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The U.S. Empire is in serious trouble as the collapse of its domestic shale gas production has begun. This is just another nail in a series of nails that have been driven into the U.S. Empire coffin.

Unfortunately, most investors don’t pay attention to what is taking place in the U.S. Energy Industry. Without energy, the U.S. economy would grind to a halt. All the trillions of Dollars in financial assets mean nothing without oil, natural gas or coal. Energy drives the economy and finance steers it. As I stated several times before, the financial industry is driving us over the cliff.

The Great U.S. Shale Gas Boom Is Likely Over For Good

Very few Americans noticed that the top four shale gas fields combined production peaked back in July 2015. Total shale gas production from the Barnett, Eagle Ford, Haynesville and Marcellus peaked at 27.9 billion cubic feet per day (Bcf/d) in July and fell to 26.7 Bcf/d by December 2015:

Top-U.S.-Shale-Gas-Fields-Production

As we can see from the chart, the Barnett and Haynesville peaked four years ago at the end of 2011. Here are the production profiles for each shale gas field:

Barnett-Shale-Gas-Field

According to the U.S. Energy Information Agency (EIA), the Barnett shale gas production peaked on November 2011 and is down 32% from its high. The Barnett produced a record 5 Bcf/d of shale gas in 2011 and is currently producing only 3.4 Bcf/d. Furthermore, the drilling rig count in the Barnett is down a stunning 84% in over the past year.

Haynesville-Shale-Gas-Field

The Haynesville was the second to peak on Jan 2012 at 7.2 Bcf/d per day and is currently producing 3.6 Bcf/d. This was a huge 50% decline from its peak. Not only is the drilling rig count in the Haynesville down 57% in a year, it fell another five rigs this past week. There are only 18 drilling rigs currently working in the Haynesville.

…click on the above link to read the rest of the article…

The U.S. Military on Peak Oil and Climate Change

January 26, 2016

The U.S. Military on Peak Oil and Climate Change

CNA. May 2009. Powering America’s Defense: Energy and the Risks to National Security. Center for Naval Analyses. 74 pages.

The destabilizing nature of increasingly scarce energy resources, the impacts of rising energy demand, and the impacts of climate change all are likely to increasingly drive military missions in this century.

GENERAL CHARLES F. “CHUCK” WALD, USAF (RET.) Former Deputy Commander, Headquarters U.S. European Command (USEUCOM); Chairman, CNA MAB

Retired Air Force General Chuck Wald wants to see major changes in how America produces and uses energy. He wants carbon emissions reduced to help stave off the destabilizing effects of climate change.

“We’ve always had to deal with unpredictable and diverse threats,” Gen. Wald said. “They’ve always been hard to judge, hard to gauge. Things that may seem innocuous become important. Things that seem small become big. Things that are far away can be felt close to home. Take the pirates off the African coast. To me, it’s surprising that pirates, today, would cause so much havoc. It’s a threat that comes out of nowhere, and it becomes a dangerous situation.

“I think climate change will give us more of these threats that come out of nowhere. It will be harder to predict them. A stable global climate is what shaped our civilizations. An unstable climate, which is what we’re creating now with global warming, will make for unstable civilizations. It will involve more surprises. It will involve more people needing to move or make huge changes in their lives. It pushes us into a period of nonlinear change. That is hugely destabilizing.

“Our hands are tied in many cases because we need something that others have. We need their oil.

He gives another reason for major changes in our energy policy: He wants to reduce the pressure on our military.

…click on the above link to read the rest of the article…

Peak Oil: Stark Realities

January 26, 2016

Peak Oil: Stark Realities

We face a choice going forward. There’s a kind of false dichotomy, a false choice that we’re being presented between policies on the left or policies on the right. It’s not left or right, it’s forward or backward. It’s a choice between investing in the future, leaving a better future for the next generation just like parents and grandparents did for us, or ignoring these hard choices and sentencing the next generation to a lower standard of living, to fewer opportunities, and a future that we could do better by. [1]

~ ~ ~

Like so much of our public discourses these days—notably surrounding the [sadly] too-comical Presidential races—truth, context, relevance, facts, integrity, and their related concepts have given way to the damaging urgency of adhering to ideology. Consequences are rendered irrelevant.

The discussions about climate change and the future of fossil fuel production have been among the noteworthy casualties of our polarized approach to governance and problem-solving. Like the other disputes light on facts in favor of extra doses of partisanship, in time the consequences will be anything but irrelevant. Recriminations, justifiable though they may be, will help none of us as we deal with the harsh realities we’ve ignored in favor of scoring points for our side.

Covering as many bases as possible, a predominantly fact-free article [except for the obligatory cherry-picking] in the irony-rich online American Thinker ventured first into the obligatory right-wing climate change doubting nonsense [citing one whole “Climate Statistics Prof” before veering off into a reference about “a well-loved and respected doctor” who was “expelled from an important medical center” because of “legitimate evidence-based concerns” regarding the center’s “decision to endorse the homosexual lifestyle,” then on to a “highly qualified scientist in California” fired because he “found scientific evidence that questioned a dogma of evolutionary thought,” and “so many other cases,” before readers were finally ushered into an equally fact-free but statement-rich denunciation of “settled science.”

…click on the above link to read the rest of the article…

OPEC, except for Iran, Has Peaked

January 20, 2016

OPEC, except for Iran, Has Peaked

The OPEC Monthly Oil Market Report is out. OPEC took a hit in December, down 205,000 barrels per day. After examining the past and present production numbers, I believe that OPEC, except Iran, has peaked. That is, the combined production from all the other OPEC nations, has peaked. And any additional production from Libya is likely to be in tiny increments that won’t make much difference in the big picture. Other OPEC nations may show a slight increase from their current level. But the combined production from all the other 11 OPEC nations, 12 if you count Indonesia, has peaked.

Of course there will be some small increases from the other 11 OPEC countries from time to time but overall, in 2016 and beyond, I believe it will OPEC will be from flat to down, with a greater chance of being down. That is we are at, or near, the peak right now. There might be a slight uptick of their combined production in the coming months but not enough to get excited abut.

All Data in the charts below is through December and is in thousand barrels per day.

OPEC 12

OPEC production, in the chart above does not include Indonesia. OPEC 12 was down 204,000 barrels per day.

Secondary Sources

OPEC uses secondary sources such as Platts and other agencies to report their production numbers. These numbers are pretty accurate and usually have only slight revisions month to month. The biggest changes were from Iraq, Nigeria and Saudi Arabia, all down.

…click on the above link to read the rest of the article…

2016: Oil Limits and the End of the Debt Supercycle

January 7, 2016

2016: Oil Limits and the End of the Debt Supercycle

What is ahead for 2016? Most people don’t realize how tightly the following are linked:

Growth in debt
Growth in the economy
Growth in cheap-to-extract energy supplies
Inflation in the cost of producing commodities
Growth in asset prices, such as the price of shares of stock and of farmland
Growth in wages of non-elite workers
Population growth

It looks to me as though this linkage is about to cause a very substantial disruption to the economy, as oil limits, as well as other energy limits, cause a rapid shift from the benevolent version of the economic supercycle to the portion of the economic supercycle reflecting contraction. Many people have talked about Peak Oil, the Limits to Growth, and the Debt Supercycle without realizing that the underlying problem is really the same–the fact the we are reaching the limits of a finite world.

There are actually a number of different kinds of limits to a finite world, all leading toward the rising cost of commodity production. I will discuss these in more detail later. In the past, the contraction phase of the supercycle seems to have been caused primarily by too high population relative to resources. This time, depleting fossil fuels–particularly oil–plays a major role. Other limits contributing to the end of the current debt supercycle include rising pollution and depletion of resources other than fossil fuels.

The problem of reaching limits in a finite world manifests itself in an unexpected way: slowing wage growth for non-elite workers. Lower wages mean that these workers become less able to afford the output of the system. These problems first lead to commodity oversupply and very low commodity prices. Eventually these problems lead to falling asset prices and widespread debt defaults.

…click on the above link to read the rest of the article…

Peak Oil? What Peak Oil?

January 4, 2016

Peak Oil? What Peak Oil?

It is unbelievable how many times I’ve heard people telling me “the US has become self-sufficient in oil production,” a group that includes some respectable members of the EU parliament. This is probably due to the confusion that the media have made on the fact that the US production has recently surpassed the US imports of oil. It is true, but that tells you nothing of how much oil the US still imports. And that is, actually, much more than it was at the time of the oil crisis and domestic consumption is on the increase (as you see in the figure above, from Art Berman’s blog)

This misperception on the actual dependence of the US on imports is probably one of the reasons that led to the recent lifting of the ban on US exports, that dated from the time of the great oil crisis of the 1970s

Art Berman clarifies the situation and wonders why “consumption has increased by one-third and imports have doubled but we no longer need to think strategically about oil supply because production is a little higher?” Here is an excerpt from his post.
____________________________________________
The Crude Oil Export Ban–What, Me Worry About Peak Oil?

Congress ended the U.S. crude oil export ban last week. There is apparently no longer a strategic reason to conserve oil because shale production has made American great again. At least, that’s narrative that reality-averse politicians and their bases prefer.

The 1975 Energy Policy and Conservation Act (EPCA) that banned crude oil export was the closest thing to an energy policy that the United States has ever had. The law was passed after the price of oil increased in one month (January 1974) from $21 to $51 per barrel (2015 dollars) because of the Arab Oil Embargo.
…click on the above link to read the rest of the article…

Doubting The Peak

January 1, 2016

Doubting The Peak

Dennis Coyne, an editor and frequent contributor to this blog, has suggested that we are not at peak oil. He argues that there is likely to be a dip in production starting next year but higher prices will cause things to turn around and we will surpass the 2015 peak by 2019. He commented a few days ago:

If we take some of the larger producers that have been increasing output and compare with the rest of the world(ROW) using EIA data from Jan 2004 to June 2015 (using the trailing 12 month average to focus on the trend) we see ROW decline has been relatively modest (1.4% based on the trailing 12 month output in June 2015). The eight increasing producing countries I have chosen are Brazil, Canada, China, Iran, Iraq, Russia, Saudi Arabia, and US and ROW=World minus the 8 countries just listed.

One possible scenario is that output is flat for the Big 8 in 2016 so that World C+C output falls by 485 kb/d in 2016 (average output for the year compared to the 2015 average). Over the 2009 to Jun 2015 period the Big 8 increased output at about 1300 kb/d per year, if we assume this rate slows to half the previous rate to a 650 kb/d per year increase (1.4%/year), then the peak is surpassed in 4 years in 2019. On a per country basis this would be a little more than a 80 kb/d increase in average annual output for each of these countries, though I doubt it would be divided equally.

So I have taken close look Dennis’s “Big 8” countries as well as “The Rest of the World”, and looked at their JODI data charts. The last data point is October 2015.

First, the rest of the world.

Dennis's Rest of the World

This is the world less Brazil, Canada, China, Iraq, Iran, Russia, Saudi Arabia and the USA. As a group they peaked in October 2004 and have been in decline ever since.

…click on the above link to read the rest of the article…

Where actually is that much-hyped global oil glut?

December 29, 2015

Where actually is that much-hyped global oil glut?

The media is full with news that there is a global oil glut.

There are now more than 3bn barrels of excess oil in the world
13/11/2015
http://www.telegraph.co.uk/finance/oilprices/11993687/There-are-now-more-than-3bn-barrels-of-excess-oil-in-the-world.html

Record oil glut stands at 3bn barrels
13/11/2015
http://www.bbc.com/news/business-34808487

It was parroted by the Australian public broadcaster ABC TV, using this (unsuitable) opportunity to take a swipe at peak oil:

Peak oil losing credibility as renewables shift accelerates
24/12/2015
“With the world awash with too much crude oil at the moment, the fear of an economic catastrophe when fossil fuels start running out is quietly fading in the background.”
http://www.abc.net.au/news/2015-12-24/peak-oil-losing-credibility-as-shift-to-renewables-accelerates/7052196

These stories go back to the IEA’s Monthly Oil Market Report (OMR), November 2015 which reads:

“Stockpiles of oil at a record 3 billion barrels are providing world markets with a degree of comfort. This massive cushion has inflated even as the global oil market adjusts to $50/bbl oil.”
https://www.iea.org/oilmarketreport/reports/2015/1115/

So how much is 3 bn barrels?

Let’s have a look at the statistics in the latest IEA OMR of December 2015. It’s only about OECD stocks, not the whole world.

Fig 1: OECD total oil stocks

https://www.iea.org/media/omrreports/fullissues/2015-12-11.pdf

We see that oil stocks in the period 2009 (light blue line) to 2013 (dotted line) varied between 2,6 bn and 2.8 bn barrels along with seasonal changes. The average stocks for this time of the year is 2.7 bn barrels. We can consider this range as the result of normal operating conditions allowing for accidents, refinery maintenance, transport disruptions, strikes etc but also demand side changes from a weak economy (2009) to high oil prices (2013).

Therefore, that magic glut is 3 bn – 2.7 bn = 300 million barrels or roughly 10% of the average. The long term trend of OECD stocks is shown in the next graph:

Fig 2: OECD stock changes since 1988

In 1988, average stocks were 2.5 bn barrels One can put many trend lines into Fig 2, depending on which period one selects and which exceptional events are excluded.

…click on the above link to read the rest of the article…

The Crude Oil Export Ban–What, Me Worry About Peak Oil?

December 28, 2015

The Crude Oil Export Ban–What, Me Worry About Peak Oil?

The EPCA not only banned the export of crude oil but also established the Strategic Petroleum Reserve. Both measures were intended to keep more oil at home in order to make the U.S. less dependent on imported oil. A 55 mile-per-hour national speed limit was established to force conservation, and the International Energy Agency (IEA) was founded to better monitor and predict global oil supply and demand trends.

Above all, the export ban acknowledged that declining domestic supply and increased imports had made the country vulnerable to economic disruption. Its repeal last week suggests that there is no longer any risk associated with dependence on foreign oil.

What, Me Worry?

The tight oil revolution has returned U.S. crude oil production almost to its 1970 peak of 10 million barrels per day (mmbpd) and imports have been falling for the last decade (Figure 1).

Figure 1. U.S. crude oil production, net imports and consumption. Source: EIA and Labyrinth Consulting Services, Inc.
(Click image to enlarge)

But today, the U.S. imports twice as much oil (97%) as in 1974! In 2015, the U.S. imported 6.8 mmbpd of crude oil (net) compared to only 3.5 mmbpd at the time of the Arab Oil Embargo (Table 1).

…click on the above link to read the rest of the article…

We are at Peak Oil now; we need very low-cost energy to fix it

December 22, 2015

We are at Peak Oil now; we need very low-cost energy to fix it

This past week, I gave a presentation to a group interested in a particular type of renewable energy–solar energy that is deployed in space, so it would provide electricity 24 hours per day. Their question was: how low does the production cost of electricity really need to be?

I gave them this two-fold answer:

1. We are hitting something similar to “Peak Oil” right now. The symptoms are the opposite of the ones that most people expected. There is a glut of supply, and prices are far below the cost of production. Many commodities besides oil are affected; these include natural gas, coal, iron ore, many metals, and many types of food. Our concern should be that low prices will bring down production, quite possibly for many commodities simultaneously. Perhaps the problem should be called “Limits to Growth,” rather than “Peak Oil,” because it is a different type of problem than most people expected.

2. The only theoretical solution would be to create a huge supply of renewable energy that would work in today’s devices. It would need to be cheap to produce and be available in the immediate future. Electricity would need to be produced for no more than four cents per kWh, and liquid fuels would need to be produced for less than $20 per barrel of oil equivalent. The low cost would need to be the result of very sparing use of resources, rather than the result of government subsidies.

Of course, we have many other problems associated with a finite world, including rising population, water limits, and climate change. For this reason, even a huge supply of very cheap renewable energy would not be a permanent solution.

This is a link to the presentation: Energy Economics Outlook. I will not attempt to explain the slides in detail.

…click on the above link to read the rest of the article…

All Roads Lead To Peak Oil

December 21, 2015

All Roads Lead To Peak Oil

I follow the JODI World Oil Database primarily because it is now four months ahead of the EIA international data base. I make some adjustments however. I use the OPEC MOMR “secondary sources” for all OPEC data where JODI also uses the MOMR but uses their “direct communication” data instead. The OPEC portion of the JODI data is “crude only” and will therefore be somewhat less than the EIA reports.

I use the Canadian National Energy Base data for Canada instead of the strange numbers JODI has for Canada. And I use the EIA data for the few small producers that JODI does not report.

With these Changes I think I have composed an excellent World Oil Database from this composite data. And with the October data just released I have composed the below charts. The data is through October and is in thousand barrels per day.

World oil production peaked, so far, in July at 76,702,000 barrels per day and in October stood at 76,128,000 bpd or 574,000 bpd below the peak.

Non-OPEC peaked, so far, in December 2014 at 45,530,000 bpd and in October stood at 44,662,000, down 868,000 bpd or just under 2% in 10 months.

For the first time in 4 years Non-OPEC production has dropped below the level it was the same month the previous year. This means the 12 month trailing average has turned negative, though just barely.

Non-OPEC less the USA has been on a 12 year bumpy plateau. In fact it stood at 35,422,000 barrels per day in October, 214,000 bpd less than the level reached in December 2003.

…click on the above link to read the rest of the article…

Report: Eagle Ford Shale Has Peaked, Lifting of Oil Export Ban Could Drain Field More Quickly

December 18, 2015

Report: Eagle Ford Shale Has Peaked, Lifting of Oil Export Ban Could Drain Field More Quickly

Titled “Eagle Ford Reality Check: The Nation’s Top Tight Oil Play After More Than a Year of Low Oil Prices,” the report is the latest in a series of long reports on the overhyped future of oil obtained via hydraulic fracturing (“fracking”) in the U.S. by Post Carbon Institute Fellow David Hughes. Hughes formerly worked for 32 years with the Geological Survey of Canada as a scientist and research manager before coming to Post Carbon.

It also comes just two months after Post Carbon’s October release of a similarly titled report on North Dakota’s Bakken Shalebasin, the second biggest shale oil field in the U.S. behind the Eagle Ford.

“In Eagle Ford Reality Check, David Hughes…looks at how production in the Eagle Ford has changed after a year of low oil prices,” a summary of the report explains. “Oil production in the Eagle Ford is now falling after more than a year of low oil prices. The glory days of the Eagle Ford are behind it, at the ripe old age of six years.”

Many of the same themes and concepts, for those familiar with Post Carbon’s previous “shale bubble” updates, reappear in this report. Those include the drilling treadmill, drilling sweet spots, and U.S. government and industry drilling productivity assessments (the seeds and intelligence upon which energy policymaking is made) vs. independent drilling productivity assessments.

…click on the above link to read the rest of the article…

Peak Oil: Imagine

December 9, 2015

Peak Oil: Imagine

Imagine what would happen if citizens took a moment or two to ponder the implications of the nonsense peddled to them daily by those public voices having decidedly different priorities than the public’s continued well-being….

Thanks to investment into supercomputers, robotics and the use of chemicals to extract the maximum from available reservoirs, the accessible oil and gas reserves will almost double by 2050.
Together with the development of renewable resources and nuclear power, the world will thus have more than 20 times the amount of energy it needs to cover its consumption despite growing demand.
‘Energy resources are plentiful. Concerns over running out of oil and gas have disappeared,’ said David Eyton, BP Group Head of Technology at the launch of BP’s inaugural Technology Outlook.
‘We are probably nearing the point where potential from additional recovery from discovered reservoirs exceeds the potential for exploration.’
Together with the development of renewable resources and nuclear power, the world will thus have more than 20 times the amount of energy it needs to cover its consumption despite growing demand. [1]

Isn’t that fantastic? We’re using chemicals [mostly undisclosed, of course] to “extract the maximum from available reservoirs” and we don’t even have to explain what that does and does not mean! Double fantastic! As if that’s not enough, no mention of costs, quality, or anything else! Wow!

Better still: by developing “renewable resources and nuclear power, the world will thus have more than 20 times the amount of energy it needs to cover its consumption despite growing demand” and we don’t even have to say a word about those pesky concerns as to having all the necessary infrastructure in place; research requirements and obstacles; funding challenges; worries about nuclear accidents … hell, we don’t have to explain a single issue about how this will all magically fall into place!

…click on the above link to read the rest of the article…

Egypt update: net oil importer and chokepoints

December 7, 2015

Egypt update: net oil importer and chokepoints

Oil production and consumption

Fig 1: Oil production vs consumption

After a post-peak decline production has stabilized but consumption has increased relentlessly at a long-term 1.7% pa, slightly below population growth of around 2% pa. Egypt is now a net oil importer. On these trends, the gap between consumption and production is likely to get larger. This increases imports and the need for fuel subsidies. Let’s zoom into the monthly oil production (crude and NGL separately)

Fig 2: Production of crude oil and natural gas plant liquids

Crude oil production declined again since 2009 at 2.5% pa, offset by an increase in NGLs of 4.7% pa

Fig 3: Net crude exports and refinery utilisation

The crude oil exported up to 2005 (at low oil prices!) is now missing. EIA data are presently only available up to 2012. The EIA writes:

According to data from OPEC’s Annual Statistical Bulletin, Egypt’s refined petroleum output averaged 445,000 b/d in 2013, suggesting that refinery utilization was about 63%. Egypt’s refining output declined by 28% from 2009 to 2013. Facts Global Energy attributes this decline to Egypt’s policy that permits foreign oil producers to export more crude oil as repayment of EGPC’s financial debt. As a result, Egypt’s crude oil exports [56% EU, 28% India, 13% China] have not declined over the past few years, despite declining production. In turn, there is a lower volume of domestic crude oil available for the domestic refineries, and Egypt must make up for the difference by importing petroleum products and/or crude oil. Egypt imported about 145,000 b/d of petroleum products in 2014, according to Global Trade Information Services. Egypt also exported about 60,000 b/d of petroleum products that same year.

…click on the above link to read the rest of the article…

Peak Oil: Right Again [Pt 2]

December 3, 2015

Peak Oil: Right Again [Pt 2]

IMGP1044

We continue with an examination of the statements offered in a recent example of cherry-picked nonsense, an article entitled: “Earth Is An Oil-Producing Machine — We’re Not Running Out.” The fine art of misleading the uninformed….

Delighted with the discovery that “Earth is actually an oil-producing machine” [a secret all these eons!], our cheerleading scribe then confidently bases that bold proclamation on “[r]esearch from the last decade.”

As noted in my most recent post, “the ‘research’ relied upon by the author were two related and generously interpreted articles from 2008—neither of which appear to have been elaborated upon since then.” Those articles were based on research conducted in 2002 and again in 2005, as explained below.

On a roll now, the writer then adds: “In other words, as Science magazine has reported, the ‘data imply that hydrocarbons are produced chemically’ from carbon found in Earth’s mantle.’” Excellent foundation and a rock-solid piece of substantiation—but for the fact it’s more than a bit misinterpreted [if that matters].

An at best marginally relevant, minuscule sampling of “data” which arguably implies something to dispute established evidence—albeit in a vague sort of way—is so much more weighty than decades of substantive yet contradictory research on point, isn’t it? We have all the utterances we need … especially if we ignore the principal scientist’s disclaimer [as quoted in Mother Jones]:

Giora Proskurowski, a researcher at Woods Hole Oceanographic Institution, recently discovered small amounts of hydrocarbons forming through an abiotic process deep in the Atlantic. The abiotic oil believers have seized on his findings, but Proskurowski says sorry—talk of bottomless, Saudi-free oil is ‘a pipe dream’

This begs at least one question: Is a “pipe dream” for new sources of oil reasonably close to could possibly being sort of “plentiful” nonetheless, if facts weren’t a consideration … perhaps?

…click on the above link to read the rest of the article…

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