit of a higher price for that

Vladimir Putin : You know, this argument doesn't really work, in my opinion. I understand Donald. He is fighting for the interests of his country and his business. He is doing the right thing and I would do the same in his place.

As for LNG, as I have already said, it is not just a little more expensive in the European market but 30 percent more. This is not a little bit more, it is a lot more, beyond all reason, and is basically unworkable.

But there are markets where LNG will be adopted, where it is efficient, for instance in the Asia-Pacific region. By the way, where did the first shipment of LNG from our new company Yamal-LNG go? Where did the first tanker go? To the United States, because it was profitable. The United States fought this project but ended up buying the first tanker. It was profitable to buy it in this market, at this place and time, and it was purchased.

LNG is still being shipped to the American continent. It's profitable.

It makes no sense to fight against what life brings. We simply need to look for common approaches in order to create favourable market conditions, including, for example, conditions conducive to the production and consumption of LNG in the United States itself and securing the best prices for producers and consumers. This could be achieved by coordinating policy, rather than just imposing decisions on partners.

As for the argument, "We defend you, so buy this from us even if it makes you worse off", I don't think it is very convincing either. Where does it lead? It has led to the Europeans starting to talk about the need to have a more independent defence capability, as well as the need to create a defence alliance of their own that allegedly will not undermine NATO while allowing the Europeans to pursue a real defence policy. This is what, in my view, such steps are leading to.

This is why I am sure that a great many things will be revised. Life will see to that.

< >

Ryan Chilcote: President Putin, let's get back to geopolitics. When you were talking about oil – and when everyone talks about oil and disruptions on the market, they don't just talk about Iran, they talk about Venezuela – you mentioned Venezuela at the beginning of our conversation. Last year, I interviewed President Maduro, the President of Venezuela, here. Venezuela is an ally of Russia. Russia has a lot of oil interests in Venezuela. Oil production in Venezuela is not going well, and politically, things are going very poorly, as you know. Millions of people are leaving the country. There's hunger. There is a lot of talk in the United States, and not only in the United States, in Central and South America, that perhaps it's time for President Maduro to go. Do you agree with that?

Vladimir Putin: This is up to the people of Venezuela, not anyone else in the world.

As for various means of influencing the situation in Venezuela, there should be no such thing All of us influence each other in one way or another, but it should not be done in a way that makes the civilian population even worse off. This is a matter of principle.

Should we rejoice that life is extremely difficult for people there and want to make things even worse with a view to overthrowing President Maduro? He was recently targeted in a terrorist attack, an assassination attempt. Shall we condone such methods of political resistance too?

I think this is absolutely unacceptable. This and anything like it. The people of the country should be given a chance to shape their destiny themselves. Nothing should be imposed from the outside.

This is what has emerged historically in Venezuela. What has emerged historically in the Persian Gulf has emerged there, and the same in Europe, America and Southeast Asia. Nobody should go in there like a bull in a china shop without understanding what is taking place there, instead thinking only that the bull is one of the largest and smartest animals. It is necessary to take a look and give people a chance to figure it out. I have a very simple outlook on this.

I would like to return to the previous question. After all, we are dealing with energy. I would like to confirm what my colleagues said here about Russia's energy resources and potential. They are indeed enormous. Truly enormous. We are in first place in gas reserves. I believe we have 73.3 trillion cubic metres of gas. The Yamal peninsula was mentioned here but NOVATEK will carry out one more project, Arctic 2, on a neighbouring peninsula. It is about the same size and with the same investment. The first tranche in this project is $27 billion, and the second tranche is about $25 billion. I believe all this will be carried out.

We have the world's largest coal reserves – 275 billion tonnes. We are third in oil reserves. Third in the world in oil reserves. We are the world's largest country by territory. If we take a deeper look we are bound to find many other things. So, we are indeed lucky.

But we were given this not by the Lord alone. Past generations of ours developed these lands. We should never forget what was done by our predecessors, and we will continue to build on it. We will work with our partners. Incidentally, almost all major energy companies work in Russia.

Ryan Chilcote: When we were talking about the EU initiative to try and allow trade between EU countries and Iran, I couldn't help but remember that Russia itself, faced with sanctions, is thinking about a plan to wean itself off of the dollar. This is something that many countries have tried and failed. Why does Russia think that it can succeed in this?

Vladimir Putin : You used the past tense or is the translation inaccurate? Faced. Have the sanctions been lifted? Did I miss something?

Ryan Chilcote: Russia is facing with sanctions.

Vladimir Putin: Okay then. You know, sometimes I think that it would be good for us if those who want to impose sanctions would go ahead and impose all the sanctions they can think of as soon as possible. ( Applause. ) This would free our hands to defend our national interests however we deem most effective for us.

It is very harmful, in general. It hurts the ones doing it. We all figured this out long ago. That is why we have never supported and will never support illegal sanctions that circumvent the United Nations.

Ryan Chilcote: Since you brought up the subject of sanctions, as you know after the Skripal poisoning, Russia is facing even more of them, perhaps as soon as November. What is Russia prepared to do to change the trajectory of relations with the United States and the West?

Vladimir Putin : We are not the ones introducing these sanctions against the United States or the West. We are just responding to their actions, and we do this in very restrained, careful steps so as not to cause harm, primarily to ourselves. And we will continue to do so.

As regards the Skripals and all that, this latest spy scandal is being artificially inflated. I have seen some media outlets and your colleagues push the idea that Skripal is almost a human rights activist. But he is just a spy, a traitor to the motherland. There is such a term, a 'traitor to the motherland,' and that's what he is.

Imagine you are a citizen of a country, and suddenly somebody comes along who betrays your country. How would you, or anybody present here, a representative of any country, feel about such a person? He is scum, that's all. But a whole information campaign has been deployed around it.

I think it will come to an end, I hope it will, and the sooner the better. We have repeatedly told our colleagues to show us the documents. We will see what can be done and conduct an investigation.

We probably have an agreement with the UK on assistance in criminal cases that outlines the procedure. Well, submit the documents to the Prosecutor General's Office as required. We will see what actually happened there.

The fuss between security services did not start yesterday. As you know, espionage, just like prostitution, is one of the most 'important' jobs in the world. So what? Nobody shut it down and nobody can shut it down yet.

Ryan Chilcote : Espionage aside, I think there are two other issues. One is the use of chemical weapons, and let's not forget that in addition to the Skripal family being affected in that attack, there was also a homeless person who was killed when they came in contact with the nerve agent Novichok.

Vladimir Putin: Listen, since we are talking about poisoning Skripal, are you saying that we also poisoned a homeless person there? Sometimes I look at what is happening around this case and it amazes me. Some guys came to England and started poisoning homeless people. Such nonsense. What is this all about? Are they working for cleaning services? Nobody wanted to poison This Skripal is a traitor, as I said. He was caught and punished. He spent a total of five years in prison. We released him. That's it. He left. He continued to cooperate with and consult some security services. So what? What are we talking about right now? Oil, gas or espionage? What is your question?

Let's move on to the other oldest profession and discuss the latest developments in that business. (Laughter.)

Ryan Chilcote : A lot of what we've discussed today goes back to Russia's relationship with the United States, and so I'll ask you just a couple of questions about that and we can move on. The US says you personally ordered the 2016 interference in the elections – I know you deny that. You have said you wanted Trump elected. What do you want to see in 2018 from these midterm election

Vladimir Putin: In Russia or the United States? What are you asking me about?

Ryan Chilcote : What would you like to see happen in the 2018 midterm elections in the United States.

Vladimir Putin: What I want – and I am completely serious – is that this nightmare about Russia's alleged interference with some election campaign in the United States ends. I want the United States, the American elite, the US elite to calm down and clear up their own mess and restore a certain balance of common sense and national interests, just like in the oil market. I want the domestic political squabbles in the United States to stop ruining Russia-US relations and adversely affecting the situation in the world.

Ryan Chilcote: I'll ask this final question on the political front. In Helsinki, you said that you wanted President Trump to win because he favours better relations with Russia. But in fact, as Russia itself says all of the time, relations between Russia and the United States seem to get worse every day. Wouldn't it be better for Russia to have a president in the United States that is not politically compromised by the widely held perception that this country helped him get into the White House?

Vladimir Putin : Firstly, I do not believe President Trump was compromised. The people elected him, the people voted for him. There are those who do not like this; those who do not want to respect the opinion of the American voters. But this is not our business – this is an internal matter of the United States.

Would we be better off or worse? I cannot say either. As is known, there are no ifs in politics. Maybe it would have been even worse, how are we to know? We must derive from what is , and work with that. Good or bad, there is no other President of the United States; there is no other United States either.

We will work. The US is the largest world power, a leader in many spheres, our natural partner in a variety of projects, including global security, the non-proliferation of weapons of mass destruction, terrorism, climate change, as well as the environment. We have a lot of common problems which overlap that we have to work on together.

We presume that sooner or later the moment will come when we will be able to restore full-fledged relations.

< >

Ryan Chilcote : President Putin, I know you need to get a meeting with the Austrian Chancellor, so I'm going to wrap this session up with you, sir. The title of our conversation today is Sustainable Energy for a Changing World. You've been driving Russian energy policy for nearly 20 years now. What changes in the world, or what change in the world, would you identify as the biggest concern for you, and what gives you the most optimism when it comes to what we're seeing.

Vladimir Putin: If you allow me, I would stick to the subject. The questions that you asked concern me as well.

Indeed, we are apparently witnessing global warming, but the reasons for this are not entirely clear, because there is still no answer. The so-called anthropogenic emissions are most likely not the main cause of this warming. It could be caused by global changes, cosmic changes, some changes in the galaxy that are invisible to us – and that's that, we don't even understand what is actually happening. Probably, anthropogenic emissions influence the situation somehow, but many experts believe they have an insignificant effect. This is my first point.

Secondly, I already said this, and I can remind you once again. Everyone blames the United States now. As you see, we have many problems and unresolved matters with the United States, and the US President and I approach many international affairs differently and evaluate our bilateral relations differently. But we still have to be objective. There was a time I saw President Bush refuse to sign the Kyoto agreements. But we still found a solution. I think the same will happen in this case. Well, Trump believes that the Paris Agreement is unprofitable for his country for a variety of reasons. I will not go into details now, he must have talked about this many times, and we know his position.

But I think, we should not antagonise the relationship with the US, because without them it would be impossible to reduce the influence of anthropogenic air pollution on the global climate even a little bit. Therefore, one way or another we need to involve the US in this discussion and this joint work. As I understand, President Trump does not object. He says that he dislikes some provisions of the Paris agreement, but he is not opposed to working with the global community on this matter.

Now, as regards the pollution and the future of the global energy, in order to fight the heat, we need no less energy resources than to fight the cold. Secondly, my colleagues were right, millions of people do not have access to energy resources, and we will never prohibit the use of the contemporary blessings of civilization, it is just unreal. The economy and the industry will keep developing.

Of course, in Russia we also join the best international practices, so-called energy efficient technology that has a little bit of influence on the environment, and we, of course, will continue this.

But I also agree with our Saudi colleague. These alternative sources are very important, but we will not be able to go without hydrocarbons in the next decades. People will have to use them for many decades to come. We mostly speak about oil, but coal is what is used most.

We are speaking about the need to use electric cars, but where will the electricity come from? From the socket? Okay, from the socket, but how did it get there? First we need to burn coal to produce electricity, while gas remains the most environmentally friendly energy resource. So we need to take a comprehensive approach to all such matters.

Ryan Chilcote : Patrick Pouyané posed a challenge to you. He said it would be good if Russia used less coal. Are you prepared to accept that challenge and reduce consumption of coal here in Russia and production?

Vladimir Putin: We have signed the relevant Paris agreements and taken up our responsibilities. We have implemented the first stage of the Kyoto Protocol, and now the Paris Agreement will replace it. We have taken up all necessary responsibilities and will adhere to them. The question is not about reducing the usage of coal for domestic needs, we are not the largest emitter, the US and Asian countries emit much more. Here, we are not the leaders. We sell a lot of coal, but also not more than anyone else and we only help cover the demand. The question is not about us, but about modern technology that uses primary energy resources.

Let us go back to the last question, could you please repeat it?

Ryan Chilcote : Well, the title of the panel is Sustainable Energy for a Changing World. You've been driving Russia's energy policy for nearly 20 years now. What changes, or what is the change that gives you the most hope and what do you think the biggest challenge that you see amongst the changes is for energy?

Vladimir Putin : Concern is caused by uncertainty. In politics, in security, and in the economy. Volatility, in other words. This is it. And the number of uncertainties is growing. This is what causes concern – the unpredictability of the situation.

Ryan Chilcote : Are you talking about your colleague, the President of the United States?

Vladimir Putin : Not exactly. He certainly makes a significant contribution to this unpredictability by virtue of being the President of the largest world power, but not only him. I am talking about the situation in general.

Look at the rise of extremism – where did it come from? Why is this problem so acute today? Why is this extremism turning into terrorism? Doesn't that concern us? This is what we need to understand – where it all came from.

I will not go into details because we have a limited amount of time. But this is happening in many spheres. In the economy – the same thing. This growing uncertainty in all fields is what causes concern.

Now, what causes optimism? Common sense, I think. No matter how hard it is, people, humankind have always found ways out of the most difficult situations, guided by the interests of their countries, their peoples, and it is the goal of any government to ensure the well-being as well as the growth of the welfare of its people.

I think that sooner or later, and the sooner the better, the realisation will come that we need to get away from controversy as soon as possible, in any case, away from trying to resolve this controversy with unacceptable tools and ways that go beyond international law. It seems to me that it is necessary to strengthen the leading role of the United Nations, and on this foundation, move on.

Ryan Chilcote : And on that note, please join me in thanking and congratulating our participants in today's panel and, of course, our host today the President of Russia.

Vladimir Putin : Thank you very much.

[Oct 05, 2018] A few days ago the annual Russian Energy Week conference occurred where Putin gave a speech and answered numerous questions related to energy and geopolitics.

Oct 05, 2018 | www.moonofalabama.org

karlof1 , Oct 5, 2018 6:44:15 PM | link

Per @54--

Thanks for your answer, which is what I'd presumed. The bottom line seems to be that nothing's unhackable--no matter what, it will get hacked.

What follows is OT, but attempts to supply a reason for the propaganda pimple burst. A few days ago the annual Russian Energy Week conference occurred where Putin gave a speech and answered numerous questions related to energy and geopolitics. A few of the choice quotes related to his answers were published, but the transcript portion recording the Q&A had yet to be published in full at the Kremlin's website. The transcript's now complete regarding those Q&As directed at and answered by Putin, and what he has to say on a wide spectrum of issues is highly educational: No one can say they know how Putin feels about a particular issue without having read his answers. A few days ago, I tried linking to the Kremlin's website only to have the post eaten by TypePad's Cloud. Here's the link . Reading his answers and comments might lead Russophobic members of Trump's Swamp to burst a propaganda pimple in revenge for his honesty.

[Oct 02, 2018] The Inevitable Oil Supply Crunch

Notable quotes:
"... "Barring technology breakthrough beyond what we already assume, we'll need new oil discoveries," ..."
"... "We haven't seen anything like this since the 1940s," ..."
"... "The most worrisome is the fact that the reserve replacement ratio in the current year reached only 11 percent (for oil and gas combined) - compared to over 50 percent in 2012." ..."
"... "The mind set for most E&Ps is still to be conservative, and default is to return capital to shareholders. Yet the duty to shareholders' interests cannot be myopically short term. More of the 'windfall' cash needs to find its way into exploration to sustain the business in the long term," ..."
"... "frontier areas," ..."
"... "Suriname, the Brazilian Equatorial Margin; Mexico; Senegal, Gambia, Namibia and South Africa; Australia and Alaska." ..."
"... "More explorers need to get in on the action if the spectre of 'peak supply' is to be kept at bay," ..."
Oct 02, 2018 | oilprice.com

"The warning signs are there – the industry isn't finding enough oil." That's the start of a new report from Wood Mackenzie. The report concludes that a supply gap could emerge in the mid-2020s as demand rises at a time when too few new sources of supply are coming online.

By 2030, there could be a supply shortfall on the order of 3 million barrels per day (mb/d), WoodMac argues. By 2035, it balloons to 7 mb/d, and by 2040, it reaches 12 mb/d. "Barring technology breakthrough beyond what we already assume, we'll need new oil discoveries," the report says.

The seeds of the problem were sown during the oil market downturn that began in 2014. Global upstream exploration spending plunged from $60 billion in 2014 to just $25 billion in 2018, according to WoodMac. Unsurprisingly, that translated into a steep decline in new discoveries. In the early part of this decade, the oil industry was discovering around 8 billion barrels of oil annually. That figure has plunged by three quarters since 2014.

Read more © Todd Korol US sanctions against Iran could give oil a boost to $100 amid dramatic shortfall in supplies

The precise figures vary, but Rystad Energy came a similar conclusion, noting that the total volume of new oil and gas reserves discovered plunged to a record low in 2017. "We haven't seen anything like this since the 1940s," Sonia Mladá Passos, Senior Analyst at Rystad Energy, said in a December 2017 statement . "The most worrisome is the fact that the reserve replacement ratio in the current year reached only 11 percent (for oil and gas combined) - compared to over 50 percent in 2012."

This year, the industry has had a bit more success. Spending is on the rebound and new discoveries are on track to rise by about 30 percent, although that is heavily influenced by the developments in Guyana, where ExxonMobil and Hess Corp. have reported nearly a dozen discoveries, and hope to ramp up production to around 750,000 bpd by 2025.

It still may not be enough. Even if the industry were to somehow return to the good ol' days prior to the 2014 market crash, and begin discovering around 8 billion barrels of oil each year, it would only delay the supply crunch into the 2030s, according to WoodMac.

But, of course, that rate of discovery remains far below those levels, so the supply crunch may take place much sooner. Moreover, because large-scale projects take several years to develop, the activity taking place today will determine the supply mix in the mid- to late-2020s.

WoodMac says that the rate of discovery is highly correlated with the level of spending, so closing the supply gap will require more capital. And because of the run up in oil prices this year, the industry will have a lot more cash to throw around.

Read more © Nick Oxford Oil surges to 4-year high as investors see no sign of production rise amid Iran sanctions

The problem for the industry is that over the last few years the mindset, and the demands of shareholders, have shifted from production growth to profitability and investor returns. Shareholders are pressuring executives to return cash in the form of dividends and share buybacks. Energy stocks are not the darlings of Wall Street in the way they once were, particularly prior to the 2014 market meltdown. That puts extra pressure on oil and gas companies to dish out more of their earnings to investors rather than plowing it back into the ground.

But that means less spending on exploration. "The mind set for most E&Ps is still to be conservative, and default is to return capital to shareholders. Yet the duty to shareholders' interests cannot be myopically short term. More of the 'windfall' cash needs to find its way into exploration to sustain the business in the long term," WoodMac said in its report.

Shale output will continue to grow, especially after new pipelines come online in Texas, which will ease the current bottleneck. But the large-scale increases in production in the medium-term will come from "frontier areas," WoodMac says, as the string of discoveries in Guyana prove. WoodMac says the areas with the highest potential include "Suriname, the Brazilian Equatorial Margin; Mexico; Senegal, Gambia, Namibia and South Africa; Australia and Alaska."

For now, the level of activity is not enough to stave off the supply crunch, WoodMac warns, unless there is a dramatic increase in spending. "More explorers need to get in on the action if the spectre of 'peak supply' is to be kept at bay," the consultancy says.

This article was originally published on Oilprice.com

[Sep 28, 2018] Art Berman Don't Believe The Hype - Oil Prices Aren't Going Back To $100

Sep 27, 2018 | www.zerohedge.com

The breakout in Brent crude prices above $80 this week has prompted analysts at the sell side banks to start talking about a return to $100 a barrel oil . Even President Trump has gotten involved, demanding that OPEC ramp up production to send oil prices lower before they start to weigh on US consumer spending, which has helped fuel the economic boom over which Trump has presided, and for which he has been eager to take credit.

But to hear respected petroleum geologist and oil analyst Art Berman tell it, Trump should relax. That's because supply fundamentals in the US market suggest that the recent breakout in prices will be largely ephemeral, and that crude supplies will soon move back into a surplus.

Indeed, a close anaysis of supply trends suggests that the secular deflationary trend in oil prices remains very much intact. And in an interview with MacroVoices , Berman laid out his argument using a handy chart deck to illustrate his findings (some of these charts are excerpted below).

As the bedrock for his argument, Berman uses a metric that he calls comparative petroleum inventories. Instead of just looking at EIA inventory data, Berman adjusts these figures by comparing them to the five year average for any given week. This smooths out purely seasonal changes.

And as he shows in the following chart, changes in comparative inventory levels have precipitated most of the shifts in oil prices since the early 1990s, Berman explains. As the charts below illustrate, once reported inventories for US crude oil and refined petroleum products crosses into a deficit relative to comparative inventories, the price of WTI climbs; when they cross into a surplus, WTI falls.

Looking back to March of this year, when the rally in WTI started to accelerate, we can on the left-hand chart above how inventories crossed below their historical average, which Berman claims prompted the most recent run up in prices.

Comparative inventories typically correlate negatively to the price of WTI. But occasionally, perceptions of supply security may prompt producers to either ramp up - or cut back - production. One example of this preceded the ramp of prices that started in 2010 when markets drove prices higher despite supplies being above their historical average. The ramp continued, even as supplies increased, largely due to fears about stagnant global growth in the early recovery period following the financial crisis.

The most rally that started around July 2017 correlated with a period of flat production between early 2016 and early 2018.

Meanwhile, speculators have been unwinding their long positions. Between mid-June 2017 and January 2018, net long positions increased +615 mmb for WTI crude + products, and +776 for WTI and Brent combined. Since then, combined Brent and WTI net longs have fallen -335 mmb, while WTI crude + refined product net long positions have fallen -225 mmb since January 2018 and -104 mmb since the week ending July 10. This shows that, despite high frequency price fluctuation, the overall trend in positioning is down.

And as longs have been unwinding, data show that the US export party has been slowing, as distillate exports, which have been the cash cow driving US refined product exports, have declined. Though they remain strong relative to the 5-year average, they have fallen relative to last year. This has accompanied refinery expansions in Mexico and Brazil.

Meanwhile, distillate and gasoline inventories have been building.

Meanwhile, US exports of crude have remained below the 2018 average in recent weeks, even as prices have continued to climb.

This could reflect supply fears in the global markets. The blowout in WTI-Brent spreads would seem to confirm this. However, foreign refineries recognize that there are limitations when it comes to processing US crude (hence the slumping demand for exports).

In recent weeks, markets have been sensitive to supply concerns thanks to falling production in Venezuela and worries about what will happen with Iranian crude exports after US sanctions kick in in November.

But supply forecasts for the US are telling a different story than supply forecasts for OPEC. In the US, markets will likely remain in equilibrium for the rest of the year, until a state of oversupply returns in 2019. But OPEC production will likely continue to constrict, returning to a deficit in 2019.

Bottom line: According to Berman, the trend of secular deflation in oil prices remains very much intact. While Berman expects prices to remain rangebound for the duration of 2018 - at least in the US - it's likely markets will turn to a supply surplus next year, sending prices lower once again.

Listen to the full interview below

[Sep 21, 2018] A Container Ship Is Sailing Through Russia's Arctic Passage for the First Time

Sep 21, 2018 | russia-insider.com

Another landmark for the "Northeastern passage" -- so far only tankers had made the trip Brendon Petersen 16 hours ago | 1,546 5 Explorers and navigators have long searched for a way to move ships through the Arctic Circle as find a faster way to move goods between the Atlantic and the Pacific without having to go around either Asia or South America. Groups of people hunted for the fabled Northwest passage through North America for decades. The problem, of course, is that the Arctic contains too much ice.

Over the past few years, however, ice levels in the Arctic have been hitting record lows thanks to climate change, and while its effects are almost universally negative, one benefit is opened northern sea routes. Over the past month, a container ship sailing from Eastern Russia is pioneering a new Arctic route by being the first such ship to cross the Arctic Ocean .

On August 23, the container ship Venta Maersk left the Russian port of Vladivostok and headed to Bremerhaven in Germany. Normally, a trip like that would take the Venta Maersk through the Suez Canal on a 34 day trip. Instead, the ship will sail through the sea north of Russia on a route that will only take 23 days.

Last week, the Venta Maersk passed through the Sannikov Strait, the narrowest and most hazardous part of its journey, and is expected to arrive in Germany by the end of the week. Once it arrives, it will become the first container ship to complete a successful route through the Arctic Circle.

[Sep 21, 2018] Trump blames OPEC for high oil prices, but his polices drive them up analyst to RT -- RT US News

Notable quotes:
"... "pushing for higher and higher oil prices" ..."
"... "they stop it," ..."
"... "protecting those countries." ..."
"... "The US economy is overstimulated by the Trump $4 trillion tax cuts for investors and businesses," ..."
"... "When Trump accuses Iran publicly, it gives the global oil speculators a reason to drive up the price," ..."
"... "He is whipping up his domestic base," ..."
"... "Trump [is] trying to blame foreigners of all kinds for economic situation in the US." ..."
"... "another factual misrepresentation," ..."
"... Like this story? Share it with a friend! ..."
Sep 21, 2018 | www.rt.com

Trump blames OPEC for high oil prices, but his polices drive them up – analyst to RT Published time: 21 Sep, 2018 21:03 Edited time: 21 Sep, 2018 21:28 Get short URL Trump blames OPEC for high oil prices, but his polices drive them up – analyst to RT FILE PHOTO. © Lucy Nicholson / Reuters The tax and trade policies of Donald Trump are, in fact, what have contributed to the surge in oil prices, a US economics professor told RT, adding that the US President's tough words to OPEC are a political stunt. On Thursday, Trump accused OPEC's Middle East producers of "pushing for higher and higher oil prices" and demanded "they stop it," adding that the US is "protecting those countries." Oil prices showed a mixed reaction to Trump's words. The Brent benchmark fell 43 cents to $78.97 per barrel, while the US Texas Intermediate grew by 9 cents to $71.21.

We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!

-- Donald J. Trump (@realDonaldTrump) September 20, 2018

OPEC does, in fact, control oil supply to a significant extent but that does not necessarily mean that it is also in full control of the oil prices, Jack Rasmus, a professor of Political Economy at St. Mary's College of California, told RT, adding that the policies pursued by the US president himself play a much bigger role in what happens to oil and gasoline prices in the US.

Read more © Nick Oxford Trump demands OPEC lower oil prices, claims US 'protects' Middle East countries

"The US economy is overstimulated by the Trump $4 trillion tax cuts for investors and businesses," Rasmus explained, adding that the rising inflation is one of the primary factors contributing to the oil price surge. Apart from that, Trump's trade war with China and even with the US allies in the West also drives up the prices, as businesses also have to raise them to adapt to the tariffs that both the US and its trading partners have imposed recently.

Trump's sanctions war on Iran also does not make the situation any better. The US sanctions, which are aimed at bringing Iran's oil exports to "zero," led to a decrease in Iran's oil sales, thus cutting the supply and driving the prices up. As if it was not enough, Trump's rhetoric only adds fuel to the fire, according to Rasmus.

"When Trump accuses Iran publicly, it gives the global oil speculators a reason to drive up the price," he told RT, adding that it is the "global speculators that are driving the short-term oil prices." "There is a connection between the speculators and Trump policies. When he makes those statements, it certainly does contribute to the oil prices rise," the analyst explained.

This rhetoric was more about winning voters' support ahead of the November mid-term elections than about really remedying the situation in the oil market, Rasmus says. "He is whipping up his domestic base," the analyst said, adding that "Trump [is] trying to blame foreigners of all kinds for economic situation in the US."

#US will find it difficult to cut #Iran 's oil exports completely as the oil market is already tight - Tehran https://t.co/T1oiFmGvOq pic.twitter.com/uaJO0Qn8gt

-- RT (@RT_com) September 15, 2018

Trump got elected on a platform of economic nationalism in particular, Rasmus said, adding that the president now sticks to that narrative and blames foreigners –be they immigrants or some foreign competitors– for the US' woes. However, this is "another factual misrepresentation," the analyst said.

As oil prices remain high, prices for gasoline in the US are growing. The average cost of gasoline has risen 60 percent from $1.87 per gallon in February 2016 to over $3 in September.

Like this story? Share it with a friend!

[Sep 20, 2018] This scenario would leave the US with the main sources of 'low production cost' Middle East energy in its hands (i.e. Gulf, Iran and Iraqi oil and gas).

Sep 20, 2018 | www.moonofalabama.org

Peter AU 1 , Sep 19, 2018 9:05:12 PM | link

Alastair Crooke's latest at Strategic Culture.

https://www.strategic-culture.org/news/2018/09/18/two-major-middle-east-projects-afoot-gaining-mass-they-may-collide-before-long.html
....But a turnaround in Iraq also puts a spike into the balloon of President Trump's aspiration to reassert US energy dominance over the Mideast. Iran – it was hoped – would ultimately capitulate and fall to economic and political pressures, and as the Iranian domino capsized, it would take with it, crashing down into political acquiescence, the Iraqi domino.

This scenario would leave the US with the main sources of 'low production cost' Middle East energy in its hands (i.e. Gulf, Iran and Iraqi oil and gas). On the face of this week's events however, it looks more likely that these resources - or at least, the greater energy resources of Iran and Iraq - will end up in the Russian sphere (together with Syria's unexplored Levant Basin prospects). And this Russian 'heartland', energy-producing sphere, may, in the end, prove to be a more than substantive rival to US (newly emerged as 'the world's top oil producer') aspirations for restoring its Mideast energy dominance.....

The piece covers both Trump's plans for global energy dominance by taking full control of middle east oil and also the Trump Kushner moves against the Palestinians.

[Sep 19, 2018] A very slow decline of world supply will hit those who can't pay for it most and maybe wake up enough through higher prices to begin planning for what will be the greatest energy transition that must take place!

Sep 19, 2018 | peakoilbarrel.com

Captjohn x Ignored says: 09/12/2018 at 1:50 pm

Here is someone that does have a clue – CEO of Schlumberger:

http://www.northamericanshalemagazine.com/articles/2497/schlumberger-ceo-can-u-s-shale-meet-future-global-oil-demand

"The short-term investment focus adopted since 2014 offers a finite set of opportunities over a limited period of time, and this period is now clearly coming to an end as seen by accelerating decline rates in many countries around the world," Kibsgaard pointed out.

BAU won't get it done – no quick fixes, 'new shale revolution' or 'reserve production' to get us through – my interest is mostly how we (as a society and culture) will react as constraints on the resource 'haves' and 'have nots' set in.

Went through Irma in South Florida last Fall – and in general order was maintained – but really only out of Gas for about 3 days – and was more of a shock type shortage. A very slow decline of world supply will hit those who can't pay for it most – and maybe wake up enough through higher prices to begin planning for what will be the greatest energy transition that must take place!

George Kaplan x Ignored says: 09/14/2018 at 2:52 am
The big oil companies are selling a story of long term stability to their investors, partly so they can justify the long term investments needed for the mega-projects where they get most of their oil and cashflow (some of those see no net return for many years). They only need to sell themselves to their investors, not their customers who just buy the cheapest or most convenient, be it crude to refineries or petrol to motorists.

The service companies live more year to year – they get hired to help develop and drill a field and then their workload drops a lot except for some well servicing during operation. Schlumberger is selling itself to its customers (the 'operators' who are the E&P companies) and investors as the go to guy for the next couple of years as activity tries to pick up but faces increasing issues as the easy (and now not so easy but still OK-ish) oil goes away.

Mike Sutherland x Ignored says: 09/14/2018 at 10:22 am
Schlumberger is not a typical service provider to the producers, although that is a large portion of their business. Since their purchase of Cameron International and other oilfield manufacturing companies, they have been providing facility engineering and fabrication services to the oil producers worldwide.

In point of fact, Schlumberger does have the information that the producers have, and then some. They use those numbers as a basis for facility engineering, and as such are arguably in a better position to interpret them than the producer as of late.

I've regularly read the BP annual report, and have come to regard it as little more than a curiosity. Schlumberger, Shell and Total have a firmer grip on the world oil situation, based on my read of their CEO's comments. However that may be confirmation bias on my part. We shall see .

[Sep 19, 2018] My estimate is we are at 90% depletion for existing technology

Sep 19, 2018 | peakoilbarrel.com

conacher says: 09/14/2018 at 10:42 am

Probably the more important item is Russian reserves my estimate is we are at 90% depletion for existing technology and OIP at cost for western Russian reserves. At this point a squeeze plan in Syria would ensure foreign reserve earnings to into wars and not fuels outcome is standard wars as a result of miss spending income
kolbeinh x Ignored says: 09/14/2018 at 2:00 pm
Yes, I assume they have some problems since they reformed the tax system in favor of upstream risky projects and at the same time imposed more taxes on downstream refineries. But to assume Russia has problems is like assuming the whole world has a problem. Could be perfectly right, but why expose Russia as opposed to others? Russia has a lot of higher cost oil; just look at the land mass and offshore mass. How could there not be prospects? Some inside knowledge is sorely lacking, since I like most western people don't have connections in that part of the world.
conacher x Ignored says: 09/14/2018 at 1:38 pm
https://medium.com/insurge-intelligence/brace-for-the-financial-crash-of-2018-b2f81f85686b

only way to 'pull off above' is both Russia western province and gehwar at "90%" OIP gone.

Ron Patterson x Ignored says: 09/14/2018 at 2:49 pm
Thanks for the link Conacher. Folks this article makes a prediction that needs to be read.

Brace for the oil, food and financial crash of 2018

80% of the world's oil has peaked, and the resulting oil crunch will flatten the economy.

New scientific research suggests that the world faces an imminent oil crunch, which will trigger another financial crisis.

A report by HSBC shows that contrary to the commonplace narrative in the industry, even amidst the glut of unconventional oil and gas, the vast bulk of the world's oil production has already peaked and is now in decline; while European government scientists show that the value of energy produced by oil has declined by half within just the first 15 years of the 21st century.

The upshot? Welcome to a new age of permanent economic recession driven by ongoing dependence on dirty, expensive, difficult oil unless we choose a fundamentally different path.

Then they say: The HSBC report you need to read, now

Global Oil Supply, Will Mature Field Declines Drive Next Supply Crunch?

This thing came out two years ago. Why did I not hear about it before? Has this been posted here and talked about already?

conacher x Ignored says: 09/14/2018 at 2:56 pm
Real issue is giants, your article in 2015 real issue is 90% ..real issue is squeeze play in motion in Syria..goal? if don't have it, don't drill it at home, no rig increases so 'end game' is cut off Isreali/Saudi friendly arab gas to Europe own Caspian area (city I recall owned by Ukraine under British treaty Yelsin) in end no WW2 buildup during economic issues (Russia 5M/day, Saudi similar) no Hilter, just preempt what's left..
Carlos Diaz x Ignored says: 09/14/2018 at 5:08 pm

"This thing came out two years ago. Why did I not hear about it before? Has this been posted here and talked about already?"

Yes, it was. Here:

http://peakoilbarrel.com/open-thread-petroleum-jan-8-2017/#comment-591795

Here:

http://peakoilbarrel.com/opec-december-production-data/#comment-593747

And here:

http://peakoilbarrel.com/texas-update-january2017/#comment-594346

I downloaded it then, and just had to look at the date the file was created. You probably also have it in your hard-drive.

It provided a nice confirmation to my thesis that Peak Oil won't happen in the future. It is taking place now, and the date we entered the Peak Oil plateau was 2015. You also forecasted that, as I did.

Ron Patterson x Ignored says: 09/14/2018 at 8:14 pm
You are correct. Hey, I am 80 years old and I just can't remember shit anymore.

Okay, I posted a few days ago that I thought peak oil would be in 2019. Perhaps I was wrong. Hell, I have been wrong quite a few times. But now perhaps peak oil is right now.

Perhaps? We shall see.

But my point is everyone seems to be agreeing with me now. Old giant fields are seeing an ever increase in decline rates. I predicted this a long time ago. Once the water hits those horizontal laterals at the very top of the reservoir, the game is over.

The decline rate in those old giant fields is increasing at an alarming rate. Obviously! Fucking obviously. It could not possibly be otherwise. Thank you and goodnight.

Carlos Diaz x Ignored says: 09/15/2018 at 4:31 am
Memory is less necessary these days with internet, computers, and smart phones, where searches can be run in a moment. Don't worry too much about that.

"But my point is everyone seems to be agreeing with me now."

I discovered your blog in 2014 when looking for confirmation on my suspicion that the oil price crash was going to result in Peak Oil. I was impressed to see that you were there years before through your analyses. I have a lot of respect for you and your intellectual capacity, and I agree with you in many things, besides Peak Oil, including the population problem, and your worries about the environment.

I don't believe the world cannot increase its oil production, I just believe it won't do it. Both Saudi Arabia and Russia have the capacity to go full throttle on what they have left. Shaybah is the most recent supergiant in KSA and expected to produce until 2060 at current output. No doubt they could increase production from Shaybah by a lot, but it is not in their interest to do so. Russia lacks the capacity to quickly increase its production, but there's still plenty of oil in Eastern Siberia, so they could also produce more. Again it is also unlikely, as it would require an investment and effort that goes against their own interest.

Peak Oil is not happening because the world is trying to produce more oil and failing, it is happening by a combination of economical, geological, and political factors that could not be easily predicted and that were set in motion in the early 2000's when the low-hanging fruit of conventional on-shore and off-shore crude oil (the cheapest kind to produce) reached its production limit. Political errors, like taking out Gaddafi, added unnecessary difficulties. The collapse of Venezuela is the latest political cause. And when things start to go wrong, it never rains, but it pours.

Michael B x Ignored says: 09/15/2018 at 5:01 am
"Peak Oil is not happening because the world is trying to produce more oil and failing, it is happening by a combination of economical, geological, and political factors that could not be easily predicted and that were set in motion in the early 2000's when the low-hanging fruit of conventional on-shore and off-shore crude oil (the cheapest kind to produce) reached its production limit."

Isn't this just a distinction without a difference? It's peak oil.

Carlos Diaz x Ignored says: 09/15/2018 at 5:35 am
The issue is that Peak Oil has been misunderstood by most people. The argument that Peak Oil won't happen until this or that date because ultimate reserves are such or such, so often read in this forum, is incorrect. Even economically recoverable reserves are not decisive. To make the problem intractable there are many liquids so some might peak while others don't so discussions about Peak Oil are endless.

But it is very simple. Peak Oil is when the world no longer gets the oil it needs to keep expanding its economy. And the best way to measure it is through C+C, because crude oil is what we have been getting since the late 19th C ans is the stuff that produces everything our economy needs, from asphalt to diesel, plane fuel, and gasoline. NGL won't cut it. Biofuels won't cut it.

And Peak Oil is being determined by economical and political factors, besides the geology.

The difference matters because Peak Oil is going to get almost everybody by surprise. Most won't realize what is the cause of all the troubles we are going to get and they'll be reassured that there is plenty of oil to be extracted, which is true but irrelevant.

Michael B x Ignored says: 09/15/2018 at 6:27 am
Thanks for the reply. I also tremble at the prospect of what is to happen because of the failure of the predictions last decade. I can only describe it through an analogy (being a lay reader and a writer):

In the 2000s, people were saying that we had an ugly wound and that we had better do something about it. But instead of properly addressing the wound, we just wrapped it in gauze, and when the blood stopped showing through, we said, "See? All better." That's my analogy for the "shale revolution" -- it was essentially a Bandaid. The complacency has only worsened in the last ten years.

This has just made the infection all the worse. When pus starts showing through the dressing and we unwrap it this time -- we're going to find gangrene.

Carlos Diaz x Ignored says: 09/15/2018 at 7:39 am
Michael,

I am re-reading Joseph Tainter's 1998 book "The collapse of complex societies." It is a sober reading that shows that in the end the laws of entropy and diminishing returns always produce the same result. We are not more intelligent than the people that preceded us. If anything we can only be stupider on average. We just have a very high opinion of ourselves.

Time for a wake up and a little bit more darwinism in our lives. The problem is the pain. With so many people it is just going to be unbearable. On a scale never imagined, not even by writers of bad sci-fi.

Guym x Ignored says: 09/16/2018 at 9:20 am
That would be a more important definition of peak oil to me, and I think we are definitely there. Then we have the absolute production definition, which was the original definition, as to production. It is now anticlimactic to your definition. As to the date or year it happens, who cares? More importantly, now, is when demand will lower enough to stop draining inventories. At what oil price will that start occurring? How fast will alternate sources replace unmet demand? New directions and everyone is likely to be wrong on estimates. EIA and IEA were totally useless before, and that will probably not change in the near future. Looking in the past won't give us much, and the future is anybody's guess.

As to current prices, $68 oil won't get any extra interest from E&Ps outside of the Permian that is stalled. To any measurable extent. Close to $80 oil is not expanding interest very much outside of the US. We are just living on borrowed time.

Dennis Coyne x Ignored says: 09/17/2018 at 9:13 am
Guym,

Oil prices are likely to continue to rise, especially if your estimates of future production (roughly similar to my estimates, but perhaps a bit more pessimistic) are correct, unless consumption of oil stops increasing. My guess is that oil (C+C) consumption will continue to increase at 400 to 800 kb/d each year , until oil prices get to about $150/b or more (around 2025 to 2027),by that time or soon after ( maybe 2030) oil consumption growth may stop either because of the expansion of electric and natural gas powered transport or because of a second Great Financial Crisis. My hope is it will be the former, but I think the latter scenario is much more likely.

Hopefully Keynes' General Theory will make a comeback before then.

It is a dollar on Kindle

https://www.amazon.com/General-Theory-Employment-Interest-Illustrated-ebook/dp/B018055I7Q/ref=tmm_kin_swatch_0?_encoding=UTF8&qid=&sr=

TechGuy x Ignored says: 09/18/2018 at 1:43 am
Ron Wrote:
"I predicted this a long time ago. Once the water hits those horizontal laterals at the very top of the reservoir, the game is over. "

FWIW: That's already happened. when it occurs, they drill a new horizontal above the old one. The new lateral also have valves on there ports. so that when the water breaches one or more of the ports, they shut them off to reduce water cut. I posted Saudi Aramco tech articles here back between 2014 and 2016 when they were available on the SA website.

Survivalist x Ignored says: 09/14/2018 at 11:32 pm
Hi Carlos, thanks for the trip down memory lane. I tend to agree with peak oil being now (ish). From what I recall the peak month for C+C was, so far, in November 2016. I suppose there is also a peak day, a peak weak, and a peak year. Folks seem to like packaging time in various proportions. Hell, there's probably a peak decade and a peak hour. My guess is the peak year will be 2018. I like, because I'm a bit thick at maths, how Ron has added trailing 12 month average to his world production chart. I just look at the 12 month trailing average for each December to get an idea of how much was produced in each calendar year. It seems that 12 month trailing average for December 2018 will beat that of 2017. My guess is 2019 won't beat 2018. Or will any other year after that. So, if Ron say's 2019, and I say 2018, then it seems that I think he is wrong lol he's probably 100 times smarter than me so doesn't lose sleep over it lol. Up until this time I have always agreed with Ron on peak oil. But now, I throw down the gauntlet! 2018 vs 2019. Two will enter, one will leave.
Carlos Diaz x Ignored says: 09/15/2018 at 5:08 am
Hi Survivalist,

The exact week, month, or year when maximal production is reached has only historical interest. The point is that since the end of 2015 the 12-month averaged C+C production has barely increased (EIA data) despite the increase in demand.

Dec 2015 80,564 100.0%
Dec 2016 80,579 100.0%
Dec 2017 80,936 100.5%
Apr 2018 81,363 101.0%

We will have to see how it evolves over to the next December, but so far it is annualized to a 0.4% increase. To me we are in a bumpy plateau since late 2015 and all those meager gains and more will be lost in the next crisis. The problem will be evident to many when after the crisis we are not able to increase production above those values.

Peak Oil is a situation, not a date, and we are in that situation since late 2015. The oil that the world demands cannot be produced so prices are going up, and up. I suppose it is possible that the powers that be intervene to reduce global oil demand by favoring a crisis in developing countries, like Argentina, Brazil, Turkey, South Africa, through interest rate changes. Wait, it is already happening. It is a dangerous tactic, as crises can spread around, and the interest rise weakens the economy.

Dennis coyne x Ignored says: 09/15/2018 at 8:59 am
Carlos,

Well one has to define the plateau a bit better. If we make the bounds wide enough one could say the peak was 2005 or even 1980 and we have been on a bumpy plateau since that point.

Better in my view to define peak as peak in centered 12 month average output wth center between month 6 and 7.

Carlos Diaz x Ignored says: 09/15/2018 at 12:42 pm
Dennis,

I use a 13-month centered average, so it is symmetrical with 6 months at each side.

But really, after a clear period of production growth 2010-2014, there was a strong growth in production 2014-2015 in response to falling prices, and then production got stuck in late 2015.

It is not a question if we are in a plateau (or very reduced growth) period, but what happens afterwards. After the previous plateau 2005-2009 there was a clear fall 2009-2010, before tight oil saved the day.

Dennis Coyne x Ignored says: 09/17/2018 at 9:23 am
Carlos,

The recent plateau is due to excess inventory and the resulting low oil price level. Oil inventories have been reduced over the past 12 to 18 months and as oil prices increase, output will also increase with perhaps a 6 to 12 month lag. How much will it need to rise above the Dec 2015 level before you no longer consider that output has not risen above your "plateau". Give me a number, is it 81.5 Mb/d, 82 Mb/b, I prefer to use a year rather than 13 months, that's 182 days on either side of the middle of the 12 month period. On leap years we can use Midnight of day 183 🙂

Dennis coyne x Ignored says: 09/14/2018 at 8:11 pm
One issue that has been corrected is that reserve requirements for large banks have increased.

Also lenders are more careful with their mortgages making a housing bubble less likely.

In addition, the assumption that higher oil prices played a major role in the GFC is incorrect.

Perhaps there is a looming recession, whether this happens in 2018, 2030 or some other year we will only know when it occurs.
Someone who predicts a recession every year will be right eventually.

I maintain my guess of 2023 to 2027 for the 12 month centered average c+c peak and severe recession GFC2 starting 2029 to 2033, lasting 5 to 7 years.

[Sep 19, 2018] One would think that the optimal strategy for a country that has oil is to ally itself with a military power that can deter invasion by some other military power, without having the ally's troops actually present on the territory

Sep 19, 2018 | peakoilbarrel.com

Watcher

x Ignored says: 09/13/2018 at 2:27 am
So people think that oil production next year will not meet demand. Of course consumption will equal production, but demand will be higher, and we won't be belabor this further because the point here is a question above -- how does society react too insufficient oil?

The question is never analyzed in a particular way. It's usually evaluated from the consumer's perspective. Who does what to get the oil they need. We can imagine they bid higher, we can imagine that day seize the oil enroute to someone else, and we can imagine a magical agreement on the part of everyone to stop all economic activity not involved in food production/distribution to reduce global consumption.

What seldom is described is the decision making process within the leadership of oil producers and exporters. It seems clear that a sudden awareness of insufficiency would yield leadership meetings making decisions not about how to distribute more oil to customers, but rather how to keep the oil for future generations of the producing country, without getting invaded and destroyed.

One would think that the optimal strategy for a country that has oil is to ally itself with a military power that can deter invasion by some other military power, without having the ally's troops actually present on the territory. Or perhaps more effective would be investing in the necessary explosives or nuclear material for one's own oil fields, and inform potential invaders that the oil will remain the property of the country whose geography covers it, or the fields will be contaminated for hundreds of years to deny them to anyone else.

Clearly this is the optimal path for an oil producer and not seeking some technology that can allow them to drain the resources of future generations more rapidly now.

Ron Patterson x Ignored says: 09/13/2018 at 6:13 am
So people think that oil production next year will not meet demand. Of course consumption will equal production, but demand will be higher,

Watcher, I assume you think demand is what people want. But there is no way to measure what people want but can't afford. So "demand" in that sense has no meaning whatsoever. So what happens is the price of gasoline, or whatever, rises or falls until supply equals demand. As prices rise, demand falls and as prices fall, demand rises because people can now afford it. Therefore demand always equals consumption. Demand is what people buy at the price they can afford. I wish we had a word for what people want but even if we did there would be no way to measure it. A poll perhaps? 😉

Carlos Diaz x Ignored says: 09/13/2018 at 6:35 am
Ron,

I answered that above
http://peakoilbarrel.com/opec-august-production-data-2/#comment-651890

Estimating demand is essential for a company and can determine its survival. Demand is dependent on price, so demand estimates are essential for deciding the price of a product. The curves for price and demand cross at a point that maximizes income.

Demand is estimated statistically (polls sometimes), with models, and expert forecast. It has a large uncertainty.

"there is no way to measure what people want but can't afford."

That is potential demand at a lower price point. It is estimated in the same way. Companies decide to lower their prices with hopes to realize that lower-price demand.

"demand always equals consumption."

Exactly. Demand becomes consumption when realized, so it only makes sense to talk about demand in the future or the present (due to lack of real-time data). It doesn't make sense to talk about past demand, because it becomes consumption or sales.

Watcher x Ignored says: 09/13/2018 at 12:26 pm
There is a numerical measure for how much people want gasoline, regardless of price.

It is the length of the line of cars at the gas station in the 1970s. Demand was measured in 100s of feet. Price somewhat doesn't matter. If you can't afford it, you put it on a credit card and then default.

Guym x Ignored says: 09/13/2018 at 2:20 pm
Put it on the credit card and not pay it. Because, it was de fault of the company to give it to you in the first place.
Survivalist x Ignored says: 09/13/2018 at 7:18 pm
The length of the queue is an interesting metric by which to measure the want that people have for an item. Nice one. I'm gonna use that. Reminds me of my Dad's old story about lining up for a week to buy tickets to see The Beatles.
Fred Magyar x Ignored says: 09/13/2018 at 9:30 pm
When you are lining up to buy tickets to see the Beatles it might be called a 'Want' or a 'Desire'. However, when it is the line at the soup kitchen it becomes 'Hunger' or 'Desperation'!
And that queue can sometimes feel like a hundred miles
Hightrekker x Ignored says: 09/13/2018 at 9:17 pm
I remember that -- -
It was eye opening.
TechGuy x Ignored says: 09/18/2018 at 12:58 am
The bigger issue is people, Business, & gov'ts servicing their debt. If the cost of energy increases, it make it more difficult to service their debt. Recall that Oil prices peaked at $147 right before the beginning of the 2008/2009 economic crisis. Since then 2008 Debt continued to soar as companies & gov'ts piled on more debt. Debt is promise on future production. Borrow now and pay it back over time.

I recall the presentation Steven Kopits did about 4 or 5 years ago that stated Oil production was well below demand. I think real global oil demand was projected to be about 120mmbd back in 2012-2013 (sorry don't recall the actual figures).

I think the bigger factor is how steep the declines will be. Presumably all of the super giants are in the same shape and likely heavily relied on horizontal drilling to offset natural decline rates. Presuming as the oil column shrinks in the decline rates will rapidly accelerate. Most of the Artic\Deep water projects were cancelled back in 2014\2015, and I believe most of those projects would take about 7 years to complete and need between Oil at $120 to $150/bbl (in 2012 dollars) to be economical. I am not sure the world can sustainably afford $120+ oil, especially considering the amount of new debt that has been added in the past 10 years.

Ron Wrote:
" I wish we had a word for what people want but even if we did there would be no way to measure it"

Perhaps the word "Gluttony" or the phase "Business As Usual". People don't like change, especially when the result, is a decrease in living standards.

Adam Ash x Ignored says: 09/14/2018 at 3:11 am
Being willing to pay more for oil may change who gets it. But it will not alter the fact that someone who wants oil will not get it. That will be a ripple of market information which will travel around the world pretty quick, I should imagine!
Dennis coyne x Ignored says: 09/14/2018 at 7:31 pm
There is always somebody who wants oil but cannot afford it.

This is unlikely to change in the next 30 to 40 years.

farmboy x Ignored says: 09/16/2018 at 10:52 am
The vast majority in almost all the places in the world would like to use more oil but their income is not enough so they end up doing with less. That includes me. Who doesn't want a bigger faster newer lawn mower, truck, or tractor? What person would not prefer the latest iphone etc. ? or going on vacation, eating out at high end steakhouses? The main reason they can't is because it would take more and cheaper oil for them to be able to afford it. Else they can only try to take it away from someone else? The peak in global oil production/person happened back in 1979, not because folks were tired of using it all but due to the laws of physics coming into play.
Adam Ash x Ignored says: 09/16/2018 at 11:05 pm
So there are two 'classes' of 'peak oil'. One class is where oil supply is constrained by price (throwing more money at production sees an increase in production), the second class is where oil supply is constrained by physical availability at any price (wave more money at production, but production cannot increase).

In the first case (price constrained) normal market behaviour will apply – folk pay more (if they can afford it) to get more.

But in the second case (resource constrained), it does not matter how much is offered, there is simply no more oil to be had.

With the prevailing declining yields and declining discoveries, are we not in the transition between these two states – moving from price constrained to resource constrained? And once we get well into resource constrained, the price a buyer can pay will determine who gets the remaining available oil, and no amount of screeching and dollar-bill-waving by those who have missed out will improve the supply situation for them.

Boomer II x Ignored says: 09/17/2018 at 12:43 am
The second case is my main interest. And I think we are already there. We wouldn't be looking at LTO and oil sands if there were cheaper options.

LTO decline rates should make the issue more obvious when there are fewer places to drill new wells.

Eulenspiegel x Ignored says: 09/17/2018 at 3:43 am
LTO decline rate would be no problem by a conventional / state possessed oil company.

They would have a field with tight oil, and then just equip let's say 20 fracking / drilling teams and start to produce through their field in 30 or 50 years. They would have a slow decline by starting at the best location and getting to the worse one, while increasing experience / technic during the years to compensate a bit.

Ron Patterson x Ignored says: 09/17/2018 at 6:23 am
You have a pretty good argument except for the "30 or 50 years" part. That's where the wheels fell off your go-cart. Just how large would the tight oil reservoir have to be to keep 20 drilling and fracking units for 30 to 50 years? And if you assume other oil companies are in that same reservoir doing the same thing? They are going to cover a lot of acreage very fast.
Dennis Coyne x Ignored says: 09/17/2018 at 9:35 pm
Adam Ash,

It matters very little. At any time t the available supply is limited and the market price will determine who gets what is available. Those willing to pay more than others will get the oil. When we reach a point where no more oil can be supplied at price P, there might always be some more oil that could be at some higher price P', it is simply a matter of oil prices reaching the point that there are substitutes that can replace the use of oil in some uses. Today the biggest use for oil is transport and electricity and natural gas may soon replace a lot of this use, especially as oil becomes scarce and prices increase.

At $100 to $120/b the transition to EVs could be quite rapid, maybe taking 20 to 25 years to replace 90% of new ICEV sales and then another 15 years for most of the fleet to be replaced as old cars are scrapped. So by 2055 most land transport uses for oil will be eliminated.

The higher oil prices rise, the more incentive there will be to switch to cheaper EVs, even natural gas will probably not be able to compete with EVs as Natural Gas will also peak (2030 to 2035) and prices will rise. It will probably be unwise to spend a lot of money for Natural gas fueling infrastructure, though perhaps it might work for long haul trucking, rail seems a more sensible option.

TechGuy x Ignored says: 09/18/2018 at 1:23 am
Adam Ash Wrote:
"So there are two 'classes' of 'peak oil'. One class is where oil supply is constrained by price (throwing more money at production sees an increase in production), the second class is where oil supply is constrained by physical availability at any price (wave more money at production, but production cannot increase)"

Consider this way:
There is already a huge shortage of $10/bbl oil, and a massive glut of $300/bbl oil. There is always shortage resources. Price is just a system that balances demand with supply.

Adam Ash Wrote:
"But in the second case (resource constrained), it does not matter how much is offered, there is simply no more oil to be had no amount of screeching and dollar-bill-waving by those who have missed out will improve the supply situation for them."

Not exactly. People that can only afford $50/bbl Oil get out priced by people willing to pay $100/bbl. Supply shifts to the people that can afford the hire price at the expense of people that cannot afford the higher cost. Higher prices will lead to new production, even if has a Negative EROEI (ie tar sands using cheap NatGas).

In an ideal world, higher prices lead to less energy waste (flying, recreation boating) and better efficiency (more energy efficient buildings & vehicles). But I am not sure that will be the case in our world.

The first to suffer from high energy prices will be the people living in poor nations. Recall back in 2008-2014 we had the Arab spring when people could afford the food costs, and started mass riots and overthrough gov'ts. This will return when Oil prices climb back up.

Its possible that the world make continue to experience price swings, as global demand struction decreases demand. For instance in July 2008 Oil was at $147/bbl but by Jan 2009 it was about $30/bbl. I doubt we will see such large price swings, but I also doubt that Oil will continuously move up without any price corrections.

Realistically we are in deflation driven global economy as the excessive debt applies deflationary force to the economy. However central banks counter deflation with artificially low interest rates and currency printing (ie Quantitive Easing). My guess is that industrialized nation gov't will become increasing dependent on QE and other gimmicks that lead to high inflation\stagnation.

[Sep 19, 2018] This is so ridiculous it is funny. Oil discoveries have been going down, down, and down, way below replacement level. Yet so-called "proven" reserves keep going up, up and up.

Sep 19, 2018 | peakoilbarrel.com

George Kaplan

x Ignored says: 09/15/2018 at 6:14 am Some interesting figures from the OPEC annual statistical review earlier this year that I missed when it came out: https://asb.opec.org/index.php/interactive-charts

First crude only peaked in 2016, with 2017 below 2016 and 2015.

Reply


George Kaplan x Ignored says: 09/15/2018 at 6:15 am

Second oil reserves have been flat since around 2010, and declining recently for the first time since the 1970s. Note, before someone points it out, they don't count Canadian Bitumen.

Ron Patterson x Ignored says: 09/15/2018 at 9:23 am
This is so ridiculous it is funny. Oil discoveries have been going down, down, and down, way below replacement level. Yet so-called "proven" reserves keep going up, up and up.

Timthetiny x Ignored says: 09/17/2018 at 1:03 am
That's to be expected.
TechGuy x Ignored says: 09/18/2018 at 2:00 am
"This is so ridiculous it is funny. Oil discoveries have been going down, down, and down, way below replacement level. Yet so-called "proven" reserves keep going up, up and up."

Well to some degree, technology has been able to extract more oil from a field. Thus a field discovered in 1950 with an initial proven reserve of 100mbbls, may have 125mbbls or proven reserves as technology has improved recovery rates. That said technology improvements likely don't match the paper proven reserves.

Fernando Leanme x Ignored says: 09/15/2018 at 9:44 am
The Venezuelan heavy oil reserves are overstated (I assume the large bump prior to 2010 is the booking of the Magna Reserva in the Orinoco Oil belt, which i know are fake). It's fairly easy to eyeball the better number by substracting 300 billion a flat line around 1200. If you want to add future bookings in that heavy oil belt, add up to 50 billion gradually. Dont forget that at the current decline rate Venezuela will be producing about 1.1 million BOPD in december, and IF things go as I think they will sometime in the first half of 2019 exports will drop to zero for a few months.
George Kaplan x Ignored says: 09/15/2018 at 6:15 am
Third gas reserves also flat. If condensate and NGLs have been meeting the increased demand that crude has been unable to, then that might be about to stop.

[Aug 26, 2018] What Really Happens to Nicaragua, Venezuela and Ecuador

Aug 26, 2018 | peakoilbarrel.com

Caelan MacIntyre

Ignored says: 08/23/2018 AT 5:14 AM

What Really Happens to Nicaragua, Venezuela and Ecuador

" On Venezuela

it is absolutely clear who is behind the food and medicine boycotts (empty supermarket shelves), and the induced internal violence. It is a carbon copy of what the CIA under Kissinger's command did in Chile in 1973 which led to the murder of the legitimate and democratically elected President Allende and to the Pinochet military coup ; except, Venezuela has 19 years of revolutionary experience, and built up some tough resistance.

To understand the context 'Venezuela', we may have to look at the country's history.

Before the fully democratically and internationally observed election of Hugo Chavez in 1998, Venezuela was governed for at least 100 years by dictators and violent despots which were directed by and served only the United States. The country, extremely rich in natural resources , was exploited by the US and Venezuelan oligarchs to the point that the population of one of the richest Latin-American countries remained poor instead of improving its standard of living according to country's natural riches. The people were literally enslaved by Washington controlled regimes .

A first coup attempt by Comandante Hugo Chavez in 1992 was oppressed by the Government of Carlos Andrés Pérez and Chavez was sent to prison along with his co-golpistas. After two years, he was freed by the Government of Rafael Caldera.

During Peréz' first term in office (1974-1979) and his predecessors, Venezuela attained a high economic growth based on almost exclusive oil exports . Though, hardly anything of this growth stayed in the country and was distributed to the people. The situation was pretty much the same as it is in today's Peru which before the 2008 crisis and shortly thereafter had phenomenal growth rates – between 5% and 8% – of which 80% went to 5% of the population oligarchs and foreign investors , and 20% was to be distributed to 95% of the population – and that on a very uneven keel. The result was and is a growing gap between rich and poor, increasing unemployment and delinquency.

Venezuela before Chavez lived practically on a monoculture economy based on petrol. There was no effort towards economic diversification. To the contrary, diversification could eventually help free Venezuela from the despot's fangs, as the US was the key recipient of Venezuela's petrol and other riches. Influenced by the 1989 Washington Consensus, Peréz made a drastic turn in his second mandate (1989-1993) towards neoliberal reforms, i.e. privatization of public services, restructuring the little social safety benefits laborers had achieved, and contracting debt by the IMF and the World Bank. He became a model child of neoliberalism, to the detriment of Venezuelans. Resulting protests under Peréz' successor, Rafael Caldera, became unmanageable. New elections were called and Hugo Chavez won in a first round with more than 56%. Despite an ugly Washington inspired coup attempt ("The Revolution will Not be Televised", 2003 documentary about the attempted 2002 coup), Hugo Chavez stayed in power until his untimely death 2013. Comandante Chavez and his Government reached spectacular social achievements for his country.

Washington will not let go easily – or at all, to re-conquer Venezuela into the new Monroe Doctrine, i.e. becoming re-integrated into Washington's backyard. Imagine this oil-rich country, with the world's largest hydrocarbon reserves, on the doorsteps of the United Sates' key refineries in Texas, just about 3 to 4 days away for a tanker from Venezuela, as compared to 40 to 45 days from the Gulf, where the US currently gets about 60% of its petrol imports. An enormous difference in costs and risks, i.e. each shipment has to sail through the Iran-controlled Strait of Hormuz.

In addition, another socialist revolution as one of Washington's southern neighbor – in addition to Cuba – is not convenient. Therefore, the US and her secret forces will do everything to bring about regime change, by constant economic aggressions, blockades, sanctions, boycotts of imports and their internal distribution – as well as outrights military threats. The recent assassination attempt of President Maduro falls into the same category. "

[Aug 25, 2018] The Geopolitics Of Energy

Very amateur level of analysis...
Aug 25, 2018 | www.zerohedge.com

The antagonism between Saudi Arabia and Iran sets off a variety of political reverberations affecting the countries of the Persian Gulf, unsettling the situation between Turkey, Syria, and Iraq, and entangling Russia and the United States in the ensuring imbroglio.

... ... ...

The role of the Russian Federation cannot be viewed apart from what is happening in the energy-rich, formerly Soviet Central Asian republics. The so-called -Stans (Kazakhstan, Uzbekistan, Azerbaijan, and Turkmenistan) are major players in today's energy markets. Whatever they do, however, cannot be seen as separate from what Russia is doing or from Russia's intentions. Although some of them, primarily Azerbaijan, have initiated projects that are not aligned with Moscow's goals, they nevertheless need to behave in ways that do not upset their powerful northern neighbour on whom they are heavily reliant, to some extent, for their welfare (due to their dependence on oil and gas pipeline networks).

Politics is therefore deeply intertwined with energy in most of those cases, bringing diplomacy front and centre as a determinant of behaviour and economic outcomes.

... ... ...

Europe's problem is that, with the exception of North Sea oil and gas, it relies entirely on imports to provide it with a comfortable level of energy. Thus, events in the Middle East and the Russian stance toward the continent determines whether it is adequately supplied with energy or faces shortages.

The deposits in the North Sea have kept some European states (Britain and Scandinavia among others) well supplied for quite a while. But unfortunately there is a strong suspicion that these deposits are diminishing at a dangerous rate. As a result Europe will gradually become dependent on imports from the Middle East, North Africa, Russia, and the Atlantic (Angola, Brazil, Mexico, and the US). The situation is disquieting since Japan, and more recently, China, are seeking to buy their own supplies from the same sources.

skbull44 Cosmicserpent Wed, 08/22/2018 - 21:37 Permalink

"...Things started to change after the fracking and shale gas revolution. The United States suddenly realized that it could not only became absolutely self-sufficient in oil and gas, but it also emerged as one of the most important exporters to the rest of the world..."

Ths is factually untrue. The US still depends on crude oil imports to meet its needs. And if this simple, verifiable fact is misunderstood by the author, then I have to wonder about the rest of his analysis...

Cloud9.5 Wed, 08/22/2018 - 21:08 Permalink

From the middle of the last century to the present, everything has been about oil. The peak oilers were correct. What they did not consider was the power of debt to hold this whole thing together long after it should have collapsed. Shale oil is not profitable. That does not mater as long as debt underwrites the cost of production. What does matter is the rapid decline rate of shale oil wells. Yes it is true that shale wells are continuing to produce long after they have reached their peak but it is the volume of production that matters.

If you read the projections put out by the Hirsch Report, the Llyiods Report and the Bundeswehr Report, things should get interesting in the next couple of years.

[Aug 25, 2018] What Trump's Policy of Energy Dominance Means for the World

Notable quotes:
"... Art of the Deal ..."
"... but neither are they amenable to a stoic acceptance of national decline" ..."
"... Unleashing American Energy ..."
"... American energy dominance, ..."
"... Countering America's Adversaries Through Sanctions Act ..."
"... "... an Israeli citizen, someone who understands your identity, who has a sense of nationhood and peoplehood, and the history and experience of the Jewish people, you should respect someone like me, who has analogous feelings about whites. You could say that I am a white Zionist – in the sense that I care about my people, I want us to have a secure homeland for us and ourselves. – Just as you want a secure homeland in Israel." ..."
Aug 25, 2018 | www.strategic-culture.org

ALASTAIR CROOKE | 05.06.2018 | WORLD / ASIA PACIFIC | FEATURED STORY

Two weeks ago, we wrote about how President Trump's foreign policy somehow had 'folded' into 'neo-Americanism', and quoted US Foreign Affairs Professor, Russell-Mead, suggesting that Trump's 8 May metamorphosis (the exit from JCPOA), represented something new, a step-change of direction (from his being principally a sharp Art of the Deal negotiator), toward – pace, Russell-Mead – "a neo-American era in world politics – rather than an [Obama-ist] post-American one". "The administration wants to enlarge American power, rather than adjust to decline (as allegedly, Obama did). For now, at least, the Middle East is the centrepiece of this new assertiveness", Russell-Mead opined, explaining that this new Trump impulse stems from: [Trump's] instincts telling him that most Americans are anything but eager for a "post-American" world. Mr. Trump's supporters don't want long wars, but neither are they amenable to a stoic acceptance of national decline" .

There is something of a paradox here: Trump and his base deplore the cost and commitment of the huge American defence umbrella, spread across the globe by the globalists (sentiments aggravated by the supposed ingratitude of its beneficiaries) – yet the President wants to " enlarge American power, rather than adjust to decline". That is, he wants more power, but less empire. How might he square this circle?

Well, a pointer arose almost a year earlier, when on 29 June 2017, the President used a quite unexpected word when speaking at an Energy Department event: Unleashing American Energy . Instead of talking about American energy independence , as might be expected, he heralded instead, a new era of American energy "dominance" .

In a speech "that sought to underscore a break with the policies of Barack Obama", the FT notes , Mr Trump tied energy to his America First agenda..."The truth is we now have near limitless supplies of energy in our country," Mr Trump said. "We are really in the driving seat, and you know what: we don't want to let other countries take away our sovereignty, and tell us what to do, and how to do it. That's not going to happen. With these incredible resources, my administration will seek not only the American energy independence that we've been looking for, for so long – but American energy dominance, " he said.

It seems, as Chris Cook explains , that Gary Cohn, then chief economic adviser to the President had a part in the genesis to this ambition. Cohn (then at Goldman Sachs), together with a colleague from Morgan Stanley, conceived of a plan in 2000 to take control of the global oil trading market through an electronic trading platform, based in New York. In brief, the big banks, attracted huge quantities of 'managed money' (from such as hedge funds), to the market, to bet on future prices (without their ever actually taking delivery of crude: trading 'paper oil', rather than physical oil). And, at the same time, these banks worked in collusion with the major oil producers (including later, Saudi Arabia) to pre-purchase physical oil in such a way that, by withholding, or releasing physical crude from, or onto the market, the big NY banks were able to 'influence' the prices (by creating a shortage, or a glut).

To give some idea of the capacity of these bankers to 'influence' price, by mid – 2008, it was estimated that some $260 billion of 'managed' (speculative) investment money was in play in energy markets, completely dwarfing the value of the oil actually coming out of the North Sea each month, at maybe $4 to $5 billion, at most. These 'paper' oil-option plays would therefore often trump the 'fundamentals' of real supply, and real end-user demand.

'Step one' for Cohn, was therefore, for the US to manage the trading market, both in price and access – with U.S. antagonists such as Iran or Russia, being able to access the market on inferior terms, if at all. The putative 'step two', has been to nurse US shale production, build new American LNG export terminals, and open America to further oil and gas exploration, whilst strong-arming everyone from Germany to South Korea and China, to buy American LNG exports. And 'thirdly', with Gulf oil exports already under the US umbrella, there were then, two major Middle East energy producers beyond the boundaries of cartel 'influence' (falling more into rival Russia's strategic energy-producing 'heartland'): Iran – which is now the subject of regime change–style, economic siege on its oil exports, and Iraq, which is subject of intense (soft) political pressures (such as threatening to sanction Iraq under the Countering America's Adversaries Through Sanctions Act ) to force its adherence to the western sphere.

What would this Trump notion of energy dominance mean in simple language? The US – were energy dominance to succeed – simply would control the tap to the economic development – or its lack thereof – for rivals China, and Asia. And the US could squeeze Russia's revenues in this way, too. In short, the US could put a tourniquet on China's and Russia's economic development plans. Is this why JCPOA was revoked by President Trump?

Here then, is the squaring of that circle (more US power, yet less empire): Trump's US aims for 'domination', not through the globalists' permanent infrastructure of the US defence umbrella, but through the smart leveraging of the US dollar and financial clearing monopoly, by ring-fencing, and holding tight, US technology, and by dominating the energy market, which in turn represents the on/off valve to economic growth for US rivals. In this way, Trump can 'bring the troops home', and yet America keeps its hegemony. Military conflict becomes a last resort.

Senior advisor Peter Navarro said on NPR earlier this week that "we can stop them [the Chinese] from putting our high tech companies out of business" and "buying up our crown jewels of technology ... Every time we innovate something new, China comes in and buys it, or steals it."

Is this then Trump's plan: By market domination and trade war, to prolong America's 'superiority' of technology, finance and energy – and not somehow be obliged to "adjust to decline"? And by acting in this way, curtail – or at least postpone – the emergence of rivals? Two questions in this context immediately present themselves: Is this formula the adoption of neo-conservatism, by the US Administration, which Trump's own base so detests? And, secondly, can the approach work?

It is not neo-conservatism, perhaps – but rather a re-working of a theme. The American neo-conservatives largely wanted to take a hammer to the parts of the world they didn't like; and to replace it with something they did. Trump's method is more Machiavellian in character.

The roots to both of these currents of thought lie however – more than partly – with Carl Schmitt's influence on American conservative thinking through his friend, Leo Strauss, at Chicago (whether not, Trump has ever read either man, the ideas still circulate in the US ether). Schmitt held that politics (in contrast to the liberal/ humanist vein) has nothing to do with making the world fairer, or more just – that is the work of moralists and theologians – politics for Schmitt, concerns power and political survival, and nothing more.

Liberals (and globalists), Schmitt suggested, are queasy at using power to crush alternative forces from emerging: their optimistic view of human nature leads them to believe in the possibility of mediation and compromise. The Schmittian optic, however dismissed derisively the liberal view, in favour of an emphasis on the role of power, pure and simple – based on a darker understanding of the true nature of 'others' and rivals. This point seems to go to the root of Trump's thinking: Obama and the 'liberals' were ready to trade the 'crown jewels' of 'Our Culture' (financial, technological and energy expertise) through some multilateral 'affirmative action' that would help less developed states (such as rival China up the ladder). Perhaps such thoughts too, lay behind Trump's withdrawal from the Climate Accord: Why help putative rivals, whist, at same time, imposing voluntary handicaps on one's own Culture?

It is on this latter, quite narrow pivot (the imperative of keeping American power intact), that neo-cons and Trumpists, come together: And both also share in their disdain for utopian liberals who would fritter away the crown jewels of western Culture – for some or other humanitarian ideal – only to allow America's determined rivals to rise up and overthrow America and its Culture (in this optic).

The common ground between both currents, is expressed with remarkable candour through Berlusconi's comment that "we must be aware of the superiority of our [western] civilisation". Steve Bannon says something very similar, though couched in the merits of preserving (a threatened) western Judeo-Christian culture.

This sense of Cultural advantage that must at all costs be recuperated and preserved perhaps goes some (but not all) way towards accounting for Trump's ardent support for Israel: Speaking to Israel's Channel Two, Richard Spencer, a prominent leader of the American Alt-Right (and one component to Trump's base), highlighted the deeply felt the dispossession of white people, in their own country [the US]:

"... an Israeli citizen, someone who understands your identity, who has a sense of nationhood and peoplehood, and the history and experience of the Jewish people, you should respect someone like me, who has analogous feelings about whites. You could say that I am a white Zionist – in the sense that I care about my people, I want us to have a secure homeland for us and ourselves. – Just as you want a secure homeland in Israel."

So, can the attempt to leverage and weaponise the American élites' Culture – through the dollar, and putative energy hegemony, and its hold over technology transfer – succeed in holding on to American 'Culture' (in the reductionist construct of Trump's base)? This is the sixty-four thousand dollar question, as they say. It may just easily provoke an equally powerful reaction; and a lot can happen domestically in the US, between now, and the November, US mid-term, elections, which might either confirm the President in power – or undo him. It is difficult to hold to any analytic horizon beyond that.

But a larger point is whilst Trump feels passionately about American Culture and hegemony; the leaders of the non-West today, feel just as passionately that it is time for 'the American Century' to yield place. Just as after WWII, former colonial states wanted independence – so, now, today's leaders want an end to dollar monopoly, they want an opt-out from the global, US-led order and its so-called 'international' institutions; they want to 'be' in their own distinctive cultural way – and they want their sovereignties back. This is not just cultural and economic nationalism, it portends a significant inflection point – away from neo-liberal economics, from individualism and raw commercialism – towards a more rounded human experience.

The tide, in the wake of WWII, surely was irreversible then. I can even recall the former European colonialists subsequently bemoaning their forced withdrawal: "They'll [the former colonies] regret it", they confidently predicted. (No, they never did.) The tide today runs strongly too, and has spread, even, to Europe. Where – who knows – whether the Europeans will have the spine to push back against Trump's financial and trade machinations: It will be an important litmus for what comes next.

But what is different now (from then), is that currency hegemony, technological prowess, and energy 'domination', are not, at all, assured to western possession. They are no longer theirs. They began their migration, some time ago.

[Aug 25, 2018] The Geostrategy That Guides Trump's Foreign Policies by ERIC ZUESSE

Notable quotes:
"... Trump's US aims for 'domination', not through the globalists' permanent infrastructure of the US defence umbrella, but through the smart leveraging of the US dollar and financial clearing monopoly, by ring-fencing, and holding tight, US technology, and by dominating the energy market, which in turn represents the on/off valve to economic growth for US rivals. ..."
"... "Towards the tail end of the Clinton administration and the Dot Com boom in 2000, [Trump's U.S. Treasury Secretary until April 2018] Gary Cohn of Goldman Sachs had dinner with his counterpart at Morgan Stanley, John Shapiro. From this dinner was hatched an audacious plan to take control of the global oil market through a new electronic global market platform." ..."
"... "Wall Street bankers, particularly Goldman Sachs and Morgan Stanley, backed him and he launched ICE in 2000 (giving 80 percent control to the two banks who, in turn, spread out the control among Shell, Total, and British Petroleum)." ..."
"... "The second objective was a switch from oil to natural gas, and when the U.S. [ military ] was obliged to leave Saudi Arabia, they [the U.S.] thereupon established their biggest regional base in Qatar, who co-own with Iran the greatest single natural gas reserve on the planet – South Pars. ..."
"... Energy Dominance ..."
"... In the four months since President Trump's announcement, the market strategy developed by Gary Cohn is now being implemented and its elements are emerging into view. ..."
"... Firstly, there has been a massive inflow of Managed Money into the oil market, particularly the Brent contract, which has seen the Brent oil price increase by 35% since the starting point, which I believe can be dated to the August Brent/BFOE Crude Oil option expiry on June 27 th 2017. ..."
"... The dominant market narrative is that the backwardation in Brent is evidence of surging global oil demand which has emptied inventories and is leading the price to new sunlit uplands. However, I see the market rather differently. ..."
"... Firstly, whether the Brent spot month is supported by financial, rather than physical demand, the result will still be a backwardation, and because few oil producers expect a price over $60 to be sustainable they therefore hedge and depress the forward price. In support of this view, I am far from the only market observer who believes that Aramco, and Rosneft would not be selling equity if either Saudi Arabia or Russia believed the oil price trajectory will be positive even in the medium term. ..."
"... This still leaves open the $64 billion question of which market participant is motivated and able to support the ICE Brent term structure for years into the future by swapping dollar risk (T-Bills) for long term oil risk (oil reserves leased via prepay purchase/resale contracts). ..."
"... My conclusion by a process of elimination is that this Big Long can only be Saudi Arabia and regional allies, with Saudi Arabia now under the management of the thrusting young Mohammad bin Salman." ..."
"... Although Trump routinely talks about withdrawing U.S. troops, he does the exact opposite. ..."
"... the U.S. economy becomes increasingly dependent upon Big Oil and Big Minerals and Big Money and Big Military, ..."
"... War against King Saud's chosen enemies (Iran, Qatar, Syria) and possibly even against the U.S. aristocracy's chosen enemy, Russia (and against Russia's allies: China, Iran, and Syria) -- seems more likely, not less likely, with Trump's geostrategy. ..."
"... "I want to address what Mr. Cohn was talking about from a standpoint of how important American energy is as an option, not as the only option, but as an option to our allies and to count[r]ies around the world. ..."
"... At the G7 it was really kind of interesting. The first thing they beat on the table talking about the Paris accord, you can't get out of it, and I was kind of like OK. Then we would go into our bilats and they'd go, how about some of that LNG you've got? How do we buy your LNG, how do we buy your coal? And it was really interesting, it was a political issue for them. This whole Paris thing is a public relation[s], political issue for them. We made the right decision, the President made the right decision on this. I think it was one of the most powerful messages that early on in this administration that was sent. ..."
"... We are in a position to be able to clearly create a hell of a lot more friends by being able to deliver to them energy and not being held hostage by some countries, Russia in particular. Whether it is Poland, Ukraine, the entirety of the EU. Totally get it, if we can lay in American LNG, if we can be able to have an alternative to Russian anthracite coal that they control in the Ukraine. ..."
"... If that was more the reality of Trump's "Unleashing American Energy" policy than just the pro-global-burnout cheerleading of Trump's mere words, then it seems to be -- in the policy's actual intent and implementation -- more like "send more troops in" than "bring the troops home," to and from anywhere. It is more like energy policy in support of the military policy, than military policy in support of the energy policy. ..."
"... In any aristocracy, some members need to make compromises with other members, no matter how united they all are against the publics' interests. This is the way it's done -- by compromises with each other. ..."
Jun 10, 2018 | www.strategic-culture.org

According to Alastair Crooke, writing at Strategic Culture, on June 5 th :

"Trump's US aims for 'domination', not through the globalists' permanent infrastructure of the US defence umbrella, but through the smart leveraging of the US dollar and financial clearing monopoly, by ring-fencing, and holding tight, US technology, and by dominating the energy market, which in turn represents the on/off valve to economic growth for US rivals.

In this way, Trump can 'bring the troops home', and yet America keeps its hegemony [America's control of the world, global empire]. Military conflict becomes a last resort."

He bases that crucially upon a landmark 6 November 2017 article by Chris Cook, at Seeking Alpha, which laid out, and to a significant extent documented, a formidable and complex geostrategy driving U.S. President Donald Trump's foreign policies. Cook headlined there "Energy Dominance And America First" , and noted that,

"Towards the tail end of the Clinton administration and the Dot Com boom in 2000, [Trump's U.S. Treasury Secretary until April 2018] Gary Cohn of Goldman Sachs had dinner with his counterpart at Morgan Stanley, John Shapiro. From this dinner was hatched an audacious plan to take control of the global oil market through a new electronic global market platform."

This "global market platform," which had been started months earlier in 2000 by Jeffrey Sprecher , is "ICE," or InterContinental Exchange, and it uses financial derivatives in order to provide to Wall Street banks control over the future direction of commodites prices (so that the insiders can game the markets), by means of the financial-futures markets, locking in future purchase-and-sale agreements. It also entails Wall Street's buying enormous commodities-storage warehouses and stashing them with such commodities - such as, in that case, aluminum) , and so it influences also the real estate markets, and doesn't only manipulate the commodities markets. Those vast storehouses (and the operation of the U.S. Government's Strategic Petroleum Reserve, to carry out a similar price-manipulation function in the oil business) are crucial in order for the entire scheme to be able to function, because without control over the storehousing of physical commodities, such futures-price manipulations aren't possible. Consequently, ICE couldn't get off the ground without major Wall Street partners, which are willing to do that. Cohn and Shapiro (Goldman, and Morgan Stanley) backed Sprecher's operation; and Wikipedia states that,

"Wall Street bankers, particularly Goldman Sachs and Morgan Stanley, backed him and he launched ICE in 2000 (giving 80 percent control to the two banks who, in turn, spread out the control among Shell, Total, and British Petroleum)."

This is today's financial world -- a world in which billionaires control the future directions of commodities-prices, and thus manipulate markets, and even determine the economic fates of nations. It's not the myth of capitalism; it is the reality of capitalism. It functions by means of corruption, as it always has, but the corrupt methods constantly evolve.

However, Trump's geostrategy goes beyond merely this, especially by bringing into the entire operation the world's wealthiest person, the trillionaire King Saud, who, as the sole owner of the Saudi Government, which in turns owns the world's largest corporation Aramco, which in turn dominates the oil market and which is also #6 in the natural-gas market (far behind the three giants, which King Saud is trying to destroy -- Russia, Iran, and Qatar -- so that the Sauds will become able to dominate even there). Trump's geostrategy ties King Saud even more tightly than before, into America's aristocracy.

King Saud, as Cook noted, is trying to disinvest in petroleum and reposition increasingly into natural gas, because outside the United States and around the world, people are seriously concerned to minimize global warming so as to postpone global burnout from uncontrollably soaring atmospheric carbon. Petroleum has an even worse carbon footprint than does natural gas; and therefore natural gas is the world's "transition fuel" to a 'survivable' future, while solar and other alternatives take hold (even if too late). Despite all of the carbon-fuels industries' propaganda, people outside the United States are determined to delay global burnout, and the insiders know this. King Saud knows that his petroleum-laden portfolio will have to diversify fast, because the long-term future for petroleum-prices is decline. And he won't be able to control prices at all in the natural-gas business unless he's got America's aristocracy on his side, in the effort to keep those prices up (at least while the Sauds will be increasing their profits from natural gas). Unlike his dominance over OPEC, Saudi Arabia has no such position to control natural gas-prices. He thus needs Wall Street's cooperation.

Cook said:

"The second objective was a switch from oil to natural gas, and when the U.S. [ military ] was obliged to leave Saudi Arabia, they [the U.S.] thereupon established their biggest regional base in Qatar, who co-own with Iran the greatest single natural gas reserve on the planet – South Pars.

Energy Dominance

In the four months since President Trump's announcement, the market strategy developed by Gary Cohn is now being implemented and its elements are emerging into view.

Firstly, there has been a massive inflow of Managed Money into the oil market, particularly the Brent contract, which has seen the Brent oil price increase by 35% since the starting point, which I believe can be dated to the August Brent/BFOE Crude Oil option expiry on June 27 th 2017.

The dominant market narrative is that the backwardation in Brent is evidence of surging global oil demand which has emptied inventories and is leading the price to new sunlit uplands. However, I see the market rather differently.

Firstly, whether the Brent spot month is supported by financial, rather than physical demand, the result will still be a backwardation, and because few oil producers expect a price over $60 to be sustainable they therefore hedge and depress the forward price. In support of this view, I am far from the only market observer who believes that Aramco, and Rosneft would not be selling equity if either Saudi Arabia or Russia believed the oil price trajectory will be positive even in the medium term.

This still leaves open the $64 billion question of which market participant is motivated and able to support the ICE Brent term structure for years into the future by swapping dollar risk (T-Bills) for long term oil risk (oil reserves leased via prepay purchase/resale contracts).

My conclusion by a process of elimination is that this Big Long can only be Saudi Arabia and regional allies, with Saudi Arabia now under the management of the thrusting young Mohammad bin Salman."

However, I do not agree with Alastair Crooke's "In this way, Trump can 'bring the troops home', and yet America keeps its hegemony [America's control of the world, global empire]. Military conflict becomes a last resort." I explained at Strategic Culture on March 25th "How the Military Controls America" and noted there that "on 21 May 2017, US President Donald Trump sold to the Saud family, who own Saudi Arabia, an all-time-record $350 billion of US arms-makers' products." This means that not only Wall Street -- the main institutional agency for America's aristocracy -- and not only American Big Oil likewise, are committed to the royal Saud family, but U.S. corporations such as Lockheed Martin also are. Vast profits are to be made, by insiders, in invasions and occupations, just as in gas and oil, and in brokerage.

Although Trump routinely talks about withdrawing U.S. troops, he does the exact opposite. And even if this trend reverses and America's troop-numbers head down, while the U.S. economy becomes increasingly dependent upon Big Oil and Big Minerals and Big Money and Big Military, America's military budget is, under Trump, the only portion of the entire U.S. federal Government that's increasing; so, "Military conflict becomes a last resort" does not seem likely, in such a context. Rather, the reverse would seem to be the far likelier case.

War against King Saud's chosen enemies (Iran, Qatar, Syria) and possibly even against the U.S. aristocracy's chosen enemy, Russia (and against Russia's allies: China, Iran, and Syria) -- seems more likely, not less likely, with Trump's geostrategy.

In fact, on 29 June 2017, when President Trump first announced his "Unleashing American Energy Event," the President spoke his usual platitudes about the supposed necessity to increase coal-production, and what he said was telecast and publicized ; but his U.S. Energy Secretary, the barely literate former Governor of Texas, Rick Perry, also delivered a speech, which was never telecast nor published, except that a few days later, on July 3rd, an excerpt from it was somehow published on the website of Liquified Natural Gas Global, and it was this:

"I want to address what Mr. Cohn was talking about from a standpoint of how important American energy is as an option, not as the only option, but as an option to our allies and to count[r]ies around the world.

At the G7 it was really kind of interesting. The first thing they beat on the table talking about the Paris accord, you can't get out of it, and I was kind of like OK. Then we would go into our bilats and they'd go, how about some of that LNG you've got? How do we buy your LNG, how do we buy your coal? And it was really interesting, it was a political issue for them. This whole Paris thing is a public relation[s], political issue for them. We made the right decision, the President made the right decision on this. I think it was one of the most powerful messages that early on in this administration that was sent.

We are in a position to be able to clearly create a hell of a lot more friends by being able to deliver to them energy and not being held hostage by some countries, Russia in particular. Whether it is Poland, Ukraine, the entirety of the EU. Totally get it, if we can lay in American LNG, if we can be able to have an alternative to Russian anthracite coal that they control in the Ukraine. That singularly will have more to do with keeping our allies free and building their confidence in us than practically anything else that I have seen out there. It is a positive message around the world right now."

If that was more the reality of Trump's "Unleashing American Energy" policy than just the pro-global-burnout cheerleading of Trump's mere words, then it seems to be -- in the policy's actual intent and implementation -- more like "send more troops in" than "bring the troops home," to and from anywhere. It is more like energy policy in support of the military policy, than military policy in support of the energy policy.

This sounds even better for the stockholders of Lockheed Martin and other weapons-firms than for the stockholders of ExxonMobil and other extractive firms. On 6 March 2018, Xinhua News Agency reported that, "U.S. President Donald Trump's chief economic adviser Gary Cohn has summoned executives from U.S. companies that depend on aluminum and steel to meet with Trump this Thursday, in a bid to persuade the president to drop his tariff plan, media reported Tuesday." After all: Goldman has warehouses full of aluminum, and has the futures-contracts which already commit the Wall Street firm to particular manipulations in the aluminum (and other) markets. Controlling the Government so that it does only what you want it to do, and only when you want the Government to do it, is difficult. In any aristocracy, some members need to make compromises with other members, no matter how united they all are against the publics' interests. This is the way it's done -- by compromises with each other.

Tags: Energy

[Aug 19, 2018] Economics

Notable quotes:
"... each click brings us closer to the bang ..."
"... Every ten years or so, the United States needs to pick up some small crappy little country and throw it against the wall, just to show the world we mean business ..."
"... there will be no war and no negotiations ..."
"... carries out the decrees, and answers to the Supreme Leader of Iran, who functions as the country's head of state ..."
"... Trump's ALL IN CAPS meme ..."
"... This is where Ali Khamenei's stance is more puzzling, at least to me: when he says that there will be no war, does he mean that the US threats are not credible or does he mean that Iran has the means to deter a US attack? His words make it sound like he is quite certain that there will be no war. How can he be so sure? I am especially amazed by the apparent Iranian confidence that the AngloZionists will not attack them when I compare it with the obvious Russian policy of actively preparing for war since at least 2014 (also see here , here , here , here , here and here ). Of course, Iran has been preparing for war with the US for almost 40 years now whereas the Russians only woke up to reality comparatively recently. I see several potential explanations for Ali Khamenei's statement (there might be more, of course) ..."
"... Personally, every time I think of a possible US attack on Iran I think of the Israeli attack on Lebanon in 2006 which happened in spite of the fact that it was plainly visible to everybody that the Israelis were waltzing straight into a conflict which they could not win and which, in fact, resulted into one of the most abjects defeats in military history. Conversely, while Hezbollah did win a truly historical victory, it also remains a fact that Hezbollah leaders did not expect the Israelis to launch a full-scale ground offensive. Finally, history is full of examples of wars which were started in spite of all objective factors indicating that they would end up in disaster. ..."
"... If it weren't for its nuclear arsenal, the US could be dismissed as a particularly obnoxious country led by ignorant leaders with bloated and mostly ineffective armed forces. Alas, the US nuclear arsenal is very real (and still very capable) and we know that top-level US Neocons have already considered using tactical nuclear weapons against a non-nuclear state's conventional force in the past . In a twisted way, this makes sense: if you are a megalomaniac infused with a sense of messianic superiority then international or even civilizational norms of behavior are of no interest (or even relevance) to you. Listening to US Presidents, pretty much all of them (but especially Obama and Trump) it is pretty clear that these folks consider themselves to be the Kulturträger ..."
"... Shaytân-e Bozorg ..."
"... It would be a big mistake to dismiss the US because of its incapable military or moral bankruptcy. The truth is that in terms of aggregate national power, the US still remains the most powerful country on the planet (even if we don't include nuclear weapons). Anyone doubting that needs to look how how the currencies of the countries the US is singles out for attack suddenly began slipping: the Russian ruble (which has since bounced back), the Iranian rial, the Venezuelan bolivar, the Turkish lira , etc.) or how little time it took Trump to bring the (admittedly spineless) Europeans to heel . ..."
"... As for Russia, for all her military might, she remains only a semi-sovereign country in which the pro-US/pro-Israeli "Atlantic Integrationists" continue to try to sabotage (often successfully) everything Putin and his supporters are doing . I would not place big hopes in China either, especially considering the lack of meaningful Chinese action in Syria where Russia and Iran did all the heavy lifting. ..."
"... So count with yet another imperial war of aggression, a barrel of crude at over 100$ and oil shortages, rocketing inflation, job losses, a stagnant real estate market and stock exchange, and a national debt and government deficit which would make even Reagan proud. And plenty of dead Americans (nevermind the Iranians, right?). But don't worry: there will still be a huge supply of Chinese-made US flags to wave! ..."
Aug 19, 2018 | www.unz.com


Ideology History
Science Bloggers


Columnists Videos
Books Print Archives
Announcements Popular
Comments Articles
Authors Settings
More... ← Making Sense of a Few Rumors About Russ... Blogview The Saker Archive Blogview The Saker Archive Iran's Reply: No War and No Negotiations The Saker August 17, 2018 2,500 Words 81 Comments Reply 🔊 Listen ॥ ■ ► RSS Email This Page to Someone
Remember My Information


=> Remove from Library B Show Comment Next New Comment Next New Reply Add to Library
Bookmark Toggle All ToC Search Text Case Sensitive Exact Words Include Comments List of Bookmarks

We can all thank God for the fact that the AngloZionists did not launch a war on the DPRK, that no Ukronazi attack on the Donbass took place during the World Cup in Russia and that the leaders of the Empire have apparently have given up on their plans to launch a reconquista of Syria. However, each of these retreats from their hysterical rhetoric has only made the Neocons more frustrated and determined to show the planet that they are still The Hegemon who cannot be disobeyed with impunity. As I wrote after the failed US cruise missile strike on Syria this spring, " each click brings us closer to the bang ". In the immortal words of Michael Ledeen , " Every ten years or so, the United States needs to pick up some small crappy little country and throw it against the wall, just to show the world we mean business ". The obvious problem is that there are no "small crappy little countries" left out there, and that those who are currently the object of the Empire's ire are neither small nor crappy.

Having now shown several times that for all its hysterical barking the Empire has to back down when the opponent does not cower away in fear, the Empire is now in desperate need to prove its "uniqueness" and (racial?) superiority. The obvious target of the AngloZionist wrath is Iran. In fact, Iran has been in the cross-hairs of the Empire ever since the people of Iran dared to show the AngloZionists to the door and, even worse, succeed in creating their own, national and Islamic democracy. To punish Iran, the US, the USSR, France and all the other "democratic" countries unleashed their puppet (Saddam Hussein) and gave him full military support, and yet the Iranians still prevailed, albeit at a terrible cost. That Iranian ability to prevail in the most terrible circumstances is also the most likely explanation for why there has not been an overt attack on Iran for the past four decades (there have, of course, there has been plenty of covert attacks during all these years).

I won't list all the recent AngloZionist threats against Iran – we all know about them. The bottom line is this: the US, Israel and the KSA are, yet again, working hand in hand to set the stage for a major war under what we could call the " Skripal-case rules of evidence " aka " highly likely ". And yet, in spite of all this saber-rattling, Iranian Supreme Leader Ali Khamenei has summed up Iran's stance in the following words " there will be no war and no negotiations ".

First, let's first look at Iranian rationale for "no negotiations"

The obvious: "no negotiations"

Ayatollah Ali Khamenei has been very clear in his explanations for why negotiating with the US makes no sense. On his Twitter account he wrote:

The Iranian Supreme Leader even posted a special graphic summary to summarize and explain the Iranian position:

Finally, Ayatollah Ali Khamenei reiterated his fundamental approach towards the AngloZionist Empire:

The contrast between the kindergarten-level low-IQ bumbling hot air and threats coming out of the White House and the words of Ali Khamenei could not be greater, especially if we compare the words the two leaders decided to post all in caps;

Trump : To Iranian President Rouhani: NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE. WE ARE NO LONGER A COUNTRY THAT WILL STAND FOR YOUR DEMENTED WORDS OF VIOLENCE & DEATH. BE CAUTIOUS!

Khamenei : THERE WILL BE NO WAR, NOR WILL WE NEGOTIATE WITH THE U.S..

Notice first that in his typical ignorance, Trump fails to realize that Hassan Rouhani is only the President of Iran and that threatening him makes absolutely no sense since he does not make national security decisions, which is the function of the Supreme Leader. Had Trump taken the time to at the very least check with Wikipedia he would have understood that the Iranian President " carries out the decrees, and answers to the Supreme Leader of Iran, who functions as the country's head of state ". It is no wonder that Trump's infantile threats instantly turned into an Internet meme !

In contrast, Khamenei did not even bother to address Trump by name but, instead, announced his strategy to the whole world.

Trump's ALL IN CAPS meme

Of course, issuing ALL IN CAPS threats just to be treated with utter contempt by the people you are trying to hard to bully and having your words become a cause of laughter on the Internet will only further enrage Trump and his supporters. When you are desperately trying to show the world how tough and scary you are, there is nothing more humiliating as being treated like some stupid kid. Therein also lies the biggest danger: such derision could force Trump and the Neocons who run him to do something desperate to prove to the word that their "red button" is still bigger than everybody else's.

ORDER IT NOW

It is important to note here that making negotiations impossible is something the Trump administration seems to have adopted as a policy. This is best illustrated by the conditions attached to the latest sanctions against Russia which, essentially, demand that Russia admit poisoning the Skripals. In fact, all the western demands towards Russia (admitting that Russia is guilty for the Skripal case, that Russia shot down MH-17, that Russia hand over Crimea to the Ukronazis, etc.) are carefully crafted to make absolutely sure that Russia will not negotiate. The sames, of course, goes for the ridiculous Pompeo demands towards the DPRK (including handing over to the US 60 to 70 percent of its nukes within six to eight months; no wonder the North Koreans denounced a "gangster-like" attitude) or the latest US grandstanding towards Turkey. Sadly, but the Neocon run media has successfully imposed the notion that negotiations are either a sign of weakness, or treason, or both. Thus to be "patriotic" and "strong" no US official can afford to be caught red-handed negotiating with the enemy of the day.

Under these conditions, why would anybody want to negotiate with the US?

Frankly, the "no negotiations" approach makes perfectly good sense, and while the Iranians are the only ones who have openly said so, the Russians have hinted to the same on many occasions (see their words about the US being "non-agreement capable" or about US diplomats confusing Austria and Australia). To any objective observer it should by now be completely obvious by now that a) the US cannot negotiate (due to intellectual, cultural and political limitations) and b) the US has no desire to negotiate. This is, of course, a highly undesirable and dangerous situation, but it would only make things worse to pretend that civilized negotiations with the US are possible.

So, if both sides agree on "no negotiations", what about war?

The not so obvious: No war?

This is where Ali Khamenei's stance is more puzzling, at least to me: when he says that there will be no war, does he mean that the US threats are not credible or does he mean that Iran has the means to deter a US attack? His words make it sound like he is quite certain that there will be no war. How can he be so sure? I am especially amazed by the apparent Iranian confidence that the AngloZionists will not attack them when I compare it with the obvious Russian policy of actively preparing for war since at least 2014 (also see here , here , here , here , here and here ). Of course, Iran has been preparing for war with the US for almost 40 years now whereas the Russians only woke up to reality comparatively recently. I see several potential explanations for Ali Khamenei's statement (there might be more, of course):

Personally, every time I think of a possible US attack on Iran I think of the Israeli attack on Lebanon in 2006 which happened in spite of the fact that it was plainly visible to everybody that the Israelis were waltzing straight into a conflict which they could not win and which, in fact, resulted into one of the most abjects defeats in military history. Conversely, while Hezbollah did win a truly historical victory, it also remains a fact that Hezbollah leaders did not expect the Israelis to launch a full-scale ground offensive. Finally, history is full of examples of wars which were started in spite of all objective factors indicating that they would end up in disaster.

It seems to me that in purely military terms (not in political ones!) Israel could be seen as a stand-in for the US and Hezbollah as a stand-in for Iran and that the outcome of any future US-Iranian war will be very similar to the outcome of the war in 2006, albeit on a much larger (and bloodier) scale. I am confident that the folks in the Pentagon realize that, but what about their Neocon bosses – do they even care about Iranian or, for that matter, US casualties? I highly doubt it: all they care about is their power and messianic ideology.

If it weren't for its nuclear arsenal, the US could be dismissed as a particularly obnoxious country led by ignorant leaders with bloated and mostly ineffective armed forces. Alas, the US nuclear arsenal is very real (and still very capable) and we know that top-level US Neocons have already considered using tactical nuclear weapons against a non-nuclear state's conventional force in the past . In a twisted way, this makes sense: if you are a megalomaniac infused with a sense of messianic superiority then international or even civilizational norms of behavior are of no interest (or even relevance) to you. Listening to US Presidents, pretty much all of them (but especially Obama and Trump) it is pretty clear that these folks consider themselves to be the Kulturträger and the Herrenvolk of the 21st century and their messianism is in no way less delusional than the one of their Nazi predecessors (or, for that matter, the one of the Popes of the past 1000 years). And why would the people who nuked two Japanese cities under the (entirely fallacious) pretext of "shortening the war" (almost a humanitarian operation!) not do the same thing in Iran?

Of sure, they probably realize that using nukes will result in a massive political backlash, but they are confident that no matter what happens in the end, they will always be able to say "screw you!" to the rest of the planet. After all, this is something which Israel and the US have been doing with almost total inpunity for decades already – why would they stop now? As for the fact that the Persian people have been dealing with all kinds of invaders since no less than 2500 years will not stop the AngloZionists from trying to crush them. After all, having laid waste to a country which many see as the cradle of civilization, Iraq, why not do the same thing to Iran? Iraq, Iran – what's the difference, they are all just "sand niggers" and our red button is bigger than theirs, right?

Standing up to Shaytân-e Bozorg (almost alone?)

It would be a big mistake to dismiss the US because of its incapable military or moral bankruptcy. The truth is that in terms of aggregate national power, the US still remains the most powerful country on the planet (even if we don't include nuclear weapons). Anyone doubting that needs to look how how the currencies of the countries the US is singles out for attack suddenly began slipping: the Russian ruble (which has since bounced back), the Iranian rial, the Venezuelan bolivar, the Turkish lira , etc.) or how little time it took Trump to bring the (admittedly spineless) Europeans to heel .

As for Russia, for all her military might, she remains only a semi-sovereign country in which the pro-US/pro-Israeli "Atlantic Integrationists" continue to try to sabotage (often successfully) everything Putin and his supporters are doing . I would not place big hopes in China either, especially considering the lack of meaningful Chinese action in Syria where Russia and Iran did all the heavy lifting.

Sadly, but the only ally Iran can truly count on is Hezbollah. And while Hezbollah is considered a "non-state actor", it has a formidable capability to strike at the US's colonial masters, especially in terms of missiles .

This will not protect Iran, but it could serve as a very real deterrent to the Israelis, especially since Hezbollah Secretary General Hassan Nasrallah he has made it clear that Hezbollah more than capable of taking on Israel .

For the time being, the Israelis are already preparing for a re-match against Hezbollah and they are massing forces in the north to prepare for a war against Hezbollah .

Does that look to you like there will be no war against Iran?

I hope so. But to me it very much looks like an attack is pretty much inevitable. I have been predicting such an attack since 2007 and, so far, I have been completely wrong (and thank God for that!). The very first article I ever wrote for my blog was entitled " Where the Empire meets to plan the next war " ended with the following words:

So count with yet another imperial war of aggression, a barrel of crude at over 100$ and oil shortages, rocketing inflation, job losses, a stagnant real estate market and stock exchange, and a national debt and government deficit which would make even Reagan proud. And plenty of dead Americans (nevermind the Iranians, right?). But don't worry: there will still be a huge supply of Chinese-made US flags to wave!

And yet, 11 years later, the AngloZionist attack which looked so imminent in 2007 has not happened yet. Could it be that this time again an attack on Iran can be avoided? Ayatollah Ali Khamenei appears to be very confident that it will not happen. I am not so sure, but I fervently hope that he is right.

[Aug 08, 2018] US World Oil Production and ExxonMobil Outlook

Aug 08, 2018 | peakoilbarrel.com

Guym says: 08/06/2018 at 8:58 am

Earlier estimates of OPEC have now changed, and there is no increase from June. Probably, a slight decrease from SA. From OPEC sources, not Platts. I think they would start increasing if Iran drops, but not much otherwise. I think Sauds and Kuwait joint venture is set up for that potential.

Changing the way I gage things, into a much simpler format. Now, I look at world inventory drops, and look at current increases from OPEC and US. Neither will change much, so inventory drops should continue. Opec needs to come up with a lot more, or it will look damn scary in 2019. With pipeline constraints, Canada is pretty much out of the picture for further increases this year, and not much, elsewhere.

Energy News says: 08/06/2018 at 11:07 am
Yes the outlook for OPEC's July production is looking more flat now. This is a strange situation because Platts is one of OPEC secondary sources and so I assume that they see all the numbers

Argus – Surprise Saudi decline depresses Opec output
https://www.argusmedia.com/en/news/1729615-surprise-saudi-decline-depresses-opec-output

Yes all the tanker trackers are saying that OPEC exports fell in July, this is Reuters version
Reuters on Twitter: https://pbs.twimg.com/media/Dj541N2WwAAy55o.png

kolbeinh says: 08/06/2018 at 11:54 am
The Platts vs Argus divergence is for sure strange. It is easier to track exports than production numbers.
Monsieur George says: 08/06/2018 at 11:57 am
Thank you. This news confirms that world production is stagnating. Possibly very close to the decline. We will have to be attentive to the inventories. It will be the first place that the nations get hold of in order to supply themselves with oil.

[Aug 08, 2018] America's About To Unleash Its NOPEC 'Superweapon' Against The Russians Saudis

Aug 08, 2018 | www.zerohedge.com

Authored by Andrew Korybko via Oriental Review,

The US Congress has revived the so-called "NOPEC" bill for countering OPEC and OPEC+.

Officially called the " No Oil Producing and Exporting Cartels Act ", NOPEC is the definition of so-called "lawfare" because it enables the US to extra-territorially impose its domestic legislation on others by giving the government the right to sue OPEC and OPEC+ countries like Russia because of their coordinated efforts to control oil prices.

Lawsuits, however, are unenforceable , which is why the targeted states' refusal to abide by the US courts' likely predetermined judgement against them will probably be used to trigger sanctions under the worst-case scenario, with this chain of events being catalyzed in order to achieve several strategic objectives.

The first is that the US wants to break up the Russian-Saudi axis that forms the core of OPEC+, which leads to the second goal of then unravelling the entire OPEC structure and heralding in the free market liberalization of the global energy industry.

This is decisively to the US' advantage as it seeks to become an energy-exporting superpower, but it must neutralize its competition as much as possible before this happens, ergo the declaration of economic-hybrid war through NOPEC. How it would work in practice is that the US could threaten primary sanctions against the state companies involved in implementing OPEC and OPEC+ agreements, after which these could then be selectively expanded to secondary sanctions against other parties who continue to do business with them.

The purpose behind this approach is to intimidate the US' European vassals into complying with its demands so as to make as much of the continent as possible a captive market of America's energy exporters, which explains why Trump also wants to scrap LNG export licenses to the EU .

If successful, this could further erode Europe's shrinking strategic independence and also inflict long-term economic damage on the US' energy rivals that could then be exploited for political purposes. At the same time, America's recently unveiled " Power Africa " initiative to invest $175 billion in gas projects there could eventually see US companies in the emerging energy frontiers of Tanzania , Mozambique , and elsewhere become important suppliers to their country's Chinese rival, which could make Beijing's access to energy even more dependent on American goodwill than ever before.

If looked at as the opening salvo of a global energy war being waged in parallel with the trade one as opposed to being dismissed as the populist piece of legislation that it's being portrayed as by the media, NOPEC can be seen as the strategic superweapon that it actually is, with its ultimate effectiveness being dependent of course on whether it's properly wielded by American decision makers.

It's too earlier to call it a game-changer because it hasn't even been promulgated yet, but in the event that it ever is, then it might go down in history as the most impactful energy-related development since OPEC, LNG, and fracking.

bshirley1968 -> HilteryTrumpkin Mon, 08/06/2018 - 14:47 Permalink

No way US can manipulate oil trade at this point without hurting themselves or helping their "enemies". Cause and effect, just think it through.

The world needs energy, Russia has energy...and a real surplus for sale. The US is a net energy consumer with no surplus. China needs energy in a big way. Trying to cut off Russian and Iranian oil and trying to blow up the Chinese economy are acts of war. The West realizes there is no way they can survive in their current status of moar with that kind of competition out there. The BRICST now constitute $17 trillion in combined GDP. They have the energy sources (Russia and Iran), they have the manufacturing base (China), they have the agricultural base (Russia, Brazil, South Africa), and they have plenty of customers.....even outside the BRICST union. That is a formidable competitive force to face when you are an economy structured on infinite growth on a finite planet......that you control less and less of each year.

[Aug 06, 2018] America's About To Unleash Its NOPEC 'Superweapon' Against The Russians Saudis

Aug 06, 2018 | www.zerohedge.com

Authored by Andrew Korybko via Oriental Review,

The US Congress has revived the so-called "NOPEC" bill for countering OPEC and OPEC+.

Officially called the " No Oil Producing and Exporting Cartels Act ", NOPEC is the definition of so-called "lawfare" because it enables the US to extra-territorially impose its domestic legislation on others by giving the government the right to sue OPEC and OPEC+ countries like Russia because of their coordinated efforts to control oil prices.

Lawsuits, however, are unenforceable , which is why the targeted states' refusal to abide by the US courts' likely predetermined judgement against them will probably be used to trigger sanctions under the worst-case scenario, with this chain of events being catalyzed in order to achieve several strategic objectives.

The first is that the US wants to break up the Russian-Saudi axis that forms the core of OPEC+, which leads to the second goal of then unravelling the entire OPEC structure and heralding in the free market liberalization of the global energy industry.

This is decisively to the US' advantage as it seeks to become an energy-exporting superpower, but it must neutralize its competition as much as possible before this happens, ergo the declaration of economic-hybrid war through NOPEC. How it would work in practice is that the US could threaten primary sanctions against the state companies involved in implementing OPEC and OPEC+ agreements, after which these could then be selectively expanded to secondary sanctions against other parties who continue to do business with them.

The purpose behind this approach is to intimidate the US' European vassals into complying with its demands so as to make as much of the continent as possible a captive market of America's energy exporters, which explains why Trump also wants to scrap LNG export licenses to the EU .

If successful, this could further erode Europe's shrinking strategic independence and also inflict long-term economic damage on the US' energy rivals that could then be exploited for political purposes. At the same time, America's recently unveiled " Power Africa " initiative to invest $175 billion in gas projects there could eventually see US companies in the emerging energy frontiers of Tanzania , Mozambique , and elsewhere become important suppliers to their country's Chinese rival, which could make Beijing's access to energy even more dependent on American goodwill than ever before.

If looked at as the opening salvo of a global energy war being waged in parallel with the trade one as opposed to being dismissed as the populist piece of legislation that it's being portrayed as by the media, NOPEC can be seen as the strategic superweapon that it actually is, with its ultimate effectiveness being dependent of course on whether it's properly wielded by American decision makers.

It's too earlier to call it a game-changer because it hasn't even been promulgated yet, but in the event that it ever is, then it might go down in history as the most impactful energy-related development since OPEC, LNG, and fracking.

[Jul 29, 2018] The industry's average decline rate -- the speed at which output falls without field maintenance or new drilling -- was 6.3% in 2016 and 5.7% last year

Jul 29, 2018 | peakoilbarrel.com

Ron Patterson says: 07/28/2018 at 12:40 pm

Behind a paywall but here is the gist of the article

WSJ: As Oil Industry Recovers From a Glut, a Supply Crunch Might Be Looming

Dearth of investments in oil projects mean a spike in prices above $100 could be on the horizon

Crude across the globe is being used up faster than it is being replaced, raising the prospect of even higher oil prices in the coming years.
The world isn't running out of oil. Rather, energy companies and petro-states -- burned by 2014's price collapse -- are spending less on new projects, even though oil prices have more than doubled since 2016. That has sparked concerns among some industry watchers of a massive price spike that could hurt businesses and consumers.
The oil industry needs to replace 33 billion barrels of crude every year to satisfy anticipated demand growth, particularly as developing countries like China and India are consuming more oil. This year, new investments are set to account for an increase of just 20 billion barrels, according to data from Rystad Energy.

The industry's average decline rate -- the speed at which output falls without field maintenance or new drilling -- was 6.3% in 2016 and 5.7% last year, the Norway-based consultancy said. In the four years before the crash, that decline rate was 3.9%.

Any shortfall in supply could push prices higher, similar to when oil hit nearly $150 a barrel in 2008, some industry participants say.
"The years of underinvestment are setting the scene for a supply crunch," said Virendra Chauhan, an oil industry analyst at consultancy Energy Aspects. He believes a production deficit could come as soon as the end of next year, potentially pushing oil above $100 a barrel.

SNIP
In parts of Brazil and Norway, decline rates are already above 10-15%, Energy Aspects' Mr. Chauhan said. Output from Venezuela's aging fields fell by more than 700,000 barrels a day over the past year, according to the IEA. In June, Angola's output hit a 12-year low, while Mexico's production is down nearly 300,000 barrels a day since the middle of 2016, despite efforts to open up the industry and reverse declines, the IEA said.
"Nobody is really stepping in," said Doug King, chief investment officer of the $140 million Merchant Commodity hedge fund. "People still got burned by the downturn."

[Jul 29, 2018] Rystad has first half figures for discoveries a bit better than last year, though more on the gas side than oil

Jul 29, 2018 | peakoilbarrel.com

George Kaplan says: 07/27/2018 at 3:42 pm

Rystad has first half figures for discoveries a bit better than last year, though more on the gas side than oil, but there was a billion barrel Equinor discovery in Brazil this week that will make things look better. I thought things were worse, partly because I assumed the Guyana discoveries would count as appraisals and be back dated against 2016 and 2017, but it looks like they are new fields. Overall though it still shows a big drop over the past few years.

https://www.rystadenergy.com/newsevents/news/press-releases/2018-conventional-discovered-resources-on-track-increase/

Watcher says: 07/28/2018 at 2:37 am
Oilprice.com is presenting the same data with a lot more hype and celebration.
George Kaplan says: 07/28/2018 at 4:03 am
A "remarkable" recovery from "abnormally" low levels – complete bollocks, and pretty close to self-contadictory. Everything is, and always will be, awesome in the oilprice universe, if not they'd lose their revenue stream.
Michael B says: 07/28/2018 at 7:00 am
George, I admit I had to rub my eyes when I read that op.com version.

Loathsome Nonsense.

Guym says: 07/28/2018 at 8:28 am
Yeah, because they are mostly deep sea stuff, we should expect to see that pumping by next month? 🤡

[Jul 28, 2018] Fernando Leanme

Jul 28, 2018 | blogspot.com.es

x Ignored says: 07/27/2018 at 3:53 am Iran would not try to block anything unless it is under attack by the US. The Pentagon is opposed to such an attack, but Trump is heavily influenced by Netanyahu and is advised by the same neocons who got the US into the fiasco in Iraq. Given the inability of the US Congress to enforce the constitution by denying the Prsident to start a war without a congressional declaration of war, it seems the USA may be on its way to destroy the world economy to please an extremist Israeli right wing government.

I write destroy the world economy because it's doubtful Iran would respond as anticipated by the Americans, who have a tendency to fight wars with strategies based on previous wars and an excess of complex gadgets and extremely expensive technology. I don't know what they have in mind, but I'm sure it would be unexpected, calibrated to avoid nuclear retaliation, and may evolve over time. But I'm sure others will see the risks, and the oil market will take off into the $100's and possibly $200's unless there's adults left in the USA senate to block this craziness.

  1. Mushalik x Ignored says: 07/26/2018 at 8:11 am Here is something:

    Trump, Iran and the New Guns of August
    https://www.bloomberg.com/view/articles/2018-07-24/trump-iran-and-the-new-guns-of-august

      • Hightrekker x Ignored says: 07/26/2018 at 9:51 am I agree– and with all those KSA installations just 15 minutes away by unstoppable missile technology (1970 midrange seems a little hard for current technology), we have a quandary, not a problem. Reply
        • Fernando Leanme x Ignored says: 07/27/2018 at 3:57 am Exactly. But I'm not sure US National Security advisor Bolton knows anything about low technology midrange missiles and drones, some of which, in a pinch, can be piloted by small light weight kamikaze martyrs.
    • Eulenspiegel x Ignored says: 07/26/2018 at 10:24 am The worst thing for a date to guess is politics.

      There are 10 countries that have to grow oil production to avoid peak oil – these with still big reserves.

      One knocked out itself – Venezuela
      One is under attack from the USA – Iran

      Irak isn't that stable, either.

      A hot war can break out every moment, or a civil war devasting and blocking infrastructure for years, while other countries deplete.

      Or peace can come and these ressources can get used.

      These combined 10 mb/d alone will determine peak oil – by 5 years or more in either direction. These 10 mb/day can't be replaced by russion oil tsars, US rednecks with too much Wallstreet money or Saudis opening secret valves of instant oil wonder production.

      Venezuela can get a new government and increase production by a big amount, helped by international money. It has the ressources to get one of the big producers when the tar oil is lifted.

      So in my eyes, it looks like somewhere between 2020 and 2030, perhaps even later.

    • Iron Osiris x Ignored says: 07/26/2018 at 10:47 am Hi Michael B,

      Couldn't agree with you more regarding OPEC reserve estimates, they are all full of shit, and no one except a handful of people in those countries would know how much they have left.

      Solving this peak oil timing is more similar to a quantum mechanics problem rather than a Newtonian mechanics one. It complexity, lack of transparency and political and economic implication make it impossible to have a deterministic answer, its pure probability, and also speculations.

      Like you i think all these projections are wrong. Maybe we will extract a lot more oil with newer technologies or new field discoveries and end up cooking the planet with climate change, and we won't see a "peak oil" for 100s of years who knows.

    • TechGuy x Ignored says: 07/26/2018 at 2:54 pm "The peak oil experts were dreadfully wrong with their HL 15 years ago, so what prevents their being just as wrong now? "

      Why is Oil at $70/bbl? Back in 1999 its was about $10/bbl. If there no supply constraints why did the price increase ~7 fold in less than 20 years? Also why the need to to drill for Shale Oil (Source Rocks) & develop in Deep & ultradeep water?

      Conventional oil peaked in 2005, All the growth is coming from offshore & Shale. New Oil discoveries have dropped off the cliff. We found almost nothing in 2017. Oil Discoveries peaked in 1960s and been in permanent decline. Thus if we are discovery less and less new oil fields every year, below the rate of consumption, Oil production will have to fall to match discoveries at some point in the future.

      Other clues:
      1. Oil Majors perfer to drill on Wall street (aka using debt to fund stock buybacks) instead of developing new fields for future production.
      2. Shale Debt: Shale drilling never made a profit, except for using OPM (other People's money) to fund CapEx\OpEx.
      3. US invaded or targeted with Regime change in Middle East Oil producing nations. Only Iran remains and you can already hear the War drumbeats for Iran. Reply

      • Michael B x Ignored says: 07/26/2018 at 3:31 pm Indeed, and thanks. Note that your answer has to do not with HL but with obvious signs & symptoms. Believe me, I've been watching, too. The uncertainty is killing me.
    • Fernando Leanme x Ignored says: 07/27/2018 at 4:25 am Michael, I have never been a peak oiler. I come at this from a different perspective: about 30 years ago I noticed exploration results were decaying, and started working in areas which would allow producing oil and gas in the far future from sources we weren't tapping much at the time.

      I remember sitting in a meeting around 1990 and suggesting to managers in a committee I was briefing that we needed to focus on locking up hydrocarbon molecules, wherever they were, cut down exploration and use that money on technology and getting access.

      This is one reason why eventually I got involved in gas conversion to liquids, heavy oil, and the former Soviet Union, which to us appeared like a happy hunting ground, including its Arctic targets in the Barents, Kara, Yamal, etc. I also had colleagues who went into deep water, EOR, North America Arctic, and of course the hydraulic fracturing of vertical horizontal wells drilled in low perm formations.

      So in my case I've been about 30 years now working on replacing conventional oil barrels with more difficult barrels. And those difficult barrels require higher prices. So the question is, what can poor countries afford? Reply

      • Michael B x Ignored says: 07/27/2018 at 5:13 am So, "not a peak oiler" means you think the fate of conventional oil is not really all that important, and cost is the ultimate arbiter, not the resource? Reply
        • Fernando Leanme x Ignored says: 07/27/2018 at 6:19 am Not a peak oiler means I don't use Hubbert Linearization or similar techniques. In the past, my job has included the estimate of resources (not reserves). The preferred technique was to estimate technical reserves, meaning we supposedly didn't focus on economics. But I couldn't have staff working out numbers doing endless iterations and model runs for highly speculative cases, so I gave them the guidance to assume a really high price, a higher OPEX and CAPEX environment, and prepare conceptual field redevelopments and marginal field developments or targeting really low quality reservoirs. We devoted about 5% of the time budget for this effort. And I told head office I wasn't about to use more manpower working such hypothetical figures, because we had to focus on reserve studies, and preparing projects to move reserves along the reserve progression pathway so we could meet our targets.

          The fate of conventional oil is already written, in the sense that most of the extra oil we get from conventional fields comes from redevelopments which rely on higher prices, and EOR. The typical field with say 45% recovery factor can be pounded hard to push it to say 55%, going above 55% gets mighty hard, and pushing to 60% is nearly impossible. So there are limits, which involve the huge amount of resources (cash, steel, chemicals, and people) we use up to get those extra barrels.

          One issue to consider is that these redevelopments which include EOR are not contributing that much extra rate. They stop decline, get a slight bump, and then yield a slower decline rate for 10-20 years. This means investments take tine to payout and if the world is suffering from acute shortages they don't help that much. The on,y fast reaction comes from fracturing "shales" and low permeability sands, infills in newer fields, and workovers. Reply

          • Michael B x Ignored says: 07/27/2018 at 6:53 am Thanks. If you were doing this in the 90s, sounds like you were "predicting" the future! Reply
          • Hickory x Ignored says: 07/27/2018 at 9:20 am Sure sounds like a long explanation for your understanding of 'peak conventional oil'. Nothing to be ashamed of. Reply
  1. AdamB x Ignored says: 07/26/2018 at 10:08 am With oil discoveries the last 3 years in the toilet due to lack of capital investment and lack of major fields its just a matter of time mathematically. Be thankful we still have time before peak production hits cause I don't think it will be fun post peak. Hopefully still 5 years until its official maybe less When will Ghawar give up the ghost .? Reply
  2. Dennis Coyne x Ignored says: 07/26/2018 at 10:58 am Another consideration is discoveries and reserve appreciation. Consider estimates of conventional C+C using Hubbert Linearization by Jean Laherrere which have gradually increased from 1998 (1800 Gb) to 2016 (2500 Gb.) In addition, there is not any particular reason that output would tend to follow a "Hubbert" type logistical function.

    Generally estimates based on Hubbert Linearization would be a minimum estimate in my view.

    In addition conventional oil Extraction rates (output divided by producing reserves) in the World (5.6% in 2016) are far lower than the United States (14.8% in 2016, all C+C), so there is the potential that with higher oil prices the average extraction rate for the World may increase. The World conventional extraction rate was about 11.6% in 1979. A gradually increasing rate of extraction might allow a plateau in output to be extended for many years (to 2030 at least). Impossible to predict of course, the number of scenarios that can be created is large.

    One such scenario is presented below (peak in 2025 at 85.5 Mb/d of C+C or 4275 Mt/year).

    The analysis using the logistic function does not account for this potential.

    Reply

  3. Energy News x Ignored says: 07/26/2018 at 11:44 am International Energy Agency – Oil Market Report: 12 July 2018
    now available to non-subscribers
    download from here: https://www.iea.org/oilmarketreport/omrpublic/currentreport/
    https://pbs.twimg.com/media/DjC5s79XcAA0_xG.jpg
    https://pbs.twimg.com/media/DjC564-W0AETF5a.jpg Reply
  4. TechGuy x Ignored says: 07/26/2018 at 2:26 pm https://srsroccoreport.com/top-u-s-shale-oil-fields-decline-rate-reaches-new-record-half-million-barrels-per-day/
    "While the U.S. reached a new record of 11 million barrels of oil production per day last week, the top five shale oil fields also suffered the highest monthly decline rate ever." Reply
    • Michael B x Ignored says: 07/26/2018 at 3:51 pm Good article. Reply
      • Dennis Coyne x Ignored says: 07/26/2018 at 6:49 pm I disagree. Oil prices are more likely to increase than to fall to $30/b and more of these companies are likely to be profitable as oil prices rise, also 3 of the top companies are profitable, so a "well run" oil company can indeed be profitable, those that are less well run will either change the way they operate or they will go out of business. The better companies buy the worthwhile assets on the cheap and life goes on.

        It's called capitalism folks. 🙂

        Also the DPR is not very good, I ignore that report and use EIA's tight oil estimates (link below) and shaleprofile.com for good information.

        https://www.eia.gov/energyexplained/data/U.S.%20tight%20oil%20production.xlsx Reply

        • GuyM x Ignored says: 07/27/2018 at 9:12 am "Also the DPR is not very good", is an understatement. I have never seen an analysis use so many different fruits to come up with bananas expected. Reply
    • Minqi Li x Ignored says: 07/26/2018 at 3:55 pm I suppose by "decline rate" they are talking about the "legacy decline" Reply
      • Guym x Ignored says: 07/26/2018 at 5:48 pm As an example, I will use approximate data from a fairly good tier 2 well in the Eagle Ford. It starts off production at 33k the first month, and drops rapidly after that to reach 8k by the final month. Let's say it produces 175k the first year, which would be profitable at today's prices. The next year it produces 55k, and the next year 36k. By the fourth year it is producing less than 100 barrels a day, and by the sixth year it is questionable to keep up. Little better than stripper status. Tier three stuff is much worse, it may reach stripper status by the third year. Eventually, all will be tier two and three status wells. That's the majority of reserves estimated. Estimating future production from current production doesn't touch on reality. Eventually, to keep up on initial production, you would have to drill twice as many wells. But, you won't keep up with twice as many, because the decline rates will be higher. There is a lot of difference between a 600k EUR well, and a 300k EUR, or a 150k EUR. 2042 for US peak? Not hardly. Reply
        • Dennis Coyne x Ignored says: 07/26/2018 at 6:44 pm Guym,

          I agree, probably 2023 to 2025 will be the US peak, after that decline is likely to be rapid because mostly tier 2 and tier 3 wells will be left, high oil prices may make them profitable, but it will be impossible to keep up with the decline rate of legacy wells after 2025 and US output will decline rapidly (4 or 5% per year) after 2030. Reply

          • Guym x Ignored says: 07/26/2018 at 7:00 pm Exactly. Reply
          • TechGuy x Ignored says: 07/26/2018 at 7:48 pm One snag: The Shale Debt starts coming due in 2019 and continues through to 2024. Shale drillers were successful since the borrowed at rock bottom interest rates and investors practically fought each other begging Shale drillers to take their money. Not so sure it will work if interest rates are higher, and The Shale sweet spots aren't endless. Reply
            • Guym x Ignored says: 07/26/2018 at 8:49 pm That might slow the start up, for sure. If the price of oil gets high enough, that will barrier will be short lived. Reply
              • TechGuy x Ignored says: 07/27/2018 at 2:43 pm As oil prices increase so does the costs. It takes a lot of diesel to haul Water, Sand, and oil. Shale drillers never really made a real profit, even when Oil was over $100/bbl. One must consider the EROEI for Shale & rising CapEx\OpEx as the cost of Oil rises.

                Second, its likely that consumers cannot afford high oil prices. As prices rise, Consumers will cut back and it will plunge the global economy back into recession. Perhaps the Worlds Central banks can coach something back into the global economy, but it won't work over the long term.

                FWIW: Some of the recent data is showing weakness in the global economy: Housing sales are falling and prices in the hot regions are flatlining. Trumps tariffs are also taking a toll as global trade is falling. And there are cracks in the developing world credit markets. We might see a stock market correction this fall, which would likely see commodity prices fall (including Oil). Reply

                • Hickory x Ignored says: 07/27/2018 at 10:37 pm " consumers cannot afford high oil prices. As prices rise, Consumers will cut back and it will plunge the global economy back into recession."

                  Well, that likely depends on how fast and far the prices go. Slow steady rise can be well tolerated pretty far. Energy is so cheap for what you get, after all.
                  Many other countries have a much better GDP/unit energy consumed than the USA, and with price pressure the USA could get there too. I suspect we could shed 10-20% of our oil consumption without big effect, particularly if we did it slowly. For example, it wouldn't affect the GDP at all if we slowed down to max 60 mph. Painless saving of energy, if you choose good music.
                  It is the fast changes in price that really tend to hurt. Reply

                  • TechGuy x Ignored says: 07/27/2018 at 11:45 pm "I suspect we could shed 10-20% of our oil consumption without big effect, particularly if we did it slowly."

                    It doesn't work that way. Consumers cut back on spending, from eating out, going on vacations. They loss confidence and delay major purchases like new cars, homes, etc.

                    Most of the population commute to work well below 60 mph. Traffic usually limits speeds to 40 mph or less during commuting hours.

                    To understand how high oil prices affect the economy just research the events around 2007/2008. Schools & business were planning to reduce work & school days to 3 or 4 days a week. Thieves were draining fuel from parked trucks and cars. The higher oil prices caused food prices to soar, which lead to the arab spring in Africa & the middle east. Europe had frequent riots. Airlines & shipping companies impose fuel surcharges. People homes had utilities shutoff. since they could afford their energy bills.

                    Funny how quickly people forget the aftermath of high energy prices. Doesn't anyone read or study economics?

    • GoneFishing x Ignored says: 07/26/2018 at 5:28 pm Nice report. Production decline is a short time away if we don't keep drilling.

      Speaking of legacy wells, the huge number of abandoned wells from the past is leaving us a legacy of leakage. The even bigger number of recent wells will continue that legacy.

      https://arstechnica.com/science/2016/11/abandoned-oil-and-gas-wells-are-still-leaking-methane/ Reply

      • Fernando Leanme x Ignored says: 07/27/2018 at 4:33 am 150 year old wells in the eastern USA could indeed leak methane. But I would not rely much on Arstechnica, it's a blog run by a guy with a liberal arts degree very well crafted to be a cheering section for renewables. It may even be subsidized by Yingli Green, a Chinese solar panel maker. Reply
        • Fred Magyar x Ignored says: 07/27/2018 at 6:57 am Are you seriously claiming that a peer reviewed scientific paper, in the 'Proceedings of The National Academy of Sciences of The United States of America' is somehow untrustworthy because it's conclusions were mentioned by Ars Technica?!

          They also provide a link to the paper:

          http://www.pnas.org/content/113/48/13636

          Identification and characterization of high methane-emitting abandoned oil and gas wells

          Abstract
          Recent measurements of methane emissions from abandoned oil/gas wells show that these wells can be a substantial source of methane to the atmosphere, particularly from a small proportion of high-emitting wells. However, identifying high emitters remains a challenge. We couple 163 well measurements of methane flow rates; ethane, propane, and n-butane concentrations; isotopes of methane; and noble gas concentrations from 88 wells in Pennsylvania with synthesized data from historical documents, field investigations, and state databases. Using our databases, we (i) improve estimates of the number of abandoned wells in Pennsylvania; (ii) characterize key attributes that accompany high emitters, including depth, type, plugging status, and coal area designation; and (iii) estimate attribute-specific and overall methane emissions from abandoned wells. High emitters are best predicted as unplugged gas wells and plugged/vented gas wells in coal areas and appear to be unrelated to the presence of underground natural gas storage areas or unconventional oil/gas production. Repeat measurements over 2 years show that flow rates of high emitters are sustained through time. Our attribute-based methane emission data and our comprehensive estimate of 470,000–750,000 abandoned wells in Pennsylvania result in estimated state-wide emissions of 0.04–0.07 Mt (1012 g) CH4 per year. This estimate represents 5–8% of annual anthropogenic methane emissions in Pennsylvania. Our methodology combining new field measurements with data mining of previously unavailable well attributes and numbers of wells can be used to improve methane emission estimates and prioritize cost-effective mitigation strategies for Pennsylvania and beyond. Reply

  5. Dave Kimble x Ignored says: 07/26/2018 at 6:11 pm All this Hubbertian analysis is useful to set a ceiling on production, but the world's economy runs on making a profit and so producers have a minimum price they must receive, while the end consumers have a maximum price they can afford to pay.

    In mid-2008 the effect of a 72% price rise in 18 months caused a $1.75 trillion extra cost on OECD oil imports and the world economy crashed. Recovery required the USG to guarantee loans to frackers to get the production numbers up. I am not saying that they won't try that again, but this can only go so far. Surely next time this happens, no one will be able to avoid the obvious conclusion that there is no future profit in oil production, and the oil industry will have its share prices downgraded, reducing the collateral for loans, whereupon they will go out of business in a puff of smoke.

    This will happen long before any URR impacts, so I wonder at how much this analysis is worth. Reply

    • Guym x Ignored says: 07/26/2018 at 8:25 pm USG guaranteed loans to frackers???? Interest rates for everyone was low then, but I don't remember reading about any guarantees. Drilling horizontals is a little past SBA stuff. Reply
    • George Kaplan x Ignored says: 07/27/2018 at 1:56 am If the "oil industry" means the IOCs then they are a minor player now. The NOCs dominate the reserves and production, of course they all seem to be having money issues as well but maybe they manifest in a slightly different way – i.e riots, uprisings and infrastructure collapse.

      It's already noticeable that many of the big companies are switching to share buy backs (Total, Shell, Anadarko) and less development spending even as the price has been rising. The one which has switched the other way is ExxonMobil, and not uncoincidentally it is the only one with really good recent discoveries. That straight line H/L for the rest of the world is just the tail run out on existing discoveries, most of which are also already developed and wouldn't be taken off line even with bankruptcies for the operators. If only as chemical feedstock oil is way better in almost every way than anything that could be made from water/CO2/renewable energy so if civilisation lasts long enough most of it will be used. Reply

  6. George Kaplan x Ignored says: 07/27/2018 at 1:44 am Forcing a logistic curve on some of those production histories might give some big errors, though maybe they cancel out overall. Hubbert said himself that H/L wouldn't work well on production that had been artificially constrained by a cartel (e.g. OPEC for Saudi, Kuwait, UAE, Iran and Iraq) or environmental moratoria (e.g. some US and Canada oil). For oil sands they tend to be built on 50 year project lives, with steady production and a fast fall off rather than a traditional decline curve. About 50 mmbbls of reserve is already tied into operating, steady production. Future developments will be similarly constrained with the additional limit from environmental objectives to both the extraction and pipelines. Logistics curves might still come close if the reserve estimates are good, but that is also the biggest unknown as other comments have said. Reply
    • Minqi Li x Ignored says: 07/27/2018 at 2:54 pm Projections are not meant to be predictions. Even EIA or IEA say that. But they are always useful to illustrate given certain assumptions, what will or what are likely to happen.

      That has been said, given our understanding of the inherent limitations of projections/data, a careful and cautious application of these projections does provide us some idea regarding the likely range of future development. For example, the projection for the US oil used in this report is likely to be too optimistic especially for years after 2025, as many have pointed out. That will reinforce the case for a global peak oil before 2025

      In addition to production, I think the consumption data in the report also provides some interesting information. I wonder if someone cares to comment about that. Reply

      • Guym x Ignored says: 07/27/2018 at 7:37 pm Well, obviously consumption can't be over production for any great amount, or we won't have inventory. Peak production precedes any mythical peak demand. Consumption mostly follows production is my guess. At probably a much higher price than today. Reply
  7. Eulenspiegel x Ignored says: 07/27/2018 at 7:25 am An info about the cost of permian wells:
    https://www.zerohedge.com/news/2018-07-26/top-us-shale-oil-fields-decline-rate-reaches-new-record-half-million-barrels-day

    "Pioneer spent $818 million on capital expenditures (CapEx) for additions to oil and gas properties (drilling and completion costs) during Q1 2018, brought on 63 horizontal wells in the Permian, and only added 9,000 barrels per day of oil equivalent over the previous quarter"

    So it's round about 13 million $ per well, not 7 million. Reply

    • Fernando Leanme x Ignored says: 07/27/2018 at 8:38 am The number of wells brought on isn't proportional to wells drilled. And the CAPEX isn't proportional to wells drilled. Therefore it's hard to derive a per well cost from such figures. Reply
      • GuyM x Ignored says: 07/27/2018 at 9:06 am Yeah, there a lot of DUCs, and you have to consider that Pioneer lays out some bucks for its gathering system and gas processing plant in the Permian. Hard to isolate per well from total capex figures. Reply
      • Eulenspiegel x Ignored says: 07/27/2018 at 9:25 am At least it tells, why the calculation

        (Sale of oil) – well cost – variable cost per barrel = profit

        does not work that good – there are lots of hidden costs even under CAPEX, that are almost as high as completion costs when these 7 million$ / well are right.

        And I think these cost are not one time cost just only in this quarter – there is alway a pipeline to build, a convertert to install, a gravel road to the site to build and so on. Reply

  8. George Kaplan x Ignored says: 07/27/2018 at 3:42 pm Rystad has first half figures for discoveries a bit better than last year, though more on the gas side than oil, but there was a billion barrel Equinor discovery in Brazil this week that will make things look better. I thought things were worse, partly because I assumed the Guyana discoveries would count as appraisals and be back dated against 2016 and 2017, but it looks like they are new fields. Overall though it still shows a big drop over the past few years.

    https://www.rystadenergy.com/newsevents/news/press-releases/2018-conventional-discovered-resources-on-track-increase/

    Reply

  9. George Kaplan x Ignored says: 07/27/2018 at 3:47 pm Baker Hughes rig count up two for USA, twelve for Canada. GoM down one oil and one gas.

    http://phx.corporate-ir.net/phoenix.zhtml?c=79687&p=irol-rigcountsoverview

    Reply

[Jul 28, 2018] Global Oil Discoveries See Remarkable Recovery In 2018 Zero Hedge

Jul 28, 2018 | www.zerohedge.com

two hoots -> Free This Fri, 07/27/2018 - 14:09 Permalink

The oil is good to have but:

With over 3000 platforms, 25,000 miles of pipeline, all unsecure in the Gulf of Mexico, they provide a lucrative target in any conflict with the US. Energy disruptions and environmental calamities would reek havoc. Surely there is a plan to quickly secure the Gulf from under/over/on the water threats? If not get at it.

https://www.fractracker.org/2014/11/latest-incident-gulf-of-mexico/http

moobra -> two hoots Fri, 07/27/2018 - 21:53 Permalink

If you threaten the energy security of the US you will be liberated if you are a country or droned if you are an individual.

shortonoil -> Newbie lurker Fri, 07/27/2018 - 16:28 Permalink

More Oilprice.com industry pimping. The world uses 36 billion barrels (Gb) of crude per year. Plus they are quoting boe, or barrels equivalent. Gas is not crude. The article should read: "The world is still pumping 9 barrels for every 1 it finds". D day is not something the industry doesn't wants advertised.

Victor999 -> Newbie lurker Fri, 07/27/2018 - 17:10 Permalink

We use well over 30B BOE a year, globally. We found new reserves of 4.5B BOE in 2018 so far. Do the math.

Toxicosis -> Free This Fri, 07/27/2018 - 15:13 Permalink

If that's the case, then why are virtually all shale companies in massive debt?

https://srsroccoreport.com/the-shale-oil-ponzi-scheme-explained-how-lou

I don't care if you educate yourself. But stupidity should hurt.

Liquid Courage -> Ghost of PartysOver Fri, 07/27/2018 - 15:18 Permalink

Look at the graph again. Draw a trend line from left to right across the peaks from 2014 til now. Is the line pointing up or down? That's peak oil.

So there's been an up tick this year. How much has been discovered. Ooooh, 4.5 billion barrels. Sounds like a lot to you? What's the world consumption rate expressed in millions of barrels per DAY? Don't know? It's around 90 million barrels per DAY. Look it up if you doubt me. If you divide 4.5 billion by 90 million, you'll calculate how many DAYS it takes to consume 4.5 billion barrels. To make it easier for you, just reduce the fraction by stroking 6 zeros off each number. That's 4,500/90. Not too hard. That's 50 DAYS of supply!!! OK, maybe another 4.5 billion will be found in 2H2018. Oooooh, another 50 DAYS worth. We're saved!!!

In the last paragraph, what's the Reserve Replacement Rate? 10% . That's not so good.

Also, a large portion of the newly discovered oil is offshore, in ultra deep reservoirs. Do you think that might be more expensive to produce?

As for abiotic oil, as Laws of Physics pointed out, even if that desperate theory were true -- which it isn't -- it's the rate of replacement that matters, and it's nowhere near 90 million barrels per day.

So, fore-warned is fore-armed, but if you'd rather bury your head in the sand that's your prerogative.

CorporateCongress -> LawsofPhysics Fri, 07/27/2018 - 15:19 Permalink

Oil consumption alone is almost 100 mmbpd. Meaning that in 6 months they found a whopping 1.5 month of supply... we're nowhere near what we need

Serfs Up Fri, 07/27/2018 - 13:49 Permalink

Average monthly discoveries in 2018 = 826 million barrels

Average monthly usage in 2018 = 2,850 million barrels.

This is fine.

[Jul 19, 2018] Proposed Law Would Allow U.S. to Sue OPEC for Manipulating Oil Market

Jul 19, 2018 | foreignpolicy.com

S 2929 text

perated by high gasoline prices just ahead of the U.S. midterm elections, lawmakers in Congress are trying to make it easier for the United States to sue OPEC. And unlike previous failed efforts to go after the oil-exporting cartel, this time Congress will find a sympathetic ear in the White House.

The bipartisan No Oil Producing and Exporting Cartels Act, or NOPEC bill, would tweak U.S. antitrust law to explicitly ban just the kind of collusive behavior that OPEC was created to engage in. The bill, a carbon copy of previous legislation, makes illegal any activity to restrain the production of oil or gas or set oil and gas prices and knocks away two legal defenses that in the past have shielded OPEC from U.S. antitrust measures.

[Jul 19, 2018] Iran in 1953: How an Oil Cartel Operation Became a Job for the CIA

Jul 19, 2018 | www.informationclearinghouse.info

Extracted from: The State, the Deep State, and the Wall Street Overworld By Peter Dale Scott

The international lawyers of Wall Street did not hide from each other their shared belief that they understood better than Washington the requirements for running the world. As John Foster Dulles wrote in the 1930s to a British colleague,

The word "cartel" has here assumed the stigma of a bogeyman which the politicians are constantly attacking. The fact of the matter is that most of these politicians are highly insular and nationalistic and because the political organization of the world has under such influence been so backward, business people who have had to cope realistically with international problems have had to find ways for getting through and around stupid political barriers. 44

This same mentality also explains why Allen Dulles as an OSS officer in 1945 simply evaded orders from Washington forbidding him to negotiate with SS General Karl Wolff about a conditional surrender of German forces in Italy – an important breach of Roosevelt's agreement with Stalin at Yalta for unconditional surrender, a breach that is regarded by many as helping lead to the Cold War. 45 And it explains why Allen, as CIA Director in 1957, dealt summarily with Eisenhower's reluctance to authorize more than occasional U-2 overflights of the USSR, by secretly approving a plan with Britain's MI-6 whereby U-2 flights could be authorized instead by the UK Prime Minister Macmillan. 46

This mentality exhibited itself in 1952, when Truman's Justice Department sought to break up the cartel agreements whereby Standard Oil of New Jersey (now Exxon) and four other oil majors controlled global oil distribution. (The other four were Standard Oil Company of New York, Standard Oil of California or Socony, Gulf Oil, and Texaco; together with Royal Dutch Shell and Anglo-Iranian, they comprised the so-called Seven Sisters of the cartel.) Faced with a government order to hand over relevant documents, Exxon's lawyer Arthur Dean at Sullivan and Cromwell, where Foster was senior partner, refused: "If it were not for the question of national security, we would be perfectly willing to face either a criminal or a civil suit. But this is the kind of information the Kremlin would love to get its hands on." 47

At this time the oil cartel was working closely with the British Anglo-Iranian Oil Company (AIOC, later BP) to prevent AIOC's nationalization by Iran's Premier Mossadeq, by instituting, in May 1951, a successful boycott of Iranian oil exports.

In May 1951 the AIOC secured the backing of the other oil majors, who had every interest in discouraging nationalisation.... None of the large companies would touch Iranian oil; despite one or two picturesque episodes the boycott held. 48

As a result Iranian oil production fell from 241 million barrels in 1950 to 10.6 million barrels in 1952.

This was accomplished by denying Iran the ability to export its crude oil. At that time, the Seven Sisters controlled almost 99% of the crude oil tankers in the world for such export, and even more importantly, the markets to which it was going. 49

But Truman declined, despite a direct personal appeal from Churchill, to have the CIA participate in efforts to overthrow Mossadeq, and instead dispatched Averell Harriman to Tehran in a failed effort to negotiate a peaceful resolution of Mossadeq's differences with London. 50

All this changed with the election of Eisenhower in November 1952, followed by the appointment of the Dulles brothers to be Secretary of State and head of CIA. The Justice Department's criminal complaint against the oil cartel was swiftly replaced by a civil suit, from which the oil cartel eventually emerged unscathed. 51

Eisenhower, an open friend of the oil industry changed the charges from criminal to civil and transferred responsibility of the case from the Department of Justice to the Department of State – the first time in history that an antitrust case was handed to State for prosecution. Seeing as how the Secretary of State was John Foster Dulles and the defense counsel for the oil cartel was Dulles' former law firm (Sullivan and Cromwell), the case was soon as good as dead. 52

Thereafter

Cooperative control of the world market by the major oil companies remained in effect, with varying degrees of success, until the oil embargo of 1973-74. That the cooperation was more than tacit can be seen by the fact that antitrust regulations were specifically set aside a number of times during the 1950-1973 period, allowing the major companies to negotiate as a group with various Mideastern countries, and after its inception [in 1960], with the Organization of Petroleum Exporting Countries or OPEC. 53

Also in November 1952 CIA officials began planning to involve CIA in the efforts of MI6 and the oil companies in Iran 54 -- although its notorious Operation TP/AJAX to overthrow Mossadeq was not finally approved by Eisenhower until July 22, 1953. 55

The events of 1953 strengthened the role of the oil cartel as a structural component of the American deep state, drawing on its powerful connections to both Wall Street and the CIA. 56 (Another such component was the Arabian-American Oil Company or ARAMCO in Saudi Arabia, which increased oil production in 1951-53 to offset the loss of oil from Iran. Until it was fully nationalized in 1980, ARAMCO maintained undercover CIA personnel like William Eddy among its top advisors.) 57 The five American oil majors in particular were also strengthened by the success of AJAX, as Anglo-Iranian (renamed BP) was henceforth forced to share 40 percent of the oil from its Iran refinery with them.

Nearly all recent accounts of Mossadeq's overthrow treat it as a covert intelligence operation, with the oil cartel (when mentioned at all) playing a subservient role. However the chronology, and above all the belated approval from Eisenhower, suggest that it was CIA that came belatedly in 1953 to assist an earlier oil cartel operation, rather than vice versa. In terms of the deep state, the oil cartel or deep state initiated in 1951 a process that the American public state only authorized two years later. Yet the inevitable bias in academic or archival historiography, working only with those primary sources that are publicly available, is to think of the Mossadeq tragedy as simply a "CIA coup."

[Jul 18, 2018] Major oil producers agreed Friday to a nominal increase in crude production of about 1 million barrels per day by Keith Johnson

Jun 22, 2018 | foreignpolicy.com

Major oil producers agreed Friday to a nominal increase in crude production of about 1 million barrels per day, a bid to put a damper on high oil prices. But in practice, major oil exporters will likely only be able to add about half that total to global markets, because many countries are already producing at capacity or face severe threats of supply disruption.

Oil markets weren't calmed by the agreement announced Friday by the Organization of the Petroleum Exporting Countries after a contentious week of meetings. Crude prices in New York rose more than 3 percent to almost $68 a barrel and rose about 2 percent in London to more than $74 a barrel.

OPEC didn't agree to increase production as such. Rather the group, with the addition of nonmember Russia, agreed to respect its existing program of restricting supplies. But since the group had gone well overboard and trimmed output by almost 2 million barrels a day, due in large part to a steep falloff in Venezuelan oil production, respecting the original target will translate into more oil for the global market -- on paper, at least.

In practice, only Saudi Arabia and Russia have the capacity to add significant amounts of crude in the next few months. That means Friday's agreement will end up adding about 600,000 barrels of oil a day to the global market.

The contentious meeting took place under the shadow of vituperation from U.S. President Donald Trump, who worried that high oil and gasoline prices would be politically painful ahead of midterm elections later this year. Even after the group's decision had been announced, Trump was still tweeting hopefully about OPEC increasing production.

[Jul 18, 2018] The United States and the Russian Federation would seem to be natural allies

Jul 18, 2018 | www.moonofalabama.org

Oil as a tool of geopolitics

Peter AU 1 , Jul 17, 2018 4:23:41 PM | 112
VK
I posted the sequence of events used to create the petro dollar back in the 2018-33 thread.
Will post them again here as this thread concerns Kissinger.
More specifics can be added to this planned sequence of events, this just the basics.
...........
In the late 1960s, US found oil at Prudhoe bay and by 1970 it was a proved crude oil reserve.
Due to environmental and other legal challenges, construction of the pipeline was held up.

In late 1972 the US Secretary of the Interior declares the trans-Alaska pipeline to be in the US national interest

1973-74. OPEC oil embargo due to US backing of Israel pushes oil prices up in an initial rise.

1973 (OPEC oil embargo) The Trans-Alaska pipeline Authorization Act legislation is quickly pushed through. Signed by Nixon on November 16 1973. This blocked all further challenges allowing construction to begin. pdf

Late 1973 Nixon along with Saudi Arabia create the petro dollar beginning in 1974.

The trans-Alaska pipeline is pushed through to meet a deadline, no costs spared, first oil delivered through the pipeline 28th July 1977, extra pumps then installed and pipeline running at full capacity by 1980. https://en.wikipedia.org/wiki/Construction_of_the_Trans-Alaska_Pipeline_System

1979-80 the price of oil skyrockets due to the Iranian revolution. The US is now the global economic hegemon as all countries now need US dollars to purchase oil.

Historical crude oil price chart https://img-fotki.yandex.ru/get/65661/111554736.48/0_118d4e_344fb37_orig
..................


I have read that Kissinger withheld information from both Nixon and Israel, but have not followed that line of research.
Here is a piece from an official Kissinger biography. You can see here he was working both sides.

https://history.state.gov/departmenthistory/people/kissinger-henry-a
Kissinger entered the State Department just two weeks before Egypt and Syria launched a surprise attack on Israel. The October War of 1973 played a major role in shaping Kissinger's tenure as Secretary. First, he worked to ensure Israel received an airlift of U.S. military supplies. This airlift helped Israel turn the war in Israel's favor, and it also led members of the Organization of Petroleum Exporting Countries (OPEC) to initiate an oil embargo against the United States. After the implementation of a United Nation's sponsored ceasefire, Kissinger began a series of "shuttle diplomacy" missions, in which he traveled between various Middle East capitals to reach disengagement agreements between the enemy combatants. These efforts produced an agreement in January 1974 between Egypt and Israel and in May 1974 between Syria and Israel. Additionally, Kissinger's efforts contributed to OPEC's decision to lift the embargo.

[Jul 18, 2018] Syria and geopolitics of oil

Jul 18, 2018 | www.moonofalabama.org

Peter AU 1 , Jul 17, 2018 6:46:40 PM | 141

Daniel,

It is noticeable that Trump's US attack any Syrian forces coming too close to US occupied zones of al Tanf and Dier Ezzor. Also Trumps takeover of the Deir Ezzor oilfields where US forces simply set up bases or forward posts in the ISIS occupied area.

Under Trump, US has set up a number of new bases in Syria. On the other hand, no concern about Afrin and Manbij. The Deir Ezzor area is Arab tribes and this and al Hasakah (Kurd/Arab?) is the top end of the Persian Gulf/Mesopotamia oil field.

US now controls al Hasakah and half of Deir Ezzor province. The have been ongoing efforts by the US under Trump to take Al Bukamal. US has a base just south of Al Bukamal in Iraq. US bases are now thick throughout Mesopotamia, with more being built.

Also a new base being installed in Kuwait.

The US controls the Arab shore of the Persian gulf, it now has many bases in Iraq and Syria. The only thing missing is the oil rich strip of Iran running alongside the Persian gulf and Mesopotamia.

[Jul 16, 2018] US total (oil + products) inventories made a new low (from the high February 2017)

Notable quotes:
"... "Conclusion. No matter what clever US energy independence calculations are out there, the fact remains that the US is physically dependent on around 8 mb/d of crude oil imports, 4.3 mb/d out of which come from countries where oil production has already peaked and/or where there are socio-economic or geopolitical problems. As of April 2018 US net crude imports were about 6 mb/d, far from oil independence." ..."
"... I note also that about 45% of USA imports come from Canada, as well depicted in in your Fig 1. Thus we are 'captives' of Canada (to use the terminology of trump), but don't seem to have much appreciation or respect for their position. ..."
Jul 16, 2018 | peakoilbarrel.com

Energy News, 07/11/2018 at 1:14 pm

US total (oil + products) inventories made a new low (from the high February 2017)

US ending stocks July 6th
Crude oil down -12.6 million barrels
Oil products down -0.7
Overall total, down -13.3 (shown on chart)
Natural Gas: Propane & NGPLs up +6.1 (not included in chart)
Chart: https://pbs.twimg.com/media/Dh1-upjXUBEOjvn.jpg

Weekly change in US total (oil + products) inventories
Chart: https://pbs.twimg.com/media/Dh1_SuAXUAcbc5M.jpg

Mushalik , 07/11/2018 at 3:45 pm
11/7/2018
US crude oil imports and exports update April 2018 data
http://crudeoilpeak.info/us-crude-oil-imports-and-exports-update-april-2018-data
Hickory , 07/12/2018 at 11:12 am
Yes indeed, excellent article as always Matt.

"Conclusion. No matter what clever US energy independence calculations are out there, the fact remains that the US is physically dependent on around 8 mb/d of crude oil imports, 4.3 mb/d out of which come from countries where oil production has already peaked and/or where there are socio-economic or geopolitical problems. As of April 2018 US net crude imports were about 6 mb/d, far from oil independence."

I note also that about 45% of USA imports come from Canada, as well depicted in in your Fig 1. Thus we are 'captives' of Canada (to use the terminology of trump), but don't seem to have much appreciation or respect for their position.

[Jul 15, 2018] Global Energy Dominance is now part of the US National security Strategy

Putin/Russia is also the only entity that can prevent Trump's US from simply walking in and taking over the rich energy hub (Mafia style) to the south of Eurasia.
Notable quotes:
"... Global Energy Dominance is now part of the US National security Strategy. Although not labeled as global, when reading through the energy dominance section of the NSS, it can clearly been seen to be global. This is not just about sell oil produced in the US. ..."
"... Trump is going for the Achilles heel of Eurasia - energy. Rather than a creative accounting scam that simply racks up huge amounts of debt, Trump is looking for a monopoly or near monopoly business to take over and rake in the profits. ..."
"... Russia supply energy to Eurasia from the North. The opening for the Trump mob is in the south. The meet with Putin may well be to sound out the possibilities of forming a cartel. ..."
"... Yes, it absolutely is. But this is not a new "Trump policy." Certainly Zbiginew Brzezenski laid this out quite clearly in his 1997 book, "The Grand Chessboard: American Primacy and Its Geostrategic Imperatives." It's really all in there, just as you're now identifying. If you can't take the time to read it, please consider at least reading some book reviews. As I've noted before, Ziggy apparently didn't foresee Putin rising to power and restoring the Russian state, which threw the proverbial monkey wrench into the globalists' plans, but really, US foreign policy has continued to follow his plans otherwise. ..."
Jul 15, 2018 | www.moonofalabama.org

Peter AU 1 , Jul 14, 2018 4:55:33 PM | 101

The latest article at the Saker site by Rostislav Ishchenko - Trump's Geopolitical Cruise - I think is the best take on Trump's and his backers mindset. Worth a read and covers what I think was the cause of the split in the US elite.

The petro dollar, kicking off in the late 70s was a piece of creative accounting to give unlimited credit. This should have been ended with the collapse of the Soviet Union, but greed got the better of most. Trump and the people backing him could see that this was now in its terminal stages and US close to collapse itself.

Rostislav Ishchenko, like many thinks that Trump is pulling the US back to a form of isolation from the world, but I don't think this is the case.

Global Energy Dominance is now part of the US National security Strategy. Although not labeled as global, when reading through the energy dominance section of the NSS, it can clearly been seen to be global. This is not just about sell oil produced in the US.

Trump is going for the Achilles heel of Eurasia - energy. Rather than a creative accounting scam that simply racks up huge amounts of debt, Trump is looking for a monopoly or near monopoly business to take over and rake in the profits.

Russia supply energy to Eurasia from the North. The opening for the Trump mob is in the south. The meet with Putin may well be to sound out the possibilities of forming a cartel.

Putin/Russia is also the only entity that can prevent Trump's US from simply walking in and taking over the rich energy hub (Mafia style) to the south of Eurasia.

Daniel , Jul 14, 2018 5:35:42 PM | 104

Peter @101

"Global Energy Dominance is now part of the US National security Strategy."

Yes, it absolutely is. But this is not a new "Trump policy." Certainly Zbiginew Brzezenski laid this out quite clearly in his 1997 book, "The Grand Chessboard: American Primacy and Its Geostrategic Imperatives." It's really all in there, just as you're now identifying. If you can't take the time to read it, please consider at least reading some book reviews. As I've noted before, Ziggy apparently didn't foresee Putin rising to power and restoring the Russian state, which threw the proverbial monkey wrench into the globalists' plans, but really, US foreign policy has continued to follow his plans otherwise.

Kissinger has written much the same, though I don't recall in which books/articles. This page from the US Navy seems a fine reading list, designed as it appears to indoctrinate officers in AZ Empire geopolitics.

http://www.navy.mil/ah_online/CNO-ReadingProgram/partnernetwork.html#!

IMO, the US took the lead in the Empire's Global Energy Dominance quest when FDR met with King Saud on Great Bitter Lake in the Suez Canal in 1945 (swinging by after the final post-war world planning meeting with Churchill and Stalin at Yalta). This was when the US largely replaced Great Britain in primacy over Asian/Middle Eastern energy dominance.

Peter AU 1 , Jul 14, 2018 5:42:51 PM | 105
Daniel, I will read through the Grand Chessboard again.
Peter AU 1 , Jul 14, 2018 5:49:29 PM | 106
US setting up more bases. A base in Iraq, and a large airfreight logistics base in Kuwait.
https://sputniknews.com/middleeast/201807141066354147-new-us-bases-iraq/

The US is in the Persian Gulf to stay. Trumps face face meet with Putin will be so Trump can try and gauge what Putin will do - if he will run any blocking moves, his reaction to a fait accompli ect. Most likely a few more face to face meetings before any move on Iran.

Daniel , Jul 14, 2018 6:52:45 PM | 108
Peter, thanks for pointing out the new and unwanted US base in Iraq. I just read that the US was building the world's largest Embassy Compound in "Iraqi Kurdistan." I wonder it they're the same thing?

In a quick web search, failing to find an answer, I noticed that besides the "Green Zone" compound we built in Baghdad at the start of the current military occupation, the record holder was the US Embassy Compound in Pakistan.

James and I have discoursed here a bit on the history of US military occupations since WW II. Boils down to the US has never removed its military from any country it's occupied with the exception of Vietnam.

veritas semper vincit @103 linked blogpost notes that the US has 40,000 troops still occupying Germany. His (I presume) post is quite entertaining considering the severe seriousness of the topic.

Dis is a nice little country ya gotz heyah. Id be a shame if sumpin' bad was ta happen to it.

[Jul 14, 2018] The only true measurement of market balance for oil going forward is global inventory level. Everything else is perhaps manipulation or guesses.

Jul 14, 2018 | peakoilbarrel.com

kolbeinh x Ignored says: 07/11/2018 at 6:11 pm

I managed to erase my own comment on this. And my comment was simple, the only true measurement of market balance for oil going forward is global inventory level. Everything else is perhaps manipulation or guesses.
Guym x Ignored says: 07/11/2018 at 7:31 pm
I agree, with all the intentional and unintentional confusion it stays confused. I stay confused trying to figure out what is confused. Inventory levels will be the only clear measure of what is happening. US inventories should not be dropping fast, as we are about the only country with increased production, but we dropped over 30 million last month. That's really not small potatoes, as commercial stocks are just a little over 400 million. Though, I think the US will be one of the last that would hit the danger zone.
Tita x Ignored says: 07/12/2018 at 3:57 pm
Good point. My intention was not to give more confusion. These are forecasts from eia and, I always like to remind this, they forecasted Brent averaging 105$ for 2015 in the STEO of October 2014. They never forecast big surplus or deficit.

I messed with the numbers of the STEO from 2018 to guess when the are reliable. Inventory levels are accurate for the US from the monthly report, which is 3 months old (april for July STEO). Other inventory levels are less accurate, but stock changes are reliable from 4-5 month data.

Global inventories increased in April (0.74 Mb/d) and May (1.14 Mb/d). This would be quite a change, as April would be a record inventory build since January 2017, and it would be followed by another record. This have to be confirmed later.

So, now I know what I will look for in these STEO.

Guym x Ignored says: 07/12/2018 at 4:35 pm
You gave data that I did not use before, and understand better, now. You did not confuse.
Eulenspiegel x Ignored says: 07/13/2018 at 3:55 am
How does this fit with production and consumption?

I thought we have still increasing consumption of about 1.5 mb/year, and production in April/May didn't jumped thad much – Opec flat and Permian already near it's pipeline bottleneck.

As much as I know, many storages are unknown, especially Opec / China. There are these satellite measurements, but there are additional deep storages.

Gathering all comsumption / raffinery input / production data would give an additional picture. Still not easy.

With 1mb/day surplus we should go soon into the next oil price crash to 30-40.

Permian price is then at 0-10$.

AdamB x Ignored says: 07/11/2018 at 11:14 am
Even if we haven't hit peak yet, the fact that production is likely to be going up by a snail's pace the next 3 years is a problem. If consumption just goes up 0.75% a year we need 600K extra a year. That seems like a big challenge to a layman like myself.
Timthetiny x Ignored says: 07/11/2018 at 12:57 pm
Well what will happen is that the price of oil will hit $150-$200 a barrel to ration demand.

Which will cause much pain and ruction and gnashing of teeth among the voters, but Europe has had those oil equivalent prices owing to taxation for quite some time and they manage high living standards. $200/bbl probably destroys 10 million a day in superfluous 'Becky driving by herself to the mall in a 3 ton SUV for no reason' kind of demand and incentivizes quite a bit of production.

The transition period will be moody for sure, but at $200/bbl, the amount of economic EOR targets in the US is somewhere in excess of 70 BBO from old conventional fields from the industry reports I have seen – its just not economic to do since there isn't enough CO2 available to flood them, so you need to use more expensive techniques which require very high prices (ethane flooding might be useful????). Worldwide its hundreds of billions. High prices that encourage us to use the resource wisely and not waste the goddamn stuff liberally would be a godsend, if we could quit wasting gigatons of plastic bullshit and 40% of our food – i.e. if everything made from oil was more expensive as well.

It would be painful economically, but Mad Max isn't coming our way. After 5 years of pain, we might actually finally get our shit together and research some goddamn alternatives.

Fernando Leanme x Ignored says: 07/11/2018 at 1:51 pm
I believe sugar cane ethanol is very competitive at $120 per barrel. This allows converting grass cattle grazing ground to cane. I believe soy and palm will also become very attractive crops. And I suspect countries like Haiti and Nicaragua will continue having riots.
kolbeinh x Ignored says: 07/11/2018 at 4:32 pm
Yes, I believe you are right. The future energy picture is complex, but authors writing books about this say sugar cane ethanol could have EROEI (energy return on energy invested) of up to 4. Even based on mechanised agriculture. And the big advantage of this crop is that it is not very nitrogen intensive, the biggest fertilizer, currently energy intensive when it comes to natural gas usage. Even when it comes to preindustrial crop rotation, the nitrogen intensive main food crops were often rotated with legume crops which were not nitrogen intesive in the hope to rebuild nitrogen content in the earth. So very long term, sugar cane ethanol is a superb type of renewable energy. (that is what I read, no expert).

Brazil has the biggest potential out there when it comes to size, and it is not inconceivable that they can cover much of domestic fuel demand with this outside aviation and possibly shipping (no need for diesel and gasoline ;-)). It would be in competition with food crops and concerns about deforestation, but still; a big potential there. Brazil is well off in a more renewable future btw, having loads of hydro power, wind power, in addition to biomass power (sugar cane the most promising).

[Jul 14, 2018] "Exxon has been pledg ing to pro duce more oil and gas for years, but its out put of about four mil lion bar rels a day is no higher to day than it was af ter its merger with Mobil Corp. in 1999

Jul 14, 2018 | peakoilbarrel.com

Boomer II x Ignored says: 07/13/2018 at 6:11 pm

From the WSJ Exxon story.

"[Exxon's] approach is a gam­ble in a new era of en­ergy break­throughs such as frack­ing and elec­tric ve­hi­cles. Many of Exxon's com­peti-tors are trans­form­ing their busi­nesses to move away from oil ex­plo­ration, and have be­gun to spend care­fully and di­ver­sify into re­new­able energy ."

"'Most in­vestors like Exxon, but they like other com­pa­nies bet­ter,' said Mark Stoeckle, chief ex­ec­u­tive of Adams Funds, which owns about $100 mil­lion in Exxon shares. 'The mar­ket is not will­ing to re­ward Exxon for spend­ing to­day in hopes that it will bring good re­turns to­mor­row.'

"Exxon has been pledg­ing to pro­duce more oil and gas for years, but its out­put of about four mil­lion bar­rels a day is no higher to­day than it was af­ter its merger with Mo­bil Corp. in 1999. Even if Exxon suc­ceeds in dou­bling last year's earn­ings of $15 bil­lion (ex­clud­ing im­pair­ments and tax re­form im­pacts) by 2025, as Mr. Woods vowed in his eight-year spend­ing plan, it would still be mak­ing far less than in 2008, when it set what was then a record for an­nual prof­its by an Amer­i­can cor­po­ra­tion, at $45 bil­lion .

"Exxon's frack­ing prospects in the Per­mian basin in West Texas and New Mex­ico, de­vel­oped by its XTO unit, re­main among its most prof­itable op­por­tu­ni­ties, the com­pany says. Still, its U.S. drilling busi­ness has lost money in 11 of the last 15 quar­ters."

Boomer II x Ignored says: 07/13/2018 at 3:46 pm
The Wall Street Journal has a big article on Exxon. I won't bother with a link because you won't be able to see it if you aren't a subscriber.

Basically it says we've seen peak Exxon.

[Jul 14, 2018] The energy cliff approaches: World Oil Gas Discoveries Continue To Decline

Jul 14, 2018 | www.zerohedge.com

shortonoil -> SRSrocco Sun, 07/08/2018 - 16:00 Permalink

Hi Steve, this is exactly what we have been talking about for the last 8 years. To make matters worse there seems to be a completely irrational belief that Shale will save the day. Outside of the fact that shale is not processable without heavier crude, and it is at best energy neutral, and probably negative, it is also long term unaffordable. There are 1.7 million Shale wells in the US. Over the next 5 years 1.4 million of those wells will have to be replaced to just keep production even. That will be $6.2 trillion even if done on the cheap. $6.2 trillion is equal to the total cost of all the finished product that will be consumed by the US for the next 12.8 years (@ $75/barrel). Expending 12.8 years of sales revenue to produce 5 years of oil is just not going to happen!

There seems to be a black out on this terrible situation. Some of that may be just plain ignorance, but I suspect that the main reason is that it is politically unspeakable. For that reason nothing is being spoken. As I have been saying for some time no one should expect big oil, big government, or big anything to come riding to the rescue. The individual is now completely on their own. Chose your options with discretion.

BW

http://www.thehillsgroup.org/

SRSrocco -> shortonoil Sun, 07/08/2018 - 16:55 Permalink

shortonoil,

Agreed. The U.S. Shale Oil Ponzi Scheme will likely begin to disintegrate within the next 1-3 years. Already, the Permian oil productivity per well has peaked.

Then when the next Shale Oil ENRON event takes place... watch as the dominos fall.

steve

Zen Xenu -> SRSrocco Sun, 07/08/2018 - 19:48 Permalink

@SRSrocco, U.S. Tight Oil depends on cheap credit. Regardless of oil prices.

Once cheap credit dries up and the previous debts are unable to be paid by drilling new wells, the entire scheme falls apart.

Oil prices do not drive U.S. Tight Oil as much as cheap credit from easy loans.

Eventually, U S. Tight Oil using new credit cards to pay debts on old credit cards will catch up with a vengence. Rising interest rates will be the catalyst. Rising oil prices only prolong the increasing debt.

MrNoItAll -> SRSrocco Sun, 07/08/2018 - 21:21 Permalink

Didn't the EIA publish something not long ago stating their concerns that we could see oil shortages by 2020? And around the same time, I recall that the Saudi Oil Minister came out and stated that without more investment, we would likely see oil shortages by 2020. And then at the recent OPEC meeting, I believe it was the Oil Minister from UAE who stated that we need to find a new North Seas equivalent oil field EVERY YEAR to meet projected demand, which of course is not going to happen. It has been a long slow grind since 2008 to get to this point, but from here on out I anticipate that things will start unraveling at an ever faster pace. Big changes on the way. But one thing that will NEVER happen is that the POTUS or some other world leader comes out and says we are running short on energy. Instead it will be Trade Wars, the damned Russians or some other lame propaganda -- anything but the truth.

Cloud9.5 -> Anonymous_Bene Mon, 07/09/2018 - 07:23 Permalink

This is a synopsis of the German Army study produced in 2010. https://www.youtube.com/watch?v=ZyUe7w1gDZo

If you want the English translation of the study in its entirety, it can be found here: https://www.permaculturenews.org/files/Peak%20Oil_Study%20EN.pdf

The mitigation section of the study was most telling. It simply stated that local sustainable economies would replace the modern era. These economies included local food production and energy production. As this process unfolds, I simply do not see how a high rise is going to remain habitable.

EddieLomax -> JamcaicanMeAfraid Mon, 07/09/2018 - 04:33 Permalink

Zero hedge put a news story a while ago where (I think 2016) the US oil industry lost more in that it earned in the previous 7 years (mining in general), so more investment wouldn't have been coming in the US anyway - the price wasn't high enough to justify it.

Worldwide we are going to see some almightly crunch, whether it will arrive after 2020 will be seen. Ironically it might save Trump anyway if the world is seen to be beset by a oil supply crunch since its hard to blame that on him.

Chief Joesph Sun, 07/08/2018 - 13:02 Permalink

The U.S. needs to get off its dead ass and start developing better batteries, solar power, and other alternative energy sources. This was talked about in 1973, during the Oil Embargo days, and its just astonishing the U.S. has done little since to ween itself off of oil. And now we now have a tariff against Chinese made solar panels. DUH!!! How dumb can you get?

El Vaquero -> Chief Joesph Sun, 07/08/2018 - 13:31 Permalink

Look at the energy density of those power sources. You'll never run an industrial civilization off of them. Electric cars may be great for zipping a couple of people around town from day to day, but you're never going to run the large mining and shipping equipment needed for our society. If you want to do that, you're going to have to develop viable breeder reactors and the technology to manufacture liquid fuels with that energy - and this is doable.

bshirley1968 -> El Vaquero Sun, 07/08/2018 - 14:10 Permalink

Right. There is nothing.....NOTHING....that can replace oil and gas as it is used and utilized by the modern industrial society. Nothing......

What needs to happen right now is a steady rise in prices that will condition our population to start learning to do with less cheap, easy energy. We have got to curb usage to give society a chance to begin to learn another way.

The major obstacle to doing this responsible, rational action? The egregious, criminal banking system that has gotten the world awash in debt to feed their greed. Any cut back in the use of energy will destroy the economy and their gravy train.

[Jul 09, 2018] THE ENERGY CLIFF APPROACHES World Oil Gas Discoveries Continue To Decline Zero Hedge Zero Hedge

Jul 09, 2018 | www.zerohedge.com

THE ENERGY CLIFF APPROACHES: World Oil & Gas Discoveries Continue To Decline

by SRSrocco Sun, 07/08/2018 - 11:25 17 SHARES

By the SRSrocco Report ,

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.

Check back for new articles and updates at the SRSrocco Report . Tags Business Finance Environment

Comments Vote up! 6 Vote down! 0

He-He That Tickles Sun, 07/08/2018 - 12:44 Permalink

Guess they better sell what's left really, really expensively.

GoinFawr -> He-He That Tickles Sun, 07/08/2018 - 13:17 Permalink

Yeah tHis article is ridiculous, resident ZH self-purported Mensa members like Tmos' have proven beyond any doubt that 'abiotic oil' replenishes the world's supply of easily accessed hydrocarbons every fifteen minutes or so, regardless of increasing consumption rates; indeed regardless of any veritable facts whatsoever.

ThorAss -> GoinFawr Sun, 07/08/2018 - 15:11 Permalink

Worked by whole life in the oil business. Depletion is real. Abiotic oil replenishment is Magic unicorns dancing on rainbows. Oil won't run out ever, but the energy required to extract the oil will make remaining oil reserves uneconomic at some point.

Zen Xenu -> ThorAss Sun, 07/08/2018 - 19:35 Permalink

Well said. Agreed.

DanDaley -> ThorAss Mon, 07/09/2018 - 06:17 Permalink

Hence Colin Campbell's book The End of Cheap Oil .

ZIRPdiggler -> ThorAss Mon, 07/09/2018 - 06:27 Permalink

It went from the cost of one barrel to extract 100 back in the 19th century, to present day 5 barrels.

Sid Davis -> GoinFawr Sun, 07/08/2018 - 16:12 Permalink

So I guess in your experience, oil wells don't go dry, ever.

But I wonder, why do you think the Saudis pump water into oil wells or the Mexicans pump in Nitrogen?

GoinFawr -> Sid Davis Sun, 07/08/2018 - 18:03 Permalink

"So I guess in your experience, oil wells don't go dry, ever."

indeed, regardless of any veritable facts whatsoever...

Thanks for comin' out!

Shemp 4 Victory -> GoinFawr Sun, 07/08/2018 - 20:33 Permalink

Good sarcasm is an underappreciated art form.

Victor999 -> GoinFawr Mon, 07/09/2018 - 01:21 Permalink

Strange that the oil industry does not agree with you. And it's strange that reserves all over the world are not stable but decreasing. Your Mensa idol is full of shit.

Adahy -> Victor999 Mon, 07/09/2018 - 02:47 Permalink

*whoosh* Right over the head.
I know /s is more difficult to detect with only text but damn, he was pretty obvious in his sarcasm.

ebear -> Adahy Mon, 07/09/2018 - 08:16 Permalink

"...he was pretty obvious in his sarcasm."

Plain as day.

Slomotrainwreck -> GoinFawr Mon, 07/09/2018 - 06:41 Permalink

I was unaware of abiotic oil. Looked it up. Seems like a reverse shale oil scam to me. Not much profit motive to either explore or drill.

I'm out.

[Jul 06, 2018] A field is creamed by massive infill drilling with horizontal wells that skim the very top of the reservoir. The decline rate is the[n] drastically reduced while the depletion rate is drastically increased.

Jul 06, 2018 | peakoilbarrel.com

Michael B. x Ignored says: 07/04/2018 at 7:18 am

A field is creamed by massive infill drilling with horizontal wells that skim the very top of the reservoir. The decline rate is the[n] drastically reduced while the depletion rate is drastically increased. Things will go just great until the water hits those horizontal wells at the top of the reservoir. Then production will drop like a rock.

I assume this is the money quote. These methods comprise the "game changer" that scuttled peak oil predictions circa 2005.

By demurring a prediction as to when the stone might–will!–drop, you're acknowledging the deplorable state of the data. This should give us pause. We might call this the New Peak Oil Reticence.

Let's grant that what you say is true (I'm certainly not qualified to refute it). If you know it (that is, that the rock will drop), then "they" know it, and by "they" I mean those who are in the business of developing these "creaming" methods. They must know it.

So what the fuck are they thinking?

eduard flopinescu x Ignored says: 07/04/2018 at 9:51 am
I think only the big fields offer a cushion, in a way or the other, in the end it all depends a lot on Ghawar. Matt Simmons was right about that.

As I see it in a pyramid scheme if a big player suddenly wants to get out their money it's over.

George Kaplan x Ignored says: 07/04/2018 at 9:59 am
In IOCs they are mostly thinking how can I satisfy my boss and/or the stockholders enough in the next quarterly report to keep my job.

[Jul 06, 2018] The possibility of Seneca cliff in oil production

Jul 06, 2018 | peakoilbarrel.com

Ron Patterson x Ignored says: 07/04/2018 at 8:18 pm

No one producing country is looking at the global problem. They are only concerned with their own country and the problems at home. Most are old men who realize that they will be long dead if there is ever a catastrophe. And most, like the contributors to this blog, believe that there will never be a catastrophe. They believe that renewables, or fusion energy, or God, human ingenuity, or something else will save us from any type of collapse.

But the point is, the oil barons of each individual country, are not even remotely concerned with the collapse of civilization as we know it. They believe God, or Allah, or human ingenuity, will simply not allow that to happen.

Michael B x Ignored says: 07/05/2018 at 5:10 am
"And most, like the contributors to this blog, believe that there will never be a catastrophe. They believe that renewables, or fusion energy, or God, human ingenuity, or something else will save us from any type of collapse."

But doesn't that require, like, planning? Plenty of planning?

Ron Patterson x Ignored says: 07/05/2018 at 7:22 am
Of course not. If someone else, or something else, is going to save you, you just sit back and let it happen. You do not need to do anything.
Guym x Ignored says: 07/04/2018 at 8:10 am
I think Dr. Minqi Li put together an exceptionally well researched paper. The only one I have a faintest glimmer of knowledge in is oil. 2021. Give or take a couple of years is a good estimate of when peak oil occurs, based on current findings and technology. Improvements in either would probably only affect the tail of the decline rate. Which, based on the immense overstatement of EIA, and the creaming you mentioned, the tail should have much more of a decline than depicted. I am tending towards 2022 to 2023 as the final peak, due to the little over a year hiatus on the Permian final push due to pipeline and other constraints. We all know 2042 is a bad projection for the US, it will get there as soon as it can. It will get there as soon as it can, because the oil price will be high enough to beg, borrow, or steal to get there. For that reason, all other sources will be staining to get there at the same time. We are in the final stage, I do think.
Ron Patterson x Ignored says: 07/04/2018 at 8:47 am
Yes, I agree with you on Dr. Minqi Li's paper. I am not sure, however, that the Permian will show enough yearly increase to hold off the peak until 2023.

[Jul 06, 2018] Ming Li paper

Notable quotes:
"... I believe due to OPEC massively inflating their URR, and the inaccuracy of the Hubbert method due to the creaming of all giant fields, the expected peak dates here are highly inaccurate. ..."
Jul 06, 2018 | peakoilbarrel.com

In the table below I have converted the data Dr. Minqi Li presented in metric tons per year to million barrels per day. Again, this is C+C plus natural gas liquids.

2017 At Peak Year Peak BPD Increase
us 11.47 15.08 2042 3.61
Saudi 11.29 12.17 2030 0.88
Russia 11.13 12.01 2033 0.88
Canada 4.74 7.85 2049 3.11
Iran 4.70 5.40 2039 0.70
Iraq 4.44 6.51 2042 2.07
China 3.S6 4.32 2015
UAE 3.53 4.38 2037 0.84
Kuwait 2.93 3.35 2040 0.42
Brazil 2.87 3.03 2025 0.16
Rest of W 27.13 33.22 2004
Total World 88.10 90.95 2021 2.85

The source for this chart is the same as the table above. I believe due to OPEC massively inflating their URR, and the inaccuracy of the Hubbert method due to the creaming of all giant fields, the expected peak dates here are highly inaccurate.

Well, all except three. The rest of the world did peak in 2004, China did peak in 2015, and the world will peak by 2021 or before. Congratulations to Dr. Minqi Li, the most accurate future peak there is the one that he calculated. Guym x Ignored says: 07/04/2018 at 8:10 am

I think Dr. Minqi Li put together an exceptionally well researched paper. The only one I have a faintest glimmer of knowledge in is oil. 2021. Give or take a couple of years is a good estimate of when peak oil occurs, based on current findings and technology. Improvements in either would probably only affect the tail of the decline rate. Which, based on the immense overstatement of EIA, and the creaming you mentioned, the tail should have much more of a decline than depicted. I am tending towards 2022 to 2023 as the final peak, due to the little over a year hiatus on the Permian final push due to pipeline and other constraints. We all know 2042 is a bad projection for the US, it will get there as soon as it can. It will get there as soon as it can, because the oil price will be high enough to beg, borrow, or steal to get there. For that reason, all other sources will be staining to get there at the same time. We are in the final stage, I do think.

Minqi Li x Ignored says: 07/04/2018 at 9:17 pm

Ron, many thanks for your very informative post about world oil (as always) and your comments on my post.

However, like much of the peak oil community, having missed some of the previous peak oil predictions, now I may err on the conservative side. Many have criticized the EIA projections and OPEC reserves. But again, even with those projections/reserves, the world oil production is still projected to peak in 2021. This suggests that world oil production may indeed peak in the near future. As I promised, I will follow up with part 2 on this.

Regarding China, China's oil consumption growth has re-accelerated as its oil production is in decline. This development may have some major impact on global economy/geopolitics in the coming years. On top of that, China is (or will soon become) the world's largest natural gas importer.

[Jul 04, 2018] World Energy 2018-2050 World Energy Annual Report (Part 1) " Peak Oil Barrel

Jul 04, 2018 | peakoilbarrel.com

World cumulative oil production up to 2017 was 192 billion metric tons. The world's remaining recoverable oil resources are estimated to be 276 billion metric tons and ultimately recoverable oil resources are estimated to be 468 billion metric tons. By comparison, the BP Statistical Review of World Energy reports that the world oil reserves at the end of 2017 were 239 billion metric tons.

World oil production is projected to peak at 4,529 million metric tons in 2021.

chart/
2017 Production and Peak Production are in million metric tons; Cumulative Production, RRR (remaining recoverable resources or reserves), and URR (ultimately recoverable resources) are in billion metric tons. For Peak Production and Peak Year, regular characters indicate historical peak production and year and italicized blue characters indicate theoretical peak production and year projected by statistical models. Cumulative production up to 2007 is from BGR (2009, Table A 3-2), extended to 2017 using annual production data from BP (2018).

[Jul 03, 2018] The squealing and consternation coming from the UK indicates that the empire changed course as for neoliberal globalization, and the UK is left out

The USA elite might now want abandoning of GATT and even WTO as it does not like the results. That single fraud on the west has had catastrophically perverse consequences for the coterie of killer's future and all because the designers of GATT had never thought outside the square of economics and failed utterly to grasp the gift of scientific and manufacturing politics.
Notable quotes:
"... The US still depends heavily on oil importation -- it is not "independent" in any manner whatsoever. Here's the most current data while this chart shows importation history since 1980. ..."
"... the only time a biological or economic entity can become energy independent is upon its death when it no longer requires energy for its existence. ..."
"... A big part of the US move into the middle east post WWII was that they needed a strategic reserve for time of war and also they could see US consumption growing far larger than US production. ..."
"... The USA of WAR may have oil independence, but it is temporary. The race is on for release from oil dependency and China intends to win in my view. It is setting ambitious targets to move to electric vehicles and mass transit. That will give it a technology dominance, and perhaps a resource dominance in the EV sphere. We are in the decade of major corporate struggles and defensive maneuverings around China investments in key EV sectors. ..."
"... In ten to twenty years' time the energy story could well be significantly different. The USA and its coterie of killers are still fighting yesterday's war, yesterday's hatred of all things Russian, yesterday's energy monopoly. ..."
"... I don't believe that the USA of WAR has changed or even intends to change the way they play their 'game'. The General Agreement on Tariffs and Trade set the trajectory for technology transfer, fabrication skills transfer, growth of academic and scientific achievement in 'other' countries (China, Russia etc). Their thoughts in the GATT deal were trade = economics = oligarchy = good. ..."
"... That single fraud on the west has had catastrophically perverse consequences for the coterie of killer's future and all because the designers of GATT had never thought outside the square of economics and failed utterly to grasp the gift of scientific and manufacturing politics. ..."
"... Canada and the gulf monarchies are the only countries with large reserves that are not hostile as yet to the US. As the US no longer is totally reliant on imports to meet its consumption, Saudi's, Bahrain and co are now expendable assets. ..."
Jul 03, 2018 | www.moonofalabama.org

karlof1 | Jun 29, 2018 5:51:08 PM | 32

Peter AU 1 @28--

The US still depends heavily on oil importation -- it is not "independent" in any manner whatsoever. Here's the most current data while this chart shows importation history since 1980.

As I've said before, the only time a biological or economic entity can become energy independent is upon its death when it no longer requires energy for its existence.

Peter AU 1 , Jun 29, 2018 6:11:54 PM | 33

karlof1 32

What I am looking at are strategic reserves, not how much oil is currently produced. With shale it now has those reserves and shale oil I think is now at the point where production could quickly ramp up to full self sufficiency if required. Even if the US were producing as much oil as they consumed, they would still be importing crude and exporting refined products.

A big part of the US move into the middle east post WWII was that they needed a strategic reserve for time of war and also they could see US consumption growing far larger than US production.

uncle tungsten , Jun 29, 2018 9:25:02 PM | 41
@Peter AU 1 #28 Thank you for that stimulating post. I just have to respond. And thanks to b and all the commenters here, it is my daily goto post.

The USA of WAR may have oil independence, but it is temporary. The race is on for release from oil dependency and China intends to win in my view. It is setting ambitious targets to move to electric vehicles and mass transit. That will give it a technology dominance, and perhaps a resource dominance in the EV sphere. We are in the decade of major corporate struggles and defensive maneuverings around China investments in key EV sectors.

In ten to twenty years' time the energy story could well be significantly different. The USA and its coterie of killers are still fighting yesterday's war, yesterday's hatred of all things Russian, yesterday's energy monopoly.

I don't believe that the USA of WAR has changed or even intends to change the way they play their 'game'. The General Agreement on Tariffs and Trade set the trajectory for technology transfer, fabrication skills transfer, growth of academic and scientific achievement in 'other' countries (China, Russia etc). Their thoughts in the GATT deal were trade = economics = oligarchy = good.

That single fraud on the west has had catastrophically perverse consequences for the coterie of killer's future and all because the designers of GATT had never thought outside the square of economics and failed utterly to grasp the gift of scientific and manufacturing politics.

By gross ignorance and foolish under-investment, the USA of WAR and its coterie of killers have eaten their future at their people's expense.

Peter AU 1 , Jun 29, 2018 9:25:04 PM | 42
karlof1 32

This is the chart for US exports of crude and petroleum products.
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTEXUS2&f=M

Peter AU 1 , Jun 30, 2018 4:07:22 AM | 65
61

Light sweet vs heavy sour. Light means it contains a lot of diesel/petrol. Sweet means low sulphur. Many oils are heavy sour. Canada sand. the stuff they get from that is thick bitumen with high sulpher. The sulpher needs to be removed and the bitumen broken down into light fuels like diesel and petrol.

Canada and the gulf monarchies are the only countries with large reserves that are not hostile as yet to the US. As the US no longer is totally reliant on imports to meet its consumption, Saudi's, Bahrain and co are now expendable assets.

The great game for the US now is control or denial. Access to oil as a strategically critical resource is no longer a factor for the US.

Peter AU 1 , Jun 30, 2018 4:30:22 AM | 67
"We're an empire now, and when we act, we create our own reality. And while you're studying that reality – judiciously, as you will – we'll act again, creating other new realities, which you can study too, and that's how things will sort out. We're history's actors . . . and you, all of you, will be left to just study what we do." Karl Rove.

The squealing and consternation coming from the UK indicates that the empire has changed course and the UK is left sitting on its own shit pile.

[Jul 03, 2018] Oil is energy and energy means power to those that control it

Notable quotes:
"... As always, profits "trump" humanity. ..."
"... The great power game is why there is continuity of government policy in the 'US west' no matter who is elected. Within the great power game democracy in the west is meaningless. ..."
"... If the US is changing how it plays the game, then the Brit players may be getting desperate. They are now small players but unlike the US do not have an oil reserve. ..."
"... This may be the reason the Brits have ramped up the propaganda to the ridiculous and also why they have attempted to take down Trump. ..."
Jul 03, 2018 | www.moonofalabama.org

Peter AU 1 | Jun 29, 2018 4:14:35 PM | 24

Loot is only a side benefit for post WWII wars and no doubt before. Oil is energy and energy means power to those that control it. UK, French, US have fucked the MENA region over simple for control of the oil.

Working to prevent communism, socialism, democracy and pan Arab movements which are all a threat to FUKUS control of MENA, and then pulling the same dirty tricks on each other. Russia has its own all and through the Soviet era seems to have only dabbled in the region.

China needs to import energy and so the great power game of controlling or denying access to energy continues.

ben , Jun 29, 2018 4:15:18 PM | 25

karlof1 @ 3 said"Criminality mostly driven by Greed."

james @ 5 said: "trump isn't much different or he would be addressing this too..."

Two bottom line truths, that are apparent...

As always, profits "trump" humanity. How to change that mindset? I for one, don't know, but, the so called "religious" among us, should ask themselves that same question. IMO, religion is, as practiced, mostly crowd control..

Peter AU 1 , Jun 29, 2018 5:16:04 PM | 28
The great power game is why there is continuity of government policy in the 'US west' no matter who is elected. Within the great power game democracy in the west is meaningless.

with USA's new found oil independence, the direction they take may change from the last 70 years or so.

Another recent change is the rise of current Russia and their vision of a multi polar world, also the rise of China.

If the US is changing how it plays the game, then the Brit players may be getting desperate. They are now small players but unlike the US do not have an oil reserve.

This may be the reason the Brits have ramped up the propaganda to the ridiculous and also why they have attempted to take down Trump.

[Jun 28, 2018] Driving a bit less is maybe a good thing, pensioners and children freezing to death and industry shut down with rolling blackouts is maybe less negotiable.

Jun 28, 2018 | peakoilbarrel.com

Guym

x Ignored says: 06/25/2018 at 6:18 pm
https://seekingalpha.com/amp/article/4183852-game-oil-prices-going-higher

Fun to look at this analysis, and plug in a one million shortage from North America. Obviously, there would not be a one million drop in Iran, as it would be sold somewhere.

George Kaplan x Ignored says: 06/26/2018 at 12:41 am
We might be seeing similar articles about gas over the next couple of years. Driving a bit less is maybe a good thing, pensioners and children freezing to death and industry shut down with rolling blackouts is maybe less negotiable.
Watcher x Ignored says: 06/26/2018 at 12:58 am
Suppose there is too little oil and the price doesn't change. Producing countries will be sure their own countries have a sufficient amount so regardless of price, that oil isn't leaving the country. It stays right there for consumption. External price is meaningless to that country, as it should be.

There are countries that produce about what they consume. Mexico is one. Argentina. Their oil isn't going anywhere. A higher price elsewhere tries to get it exported? Clearly the govt will stop anything like that. Just as the US did with its export ban in the 70s. Price doesn't matter if bans are in place.

Oh, and another annoying thing in that article. Something like . . . if supply shrinks, only "demand destruction" can avoid some sort of catastrophe. This is absurd. Demand is not destroyed. The desire for oil will grow with population. The population demands oil. It is consumption that is destroyed by lack of supply. Can't consume what doesn't exist.

Besides which, if some level of "grim" is approached, then some decision is going to be made to liberate that Orinoco heavy from the horrible popularly elected government that controls it. As I noted before, there is a large ethnic Russian population in Venezuela. The 1917 revolution sent many people there, fleeing confiscation. Liberation may not go smoothly.

George Kaplan x Ignored says: 06/26/2018 at 2:28 am
Mexico doesn't use what it produces, it doesn't have the refining capacity – it exports crude and imports products.
Invading Venezuela wouldn't necessarily stop the decline in production – their equipment and wells are falling apart, to get back to where they were a couple of years ago would require a five year occupation, probably with forced labour (or really high wages), and the investment money all coming from the invading country, with no net returns for longer than that.
Demand is usually defined with some relation to price, not assuming a commodity is free.
Eulenspiegel x Ignored says: 06/26/2018 at 3:47 am
If you would pay a tenth of the wage of an oil redneck in Texas, there would be long queues before the recruiting offices.

Forced labour is no good idea – especially when handling expensive equipment. Pay a good local! wage, and you'll have enough people.

You'll have to import foreign workforce, too, to rebuild this mess to modern standard. So billions will be needed before the oil starts flowing again.

[Jun 27, 2018] Are we close to plato oil situation, when all efforts to raise production fail?

Notable quotes:
"... tier plays that have been a bust. With the seismic and visualisation technology improvements the E&Ps should know better where and where not to drill. They seem to be more selective with falling wildcat numbers (and that is not much of a function of price that I can see as it has been happening since 2010) and yet the commercial discovery rates are staying fairly low. I can only interpret that as indicating that there just isn't that much left. With Rystad indicating 6 to 8% decline rates in mature fields, and rising, and few new prospects how can there not be a peak? ..."
"... Saudi ministers spout out any thing that comes to mind to support flip-flop policies and their feud with Iran seems to be bubbling in the background of a lot that's going on; every year Iran and/or Iraq say they have a new plan and target for higher production, which is 100% guaranteed not to be met even remotely. ..."
Jun 27, 2018 | peakoilbarrel.com

George Kaplan x Ignored says: 06/27/2018 at 12:19 am

I think if the world economy starts to drop, which is overdue and looking increasingly likely every time Trump opens his mouth, and keeps the oil price down then it's likely we'll be in a slow but accelerating decline. That might be a good thing – the further the peak is pushed out the steeper the decline when it comes.

What has surprised my most recently has been the fall in discoveries for oil and, maybe more so, gas, and with that the number of new fron tier plays that have been a bust. With the seismic and visualisation technology improvements the E&Ps should know better where and where not to drill. They seem to be more selective with falling wildcat numbers (and that is not much of a function of price that I can see as it has been happening since 2010) and yet the commercial discovery rates are staying fairly low. I can only interpret that as indicating that there just isn't that much left. With Rystad indicating 6 to 8% decline rates in mature fields, and rising, and few new prospects how can there not be a peak?

The oil drop might have been more expected than the gas, and was predicted by some when peak oil was first mentioned, I think gas less so, but perhaps the price has had a bigger effect there. Whatever the cause many countries have been banking on ever rising supplies, either by pipeline or LNG, that might not be forthcoming.

Having said that simple economic arguments rarely seem to work as predicted, oil supplies would have peaked well before now without, mostly non-proftable, LTO; Venezuela production should be rising not a basket case; Saudi ministers spout out any thing that comes to mind to support flip-flop policies and their feud with Iran seems to be bubbling in the background of a lot that's going on; every year Iran and/or Iraq say they have a new plan and target for higher production, which is 100% guaranteed not to be met even remotely.

At the moment the traders don't seem certain which way to turn – falling/rising supplies, short/long term demand rise/fall – you can see why they tend to fixate on US crude stocks, everything else is too complicated. The next few Wednesday/Thursday trading patterns will be interesting.

(ps if anything highlights the state of the oil industry at the moment it's that Fram, a two well, eight year life-cycle, gas condensate tie-back with about 10 mmboe reserves, has been the main headline news on at least four of the trade magazines this week.)

[Jun 27, 2018] GoM First Quarter 2018, Production Summary " Peak Oil Barrel

Jun 27, 2018 | peakoilbarrel.com

Guym x Ignored says: 06/27/2018 at 7:49 am

https://www.rt.com/business/430902-russia-us-iran-oil-sanctions/amp/

A little short by over 2 million a day. Perry has to know the Permian is on a hiatus for at least a year. That's probably over a million. Iran push is for another million. Yeah, that's a little short. Idiocy reigns. Russia just called for tariffs against the US. Any assistance from Russia ain't gonna happen.

The slow motion train wreck in progress. No one knows why the driver of the Lower for Longer Train has picked up speed down the curving stretch .

Kolbeinh x Ignored says: 06/27/2018 at 8:51 am
Let us have fun now, because I am not sure the chaos at the station coming further down the stretch somewhere is equally funny.
Guym x Ignored says: 06/27/2018 at 9:17 am
Ok, I'll forgo the train wreck series. Yeah, it's serious. So was the ridiculous pricing we've had for the past four years, and no one but the people who relied on oil income complained. There was not enough for capex to get new oil. The trainweck happened already.

[Jun 27, 2018] Bloomberg cheerleading: U.S. oil production is booming at record levels, and U.S. oil exports have also reached new highs -- 3 million barrels a day in the last week. OK, but the US exported 3 million barrels per day and imported 8.4 million barrels per day

Jun 27, 2018 | peakoilbarrel.com

Ron Patterson x Ignored says: 06/27/2018 at 3:44 pm

US oil exports boom to record level, surpassing most OPEC nations

U.S. oil production is booming at record levels, and U.S. oil exports have also reached new highs -- 3 million barrels a day in the last week, according to government data.
Those exports are more than most OPEC countries can produce each day and only lag two OPEC countries, Saudi Arabia and Iraq, in terms of exports.

And if you read far enough down in that article they do mention imports, as if they hardly matter.

As U.S. production has grown, U.S. imports have decreased. The U.S. imported a relatively high 8.4 million barrels per day last week.

Okay, the US exported 3 million barrels per day and imported 8.4 million barrels per day. Yet the headline says the US exported more oil than most OPEC countries. Is this Orwellian Newspeak?

Guym x Ignored says: 06/27/2018 at 4:31 pm
We all agree that 2+ 2 = 5, but what we don't know is which one belongs to the thought police. I agree the Permian will produce 1.3 million this year, just take the rat cage off my head.
Hickory x Ignored says: 06/27/2018 at 4:35 pm
"the US exported 3 million barrels per day and imported 8.4 million barrels per day. Yet the headline says the US exported more oil than most OPEC countries. Is this Orwellian Newspeak?"

I think we can call it 'trump math'

[Jun 26, 2018] There will be no increase in the amount of oil produced by OPEC this year

Jun 26, 2018 | www.moonofalabama.org

karlof1 | Jun 26, 2018 4:25:16 PM | 11

CarlD @9 Et al--

At the just concluded OPEC meeting, Iran, Iraq and Venezuela were against any increase in extraction, while the Saudis wanted an increase. What resulted is detailed in this article . Moneygraph:

"... OPEC does not need to change its output deal since the group had already cut supply by much more than it had agreed. What Zanganeh offered was for OPEC and Russia to pump back up to decrease the current cuts to the initial 1.176 million barrels per day (bpd).

"Output in May 2018 was actually down by 1.9 million, somehow 62 percent or 724,000 bpd more than what was agreed upon in 2016."

The upshot is an increase will occur but no increase will occur--understand? The extraction amount agreed to in 2016 remains the amount OPEC will extract. There will be no increase in that amount this year.

[Jun 21, 2018] There is a narrative that oil demand will soon begin dropping due to widespread use of EV.

Jun 21, 2018 | peakoilbarrel.com

shallow sand x Ignored says: 06/18/2018 at 2:36 pm

There is a narrative that oil demand will soon begin dropping due to widespread use of EV.

1 million EV just replaces 14,000 BOPD of demand. Conservatively assuming those one million EV require $40K per unit of CAPEX, just to replace 14,000 BOPD of demand took $40 billion of CAPEX.

Likewise, to replace 1.4 million BOPD of demand via EV would take $4 trillion of CAPEX.

Worldwide demand has been growing somewhere between 1.2-2.0 million BOPD annually, depending on who one believes.

See where I am going with this? How do the EV disruption proponents explain away the massive CAPEX required just to cause oil demand to flatten, let alone render it near obsolete?

I'd like to see some explanation with numbers.

GoneFishing x Ignored says: 06/18/2018 at 3:28 pm
The average US car gets 25 mpg and travels 12,500 miles per year for 500 gallons of gasoline per year.

Refineries in the US produce 20 gallons of gasoline per barrel of oil.

That gives 69,000 BOPD per day reduction per million EV cars in the US and 110,000 BOPD oil equivalent energy due to the multiple energies put into gasoline and distillate production.

At current rates of EV sales growth the US will reach 50 million EV cars by 2031. That should put he US to being mostly independent of external oil for gasoline by mid 2030's and

It's tough to predict a complete transition in the US since cars as a service could greatly reduce the numbers of cars needed, especially in dense population areas. That would mean a much earlier transition.

If US ICE cars trend upward in mpg during that time, the demand for oil could be quite low by the early 2030's.
All depends on continuation of trends, for which the auto manufacturers seem to be on board. Just have to get the public charging infrastructure out ahead of the trend.

Here is an interesting article, from a couple of years ago, showing the trend and sales at that time.

https://www.nanalyze.com/2017/03/electric-cars-usa/

Dennis Coyne x Ignored says: 06/18/2018 at 6:04 pm
Shallow sand,

Cars get replaced all the time and the cost of new EVs will fall over time to the same price as ICEV, so it's simply a matter of replacing the ICEV currently sold with EVs over time, in addition cars can get better gas mileage (50 MPG in a Prius vs 35 MPG in a Toyota Corolla or 25 MPG in a Camry.) There's also plug in hybrids like the Honda Clarity (47 miles batttery range) or Prius Prime(25 mile range on battery) these have an ICE for when the battery is used up.

If oil prices rise in the short term to over $100/b (probably around 2022 to 2030), there will be demand for other types of transport besides a pure ICEV.

EVs and plugin hybrids will become cheaper as manufacturing is scaled up due to economies of scale.

[Jun 21, 2018] Strange consumption growth in Eastern Europe

Jun 21, 2018 | peakoilbarrel.com

Watcher, 06/17/2018 at 11:37 pm

Got time to go thru the bible more carefully.

Surprising stuff. Huge oil consumption growth rates in Eastern Europe. 8+% growth %s in Poland, Czech Republic and Slovakia. Something weird going on because Romania and Slovenia didn't show the same thing.

Western Africa grew consumption of oil 13% last year. I'll add a !!!!. East Africa about 6%. Both are over 600K bpd, so that growth rate is not on tiny burn.

World oil consumption growth 1.8%.

(population in africa . . . . . .)

Ktoś, 06/18/2018 at 8:44 am

Poland's official oil consumption growth is caused by better fighting with illegal, and unregistered fuel imports since mid 2016. When taxes are 50% of fuel price, there is big incentive for illegal activities. Real oil consumption probably didn't increase much.
Strummer, 06/18/2018 at 2:00 pm
Poland, Czech and Slovakia are going through a huge economic boom now (I live in Slovakia and party in Czech Republic). It's visible everywhere, there wasn't this much spending and employment ever in the last 28 years
Watcher, 06/19/2018 at 12:04 am
South Africa grew at 0.6%.

Middle Africa is listed as growing at 0.4%. North Africa is divided up Egypt, Morocco and "Other North Africa". Other was +4.7% consumption growth.

It's gotta be Nigeria west and Angola east.

Watcher, 06/18/2018 at 2:43 pm
Pssssst.

Oil consumption 2017 increased 1.8% from 2016.

Oil price 2016 about $41/b. Oil price 2017 about $55/b.

hahahahhaa

Dennis Coyne, 06/19/2018 at 6:41 am
Oil demand is mostly determined by GDP growth, oil price has a minor influence on short term demand. World GDP grew by about 5% from 2016 to 2017 according to the IMF, so oil demand increased by 1.8% possibly less than one would expect. Real GDP (at market exchange rates) grew by about 3% in 2017.

[Jun 21, 2018] The idea behind peak demand fallacy is simply that oil supply may at some point become relatively abundant relative to demand in the future (date unknown).

Jun 21, 2018 | peakoilbarrel.com

Dennis Coyne x Ignored says: 06/18/2018 at 5:54 pm

Hi George,

The idea behind peak demand is simply that oil supply may at some point become relatively abundant relative to demand in the future (date unknown). When and if that occurs, OPEC may become worried that their oil resources will never be used and will begin to fight for market share by increasing production and driving down the price of oil to try to spur demand. That is the theory, I think we are probably 20 to 40 years from reaching that point for conventional oil.

Oil still contributes quite a bit to carbon emissions and while I agree coal use needs to be reduced (as carbon emissions per unit of exergy is higher for coal than oil), I would think it may be possible to work on reducing both coal and oil use at the same time. Using electric rail combined with electric trucks, cars and busses could reduce quite a bit of carbon emissions from land transport, ships and air transport may be more difficult.

Eulenspiegel x Ignored says: 06/19/2018 at 3:56 am
Why making a fire sale?

It's better to sell half of your ressources for 90$ / barrel than all at 30$ / barrel.

The gulf states will always have cheap production costs at their side, they will earn more at each price of oil. Why not make big money, especially when at lower production speed the production costs are much lower (less expensive infrastructure).

And in the first case you can sell chemical feedstock for a few 100 years ongoing for a good coin. Theocracies and Kingdoms plan sometimes for a long time. When you bail out everything at sale prices, you end with nothing ( and even no profit).

Dennis Coyne x Ignored says: 06/20/2018 at 8:00 am
Eulenspeigel,

You assume half the resource can be sold at $90/b, at some point in the future oil supply may be greater than demand at a price of $90/b, so at $90/b no oil is sold and revenue is zero.

In a situation of over supply there will be competition for customers and the supply will fall to the point where supply and demand are matched. Under those conditions OPEC may decide to drive higher cost producers out of business and take market share, oil price will fall to the cost of the most expensive (marginal) barrel that satisfies World demand.

I don't think we are close to reaching this point, but perhaps by 2035 or 2040 alternative transport may have ramped to the point where World demand for oil falls below World Supply of oil at $90/b and the oil price will gradually drop to a level where supply and demand match.

[Jun 21, 2018] Older wells are declining at about 8% per year

Jun 21, 2018 | peakoilbarrel.com

Fernando Leanme , 06/19/2018 at 2:17 pm

Older wells are declining at about 8% per year. A 25 BOPD well with a 10 BOPD economic limit should have 70,000 barrels of oil left to produce in about 12 years.
Dennis Coyne , 06/20/2018 at 7:53 am
Hi Fernando,

Is it safe to assume that newer wells will behave the same as older wells?

Some petroleum engineers that have commented at shaleprofile.com (Enno Peters wonderful resource) that the high level of extraction from newer wells will likely lead to a thinner tail.

Chart below from

https://shaleprofile.com/index.php/2018/06/19/north-dakota-update-through-april-2018/

illustrates this, notice how the 2014 and 2015 wells fall below the 2010 well profile after 24 months, the same is likely to occur for 2016 and later wells. Also note that the 2010 well profile is representative (close to the mean) for 2009 to 2012 average well profiles.

Fernando Leanme , 06/20/2018 at 9:08 am
Dennis, i would say the decline rate (8%) is very safe to use for all LTO wells, i would definitely apply it after the 6th year of well life, because by then what counts is rock quality and fluid type. This is only good for a bulk projection.

By the way I tweaked my price model when I was preparing my CO2 pathway. I took into account the Venezuela crash, the difficulties the Canadians have moving their crude, etc. The price projection is $88 per barrel Brent for evaluating projects which start spending in 2019. I also prepared a different look for very long term projects which start spending in 2023: $110 per barrel.

Don't forget these aren't prices predicted for those particular years. They are prices one can use to evaluate long term projects such as exploring in the Kara Sea, offshore West Africa deep water, the African rifts, Venezuela heavy oil developments, etc. These prices are plugged in and escalated with inflation for the 20-30 year project period. Real prices should oscillate back and forth around these values.

[Jun 21, 2018] Norwegian production is down

Jun 21, 2018 | peakoilbarrel.com

Energy News, 06/19/2018 at 3:47 am 2018-06-19

Norwegian crude oil & condensate production (without NGLs) at 1,321 kb/day in May, down -223 m/m, down -297 from 2017 average or -18%. The main reasons that production in May was below forecast is maintenance work and technical problems on some fields.
http://www.npd.no/en/news/Production-figures/2018/May-2018/
Almost down to the Sept 2012 low at 1,310 kb/day

George Kaplan , 06/19/2018 at 4:01 am

Big unplanned outages coming on the gas side for June numbers as well.
Kolbeinh , 06/19/2018 at 4:26 am
This is what happens when there are no sizeable new fields coming online for 1/2 year and as G.Kaplan has mentioned not enough allocation for supply disruptions are included in the forecast.
A brutal decline, even if this month is an anomaly as NPD say.
George Kaplan, 06/19/2018 at 4:39 am
Looking at the field numbers (only through April) it looks like Troll Oil is in decline a bit earlier and a bit steeper than expected. It's the biggest oil producer still bu has dropped fairly consistently and slightly accelerating from 161 kbpd in October to 121 in April. It's all horizontal wells and requires continuous drilling to maintain production, it's close to exhaustion with only 10% remaining at the end of 2017 (about R/P of 3 years) and had been holding a good plateau around 150 for a few years. The gas is due to be developed starting in 2021 so the oil rim would need to be depleted by then, but maybe dropping a bit sooner than expected – is a reservoir not behaving as modelled a "technical problem"?

[Jun 21, 2018] Personally I think all the conventional oil in the ground will eventually be used, it's just too useful. It's just a matter of how long it takes. It would be better if it was used for chemicals and something else used for fuel

Jun 21, 2018 | peakoilbarrel.com

dclonghorn, 06/17/2018 at 10:57 pm

Here's a link to an interesting oil market assessment from 9 point energy.

http://www.ninepoint.com/commentary/commentaries/052018/energy-strategy-052018/

They come up with a projection of 100 oil by 2020 using some conservative assumptions.

George Kaplan , 06/18/2018 at 1:35 am
I don't know about the price as it depends on the demand side and the global economy looks to me increasingly rocky, but the supply side analysis looks pretty good, except as you say a bit conservative. One thing missing was consideration of increasing decline rates on mature fields, especially offshore, partly a result of accelerating production in the high price years and partly because of an increasing ratio for deep and ultra deep water. Additionally I think the lack of increase in non-US drilling rigs as the price has risen is relevant and partly represents a shortage of in-fill prospects and short cycle appraisals.

If they are relying on GoM to add the 300 kbpb (or more into 2020) that EIA are predicting then I think they are going to be short by 400 to 500 kbpd for a 2020 exit rate.

(I don't follow the chart showing new OPEC developments, the numbers can't be number of projects, probably kbpd added, or maybe mmbbls reserves, and I'm betting they've mixed in gas with the oil.)

As in all these investment type analyses they don't look too far ahead and there's a kind of tacit assumption that everything will be sorted out with more investment later on, but five years of low discoveries and accelerated development of the good ones means there's actually not that much new to invest in, and if there is then ExxonMobil will be looking to buy it.

Guym , 06/18/2018 at 8:55 am
Yeah, demand is always a big question. Hard to measure, even in the rear view mirror. However, their constant increase of 1.2 million barrels in the US over a three year period, should offset any question of demand. While 1.2 in 2020 is something I can't predict, 1.2 million for 2018 and 2019 is impossible without increased pipelines long before the second half of 2019. So, I think it is way conservative.
George Kaplan , 06/18/2018 at 4:47 am
They say "We believe we are 6-9 months ahead of consensus with our oil forecast. Why is no one else seeing what we see?." Obviously they haven't been reading POB for the last two years.
Energy News , 06/18/2018 at 5:40 am
SLB seems to agree with Simmons, that outside of OPEC & the USA overall World oil production is going to continue falling

2018-06-12 Schlumberger Investor Presentations – Wells Fargo West Coast Energy Conference
aggregate base decline, which increased from approx 5% in 2015 to around 7% in 2017. Given this acceleration, it is probably not realistic to expect the new projects slated to come online during the next few years to be enough to reverse production decline outside of the US and Middle East.
Some slides on Twitter
https://pbs.twimg.com/media/DfgLlUHV4AEqYOl.jpg
https://pbs.twimg.com/media/DfgLlUHVAAAx_l8.jpg
Simmons charts https://pbs.twimg.com/media/DfcPDiBV4AMwNH2.jpg

Guym , 06/18/2018 at 9:06 am
POB made it possible to piece together in my own way, otherwise I would be like most. Staying confused with constant conflicting info. Predicting price is virtually impossible, as is demand to a large extent. But, when supply is ready to fall off a cliff, then being exact is not required.
Dennis Coyne , 06/18/2018 at 11:19 am
Guym,

A simple way to think about C+C demand is to assume over the long run that supply and demand will be roughly equal (though of course there will be short term imbalances which changes in the oil price over the short term will try to correct). From 1982 to 2017 C+C output grew at an average annual rate of about 800 kb/d. It is probably safe to assume that oil demand will continue to grow at roughly that pace in the absence of a severe global recession and those are pretty rare. I define a "severe global recession" as one where real World GDP (constant prices) based on market exchange rates decreases over an annual cycle for one or more years. Since 1900 there have been two cases where this occurred, the Great Depression and the Global Financial Crisis (GFC) in 2008/2009. These have been on roughly a 60 to 70 year cycle (a previous crisis occurred in 1870, but this might have only been a US crisis and possibly not a global one.)

In any case, my guess is that a Global economic crisis may result a the World tries to adjust to declining (or stagnant) World Oil output after 2025, probably hitting around 2030 to 2035. If economists re-read Keynes General Theory and respond to the crisis with appropriate policy recommendations, the economic crisis may be short lived. On the other hand a World response similar to the European response to the GFC, where fiscal austerity is considered the appropriate response to a lack of aggregate demand (this was also Herbert Hoover's response to the 1929 Stock Crash), then a prolonged deep depression will be the result.

Hopefully the former course will be chosen.

[Jun 21, 2018] BP's Proven Reserves tab, historical says some interesting things

Jun 21, 2018 | peakoilbarrel.com

Watcher x Ignored says: 06/19/2018 at 12:15 am

BP's Proven Reserves tab, historical says some interesting things:

US reserves did not grow or shrink last year 50B.

Canada reserves shrank about 1%. Weird.

Brazil reserves grew 1% but are down a lot from 2014.

KSA flat. Venezuela Orinoco reserves slight uptick 0.4%.

The somewhat vast majority of countries say their reserves are flat in 2017 vs 2016. They pumped billions of barrels, but no change to reserves for . . . lemme count . . . 36 countries (of which the US was one).

World as a whole reserves total declined 0.03%.

BP's flow report is "all liquids". Dunno if that is consumption, too. And if reserves . . . reserves are in a footnote. Crude, Condensate AND NGLs. Probably excludes algae.

[Jun 21, 2018] What? Me worry? Rystadt says US has 79 more years of oil still available.

Jun 21, 2018 | peakoilbarrel.com

Guym

x Ignored says: 06/19/2018 at 11:46 am
https://oilprice.com/Energy/Crude-Oil/US-Outstrips-Saudis-In-Largest-Recoverable-Oil-Reserves.html

What? Me worry? Rystadt says US has 79 more years of oil still available. Of course, that is the imaginary oil. They admit that commercially recoverable oil in the world only has 13 years left. Where did we pick up another 50 billion of imaginary oil in the US this year?

[Jun 20, 2018] Consumption of oil continues to grow in 2018

Jun 20, 2018 | peakoilbarrel.com

Watcher, 06/13/2018 at 12:54 pm

The bible is out. A few surprises.

India's oil consumption growth was only 2.9%. Derives from their monetary debacle early in the year. We should see signs of whether or not that corrects back to their much higher norm before next year.

China consumption growth 4%. Higher than India. Clearly an aberration.

KSA consumption actually declined fractionally, which allows Japan to still be ahead of them in consumption.

US consumption growth 1%. So much for EV silliness.

[Jun 20, 2018] Excellent write-up on peak oil supply

Images removes
Jun 20, 2018 | crudeoilpeak.info

Peak oil in Asia Pacific (part 1)

This post uses data released by the BP Statistical Review in June 2018

https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy.html

Oil production seems to have left its bumpy 6 year long (2010-2015) plateau of 8.4 mb/d and is now back to 2004 levels of 7.9 mb/d, a decline of 6% over 2 years.

Base production is the sum of the minimum production levels in each country during the period under consideration. Incremental production is the production above that base production. In this way we clearly see that the peak was shaped by China, sitting on a declining wedge of all other Asian countries together. Note that growing production in Thailand and India could not stop that decline. Now let's look at the other side of the coin, consumption:

There has been a relentless increase in consumption since the mid 80s. The growth rate after the financial crisis in 2008 was an average of 3% pa.

Chinese annual oil consumption growth rates have been quite variable between 2% and a whopping 16% in 2004 which contributed to high oil prices. Fig 4 also shows there is little correlation between GDP growth and oil consumption growth (statistical problems?). There is nothing in this graph that could tell us that the Chinese economy has a consistent trend to become less dependent on oil. In the years since 2011, oil consumption growth was around 60% of GDP growth.

Let's compare China with the US. China's oil consumption is catching up fast with US consumption.

On current trends, China's oil consumption would reach US consumption levels of 20 mb/d in just 14 years.

Contrary to misinformation by the media, the US is still a net importer of oil. Even blind Freddy can see that there will be intense competition for oil on global markets.

All governments who plan for perpetual growth in Asia (new freeways, road tunnels, airports etc) should fill in the above graph. Hint: We can see that Asia has diversified its sources of oil imports but is still utterly dependent on Middle East oil

"Other Middle East" is Iran and Oman (as Syria and Yemen no longer export oil)

China is preparing for the future by building bases to secure oil supply routes:

Proven reserves have not changed much in the last years meaning that P2 and P3 reserves have been proved up commensurate with production. The reserve to production ratio is 16.7 years equivalent to an annual depletion rate of 6%, a little bit higher than a reasonable rate of 5% (R/P of 20 years).

The depletion rates vary considerably and may only be approximate as oil reserves will have been estimated by using differing methodology and accuracy. Indonesia's depletion rate is very high. Not shown in Fig 14 is Thailand where the depletion rate is off the charts (almost 50%) suggesting reserves are too low.

In part 2 we look at the oil balance in each country. Tags: BP Statistical Review , China oil demand , china peak oil , Middle East , South China Sea , South East Asia

[Jun 20, 2018] it seems the physical market is getting tighter again and that the export flood may have something to do with the meeting. Or it could be that reduced exports from Iran, Venezuela and Libya are starting to impact the market.

Jun 20, 2018 | peakoilbarrel.com

Kolbeinh, 06/18/2018 at 6:21 am

There are some rumors that KSA has increased exports starting in May (about 0.5 m b/d more than prior months) by drawing even more from storage. If we are to believe OPEC production numbers from May which are steady, that must be the case. OPEC has essentially flooded the market with exports before the meeting on Friday. The nearest month Brent future changed to contango compared to closest month some weeks ago, but it has now all changed again to backwardation. Point being, it seems the physical market is getting tighter again and that the export flood may have something to do with the meeting. Or it could be that reduced exports from Iran, Venezuela and Libya are starting to impact the market.

If the market balance overall is to change from a a deficit to near balanced, production within OPEC has to be increased with almost maximum of whatever spare capacity available in my opinion. The assumption is that spare capacity in reality is smaller than stated by the agencies.

[Jun 18, 2018] China blindsides US with new energy tariffs threat by Jim W. Dean

Notable quotes:
"... According to US Energy Department figures, China imports approximately 363,000 barrels of US crude oil daily. The country also imports about 200,000 barrels a day of other petroleum products including propane. ..."
Jun 18, 2018 | www.veteranstoday.com
Just as China topped the list of nations buying US oil, Beijing – retaliating to unilateral Trump economic threats – sent jitters through energy markets on Friday by threatening new tariffs on natural gas, crude oil and many other energy products.

On Friday, Beijing threatened to impose tariffs on US energy products in response to $50 billion in tariffs imposed by US President Donald Trump. Such tariffs would inhibit Chinese refiners from buying US crude imports, potentially crashing US energy markets and hitting the fossil fuel industry where it hurts the most: in shareholder approval.

"This is a big deal. China is essentially the largest customer for US crude now, and so for crude it's an issue, let alone when you involve [refined] products, too. This is obviously a big development," Matt Smith, director of commodity research at ClipperData, told Reuters.

According to US Energy Department figures, China imports approximately 363,000 barrels of US crude oil daily. The country also imports about 200,000 barrels a day of other petroleum products including propane.

The US energy industry has seen its profits boosted by fracking in domestic shale fields, which produce some 10.9 million barrels of oil per day.

The US is also exporting a record 2 million barrels per day, and encouraging countries like China to import more US energy products instead of those from Iran, after Trump recently withdrew from the historic Joint Comprehensive Plan of Action (JCPOA) 2015 nuclear arms deal with Tehran.

China is currently the largest buyer of Iranian oil as well, purchasing some 650,000 barrels daily during the first quarter of 2018.

According to Bernadette Johnson with the Denver, Colorado, energy consultancy Drilling info, tariffs will increase prices for other petroleum products including propane and liquefied natural gas.

"The constant back-and-forth about the tariffs creates a lot of market uncertainty that makes it harder to sell cargoes or sign long-term [trade] deals," Johnson noted, cited by Reuters.

In late March, the White House slapped trade sanctions on China, the world's second largest economy, including limitations in the investment sector as well as tariffs on $60 billion worth of products.

Citing "fairness" considerations, Trump referred to the car market, stating that China charged a tariff ten times higher on US cars than the US did on the few Chinese cars sold in the US.

Separately, in a bid to deliver on campaign promises, Trump announced his intention to impose a 25-percent tariff on steel imports and a 10-percent tariff on aluminum imports from an array of US allies, including the EU, Mexico and Canada. Those nations -- longtime allies to the US -- have promised retaliatory economic measures.

Trump has also reportedly mulled placing a 25-percent import tax on European cars, something that would significantly affect the highly-profitable US market for expensive German automobiles.

[Mar 29, 2018] "The objectives of these US actions as the labelling of China as a "strategic competitor" suggests, is it to halt China's technological progress altogether

China's rise has made the US fear the loss of its role as the sole superpower. And the neoliberal elite fights back. That replays on a new level rift of the USSR and China in the past.
Mar 29, 2018 | www.ft.com

Martin Wolf : How China can avoid a trade war with the US

... the plan to impose 25 per cent tariffs on $60bn of (as yet, unspecified) Chinese exports to the US shows the aggression of Mr Trump's trade agenda. The proposed tariffs are just one of several actions aimed at China's technology-related policies. These include a case against China at the World Trade Organization and a plan to impose new restrictions on its investments in US technology companies.

The objectives of these US actions are unclear. Is it merely to halt alleged misbehaviour, such as forced transfers -- or outright theft -- of intellectual property? Or, as the labelling of China as a "strategic competitor" suggests, is it to halt China's technological progress altogether -- an aim that is unachievable and certainly non-negotiable. Mr Trump also emphasised the need for China to slash its US bilateral trade surplus by $100bn. Indeed, his rhetoric implies that trade should balance with each partner. This aim is, once again, neither achievable nor negotiable.

...A still more pessimistic view is that trade discussions will break down in a cycle of retaliation, perhaps as part of broader hostilities.

[Feb 20, 2018] For the life of me I cannot figure why Americans want a war/conflict with Russia

Highly recommended!
This post summaries several "alternative" views that many suspect, but can't express as clearly as here.
Feb 20, 2018 | www.moonofalabama.org

Palloy | Feb 20, 2018 8:52:02 PM | 34

@4 "For the life of me I cannot figure why Americans want a war/conflict with Russia."

Ever since US Crude Oil peaked its production in 1970, the US has known that at some point the oil majors would have their profitability damaged, "assets" downgraded, and borrowing capacity destroyed. At this point their shares would become worthless and they would become bankrupt. The contagion from this would spread to transport businesses, plastics manufacture, herbicides and pesticide production and a total collapse of Industrial Civilisation.

In anticipation of increasing Crude Oil imports, Nixon stopped the convertibility of Dollars into Gold, thus making the Dollar entirely fiat, allowing them to print as much of the currency as they needed.

They also began a system of obscuring oil production data, involving the DoE's EIA and the OECD's IEA, by inventing an ever-increasing category of Undiscovered Oilfields in their predictions, and combining Crude Oil and Condensate (from gas fields) into one category (C+C) as if they were the same thing. As well the support of the ethanol-from-corn industry began, even though it was uneconomic. The Global Warming problem had to be debunked, despite its sound scientific basis. Energy-intensive manufacturing work was off-shored to cheap labour+energy countries, and Just-in-Time delivery systems were honed.

In 2004 the price of Crude Oil rose from $28 /barrel up to $143 /b in mid-2008. This demonstrated that there is a limit to how much business can pay for oil (around $100 /b). Fracking became marginally economic at these prices, but the frackers never made a profit as over-production meant prices fell to about $60 /b. The Government encourages this destructive industry despite the fact it doesn't make any money, because the alternative is the end of Industrial Civilisation.

Eventually though, there must come a time when there is not enough oil to power all the cars and trucks, bulldozers, farm tractors, airplanes and ships, as well as manufacture all the wind turbines and solar panels and electric vehicles, as well as the upgraded transmission grid. At that point, the game will be up, and it will be time for WW3. So we need to line up some really big enemies, and develop lots of reasons to hate them.

Thus you see the demonisation of Russia, China, Iran and Venezuela for reasons that don't make sense from a normal perspective.

[Jan 21, 2018] Wells that they drilled last year will produce the biggest rates of decline, well over 50 percent. So, how many wells would need to be completed to increase production over a million barrels in 2018?

Jan 21, 2018 | peakoilbarrel.com

John x Ignored says: 01/18/2018 at 9:12 pm

Will be interesting to see US shale production in response to increasing frac hits, increasing costs, mounting debt wall. These are all legitimate issues which IEA seems to overlook when issuing rosy predictions. Three Stooges thought they could repair a hole in a pair of pants by cutting it out .same logic as IEA.
Guym x Ignored says: 01/19/2018 at 5:20 pm
Yeah, it's those items and more. The biggest they overlook is declines from production. The past two years, they have concentrated in sweet spots, to keep their chins above water. In doing so, they have miraculously brought production back up to 2015 highs, and not much more, although the EIA is reporting imaginary oil. Underneath all that production, wells are declining at a rapid rate. The biggest rates are what they drilled last year. Those wells will produce less than half of what they produced last year. So, how many wells would need to be completed to increase production over a million barrels in 2018? More than current capacity, that's for sure.
Dennis Coyne x Ignored says: 01/19/2018 at 6:40 pm
Hi Guym,

I agree.

Although tight oil output has increased at an annual rate of close to 1000 kb/d over the past 12 months (Dec 2016 to Nov 2017), I doubt that rate of increase will continue, probably about half that unless oil prices rise more than I expect (and I expect we might get to $85/b by Jan 2019).

Guym x Ignored says: 01/19/2018 at 7:48 pm
I'd say it's a crap shoot as to whether it goes up, or down with about the same number of completions in 2018 as 2017. Ok, let's say we have more completions, I still can't say it will go up 500k barrels. While people place statistics on depletion rates, I haven't seen a well, yet, that can comprehend statistics. As a matter of fact, they defy statistics.
There are 180k producing wells in Texas. There were about 5400 completions in 2017. That's about 3% of total producing wells.

[Jan 21, 2018] Possible Seneca cliff of oil production due to technological enhancements of extraction of oil from depleting fields. And first of all KSA

Notable quotes:
"... Major oil producing countries, Saudi Arabia chief among them, are using technology to stave off production declines. These YouTube videos are a perfect example of the extreme lengths being employed to continue production: ..."
"... When the decline kicks in, these technologies will ensure that the cliff will be steeper. While I believe we are living at the absolute peak of world production and that decline will kick in soon, I'm not so concerned about specific predictions. It will happen soon enough and when it does the impact will be severe. ..."
"... I think of this problem in personal terms -- my son was born in 2000. He will live to see a world of diminishing oil production (as well as sea level rise, resource conflicts, and many other problems). Does anyone doubt that by the time he is 30 (2030) world oil production will be in decline? Does anyone doubt by the time he is 50 (2050) the world will be a drastically different place than it is today? I have lived through the peak period. I cannot envision what comes after. I can only hope that my son finds a way through it. ..."
"... "Does anyone doubt that by the time he is 30 (2030) world oil production will be in decline? Does anyone doubt by the time he is 50 (2050) the world will be a drastically different place than it is today?" ..."
"... Perhaps. But such sentiments were very common ten, fifteen years ago, and they were directed toward today, not 2030. So, yes, I do "doubt" it, but that's not saying much, as it's a subject I find interesting but useless to speculate about. ..."
"... I'm checking in here for the first time in about 9 years. I'm an old-time peaker, who jumped ship in 2009 when it became clear the dire predictions of Campbell, Deffeyes, et al., were failing to materialize. ..."
Jan 19, 2018 | peakoilbarrel.com

x says: 01/19/2018 at 9:55 am

Ron is absolutely right about the creaming issue. Major oil producing countries, Saudi Arabia chief among them, are using technology to stave off production declines. These YouTube videos are a perfect example of the extreme lengths being employed to continue production:

These videos underscore how uniquely valuable oil is as an energy source and how no other substitute will ever come close to matching its utility.

When the decline kicks in, these technologies will ensure that the cliff will be steeper. While I believe we are living at the absolute peak of world production and that decline will kick in soon, I'm not so concerned about specific predictions. It will happen soon enough and when it does the impact will be severe.

I think of this problem in personal terms -- my son was born in 2000. He will live to see a world of diminishing oil production (as well as sea level rise, resource conflicts, and many other problems). Does anyone doubt that by the time he is 30 (2030) world oil production will be in decline? Does anyone doubt by the time he is 50 (2050) the world will be a drastically different place than it is today? I have lived through the peak period. I cannot envision what comes after. I can only hope that my son finds a way through it.

Michael says: 01/19/2018 at 10:12 am

"Does anyone doubt that by the time he is 30 (2030) world oil production will be in decline? Does anyone doubt by the time he is 50 (2050) the world will be a drastically different place than it is today?"

Perhaps. But such sentiments were very common ten, fifteen years ago, and they were directed toward today, not 2030. So, yes, I do "doubt" it, but that's not saying much, as it's a subject I find interesting but useless to speculate about.

I'm checking in here for the first time in about 9 years. I'm an old-time peaker, who jumped ship in 2009 when it became clear the dire predictions of Campbell, Deffeyes, et al., were failing to materialize.

This doesn't mean I think oil is infinite or anything. I do think our capacity to predict doom is much more circumscribed than our abilities to avoid it.

(I like the new editing feature on this site.)

[Jan 16, 2018] GOM oil and gas production in decline from now on

Jan 16, 2018 | peakoilbarrel.com

SouthLaGeo

x Ignored says: 01/12/2018 at 7:11 pm
Interesting BOEM report attached – their prediction of GOM oil and gas production from 2018-2027.
They predict oil production will increase from 1.65-1.67 mmbopd in the 2017-2019 window to 1.74-1.77 mmbopd in the 2023-2027 time frame. They include future production from current reserves, contingent resources and undiscovered resources. Contingent resources are mainly field expansion projects, new fault blocks, new reservoirs, and resources from discoveries that have not been put on production.
They have initial production from undiscovered resources occurring already in 2019 – suggesting that a few discoveries will be made and be on line by the end of 2019. Seems rather ambitious even for subsea tiebacks.
Given the lack of GOM exploration success in the last few years, my biggest challenge to these predictions are their estimates of production coming from new discoveries. They show about 1 BBO of production comes from currently undiscovered resources in this 10 year window.

https://www.boem.gov/BOEM-2017-082/

George Kaplan x Ignored says: 01/13/2018 at 3:14 am
SLG – hope you are well and had a good holidays. Here is my updated effort at the same thing. I've added some new discoveries, but not as big or developed as fast BOEM show. I've included all qualified fields as named entries except a few discovered in 2016 and 2017, and for a lot I've had to make guesses for reserves based on the expected development size (numbers in brackets show nameplate capacity). I might be able to improve things a bit when BOEM reserve numbers for end of 2016 come out, but it's still not going to look much like their estimates. It's noticeable that there's a lot of activity in short term, small tie backs now – but these only add about 5 to 10 kbpd and immediately start to decline. So like you I don't know where they are getting such high contingent resource production additions from unless it is all on existing developments – I guess if a lot of fields get to grow like Mars-Ursa has and Atlantis might this year then there'd be enough, but that seems unlikely to me, especially at the rate they show it.

SouthLaGeo x Ignored says: 01/13/2018 at 8:47 am
Thanks George, and same to you for the new year.
I've made a stab at comparing numerous production profiles for the 2018-2027 window – your's from above, my midcase and downside estimates from a little over a year ago, and BOEM's estimates – both their total estimate, and their total estimate minus any new resources/discoveries.
I plan to expand on this in a future post – including revised EUR estimate ranges.

George Kaplan x Ignored says: 01/13/2018 at 11:53 am
They are all models with something worthwhile to add to the discussion, which is not what I would say about the EIA projections. They just add have some kind of growth rate, with no basis in actual numbers, and make it look fancy by adding a hurricane effect – and yet this is the number usually quoted in the MSM. I think their predictions a couple of years ago had an exit rate for this year of 2.2 mmbpd – miles off, and when they do try to provide bottom up justification they look ridiculously ill informed.

Fernando Leanme x Ignored says: 01/15/2018 at 4:49 am
Maybe they have a higher oil price forecast? Or they don't bother to see if what gets put on line is worth developing? I know this is hard, but try preparing a forecast with prices increasing 3% per year above inflation for 30 years, and you will get a higher forecast.
Dennis Coyne x Ignored says: 01/15/2018 at 10:28 am
https://www.eia.gov/outlooks/aeo/data/browser/#/?id=12-AEO2017&region=0-0&cases=ref2017&start=2015&end=2030&f=A&linechart=ref2017-d120816a.3-12-AEO2017&sourcekey=0 \

The BOEM probably uses the EIA AEO 2017 reference price forecast.

[Jan 13, 2018] All eyes may be fixed on Jan. 18 as the day China begins trading oil contracts in Yuan currency ~ The Daily Economist

Jan 13, 2018 | www.thedailyeconomist.com

According to one source out of the Far East, China's Yuan denominated oil contract is set to go live for trading on Jan. 18.

While not an official date announced from government sources, according to an anonymous member of the Futures market where the new oil contract will trade, this is the expected date for Beijing to begin its latest challenge to the long-standing Petrodollar system.

According to the Shanghai-based news portal Jiemian, which cited an unidentified person from a futures company, trading is expected to start Jan. 18. Multiple rounds of testing have been carried out and all listing requirements met. The State Council, China's cabinet, was said to have given its approval in December, one of the final regulatory hurdles. The push for oil futures gained impetus in 2017 when China surpassed the U.S. as the world's biggest crude importer. - Zerohedge
While the Chinese markets are not expected to immediately take dominion over the West's Brent and WTI oil markets, several countries which include Venezuela, Russia, Qatar, Pakistan, and perhaps even Iran appear ready to transition away from dollar based oil trade. Additionally, many more nations will likely be willing to dip their toes into this market as it proves itself to be a viable alternative to dollar hegemony, and as protection from foreign policy threats from the U.S. which often uses the dollar as leverage in economic sanctions.

[Jan 03, 2018] Oil production in the USA remains flat

Notable quotes:
"... At this point the only (legal) reason left to explain the divergence is that the EIA has started including NGL into their numbers ..."
Dec 29, 2017 | peakoilbarrel.com

Energy News says: 12/29/2017 at 11:54 am

EIA 914 Survey, October crude oil production 9,637 kb/day, +167 kb/day m/m. September revised down -11 kb/d to 9,470 kb/day

Texas October 3,767 kb/day, September 3,561 kb/day revised down -13 kb/d

Gulf of Mexico October (Hurricane Nate) 1,449 kb/day, September 1,649 kb/day, revised -1 kb/d

https://www.eia.gov/petroleum/production/#oil-tab

dclonghorn says: 12/29/2017 at 12:00 pm
EIA estimated Texas production at 3767000 bpd vs Dr Dean's above estimate of 3305000 bpd a difference of 462000 bpd. Wow that is a big difference.
Dean says: 12/29/2017 at 12:13 pm
Yes, it is unreal: either at the Texas RRC they had really HUGE problems in the past months collecting data, or the EIA used only model estimates without any form of revision.

The correcting factors of the Texas RRC have not changed much and they showed they usual variability, so that I cannot explain why there is such a big divergence between corrected RRC data and EIA. They only problem that I can think of (on the part of the RRC) is that the hurricane completely disrupted their work: does anyone know whether the offices and data servers of the Texas RRC were damaged during the hurricane? Thanks for the information.

Dean says: 12/29/2017 at 1:55 pm
I had a very interesting discussion on Twitter: operators in Texas confirmed me that the RRC offices were not affected by the hurricane and data reporting proceeded normally. At this point the only (legal) reason left to explain the divergence is that the EIA has started including NGL into their numbers:

https://twitter.com/ZmansEnrgyBrain/status/946796541406208000

[Jan 03, 2018] No major discoveries in 2017

Notable quotes:
"... Rystad Energy concluded this week that 2017 was yet another record low year for discovered conventional volumes globally. Less than seven billion barrels of oil equivalent has been discovered YTD. "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 million barrels of oil equivalent 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%; largely thanks to the giant onshore gas field Galkynysh in Turkmenistan. Not only did the total volume of discovered resources decrease – so did the resources per discovered field. An average offshore discovery in 2017 held ~100 million barrels of oil equivalent, compared to 150 million boe in 2012. "Low resources per discovered field can influence its commerciality. Under our current base case price scenario, we estimate that over 1 billion boe discovered during 2017 might never be developed", says Passos. ..."
"... We have recently observed strong empiric evidence for the theory that a positive tendency in initial production rates for shale wells does not always lead to similar improvements in ultimate recovery. ..."
"... But profits and stock valuations are terrible over the past five to ten years. Drillers, Explorers, Services, I'd be shocked if you could find an index combo that has come even close to matching S&P, Biotech, Semiconductors, NASDAQ. Not positive but E&P et al might not even have beaten transportation over the past decade. If you've been invested in Oil and Gas you are officially a loser. ..."
"... The cooperative program and understanding between the Kingdom and Russia, the two largest producers in the market. ..."
"... Last but not least, we need to develop a culture of saving to increase our capital buildup for the economy. This is not an easy task, and requires a total rehabilitation of our consuming behavior." ..."
"... At this posting, New England is burning oil for 17% of their electricity generation. Wholesale spot price for electricity is $230/Mwh, about 10 times regular pricing. Later this afternoon, demand is expected to increase more. ..."
Dec 21, 2017 | peakoilbarrel.com

George Kaplan, says: 12/21/2017 at 6:55 am

https://www.rystadenergy.com/NewsEvents/PressReleases/all-time-low-discovered-resources-2017

ALL-TIME LOW FOR DISCOVERED RESOURCES IN 2017: AROUND 7 BILLION BARRELS OF OIL EQUIVALENT WAS DISCOVERED

Rystad Energy concluded this week that 2017 was yet another record low year for discovered conventional volumes globally. Less than seven billion barrels of oil equivalent has been discovered YTD.

"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 million barrels of oil equivalent 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%; largely thanks to the giant onshore gas field Galkynysh in Turkmenistan.

Not only did the total volume of discovered resources decrease – so did the resources per discovered field.

An average offshore discovery in 2017 held ~100 million barrels of oil equivalent, compared to 150 million boe in 2012. "Low resources per discovered field can influence its commerciality. Under our current base case price scenario, we estimate that over 1 billion boe discovered during 2017 might never be developed", says Passos.

I think every drilled high impact wildcat well identified by Rystad at the end of 2016 has now turned out dry, with a couple postponed for lack of finance.

Dennis Coyne, says: 12/21/2017 at 8:14 am
Thanks George.

It would be great if they gave the gas/liquids split all rolled up. Does it look to your eyes like a roughly 50/50 gas/liquids split in 2017, as it does to mine? (Talking about Rystad chart.)

SouthLaGeo, says: 12/21/2017 at 8:38 am
2017 looks likes another very disappointing year for conventional discoveries. I wonder how unconventional resource adds have been over the last few years. I suspect that is how many of our big oil friends are achieving their annual resource add goals.
George Kaplan, says: 12/21/2017 at 8:50 am
The EIA reserves are going to be interesting: even before the price crash the extension numbers, which is where all the LTO growth came from rather than discoveries, were starting to fall and reserve changes looked like they might be going negative, which I'd guess is due to decreases in URR estimates; e.g. below for Bakken.

George Kaplan, says: 12/21/2017 at 8:50 am
And EF.

George Kaplan, says: 12/21/2017 at 8:54 am
About 50/50, maybe slightly more gas because of the big BP find, which I thought was 2.5Gboe but they have as 2.
Dennis Coyne, says: 12/21/2017 at 10:54 am
Thanks George,

Yes reserves decreased in 2015, probably due (in part) to a fall in oil prices from $59/b in Dec 2014 to $37/b in Dec 2015, the price in Dec 2016 was $52/b, using spot prices from the EIA, so perhaps reserves increased a bit in 2016, it will be interesting to see the 2016 estimate.

George Kaplan, says: 12/22/2017 at 3:22 am
I think they have to use averages for determining economic recovery not spot prices – I can't remember now if it's six month or annual (or other – I think maybe six months to March and September when they reevaluate) – 2016 would be bout the same or a bit lower depending on the time frame.
Dennis Coyne, says: 12/22/2017 at 8:59 am
Hi George,

I am not sure exactly how it works.

I found this:

https://sprioilgas.com/sec-oil-and-gas-reserve-reporting/

Initially, SEC rules required a single-day, fiscal-year-end spot price to determine a company's oil and gas reserves and economic production capability. The SEC Final Rule changes this requirement to a 12-month average of the first-of-the-month prices.

Using this I get
2014, 101
2015, 54
2016, 42

So 2016 reserves should decrease further if prices affect reserves.

George Kaplan, says: 12/21/2017 at 6:56 am
EIA reserve estimates were due at the end of November, but still haven't appeared, maybe they don't look so good?
Dennis Coyne, says: 12/21/2017 at 8:15 am
Hi George,

Last year it was mid Dec, maybe at the end of the year. Not sure why it takes so long as these are 2016 reserves as of Dec 31, 2016.

George Kaplan, says: 12/21/2017 at 6:59 am
https://www.rystadenergy.com/NewsEvents/Newsletters/UsArchive/shale-newsletter-december-2017

EMPIRICAL EVIDENCE FOR COLLAPSING PRODUCTION RATES IN EAGLE FORD

We have recently observed strong empiric evidence for the theory that a positive tendency in initial production rates for shale wells does not always lead to similar improvements in ultimate recovery.

Cabot announced they are selling up in the EF and concentrating on gas (15,000 bpd), maybe more likr them to come.

Fernando Leanme, says: 12/21/2017 at 10:14 am
I have had to work hard over the years to explain to management that oil completions have to be optimized, and that seeking the highest peak rate wasn't likely to be the best answer. This of course happens because high level oil company managers are good at sales and PowerPoint, but have opportunities for improvement in key areas.
Dennis Coyne, says: 12/22/2017 at 2:38 pm
Hi George,

Great article, thanks.

This confirms the suspicion of many that the high peak rates on newer wells (often with longer laterals and more frack stages and proppant, in short more expensive wells) don't boost cumulative output much. In the case of the Eagle Ford, wells in Karnes county (the core of the play) only increased output by about 40 kb over the older wells with less expensive completion methods.

Looking at Bakken data, it is clear that this is the case as well, with about a 10%to 15 % increase in cumulative output over the first 24 months and then similar output to older wells thereafter.

Many observers assume that a higher peak production from a well leads to higher cumulative output of the same proportion. That is if the peak goes from 400 kbo/d for a well projected to have an EUR of 200 kbo to a peak of 800 kbo/d for a newer well, it is often assumed that the new well will have cumulative output of 400 kbo. This is incorrect, in fact the newer well is more likely to have an output of 240 kbo an increase of only 20% rather than the 100% often assumed.

Ron Patterson, says: 12/25/2017 at 7:00 am
Another article citing that same Rystad report:

Shale Growth Hides Underlying Problems

However, Rystad Energy argues that there is some evidence that suggests those higher initial production (IP) rates do not necessarily translate into larger gains in the total volume of oil and gas that is ultimately recovered. A sample of wells in the Eagle Ford showed steadily higher IPs in recent years, but they also exhibited steeper and steeper decline rates.

George Kaplan, says: 12/21/2017 at 7:16 am
It seems a bit unlikely that Canada is going to continue increasing production as shown above over the next 6 to 8 years (after 2018 ramp ups are complete). There are no major greenfiled developments currently under construction and these take at least 5 years from FEED to production, there are continuing redundancies in the oil patch as some of the large, recent developments move from development to operations, and there is no spare pipeline (or rail) capacity such that the oil is at about $10 to $15 discount which is likely to increase as Fort Hill's ramps up through next year (and new pipeline permitting and construction is likely to take even longer than the actual oil sands project).

With Iran and Iraq – they may have oil in the ground, but they need huge,new surface production facilites to process it and supply water/gas for injection – those too take about 5 years to construct, assuming they can find some outside funding.

FreddyW, says: 12/23/2017 at 5:31 am
Dennis,

"OPEC has already demonstrated it can produce more, before they cut back in Jan 2017"

Yes OPEC may have some capacity to increase production. But many OPEC countries are in decline and Saudi Arabia does not have any Khurais or Manifa like fields left to develop. If I ruled Saudi Arabia then I wouldn´t produce more than 10 mb/d even if there were shortages. Better to stay on the platau a little bit longer. Iraq is the country with the biggest possibilities for increases. But they will do so when they are able to, not because of shortages. The other countries you mentioned have mainly expensive oil like tar sands in Canada, arctic in Russia and ultra deepwater in Brazil. Sure we can see increases there but it takes a long time to develop.

"I don't think oil producers were struggling at $100/b, they were overproducing so prices dropped."

US LTO increased production. But conventional prioduction not so much (outside OPEC). Remember this?
https://www.ft.com/content/35950e2a-a4be-11e3-9313-00144feab7de
(google for "ExxonMobil targets $5.5bn spending cuts")

"There's also rail, ridesharing, telecommuting, public transportation etc. High oil prices will lead to changes."

Yes I agree on that. Changes will have to happen.

Dennis Coyne, says: 12/26/2017 at 2:20 pm
Hi Tech guy,

http://www.imf.org/external/datamapper/NGDP_RPCH@WEO/WEOWORLD

World real economic growth has been about 3.5% per year since 2012.

https://www.bis.org/statistics/totcredit.htm?m=6%7C380%7C669

For the World Debt to GDP has increased from 226% in 2012 to 243% in 2Q2017, for advanced economies over the same period debt to GDP went from 272% to 275% and for emerging economies over the same period 145% to 190%.

The story is better access to credit for emerging economies from 2012 to 2017.

A major recession is not very likely.

The IMF forecasts real GDP growth of 3.75% for the World from 2018 to 2022.

Dennis Coyne, says: 12/27/2017 at 5:12 pm
Hi Techguy,

Oil prices at over $100/b were no problem for the World economy from 2011-2014, real GDP grew at 3.5% per year. No reason $100/b oil would cause a recession.

The $160/b (2017$) will only be about 3.3% of World GDP in 2026, assuming medium UN population growth scenario and real per capita GDP growth at 1.5%/year and 84 Mb/d C+C output in 2026.

That's a lower level than 2014.

George Kaplan, says: 12/21/2017 at 7:25 am
https://www.eia.gov/petroleum/weekly/

There was another big drop in US crude stocks by the twip – down 6.5 mmbbls with gasoline and diesel up 2 mmbbls combined. The crude level is fast approaching the middle of the 5 year average – how far does it have to undershoot before panic sets in?

Jeff, says: 12/21/2017 at 9:05 am
US SPR drawdown this year is about 21.5 million barrels, this is usually not included when calculating the 5y average. Planned annual sales are similar for the next couple of years ( https://www.eia.gov/todayinenergy/detail.php?id=29692 note that the figure shows fiscal year).

The story being told is that oil markets should be in balance next year or slight surplus if LTO maintains its pace. KSA low production during end of 2017 and the problems in Venezuela should result in continued stock drawdowns or only a small build during the spring (forties supports this too). Next summer driving season can be interesting, assuming the economy remains healthy. 2019 will be _very_ interesting since it will be revealed how much of the OPEC cuts were made voluntary.

Heinrich Leopold, says: 12/21/2017 at 4:49 pm
As inventories are still way above historical averages, it is important to bear in mind that substantial infrastructure in form of tanks and pipelines have been constructed over the last few years. This increased the necessary working inventory to keep the system functioning. So, the critical inventory level might be much higher than in previous years.
George Kaplan, says: 12/22/2017 at 3:26 am
They need a minimum amount of empty capacity to allow for blending and movement, not a minimum amount of stored volume to keep it working. The storage is to cover for upsets and to allow people to make money from arbitrage.
FreddyW says: 12/22/2017 at 5:39 am
You are wrong on this point. See
https://www.reuters.com/article/us-oil-storage-kemp/should-we-worry-as-oil-stocks-hit-3-billion-barrels-kemp-idUSKCN0T92PP20151120

The lowest value the commercial oil stocks have been since 1982 was 247 mb in 2004:
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCESTUS1&f=W

It was propably close to the point where it was low enough to cause problems at that time. Why? Because from a commercial point of view, it´s just stupid to have more storage than you need. It´s cost money to store it and it´s better to sell it and get the money instead of just having it in storage. Also there is the SPR from where you can get oil if there is supply problems. So really no need to have large amounts of oil in storage.

George Kaplan, says: 12/22/2017 at 3:26 am
I was speculating about future undershoot, not current conditions.
Dennis Coyne, says: 12/22/2017 at 9:34 am
Hi George,

Yes that was how I interpreted your original comment. At least for US commercial crude stocks for the current week we are currently about 95 million barrels above the 2012 and 2013 average for the same week of the year, so perhaps another few years before any panic if stocks continue to decrease by 50 Mb per year as they did from 2016 to 2017. I chose 2012 and 2013 because oil prices were relatively high in 2012 and 2013 ($88/b and $98/b in Dec 2012 and Dec 2013 for WTI).

On rereading your original comment, I think when it gets near the lower edge of the 5 year average, panics sets in, it may take a few years.

Longtimber, says: 12/21/2017 at 4:17 pm
http://www.zerohedge.com/news/2017-12-20/another-governor-demands-state-pension-abandon-fiduciary-duties-sell-fossil-fuel-inv
A factor in Future production if Pension Shale Patch backing is reduced? A sample position breakout in there.
texas tea, says: 12/22/2017 at 8:03 am
"You can just say it is an industry in decline and there are better places to put one's money in." yes you can say "the industry is in decline" but then you would be wrong, not usual for you or many on the board. In this case however, the statement is not only wrong but delusional. Both production and demand are at record highs for oil natural gas and natural gas liquids. Of course why let facts get in the way of your political views, to quote a old line; fat, drunk and stupid in no way to go through life, son 😜
twocats, says: 12/22/2017 at 2:03 pm
"Both production and demand are at record highs for oil natural gas and natural gas liquids. "

But profits and stock valuations are terrible over the past five to ten years. Drillers, Explorers, Services, I'd be shocked if you could find an index combo that has come even close to matching S&P, Biotech, Semiconductors, NASDAQ. Not positive but E&P et al might not even have beaten transportation over the past decade. If you've been invested in Oil and Gas you are officially a loser.

Now, high yield bonds might be a different story. But in the wake of all the bankruptcies for the past five years was 100% of all bonds paid? They might have been, not sure.

Boomer II, says: 12/22/2017 at 6:40 pm
Oil companies themselves have changed the way they are investing. So I take that as a sign they, too, think their best times are behind them.

In terms of financial management, there are industries that have done better and are likely to do better than gas and oil. It's simply not a growth industry anymore.

Dennis Coyne, says: 12/24/2017 at 8:44 am
Hi Boomer II,

I think oil prices have an effect on investment, especially outside the LTO focused companies. For the LTO players they seem to focus on output growth regardless of profits, not a great long term business model.

David Archibald, says: 12/21/2017 at 10:10 pm
Regarding the gap, a third of the consumption growth over the last decade was from China. If Chinese consumption plateaus, as it very well might, then consumption growth from here will be less and the gap smaller. But putting in an assumption to change an established trend would just add another point of failure. This piece isn't so much a model as a creation story, trying to figure out why past expectations weren't met and where the known unkowns might come from. A big one of these is what the Permian might end up doing. I think that is why industry is paying up to get into the Permian. If you are not in the Permian you don't have a future. And shareholders will pay any amount of money for you to keep your job.

The piece was prompted by Ovi's observation that Non-OPEC less the big three has been in decline since 2004 – very encouraging. There are some systems in which a price rise does not result in an increase in production simply because the resource is clapped out. The gold market last decade for example. The gold price rose at an average of about 17% per annum year after year but gold production fell. That is not supposed to happen. Now some mines are digging up rock with just over one part in a million of gold in it and that pays for turning that rock into mud.

Paul Pukite (@WHUT), says: 12/21/2017 at 10:57 pm

David Archibald says

https://www.mediamatters.org/blog/2014/04/14/meet-david-archibald-the-fringe-scientist-predi/198886

Hickory, says: 12/22/2017 at 11:30 pm
Thanks Paul. Good to know the bias of the author.
Watcher, says: 12/22/2017 at 2:11 am
There was a July report for China imports that extrapolated to another 6.6% consumption growth year for them. No evidence of slow down. Ditto India.

Reminder to folks because it is a tad obscure. India's consumption growth is 8% but it's concentrated in an unusual way. LPG. They run motors on LPG, mostly motorbikes.

Watcher, says: 12/23/2017 at 2:24 am
https://fred.stlouisfed.org/series/M12MTVUSM227NFWA/

Vehicle miles driven. The increase is relentless as is US population growth. In the big smash of 2008/2009 there was a flattening of the increase but not really any sort of collapse. There was in oil price, but there was no need for it since consumption did not decline more than 5%. A quick look at historical consumption not just miles driven shows essentially the same tiniest of down ticks during that timeframe.

So I would say we need a new theory as to why price declines during recession. Doesn't appear to be less driving to work.

OFM, says: 12/23/2017 at 8:23 am
Consumption of oil would seem to decline a little bit right across the board during a recession, especially a big one. Construction machinery runs less, people travel less, buy fewer new things. It doesn't take very much by way of falling consumption to reduce the price of oil. The price of oil is highly inelastic, in the short term, and it's like milk.

The price of milk has to fall a long way before you can find uses for more than the usual amount.

People buy as much milk as they want for their kids, and maybe a little to cook with. NO MORE, even if the price goes down a lot. They don't have any use for it. So .. if it's coming to market, it has to sell cheaper in order for people to FIND uses for it. You can feed milk to the cat, and even to the pigs, if it's cheap enough. Farmers have been feeding excess milk to pigs just about forever, lol. I did so myself when we had more than we could use otherwise when I was a kid.

So . if the price of gasoline falls, maybe you take the ski boat to the lake one extra weekend , which can easily result in burning a couple of hundred gallons, round trip, as opposed to spending the weekend golfing at a cheap nearby course.

Or you drive the old car that's a gas hog more, because it saves putting miles on a newer car. When the price of gasoline bottomed out, I drove my old four by four truck a lot more than I would have otherwise, because I knew I would be retiring it before long, and wanted to get as many miles out of it as I could, saving wear and tear on the car .. which I'm planning on keeping indefinitely.

It broke down yesterday, and while it's not quite dead, I 'm thinking it's time to euthanize it, lol.

I'm also running my big yellow machines a lot more than usual, because when diesel is down close to two bucks, as opposed to four bucks or so, this saves me a hundred bucks a day, or more, if I stay with it, and I've got some pretty big long term projects such as a new lake, which I work on at odd times, whenever circumstances permit.

IF I were hiring out, which I don't , I would be able to offer a neighbor a hundred bucks or more off for a days work, with diesel at two, as opposed to four bucks. That would result in neighbors with cash, and thrifty Scots habits, spending some of their savings, doing long planned work sooner, or maybe going for a new small project.

Overall though construction falls off during a recession.

Most of the increase in total miles happens as the result of people driving new cars, and by and large, new cars and light trucks are far more fuel efficient than old ones.

And people who are broke spend as much on gasoline as they can afford, period. They MUST spend to get to work. If a tank at twenty bucks will get them to Grandma's house and back in their old clunker, they go. A tank a forty bucks often means calling rather than visiting.

Krisvis says: 12/23/2017 at 10:04 am
It is pretty much a given that Permian oil needs export market. This is from PAA conference call.

" PAA comments: If you look at the amount of 45-plus gravity. It's about 300,000 barrels a day now, growing to 1 million plus. So, a lot of those volumes are coming, and that's really the crux of the benefit of a Cactus pipeline being able to take that directly to the water because I think we are going to see a lot of pushback from refiners. We are already starting to see it as far as the lightning of the general stream going up to Cushing.

The refiners don't want any lighter. So, it's an integral part of the strategy and a piece of everything we've been building."

Delaware basin produces 56% oil that is greater than API gravity 50 plus according to Woodmac.

Every week I see announcements to export US oil. Here are some.

https://www.businesswire.com/news/home/20171206005367/en/Wolf-Midstream-Partners-Plans-New-Permian-Basin#.Wik_YewJKuc.twitter
https://www.upi.com/More-US-oil-export-capacity-in-the-works/8051512568297/?spt=su&or=btn_tw
https://www.businesswire.com/news/home/20171222005375/en/EPIC-Announces-Approval-New-Build-730-mile-Permian

HuntingtonBeach, says: 12/24/2017 at 2:34 am
"OPINION-
Don't be taken in by the surge in oil prices

But oil prices have continued to be volatile. They went down from $114 per barrel in June 2014 to $26 per barrel in early 2016 and moved gradually upward to touch $64 per barrel in late November 2017. On the other hand, economic forecasts expect oil prices to continue to rise to a range of between $70 to $80 by the end of the first quarter of 2018. Futurists in the field base their expectations on the following indicators:

1) The cooperative program and understanding between the Kingdom and Russia, the two largest producers in the market. 2) The continuation of efforts to reduce oil surplus in the market 3) The agreement among OPEC members and some non-members to continue their programs of production reduction up to the end of 2018. 8. Last but not least, we need to develop a culture of saving to increase our capital buildup for the economy. This is not an easy task, and requires a total rehabilitation of our consuming behavior."

http://www.saudigazette.com.sa/article/524652/Opinion/OP-ED/Dont-be-taken-in-by-the-surge-in-oil-prices

Heinrich Leopold, says: 12/27/2017 at 10:04 am
Interesting development for natgas: Iroquois zone 2 spot prices just shot up to over 32 USD per mcf. This is nearly 1000% up from last month. As much depends now on the future weather, it shows how volatile the US gas market can be – despite massive efforts towards more supply.

As the industry has completely shifted the supply from the South to the Northeast, hurricanes are no more a threat to supply, yet freeze offs become now a major issue. Previously just the supply of the Rockies has been hampered by freeze offs. As this concerned just 10% of US total production, this has never been an issue for gas supply. However, as currently 70% of supply comes from the Northeast and the Rockies, freeze off could lead to serious supply disruptions, if the freeze continues.

The next weeks could now be very interesting.

coffeeguyzz, says: 12/27/2017 at 11:07 am
Not freeze offs, simply lack of pipeline capacity in the face of unprecedented demand. When the receipt figures from the various transfer points are published, they should show 100% capacity utilization.

At this posting, New England is burning oil for 17% of their electricity generation. Wholesale spot price for electricity is $230/Mwh, about 10 times regular pricing. Later this afternoon, demand is expected to increase more.

The supply is there in the pipelines, Mr. Leopold, there just isn't enough of them to satisfy demand during this cold spell.

Heinrich Leopold, says: 12/27/2017 at 11:47 am
Coffee,

I was expecting your reply. Thanks for your opinion.

Nevertheless, there has been huge infrastructure spending over the last years. The pipelines should be already in place.

However, freeze offs are not an issue just yet. If the gas wells freeze off later in the week (temperatures are going to zero down until Cincinnati) , the shortage of supply may be really a concern. There is just one week left and we know it.

This is one of the structural weaknesses of Shale gas:you probably do not have it when you need it the most.

coffeeguyzz, says: 12/27/2017 at 12:35 pm
Mr. Leopold

The pipelines that have been completed greatly favor delivery west to southwest from the Appalachian Basin.

The Atlantic Sunrise is being built that will deliver into the NYC area via a hookup with Transco, I believe.

Deliveries to the north, that is New York State and New England have been virtually nil.

Yes, the storage aspects of all gas products is a challenge, and – as you mentioned – the coming cold days will highlight the vulnerabilities of the situation, sadly, at great expense to many.

[Jan 03, 2018] Quick rump up of oil production is impossible. There will no the second shale revolution in the current range of oil prices, or may be ever

Jan 03, 2018 | peakoilbarrel.com

says: 12/27/2017 at 8:37 pm

So, is there a big wall of US shale oil coming from Texas that will dash my "happy times" of $55-65 WTI?

So thankful to get up to this level after 36 months of headaches about the oil price. Seems the only thing that could screw it up is US shale, which apparently is set to explode in 2018.

I saw someone touting Halcon stock today on SA. Making a big deal about having little debt. Too bad they flushed about $3 billion of debt when they went BK. I'm sure Mr Wilson (CEO) is, "still getting his" so to speak.

My brother is griping about why he hasn't been able to draw a salary for the last three years, heck all the shalie management has! Have to remind him we aren't in the shale fantasy land. He knows, he's just blowing like I'm prone to do.

If I don't post anymore this year, happy New Year everyone!! Things are looking up, just hope the shale industry doesn't torch it again!

Heinrich Leopold x Ignored says: 12/30/2017 at 8:12 am
Shallow sand,

IN my view you will be sleeping well in the next year. Shale increases mostly the supply of condensate and light distillates, which does little to cover the worldwide shortage of middle distillates. So, the price of 'real' oil will very likely increase over the next future whereas the prices of light distillates (propane, butane, pentane , LPG, NGPL composite .. ) are very likely depressed. Light distillates can substitute middle distillates to some degree, yet the potential is limited. So, in that sense I wish you a happy and successful New Year.

Energy News x Ignored says: 12/28/2017 at 4:36 am
INEOS Forties Pipeline System Media Update – 28/12/2017
All restrictions on the flow of oil and gas from platforms feeding into the pipeline system have been fully lifted. All customers and control rooms have now been informed.
https://www.ineos.com/businesses/ineos-fps/news/ineos-forties-pipeline-system-media-update/
https://uk.reuters.com/article/forties-oil/update-1-ineos-sees-forties-oil-flows-back-to-normal-around-new-year-idUKL8N1OS0VU
Stephen Hren x Ignored says: 12/28/2017 at 12:59 pm
https://mobile.nytimes.com/2017/12/27/world/americas/venezuela-oil-pdvsa.html?action=click&module=Top%20Stories&pgtype=Homepage

Oil production in Venezuela appears to be in free fall.

Mushalik x Ignored says: 12/28/2017 at 4:37 am
Shale gas revolution did not last long for BHP – the Fayetteville story
http://crudeoilpeak.info/shale-gas-revolution-did-not-last-long-for-bhp-the-fayetteville-story
Heinrich Leopold x Ignored says: 12/30/2017 at 6:37 am
There is no question, Shale is a disaster for investors. Nevertheless, it is a blessing for Wall Street as high oil and gas production ensures dollar stability and a growing bond bubble. The only question is when will investors will wake up. As it is perfectly OK for small companies to sacrifice themselves and burn the cash of investors through, big companies are less willing to do so. Who is next? XOM, Statoil , APA ?
Energy News x Ignored says: 12/28/2017 at 7:31 am
The ratio of commodities / S&P500 is at a record low, S&P_GSCI / S&P_500
The S&P GSCI currently comprises 24 commodities from all commodity sectors – energy products, industrial metals, agricultural products, livestock products and precious metals.
Bloomberg chart on Twitter: https://pbs.twimg.com/media/DSCfWj6W4AA7xyW.jpg
Dennis Coyne x Ignored says: 12/28/2017 at 7:33 am
https://www.bloomberg.com/news/articles/2017-12-27/all-that-new-shale-oil-may-not-be-enough-as-big-discoveries-drop

Discoveries of new reserves this year were the fewest on record and replaced just 11 percent of what was produced, according to a Dec. 21 report by consultant Rystad Energy. While shale wells are creating a glut now, without more investment in bigger, conventional supply, the world may see output deficits as soon as 2019, according to Canadian producer Suncor Energy Inc.

George Kaplan x Ignored says: 12/28/2017 at 9:39 am
Are we not now near enough to 2019 to say that there just isn't time to bring major new conventional projects on-line before mid to late 2019? The only offshore projects that could be approved and developed earlier than that would be single well tie backs using the wildcat/appraisal well as a producer, probably no more than 5 to 10 kbpd and in immediate (and likely rapid) decline, and would be dependent on there being spare processing capacity on a nearby hub (i.e. production the new production would be mitigating decline not adding output).
George Kaplan x Ignored says: 12/29/2017 at 5:00 am
But the issue isn't lack of discoveries this year, as the headline implies, it's the lack of recent FIDs which might be in part because of the drop off in discoveries in 2012 to 2015 (for all oil, but particularly easily developed oil), coupled with high debt loads, and prices that aren't high enough (or at least not yet for long enough) to allow development of what resources there are available to the IOCs. As prices rise and IOCs become more confident and are able to pay dividends as well as fund longer term developments then the really low discoveries in 2015 to 2017 might give them far fewer options than people expect (noteworthy is that any discoveries in that period that have been attractive, like Liza, have been immediately fast-tracked, so there really isn't much of a backlog of attractive projects at all).
Dennis Coyne x Ignored says: 12/30/2017 at 7:37 am
Hi George,

Headlines are almost always not quite right.

I was basing my comment on what the article said. Many of the companies are aware that discoveries have been low and not many projects will be coming online soon.

George Kaplan x Ignored says: 12/28/2017 at 9:50 am
Mexico may be heading for a period of accelerated decline (above 10%). Their two onshore regions and the southern marine region are falling at 15 to 20%, and the largest producing region (Northern Marine, which includes KMZ and Cantarell) looks like it may be starting to accelerate. The non KMZ nd Cantarell fields had been the only ones increasing, but look to now be in decline or at least on plateau, and by PEMEX forecast KMZ should be off plateau in the next couple of months or so. Mexico has now stopped exporting light oil (which mostly comes from the three smaller regions, with KMZ and Cantarell producing heavy and medium heavy) and will presumably be looking for increasing imports of it, which is probably good for the Texas LTO producers. Operating rigs have recently been declining fast.

(Apologies if this has already been posted)

George Kaplan x Ignored says: 12/28/2017 at 9:53 am
ps – for numbers: last month C&C was down 35 kbpd, and overall 210 kbpd y-o-y (almost exactly 10%).
Lightsout x Ignored says: 12/28/2017 at 10:11 am
Hi George

Do you have any information on how the ramp up of production is going for the Western isles project following first oil on 15th November.
On a side it looks like the Weald basin myth is starting to unravel.

George Kaplan x Ignored says: 12/28/2017 at 11:27 am
Not yet -first numbers for December start-up should be in March, it's a question of limiting their losses at current prices I think. All the wells were predrilled so ramp up should be fast but I wouldn't be surprised if they get pretty low reliability in the first 6 to 12 months given all the construction problems they had. Also interesting that Catcher started up on time, against most expectations. Wonder if Clair Ridge will make it this year – do you know if there are big tax benefits from depreciation for starting within a given calendar year in the UK (or might be financial yar end is more important)?
George Kaplan x Ignored says: 12/29/2017 at 10:19 am
This shows how fast the SW marine region fields are now falling (a lot of small fields were added 2007 to 2015 and are now in steep decline).

There seems no reason this and the two land regions shouldn't continue to fall at current rates (they may even accelerate given how the rig count has dropped), and if KMZ follows the predicted PEMEX curve Mexico could drop around 350 kbpd this year, possibly the same in 2019 in decline (but with 60 kbpd additions due from Abkatun), but maybe approaching as low as 1000 kbpd by mid 2020, which is probably the earliest ENI will be able to get their shallow water field on line if they fast track it.

Greenbub x Ignored says: 12/30/2017 at 1:26 am
thanks, George
Energy News x Ignored says: 12/28/2017 at 1:04 pm
Dallas Fed Energy Survey – December 28, 2017 – At what West Texas Intermediate (WTI) crude oil price would you expect the U.S. oil rig count to substantially increase?
Above $60, chart on Twitter: https://pbs.twimg.com/media/DSJdl-zX0AAUwD4.jpg
https://www.dallasfed.org/research/surveys/des/2017/1704.aspx#tab-questions
Frugal x Ignored says: 12/28/2017 at 11:11 pm
$16B Mackenzie pipeline project cancelled

CALGARY -- Imperial Oil says its much-delayed $16.1-billion project to build a natural gas pipeline across the Northwest Territories from the coast of the Beaufort Sea to northern Alberta has finally been cancelled.

George Kaplan x Ignored says: 12/29/2017 at 6:50 am
IRAQ FORMS PANEL TO OPERATE MAJNOON FIELD

Originally the plan was to increase Majnoon to over 1 mmbpd. That has now been downgraded to 400 kbpd (from current 220). Shell and Petronas have pulled out and a "government panel" will oversee the development. I'd bet on continued decline rather than any increase, and potential for significant reservoir damage along the way.

Similarly for Nasirya oil field – intend is to increase from 90 kbpd to 200, using a local oil company that also sounds like it has a lot of government input.

To me none of this ever declining brownfield development with IOCs pulling out, and promises of more exploration "coming" is compatible with the claims for their discovered resources (developed or not), or any chance of a quick ramp up if oil prices start to inflate rapidly after 2018.

http://www.ogj.com/articles/2017/12/iraq-forms-panel-to-operate-majnoon-field.html

Heinrich Leopold x Ignored says: 12/29/2017 at 9:28 am
So far, the experiences about freeze off Shale wells are limited. Will glycol also work for Shale wells when there is much water involved? I think nobody knows yet how big the impact of the cold will be on Shale wells. However, it looks like shorts are getting hyper-nervous.
Ian H x Ignored says: 12/29/2017 at 7:25 am
Oil and Gas Producers Find Frac Hits in Shale Wells a Major Challenge
In North America's most active shale fields, the drilling and hydraulic fracturing of new wells is directly placing older adjacent wells at risk of suffering a premature decline in oil and gas production.

The underlying issue has been coined as a "frac hit." And though they have long been a known side effect of hydraulic fracturing, frac hits have never mattered or occurred as much as they have recently, according to several shale experts who say the main culprit is infill drilling.

"It is a very common occurrence -- almost to the point where it is a routinely expected part of the operations," said Bob Barree, an industry consultant and president of Colorado-based petroleum engineering firm Barree & Associates.

He added that frac hits are also an expensive problem that involve costly downtime to prepare for, remediation efforts after the fact, and lost productivity in the older wells on a pad site.

A frac hit is typically described as an interwell communication event where an offset well, often termed a parent well in this setting, is affected by the pumping of a hydraulic fracturing treatment in a new well, called the child well. As the name suggests, frac hits can be a violent affair as they are known to be strong enough to damage production tubing, casing, and even wellheads
https://www.spe.org/en/jpt/jpt-article-detail/?art=2819

FWIW The first SPE paper referenced discusses mediating the negative nature of frac hits. It discusses the refrakking of a six well pad drilled in 2010 in the middle Bakken and three forks, North Fork Field, McKenzie. The six wells have a cumulative oil production to date of 3.6mmboe and 7.7bcf.
Since I am not in the field, much of the paper went over my head, I merely skimmed through it, however it appears that well communication was observed for horizontal and vertical spacing of 1000 feet.

[Dec 25, 2017] The Petro-Yuan Bombshell and Its Relation to the New US Security Doctrine

Notable quotes:
"... The new 55-page "America First" National Security Strategy (NSS), drafted over the course of 2017, defines Russia and China as "revisionist" powers, "rivals," and for all practical purposes strategic competitors of the United States. ..."
"... The NSS stops short of defining Russia and China as enemies, allowing for an "attempt to build a great partnership with those and other countries." Still, Beijing qualified it as "reckless" and "irrational." The Kremlin noted its "imperialist character" and "disregard for a multipolar world." Iran, predictably, is described by the NSS as "the world's most significant state sponsor of terrorism." ..."
Dec 25, 2017 | russia-insider.com

"Russia and China ... have concluded that pumping the US military budget by buying US bonds ... is an unsustainable proposition ..." Pepe Escobar 12,072 198

The new 55-page "America First" National Security Strategy (NSS), drafted over the course of 2017, defines Russia and China as "revisionist" powers, "rivals," and for all practical purposes strategic competitors of the United States.

The NSS stops short of defining Russia and China as enemies, allowing for an "attempt to build a great partnership with those and other countries." Still, Beijing qualified it as "reckless" and "irrational." The Kremlin noted its "imperialist character" and "disregard for a multipolar world." Iran, predictably, is described by the NSS as "the world's most significant state sponsor of terrorism."

Russia, China and Iran happen to be the three key movers and shakers in the ongoing geopolitical and geo-economic process of Eurasia integration.

The NSS can certainly be regarded as a response to what happened at the BRICS summit in Xiamen last September. Then, Russian President Vladimir Putin insisted on "the BRIC countries' concerns over the unfairness of the global financial and economic architecture which does not give due regard to the growing weight of the emerging economies," and stressed the need to "overcome the excessive domination of a limited number of reserve currencies."

That was a clear reference to the US dollar, which accounts for nearly two-thirds of total reserve currency around the world and remains the benchmark determining the price of energy and strategic raw materials.

And that brings us to the unnamed secret at the heart of the NSS; the Russia-China "threat" to the US dollar.

The CIPS/SWIFT face-off

The website of the China Foreign Exchange Trade System (CFETS) recently announced the establishment of a yuan-ruble payment system, hinting that similar systems regarding other currencies participating in the New Silk Roads, a.k.a. Belt and Road Initiative (BRI) will also be in place in the near future.

Crucially, this is not about reducing currency risk; after all Russia and China have increasingly traded bilaterally in their own currencies since the 2014 US-imposed sanctions on Russia. This is about the implementation of a huge, new alternative reserve currency zone, bypassing the US dollar.

The decision follows the establishment by Beijing, in October 2015, of the China International Payments System (CIPS). CIPS has a cooperation agreement with the private, Belgium-based SWIFT international bank clearing system, through which virtually every global transaction must transit.

What matters, in this case, is that Beijing – as well as Moscow – clearly read the writing on the wall when, in 2012, Washington applied pressure on SWIFT; blocked international clearing for every Iranian bank; and froze $100 billion in Iranian assets overseas as well as Tehran's potential to export oil. In the event that Washington might decide to slap sanctions on China, bank clearing though CIPS works as a de facto sanctions-evading mechanism.

Last March, Russia's central bank opened its first office in Beijing. Moscow is launching its first $1 billion yuan-denominated government bond sale. Moscow has made it very clear it is committed to a long-term strategy to stop using the US dollar as their primary currency in global trade, moving alongside Beijing towards what could be dubbed a post-Bretton Woods exchange system.

Gold is essential in this strategy. Russia, China, India, Brazil & South Africa are all either large producers or consumers of gold – or both. Following what has been extensively discussed in their summits since the early 2010s, the BRICS countries are bound to focus on trading physical gold .

Markets such as COMEX actually trade derivatives on gold, and are backed by an insignificant amount of physical gold. Major BRICS gold producers – especially the Russia-China partnership – plan to be able to exercise extra influence in setting up global gold prices.

The ultimate politically charged dossier

Intractable questions referring to the US dollar as the top reserve currency have been discussed at the highest levels of JP Morgan for at least five years now. There cannot be a more politically charged dossier. The NSS duly sidestepped it.

The current state of play is still all about the petrodollar system; since last year, what used to be a key, "secret" informal deal between the US and the House of Saud, is firmly in the public domain .

Even warriors in the Hindu Kush may now be aware of how oil and virtually all commodities must be traded in US dollars, and how these petrodollars are recycled into US Treasuries. Through this mechanism, Washington has accumulated an astonishing $20 trillion in debt – and counting.

Vast populations all across MENA (Middle East-Northern Africa) also learned what happened when Iraq's Saddam Hussein decided to sell oil in euros, or when Muammar Gaddafi planned to issue a pan-African gold dinar.

But now it's China who's entering the fray, following through on plans set up way back in 2012. And the name of the game is oil-futures trading priced in yuan, with the yuan fully convertible into gold on the Shanghai and Hong Kong foreign exchange markets.

The Shanghai Futures Exchange and its subsidiary, the Shanghai International Energy Exchange (INE) have already run four production environment tests for crude oil futures. Operations were supposed to start at the end of 2017, but even if they start sometime in early 2018, the fundamentals are clear: this triple win (oil/yuan/gold) completely bypasses the US dollar. The era of the petro-yuan is at hand.

Of course, there are questions on how Beijing will technically manage to set up a rival mark to Brent and WTI, or whether China's capital controls will influence it. Beijing has been quite discreet on the triple win; the petro-yuan was not even mentioned in National Development and Reform Commission documents following the 19th CCP Congress last October.

What's certain is that the BRICS countries supported the petro-yuan move at their summit in Xiamen, as diplomats confirmed to Asia Times . Venezuela is also on board. It's crucial to remember that Russia is number two and Venezuela is number seven among the world's Top Ten oil producers. Considering the pull of China's economy, they may soon be joined by other producers.

Yao Wei, chief China economist at Societe Generale in Paris, goes straight to the point, remarking how "this contract has the potential to greatly help China's push for yuan internationalization."

The hidden riches of "belt" and "road"

An extensive report by DBS in Singapore hits most of the right notes linking the internationalization of the yuan with the expansion of BRI.

In 2018, six major BRI projects will be on overdrive; the Jakarta-Bandung high-speed railway, the China-Laos railway, the Addis Ababa-Djibouti railway, the Hungary-Serbia railway, the Melaka Gateway project in Malaysia, and the upgrading of Gwadar port in Pakistan.

HSBC estimates that BRI as a whole will generate no less than an additional, game-changing $2.5 trillion worth of new trade a year.

It's important to keep in mind that the "belt" in BRI should be seen as a series of corridors connecting Eastern China with oil/gas-rich regions in Central Asia and the Middle East, while the "roads" soon to be plied by high-speed rail traverse regions filled with – what else - un-mined gold.

A key determinant of the future of the petro-yuan is what the House of Saud will do about it. Should Crown Prince – and inevitable future king – MBS opt to follow Russia's lead, to dub it as a paradigm shift would be the understatement of the century.

Yuan-denominated gold contracts will be traded not only in Shanghai and Hong Kong but also in Dubai. Saudi Arabia is also considering to issue so-called Panda bonds, after the Emirate of Sharjah is set to take the lead in the Middle East for Chinese interbank bonds.

Of course, the prelude to D-Day will be when the House of Saud officially announces it accepts yuan for at least part of its exports to China.

A follower of the Austrian school of economics correctly asserts that for oil-producing nations, higher oil price in US dollars is not as important as market share: "They are increasingly able to choose in which currencies they want to trade."

What's clear is that the House of Saud simply cannot alienate China as one of its top customers; it's Beijing who will dictate future terms. That may include extra pressure for Chinese participation in Aramco's IPO. In parallel, Washington would see Riyadh embracing the petro-yuan as the ultimate red line.

An independent European report points to what may be the Chinese trump card: "an authorization to issue treasury bills in yuan by Saudi Arabia," the creation of a Saudi investment fund, and the acquisition of a 5% share of Aramco.

Nations under US sanctions, such as Russia, Iran and Venezuela, will be among the first to embrace the petro-yuan. Smaller producers such as Angola and Nigeria are already selling oil/gas to China in yuan.

And if you don't export oil but are part of BRI, such as Pakistan, the least you can do is replace the US dollar in bilateral trade, as Interior Minister Ahsan Iqbal is currently evaluating.

A key feature of the geoeconomic heart of the world moving from the West towards Asia is that by the start of the next decade the petro-yuan and trade bypassing the US dollar will be certified facts on the ground across Eurasia.

The NSS for its part promises to preserve "peace through strength." As Washington currently deploys no less than 291,000 troops in 183 countries and has sent Special Ops to no less than 149 nations in 2017 alone, it's hard to argue the US is at "peace" – especially when the NSS seeks to channel even more resources to the industrial-military complex.

"Revisionist" Russia and China have committed an unpardonable sin; they have concluded that pumping the US military budget by buying US bonds that allow the US Treasury to finance a multi-trillion dollar deficit without raising interest rates is an unsustainable proposition for the Global South. Their "threat" – under the framework of BRICS as well as the SCO, which includes prospective members Iran and Turkey – is to increasingly settle bilateral and multilateral trade bypassing the US dollar.

It ain't over till the fat (golden) lady sings. When the beginning of the end of the petrodollar system – established by Kissinger in tandem with the House of Saud way back in 1974 – becomes a fact on the ground, all eyes will be focused on the NSS counterpunch.

John C Carleton , December 23, 2017 10:11 AM

China and Russia been dumping US bonds for a good while.
They just have to do it slowly, so they can get as much cash, to buy stolen discounted gold with from the British Anglo Zionist Empire, as possible without tanking the market.

The Federal reserve, prints currency, "loans" it to USA corporation, at USURY rates, gives this currency to other "sovereign" puppet states such as Belgium, who then act like they are buying the bonds for themselves.

It is a scam. Those who trust the USA/British Empire, will wind up with worthless paper, while the Usury bankers, their bosses, China and Russia, will wind up with gold.
All you USA worshipers should understand something.
He who has the gold, makes the rules.
Guess the western sheep are going to be the bitc#s of China and Russia for the next century or so.

Tommy Jensen John C Carleton , December 23, 2017 11:26 AM

I believe America will win. Therefore I sold my gold and bought dollares. The bad guys always win.............LOL.

Cliff Aleksandar Tomić , December 23, 2017 6:20 PM

" Treason doth never prosper
What be the reason?
For when it prosper,
None dare call it treason" -William Shakespere

Mychal Arnold Tommy Jensen , December 24, 2017 4:49 AM

Hey Tim or whatever. Yep you always win huh? Vietnam, Afghanistan, Libya, Syria, Sudan, .ring any bells I could go on but you have been embarrassed enough with your msm drivel. Always the weak and defenseless you lily livered chicken's. You better avoid war with the two most powerful countries in the world. Can you guess? and neither are you pedos and babykillers. You make me sick and disgusted. Voted again the most threat to world peace. Ussa, ussa, ussa. Proud are ya all. The time is coming where you reap what you have sown and on that day I shall dance my happy dance that you feel what you and your evil countrymen have wrought in the world in the name of democracy and freedom hope it is on cable! You rotten to the core people!

Richard Burton Mychal Arnold , December 24, 2017 11:11 AM

Here here, the US Holocaust, countless millions killed all over the globe as the USA plunders, wars and props-up evil, despot regimes. Bin Laden, Taleban, just two of the US former best allies, how long can a 200 year old, degenerate country like the USA keep sponging-off/ using exploiting the worlds billions to enrich itself? USA... infested with drugs, crime, rust belts, slums, homeless, street bums VAST inequality.

zorbatheturk Richard Burton , December 25, 2017 2:11 AM

It's still a million miles better than a craphole like RuSSia!

Mychal Arnold Richard Burton , December 24, 2017 12:01 PM

Yep! As Rome burns and eaten from within!

Le Ruse Tommy Jensen , December 25, 2017 2:32 AM

Yes Tommy.. Good move !!
Buy US$ !! US$ is backed by US government !! Gold is not backed by anything !!

Peter Jennings John C Carleton , December 23, 2017 11:09 AM

Remember the Belgium Bulge a few years back? the process must also work in reverse.

wilmers13 John C Carleton , December 24, 2017 12:43 AM

You cannot buy gold from the Empire, have you not read the book Gold Warriors.

Security is a propaganda term now, stands for war preparations.

John C Carleton wilmers13 , December 24, 2017 8:39 AM

The Empire sells other peoples gold to China and Russia everyday, having stole and sold Americans gold long since.
Works like this.
The not Federal, and no Reserve(s) dollar, is worth about 1 cent, of a 1913, pre Usury criminal banker scam "dollar".
That 1 % is swiftly loosing it's value.
To keep the American people, from realizing, the USA, is using them for cattle, stealing their labor, through planned hyperinflation,:
Israhell/Washington crime cabal, dumps massive amounts of "paper gold and silver", on the market, each and every damn day the rigged market is open, in order to artificially keep the price of gold and silver way the hell below where it should be priced in federal reserve currency.
This hide s the true inflation rate of the not federal and no reserves private Usury Banker Currency, falsely identified as the "US Dollar".
Israhell/Washington DC, does not have the physical gold and silver to cover what they sell.
It is a criminal scam.
Those who buy this paper gold and silver, small guy, will never be given physical for the paper.
Small guy, traded green paper for white paper. Either will be worthless soon.
Sovereigns, can buy enough of it, to demand delivery of physical.
The day the British Anglo zionist Empire defaults delivering physical gold, to China and Russia, for the paper gold, is the day the curtain comes down on the illusion of the USA financial empire.
Washington DC knows this, China knows this, Russia knows this.
In order to buy time, Israhell/Washington DC, has stolen, sold at hugely discounted prices, to keep the dollar scam alive, just a while longer, all the gold they were supposably storing for safe keeping, of other sovereigns.
They have stolen privately held gold, which was stored in commercial banks and vaults for "safe keeping.
They stole the gold which went missing from the basement vaults in the world trade centers, before they set off the demolition charges.
Then they sold it.
They stole and sold Ukraines gold.
They stole and sold, Libya's gold.
They had intended to have already stole and sold Syria's gold.
They are fast running out of other peoples gold, to deliver to China and Russia at huge discounts, to prop up the scam, just a while longer.
The day there is no more stolen gold to deliver to China and Russia, the music stops, all the chairs are removed, this game of musical chars is over. Starving Americans will eat their pets, rats, and each other.
Thanks Israhell!
Thanks Washington DC/USA.

Trauma2000 John C Carleton , December 24, 2017 1:11 PM

I want more information on this. Isabella said a similar thing. I want to know more... So the U$T's that are in actual fact worthless, Russia is using to buy gold at a huge discount to what should be the true market rate; and then Russia is storing this. I understand the storing thing. I'm a straight forward kind-of-a-guy. But its the U.$.T.'s to Physical Gold I can't get my head around.

Why is the U.$. honouring what is a knife-to-its-throat deal that is very soon going to result in the collapse of the U.$. dollar? And according to this forum fully 20% of Russia's reserves are still held in fiat U.$.T's..?

Why would Russia hold such a large percentage if its reserves in what will be worthless U.$.T.'s when it knows that the U.$. is going to try and scam Russia and default..?

I want to know more.

John C Carleton Trauma2000 , December 24, 2017 2:02 PM

Picture a crime family.
Some branches are pure evil.
Some not so evil.
Some are very open about their evil.
Some are sneaky hypocrites who use the news media to white wash their crimes, and vilify their victims.

BUT! And this is one huge BUT, they all know too much on each other to start talking too damn much.
Also, their criminal Empire, (shearing/raping/murdering the sheep for fun and profit) is all tied together. Common banks, common/interchangeable fiat currencies, Usury debt practices.
Take part of it down, the other part will suffer great losses, if not go down with them.
Russia, and China, has gotten tired of the British Anglo zionist Empire lording it over them and treating them like red headed step children.
Russia and China, have not seen the Light, are not operating for the sake of their people, but to keep themselves in power, by returning to the people, some of the wealth they stole from the people to begin with
British Anglo zionist pig fkers Empire, is too greedy to return any of the stolen loot.
The BAzE, have a let them eat grass like the animals they are elitist attitude.
China and Russia, are trying to position themselves to come out on top when the economic reset happens.
They both were FORCED, by Empire, to both buy and hold, huge stashes of both Federal reserve fiat currency, and bonds, to do business in the rest of the world.
The USA military is the enforcement arm for the BAzE.
USA military is corrupted, demoralized, veterans fked over royally, weapons do not work as their purpose, was to steal the labor of the American working man and women, not to produce weapons which worked as advertised.
Russia and China, will continue to buy gold, buy time, to get in a better position to give Uncle Sugar's pedophilic ass both middle fingers.
It is in their interest to do so.
The owners of the British Anglo zionist Empire, have their personal vaults filled with stolen gold.
The politicians you see, the Rothschild's even, are window dressing to hide the true owners, and to protect the true owners asses during slave revolts, by offering, kings, queens, politicians, bankers, heads to get chopped.
These owners have no loyalty to any other person, or country in the world. They see themselves as the chess players, humanity as the pieces, the earth as their personal chess board.
They do not give a FF about America, the American people, or the hand puppet political whore of DC/USA.
The hand puppet whores, are too stupid, and corrupt anyway, to understand whats coming, or to have the power, intelligence, or balls to stop it
There are all kinds of fun and wealth created, for deviant sick bastards, in creating, and tearing down empires.
Besides, all the death and destruction gets them sexually excited
Takes years of study, experience with, and intuition, to begin to understand their evil, and the way the world really works.
Whether someone started years back, educating themselves, preparing for whats coming, will determine if they will enter the kill zone as a sheep or not.
The only protection sheep have, is the hope, the jackals will rape and murder some other sheep, not them. That is why they will not stand up or speak up.
That is why they violently attack anyone wants to leave the herd mentality, everyone else forced to be in the same sheep state as them,
They are afraid the jackal will notice them individually.
Herd numbers and hiding in the herd, are the cowards only protection

Bd-prince Pramanik Trauma2000 , December 24, 2017 8:28 PM

your answer is in your question!

Mychal Arnold John C Carleton , December 24, 2017 12:41 PM

John I firmly believe they will get what is coming to them just a matter of time nothing endures forever. But mostly not in our life time, though!

John C Carleton Mychal Arnold , December 24, 2017 12:46 PM

Any day now, any week, not very many months, can the scam go on.
In other words, Americans might want to bone up on delicious recipes for Rats, cats, and their neighbors.

Trauma2000 John C Carleton , December 23, 2017 3:15 PM

re: "China and Russia been dumping US bonds for a good while.
They just have to do it slowly, so they can get as much cash, to buy stolen discounted gold with from the British Anglo Zionist Empire, as possible without tanking the market."

I have been reading this for a while. But I've yet to see it in practice. Rosneft is still accepting U.$. dollars for oil/gas transactions, the most recent of which I believe was the gas shipment from St Petersburg to Poland..? https://tomluongo.me/2017/1...

I need to read more on this subject.

BobValdez Trauma2000 , December 23, 2017 3:48 PM

Russia acceps dollars for oil, and uses them to buy physical gold. No need to hold useless dollars, just convert them to gold.

Paw Trauma2000 , December 23, 2017 9:48 PM

What you buy by petrodollars ?
Saudi .Arabia buys arms. But SA has got millions of unemployed people , because they studied Islamic religion , wahabist fanaticism ... Further SA employs millions of workers from other countries. And owns US assets in value over 1 trillion dollars. So what else to buy , where to spend their petrodollars? Only get billions dollars arms ,that are in couple years useless...Population hate the fully corrupt royal family in numbers approximately 40 thousands princess as they have to get about 500 thousands yearly salaries...For doing nothing , only to spend it everywhere...
Populations hate US presence in SA. Very much.

Richard Burton Paw , December 24, 2017 11:18 AM

But the Great Satan~USA adore such scum as the vile Crooked Saudi royal family, the snakehead USA ignore all their anti-democracy, anti- human rights their beheading, their evil ways, they worship money the US swine, its all they see and lap-up, plus they have Russia/ China /Iran to pick on and blame not their evil Saudi- swine arms buyers. View Hide

Isabella Jones Trauma2000 , December 24, 2017 11:54 AM

At the moment, because the US is illegally holding gold prices down using uncovered shorts on paper gold, and at the same time has used sanctions to devalue the rouble, Russia is producing oil at reduced - rouble - rates, selling it on the international market for U$, [artificially inflated] and buying massive amounts of cheap gold with the huge profits she is making.
Russia is singing all the way to the bank right now. The US backed itself into a corner on this one it cannot get out from - short of waging war on Russia !!!

Mychal Arnold Isabella Jones , December 24, 2017 12:32 PM

10% of GDP goes out where is the ussa 100 as are many others in the west. All western country have huge debts funny how that is or is it?

Tony B. Isabella Jones , December 24, 2017 11:31 PM

Why should anyone who is in love with gold be upset if someone is holding the price down? It should be a wonderful time to buy.
Russia is MINING gold, its own gold.

Isabella Jones Tony B. , December 25, 2017 5:41 AM

It is a great time to buy, if you have some spare cash to store, I agree. It's just a poor time if you need to realise your gold - you wont get the price for it you should. But indeed, it's a buyers market. Yes, Russia has a fair bit of gold "reserves" just sitting in the ground.

John C Carleton Trauma2000 , December 23, 2017 3:41 PM

There is the face the beast lets you see, and the real face of the beast.
You do not think the beast is stupid enough to show it's real face to all the sheep?
Really?
The sheep who are given personal attention in private places, see the real face of the beast, because it sexually excites the beast for the chosen sheep to die bleating in terror.

Nathan Dunning John C Carleton , December 23, 2017 4:36 PM

You're a tool for the left I bet you're American Liberal.

John C Carleton Nathan Dunning , December 24, 2017 9:44 AM

You are a sheep.
i Am a wolf.
You are lucky i lost my taste for mutton.
i prefer goat and jackal. View Hide

John C Carleton Nathan Dunning , December 24, 2017 9:49 AM

View Hide

Mychal Arnold Nathan Dunning , December 24, 2017 12:45 PM

Guess you just got here you friggin troll. You know nothing you shill. Go back to the basement mom has brought you dinner and cookies n milk and let the grown men talk, now that is a good boy bye. Sorry John I have disappointed my Mom said be nice but idiots bother me. Say hi to your lovely Mom for me and God bless. Merry Christmas everyone! Got your back as always.

alexwest11 John C Carleton , December 23, 2017 11:25 AM

John C Carleton • an hour ago China and Russia been dumping US bond
-------
no they don't! Russians reserves are about 100+ bln in UST

and WHOLLY 20 % OF RUSSIAN assets in Russian banks are kept mostly $$$ and some euro

John C Carleton alexwest11 , December 23, 2017 12:18 PM

Glad you are so confident in the currency, which has lost 99% of it's buying power since 1913, when the not Federal and no Reserve(s) was forced on the American people by the Usury Banker ancestors of the owners of the 'Fed", buying USA politicians.

Where did that 99% value go?
To the I%ters. You know, the pedophile elite.
They want it all, they are coming for the other 1% of the "dollar's" value.
They are coming for Social security, government pensions, private pensions, checking accounts, any thing with any value.

Oh by the way, just cause you are ignorant of how things work, don't mean they don't work that way, just means you are ignorant.
Have a wonderful day now!
See mother, i was nice to the bad person who was trying to run interference for pedophile baby rapers.

oncefiredbrass John C Carleton , December 24, 2017 2:44 AM

Good to see someone else Awake! A good portion of the Sheep are still sleeping, they think the National Debt and Zero Interest Rates mean nothing (in the Eurozone Interest is Negative). The US Dollar is soon to be Toilet Paper! Our Military can only overthrow small countries that defy the PetroDollar system. Now with so many doing it, John Carleton is right, the National Debt and Retirements Accounts are basically equal. That is why Obutthead set the start of grabbing them by creating the MYRA, the Theory is the Sheep are to stupid to manage their own retirement accounts, so the Government would grab them and put them in a so called safe investment called "Treasury's". Unfortunately the SS Trust Fund has been raided and is broke, but they do have drawers full of Treasuries. Trump has to immediately open public lands for Mining & Drilling! A normalization of Interest Rates to 5-6% would consume Government Revenues just to pay Interest on the Debt!

John C Carleton oncefiredbrass , December 24, 2017 8:22 AM

Will work like this, they may already be doing it quietly.
Take private pensions.
They are already in trouble, having stocks, bonds, commercial real estate holdings.
All of these will become worthless, or close to it.
Anything with value, currency, decimal dollars, will be taken by the Washington thieves, and worthless US bonds which will probably never be redeemed, or redeemed for chump change, will be put in their place by Washington, as they "protect" the retirement accounts.
Old people will eat rats, each other, dog and cats, die without medical care and meds which they can not afford.
Some will eat their pistols.
Not going to be nice or orderly.

Ron John C Carleton , December 23, 2017 11:11 PM

Dude, your postings are good and has an element of humor, thanks.

alexwest11 John C Carleton , December 23, 2017 11:25 PM

pedophile baby rapers.
------
people who associate everything w/ pedophile baby rapers.
USUALLY ARE pedophile baby rapers.!!!!!

YES, $ lost about 97 %, but rest of even worse

russian ruble of 1913 - worthless
german mark -worthless
japanese yen - worthless
etc!

John C Carleton alexwest11 , December 24, 2017 8:58 AM

Open mouth in ignorance, insert foot.
Don't worry about a foot in the other end, i will do that verbally with my Texas cowboy boot.

Dispora Pedophiles increasingly Use Israel as 'haven,' activist charge.'
https://www.timesofisrael.c...

'Advocacy group: Israel is a pedophiles paridise-Haaetz-Israel News'
https://www.haaretz.com/adv...

'Nachlaot, where pedophiles roam free,--the Times of Israel
https://www.haaretz.com/adv...

'Israel Found to be Safe For Pedophiles'
http://yournewswire.com/isr...

'Jewish Pedophiles Increasingly use Israel as a haven, activist charge'